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07/31/2019

Ultra Clean Reports Second Quarter 2019 Financial Results

HAYWARD, Calif., July 31, 2019 /PRNewswire/ -- Ultra Clean Holdings, Inc. (Nasdaq: UCTT), today reported its financial results for the second quarter ended June 28, 2019.

(PRNewsfoto/Ultra Clean Holdings, Inc.)

"UCT delivered a strong second quarter, surpassing the top-end of our guided range for revenue, and reflecting solid execution despite ongoing market uncertainty," said Jim Scholhamer, CEO. "In light of these market dynamics, we will continue to optimize for cash generation through operational efficiencies and work to align our cost structure with the prevailing business environment."

Second Quarter 2019 GAAP Financial Results

Consolidated revenue was $265.4 million, an increase of 2.0% compared to the prior quarter and a decrease of 8.6% over the same period a year ago. SPS contributed $210.4 million and SSB added $55.0 million. Total gross margin was 18.2% compared to 17.2% last quarter and 15.9% for the same period a year ago.

Net loss was $0.2 million or $0.01 per basic and diluted share. This compares to net income of $0.6 million or $0.02 per basic and diluted share in the previous quarter, and net income of $19.0 million or $0.49 and $0.48 per basic and diluted share for the same period last year.

Second Quarter 2019 Non-GAAP Financial Results

Non-GAAP net income was $8.2 million or $0.21 per diluted share. This compares to $8.1 million, or $0.21 per diluted share in the previous quarter and $21.5 million or $0.55 for the prior year. 

Non-GAAP operating margin was 6.2% compared to 6.1% in the previous quarter and 8.7% 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.

Third Quarter 2019 Outlook

The Company expects revenue in the range of $235.0 million to $255.0 million and GAAP diluted net income per share to be between $0.00 and $0.10.  The Company expects non-GAAP diluted net income per share to be between $0.11 and $0.21.

Conference Call

The call will take place at 3:15 p.m. PT today and can be accessed by dialing 1-844-826-3034 or 1-412-317-5179. No passcode is required. A replay of the call will be available by dialing 1-877-344-7529 or 1-412-317-0088 and entering the confirmation code 10133370. For international replay numbers, please select from this link https://services.choruscall.com/ccforms/replay.html. 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 following quarter 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 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 28, 2018 as filed with the Securities and Exchange Commission and subsequently filed quarterly reports on Form 10-Q. 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


Six months ended


June 28, 


June 29, 


June 28, 


June 29, 

2019


2018

2019


2018













Revenues

$

265,367


$

290,213


$

525,508


$

605,055

Cost of goods sold


217,198



244,148



432,542



510,186

Gross profit


48,169



46,065



92,966



94,869













Operating expenses:












  Research and development


3,921



2,915



7,352



5,944

  Sales and marketing


5,366



3,630



10,761



7,435

  General and administrative


29,911



16,856



57,702



31,918

    Total operating expenses


39,198



23,401



75,815



45,297

Income from operations


8,971



22,664



17,151



49,572

  Interest and other income (expense), net


(6,390)



(809)



(11,709)



(483)

Income before provision for income taxes


2,581



21,855



5,442



49,089

  Income tax provision


2,835



2,895



4,342



5,388

Net income 


(254)



18,960



1,100



43,701

Net income attributable to non-controlling interest


(52)



-



697



-

Net income attributable to Ultra Clean Holdings, Inc. 

$

(202)


$

18,960


$

403


$

43,701













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












  Basic

$

(0.01)


$

0.49


$

0.01


$

1.16

  Diluted

$

(0.01)


$

0.48


$

0.01


$

1.14

Shares used in computing net income per share:












  Basic


39,399



38,802



39,261



37,763

  Diluted


39,399



39,297



39,556



38,418

 

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in thousands)










June 28,


December 28,

2019

2018

ASSETS







Current assets:







  Cash and cash equivalents


$

168,128


$

144,145

  Accounts receivable, net of allowance



98,306



106,956

  Inventory



164,055



186,116

  Other current assets



24,102



25,708

    Total current assets



454,591



462,925








Equipment and leasehold improvements, net



144,505



143,459

Goodwill



166,654



150,226

Purchased intangibles, net



190,500



193,507

Deferred tax assets, net



12,244



10,167

Operating lease right-of-use assets



34,721



Other non-current assets



5,743



5,193

Total assets


$

1,008,958


$

965,477








LIABILITIES AND STOCKHOLDERS' EQUITY







Current liabilities:







  Bank borrowings


$

7,203


$

9,671

  Accounts payable



97,288



99,011

  Operating lease liabilities



11,295



  Other current liabilities



39,183



30,616

    Total current liabilities



154,969



139,298








Bank borrowings, net of current portion



330,895



331,549

Deferred tax liability



21,449



15,834

Operating lease liabilities



25,656



Other long-term liabilities



21,501



27,808

    Total liabilities



554,470



514,489








Stockholders' equity:







  Common stock



291,635



287,127

  Retained earnings



150,121



149,718

  Accumulated other comprehensive loss



(2,655)



(547)

