PR Newswire | Apr 28, 2021 04:06PM EDT

04/28 15:05 CDT

Ultra Clean Reports First Quarter 2021 Financial Results HAYWARD, Calif., April 28, 2021

HAYWARD, Calif., April 28, 2021 /PRNewswire/ -- Ultra Clean Holdings, Inc. (Nasdaq: UCTT), today reported its financial results for the first quarter ended March 26, 2021.

"Accelerating semiconductor demand, together with UCT's ability to execute on a global scale, resulted in another very robust quarter for the company," said Jim Scholhamer, CEO. "We have strong momentum across the company as our broad portfolio of products and services, including Ham-Let, makes us increasingly relevant and strategic to the success of our customers. Demand for semiconductors has never been higher and we will continue to invest in ways that position UCT to play a larger, more pivotal role in the industry's future."

First Quarter 2021 GAAP Financial Results

Total revenue was $417.6 million. Products contributed $345.6 million and Services added $72.0 million. Total gross margin was 20.8%, operating margin was 9.7%, and net income was $25.0 million or $0.62 and $0.60 per basic and diluted share. This compares to total revenue of $369.6 million, gross margin of 21.0%, operating margin of 9.0%, and net income of $22.6 million or $0.56 and $0.55 per basic and diluted share in the prior quarter.

First Quarter 2021 Non-GAAP Financial Results

On a non-GAAP basis, gross margin was 21.3%, operating margin was 12.2%, and net income was $38.2 million or $0.92 per diluted share. This compares to gross margin of 21.5%, operating margin of 11.9%, and net income of $33.5 million or $0.81 per diluted share in the prior quarter.

Second 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 $490.0 million to $520.0 million and GAAP diluted net income per share to be between $0.56 and $0.68. The Company expects non-GAAP diluted net income per share to be between $0.90 and $1.03.

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 10154013. 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, components and parts, and ultra-high purity cleaning and analytical services primarily for the semiconductor industry. Under its Products division, UCT offers its customers an integrated outsourced solution for major subassemblies, improved design-to-delivery cycle times, design for manufacturability, prototyping, and high-precision manufacturing. Under its Services Division, UCT offers its customers 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, certain insurance proceeds, and the tax effects of the foregoing adjustments.

A reconciliation of our guidance for non-GAAP net income per diluted share for the subsequent 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 25, 2020 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

March 26, March 27,

2021 2020

Revenues:

Product $ 345,616 $ 259,383

Services 72,011 61,513

Total revenues 417,627 320,896

Cost of revenues:

Product 283,569 214,755

Services 47,120 40,479

Total cost of revenues 330,689 255,234

Gross profit 86,938 65,662

Operating expenses:

Research and development 4,208 3,408

Sales and marketing 7,608 5,750

General and administrative 34,712 33,954

Total operating expenses 46,528 43,112

Income from operations 40,410 22,550

Interest income 98 312

Interest expense (3,605) (5,188)

Other income (expense), net (4,263) (2,691)

Income before provision for income taxes 32,640 14,983

Provision for income taxes 7,015 4,465

Net income 25,625 10,518

Less: Net income attributable to noncontrolling interests 628 1,095

Net income attributable to UCT $ 24,997 $ 9,423

Net income per share attributable to UCT common stockholders:

Basic $ 0.62 $ 0.24

Diluted $ 0.60 $ 0.23

Shares used in computing net income per share:

Basic 40,564 39,817

Diluted 41,639 40,704

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in thousands)

March 26, December 25,

2021 2020

ASSETS

Current assets:

Cash and cash equivalents $ 264,257 $ 200,274

Accounts receivable, net of allowance 168,041 145,539

Inventories 189,167 180,385

Prepaid expenses and other current assets 14,743 18,895

Total current assets 636,208 545,093

Property, plant and equipment, net 157,344 159,150

Goodwill 171,132 171,132

Intangibles assets, net 155,630 160,519

Deferred tax assets, net 22,277 23,513

Operating lease right-of-use assets 41,642 37,821

Other non-current assets 6,326 5,315

Total assets $ 1,190,559 $ 1,102,543

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Bank borrowings $ 8,021 $ 7,361

Accounts payable 164,875 121,328

Accrued compensation and related benefits 30,933 34,532

Operating lease liabilities 12,402 11,721

Other current liabilities 46,848 26,335

Total current liabilities 263,079 201,277

Bank borrowings, net of current portion 259,822 261,619

Deferred tax liabilities 33,571 33,571

Operating lease liabilities 33,875 31,050

Other liabilities 23,567 23,812

Total liabilities 613,914 551,329

Equity:

UCT stockholders' equity:

Common stock 313,043 309,589

Retained earnings 242,969 217,972

Accumulated other comprehensive gain 1,603 5,087

Total UCT stockholders' equity 557,615 532,648

Noncontrolling interest 19,030 18,566

Total equity 576,645 551,214

Total liabilities and stockholders' equity $ 1,190,559 $ 1,102,543

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in thousands)

Three Months Ended

March 26, March 27,

2021 2020

Cash flows from operating activities:

