UCTT 10-K & 10-Q changes, risk factors and insider trading

Our revenues in periods of increasing demand depends, in part, upon our ability to: (i) timely mobilize our supply chain to maintain component and raw material supply at scale; (ii) optimize our design, as well as mobilize our engineering and manufacturing capacity in a timely manner; (iii) expand, as necessary, our manufacturing, cleaning, coating and analytical services capacity; and (iv) maintain our product and service quality as we increase production. We are currently anticipating a period of historically elevated demand, driven by growth in artificial intelligence. During periods of strong demand such as those currently anticipated, competition for critical components, raw materials, and skilled labor intensifies, which may constrain our ability to meet customer requirements. If we fail to timely respond to rapid increases in demand for our products and services, or to effectively manage the corresponding expansion of our manufacturing and service capacity, our customers may divert their purchases of products and services from us to our competitors.

Our ability to remain profitable and mitigate the impact on our business in periods of decreasing demand depends, in part, upon our ability to: (i) maintain the prices, quality and delivery cycles of our products and services while managing costs by optimizing our inventory levels, (ii) reduce or cancel orders from our suppliers, all without compromising our relationships with such suppliers; and (iii) continue to motivate our employees while reducing our fixed and variable costs through various initiatives, which may include reducing our workforce. A sharper-than-expected correction following a demand peak could exacerbate these challenges, particularly if we have meaningfully expanded our cost structure or inventory commitments in response to elevated near-term demand.

OurIncomplete inabilityor to successfully manage theunsuccessful implementation and integration of a company-wide enterprise resource planning (“ERP”) system could adversely affect our operating results.

We are continuing theto implementationimplement ofand integrate a company-wide ERP system. This process has been and continues to be complex and time-consuming and we expect to incur additional capital outlays and expenses. This ERP system will replace or interface with our existing operating and financial systems, which has been and is a major undertaking from a financial management and personnel perspective. Should the ERP system not be implemented or integrated successfully throughout all our business units on time and within budget, or if the system does not perform in a satisfactory manner, it could be disruptive and adversely affect our operations, including our ability to: (i) report accurate, timely and consistent financial results; (ii) purchase supplies, components and raw materials from our suppliers; and (iii) deliver products and services to customers on a timely basis and to collect our receivables from them. We have teams leading the implementation of the ERP system at most of our locations.locations, and the integration of acquired entities onto our ERP platform. To the extent these teams or key individuals are not retained through the implementation process, the success of our implementation could be compromised and the expected benefits of the ERP system may not be realized.

We havemay identifiedidentify material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controlscontrols, which, if not remediated,which could adversely affect the accuracy, reliability, and timeliness of our financial reports,reporting, our reputation, business operations, and stock price.

EffectiveMaintaining effective internal controls over financial reporting areis necessary for usessential to provideproviding reliable and timely financial reports and, together with adequate disclosure controls and procedures, are designed to reasonably detectdetecting and preventpreventing fraud. In addition, Section 404 of the Sarbanes-Oxley Act of 2002 requires usboth management and our independent registered public accounting firm to evaluate and report on our internal control over financial reporting. The process of designing,Designing, implementing, maintaining, and updatingcontinuously improving our internal controls and complying with Section 404 is expensive and time consuming, and requires significant management attention from management and company resources. Failure to maintain existing or implement new or improved controls, or difficulties encountered in their implementation, could harm our results of operations or cause us to fail to meet our reporting obligations.

WeAlthough we have begunsuccessfully the process of evaluatingremediated the material weaknesses andidentified havein takenour stepsAnnual towardReport executingon aForm full10-K remediation plan. Untilfor the remediationyear planended isDecember implemented,27, tested,2024, andthere deemed effective, we cannotcan be certainno assurance that our actions will adequately remediate the material weaknesses or that no additional material weaknesses inwill our internal controls willnot be identified in the future. As our business grows and evolves, our control environment must adapt to changes in our operations, systems, transaction complexity, and regulatory requirements. Failure to identify risks, implement necessary control changes, or maintain existing controls could result in new control deficiencies. If we identify material weaknesses in the future, and are unable to remediate thethose material weaknesses, our ability to record, process and report financial information accurately, and to prepare financial statements within the time periods specified by the rules and forms of the SEC, could be adversely affected and could reduce the market’s confidence in our financial statements and harm our stock price.

We hold our customers’ parts on our premises and anyAny significant damage or loss toof thesecustomer partsand supplier property held at our facilities could cause our operating results to suffer.