  Ultra Clean Holdings, Inc. stockholders' equity



439,101



436,298

  Noncontrolling interest



15,387



14,690

    Total stockholders' equity



454,488



450,988

Total liabilities and stockholders' equity


$

1,008,958


$

965,477

 

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited; in thousands)






Six Months Ended


June 28,


June 29,


2019


2018

Cash flows from operating activities:




Net income including noncontrolling interests

$    1,100


$  43,701

Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation and amortization

21,225


5,188

Stock-based compensation

5,777


4,920

Others

(222)


(27)

Changes in assets and liabilities:




Accounts receivable

10,001


(8,758)

Inventories

32,362


7,766

Prepaid expenses and other

3,705


(3,558)

Deferred income taxes

(2,077)


(113)

Other non-current assets

(566)


(313)

Accounts payable

(4,704)


(59,490)

Accrued compensation and related benefits

3,358


(1,332)

Income taxes payable

(2,206)


(3,933)

Other liabilities

264


3,903

Net cash provided by (used for) operating activities

68,017


(12,046)

Cash flows from investing activities:




Purchases of equipment and leasehold improvements

(6,750)


(9,666)

Acquisition of DMS

(29,873)


Proceeds from sale of equipment

458


Net cash used for investing activities

(36,165)


(9,666)

Cash flows from financing activities:




Proceeds from bank borrowings

28,112


21,886

Proceeds from issuance of common stock

125


94,454

Payments on bank borrowings and finance leases

(32,389)


(19,148)

Employees' taxes paid upon vesting of restricted stock units

(1,394)


(2,618)

Net cash provided by (used for) financing activities

(5,546)


94,574

Effect of exchange rate changes on cash and cash equivalents

(2,323)


(22)

Net increase in cash and cash equivalents

$  23,983


$  72,840

Cash and cash equivalents at beginning of period

144,145


68,306

Cash and cash equivalents at end of period

$168,128


$141,146

 

ULTRA CLEAN HOLDINGS, INC.

REPORTABLE SEGMENTS

GAAP TO NON-GAAP RECONCILIATION 

(Unaudited; Dollars in thousands)
















GAAP


Non-GAAP



Three months ended


Three months ended



June 28, 2019


June 28, 2019



SPS


SSB


Consolidated


SPS


SSB


Consolidated

Revenues


$  210,390


$  54,977


$     265,367


$ 210,390


$ 54,977


$     265,367

Gross profit


$    29,316


$  18,853


$       48,169


$   30,432


$ 19,560


$       49,992

Gross margin


13.9%


34.3%


18.2%


14.5%


35.6%


18.8%

Operating profit


$     6,368


$   2,603


$         8,971


$   10,324


$   6,066


$       16,390

Operating margin


3.0%


4.7%


3.4%


4.9%


11.0%


6.2%






















Three months ended









June 28, 2019









SPS


SSB


Consolidated

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







Reported gross profit on a GAAP basis


$   29,316


$ 18,853


$       48,169

Amortization of intangible assets (1)


-


1,023


1,023

Restructuring charges (2)


350


-


350

Fair value adjustments (5)


766


-


766

Depreciation adjustments (6)


-


(316)


(316)

Non-GAAP gross profit


$   30,432


$ 19,560


$       49,992














Reconciliation of GAAP Gross margin to Non-GAAP Gross margin







Reported gross margin on a GAAP basis


13.9%


34.3%


18.2%

Amortization of intangible assets (1)


0.0%


1.9%


0.4%

Restructuring charges (2)


0.2%


-


0.1%

Fair value adjustments (5)


0.4%


-


0.2%

Depreciation adjustments (6)


0.0%


-0.6%


-0.1%

Non-GAAP gross margin


14.5%


35.6%


18.8%














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







Reported income from operations on a GAAP basis


$     6,368


$   2,603


$         8,971

Amortization of intangible assets (1)


1,230


3,823


5,053

Restructuring charges (2)


367


-


367

Executive transition costs (3)


382


-


382

Acquisition costs (4)


1,211


-


1,211

Fair value adjustments (5)


766


-


766

Depreciation adjustments (6)


-


(360)


(360)

Non-GAAP income from operations


$   10,324


$   6,066


$       16,390














Reconciliation of GAAP Operating margin to Non-GAAP Operating margin







Reported operating margin on a GAAP basis


3.0%


4.7%


3.4%

Amortization of intangible assets (1)


0.6%


7.0%


1.9%

Restructuring charges (2)


0.2%


0.0%


0.1%

Executive transition costs (3)


0.2%


0.0%


0.1%

Acquisition costs (4)


0.6%


0.0%


0.5%

Fair value adjustments (5)


0.4%


0.0%


0.3%

Depreciation adjustments (6)


0.0%


-0.7%


-0.1%

Non-GAAP operating margin


4.9%


11.0%


6.2%














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

2    Represents severance costs and cost related to facility closures

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

4    Represents costs related to the QGT and DMS acquisitions

5    Fair value adjustment related to DMS' sold inventories

6    Depreciation adjustments related to QGT's fixed assets

 

ULTRA CLEAN HOLDINGS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS











Three Months Ended




June 28,


June 29,


March 29,




2019


2018


2019


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


$     (202)


