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.
"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.
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SOURCE Ultra Clean Holdings, Inc.
