PR Newswire | Aug 2, 2021 04:06PM EDT

08/02 15:05 CDT

Ultra Clean Reports Second Quarter 2021 Financial Results HAYWARD, Calif., Aug. 2, 2021

HAYWARD, Calif., Aug. 2, 2021 /PRNewswire/ -- Ultra Clean Holdings, Inc. (Nasdaq: UCTT), today reported its financial results for the second quarter ended June 25, 2021.

"UCT delivered strong second quarter results driven by disciplined execution in a robust demand environment across all of our end markets," said Jim Scholhamer, CEO. "These results demonstrate that UCT's diversified suite of capabilities and ability to deliver are enabling us to play a larger, more valuable role in the semiconductor ecosystem."

Second Quarter 2021 GAAP Financial Results

Total revenue was $515.2 million. Products contributed $442.5 million and Services added $72.7 million. Total gross margin was 19.4%, operating margin was 6.2%, and net income was $17.1 million or $0.39 per basic and diluted share. This compares to total revenue of $417.6 million, gross margin of 20.8%, operating margin of 9.7%, and net income of $25.0 million or $0.62 and $0.60 per basic and diluted share in the prior quarter.

Second Quarter 2021 Non-GAAP Financial Results

On a non-GAAP basis, gross margin was 21.2%, operating margin was 11.7%, and net income was $43.7 million or $0.99 per diluted share. This compares to gross margin of 21.3%, operating margin of 12.2%, and net income of $38.2 million or $0.92 per diluted share in the prior quarter.

Third Quarter 2021 Outlook

The Company expects revenue in the range of $520.0 million to $560.0 million and GAAP diluted net income per share to be between $0.68 and $0.85. The Company expects non-GAAP diluted net income per share to be between $0.94 and $1.10.

Conference Call

The call will take place on Monday, August 2, 2021 at 1:30 p.m. PT (4:30 pm ET) 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 10158101. 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 Six Months Ended

June 25, June 26, June 25, June 26,

2021 2020 2021 2020

Revenues:

Product $ 442,515 $ 277,892 $ 788,131 $ 537,275

Services 72,685 66,890 144,696 128,403

Total revenues 515,200 344,782 932,827 665,678

Cost of revenues:

Product 367,919 229,276 651,488 444,031

Services 47,398 41,628 94,518 82,107

Total cost of revenues 415,317 270,904 746,006 526,138

Gross profit 99,883 73,878 186,821 139,540

Operating expenses:

Research and development 6,066 3,827 10,274 7,251

Sales and marketing 12,652 5,876 20,260 11,668

General and administrative 49,218 33,350 83,930 67,247

Total operating expenses 67,936 43,053 114,464 86,166

Income from operations 31,947 30,825 72,357 53,374

Interest income 59 158 157 470

Interest expense (7,059) (3,773) (10,664) (8,961)

Other income (expense), net (711) 560 (4,974) (2,131)

Income before provision for income taxes 24,236 27,770 56,876 42,752

Provision for income taxes 6,221 5,691 13,236 10,156

Net income 18,015 22,079 43,640 32,596

Less: Net income attributable to noncontrolling 917 815 1,545 1,910interests

Net income attributable to UCT $ 17,098 $ 21,264 $ 42,095 $ 30,686

Net income per share attributable to UCT commonstockholders:

Basic $ 0.39 $ 0.53 $ 1.00 $ 0.77

Diluted $ 0.39 $ 0.52 $ 0.98 $ 0.75

Shares used in computing net income per share:

Basic 43,328 40,087 41,946 39,952

Diluted 44,253 40,834 42,948 40,774

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in thousands)

June 25, December 25,

2021 2020

ASSETS

Current assets:

Cash and cash equivalents $ 451,401 $ 200,274

Accounts receivable, net of allowance 210,426 145,539

Inventories 301,956 180,385

Prepaid expenses and other current assets 35,506 18,895

Total current assets 999,289 545,093

Property, plant and equipment, net 218,295 159,150

Goodwill 257,179 171,132

Intangibles assets, net 270,518 160,519

Deferred tax assets, net 23,288 23,513

Operating lease right-of-use assets 69,809 37,821

Other non-current assets 8,277 5,315

Total assets $ 1,846,655 $ 1,102,543

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Bank borrowings $ 21,594 $ 7,361

Accounts payable 231,002 121,328

Accrued compensation and related benefits 43,911 34,532

Operating lease liabilities 15,966 11,721

Other current liabilities 42,487 26,335

Total current liabilities 354,960 201,277

Bank borrowings, net of current portion 573,116 261,619

Deferred tax liabilities 45,497 33,571

Operating lease liabilities 54,274 31,050

Other liabilities 30,088 23,812

Total liabilities 1,057,935 551,329

Equity:

UCT stockholders' equity:

Common stock 502,873 309,589

Retained earnings 260,067 217,972

Accumulated other comprehensive gain 4,586 5,087

Total UCT stockholders' equity 767,526 532,648

Noncontrolling interest 21,194 18,566

Total equity 788,720 551,214

Total liabilities and stockholders' equity $ 1,846,655 $ 1,102,543

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in thousands)