In connection with both our Products and Services business,businesses, we hold meaningful amounts of property owned by our customers and suppliers at our facilities. This includes customer components and assemblies across our product lines, as well as supplier-owned inventory and materials consigned to us for manufacturing or service operations. We face a number of risks associatedrelated withto customersafeguarding partsthis beingthird-party held on our premises,property, including the risk of mishandling or damaging,damaging customer parts, any of which could be materially harmful for our business.

The manufacture and delivery of our products, the provision of our services and our financial reporting depend on the continuing operation of our technology infrastructure and systems, particularly our data center located in California. We face evolving and increasing cybersecurity threats, including ransomware attacks, malware, denial-of-service attacks, social engineering (including phishing), supply chain attacks, and other attempts to gain unauthorized access to our systems and data. Any damage to or failure of our systems could result in interruptions in our ability to manufacture or deliver products or services, or adversely impact our ability to accurately and timely report our financial results. Interruptions could reduce our sales and profits, and our systems could be perceived as unreliable. Our systems and operations are vulnerable to damage or interruption from earthquakes, terrorist attacks, floods, fires, power loss, hardware or software failures, telecommunications failures, cyber attacks, and similar events. Some of the critical components of our system are not redundant and we currently do not have a backup data center.

Our business is subject to the risks offrom earthquakes,natural fire,disasters, powerinfrastructure outages, floods,failures, and othergeopolitical catastrophic events, and to interruption by man-made disruptions,conflicts, such as armed conflicts or terrorism.

Our facilities may experience catastrophic losses caused byfrom natural disasters or other causalities, such as earthquakes, storms, floods, fires, public health epidemic,epidemics, labor disruptions, power outages, terrorist attacks or political unrest, the occurrence of any one of which could disrupt our operations, delay production and shipments, and result in largesignificant repair expenses. We have facilities in areas with above averageelevated seismic activity, such as our facilities inincluding Hayward, California, and our Taiwan facilities in Hsinchu and Tainan. We have also have experienced fires and extended power outages at our facilities,facilities. such as the fire that occurred at a Korean plant operated by our joint venture, Cinos Korea, in 2018. This risk is further exacerbated by the fact that ourOur insurance policies do not fully cover the losses causedfrom by earthquakes orearthquakes, other natural disastersdisasters, or power loss.loss, leaving us exposed to substantial uninsured costs. Our Fluid Solutions business operations are concentrated in Israel, where many key employees, offices and some of its production facilities are located. The political,region economicfaces ongoing armed conflict and security situationthreats inthat Israeldirectly hasimpact our operations. While a directphased impactceasefire on our operations there, and a state of war in Israel, such as the Gaza waragreement between Israel and Hamas-ledHamas groupstook that startedeffect in 2023,October 2025, the situation remains fragile with continued violence, miliary activity, and restrictions on movement and commerce. This instability has disrupted and may harm,continue andto havedisrupt harmed,our workforce availability, our ability to supply ourship products to customers.customers, and our ability to receive materials from suppliers.

In addition, our suppliers experiencing natural disasters or geopolitical disruptions may not be able to provide sufficient components or raw materials in a timely manner, which can cause disruptions into our operations.

We and our customers have significant operations in China. The extent of the impact of the ongoing trade tension between the United States and China on our sales and operations is difficult to predict. InSince December 2024, the U.S. Department of Commerce imposedhas additionalsignificantly expanded export license requirements on certain semiconductor goods and technologies sold to certainChina, and has added over 140 Chinese entities into China.its ThisEntity expansionList. ofAlthough the U.S. and China agreed to temporarily suspend certain export licensecontrol requirementsmeasures in ChinaOctober has2025, adverselythis impactedlimited somerelief ofdoes ournot customersresolve withthe businessunderlying presenceregulatory inrestrictions China,or which in turn had an adverse impact on our business.uncertainty. These newevolving regulations have created ongoing uncertainty for our operations in China, as the full scope and extent of thecurrent newand future license requirements remain uncertain, and may change over time. Obtaining these export licenses is likelyremains difficult for us and/or our customers, and any delays (or denial) in the approval process could disrupt our supply chains and negatively impact production schedules. For example, the utilization rate of our manufacturing subsidiary in China may be negatively impacted if we would not be able to support our customers with goods and services originating out of that location.

Additionally, tariffs and retaliatory tariffs levied by the United States and China on certain raw materials have in the past increased the cost of materials for our products. If the current trade relationship between U.S. and- China continuestensions on the same tense trajectory,escalate, we may experience additional taxes and tariffs on raw materials sourced from China, which could render our products less competitive and/or profitable.

