PR Newswire | Feb 17, 2021 04:06PM EST

02/17 15:05 CST

Ultra Clean Reports Fourth Quarter and Full Year 2020 Financial Results HAYWARD, Calif., Feb. 17, 2021

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 Relationsrbennetto@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 UCTcommon 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 operatingactivities(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 fromoperations (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 ofThermal, FDS, QGT and DMS

2 Represents severance, retention and costs related to facility closures

3 Represents compensation expense for stock granted to employees anddirectors

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 December September December December 25, 27, 25, 25, 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 fromoperations (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 Interestand other income (expense) (inthousands)

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 PerDiluted 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 December September December December 25, 27, 25, 25, 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 ofAIT, Thermal, FDS, QGT and DMS

2 Represents severance, retention and costs related to facility closures

3 Represents compensation expense for stock granted to employees anddirectors

4 Fair value adjustments related to contingent consideration, purchaseobligation, 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 rateshown below

9 The Company's GAAP tax expense is generally higher than the Company'snon-GAAP tax expense, primarily dueto losses in the U.S. with full federal and state valuation allowances. TheCompany's non-GAAP tax rate and resultingnon-GAAP tax expense considers the tax implications as if there was no federalor state valuation allowance positionin effect.

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SOURCE Ultra Clean Holdings, Inc.