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04/29/2020

Ultra Clean Reports First Quarter 2020 Financial Results

HAYWARD, Calif., April 29, 2020 /PRNewswire/ -- Ultra Clean Holdings, Inc. (Nasdaq: UCTT), today reported its financial results for the first quarter ended March 27, 2020.

"UCT's strong performance in the first quarter resulted in record revenue, improved profitability and solid earnings," said Jim Scholhamer, CEO. "Early recognition of the pandemic, supported by an exceptional business continuity team and a dedicated workforce, allowed us to minimize disruptions to our facilities and supply chain for both equipment and service operations. All of UCT's facilities remain operational and we will continue to leverage our global footprint to fulfill ongoing customer demand."

First Quarter 2020 GAAP Financial Results

Total revenue was $320.9 million. SPS contributed $259.4 million and SSB added $61.5 million. Total gross margin was 20.5%, operating margin was 7.0%, and net income was $9.4 million or $0.24 and $0.23 per basic and diluted share, respectively. This compares to total revenue of $286.4 million, gross margin of 19.7%, operating margin of 1.6%, and net loss of $10.3 million or $(0.26) per basic share in the prior quarter.  

First Quarter 2020 Non-GAAP Financial Results

On a non-GAAP basis, gross margin was 20.9%, operating margin was 9.9%, and net income was $21.0 million or $0.52 per diluted share excluding stock-based compensation. This compares to gross margin of 20.3%, operating margin of 9.3%, and net income of $16.0 million or $0.40 per diluted share, excluding stock-based compensation, in the prior quarter.

Second Quarter 2020 Outlook

Due to limited visibility resulting from the coronavirus pandemic, the Company has widened its guidance ranges to reflect the heightened uncertainty in the marketplace. The Company expects revenue in the range of $290.0 million to $330.0 million and GAAP diluted net income per share to be between $0.24 and $0.40. The Company expects non-GAAP diluted net income per share to be between $0.40 and $0.56.  

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. 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 10142384. 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 micro-contamination analytical services. Ultra Clean is headquartered in Hayward, California. Additional information is available at www.uct.com.

Use of Non-GAAP Measures

In addition to providing results that are determined in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP), management uses non-GAAP gross margin, non-GAAP operating margin and non-GAAP net income 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 from GAAP results to non-GAAP results are included at the end of this press release.

The Company currently defines non-GAAP net income as net income (loss) before amortization of intangible assets, restructuring charges, executive transition costs, acquisition costs, fair value adjustments, depreciation adjustments, stock-based compensation and the tax effects of the foregoing adjustments.

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 27, 2019 as filed with the Securities and Exchange Commission. 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



March 27, 


March 29, 


2020


2019








Revenues:







Product


$

259,383


$

200,245

Services



61,513



59,896

Total revenues



320,896



260,141

Cost of revenues:







Product



214,755



174,564

Services



40,479



40,780

Total cost revenues



255,234



215,344

Gross margin



65,662



44,797

Operating expenses:







Research and development



3,408



3,431

Sales and marketing



5,750



5,395

General and administrative



33,954



27,791

Total operating expenses



43,112



36,617

Income from operations



22,550



8,180

Interest income



312



191

Interest expense



(5,188)



(6,589)

Other income (expense), net



(2,691)



1,079

Income before provision for income taxes



14,983



2,861

Provision for income taxes



4,465



1,507

Net income



10,518



1,354

Less: Net income attributable to noncontrolling interests



1,095



749

Net income attributable to UCT


$

9,423


$

605








Net income per share attributable to UCT common stockholders:





Basic



$     0.24



$     0.02

Diluted



$     0.23



$     0.02

Shares used in computing net income per share:







Basic



39,817



39,122

Diluted



40,704



39,448

 

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in thousands)










March 27, 


December 27,

2020

2019

ASSETS







Current assets:







  Cash and cash equivalents


$

208,070


$

162,531

  Accounts receivable, net of allowance



113,272



112,694

  Inventories



186,988



172,420

  Prepaid expenses and other current assets



19,617



19,400

Total current assets



527,947



467,045








Property, plant and equipment, net



143,404



145,272

Goodwill



171,132



171,087

Intangibles assets, net



175,368



180,318

Deferred tax assets, net



13,903



15,498

Operating lease right-of-use assets



35,584



34,877

Other non-current assets



4,907



5,209

Total assets


$

1,072,245


$

1,019,306








LIABILITIES AND STOCKHOLDERS' EQUITY







Current liabilities:







  Bank borrowings


$

8,331


$

8,842

  Accounts payable



129,262



133,058

  Accrued compensation and related benefits



25,036



24,825

  Operating lease liabilities



13,443



13,179

  Other current liabilities



36,948



30,694

Total current liabilities



213,020



210,598








Bank borrowings, net of current portion



323,852



283,390

Deferred tax liabilities 



24,635



25,183

Operating lease liabilities



28,810



28,828

Other liabilities



19,120



18,800

Total liabilities



609,437



566,799








Equity:







