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02/21/2019

Ultra Clean Reports Fourth Quarter and Full Year 2018 Financial Results

HAYWARD, Calif., Feb. 21, 2019 /PRNewswire/ -- Ultra Clean Holdings, Inc. (Nasdaq: UCTT), today reported its financial results for the fourth quarter and full year ended December 28, 2018.

(PRNewsfoto/Ultra Clean Holdings, Inc.)

"A full quarter of revenue from our new services business, driven by our acquisition of Quantum, contributed to top line growth for the fourth quarter and delivered greater than 18 percent revenue growth for the year," said Jim Scholhamer, CEO. "We expect the overall semiconductor industry to remain challenged for the near-term so we are implementing a series of rigorous cost structure improvements. These initiatives will improve profitability without compromising our ability to react quickly by seizing opportunities with IDM's and OEM's when industry growth resumes."

Fourth Quarter 2018 GAAP Financial Results

Total revenue was $257.4 million, an increase of 10.0% compared to the third quarter and an increase of 3.4% compared to the same period a year ago.

Gross margin was 17.9% compared to 15.0% last quarter and 17.7% a year ago. Operating margin was 4.0% compared to 0.4% last quarter and 8.8% for the same period last year.

Net loss was $1.1 million or $0.03 per basic and diluted share. This compares to net loss of $6.0 million or $0.15 per basic and diluted share in the previous quarter, and net income of $20.8 million or $0.62 and $0.60 per basic and diluted share last year.

Cash and cash equivalents were $144.1 million, a decrease of $16.2 million compared to the end of the third quarter.  

Fourth Quarter Non-GAAP Financial Results

Non-GAAP net income was $8.7 million, or $0.23 per diluted share. This compares to non-GAAP net income of $11.9 million or $0.30 per diluted share in the previous quarter and non-GAAP net income of $20.3 million or $0.59 for the prior year. 

Non-GAAP operating margin was 6.5% compared to 6.4% in the previous quarter and 9.5% in the same period a year ago.

The Company has provided a reconciliation of GAAP to non-GAAP financial measures in the financial statement tables included in this press release.

Full Year 2018 GAAP Financial Results

Total revenue was $1,096.5 million, an increase of 18.6% from fiscal year 2017. Gross margin was 16.0% compared to 18.1% a year ago. Operating margin was 5.5% compared to 9.7% in fiscal year 2017. Net income was $36.6 million or $0.95 and $0.94 per basic and diluted share. This compares to net income of $75.1 million or $2.25 and $2.19 per basic and diluted share last year.

Full Year 2018 Non-GAAP Financial Results

Non-GAAP net income was $64.7 million, or $1.66 per diluted share. This compares to non-GAAP net income of $80.3 million or $2.34 per diluted share in the previous fiscal year. Non-GAAP operating margin was 7.8% compared to 10.3% a year ago.

First Quarter 2019 Outlook

The Company expects revenue to be between $230.0 million to $250.0 million and GAAP diluted net (loss) income per share to be in the range of ($0.03) to $0.07. The Company expects non-GAAP net income per diluted share to be in the range of $0.09 to $0.19.

Conference Call

The call will take place at 1:45 p.m. PT and can be accessed by dialing 1-844-826-3034 or 1-412-317-5179 (international). No passcode is required. A replay of the call will be available by dialing 1-877-344-7529 or 1-412-317-0088 (international) and entering the confirmation code 10128320. The Webcast will be available on the Investor Relations section of the Company's website at http://uct.com/investors/events/

About Ultra Clean Holdings, Inc.

Ultra Clean Holdings, Inc. is a leading developer and supplier of critical subsystems, ultra-high purity cleaning and analytical services primarily for the semiconductor industry. Ultra Clean offers its customers an integrated outsourced solution for major subassemblies, improved design-to-delivery cycle times, design for manufacturability, prototyping and component manufacturing, and tool chamber parts cleaning and coating, as well as microcontamination analytical services. Ultra Clean is headquartered in Hayward, California. Additional information is available at www.uct.com.

