Ultra Clean Reports First Quarter 2019 Financial Results
HAYWARD, Calif., May 2, 2019 /PRNewswire/ -- Ultra Clean Holdings, Inc. (Nasdaq: UCTT), today reported its financial results for the first quarter ended March 29, 2019.
"Solid execution of our plan resulted in a strong start to the year as we delivered revenue and non-GAAP EPS above our expectations," said Jim Scholhamer, CEO. "We continue to make strategic investments, such as our recent acquisition of Dynamic Manufacturing Solutions, which broaden our product portfolio and drive profitable growth."
UCT has elected to change its organizational and reporting structure to capture efficiencies and operating leverage as a result of the Quantum acquisition in August 2018. The Company will now report results for two operating segments: Semiconductor Products and Solutions ("SPS") and Semiconductor Services Business ("SSB"). The Company has provided a reconciliation of GAAP to non-GAAP segment financial measures in the financial statement tables included in this press release.
First Quarter 2019 GAAP Financial Results
Consolidated revenue was $260.1 million, an increase of 1.1% compared to the prior quarter and a decrease of 17.4% over the same period a year ago. SPS contributed $200.2 million and SSB added $59.9 million. Total gross margin was 17.2% compared to 17.9% last quarter and 15.5% a year ago.
Net income was $0.6 million or $0.02 per basic and diluted share. This compares to a net loss of $1.1 million or $0.03 per basic and diluted share in the previous quarter, and net income of $24.7 million or $0.67 and $0.66 per basic and diluted share last year.
First Quarter 2019 Non-GAAP Financial Results
Non-GAAP net income was $8.1 million or $0.21 per diluted share. This compares to $8.7 million, or $0.23 per diluted share in the previous quarter and $25.7 million or $0.69 for the prior year.
Non-GAAP operating margin was 6.1% compared to 6.5% in the previous quarter and 9.2% 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.
Second Quarter 2019 Outlook
The Company expects revenue in the range of $245.0 million to $265.0 million and GAAP diluted net (loss) income per share to be between ($0.02) and $0.08. The Company expects non-GAAP net income per diluted share to be in the range of $0.12 to $0.22.
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 (international). No passcode is required. A replay of the call will be available by dialing 1-877-344-7529 or 1-412-317-0088 (international) and entering the confirmation code 10130907. 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 second quarter of 2019 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
March 29, March 30,
2019 2018
---
Revenues $
260,141 $
314,842
Cost of goods sold 215,344 266,038
Gross profit 44,797 48,804
Operating expenses:
Research and development 3,431 3,029
Sales and marketing 5,395 3,805
General and administrative 27,791 15,062
Total operating expenses 36,617 21,896
Income from operations 8,180 26,908
Interest and other income
(expense), net (5,319) 326
Income before provision for
income taxes 2,861 27,234
Income tax provision 1,507 2,493
Net income 1,354 24,741
Net income attributable to
non-controlling interest 749
Net income
attributable to
Ultra Clean
Holdings, Inc. $
605 $
24,741
===
Net income per share
attributable to Ultra Clean
Holdings, Inc. common
stockholders:
Basic $
0.02 $
0.67
Diluted $
0.02 $
0.66
Shares used in computing net
income per share:
Basic 39,122 36,723
Diluted 39,448 37,491
ULTRA CLEAN HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; in thousands)
March 29, December 28,
2019 2018
--- ---
ASSETS
Current assets:
Cash and cash equivalents $
154,774 $
144,145
Accounts receivable, net of allowance 110,971 106,956
Inventory 180,299 186,116
Other current assets 28,056 25,708
Total current assets 474,100 462,925
Equipment and leasehold improvements, net 141,082 143,459
Goodwill 150,226 150,226
Purchased intangibles, net 188,653 193,507
Deferred tax assets, net 10,201 10,167
Operating lease right-of-use assets 32,892
Other non-current assets 6,091 5,193
Total assets $
1,003,245 $
965,477
===
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank borrowings $
9,686 $