UCT Stockholders' equity:







  Common stock



300,770



297,693

  Retained earnings



149,790



140,367

  Accumulated other comprehensive loss



(4,628)



(1,334)

Total UCT stockholders' equity



445,932



436,726

  Noncontrolling interest



16,876



15,781

Total equity



462,808



452,507

Total liabilities and stockholders' equity


$

1,072,245


$

1,019,306

 

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited; in thousands)






Three Months Ended


March 27, 


March 29, 


2020


2019

Cash flows from operating activities:




Net income

$   10,518


$      1,354

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




      Depreciation and amortization

11,804


12,157

Stock-based compensation

3,077


2,913

Deferred income taxes

1,046


(37)

Others

2,977


(1,225)

Changes in assets and liabilities:




Accounts receivable

(663)


(4,182)

Inventories

(14,741)


5,579

Prepaid expenses and other

(224)


(2,430)

Other non-current assets

302


(943)

Accounts payable

(4,099)


(626)

Accrued compensation and related benefits

219


3,087

Change in operating leases

(418)


Income taxes payable

1,559


1,266

Other liabilities

4,359


1,185

Net cash provided by operating activities

15,716


18,098

Cash flows from investing activities:




Purchases of property, plant and equipment

(6,708)


(4,844)

Proceeds from sale of equipment


646

Net cash used for investing activities

(6,708)


(4,198)

Cash flows from financing activities:




Proceeds from bank borrowings

51,505


6,587

Payments on bank borrowings and finance leases

(14,477)


(8,863)

Employees' taxes paid upon vesting of restricted stock units


(850)

Net cash provided by (used for) financing activities

37,028


(3,126)

Effect of exchange rate changes on cash and cash equivalents

(497)


(145)

Net increase in cash and cash equivalents

$   45,539


$   10,629

Cash and cash equivalents at beginning of period

162,531


144,145

Cash and cash equivalents at end of period

$ 208,070


$ 154,774

 

ULTRA CLEAN HOLDINGS, INC.

REPORTABLE SEGMENTS

GAAP TO NON-GAAP RECONCILIATION 

(Unaudited; Dollars in thousands)
















GAAP


Non-GAAP



Three months ended


Three months ended



March 27, 2020


March 27, 2020



SPS


SSB


Consolidated


SPS


SSB


Consolidated

Revenues


$259,383


$61,513


$      320,896


$259,383


$ 61,513


$      320,896

Gross profit


$   44,628


$21,034


$        65,662


$   45,168


$ 22,057


$        67,225

Gross margin


17.2%


34.2%


20.5%


17.4%


35.9%


20.9%

Operating profit


$   20,339


$   2,211


$        22,550


$   24,553


$   7,300


$        31,853

Operating margin


7.8%


3.6%


7.0%


9.5%


11.9%


9.9%






















Three months ended









March 27, 2020









SPS


SSB


Consolidated

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






Reported gross profit on a GAAP basis




$   44,628


$ 21,034


$        65,662

Amortization of intangible assets (1)




-


1,023


1,023

Restructuring charges (2)





233


-


233

Stock based compensation expense (3)




307


-


307

Non-GAAP gross profit




$   45,168


$ 22,057


$        67,225














Reconciliation of GAAP Gross margin to Non-GAAP Gross margin







Reported gross margin on a GAAP basis




17.2%


34.2%


20.5%

Amortization of intangible assets (1)




0.0%


1.7%


0.3%

Restructuring charges (2)





0.1%


-


0.0%

Stock based compensation expense (3)




0.1%


-


0.1%

Non-GAAP gross margin





17.4%


35.9%


20.9%














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



Reported income from operations on a GAAP basis


$   20,339


$   2,211


$        22,550

Amortization of intangible assets (1)




1,173


3,778


4,951

Restructuring charges (2)





587


1,013


1,600

Stock based compensation expense (3)




2,454


298


2,752

Non-GAAP income from operations




$   24,553


$   7,300


$        31,853














Reconciliation of GAAP Operating margin to Non-GAAP Operating margin







Reported operating margin on a GAAP basis




7.8%


3.6%


7.0%

Amortization of intangible assets (1)




0.5%


6.1%


1.5%

Restructuring charges (2)





0.2%


1.6%


0.5%

Stock based compensation expense (3)




1.0%


0.5%


0.9%

Non-GAAP operating margin





9.5%


11.9%


9.9%














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

2    Represents severance, retention and costs related to facility closures




3    Represents compensation expense for stock granted to employees and directors




 