In addition to any litigation related to our intellectual property rights, we have been in the past and may in the future be named as a defendant in other lawsuits and regulatory actions relating to our business, such as commercial contract claims, environmental compliance claims, employment claims, class action litigations, and tax examinations, any one of which may expose us to significant damages and reputational harm. The outcome of such litigations and regulatory proceedings is difficult to predict. An unfavorable outcome could have a material adverse effect on our business, including limiting our ability to engage in certain business activities. In addition, such proceedings are often expensive, time-consuming and disruptive to normal business operations and require significant attention from our management. For example, we have been incurringincurred costs responding to a subpoena received from the SEC related to the material weaknesses identified in our 2022 and 2023 annual reports and the change of our independent auditors.

As of December 27,26, 2024,2025, we have gross debt of $499.7 million. Such debt is composed of a $493.8$481.4 million term loan outstanding under our credit agreement with Barclays Bank and $5.9 million under credit facilities at Fluid Solutions less unamortized debt costs of $7.2$4.5 million.

We made capital expenditures of approximately $63.5$50.3 million and $75.8$63.5 million forin fiscal years 20242025 and 2023,2024, respectively, which are primarily related to investments in ourfor manufacturing facilitiesfacility investments in the United States, Ireland and MalaysiaMalaysia, and tofor ourinformation technology infrastructure improvements, including ERP system implementation.upgrades Theand amountintegration of acquired entities onto our platforms. Our future capitalcash requirements will depend on many factors, including: the costfollowing associatedcapital with theexpenditures: expansion of our manufacturing capacity intoin Malaysia and other locations as part of our strategic growth plan; theenhancement cost to maintain appropriateof IT systems and cybersecurity infrastructure; themanufacturing costprocess changes and facility modifications required to maintainmeeting adequateevolving manufacturingcustomer capacityrequirements; the timing and extent of spending to support product development efforts; the timing of new product introductionsintroductions. Our cash requirements will also depend on the following operating and enhancementsstrategic toexpenditures: existingintegration productscosts for acquisitions, including IT systems consolidation; theproduct timing, sizedevelopment and availabilityengineering of strategic transactions; the cost to integrate our acquisitions into our business environment; changing manufacturing capabilities to meet new or increased customer requirements; market acceptance of our productsinvestments; and ourongoing abilityIT tomaintenance generateand sufficientcybersecurity cash flow from our operating activities.operations.

InIf ordercash generated from operations is insufficient to financefund ourthese capital expenditures or any future strategic acquisitions,requirements, we may need to raise additional fundscapital through public or private equity or debt financing,financing. but suchSuch financing may not be available on termsacceptable satisfactory to us,terms, or at all. InEquity addition,financing equitywould financingsdilute couldexisting bestockholders, dilutive to holders of our common stock, andwhile debt financingsfinancing would likely involveimpose additionalrestrictive covenants that restrictlimit our businessoperational operations.flexibility. Any potentialAdditionally, strategic acquisitionacquisitions or significant capital expenditureexpenditures may also require the consent offrom our existing lenders.lenders under our credit facilities. If we cannot raisesecure fundsadequate on acceptable termsfinancing when needed, we may not be able to develop or enhance our products, takepursue advantage of futurestrategic opportunities, growmaintain ourcompetitive businessmanufacturing capacity, or respond effectively to competitive pressures or unanticipatedchanging requirements.market conditions.

Ultra Clean Holdings, Inc., (“UCT”, the “Company” or “We”) is a leading developer and supplier of critical subsystems, components, parts, and ultra-high purity cleaning and analytical services primarily for the semiconductor industry. UCT offers its customers an integrated outsourced solution for major subassemblies, improved design-to-delivery cycle times, design for manufacturability, prototyping and part and component manufacturing, as well as tool chamber parts cleaning and coating, and micro-contamination analytical services. We report results for two segments: Products and Services. Our Products segment primarily designs, engineers and manufactures production tools, components and parts, and modules and subsystems for the semiconductor and display capital equipment markets. Products include chemical delivery modules, frame assemblies, gas delivery systems, fluid delivery systems, precision robotics, process modules as well as other high-level assemblies.assemblies for wafer fabrication equipment (“WFE”) and sub-fab support equipment. Our Services segment provides ultra-high purity parts cleaning, process tool part recoating, surface encapsulation and high sensitivity micro contamination analysis primarily for the semiconductor device makers and wafer fabrication equipment (“WFE”) markets.

We must assess the likelihood that we will be able to recover our deferred tax assets. If recovery is not more likely than not, we must increase our provision for taxes by recording a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be recoverable. In determining whether the realization of these deferred tax assets may be impaired, we make judgments with respect to whether we are likely to generate sufficient future taxable income to realize these assets. In order to reverse a valuation allowance, U.S. GAAP suggests that we review our recent cumulative income/loss as well as determine our ability to generate sufficient future taxable income to realize our net deferred tax assets. As of December 27,26, 2024,2025, we maintained a full valuation allowance on our U.S. federal and state and on certain of our foreign deferred tax assets in the amount of $96.3$104.2 million as we believe it is more likely than not that these deferred tax assets will not be realized.

