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10/28/2020

Ultra Clean Reports Third Quarter 2020 Financial Results

HAYWARD, Calif., Oct. 28, 2020 /PRNewswire/ -- Ultra Clean Holdings, Inc. (Nasdaq: UCTT), today reported its financial results for the third quarter ended September 25, 2020.

"Delivering another quarter of solid revenue and earnings is strong evidence of UCTT's execution capabilities as we drive towards our longer-term strategic and financial goals," said Jim Scholhamer, CEO. "Our diversified suite of quality products and services is capturing additional business from existing customers and gaining traction with new customers. Industry momentum remains steady as our end markets expand to power a new generation of semiconductor devices, giving us confidence in our ability to sustainably outperform over the long-term." 

Third Quarter 2020 GAAP Financial Results

Total revenue was $363.3 million. SPS contributed $294.4 million and SSB added $68.9 million. Total gross margin was 20.5%, operating margin was 9.6%, and net income was $24.4 million or $0.60 and $0.59 per basic and diluted share. This compares to total revenue of $344.8 million, gross margin of 21.4%, operating margin of 8.9%, and net income of $21.3 million or $0.53 and $0.52 per basic and diluted share in the prior quarter.

Third Quarter 2020 Non-GAAP Financial Results

On a non-GAAP basis, gross margin was 21.0%, operating margin was 11.6%, and net income was $29.9 million or $0.73 per diluted share. This compares to gross margin of 22.0%, operating margin of 11.7%, and net income of $30.5 million or $0.75 per diluted share in the prior quarter.

Fourth Quarter 2020 Outlook

Due to limited visibility resulting from the pandemic, the Company has widened its guidance ranges to reflect the heightened uncertainty in the marketplace. The Company expects revenue in the range of $345.0 million to $375.0 million and GAAP diluted net income per share to be between $0.44 and $0.58. The Company expects non-GAAP diluted net income per share to be between $0.63 and $0.77.   

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 10148588. 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," "should" 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


Nine Months Ended


September 25,


September 27,


September 25,


September 27,


2020


2019


2020


2019













Revenues:












Product

$

294,381


$

200,024


$

831,656


$

610,660

Services


68,895



54,299



197,298



169,171

Total revenues


363,276



254,323



1,028,954



779,831

Cost of revenues:












Product


243,582



170,144



687,613



525,782

Services


45,118



36,675



127,225



113,579

Total cost of revenues


288,700



206,819



814,838



639,361

Gross profit


74,576



47,504



214,116



140,470

Operating expenses:












Research and development


3,514



3,634



10,765



10,986

Sales and marketing


5,989



5,877



17,657



16,638

General and administrative


30,251



29,735



97,498



87,437

Total operating expenses


39,754



39,246



125,920



115,061

Income from operations


34,822



8,258



88,196



25,409

Interest income


226



74



696



416

Interest expense


(4,133)



(6,636)



(13,094)



(19,899)

Other income (expense), net


(1,079)



3,070



(3,210)



4,282

Income before provision for income taxes


29,836



4,766



72,588



10,208

Provision for income taxes


4,776



3,878



14,932



8,220

Net income


25,060



888



57,656



1,988

Less: Net income attributable to noncontrolling
interests


695



375



2,605



1,072

Net income attributable to UCT

$

24,365


$

513


$

55,051


$

916













Net income per share attributable to UCT common
stockholders:












Basic

$

0.60


$

0.01


$

1.37


$

0.02

Diluted

$

0.59


$

0.01


$

1.35


$

0.02

Shares used in computing net income per share:












Basic


40,367



39,557



40,091



39,363

Diluted


41,149



40,025



40,929



39,746

 

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in thousands)










September 25,


December 27,



2020


2019

ASSETS







Current assets:







  Cash and cash equivalents


$

176,131


$

162,531

  Accounts receivable, net of allowance



145,523



112,694

  Inventories



175,332



172,420

  Prepaid expenses and other current assets



17,150



19,400

Total current assets



514,136



467,045








Property, plant and equipment, net



150,487



145,272

Goodwill



171,132



171,087

Intangibles assets, net



165,469



180,318

Deferred tax assets, net



15,773



15,498

Operating lease right-of-use assets



38,062



34,877

Other non-current assets



5,192



5,209

Total assets


$

1,060,251


$

1,019,306








LIABILITIES AND STOCKHOLDERS '  EQUITY







Current liabilities:







  Bank borrowings


$

7,515


$

8,842

  Accounts payable



111,398



133,058

  Accrued compensation and related benefits



30,752



24,825

  Operating lease liabilities



12,090



13,179

  Other current liabilities



33,543



30,694

Total current liabilities



195,298



210,598








Bank borrowings, net of current portion



272,605



283,390

Deferred tax liabilities



25,183



25,183

Operating lease liabilities



31,242



28,828

Other liabilities



17,468



18,800

Total liabilities



541,796



566,799








Equity:







UCT stockholders' equity:







  Common stock



305,994



297,693

  Retained earnings



195,418



140,367

  Accumulated other comprehensive loss



(1,343)