Use of Non-GAAP Measures

Management uses non-GAAP net income and net income per diluted share to evaluate the Company's operating and financial results. We believe the presentation of non-GAAP results is useful to investors for analyzing our core business and business trends and comparing performance to prior periods, along with enhancing investors' ability to view the Company's results from management's perspective. The presentation of this additional information should not be considered a substitute for results prepared in accordance with GAAP. Tables presenting reconciliations of non-GAAP results to U.S. GAAP results are included at the end of this press release. A reconciliation of our guidance for non-GAAP net income per diluted share for the first quarter of 2019 is not available due to fluctuations in the geographic mix of our earnings from quarter to quarter, which impacts our tax rate and cannot be reasonably predicted or determined. As a result, such reconciliation is not available without unreasonable efforts and we are unable to determine the probable significance of the unavailable information.

Safe Harbor Statement

The foregoing information contains, or may be deemed to contain, "forward-looking statements" (as defined in the US Private Securities Litigation Reform Act of 1995) which reflect our current views with respect to future events and financial performance. We use words such as "anticipates,", "projection", "outlook", "forecast", "believes," "plan," "expect," "future,"' "intends," "may," "will," "estimates,", "see", "predicts," and similar expressions to identify these forward-looking statements. Forward looking statements included in this press release include our expectations about the semiconductor capital equipment market and our first quarter 2019 outlook. All forward-looking statements address matters that involve risks and uncertainties. Accordingly, the Company's actual results may differ materially from the results predicted or implied by these forward-looking statements. These risks, uncertainties and other factors also include, among others, those identified in "Risk Factors", "Management's Discussion and Analysis of Financial Condition and Results of Operations'' and elsewhere in our annual report on Form 10-K for the year ended December 29, 2017 as filed with the Securities and Exchange Commission and subsequently filed quarterly reports on Form 10-Q. Additional information will also be set forth in our annual report on Form 10-K for the year ended December 28, 2018. Ultra Clean Holdings, Inc. undertakes no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise unless required by law.

Contact:

Rhonda Bennetto
Vice President Investor Relations
rbennetto@uct.com

 

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in thousands, except per share data)














Three months ended


Twelve months ended


December 28, 


December 29, 


December 28, 


December 29, 

2018


2017

2018


2017













Sales

$

257,389


$

248,886


$

1,096,523


$

924,351

Cost of goods sold


211,412



204,819



920,682



756,722

Gross profit


45,977



44,067



175,841



167,629













Operating expenses:












  Research and development


4,059



3,264



13,287



11,666

  Sales and marketing


5,032



3,684



16,306



13,748

  General and administrative


26,676



15,162



85,544



52,818

    Total operating expenses


35,767



22,110



115,137



78,232

Income from operations


10,210



21,957



60,704



89,397

  Interest and other income (expense), net


(5,187)



(378)



(8,436)



(2,455)

Income before provision for income taxes


5,023



21,579



52,268



86,942

  Income tax provision


5,335



730



15,319



11,857

Net income (loss)


(312)



20,849



36,949



75,085

  Net income (loss) attributable to non-controlling interest


796



-



353



-

Net income (loss) attributable to Ultra Clean Holdings, Inc. 

$

(1,108)


$

20,849


$

36,596


$

75,085













Net income (loss) per share attributable to Ultra Clean Holdings, Inc. common stockholders:












  Basic

$

(0.03)


$

0.62


$

0.95


$

2.25

  Diluted

$

(0.03)


$

0.60


$

0.94


$

2.19

Shares used in computing net income (loss) per share:












  Basic


39,009



33,602



38,366



33,409

  Diluted


39,009



34,500



38,919



34,303

 

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in thousands)










December 28,


December 29,

2018

2017

ASSETS







Current assets:







