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02/17/2021

Ultra Clean Reports Fourth Quarter and Full Year 2020 Financial Results

HAYWARD, Calif., Feb. 17, 2021 /PRNewswire/ -- Ultra Clean Holdings, Inc. (Nasdaq: UCTT), today reported its financial results for the fourth quarter and full year ended December 25, 2020.

"UCT delivered another solid quarter to conclude an extraordinary year where we reached many new milestones, including record revenue and earnings per share, marking the fifth straight year we significantly outperformed the overall wafer fab equipment industry," said Jim Scholhamer, CEO. "Industry demand remains robust and we continue to position ourselves for new opportunities. We are excited about our acquisition of Hamlet and expect to close the transaction by early Q2 of 2021".

Fourth Quarter 2020 GAAP Financial Results

Total revenue was $369.6 million. SPS contributed $299.5 million and SSB added $70.1 million. Total gross margin was 21.0%, operating margin was 9.0%, and net income was $22.6 million or $0.56 and $0.55 per basic and diluted share. This compares to total revenue of $363.3 million, gross margin of 20.5%, operating margin of 9.6%, and net income of $24.4 million or $0.60 and $0.59 per basic and diluted share in the prior quarter.

Fourth Quarter 2020 Non-GAAP Financial Results

On a non-GAAP basis, gross margin was 21.5%, operating margin was 11.9%, and net income was $33.5 million or $0.81 per diluted share. This compares to gross margin of 21.0%, operating margin of 11.6%, and net income of $29.9 million or $0.73 per diluted share in the prior quarter.

Full Year 2020 GAAP Financial Results

Total revenue was $1,398.6 million. SPS contributed $1,131.2 million and SSB added $267.4 million. Total gross margin was 20.9%, operating margin was 8.7%, and net income was $77.6 million or $1.93 and $1.89 per basic and diluted share. This compares to total revenue of $1,066.2 million, gross margin of 18.5%, operating margin of 2.8%, and net loss of $9.4 million or $0.24 per basic and diluted share in the prior year. 

Full Year 2020 Non-GAAP Financial Results

On a non-GAAP basis, the company reported gross margin of 21.4%, operating margin of 11.3%, and net income of $115.0 million or $2.80 per diluted share. This compares to the gross margin of 19.3% operating margin of 7.8%, and net income of $46.5 million or $1.16 per diluted share in the prior year.

First Quarter 2021 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 $375.0 million to $405.0 million and GAAP diluted net income per share to be between $0.61 and $0.74. The Company expects non-GAAP diluted net income per share to be between $0.80 and $0.93.   

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 10151480. 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


Twelve Months Ended


December 25,


December 27,


December 25,


December 27,


2020


2019


2020


2019













Revenues:












Product

$

299,495


$

230,206


$

1,131,151


$

840,866

Services


70,133



56,207



267,431



225,378

Total revenues


369,628



286,413



1,398,582



1,066,244

Cost of revenues:












Product


247,103



193,321



934,716



719,103

Services


44,880



36,696



172,105



150,275

Total cost of revenues


291,983



230,017



1,106,821



869,378

Gross profit


77,645



56,396



291,761



196,866

Operating expenses:












Research and development


3,987



3,632



14,829



14,618

Sales and marketing


6,569



5,755



25,128



22,393

General and administrative


33,915



42,505



130,434



129,942

Total operating expenses


44,471



51,892



170,391



166,953

Income from operations


33,174



4,504



121,370



29,913

Interest income


179



32



875



448

Interest expense


(3,758)



(5,656)



(16,852)



(25,555)

Other income (expense), net


(2,512)



(6,676)



(5,722)



(2,394)

Income (loss) before provision for income taxes


27,083



(7,796)



99,671



2,412

Provision for income taxes


4,349



1,811



19,281



10,031

Net income (loss)


22,734



(9,607)



80,390



(7,619)

Less: Net income attributable to noncontrolling interests


180



660



2,785



1,732

Net income (loss) attributable to UCT

$

22,554


$

(10,267)


$

77,605


$

(9,351)













Net income (loss) per share attributable to UCT
common stockholders:












Basic

$

0.56


$

(0.26)


$

1.93


$

(0.24)

Diluted

$

0.55


$

(0.26)


$

1.89


$

(0.24)

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












Basic


40,521



39,778



40,198



39,467

Diluted


41,353



39,778



41,074



39,467

 

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in thousands)










December 25,


December 27,



2020


2019

ASSETS







Current assets:







