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.
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SOURCE Ultra Clean Holdings, Inc.