  Cash and cash equivalents


$

144,145


$

68,306

  Accounts receivable, net of allowance



108,024



90,213

  Inventory



186,116



236,840

  Other current assets



21,088



12,089

    Total current assets



459,373



407,448








Equipment and leasehold improvements, net



142,922



32,246

Goodwill



155,472



85,248

Purchased intangibles, net



193,707



31,587

Deferred tax assets, net



2,323



4,951

Other non-current assets



8,110



1,932

Total assets


$

961,907


$

563,412








LIABILITIES AND STOCKHOLDERS' EQUITY







Current liabilities:







  Bank borrowings


$

9,671


$

12,381

  Accounts payable



99,011



173,521

  Other current liabilities



33,542



21,445

    Total current liabilities



142,224



207,347








Bank borrowings, net of current portion



331,549



39,893

Deferred tax liability



7,990



9,981

Other long-term liabilities



28,497



5,886

    Total liabilities



510,260



263,107








Stockholders' equity:







  Common stock



287,127



185,336

  Retained earnings



149,718



113,122

  Accumulated other comprehensive income (loss)



(886)



1,847

  Ultra Clean Holdings, Inc. stockholders' equity



435,959



300,305

  Noncontrolling interest



15,688



-

    Total stockholders' equity



451,647



300,305

Total liabilities and stockholders' equity


$

961,907


$

563,412

 

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited; in thousands)






Twelve Months Ended


December 28,


December 29,


2018


2017

Cash flows from operating activities:




Net income including noncontrolling interests

$        36,949


$        75,085

Adjustments to reconcile net income to net cash provided by operating activities (excluding assets acquired and liabilities assumed):




Depreciation and amortization

21,907


10,865

Stock-based compensation

10,272


7,757

Others

(308)


(206)

Changes in assets and liabilities:




Accounts receivable

7,694


(14,930)

Inventories

50,151


(131,874)

Prepaid expenses and other

(2,407)


(4,911)

Deferred income taxes

(82)


(3,755)

Other non-current assets

(162)


(582)

Accounts payable

(82,951)


99,569

Accrued compensation and related benefits

2,048


2,777

Income taxes payable

798


8,177

Other liabilities

1,474


933

Net cash provided by operating activities

45,383


48,905

Cash flows from investing activities:




Purchases of equipment and leasehold improvements

(29,487)


(16,149)

Acquisition of Quantum, net of cash acquired

(319,781)


Net cash used for investing activities

(349,268)


(16,149)

Cash flows from financing activities:




Proceeds from bank borrowings

387,054


15,076

Proceeds from issuance of common stock

94,611


1,816

Principal payments on bank borrowings

(86,354)


(31,248)

Debt issuance costs paid

(12,144)


Employees' taxes paid upon vesting of restricted stock units

(3,092)


(2,714)

Net cash provided by (used for) financing activities

380,075


(17,070)

Effect of exchange rate changes on cash and cash equivalents

(351)


155

Net increase in cash and cash equivalents

$        75,839


$        15,841

Cash and cash equivalents at beginning of period

68,306


52,465

Cash and cash equivalents at end of period

$      144,145


$        68,306

 

ULTRA CLEAN HOLDINGS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS














Three Months Ended


Twelve Months Ended



December 28,


December 29,


September 28,


December 28,


December 29,



2018


2017


2018


2018


2017

Reconciliation of GAAP Net Income (loss) to Non-GAAP Net Income (in thousands)











Reported net income (loss) attributable to Ultra Clean Holdings, Inc. on a GAAP basis

$               (1,108)


$              20,849


$               (5,997)


$              36,596


$              75,085

Amortization of intangible assets (1)


4,973


1,745


2,411


9,580


5,438

Reduction in force (2)


297


-


1,319


2,640


-

Product transition fees (3)


-


-


657


657


-

Executive transition costs (4)


418


-


246


2,064


-

Disposal of business unit (5)


-


-


1,082


1,082


-

Bank transaction costs (6)


-


-


99


99


-

Acquisition costs (7)


613


-


9,391


10,003


-

Facility lease early exit costs (8)


117


-


-


117


-

Income tax effect of non-GAAP adjustments (9)


(1,101)


(229)


(2,220)


(4,501)


(714)

Income tax effect of valuation allowance (10)


4,474


(2,096)


4,865


6,355


469

Non-GAAP net income attributable to Ultra Clean Holdings, Inc.