We evaluate our goodwill and indefinite life tradename for impairment,impairment at the reporting unit level,level on an annual basis, and whenevermore frequently if events or changes in circumstances indicate that the carrying valueamount may notexceed beits fullyfair recoverable.value. In addition, we evaluate our identifiable intangible assets and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Factors we consider important which could trigger an impairment review include the following:

We continually apply judgment when performing these evaluations and continuously monitor for events and circumstances that could negatively impact the key assumptions in determining fair value, including long-term revenue growth projections, undiscountedprojected cash flows, discount rates, recent market valuations from transactions by comparable companies, volatility in our market capitalization and general industry, market and macroeconomic conditions. It is possible that changes in such circumstances, or in the variables associated with the judgments, assumptions and estimates used in assessing fair value, would require us to record a non-cash impairment charge.

A discussion regarding our financial condition and results of operations for fiscal 2024,2025, compared to fiscal 2023,2024, is presented below. The results of operations for 2023, and the discussion below reflect two months of activity resulting from the acquisition of HIS.

Products revenues increaseddecreased $352.1by $54.4 million in fiscal year 20242025 over fiscal year 2023,2024, primarily duedriven toby anlower increasecustomer demand, reflecting a slowdown in customer demand,purchasing alongactivity within anresponse overallto short-term market improvement in the semiconductor industry and in part due to the acquisition of HIS in October 2023.conditions.

Services revenues increased $11.0by $10.8 million in fiscal year 20242025 over fiscal year 2023,2024, primarilydriven dueby to increase inhigher demand across its customer base.

Cost of Products revenues consists of purchased materials, direct labor and manufacturing overhead. Cost of products revenues increaseddecreased $279.2by $22.7 million for fiscal 20242025 compared to fiscal 2023.2024. The increasedecrease was dueprimarily driven by lower sales volume, which led to highera sales$33.3 volumemillion drivingreduction increasedin material costscosts, ofpartially $241.0offset million,by higher direct labor spending of $24.4 million, and unfavorable absorption of overhead costs ofand $13.8restructuring-related million.costs.

Services Cost of Services revenues consists of direct labor, manufacturing overhead and materials (such as chemicals, gases and consumables).consumables. Cost of services revenues increased $4.9by $12.5 million in fiscal 20242025 compared to the prior yearyear, driven by higher volumes of service orders,orders and increases in headcount, overtime and employee-related expenses, resulting in increasean inadditional material$8.8 million of costs, as well as higher overhead costs and overheadrestructuring-related costs.activities.

In both segments, costs of revenue increased as a percentpercentage of revenuerevenue, decreasedprimarily asdue certainto fixed costs remainthat regardlessdo ofnot scale with volume.

Products gross profit and gross margin increaseddecreased in fiscal year 20242025 compared to fiscal year 20232024, primarily due to higher revenue levels, product shiftemployee and volumerestructuring-related shift from higher to lower cost regions.costs.

Services gross profit increaseddecreased in fiscal year 20242025 compared to fiscal year 20232024, primarily due to higher revenuecost levels.of revenues driven by increased labor and compensation-related costs, as well as higher overhead and restructuring-related costs.

Research and development expenses consist primarily of activities related to new component testing and evaluation, test equipment and fixture development, product design, the advancement of cleaning and coating and analytical processes, and other product-development activities. Research and development expenses were consistent in fiscal year 2024 compared to fiscal year 2023.

Sales and marketing expenses consist primarily of salaries and commissions paid to our sales employees, salaries paid to our engineers who partner with sales and service employees to help determine the components and configuration requirements for new products and other costs related to the sales of our products. Sales and marketing expenses increased $5.5 million in fiscal year 2024 over fiscal year 2023, due to an increase in headcount.

General and administrative expenses increased $17.5$6.5 million in fiscal year 20242025 over fiscal year 2023,2024, primarily driven by increasesincrease in spending for certain third party professional services of $5.8 million, stock-based compensationcompensation, expensea ofseparation $4.4payment million, amortization of intangible assets acquired through business combinations of $3.6 million, in additionmade to the prior CEO, and increased restructuring activities, including both involuntary separations and a combinationvoluntary ofearly otherretirement factors, none of which were individually significant.program.

Interest expenseincome decreased $2.3$0.9 million in fiscal year 20242025 over fiscal year 20232024 due to lower interest ratesearning and due to lower amortization of debt issuance costs due to debt modification.balances.