ULTRA CLEAN HOLDINGS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS










Three Months Ended



March 27, 


March 29, 


December 27,



2020


2019


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


$    9,423


$       605


$        (10,267)

Amortization of intangible assets (1)


4,951


4,854


5,091

Restructuring charges (2)


1,600


947


13,552

Stock based compensation expense (3)


2,752


3,027


3,537

Fair value adjustments (4)


2,948


-


6,562

Acquisition related costs (5)


-


2,339


111

Income tax effect of non-GAAP adjustments (6)


(2,291)


(2,144)


(6,001)

Income tax effect of valuation allowance (7)


1,663


958


3,440

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


$  21,046


$  10,586


$          16,025








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







Reported income from operations on a GAAP basis


$  22,550


$    8,180


$            4,504

Amortization of intangible assets (1)


4,951


4,854


5,091

Restructuring charges (2)


1,600


617


13,500

Stock based compensation expense (3)


2,752


3,027


3,537

Acquisition related costs (5)


-


2,339


111

Non-GAAP income from operations


$  31,853


$  19,017


$          26,743








Reconciliation of GAAP Operating margin to Non-GAAP Operating margin







Reported operating margin on a GAAP basis


7.0%


3.1%


1.6%

Amortization of intangible assets (1)


1.5%


1.9%


1.8%

Restructuring charges (2)


0.5%


0.2%


4.7%

Stock based compensation expense (3)


0.9%


1.2%


1.2%

Acquisition related costs (5)


0.0%


0.9%


0.0%

Non-GAAP operating margin


9.9%


7.3%


9.3%








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







Reported gross profit on a GAAP basis


$  65,662


$  44,797


$          56,396

Amortization of intangible assets (1)


1,023


1,023


1,023

Restructuring charges (2)


233


515


21

Stock based compensation expense (3)


307


553


752

Non-GAAP gross profit


$  67,225


$  46,888


$          58,192








Reconciliation of GAAP Gross margin to Non-GAAP Gross margin







Reported gross margin on a GAAP basis


20.5%


17.2%


19.7%

Amortization of intangible assets (1)


0.3%


0.4%


0.4%

Restructuring charges (2)


0.0%


0.2%


0.0%

Stock based compensation expense (3)


0.1%


0.2%


0.2%

Non-GAAP gross margin


20.9%


18.0%


20.3%








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


$   (7,567)


$   (5,319)


$        (12,300)

Restructuring charges (2)


-


(330)


52

Fair value adjustments (4)


2,948


-


6,562

Non-GAAP interest and other income (expense)


$   (4,619)


$   (5,649)


$          (5,686)








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

2    Represents severance, retention and costs related to facility closures

3    Represents compensation expense for stock granted to employees and directors

4    Fair value adjustments related to contingent consideration and purchase obligation

5    Represents costs related to the QGT and DMS acquisitions

6    Tax effect of items (1) through (5) above based on the non-GAAP tax rate shown below

7    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



March 27, 


March 29, 


December 27,



2020


2019


2019

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







Reported net income (loss) on a GAAP basis


$      0.23


$      0.02


$            (0.26)

Amortization of intangible assets


0.12


0.12


0.13

Restructuring charges


0.04


0.03


0.34

Stock based compensation expense


0.07


0.07


0.09

Fair value adjustments


0.08


-


0.16

Acquisition related costs


-


0.06


0.01

Income tax effect of non-GAAP adjustments


(0.06)


(0.05)


(0.15)

Income tax effect of valuation allowance


0.04


0.02


0.08

Non-GAAP net income


$      0.52


$      0.27


$              0.40

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

40,704


39,448


40,523








ULTRA CLEAN HOLDINGS, INC.

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



Three Months Ended



March 27, 


March 29, 


December 27,



2020


2019


2019

(in thousands, except percentages)







Provision for income taxes on a GAAP basis


$    4,465


$    1,507


$            1,811

Income tax effect of non-GAAP adjustments (1)


2,291


2,144


6,001

Income tax effect of valuation allowance (2)


(1,663)


(958)


(3,440)

Non-GAAP provision for income taxes


$    5,093


$    2,693


$            4,372








Income (loss) before income taxes on a GAAP basis


$  14,983


$    2,861


$          (7,796)

Amortization of intangible assets


4,951


4,854


5,091

Restructuring charges


1,600


947


13,552

Stock based compensation expense


2,752


3,027


3,537

Fair value adjustments


2,948


-


6,562

Acquisition related costs


-


2,339


111

Non-GAAP income before income taxes


$  27,234


$  14,028


$          21,057

Effective income tax rate on a GAAP basis


29.8%


52.7%


-23.2%

Non-GAAP effective income tax rate


18.7%


19.2%


20.8%


1    Tax effect of items (1) through (7) 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-first-quarter-2020-financial-results-301049553.html

SOURCE Ultra Clean Holdings, Inc.

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