  Cash and cash equivalents


$

200,274


$

162,531

  Accounts receivable, net of allowance



145,539



112,694

  Inventories



180,385



172,420

  Prepaid expenses and other current assets



18,895



19,400

Total current assets



545,093



467,045








Property, plant and equipment, net



159,150



145,272

Goodwill



171,132



171,087

Intangibles assets, net



160,519



180,318

Deferred tax assets, net



23,513



15,498

Operating lease right-of-use assets



37,821



34,877

Other non-current assets



5,315



5,209

Total assets


$

1,102,543


$

1,019,306








LIABILITIES AND STOCKHOLDERS '  EQUITY







Current liabilities:







  Bank borrowings


$

7,361


$

8,842

  Accounts payable



121,328



133,058

  Accrued compensation and related benefits



34,532



24,825

  Operating lease liabilities



11,721



13,179

  Other current liabilities



26,335



30,694

Total current liabilities



201,277



210,598








Bank borrowings, net of current portion



261,619



283,390

Deferred tax liabilities



33,571



25,183

Operating lease liabilities



31,050



28,828

Other liabilities



23,812



18,800

Total liabilities



551,329



566,799








Equity:







UCT stockholders' equity:







  Common stock



309,589



297,693

  Retained earnings



217,972



140,367

  Accumulated other comprehensive loss



5,087



(1,334)

Total UCT stockholders' equity



532,648



436,726

  Noncontrolling interest



18,566



15,781

Total equity



551,214



452,507

Total liabilities and equity


$

1,102,543


$

1,019,306








 

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in thousands)








Fiscal Year Ended


December 25,


December 27,


2020


2019

Cash flows from operating activities:






Net income (loss)

$

80,390


$

(7,619)

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






      Depreciation and amortization


46,635



43,360

Stock-based compensation


12,743



12,065

Deferred income taxes


375



(3,563)

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


7,653



2,799

Others


(2,402)



1,964

Changes in assets and liabilities:






Accounts receivable


(32,693)



(4,488)

Inventories


(8,017)



22,292

Prepaid expenses and other current assets


1,243



3,747

Other non-current assets


(106)



12

Accounts payable


(12,559)



31,017

Accrued compensation and related benefits


9,696



9,006

Operating lease assets and liabilities


(1,111)



7,130

Income taxes payable


2,785



(2,906)

Other liabilities


(7,354)



6,153

Net cash provided by operating activities


97,278



120,969

Cash flows from investing activities:






Purchases of property, plant and equipment


(36,427)



(26,312)

Proceeds from sale of property and equipment, including insurance proceeds


6,601



7,002

Acquisition of Dynamic Manufacturing Solutions, LLC




(29,873)

Net cash used in investing activities


(29,826)



(49,183)

Cash flows from financing activities:






Proceeds from bank borrowings


76,690



41,847

Proceeds from issuance of common stock


604



342

Payments on bank borrowings and finance leases


(105,475)



(93,065)

Payment of contingent earn-out


(1,428)



Withholding tax on employee equity compensation


(1,500)



(1,841)

Others




(641)

Net cash used in financing activities


(31,109)



(53,358)

Effect of exchange rate changes on cash and cash equivalents


1,400



(42)

Net increase in cash and cash equivalents


37,743



18,386

Cash and cash equivalents at beginning of period


162,531



144,145

Cash and cash equivalents at end of period

$

200,274


$

162,531

 

ULTRA CLEAN HOLDINGS, INC.

REPORTABLE SEGMENTS

GAAP TO NON-GAAP RECONCILIATION

(Unaudited; dollars in thousands)






















GAAP


Non-GAAP



Three Months Ended


Three Months Ended



December 25, 2020


December 25, 2020



SPS


SSB


Consolidated


SPS


SSB


Consolidated

Revenues


$

299,495


$

70,133


$

369,628


$

299,495


$

70,133


$

369,628

Gross profit


$

52,392


$

25,253


$

77,645


$

53,330


$

26,276


$

79,606

Gross margin



17.5%



36.0%



21.0%



17.8%



37.5%



21.5%

Income from operations


$

25,905


$

7,269


$

33,174


$

32,461


$

11,450


$

43,911

Operating margin



8.6%



10.4%



9.0%



10.8%



16.3%



11.9%































Three Months Ended












December 25, 2020












SPS


SSB


Consolidated

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

Reported gross profit on a GAAP basis


$

52,392


$

25,253


$

77,645

Amortization of intangible assets (1)



-



1,023



1,023

Restructuring charges (2)



