Ultra Clean Holdings, Inc. (NASDAQ:UCTT) Q3 2023 Earnings Conference Call October 25, 2023 4:45 PM ET
Company Participants
Rhonda Bennetto - SVP IR
Jim Scholhamer - CEO
Sheri Savage - CFO
Conference Call Participants
Robert Mertens - TD Cowen
Operator
Good day, and welcome to the Ultra Clean Q3 2023 Earnings Call and Webcast. All participants will be in listen-only mode. [Operator instructions] Please note, this event is being recorded.
I would now like to turn the conference over to Rhonda Bennetto, Investor Relations. Please go ahead.
Rhonda Bennetto
Thank you, operator. Good afternoon everyone and thank you for joining us. With me today are Jim Scholhamer, Chief Executive Officer; and Sheri Savage, Chief Financial Officer. Jim will begin with some prepared remarks about the business and Sheri will follow with the financial review. Then we'll open up the call for questions.
Today's call contains forward-looking statements that are subject to risks and uncertainties. For more information, please refer to the Risk Factors section in our SEC filings. All forward-looking statements are based on estimates, projections, and assumptions as of today, and we assume no obligation to update them after this call.
Discussion of our financial results will be presented on a non-GAAP basis. A reconciliation of GAAP to non-GAAP can be found in today's press release posted on our website.
And with that, I'd like to turn the call over to Jim. Jim?
Jim Scholhamer
Thank you, Rhonda. Total revenue for the third quarter came in as expected, increasing 3% over the second quarter. Our product business grew just over 5% as some WFE fundamental dynamics began to show small signs of improvement.
We believe that some progress has been made for equipment inventory reduction throughout the system and expect several more quarters until normal levels are achieved.
We are aligned with our customers and their customers that while we don't know the pace or the timing of the recovery, we believe the fundamentals are slowly setting the stage for the industry to return to growth.
Our typically high-margin service business saw an abrupt decline in revenue due to a sudden and unexpected large reduction in wafer starts at a primary customer. While this pullback had a detrimental effect on our overall profitability and earnings, we believe that production cuts should help rebalance of supply and demand and a recovery of chip prices.
For the foreseeable future, we will continue to focus on optimizing our global footprint, driving operational efficiencies, and other strategic initiatives to further increase our value for our customers. These efforts will lay the foundation required to capitalize on share gain opportunities heading into the next ramp.