HAYWARD, Calif., Nov. 6, 2018 /PRNewswire/ -- Ultra Clean
Holdings, Inc. (Nasdaq: UCTT), a leading developer and supplier of
critical subsystems, ultra-high purity cleaning and analytical
services for the semiconductor and display capital equipment
industries, today reported its financial results for the third
quarter ended September 28, 2018.
"The addition of a new, recurring revenue stream from Quantum
late in the third quarter helped to offset the pause in the
semiconductor capital equipment investment cycle," said
Jim Scholhamer, CEO. "By expanding
our core products and systems business to include a services
component, we can play a larger, more vital role creating and
capturing value for our existing and new top-tier OEM and IDM
customers. We remain very positive on the industry's long-term
drivers and will continue to execute on our growth strategy,
extending our position as a leading supplier to the semiconductor
market."
GAAP Financial Results
The financial information presented for the third quarter of
2018 includes five weeks of operations of Quantum Global
Technologies, which UCT acquired on August
27, 2018.
Total revenue for the third quarter was $234.1 million, a decrease of 19.3% compared to
the second quarter and a decrease of 3.5% compared to the same
period a year ago.
Gross margin was 15.0% compared to 15.9% last quarter and 17.6%
a year ago. Operating margin was 0.4% compared to 7.8% last quarter
and 9.6% for the same period last year.
Net loss for the third quarter was $6.0
million or $0.15 per basic and
diluted share compared to net income of $19.0 million or $0.49 and $0.48 per
basic and diluted share in the previous quarter, and net income of
$19.7 million or $0.59 and $0.57 per
basic and diluted share last year.
Cash and cash equivalents at the end of the third quarter were
$160.3 million, an increase of
$19.2 million compared to the second
quarter.
Non-GAAP Financial Results
Non-GAAP net income was $11.9
million, or $0.30 per diluted
share. This compares to non-GAAP net income of $21.5 million or $0.55 per diluted share in the previous quarter
and non-GAAP net income of $21.3
million or $0.62 for the prior
year.
Non-GAAP operating margin was 6.4% compared to 8.7% in the
previous quarter and 10.1% 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.
Fourth Quarter 2018 Outlook
The Company expects revenue to be between $240 million to $260
million and GAAP diluted net income per share to be in the
range of $0.20 to $0.30. The Company expects non-GAAP net income
per diluted share to be in the range of $0.22 to $0.32.
Conference Call
UCT will conduct a conference call today, Tuesday, November 6, 2018, beginning at
1:45 p.m. PT.
The call-in number is (844) 826-3034 (domestic) and (412)
317-5179 (international). A replay of the conference will be
available for seven days following the call at (877) 344-7529
(domestic) and (412) 317-0088 (international). The
confirmation number for live broadcast and replay is
10124276.
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 and display related
industries. 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. 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 fourth quarter of 2018 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
our fourth quarter 2018 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 29, 2017 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
250-307-9030
ULTRA CLEAN
HOLDINGS, INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Unaudited; in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
Nine months ended
|
|
September
28,
|
|
September
29,
|
|
September
28,
|
|
September
29,
|
2018
|
|
2017
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
$
|
234,079
|
|
$
|
242,610
|
|
$
|
839,134
|
|
$
|
675,465
|
Cost of goods
sold
|
|
199,084
|
|
|
199,914
|
|
|
709,270
|
|
|
551,903
|
Gross
profit
|
|
34,995
|
|
|
42,696
|
|
|
129,864
|
|
|
123,562
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
3,284
|
|
|
2,722
|
|
|
9,228
|
|
|
8,402
|
Sales and
marketing
|
|
3,839
|
|
|
3,662
|
|
|
11,274
|
|
|
10,064
|
General and
administrative
|
|
26,950
|
|
|
13,050
|
|
|
58,868
|
|
|
37,656
|
Total operating expenses
|
|
34,073
|
|
|
19,434
|
|
|
79,370
|
|
|
56,122
|
Income from
operations
|
|
922
|
|
|
23,262
|
|
|
50,494
|
|
|
67,440
|
Interest and
other income (expense), net
|
|
(2,766)
|
|
|
(19)
|
|
|
(3,249)
|
|
|
(2,077)
|
Income (loss) before
provision for income taxes
|
|
(1,844)
|
|
|
23,243
|
|
|
47,245
|
|
|
65,363
|
Income tax
provision
|
|
4,596
|
|
|
3,527
|
|
|
9,984
|
|
|
11,127
|
Net income
(loss)
|
|
(6,440)
|
|
|
19,716
|
|
|
37,261
|
|
|
54,236
|
Net loss
attributable to non-controlling interest
|
|
(443)
|
|
|
-
|
|
|
(443)
|
|
|
-
|
Net income (loss)
attributable to Ultra Clean Holdings, Inc.