9,671
Accounts payable 99,204 99,011
Operating lease liabilities 10,554
Other current liabilities 37,249 30,616
Total current liabilities 156,693 139,298
Bank borrowings, net of current portion 329,810 331,549
Deferred tax liability 15,834 15,834
Operating lease liabilities 25,132
Other long-term liabilities 22,247 27,808
Total liabilities 549,716 514,489
Stockholders' equity:
Common stock 289,190 287,127
Retained earnings 150,323 149,718
Accumulated other comprehensive loss (1,423) (547)
Ultra Clean Holdings, Inc. stockholders'
equity 438,090 436,298
Noncontrolling interest 15,439 14,690
Total stockholders' equity 453,529 450,988
Total liabilities and
stockholders' equity $
1,003,245 $
965,477
===
ULTRA CLEAN HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in thousands)
Three Months Ended
March 29, March 30,
2019 2018
Cash flows from operating activities:
Net income including
noncontrolling interests $1,354 $24,741
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 12,157 2,452
Stock-based compensation 2,913 2,563
Others (1,225) (804)
Changes in assets and liabilities:
Accounts receivable (4,182) 6,839
Inventories 5,579 (24,660)
Prepaid expenses and other (2,430) (1,089)
Deferred income taxes (37) (46)
Other non-current assets (943) (255)
Accounts payable (626) (4,214)
Accrued compensation and related
benefits 3,087 187
Income taxes payable 1,266 (2,358)
Other liabilities 1,185 1,723
Net cash provided by operating
activities 18,098 5,079
Cash flows from investing activities:
Purchases of equipment and
leasehold improvements (4,844) (5,911)
Proceeds from sale of equipment 646 -
Net cash used for investing
activities (4,198) (5,911)
Cash flows from financing activities:
Proceeds from bank borrowings 6,587 10,222
Proceeds from issuance of common
stock - 94,330
Payments on bank borrowings and
finance leases (8,863) (7,873)
Employees' taxes paid upon
vesting of restricted stock
units (850) (1,862)
Net cash provided by (used for)
financing activities (3,126) 94,817
Effect of exchange rate changes
on cash and cash equivalents (145) 74
Net increase in cash and cash
equivalents $10,629 $94,059
---
Cash and cash equivalents at
beginning of period 144,145 68,306
Cash and cash equivalents at end
of period $154,774 $162,365
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 29, 2019
March 29, 2019
SPS
SSB Consolidated
SPS
SSB Consolidated
Revenues $200,245 $59,896 $260,141 $200,245 $59,896 $260,141
Gross profit $25,681 $19,116 $44,797 $26,196 $20,139 $46,335
Gross margin 12.8% 31.9% 17.2% 13.1% 33.6% 17.8%
Operating profit $4,324 $3,856 $8,180 $8,312 $7,678 $15,990
Operating margin 2.2% 6.4% 3.1% 4.2% 12.8% 6.1%
Three months ended
March 29, 2019
SPS
SSB Consolidated
Reconciliation of GAAP Gross profit to Non-GAAP Gross profit (in thousands)
---
Reported gross profit on a GAAP basis $25,681 $19,116 $44,797
Amortization of intangible assets (1) 1,023 1,023
Restructuring charges (2) 515 515
Non-GAAP gross profit $26,196 $20,139 $46,335
Reconciliation of GAAP Gross margin to Non-GAAP Gross margin
---
Reported gross margin on a GAAP basis 12.8% 31.9% 17.2%
Amortization of intangible assets (1) 0.0% 1.7% 0.4%
Restructuring charges (2) 0.3% 0.2%
Non-GAAP gross margin 13.1% 33.6% 17.8%
Reconciliation of GAAP Income from operations to Non-GAAP Income from operations (in thousands)
---
Reported income from operations on a GAAP basis $4,324 $3,856 $8,180
Amortization of intangible assets (1) 1,032 3,822 4,854
Restructuring charges (2) 617 617
Acquisition costs (3) 2,339 2,339
Non-GAAP income from operations $8,312 $7,678 $15,990
Reconciliation of GAAP Operating margin to Non-GAAP Operating margin
---
Reported operating margin on a GAAP basis 2.2% 6.4% 3.1%
Amortization of intangible assets (1) 0.5% 6.4% 1.9%
Restructuring charges (2) 0.3% 0.0% 0.2%
Acquisition costs (3) 1.2% 0.0% 0.9%
Non-GAAP operating margin 4.2% 12.8% 6.1%
1 Amortization of intangible
assets related to the Company's
acquisitions of AIT, Thermal,
FDS and QGT
2 Represents severance costs
and cost related to facilities
closed during the quarter
3 Represents costs related to
the QGT and DMS acquisitions
ULTRA CLEAN HOLDINGS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS
Three Months Ended
March 29,
March 30,
December 28,
2019 2018 2018
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 $605 $24,741 $(1,108)
Amortization of intangible
assets (1) 4,854 1,098 4,973
Restructuring charges (2) 947 1,024 297
Executive transition costs (3) 418
Acquisition costs (4) 2,339 613
Facility lease early exit costs
(5) 117
Income tax effect of non-GAAP
adjustments (6) (1,563) (262) (1,101)
Income tax effect of valuation
allowance (7) 958 (873) 4,474
Non-GAAP net income
attributable to Ultra Clean
Holdings, Inc. $8,140 $25,728 $8,683
Reconciliation of GAAP Income from operations to Non-GAAP Income from
operations (in thousands)
Reported income from operations
on a GAAP basis $8,180 $26,908 $10,210
Amortization of intangible
assets (1) 4,854 1,098 4,973
Restructuring charges (2) 617 1,024 297
Executive transition costs (3) 418
Acquisition costs (4) 2,339 613
Facility lease early exit costs
(5) 117
Non-GAAP income from operations $15,990 $29,030 $16,628
Reconciliation of GAAP Operating
margin to Non-GAAP Operating
margin
---
Reported operating margin on a
GAAP basis 3.1% 8.5% 4.0%
Amortization of intangible
assets (1) 1.9% 0.4% 1.9%
Restructuring charges (2) 0.2% 0.3% 0.1%
Executive transition costs (3) 0.0% 0.0% 0.2%
Acquisition costs (4) 0.9% 0.0% 0.3%
Facility lease early exit costs
(5) 0.0% 0.0% 0.0%
Non-GAAP operating margin 6.1% 9.2% 6.5%
Reconciliation of GAAP Gross
profit to Non-GAAP Gross
profit (in thousands)
---
Reported gross profit on a GAAP
basis $44,797 $48,804 $45,977
Amortization of intangible
assets (1) 1,023 1,363
Restructuring charges (2) 515 937 297
Executive transition costs (3) 418
Non-GAAP gross profit $46,335 $49,741 $48,055
Reconciliation of GAAP Gross
margin to Non-GAAP Gross
margin
---
Reported gross margin on a GAAP
basis 17.2% 15.5% 17.9%
Amortization of intangible
assets (1) 0.4% 0.0% 0.5%
Restructuring charges (2) 0.2% 0.3% 0.1%
Executive transition costs (3) 0.0% 0.0% 0.2%
Non-GAAP gross margin 17.8% 15.8% 18.7%
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 $(5,319) $326 $(5,187)
Restructuring charges (2) (330)
Non-GAAP interest and other
income (expense) $(5,649) $326 $(5,187)
1 Amortization of intangible
assets related to the Company's
acquisitions of AIT, Thermal,
FDS and QGT
2 Represents severance costs
and cost related to facilities
closed during the quarter
3 Represents termination
benefits paid to a former
executive of the Company
4 Represents costs related to
the QGT and DMS acquisitions
5 Represents lease related
costs due to the early exit of
a facility
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 29,
March 30,
December 28,
2019 2018 2018
Reconciliation of GAAP
Earnings Per Diluted Share to
Non-GAAP Earnings Per
Diluted Share
---
Reported net income (loss) on
a GAAP basis $0.02 $0.66 (0.03)
Amortization of intangible
assets 0.12 0.03 0.13
Restructuring charges 0.03 0.03 0.01
Executive transition costs 0.01
Acquisition costs 0.06 0.02
Facility lease early exit
costs 0.00
Income tax effect of non-GAAP
adjustments (0.04) (0.01) (0.03)
Income tax effect of valuation
allowance 0.02 (0.02) 0.12
Non-GAAP net income $0.21 $0.69 $0.23
Weighted average number of
diluted shares (thousands) 39,448 37,491 39,009
ULTRA CLEAN HOLDINGS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP EFFECTIVE INCOME TAX RATE
Three Months Ended
March 29,
March 30,
December 28,
2019 2018 2018
(in thousands, except
percentages)
Provision for income taxes
on a GAAP basis $1,507 $2,493 $5,335
Income tax effect of non-
GAAP adjustments (1) 1,563 262 1,101
Income tax effect of
valuation allowance (2) (958) 873 (4,474)
Non-GAAP provision for
income taxes $2,112 $3,628 $1,962
Income (loss) before income
taxes on a GAAP basis $2,861 $27,234 $5,023
Amortization of intangible
assets 4,854 1,098 4,973
Restructuring charges 947 1,024 297
Executive transition costs 418
Acquisition costs 2,339 613
Facility lease early exit
costs 117
Non-GAAP income before
income taxes $11,001 $29,356 $11,441
Effective income tax rate on 52.7 9.2 106.2
a GAAP basis % % %
Non-GAAP effective income 19.2 12.4
tax rate % % 17.2
%
1 Tax effect of items (1)
through (5) 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.