The change in tax rates in fiscal year 20242025 reflects, primarily, the changes in the geographic distribution of our worldwide earnings. For fiscal year 2024,2025, our effective tax rate was higherlower than the federal statutory rate of 21.0% primarily due to the valuation allowance in the U.S.U.S., impairment of goodwill and earnings in our foreign subsidiaries subject to local statutory tax rates.

Our ability to realize deferred tax assets depends on our ability to generate sufficient future taxable income. In assessing our future taxable income, we have considered all sources of future taxable income available to realize our deferred tax assets, including the taxable income from future reversalreversals of existing temporary differences, carryforwards, and tax-planning strategies. If changes occur in the assumptions underlying our tax planning strategies or in the scheduling of the reversal of our deferred tax liabilities, the valuation allowance may need to be adjusted in the future.

The Company remittedin the past has asserted that the earnings fromof our foreign subsidiaries, with the exception of certain of its subsidiaries in Singapore, are intended to be permanently reinvested. In fiscal year 2025, the Company changed its assertion for the earnings of one of its subsidiaries in China and only considers the earnings accumulated prior to fiscal year 2023 to be permanently reinvested. As of the end of fiscal 2025, the Company has recorded a deferred tax liability of $1.0 million related to accumulated earnings subject to future repatriation. The Company remitted earnings to the U.S. from its subsidiaries in Singapore in 2024.2025. With the possible exception of this Singapore subsidiary,and China subsidiaries, the Company has no plans to remit other foreign earnings.earnings to the U.S. We may change our intent to reinvest certain of our undistributed foreign earnings indefinitely, which could require us to accrue or pay taxes on some or all of these undistributed earnings.

The increasedecrease in cash and cash equivalents in fiscal year 2024,2025 compared to fiscal year 2023,2024 was primarily due to cash provided by operating and financing activities of $65.0 million and $9.8$65.6 million, respectivelywhich was offset by cash used in investing and financing activities of $63.5$47.0 million.million and $21.2 million, respectively.

•Cash used in investing activities was $47.0 million in fiscal year 2025 compared to $63.5 million in fiscal year 2024 compared to $119.7 million in fiscal year 2023.2024. During fiscal year 2024,2025, net cash used for investing activities primarily consisted of $63.5$50.3 million related to purchases of property, plant and equipment.equipment, partially offset by an asset-related government grant of $2.9 million. During fiscal year 2023,2024, net cash used forin investing activities primarilywas consisted of $75.8$63.5 million related tofor purchases of property, plant and equipment and $46.1 million related to an acquisition.equipment.

•Cash providedused by financing activities was $21.2 million in fiscal year 2025 compared to cash provided of $9.8 million in fiscal year 20242024. comparedThe to cash used of $69.9$31.0 million increase in fiscal year 2023. During fiscal year 2024, net cash providedused by financing activities was primarily due to the absence of $23.5 million of net cash proceeds from thebank amendedborrowings creditrelated agreement,to a decreaseprior-period ofdebt $28.4modification, an $8.0 million increase in principal payments on bank borrowings, and a $29.4$3.4 million increase in share repurchases, partially offset by a $1.9 million decrease in share repurchases offset partially by the additional $2.5 million payment of debt issuance costs. During fiscal year 2023, net cash provided by financing activities primarily consisted of debt repayment of $38.6 million and $29.4 million of shares repurchased.

As of December 27,26, 2024,2025, we had undistributed earnings of approximately $555.0$596.7 million from our foreign subsidiariessubsidiaries, that$577.3 million of which are indefinitely investedreinvested outside of the U.S. As of December 27,26, 2024,2025, we have cash of approximately $273.1$253.0 million in our foreign subsidiaries.

TheOn April 4, 2024, the Company entered into a Sixth Amendment resulted into the receiptsCredit Agreement dated as of anAugust additional27, 2018. The amendment (i) extended the maturity date of the term loan and revolving credit facilities by 30 months; (ii) reduced the interest rate applicable to the term loan facility under the Credit Agreement by 0.25% per annum; and (iii) increased the outstanding amount under the Term Loan of $475.4 million to $500 million. The Company received $67.7 million of additional debt, net of $1.1 million relatedin lender fees from new or existing syndicate lenders which wasfees, offset by syndicate$44.2 lendersmillion whoin reduced theirsyndicate positions by $44.2 million.positions. The Company capitalized additional $2.5 million of additional costs related to this amendment andamendment, continued to defer previously capitalized costs of $5.2 million.million The Companyand expensed third party transaction costs and the previously capitalized costs of extinguished debt of $3.6 million which was included in the other income (expense), net in the Consolidated Statements of Operations for the fiscal year ended December 27, 2024.