|
$
|
(5,997)
|
|
$
|
19,716
|
|
$
|
37,704
|
|
$
|
54,236
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share attributable to Ultra Clean Holdings, Inc. common
stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.15)
|
|
$
|
0.59
|
|
$
|
0.99
|
|
$
|
1.63
|
Diluted
|
$
|
(0.15)
|
|
$
|
0.57
|
|
$
|
0.97
|
|
$
|
1.59
|
Shares used in
computing net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
38,930
|
|
|
33,540
|
|
|
38,152
|
|
|
33,342
|
Diluted
|
|
38,930
|
|
|
34,360
|
|
|
38,745
|
|
|
34,216
|
ULTRA CLEAN
HOLDINGS, INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Unaudited; in
thousands)
|
|
|
|
|
|
|
|
|
|
September
28,
|
|
December
29,
|
2018
|
2017
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
160,340
|
|
$
|
68,306
|
Accounts
receivable, net of allowance
|
|
|
95,056
|
|
|
90,213
|
Inventory
|
|
|
198,578
|
|
|
236,840
|
Other current
assets
|
|
|
30,873
|
|
|
12,089
|
Total current assets
|
|
|
484,847
|
|
|
407,448
|
|
|
|
|
|
|
|
Equipment and
leasehold improvements, net
|
|
|
133,746
|
|
|
32,246
|
Goodwill
|
|
|
151,869
|
|
|
85,248
|
Purchased
intangibles, net
|
|
|
203,180
|
|
|
31,587
|
Deferred tax assets,
net
|
|
|
4,918
|
|
|
4,951
|
Other non-current
assets
|
|
|
8,072
|
|
|
1,932
|
Total
assets
|
|
$
|
986,632
|
|
$
|
563,412
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Bank
borrowings
|
|
$
|
42,818
|
|
$
|
12,381
|
Accounts
payable
|
|
|
95,178
|
|
|
173,521
|
Other current
liabilities
|
|
|
37,627
|
|
|
21,445
|
Total current liabilities
|
|
|
175,623
|
|
|
207,347
|
|
|
|
|
|
|
|
Bank borrowings, net
of current portion
|
|
|
330,984
|
|
|
39,893
|
Deferred tax
liability
|
|
|
9,868
|
|
|
9,981
|
Other long-term
liabilities
|
|
|
23,409
|
|
|
5,886
|
Total liabilities
|
|
|
539,884
|
|
|
263,107
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
Common
stock
|
|
|
283,995
|
|
|
185,336
|
Retained
earnings
|
|
|
150,826
|
|
|
113,122
|
Accumulated
other comprehensive income
|
|
|
(43)
|
|
|
1,847
|
Ultra Clean
Holdings, Inc. stockholders' equity
|
|
|
434,778
|
|
|
300,305
|
Noncontrolling
interest
|
|
|
11,970
|
|
|
-
|
Total stockholders' equity
|
|
|
446,748
|
|
|
300,305
|
Total liabilities and
stockholders' equity
|
|
$
|
986,632
|
|
$
|
563,412
|
|
|
|
|
|
|
|
ULTRA CLEAN
HOLDINGS, INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(unaudited; in
thousands)
|
|
|
|
|
|
Nine Months
Ended
|
|
September
28,
|
|
September
29,
|
|
2018
|
|
2017
|
Cash flows from
operating activities:
|
|
|
|
Net income including
noncontrolling interests
|
$
37,261
|
|
$
54,236
|
Adjustments to
reconcile net income to net cash provided by operating activities
(excluding assets acquired and liabilities assumed):
|
|
|
|
Depreciation and
amortization
|
10,730
|
|
7,703
|
Stock-based
compensation
|
7,133
|
|
5,059
|
Change in the fair
value of financial instruments
|
(499)
|
|
(278)
|
Others
|
1,352
|
|
72
|
Changes in assets and
liabilities:
|
|
|
|
Accounts
receivable
|
13,730
|
|
(32,387)
|
Inventories
|
37,816
|
|
(60,484)
|
Prepaid expenses and
other
|
(6,292)
|
|
(4,386)
|
Deferred income
taxes
|
68
|
|
(224)
|
Other non-current
assets
|
(297)
|
|
(486)
|
Accounts
payable
|
(86,699)
|
|
57,695
|
Accrued compensation
and related benefits
|
5,332
|
|
4,514
|
Income taxes
payable
|
(3,969)
|
|
4,614
|
Other
liabilities
|
(335)
|
|
1,978
|
Net cash provided by
operating activities
|
15,331
|
|
37,626
|
Cash flows from
investing activities:
|
|
|
|
Purchases of
equipment and leasehold improvements
|
(15,526)
|
|
(12,534)
|
Acquisition of
Quantum, net of cash acquired
|
(290,462)
|
|
—
|
Net cash used for
investing activities
|
(305,988)
|
|
(12,534)
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from bank
borrowings
|
382,184
|
|
8,172
|
Proceeds from
issuance of common stock
|
94,471
|
|
1,689
|
Principal payments on
bank borrowings
|
(78,608)
|
|
(19,228)
|
Debt issuance costs
paid
|
(12,118)
|
|
—
|
Employees' taxes paid
upon vesting of restricted stock units
|
(2,945)
|
|
(2,369)
|
Net cash provided by
(used for) financing activities
|
382,984
|
|
(11,736)
|
Effect of exchange
rate changes on cash and cash equivalents
|
(293)
|
|
118
|
Net increase in cash
and cash equivalents
|
$
92,034
|
|
$
13,474
|
Cash and cash
equivalents at beginning of period
|
68,306
|
|
52,465
|
Cash and cash
equivalents at end of period
|
$
160,340
|
|
$
65,939
|
ULTRA CLEAN
HOLDINGS, INC.