(1,334)

Total UCT stockholders' equity



500,069



436,726

  Noncontrolling interest



18,386



15,781

Total equity



518,455



452,507

Total liabilities and equity


$

1,060,251


$

1,019,306








 

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in thousands)








Nine Months Ended


September 25,


September 27,


2020


2019

Cash flows from operating activities:






Net income

$

57,656


$

1,988

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






      Depreciation and amortization


35,064



32,152

Stock-based compensation


9,463



9,078

Deferred income taxes


(273)



(2,115)

Change in the fair value of financial instruments and earn-out liability


4,376



(3,720)

Others


(1,939)



25

Changes in assets and liabilities:






Accounts receivable


(32,677)



(2,376)

Inventories


(2,964)



42,489

Prepaid expenses and other current assets


325



1,994

Other non-current assets


17



(776)

Accounts payable


(21,919)



(282)

Accrued compensation and related benefits


5,916



8,757

Operating lease assets and liabilities


(791)



2,332

Income taxes payable


3,169



(1,473)

Other liabilities


(2,538)



1,000

Net cash provided by operating activities


52,885



89,073

Cash flows from investing activities:






Purchases of property, plant and equipment


(26,535)



(12,665)

Proceeds from sale of property and equipment, including insurance proceeds


6,614



2,698

Acquisition of Dynamic Manufacturing Solutions, LLC




(29,873)

Net cash used in investing activities


(19,921)



(39,840)

Cash flows from financing activities:






Proceeds from bank borrowings


69,670



34,805

Proceeds from issuance of common stock


260



126

Payments on bank borrowings and finance leases


(85,688)



(64,534)

Payment of contingent earn-out


(1,428)



Withholding tax on employee equity compensation


(1,422)



(1,652)

Net cash used in financing activities


(18,608)



(31,255)

Effect of exchange rate changes on cash and cash equivalents


(756)



(3,433)

Net increase in cash and cash equivalents


13,600



14,545

Cash and cash equivalents at beginning of period


162,531



144,145

Cash and cash equivalents at end of period

$

176,131


$

158,690

 

ULTRA CLEAN HOLDINGS, INC.

REPORTABLE SEGMENTS

GAAP TO NON-GAAP RECONCILIATION

(Unaudited; dollars in thousands)























GAAP



Non-GAAP




Three Months Ended



Three Months Ended



September 25, 2020


September 25, 2020



SPS


SSB


Consolidated


SPS


SSB


Consolidated

Revenues


$

294,381


$

68,895


$

363,276


$

294,381


$

68,895


$

363,276

Gross profit


$

50,799


$

23,777


$

74,576


$

51,442


$

24,799


$

76,241

Gross margin



17.3%



34.5%



20.5%



17.5%



36.0%



21.0%

Income from operations


$

27,404


$

7,418


$

34,822


$

31,716


$

10,247


$

41,963

Operating margin



9.3%



10.8%



9.6%



10.8%



14.9%



11.6%































Three Months Ended












September 25, 2020












SPS


SSB


Consolidated

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

Reported gross profit on a GAAP basis


$

50,799


$

23,777


$

74,576

Amortization of intangible assets (1)



-



1,022



1,022

Restructuring charges (2)



260



-



260

Stock-based compensation expense (3)



383



-



383

Non-GAAP gross profit


$

51,442


$

24,799


$

76,241




















Reconciliation of GAAP Gross margin to Non-GAAP Gross margin

Reported gross margin on a GAAP basis



17.3%



34.5%



20.5%

Amortization of intangible assets (1)



0.0%



1.5%



0.3%

Restructuring charges (2)



0.1%



-



0.1%

Stock-based compensation expense (3)



0.1%



-



0.1%

Non-GAAP gross margin



17.5%



36.0%



21.0%




















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

Reported income from operations on a GAAP basis


$

27,404


$

7,418


$

34,822

Amortization of intangible assets (1)



1,173



3,776



4,949

Restructuring charges (2)



260



-



260

Stock-based compensation expense (3)



2,879



405



3,284

Gain on the sale of property (4)



-



(1,352)



(1,352)

Non-GAAP income from operations


$

31,716


$

10,247


$

41,963




















Reconciliation of GAAP Operating margin to Non-GAAP Operating margin

Reported operating margin on a GAAP basis



9.3%



10.8%



9.6%

Amortization of intangible assets (1)



0.4%



5.5%



1.4%

Restructuring charges (2)



0.1%



0.0%



0.1%

Stock-based compensation expense (3)



1.0%



0.6%



0.9%

Gain on the sale of property (4)



0.0%



-2.0%



-0.4%

Non-GAAP operating margin



10.8%



14.9%



11.6%




















1    Amortization of intangible assets related to the Company's acquisitions of 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    Represents gain realized on the sale of land in South Korea

 

ULTRA CLEAN HOLDINGS, INC.


UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS













Three Months Ended



September 25,


September 27,


June 26,



2020


2019


2020


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


Reported net income attributable to UCT on a GAAP basis

$

24,365


$

513


$

21,264


Amortization of intangible assets (1)


4,949



5,093



4,949


Restructuring charges (2)


400



1,393



1,572


Stock-based compensation expense (3)


3,284



3,408



3,104


Fair value adjustments (4)


200



129



1,209


Acquisition related costs (5)


-



200



-


Gain on the sale of property (6)


(1,352)



-



-


Income tax effect of non-GAAP adjustments (7)


(1,352)



(2,351)



(2,037)


Income tax effect of valuation allowance (8)


(616)



2,781



470


Non-GAAP net income attributable to UCT

$

29,878


$

11,166


$

30,531












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


Reported income from operations on a GAAP basis

$

34,822


$

8,258


$

30,825


Amortization of intangible assets (1)


4,949



5,093



4,949


Restructuring charges (2)


260



954



1,572


Stock-based compensation expense (3)


3,284



3,408



3,104


Fair value adjustments (4)


-



129



-


Acquisition related costs (5)


-



200



-


Gain on the sale of property (6)


(1,352)



-



-


Non-GAAP income from operations

$

41,963


$

18,042


$

40,450












Reconciliation of GAAP Operating margin to Non-GAAP Operating margin


Reported operating margin on a GAAP basis


9.6%



3.2%



8.9%


Amortization of intangible assets (1)


1.4%



2.0%



1.4%


Restructuring charges (2)


0.1%



0.4%



0.5%


Stock-based compensation expense (3)


0.9%



1.3%



0.9%


Fair value adjustments (4)


0.0%



0.1%



0.0%


Acquisition related costs (5)


0.0%



0.1%



0.0%


Gain on the sale of property (6)


-0.4%



0.0%



0.0%


Non-GAAP operating margin


11.6%



7.1%



11.7%












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


Reported gross profit on a GAAP basis

$

74,576


$

47,504


$

73,878


Amortization of intangible assets (1)


1,022



1,023



1,022


Restructuring charges (2)


260



154



253


Stock-based compensation expense (3)


383



514



726


Fair value adjustments (4)


-



129



-


Non-GAAP gross profit

$

76,241


$

49,324


$

75,879












Reconciliation of GAAP Gross margin to Non-GAAP Gross margin


Reported gross margin on a GAAP basis


20.5%



18.7%



21.4%


Amortization of intangible assets (1)


0.3%



0.4%



0.3%


Restructuring charges (2)


0.1%



0.1%



0.1%


Stock-based compensation expense (3)


0.1%



0.2%



0.2%


Fair value adjustments (4)


0.0%



0.0%



0.0%


Non-GAAP gross margin


21.0%



19.4%



22.0%












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

$

(4,986)


$

(3,492)


$

(3,055)


Restructuring charges (2)


140



439



-


Fair value adjustments (4)


200



-



1,209


Non-GAAP interest and other income (expense)

$

(4,646)


$

(3,053)


$

(1,846)


 



Three Months Ended



September 25,


September 27,


June 26,



2020


2019


2020

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

Reported net income on a GAAP basis


$

0.59


$

0.01


$

0.52

Amortization of intangible assets (1)



0.12



0.13



0.12

Restructuring charges (2)



0.01



0.03



0.04

Stock-based compensation expense (3)



0.08



0.09



0.08

Fair value adjustments (4)



0.00



0.00



0.03

Gain on the sale of property (6)



(0.03)



-



-

Income tax effect of non-GAAP adjustments (7)



(0.03)



(0.06)



(0.05)

Income tax effect of valuation allowance (8)



(0.01)



0.07



0.01

Non-GAAP net income


$

0.73


$

0.27


$

0.75

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


41,149



40,025



40,834











ULTRA CLEAN HOLDINGS, INC.

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













Three Months Ended



September 25,


September 27,


June 26,



2020


2019


2020

(in thousands, except percentages)










Provision for income taxes on a GAAP basis


$

4,776


$

3,878


$

5,691

Income tax effect of non-GAAP adjustments (7)



1,352



2,351



2,037

Income tax effect of valuation allowance (8)



616



(2,781)



(470)

Non-GAAP provision for income taxes


$

6,744


$

3,448


$

7,258











Income before income taxes on a GAAP basis


$

29,836


$

4,766


$

27,770

Amortization of intangible assets (1)



4,949



5,093



4,949

Restructuring charges (2)



400



1,393



1,572

Stock-based compensation expense (3)



3,284



3,408



3,104

Fair value adjustments (4)



200



129



1,209

Acquisition related costs (5)



-



200



-

Gain on the sale of property (6)



(1,352)



-



-

Non-GAAP income before income taxes


$

37,317


$

14,989


$

38,604

Effective income tax rate on a GAAP basis



16.0%



81.4%



20.5%

Non-GAAP effective income tax rate



18.1%



23.0%



18.8%











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, purchase obligation, DMS' sold inventories

5    Represents costs related to the acquisition of DMS

6    Represents gain realized on the sale of land in South Korea

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.

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/ultra-clean-reports-third-quarter-2020-financial-results-301162138.html

SOURCE Ultra Clean Holdings, Inc.

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