On October 8, 2024, the Company entered a Seventh Amendment (the “Seventh Amendment”) to the Credit Agreement to further reducereducing the interest rate applicable to the term loan facility under the Credit Agreement by 0.25% per annum.

The Term Loan has a maturity date of February 25, 2028. The Company pays monthly interest payments in arrears and quarterly principal payments of 0.625% of the outstanding principal balance as of OctoberSeptember 8,15, 2024,2025, with the remaining principal paid upon maturity.

The letter of credit facility has an available commitment of $50.0 million and a maturity date of August 27, 2027. The Company pays a quarterly fee in arrears equal to 2.5% (subject to certain adjustments to the Term Loan) of the dollar equivalent of all outstanding letters of credit,credit equal to the applicable margin for the revolving credit facility, and a fronting fee equal to 0.125% of the undrawn and unexpired amount of each letter of credit. As of December 27,26, 2024,2025, the Company had $3.5$3.4 million of outstanding letters of credit and $46.5$46.6 million of available commitments remaining under the letter of credit facility.

Under the Credit Agreement, the Company may elect that the Term Loan bear interest at a rate per annum equal to either (a) “ABR” (as defined in the Credit Agreement), plus the applicable margin or (b) the “EurodollarTerm RateSOFR” (as defined in the Credit Agreement), based on SOFR, plus the applicable margin. The applicable margin for the Term Loan is equal to a rate per annum equal to either (i) at any time that the Company’s corporate family rating is Ba3 (with a stable outlook) or higher from Moody’s and BBBB- (with a stable outlook) or higher from S&P, (x) 3.00%2.50% for such EurodollarTerm termSOFR loans and (y) 2.00%1.50% for such ABR term loans or (ii) at all other times, (x) 3.25%2.75% for such EurodollarTerm termSOFR loans and (y) 2.25%1.75% for such ABR term loans. Interest on the Term Loan is payable on (1) in the case of such ABR term loans, the last day of each calendar quarter and (2) in the case of such EurodollarTerm termSOFR loans, the last day of each relevant interest period and, in the case of any interest period longer than three months, on each successive date three months after the first day of such interest period.

As of MarchJune 27,26, 2026, we had approximately $19.4$15.0 million principal amount of indebtedness for borrowed money outstanding under our credit agreement, gross of unamortized debt costs of $1.0 million,agreement and $600.0 million aggregate principal amount of indebtedness outstanding under our convertible notes issued in March 2026 (the “2031 Convertible Notes”).

Our fiscal year consists of a 52- or 53-week period. Fiscal year 2026 is a 53-week period ending January 1, 2027, and fiscal year 2025 was a 52-week period ended December 26, 2025. The fiscal quarters ended MarchJune 27,26, 2026 and MarchJune 28,27, 2025 were both 13-week periods.

Discussion of Results of Operations for the Three and Six months ended MarchJune 27,26, 2026 compared to the Three and Six months ended MarchJune 28,27, 2025

For the three-monththree periodand six month periods ended MarchJune 27,26, 2026, Products revenues increased compared to the same periodperiods in the prior year. The increase in Products revenues wasyear, primarily due to an increase in customer demand, alongdriven withby an overall market improvement in the semiconductor industry.

Services revenues increased for the three-monththree periodand six month periods ended MarchJune 27,26, 2026 compared to the same periodperiods in the prior yearyear, primarily due to an increase in demand across its customer base.

Revenues by geographic area are categorized based on the customer’s location to which the products were shipped or the location where services were performed.

For the three and six months ended MarchJune 27,26, 2026, U.S. and international revenues increased compared to the same periodperiods in the prior year, primarily reflecting improved conditions in the semiconductor capital equipment market, which drove higher customer demand across multiple regions. International revenue grew faster than U.S. revenue in both periods, shifting the geographic mix further toward international.

Cost of Products revenues consists of purchased materials, direct labor and manufacturing overhead. For the three-month period ended MarchJune 27,26, 2026, CostProducts cost of Products revenuesrevenue increased by $10.4$95.5 million compared to the same period in the prior year. The increase was primarily driven by higher labormaterial and manufacturing overheadlabor costs of $9.4$81.8 million and $2.2$18.4 million, respectively, associated with increased production activity, partially offset by a decrease in materialmanufacturing overhead costs of $1.2$4.7 million.

Services Cost of revenues consists of direct labor, overhead, and materials such as chemicals, gases and consumables. For the three-monthsix-month period ended MarchJune 27,26, 2026, ServicesProducts Costcost of revenuesrevenue increased by $4.3$106.0 million compared to the same period in the prior year. The increase was primarily driven by higher material and labor costs of $80.6 million and $27.8 million, respectively, associated with increased production activity, partially offset by a higher service volumes, which resulteddecrease in increasedmanufacturing labor, overhead, and materialoverhead costs of $2.4 million, $1.3 million and $0.6 million, respectively.million.