$                8,683


$              20,269


$              11,853


$              64,692


$              80,278












Reconciliation of GAAP Income from operations to Non-GAAP Income from operations (in thousands)











Reported income from operations on a GAAP basis


$              10,210


$              21,957


$                   922


$              60,704


$              89,397

Amortization of intangible assets (1)


4,973


1,745


2,411


9,580


5,438

Reduction in force (2)


297


-


1,319


2,640


-

Product transition fees (3)


-


-


657


657


-

Executive transition costs (4)


418


-


246


2,064


-

Acquisition costs (7)


613


-


9,391


10,003


-

Facility lease early exit costs (8)


117


-


-


117


-

Non-GAAP income from operations


$              16,628


$              23,702


$              14,946


$              85,765


$              94,835












Reconciliation of GAAP Operating margin to Non-GAAP Operating margin











Reported operating margin on a GAAP basis


4.0%


8.8%


0.4%


5.5%


9.7%

Amortization of intangible assets (1)


1.9%


0.7%


1.0%


0.9%


0.6%

Reduction in force (2)


0.1%


0.0%


0.6%


0.2%


0.0%

Product transition fees (3)


0.0%


0.0%


0.3%


0.1%


0.0%

Executive transition costs (4)


0.2%


0.0%


0.1%


0.2%


0.0%

Acquisition costs (7)


0.3%


0.0%


4.0%


0.9%


0.0%

Facility lease early exit costs (8)


0.0%


0.0%


0.0%


0.0%


0.0%

Non-GAAP operating margin


6.5%


9.5%


6.4%


7.8%


10.3%












Reconciliation of GAAP Gross profit to Non-GAAP Gross profit (in thousands)











Reported gross profit on a GAAP basis


$              45,977


$              44,067


$              34,995


$            175,841


$            167,629

Amortization of intangible assets (1)


1,363


-


-


1,363


-

Reduction in force (2)


297


-


1,197


2,431


-

Product transition fees (3)


-


-


657


657


-

Executive transition costs (4)


418


-


-


418


-

Non-GAAP gross profit


$              48,055


$              44,067


$              36,849


$            180,710


$            167,629












Reconciliation of GAAP Gross margin to Non-GAAP Gross margin











Reported gross margin on a GAAP basis


17.9%


17.7%


15.0%


16.0%


18.1%

Amortization of intangible assets (1)


0.5%


0.0%


0.0%


0.1%


0.0%

Reduction in force (2)


0.0%


0.0%


0.4%


0.2%


0.0%

Product transition fees (3)


0.1%


0.0%


0.3%


0.1%


0.0%

Executive transition costs (4)


0.2%


0.0%


0.0%


0.1%


0.0%

Non-GAAP gross margin


18.7%


17.7%


15.7%


16.5%


18.1%












Reconciliation of GAAP Interest and other income (expense) to Non-GAAP Interest and other income (expense) (in thousands)











Reported interest and other income (expense) on a GAAP basis


$               (5,187)


$                  (378)


$               (2,766)


$              (8,436)


$              (2,455)

Disposal of business unit (5)


-


-


1,082


1,082


-

Bank transaction costs (6)


-


-


99


99


-

Non-GAAP interest and other income (expense)


$               (5,187)


$                  (378)


$               (1,585)


$              (7,255)


$              (2,455)


1    Amortization of intangible assets related to the Company's acquisitions of AIT, Thermal, FDS and QGT

2    Represents severance costs related to the company's reduction in force during the quarter

3    One-time product transition payment  

4    Represents termination benefits paid to a former executive of the Company

5    Represents the loss on disposal of the Company's 3D printing operations in Singapore

6    Represents the writeoff of debt issuance costs, bank fees related to the payoff of remaining debt with East West Bank.