Net income $ 25,625 $ 10,518

Adjustments to reconcile net income to net cash provided by operatingactivities:

Depreciation and amortization 11,823 11,804

Stock-based compensation 3,465 3,077

Deferred income taxes 1,236 1,046

Change in the fair value of financial instruments and earn-out liability 11,639 2,977

Gain from insurance proceeds (7,332) -

Others 101 -

Changes in assets and liabilities:

Accounts receivable (22,502) (663)

Inventories (8,782) (14,741)

Prepaid expenses and other current assets 3,018 (224)

Other non-current assets (1,011) 302

Accounts payable 43,266 (4,099)

Accrued compensation and related benefits (3,599) 219

Operating lease assets and liabilities (315) (418)

Income taxes payable 2,777 1,559

Other liabilities 6,194 4,359

Net cash provided by operating activities 65,603 15,716

Cash flows from investing activities:

Purchases of property, plant and equipment (6,487) (6,708)

Insurance proceeds 7,332 -

Net cash provided by (used in) investing activities 845 (6,708)

Cash flows from financing activities:

Proceeds from bank borrowings 6,627 51,505

Payments on bank borrowings and finance leases (8,243) (14,477)

Others (2) -

Net cash provided by (used in) financing activities (1,618) 37,028

Effect of exchange rate changes on cash and cash equivalents (847) (497)

Net increase in cash and cash equivalents 63,983 45,539

Cash and cash equivalents at beginning of period 200,274 162,531

Cash and cash equivalents at end of period $ 264,257 $ 208,070

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 26, 2021 March 26, 2021

Products Services Consolidated Products Services Consolidated

Revenues $ 345,616 $ 72,011 $ 417,627 $ 345,616 $ 72,011 $ 417,627

Gross profit $ 62,047 $ 24,891 $ 86,938 $ 63,033 $ 25,913 $ 88,946

Gross margin 18.0% 34.6% 20.8% 18.2% 36.0% 21.3%

Income from operations $ 34,244 $ 6,166 $ 40,410 $ 40,525 $ 10,294 $ 50,819

Operating margin 9.9% 8.6% 9.7% 11.7% 14.3% 12.2%

Three Months Ended

March 26, 2021

Products Services Consolidated

Reconciliation of GAAP Gross profit to Non-GAAP Gross profit (in thousands)

Reported gross profit on a GAAP basis $ 62,047 $ 24,891 $ 86,938

Amortization of intangible assets (1) - 1,022 1,022

Restructuring charges (2) 6 - 6

Stock-based compensation expense (3) 980 - 980

Non-GAAP gross profit $ 63,033 $ 25,913 $ 88,946

Reconciliation of GAAP Gross margin to Non-GAAP Gross margin

Reported gross margin on a GAAP basis 18.0% 34.6% 20.8%

Amortization of intangible assets (1) 0.0% 1.4% 0.3%

Restructuring charges (2) 0.0% - 0.0%

Stock-based compensation expense (3) 0.2% - 0.2%

Non-GAAP gross margin 18.2% 36.0% 21.3%

Reconciliation of GAAP Income from operations to Non-GAAP Income fromoperations (in thousands)

Reported income from operations on a GAAP basis $ 34,244 $ 6,166 $ 40,410

Amortization of intangible assets (1) 1,173 3,716 4,889

Restructuring charges (2) 140 - 140

Stock-based compensation expense (3) 3,631 412 4,043

Acquisition related costs (4) 1,337 - 1,337

Non-GAAP income from operations $ 40,525 $ 10,294 $ 50,819

Reconciliation of GAAP Operating margin to Non-GAAP Operating margin

Reported operating margin on a GAAP basis 9.9% 8.6% 9.7%

Amortization of intangible assets (1) 0.3% 5.1% 1.2%

Restructuring charges (2) 0.0% 0.0% 0.0%

Stock-based compensation expense (3) 1.1% 0.6% 1.0%

Acquisition related costs (4) 0.4% 0.0% 0.3%

Non-GAAP operating margin 11.7% 14.3% 12.2%

1 Amortization of intangible assets related to the Company's businessacquisitions

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 acquisition of Ham-Let (Israel-Canada)Ltd.

ULTRA CLEAN HOLDINGS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS

Three Months Ended

March 26, March 27, December 25,

2021 2020 2020

Reconciliation of GAAP Net Income to Non-GAAP Net Income (in thousands)

Reported net income attributable to UCT on a GAAP basis $ 24,997 $ 9,423 $ 22,554

Amortization of intangible assets (1) 4,889 4,951 4,950

Restructuring charges (2) 140 1,600 1,003

Stock-based compensation expense (3) 4,043 2,752 3,760

Fair value adjustments (4) 11,582 2,948 3,266

Acquisition related costs (5) 1,337 - 1,024

Insurance proceeds (6) (7,332) - -

Income tax effect of non-GAAP adjustments (7) (2,639) (2,291) (2,521)

Income tax effect of valuation allowance (8) 1,140 1,663 (525)