$ 18,960


$        605


Amortization of intangible assets (1)


5,053


1,098


4,854


Restructuring charges (2)


392


-


947


Executive transition costs (3)


382


1,400


-


Acquisition costs (4)


1,211


-


2,339


Fair value adjustments (5)


766


-


-


Depreciation adjustments (6)


(360)


-


-


Income tax effect of non-GAAP adjustments (7)


(1,407)


(296)


(1,563)


Income tax effect of valuation allowance (8)


2,344


303


958


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


$   8,179


$ 21,465


$    8,140










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








Reported income from operations on a GAAP basis


$   8,971


$ 22,664


$    8,180


Amortization of intangible assets (1)


5,053


1,098


4,854


Restructuring charges (2)


367


-


617


Executive transition costs (3)


382


1,400


-


Acquisition costs (4)


1,211


-


2,339


Fair value adjustments (5)


766


-


-


Depreciation adjustments (6)


(360)


-


-


Non-GAAP income from operations


$ 16,390


$ 25,162


$  15,990










Reconciliation of GAAP Operating margin to Non-GAAP Operating margin








Reported operating margin on a GAAP basis


3.4%


7.8%


3.1%


Amortization of intangible assets (1)


1.9%


0.4%


1.9%


Restructuring charges (2)


0.1%


0.0%


0.2%


Executive transition costs (3)


0.1%


0.5%


0.0%


Acquisition costs (4)


0.5%


0.0%


0.9%


Fair value adjustments (5)


0.3%


0.0%


0.0%


Depreciation adjustments (6)


-0.1%


0.0%


0.0%


Non-GAAP operating margin


6.2%


8.7%


6.1%










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








Reported gross profit on a GAAP basis


$ 48,169


$ 46,065


$  44,797


Amortization of intangible assets (1)


1,023


-


1,023


Restructuring charges (2)


350


-


515


Fair value adjustments (5)


766


-


-


Depreciation adjustments (6)


(316)






Non-GAAP gross profit


$ 49,992


$ 46,065


$  46,335










Reconciliation of GAAP Gross margin to Non-GAAP Gross margin








Reported gross margin on a GAAP basis


18.2%


15.9%


17.2%


Amortization of intangible assets (1)


0.4%


0.0%


0.4%


Restructuring charges (2)


0.1%


0.0%


0.2%


Fair value adjustments (5)


0.2%


0.0%


0.0%


Depreciation adjustments (6)


-0.1%


0.0%


0.0%


Non-GAAP gross margin


18.8%


15.9%


17.8%










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


$  (6,390)


$     (809)


$   (5,319)


Restructuring charges (2)


(25)


-


(330)


Non-GAAP interest and other income (expense)


$  (6,415)


$     (809)


$   (5,649)










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

2    Represents severance costs and cost related to facility closures

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

4    Represents costs related to the QGT and DMS acquisitions

5    Fair value adjustment related to DMS' sold inventories

6    Depreciation adjustments related to QGT's fixed assets

7    Tax effect of items (1) through (6) above based on the non-GAAP tax rate shown below

8    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. 



Three Months Ended




June 28,


June 29,


March 29,




2019


2018


2019


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








Reported net income (loss) on a GAAP basis


$    (0.01)


$      0.48


$       0.02


Amortization of intangible assets


0.13


0.03


0.12


Restructuring charges


0.01


-


0.03


Executive transition costs


0.01


0.04


-


Acquisition costs


0.03


-


0.06


Fair value adjustments


0.02


-


-


Depreciation adjustments


(0.01)


-


-


Income tax effect of non-GAAP adjustments


(0.03)


(0.01)


(0.04)


Income tax effect of valuation allowance


0.06


0.01


0.02


Non-GAAP net income


$      0.21


$      0.55


$       0.21


Weighted average number of diluted shares (thousands) on a non-gaap basis


39,734


39,297


39,448










 

ULTRA CLEAN HOLDINGS, INC.

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



Three Months Ended




June 28,


June 29,


March 29,




2019


2018


2019


(in thousands, except percentages)








Provision for income taxes on a GAAP basis


$   2,835


$   2,895


$    1,507


Income tax effect of non-GAAP adjustments (1)


1,407


296


1,563


Income tax effect of valuation allowance (2)


(2,344)


(303)


(958)


Non-GAAP provision for income taxes


$   1,898


$   2,888


$    2,112










Income (loss) before income taxes on a GAAP basis


$   2,581


$ 21,855


$    2,861


Amortization of intangible assets


5,053


1,098


4,854


Restructuring charges


392


-


947


Executive transition costs


382


1,400


-


Acquisition costs


1,211


-


2,339


Fair value adjustments


766


-


-


Depreciation adjustments


(360)


-


-


Non-GAAP income before income taxes


$ 10,025


$ 24,353


$  11,001


Effective income tax rate on a GAAP basis


109.8%


13.2%


52.7%


Non-GAAP effective income tax rate


18.9%


11.9%


19.2%




1   Tax effect of items (1) through (4) 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-second-quarter-2019-financial-results-300894230.html

SOURCE Ultra Clean Holdings, Inc.

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