Six Months Ended

June 25, June 26,

2021 2020

Cash flows from operating activities:

Net income $ 43,640 $ 32,596

Adjustments to reconcile net income to net cash provided byoperating activities (excluding assets acquired andliabilities assumed):

Depreciation and amortization 30,906 23,403

Stock-based compensation 7,169 6,150

Deferred income taxes 877 (17)

Change in the fair value of financial instruments 12,987 4,186

Gain from insurance proceeds (7,332) -

Others 231 (239)

Changes in assets and liabilities:

Accounts receivable (13,254) (26,040)

Inventories (41,271) (21,459)

Prepaid expenses and other current assets (328) (1,567)

Other non-current assets (713) 290

Accounts payable 80,768 6,520

Accrued compensation and related benefits (1,084) 2,832

Operating lease assets and liabilities (575) (510)

Income taxes payable 948 4,887

Other liabilities 3,756 2,153

Net cash provided by operating activities 116,725 33,185

Cash flows from investing activities:

Purchases of property, plant and equipment (22,702) (17,049)

Proceeds from sale of equipment, including insurance proceeds 7,399 2,922

Acquisition of business, net of cash acquired (355,155) -

Net cash used in investing activities (370,458) (14,127)

Cash flows from financing activities:

Proceeds from bank borrowings 371,486 60,478

Proceeds from issuance of common stock 193,138 260

Principal payments on bank borrowings and finance leases (43,370) (26,261)

Payments of debt issuance costs (8,899) -

Employees' taxes paid upon vesting of restricted stock units (7,013) (1,382)

Others (128) -

Net cash provided by financing activities 505,214 33,095

Effect of exchange rate changes on cash and cash equivalents (354) (320)

Net increase in cash and cash equivalents 251,127 51,833

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

Cash and cash equivalents at end of period $ 451,401 $ 214,364

ULTRA CLEAN HOLDINGS, INC.

REPORTABLE SEGMENTS

GAAP TO NON-GAAP RECONCILIATION

(Unaudited; dollars in thousands)

GAAP Non-GAAP

Three Months Ended Three Months Ended

June 25, 2021 June 25, 2021

Products Services Consolidated Products Services Consolidated

Revenues $ 442,515 $ 72,685 $ 515,200 $ 442,515 $ 72,685 $ 515,200

Gross profit $ 74,596 $ 25,287 $ 99,883 $ 83,052 $ 26,309 $ 109,361

Gross margin 16.9% 34.8% 19.4% 18.8% 36.2% 21.2%

Income from operations $ 24,023 $ 7,924 $ 31,947 $ 48,297 $ 12,133 $ 60,430

Operating margin 5.4% 10.9% 6.2% 10.9% 16.7% 11.7%

Three Months Ended

June 25, 2021

Products Services Consolidated

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

Reported gross profit on a GAAP basis $ 74,596 $ 25,287 $ 99,883

Amortization of intangible assets (1) 658 1,022 1,680

Restructuring charges (2) 201 - 201

Stock-based compensation expense (3) 414 - 414

Fair value related adjustments (4) 7,183 7,183

Non-GAAP gross profit $ 83,052 $ 26,309 $ 109,361

Reconciliation of GAAP Gross margin to Non-GAAP Gross margin

Reported gross margin on a GAAP basis 16.9% 34.8% 19.4%

Amortization of intangible assets (1) 0.1% 1.4% 0.3%

Restructuring charges (2) 0.1% - 0.0%

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

Fair value related adjustments (4) 1.6% - 1.4%

Non-GAAP gross margin 18.8% 36.2% 21.2%

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

Reported income from operations on a GAAP basis $ 24,023 $ 7,924 $ 31,947

Amortization of intangible assets (1) 5,795 3,716 9,511

Restructuring charges (2) (68) 40 (28)

Stock-based compensation expense (3) 3,271 453 3,724

Fair value related adjustments (4) 7,183 - 7,183

Acquisition related costs (5) 8,093 - 8,093

Non-GAAP income from operations $ 48,297 $ 12,133 $ 60,430

Reconciliation of GAAP Operating margin to Non-GAAP Operating margin

Reported operating margin on a GAAP basis 5.4% 10.9% 6.2%

Amortization of intangible assets (1) 1.3% 5.1% 1.8%

Restructuring charges (2) 0.0% 0.1% 0.0%

Stock-based compensation expense (3) 0.8% 0.6% 0.7%

Fair value related adjustments (4) 1.6% 0.0% 1.4%

Acquisition related costs (5) 1.8% 0.0% 1.6%

Non-GAAP operating margin 10.9% 16.7% 11.7%

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 acquisition fair value related adjustments