7    Represents costs related to the acquisition of QGT

8    Represents lease related costs due to the early exit of a facility

9    Tax effect of items (1) through (8) above based on the non-GAAP tax rate shown below

10    The Company's GAAP tax expense is generally higher than the Company's non-GAAP tax expense, primarily due to losses in the U.S. with full federal and state valuation allowances. The Company's non-GAAP tax rate and resulting non-GAAP tax expense considers the tax implications as if there was no federal or state valuation allowance position in effect. 

 

ULTRA CLEAN HOLDINGS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS




Three Months Ended


Twelve Months Ended



December 28,


December 29,


September 28,


December 28,


December 29,



2018


2017


2018


2018


2017

Reconciliation of GAAP Earnings Per Diluted Share to Non-GAAP Earnings Per Diluted Share











Reported net income (loss) on a GAAP basis


(0.03)


$                  0.60


$                 (0.15)


$                  0.94


$                  2.19

Amortization of intangible assets


0.13


0.05


0.06


0.25


0.16

Reduction in force


0.01


-


0.03


0.07


-

Product transition fees


-


-


0.02


0.02


-

Executive transition costs


0.01


-


0.01


0.05


-

Disposal of business unit 


-


-


0.03


0.03


-

Bank transaction costs


-


-


-


0.00


-

Acquisition costs


0.02


-


0.24


0.26


-

Facility lease early exit costs


0.00


-


-


0.00


-

Income tax effect of non-GAAP adjustments


(0.03)


(0.01)


(0.06)


(0.12)


(0.02)

Income tax effect of valuation allowance


0.12


(0.05)


0.12


0.16


0.01

Non-GAAP net income


$                  0.23


$                  0.59


$                  0.30


$                  1.66


$                  2.34

Weighted average number of diluted shares (thousands)


39,009


34,500


38,930


38,919


34,303

 

ULTRA CLEAN HOLDINGS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP EFFECTIVE INCOME TAX RATE




Three Months Ended


Twelve Months Ended



December 28,


December 29,


September 28,


December 28,


December 29,



2018


2017


2018


2018


2017

(in thousands, except percentages)











Provision for income taxes on a GAAP basis


$                5,335


$                   730


$                4,596


$              15,319


$              11,857

Income tax effect of non-GAAP adjustments (1)


1,101


229


2,220


4,501


714

Income tax effect of valuation allowance (2)


(4,474)


2,096


(4,865)


(6,355)


(469)

Non-GAAP provision for income taxes


$                1,962


$                3,055


$                1,951


$              13,465


$              12,102












Income (loss) before income taxes on a GAAP basis


$                5,023


$              21,579


$               (1,844)


$              52,268


$              86,942

Amortization of intangible assets


4,973


1,745


2,411


9,580


5,438

Reduction in force


297


-


1,319


2,640


-

Product transition fees


-


-


657


657


-

Executive transition costs


418


-


246


2,064


-

Disposal of business unit


-


-


1,082


1,082


-

Bank transaction costs


-


-


99


99


-

Acquisition costs


613


-


9,391


10,003


-

Facility lease early exit costs


117


-


-


117


-

Non-GAAP income before income taxes


$              11,441


$              23,324


$              13,361


$              78,510


$              92,380

Effective income tax rate on a GAAP basis


106.2%


3.4%


-249.2%


29.3%


13.6%

Non-GAAP effective income tax rate


17.2%


13.1%


14.6%


17.2%


13.1%


1    Tax effect of items (1) through (8) above based on the non-GAAP tax rate

2   The Company's GAAP tax expense is generally higher than the Company's non-GAAP tax expense, primarily due to losses in the U.S. with full federal and state valuation allowances. The Company's non-GAAP tax rate and resulting non-GAAP tax expense considers the tax implications as if there was no federal or state valuation allowance position in effect. 

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/ultra-clean-reports-fourth-quarter-and-full-year-2018-financial-results-300799970.html

SOURCE Ultra Clean Holdings, Inc.

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