Products gross profit and margin decreasedincreased for the three-monththree periodand six month periods ended MarchJune 27,26, 2026 compared to the same periodperiods in the prior yearyear, due to anhigher unfavorablerevenue levels, favorable absorption of fixed costs, a favorable product mixmix, and a shift in sales volumes across different geographic regions.

Services gross profit and gross margin increased for the three-monththree periodand six month periods ended MarchJune 27,26, 2026 compared to the same periodperiods in the prior year, primarily due to higher revenue levelslevels. Gross margin remained flat for the six-month period, as cost of revenue grew in line with revenue and offset improved absorption of fixed costs. For the three-month period, gross margin decreased slightly, as cost of revenue growth outpaced revenue growth.

ServicesProducts operating income and operating margin increased for the three-monththree periodand six month periods ended MarchJune 27,26, 2026 compared to the same periodperiods in the prior year, primarily reflecting higher gross profit driven by increased revenue and improvedthe fixedabsence costof absorptionthe while$77.6 changesmillion goodwill impairment charge recorded in operatingthe expensesprior were not material.period.

Research and development expenses increased for the three-monththree periodand six month periods ended MarchJune 27,26, 2026 compared to the same periodperiods in the prior year, primarily due to higher employee-related costscompensation driven by increased headcount and, to a lesser extent, annual merit increases.costs.

Sales and marketing expenses increased for the three-monththree periodand six month periods ended MarchJune 27,26, 2026 compared to the same periodperiods in the prior year, primarily due to increaseshigher acrossemployee-related various expense categories, none of which were individually significant.costs.

General and administrative expenses were relatively consistentincreased for the three-monththree periodand six month periods ended MarchJune 27,26, 2026 compared to the same periodperiods in the prior year.year, primarily due to higher employee-related costs.

Interest income increasedwas relatively consistent for the three-monththree periodand six month periods ended MarchJune 27,26, 2026 compared to the same periodperiods in the prior year, primarily due to higher interest-earning balances.year.

Interest expense decreased for the three-monththree periodand six month periods ended MarchJune 27,26, 2026 compared to the same periodperiods in the prior year, primarily due to lower interest ratesexpense andfollowing athe reducedterm principalloan balance.prepayment, partially offset by higher amortization of debt issuance costs related to the convertible notes.

Other income (expense), net decreasedimproved for the three-monththree periodand six month periods ended MarchJune 27,26, 2026 compared to the same periodperiods in the prior year. The prior year periodyear, primarily reflecteddue to favorable foreign exchange gains, whilepartially theoffset current period reflectsby a loss on extinguishment of debt,debt partiallyin offsetthe bycurrent-year favorablesix-month foreign exchange transaction and remeasurement gains and higher other miscellaneous income.period.

The increase in the provision for income taxes for the three-monththree periodand six month periods ended MarchJune 27,26, 2026 compared to the same periodperiods in the prior year is primarily attributable to the impact of a planned distribution of earnings fromfrom, and change in ownership of, one of the Company’s foreign subsidiaries in the current year, changes in the geographic mix of worldwide earnings and financial results in jurisdictions which are taxed at different rates, and the impact of losses in jurisdictions with full valuation allowances on deferred tax assets.

Company managementManagement continuously evaluates the need for a valuation allowance on its deferred tax assets and, as of MarchJune 27,26, 2026, concluded that a full valuation allowance on its U.S. federal, state and certain of its foreign deferred tax assets remained appropriate.

•For the three-monthsix-month period ended MarchJune 27,26, 2026, cash used in operating activities was $33.3$74.4 million, compared to cash provided by operating activities of $28.2$57.4 million for the same period in the prior year. The $61.5$131.8 million decrease in net cash provided by operating activities was primarily driven by an unfavorable change in net working capital of $68.6$145.0 million and aan higherunfavorable net loss of $12.5 million, partially offset by a $19.6 million increasechange in non-cash items included in net loss of $146.7 million, partially offset by a $159.9 million improvement in net loss.

•The major contributors to net changes in operating assets and liabilities for the three-monthsix-month period ended MarchJune 27,26, 2026 were as follows:

◦Accounts payable increased by $68.0$104.4 million, while accrued compensation and related benefits decreasedincreased by $4.0$11.3 millionmillion, and incomeother taxesliabilities payable decreasedincreased by $2.8$13.8 million, primarily reflecting increased production activities and the timing of payments.