5 Represents costs related to the acquisition of Ham-Let

ULTRA CLEAN HOLDINGS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS

Three Months Ended

June 25, June 26, March 26,

2021 2020 2021

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

Reported net income attributable to UCT on a GAAP basis $ 17,098 $ 21,264 $ 24,997

Amortization of intangible assets (1) 9,511 4,949 4,889

Restructuring charges (2) (28) 1,572 140

Stock-based compensation expense (3) 3,724 3,104 4,043

Fair value related adjustments (4) 8,583 1,209 11,582

Acquisition related costs (5) 8,093 - 1,337

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

Income tax effect of non-GAAP adjustments (7) (5,259) (2,037) (2,639)

Income tax effect of valuation allowance (8) 1,956 470 1,140

Non-GAAP net income attributable to UCT $ 43,678 $ 30,531 $ 38,157

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

Reported income from operations on a GAAP basis $ 31,947 $ 30,825 $ 40,410

Amortization of intangible assets (1) 9,511 4,949 4,889

Restructuring charges (2) (28) 1,572 140

Stock-based compensation expense (3) 3,724 3,104 4,043

Fair value related adjustments (4) 7,183 - -

Acquisition related costs (5) 8,093 - 1,337

Non-GAAP income from operations $ 60,430 $ 40,450 $ 50,819

Reconciliation of GAAP Operating margin to Non-GAAP Operating margin

Reported operating margin on a GAAP basis 6.2% 8.9% 9.7%

Amortization of intangible assets (1) 1.8% 1.4% 1.2%

Restructuring charges (2) 0.0% 0.5% 0.0%

Stock-based compensation expense (3) 0.7% 0.9% 1.0%

Fair value related adjustments (4) 1.4% 0.0% 0.0%

Acquisition related costs (5) 1.6% 0.0% 0.3%

Non-GAAP operating margin 11.7% 11.7% 12.2%

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

Reported gross profit on a GAAP basis $ 99,883 $ 73,878 $ 86,938

Amortization of intangible assets (1) 1,680 1,022 1,022

Restructuring charges (2) 201 253 6

Stock-based compensation expense (3) 414 726 980

Fair value related adjustments (4) 7,183 - -

Non-GAAP gross profit $ 109,361 $ 75,879 $ 88,946

Reconciliation of GAAP Gross margin to Non-GAAP Gross margin

Reported gross margin on a GAAP basis 19.4% 21.4% 20.8%

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

Restructuring charges (2) 0.0% 0.1% 0.0%

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

Fair value related adjustments (4) 1.4% 0.0% 0.0%

Non-GAAP gross margin 21.2% 22.0% 21.3%

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 $ (7,711) $ (3,055) $ (7,770)

Fair value related adjustments (4) 1,400 1,209 11,582

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

Non-GAAP interest and other income (expense) $ (6,311) $ (1,846) $ (3,520)

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

Reported net income on a GAAP basis $ 0.39 $ 0.52 $ 0.60

Amortization of intangible assets (1) 0.22 0.12 0.12

Restructuring charges (2) (0.00) 0.04 0.00

Stock-based compensation expense (3) 0.09 0.08 0.10

Fair value related adjustments (4) 0.19 0.03 0.28

Acquisition related costs (5) 0.18 - 0.03

Insurance proceeds (6) - - (0.18)

Income tax effect of non-GAAP adjustments (7) (0.12) (0.05) (0.06)

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

Non-GAAP net income $ 0.99 $ 0.75 $ 0.92

Weighted average number of diluted shares (thousands) on a non-GAAP basis 44,253 40,834 41,639

ULTRA CLEAN HOLDINGS, INC.

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

Three Months Ended

June 25, June 26, March 26,

2021 2020 2021

(in thousands, except percentages)

Provision for income taxes on a GAAP basis $ 6,221 $ 5,691 $ 7,015

Income tax effect of non-GAAP adjustments (7) 5,259 2,037 2,639

Income tax effect of valuation allowance (8) (1,956) (470) (1,140)

Non-GAAP provision for income taxes $ 9,524 $ 7,258 $ 8,514

Income (loss) before income taxes on a GAAP basis $ 24,236 $ 27,770 $ 32,640

Amortization of intangible assets (1) 9,511 4,949 4,889

Restructuring charges (2) (28) 1,572 140

Stock-based compensation expense (3) 3,724 3,104 4,043

Fair value related adjustments (4) 8,583 1,209 11,582

Acquisition related costs (5) 8,093 - 1,337

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

Non-GAAP income before income taxes $ 54,119 $ 38,604 $ 47,299

Effective income tax rate on a GAAP basis 25.7% 20.5% 21.5%

Non-GAAP effective income tax rate 17.6% 18.8% 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 Represents acquisition related fair value adjustments and fair valueadjustments of contingent consideration, purchase obligation and forward hedgecontracts

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 due to losses in the U.S. with full federal andstate valuation allowances. The Company's non-GAAP tax rate and resultingnon-GAAP tax expense considers the tax implications as if there was no federalor state valuation allowance position in effect.

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SOURCE Ultra Clean Holdings, Inc.