Non-GAAP net income attributable to UCT $ 38,157 $ 21,046 $ 33,511

Reconciliation of GAAP Income from operations to Non-GAAP Income fromoperations (in thousands)

Reported income from operations on a GAAP basis $ 40,410 $ 22,550 $ 33,174

Amortization of intangible assets (1) 4,889 4,951 4,950

Restructuring charges (2) 140 1,600 1,003

Stock-based compensation expense (3) 4,043 2,752 3,760

Fair value adjustments (4) - - -

Acquisition related costs (5) 1,337 - 1,024

Non-GAAP income from operations $ 50,819 $ 31,853 $ 43,911

Reconciliation of GAAP Operating margin to Non-GAAP Operating margin

Reported operating margin on a GAAP basis 9.7% 7.0% 9.0%

Amortization of intangible assets (1) 1.2% 1.5% 1.3%

Restructuring charges (2) 0.0% 0.5% 0.3%

Stock-based compensation expense (3) 1.0% 0.9% 1.0%

Fair value adjustments (4) 0.0% 0.0% 0.0%

Acquisition related costs (5) 0.3% 0.0% 0.3%

Non-GAAP operating margin 12.2% 9.9% 11.9%

Reconciliation of GAAP Gross profit to Non-GAAP Gross profit (in thousands)

Reported gross profit on a GAAP basis $ 86,938 $ 65,662 $ 77,645

Amortization of intangible assets (1) 1,022 1,023 1,023

Restructuring charges (2) 6 233 242

Stock-based compensation expense (3) 980 307 696

Non-GAAP gross profit $ 88,946 $ 67,225 $ 79,606

Reconciliation of GAAP Gross margin to Non-GAAP Gross margin

Reported gross margin on a GAAP basis 20.8% 20.5% 21.0%

Amortization of intangible assets (1) 0.3% 0.3% 0.3%

Restructuring charges (2) 0.0% 0.0% 0.0%

Stock-based compensation expense (3) 0.2% 0.1% 0.2%

Non-GAAP gross margin 21.3% 20.9% 21.5%

Reconciliation of GAAP Interest and other income (expense) to Non-GAAP Interestand other income (expense) (in thousands)

Reported interest and other income (expense) on a GAAP basis $ (7,770) $ (7,567) $ (6,091)

Fair value adjustments (4) 11,582 2,948 3,266

Insurance proceeds (6) (7,332) - -

Non-GAAP interest and other income (expense) $ (3,520) $ (4,619) $ (2,825)

Reconciliation of GAAP Earnings Per Diluted Share to Non-GAAP Earnings PerDiluted Share

Reported net income on a GAAP basis $ 0.60 $ 0.23 $ 0.55

Amortization of intangible assets (1) 0.12 0.12 0.12

Restructuring charges (2) 0.00 0.04 0.02

Stock-based compensation expense (3) 0.10 0.07 0.09

Fair value adjustments (4) 0.28 0.08 0.08

Acquisition related costs (5) 0.03 - 0.02

Insurance proceeds (6) (0.18) - -

Income tax effect of non-GAAP adjustments (7) (0.06) (0.06) (0.06)

Income tax effect of valuation allowance (8) 0.03 0.04 (0.01)

Non-GAAP net income $ 0.92 $ 0.52 $ 0.81

Weighted average number of diluted shares (thousands) on a non-GAAP basis 41,639 40,704 41,353

ULTRA CLEAN HOLDINGS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP EFFECTIVE INCOME TAX RATE

Three Months Ended

March 26, March 27, December 25,

2021 2020 2020

(in thousands, except percentages)

Provision for income taxes on a GAAP basis $ 7,015 $ 4,465 $ 4,349

Income tax effect of non-GAAP adjustments (7) 2,639 2,291 2,521

Income tax effect of valuation allowance (8) (1,140) (1,663) 525

Non-GAAP provision for income taxes $ 8,514 $ 5,093 $ 7,395

Income (loss) before income taxes on a GAAP basis $ 32,640 $ 14,983 $ 27,083

Amortization of intangible assets (1) 4,889 4,951 4,950

Restructuring charges (2) 140 1,600 1,003

Stock-based compensation expense (3) 4,043 2,752 3,760

Fair value adjustments (4) 11,582 2,948 3,266

Acquisition related costs (5) 1,337 - 1,024

Insurance proceeds (6) (7,332) - -

Non-GAAP income before income taxes $ 47,299 $ 27,234 $ 41,086

Effective income tax rate on a GAAP basis 21.5% 29.8% 16.1%

Non-GAAP effective income tax rate 18.0% 18.7% 18.0%

1 Amortization of intangible assets related to the Company's businessacquisitions

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, forward hedge contracts

5 Represents costs related to acquisitions

6 Insurance proceeds pertaining to the Cinos fire in 2018

7 Tax effect of items (1) through (6) above based on the non-GAAP tax rateshown below

8 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 andresulting non-GAAP tax expense considers the tax implications as if there wasno federal or state valuationallowance position in effect.

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SOURCE Ultra Clean Holdings, Inc.