•Net cash used in investing activities during the three-monthsix-month period ended MarchJune 27,26, 2026 and MarchJune 28,27, 2025 consisted primarily of $9.6$25.8 million and $12.4$29.2 million purchases of property, plant and equipment, respectively.

•Net cash provided by financing activities was $57.6$48.5 million for the three-monthsix-month period ended MarchJune 27,26, 2026, compared to cash used in financing activities of $12.2$18.8 million for the same period in the prior year. The increase was primarily driven by $600.0 million of proceeds from the issuance of convertible notes.notes and a $15.0 million drawdown on the revolving credit facility. This was partially offset by principal payments on bank borrowings of $462.0$481.5 million, repurchases of common stock of $40.0 million, payments for capped call transactions of $25.1 million, and payments of debt issuance costs of $15.3$17.4 million. In the prior year, financing activities primarily reflected lower levels of debt repayments and minimal issuance costs, with no comparable convertible note issuance or share repurchase activity.

We believe we have sufficient capital to fund our working capital needs, satisfy our debt obligations, maintain our existing capital equipment, purchase new capital equipment and make strategic acquisitions from time to time.acquisitions. As of MarchJune 27,26, 2026, we had cash and cash equivalents of $323.5$255.9 million compared to $311.8 million as of December 26, 2025. Our cash and cash equivalents, cash generated from operations, and amounts available under our revolving line of credit described below were our principal sources of liquidity as of MarchJune 27,26, 2026.

During the threesix months ended MarchJune 27,26, 2026, the Company sold accounts receivable totaling $19.0$49.0 million under this arrangement.

As of MarchJune 27,26, 2026, we have cash of approximately $231.1$219.6 million in our foreign subsidiaries. It is not practicable to determine the tax liability that might be incurred if the undistributed earnings of these foreign subsidiaries were to be distributed. It is the Company’s practice and intention to reinvest the earnings of its non-U.S. subsidiaries in those operations, except for certain of its subsidiaries based in Singapore and China. There is no expected Singapore or U.S. tax liability on a distribution of the Singapore earnings. However, the Company has accrued taxes on a portion of the undistributed earnings of the China subsidiary in its financial statements as of MarchJune 27,26, 2026.

The Company’s total gross debt increased to $601.9 million as of MarchJune 27,26, 2026,2026 primarily due to the issuance ofreflects $600.0 million aggregate principal amount of 0.00% Convertible Notes due 2031 duringissued thein quarter,fiscal partiallyyear offset2026 byand thea repayment of $462.0$15.0 million ofrevolver thedrawdown. Company’sThe Company's term loan facility.facility was retired in full during fiscal year 2026 and carried no outstanding balance as of June 26, 2026.

On April 23, 2026, the Company entered into the Tenth Amendment to its Credit Agreement, which increased the aggregate revolving credit commitment from $150.0 million to $250.0 million and extended the maturity date to April 23, 2031. As of MarchJune 27,26, 2026, therethe wereCompany nohad $15.0 million of borrowings outstanding under the revolving credit facility, and available borrowing capacity was $145.9$230.9 million, net of $4.1 million of outstanding letters of credit.credit and borrowings. The Company was in compliance with all financial covenants under the Amended Credit Agreement as of MarchJune 27,26, 2026.

The Company also maintains credit facilities in Czechia and Israel, which provide for revolving credit capacity of up to 7.0 million euros (approximately $8.1$8.0 million) and $5.0 million, respectively. As of MarchJune 27,26, 2026, there were no borrowings outstanding under theseeither facilities,facility; andhowever, $2.1 million of the fullCzechia amountsfacility remainedwas available.utilized for outstanding bank guarantees.

As of MarchJune 27,26, 2026, the Company had $145.9$230.9 million, $6.4$5.9 million and $5.0 million available to draw from its credit facilities in the U.S., Czechia, and Israel, respectively.

Capital expenditures were $9.6$25.8 million during the threesix months ended MarchJune 27,26, 2026 and were primarily attributable to the capital invested in our manufacturing and service facilities worldwide. Our anticipated capital expenditures for the remainder of 2026 are expected to be financed primarily from our cash flow generated from operations and cash on hand.

The Company had commitments to various third parties to purchase inventories totaling approximately $721.3$971.1 million as of MarchJune 27,26, 2026.

In conjunction with the sale of our products in the ordinary course of business, we provide standard indemnification against certain liabilities to our customers, which may include claims of losses by their own customers resulting out of property damages, bodily injuries or deaths, or infringement of intellectual property rights by our products. Our potential liability arising out of intellectual property infringement claims by any third party is generally uncapped. As of MarchJune 27,26, 2026, we have not incurred any significant costs to defend lawsuits or settle claims related to these indemnification arrangements. As a result, we believe the estimated fair value of these arrangements is minimal.