|
UNAUDITED
RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
September
28,
|
|
September
29,
|
|
June 29,
|
|
|
2018
|
|
2017
|
|
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
|
$
(5,997)
|
|
$
19,716
|
|
$
18,960
|
Amortization of
intangible assets (1)
|
|
2,411
|
|
1,231
|
|
1,098
|
Reduction in force
(2)
|
|
1,319
|
|
-
|
|
-
|
Product transition
fees (3)
|
|
657
|
|
-
|
|
-
|
Executive transition
costs (4)
|
|
246
|
|
-
|
|
1,400
|
Disposal of business
unit (5)
|
|
1,082
|
|
-
|
|
-
|
Bank transaction
costs (6)
|
|
99
|
|
-
|
|
-
|
Acquisition costs
(7)
|
|
9,391
|
|
-
|
|
-
|
Income tax effect of
non-GAAP adjustments (8)
|
|
(2,220)
|
|
(159)
|
|
(296)
|
Income tax effect of
valuation allowance (9)
|
|
4,865
|
|
524
|
|
303
|
Non-GAAP net income
attributable to Ultra Clean Holdings, Inc.
|
|
$
11,853
|
|
$
21,312
|
|
$
21,465
|
|
|
|
|
|
|
|
Reconciliation of
GAAP Income from operations to Non-GAAP Income from operations (in
thousands)
|
|
|
|
|
Reported income from
operations on a GAAP basis
|
|
$
922
|
|
$
23,262
|
|
$
22,664
|
Amortization of
intangible assets (1)
|
|
2,411
|
|
1,231
|
|
1,098
|
Reduction in force
(2)
|
|
1,319
|
|
-
|
|
-
|
Product transition
fees (3)
|
|
657
|
|
-
|
|
-
|
Executive transition
costs (4)
|
|
246
|
|
-
|
|
1,400
|
Acquisition costs
(7)
|
|
9,391
|
|
-
|
|
-
|
Non-GAAP income from
operations
|
|
$
14,946
|
|
$
24,493
|
|
$
25,162
|
|
|
|
|
|
|
|
Reconciliation of
GAAP Operating margin to Non-GAAP Operating margin
|
|
|
|
|
|
|
Reported operating
margin on a GAAP basis
|
|
0.4%
|
|
9.6%
|
|
7.8%
|
Amortization of
intangible assets (1)
|
|
1.0%
|
|
0.5%
|
|
0.4%
|
Reduction in force
(2)
|
|
0.6%
|
|
0.0%
|
|
0.0%
|
Product transition
fees (3)
|
|
0.3%
|
|
0.0%
|
|
0.0%
|
Executive transition
costs (4)
|
|
0.1%
|
|
0.0%
|
|
0.0%
|
Acquisition costs
(7)
|
|
4.0%
|
|
0.0%
|
|
0.0%
|
Non-GAAP operating
margin
|
|
6.4%
|
|
10.1%
|
|
8.7%
|
|
|
|
|
|
|
|
Reconciliation of
GAAP Gross profit to Non-GAAP Gross profit (in
thousands)
|
|
|
|
|
|
|
Reported gross profit
on a GAAP basis
|
|
$
34,995
|
|
$
42,696
|
|
$
46,065
|
Reduction in force
(2)
|
|
1,197
|
|
-
|
|
-
|
Product transition
fees (3)
|
|
657
|
|
-
|
|
-
|
Non-GAAP gross
profit
|
|
$
36,849
|
|
$
42,696
|
|
$
46,065
|
|
|
|
|
|
|
|
Reconciliation of
GAAP Gross margin to Non-GAAP Gross margin
|
|
|
|
|
|
|
Reported gross margin
on a GAAP basis
|
|
15.0%
|
|
17.6%
|
|
15.9%
|
Reduction in force
(2)
|
|
0.4%
|
|
-
|
|
0.0%
|
Product transition
fees (3)
|
|
0.3%
|
|
-
|
|
0.0%
|
Non-GAAP gross
margin
|
|
15.7%
|
|
17.6%
|
|
15.9%
|
|
|
|
|
|
|
|
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
|
|
$
(2,766)
|
|
$
(19)
|
|
$
(809)
|
Disposal of business
unit (5)
|
|
1,082
|
|
-
|
|
-
|
Bank transaction
costs (6)
|
|
99
|
|
-
|
|
-
|
Non-GAAP interest and
other income (expense)
|
|
$
(1,585)
|
|
$
(19)
|
|
$
(809)
|
|
|
|
|
|
|
|
1
Amortization of intangible assets related to the Company's
acquisitions of AIT, Thermal, FDS and QGT
|
2
Represents severence costs related to the company's reduction in
force during the quarter
|
3
One-time product transition payment
|
4
Represents final termination benefits paid to a former executive of
the Company
|
5
Represents the loss on disposal of the Companuy's 3D printing
operations in Singapore
|
6
Represents the writeoff of debt issuance costs, bank fees related
to the payoff of remaining debt with East West Bank.