242



-



242

Stock-based compensation expense (3)



696



-



696

Non-GAAP gross profit


$

53,330


$

26,276


$

79,606




















Reconciliation of GAAP Gross margin to Non-GAAP Gross margin

Reported gross margin on a GAAP basis



17.5%



36.0%



21.0%

Amortization of intangible assets (1)



0.0%



1.5%



0.3%

Restructuring charges (2)



0.1%



-



0.0%

Stock-based compensation expense (3)



0.2%



-



0.2%

Non-GAAP gross margin



17.8%



37.5%



21.5%




















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

Reported income from operations on a GAAP basis


$

25,905


$

7,269


$

33,174

Amortization of intangible assets (1)



1,173



3,777



4,950

Restructuring charges (2)



998



5



1,003

Stock-based compensation expense (3)



3,361



399



3,760

Acquisition related costs (4)



1,024



-



1,024

Non-GAAP income from operations


$

32,461


$

11,450


$

43,911




















Reconciliation of GAAP Operating margin to Non-GAAP Operating margin

Reported operating margin on a GAAP basis



8.6%



10.4%



9.0%

Amortization of intangible assets (1)



0.4%



5.4%



1.3%

Restructuring charges (2)



0.4%



0.0%



0.3%

Stock-based compensation expense (3)



1.1%



0.5%



1.0%

Acquisition related costs (4)



0.3%



0.0%



0.3%

Non-GAAP operating margin



10.8%



16.3%



11.9%




















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 costs related to the proposed acquisition of Ham-Let Ltd.

 

ULTRA CLEAN HOLDINGS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS

















Three Months Ended


Twelve Months Ended


December
25,


December
27,


September
25,


December
25,


December
27,


2020


2019


2020


2020


2019

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

Reported net income (loss) attributable to UCT on a GAAP basis

$

22,554


$

(10,267)


$

24,365


$

77,605


$

(9,351)

Amortization of intangible assets (1)


4,950



5,091



4,949



19,799



20,090

Restructuring charges (2)


1,003



13,552



400



4,573



16,667

Stock-based compensation expense (3)


3,760



3,537



3,284



12,899



13,062

Fair value adjustments (4)


3,266



6,562



200



7,624



7,457

Acquisition related costs (5)


1,024



111



-



1,024



3,861

Gain on the sale of property (6)


-



-



(1,352)



(1,352)



-

Depreciation adjustments (7)


-



-



-



-



(360)

Income tax effect of non-GAAP adjustments (8)


(2,521)



(6,001)



(1,352)



(8,200)



(14,343)

Income tax effect of valuation allowance (9)


(525)



3,440



(616)



994



9,461

Non-GAAP net income attributable to UCT

$

33,511


$

16,025


$

29,878


$

114,966


$

46,544
















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

Reported income from operations on a GAAP basis

$

33,174


$

4,504


$

34,822


$

121,370


$

29,913

Amortization of intangible assets (1)


4,950



5,091



4,949



19,799



20,090

Restructuring charges (2)


1,003



13,500



260



4,433



15,821

Stock-based compensation expense (3)


3,760



3,537



3,284



12,899



13,062

Fair value adjustments (4)


-



-



-



-



895

Acquisition related costs (5)


1,024



111



-



1,024



3,863

Gain on the sale of property (6)


-



-



(1,352)



(1,352)



-

Depreciation adjustments (7)


-



-






-



(360)

Non-GAAP income from operations

$

43,911


$

26,743


$

41,963


$

158,173


$

83,284
















Reconciliation of GAAP Operating margin to Non-GAAP Operating margin

Reported operating margin on a GAAP basis


9.0%



1.6%



9.6%



8.7%



2.8%

Amortization of intangible assets (1)


1.3%



1.8%



1.4%



1.4%



1.9%

Restructuring charges (2)


0.3%



4.7%



0.1%



0.3%



1.5%

Stock-based compensation expense (3)


1.0%



1.2%



0.9%



0.9%



1.1%

Fair value adjustments (4)


0.0%



0.0%



0.0%



0.0%



0.1%

Acquisition related costs (5)


0.3%



0.0%



0.0%



0.1%



0.4%

Gain on the sale of property (6)


0.0%



0.0%



-0.4%



-0.1%



0.0%

Non-GAAP operating margin


11.9%



9.3%



11.6%



11.3%



7.8%
















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

Reported gross profit on a GAAP basis

$

77,645


$

56,396


$

74,576



291,761



196,866

Amortization of intangible assets (1)