|
7
Represents costs related to the acquisition of QGT
|
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.
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
September
28,
|
|
September
29,
|
|
June 29,
|
|
|
2018
|
|
2017
|
|
2018
|
Reconciliation of
GAAP Earnings Per Diluted Share to Non-GAAP Earnings Per Diluted
Share
|
|
|
|
|
Reported net income
(loss) on a GAAP basis
|
|
$
(0.15)
|
|
$
0.57
|
|
$
0.48
|
Amortization of
intangible assets
|
|
0.06
|
|
0.04
|
|
0.03
|
Reduction in
force
|
|
0.03
|
|
-
|
|
-
|
Product transition
fees
|
|
0.02
|
|
-
|
|
0.00
|
Executive transition
costs
|
|
0.01
|
|
-
|
|
0.04
|
Disposal of business
unit
|
|
0.03
|
|
-
|
|
-
|
Bank transaction
costs
|
|
0.00
|
|
-
|
|
-
|
Acquisition
costs
|
|
0.24
|
|
-
|
|
-
|
Income tax effect of
non-GAAP adjustments
|
|
(0.06)
|
|
(0.01)
|
|
(0.01)
|
Income tax effect of
valuation allowance
|
|
0.12
|
|
0.02
|
|
0.01
|
Non-GAAP net
income
|
|
$
0.30
|
|
$
0.62
|
|
$
0.55
|
Weighted average
number of diluted shares (thousands)
|
38,930
|
|
34,360
|
|
39,297
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ULTRA CLEAN
HOLDINGS, INC.
|
UNAUDITED
RECONCILIATION OF GAAP TO NON-GAAP EFFECTIVE INCOME TAX
RATE
|
|
|
Three Months
Ended
|
|
|
September
28,
|
|
September
29,
|
|
June 29,
|
|
|
2018
|
|
2017
|
|
2018
|
(in thousands,
except percentages)
|
|
|
|
|
|
|
Provision for income
taxes on a GAAP basis
|
|
$
4,596
|
|
$
3,527
|
|
$
2,895
|
Income tax effect of
non-GAAP adjustments (1)
|
|
2,220
|
|
159
|
|
296
|
Income tax effect of
valuation allowance (2)
|
|
(4,865)
|
|
(524)
|
|
(303)
|
Non-GAAP provision
for income taxes
|
|
$
1,951
|
|
$
3,162
|
|
$
2,888
|
|
|
|
|
|
|
|
Income (loss) before
income taxes on a GAAP basis
|
|
$
(1,844)
|
|
$
23,243
|
|
$
21,855
|
Amortization of
intangible assets
|
|
2,411
|
|
1,231
|
|
1,098
|
Reduction in
force
|
|
1,319
|
|
-
|
|
-
|
Product transition
fees
|
|
657
|
|
-
|
|
-
|
Executive transition
costs
|
|
246
|
|
-
|
|
1,400
|
Disposal of business
unit
|
|
1,082
|
|
-
|
|
-
|
Bank transaction
costs
|
|
99
|
|
-
|
|
-
|
Acquisition
costs
|
|
9,391
|
|
-
|
|
-
|
Non-GAAP income
before income taxes
|
|
$
13,361
|
|
$
24,474
|
|
$
24,353
|
Effective income tax
rate on a GAAP basis
|
|
-249.2%
|
|
15.2%
|
|
13.2%
|
Non-GAAP effective
income tax rate
|
|
14.6%
|
|
12.9%
|
|
11.9%
|
|
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.