1,023



1,023



1,022



4,090



4,090

Restructuring charges (2)


242



21



260



988



1,041

Stock-based compensation expense (3)


696



875



383



2,112



2,853

Fair value adjustments (4)


-



-



-



-



895

Depreciation adjustments (7)


-



-



-



-



(316)

Non-GAAP gross profit

$

79,606


$

58,315


$

76,241


$

298,951


$

205,429
















Reconciliation of GAAP Gross margin to Non-GAAP Gross margin

Reported gross margin on a GAAP basis


21.0%



19.7%



20.5%



20.9%



18.5%

Amortization of intangible assets (1)


0.3%



0.4%



0.3%



0.3%



0.4%

Restructuring charges (2)


0.0%



0.0%



0.1%



0.1%



0.1%

Stock-based compensation expense (3)


0.2%



0.3%



0.1%



0.2%



0.3%

Fair value adjustments (4)


0.0%



0.0%



0.0%



0.0%



0.1%

Depreciation adjustments (7)


0.0%



0.0%



0.0%



0.0%



-0.1%

Non-GAAP gross margin


21.5%



20.4%



21.0%



21.4%



19.3%

 

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

$

(6,091)


$

(12,300)


$

(4,986)


$

(21,699)


$

(27,501)

Restructuring charges (2)


-



52



140



140



847

Fair value adjustments (4)


3,266



6,562



200



7,624



6,562

Non-GAAP interest and other income (expense)

$

(2,825)


$

(5,686)


$

(4,646)


$

(13,935)


$

(20,092)
















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

Reported net income (loss) on a GAAP basis

$

0.55


$

(0.26)


$

0.59



1.89



(0.24)

Amortization of intangible assets (1)


0.12



0.13



0.12



0.48



0.50

Restructuring charges (2)


0.02



0.34



0.01



0.11



0.42

Stock-based compensation expense (3)


0.09



0.09



0.08



0.32



0.33

Fair value adjustments (4)


0.08



0.16



0.00



0.19



0.19

Acquisition related costs (5)


0.02



0.00



-



0.02



0.10

Gain on the sale of property (6)


-



-



(0.03)



(0.03)



-

Depreciation adjustments (7)


-



-






-



(0.01)

Income tax effect of non-GAAP adjustments (8)


(0.06)



(0.15)



(0.03)



(0.20)



(0.36)

Income tax effect of valuation allowance (9)


(0.01)



0.09



(0.01)



0.02



0.23

Non-GAAP net income

$

0.81


$

0.40


$

0.73


$

2.80


$

1.16

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


41,353



40,025



41,149



41,074



40,027
















ULTRA CLEAN HOLDINGS, INC.

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

















Three Months Ended


Twelve Months Ended


December
25,


December
27,


September
25,


December
25,


December
27,


2020


2019


2020


2020


2019

(in thousands, except percentages)















Provision for income taxes on a GAAP basis

$

4,349


$

1,811


$

4,776



19,281



10,031

Income tax effect of non-GAAP adjustments (7)


2,521



6,001



1,352



8,200



14,343

Income tax effect of valuation allowance (8)


525



(3,440)



616



(994)



(9,461)

Non-GAAP provision for income taxes

$

7,395


$

4,372


$

6,744


$

26,487


$

14,913
















Income (loss) before income taxes on a GAAP basis

$

27,083


$

(7,796)


$

29,836



99,671



2,412

Amortization of intangible assets (1)


4,950



5,091



4,949



19,799



20,090

Restructuring charges (2)


1,003



13,552



400



4,573



16,667

Stock-based compensation expense (3)


3,760



3,537



3,284



12,899



13,062

Fair value adjustments (4)


3,266



6,562



200



7,624



7,457

Acquisition related costs (5)


1,024



111



-



1,024



3,861

Gain on the sale of property (6)


-



-



(1,352)



(1,352)



-

Depreciation adjustments (7)


-



-



-



-



(360)

Non-GAAP income before income taxes

$

41,086


$

21,057


$

37,317


$

144,238


$

63,189

Effective income tax rate on a GAAP basis


16.1%



-23.2%



16.0%



19.3%



415.9%

Non-GAAP effective income tax rate


18.0%



20.8%



18.1%



18.4%



23.6%
















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, forward hedge contracts

5    Represents costs related to the acquisitions

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

7    Depreciation adjustments related to QGT's fixed assets

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

9    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-2020-financial-results-301230282.html

SOURCE Ultra Clean Holdings, Inc.

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