PR Newswire | Oct 27, 2021 04:06PM EDT

10/27 15:05 CDT

Ultra Clean Reports Third Quarter 2021 Financial Results HAYWARD, Calif., Oct. 27, 2021

HAYWARD, Calif., Oct. 27, 2021 /PRNewswire/ -- Ultra Clean Holdings, Inc. (Nasdaq: UCTT), today reported its financial results for the third quarter ended September 24, 2021.

"UCT's third quarter performance and fourth quarter outlook demonstrate strong execution in a demanding environment across our end markets," said Jim Scholhamer, CEO. "UCT's operational and supply chain flexibility has proven to be advantageous in meeting customer demand. Ongoing, targeted investments in our business will expand our global capacity and position us well for sustainable growth."

Third Quarter 2021 GAAP Financial Results

Total revenue was $553.7 million. Products contributed $482.0 million and Services added $71.7 million. Total gross margin was 20.6%, operating margin was 9.1%, and net income was $31.9 million or $0.71 and $0.70 per basic and diluted share. This compares to total revenue of $515.2 million, gross margin of 19.4%, operating margin of 6.2%, and net income of $17.1 million or $0.39 per basic and diluted share in the prior quarter.

Third Quarter 2021 Non-GAAP Financial Results

On a non-GAAP basis, gross margin was 21.6%, operating margin was 12.4%, and net income was $48.8 million or $1.07 per diluted share. This compares to gross margin of 21.2%, operating margin of 11.7%, and net income of $43.7 million or $0.99 per diluted share in the prior quarter.

Fourth Quarter 2021 Outlook

The Company expects revenue in the range of $590.0 million to $630.0 million and GAAP diluted net income per share to be between $0.89 and $1.06. The Company expects non-GAAP diluted net income per share to be between $1.12 and $1.29.

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 10160642. 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, gain on sale of property 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 Nine Months Ended

September 24, September 25, September 24, September 25,

2021 2020 2021 2020

Revenues:

Product $ 481,949 $ 294,381 $ 1,270,080 $ 831,656

Services 71,703 68,895 216,399 197,298

Total revenues 553,652 363,276 1,486,479 1,028,954

Cost of revenues:

Product 393,343 243,582 1,044,831 687,613

Services 46,239 45,118 140,757 127,225

Total cost of revenues 439,582 288,700 1,185,588 814,838

Gross profit 114,070 74,576 300,891 214,116

Operating expenses:

Research and development 6,463 3,514 16,737 10,765

Sales and marketing 13,828 5,989 34,088 17,657

General and administrative 43,195 30,251 127,125 97,498

Total operating expenses 63,486 39,754 177,950 125,920

Income from operations 50,584 34,822 122,941 88,196

Interest income 114 226 271 696

Interest expense (6,885) (4,133) (17,549) (13,094)

Other income (expense), net (1,462) (1,079) (6,436) (3,210)

Income before provision for income taxes 42,351 29,836 99,227 72,588

Provision for income taxes 8,392 4,776 21,628 14,932

Net income 33,959 25,060 77,599 57,656

Less: Net income attributable to noncontrolling interests 2,079 695 3,624 2,605

Net income attributable to UCT $ 31,880 $ 24,365 $ 73,975 $ 55,051

Net income per share attributable to UCT common stockholders:

Basic $ 0.71 $ 0.60 $ 1.73 $ 1.37

Diluted $ 0.70 $ 0.59 $ 1.69 $ 1.35

Shares used in computing net income per share:

Basic 44,757 40,367 42,883 40,091

Diluted 45,404 41,149 43,791 40,929

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in thousands)

September 24, December 25,

2021 2020

ASSETS

Current assets:

Cash and cash equivalents $ 456,980 $ 200,274

Accounts receivable, net of allowance 232,530 145,539

Inventories 324,628 180,385

Prepaid expenses and other current assets 38,615 18,895

Total current assets 1,052,753 545,093

Property, plant and equipment, net 227,849 159,150

Goodwill 263,574 171,132

Intangibles assets, net 261,007 160,519

Deferred tax assets, net 23,107 23,513

Operating lease right-of-use assets 87,008 37,821

Other non-current assets 8,698 5,315

Total assets $ 1,923,996 $ 1,102,543

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Bank borrowings $ 23,205 $ 7,361

Accounts payable 271,363 121,328

Accrued compensation and related benefits 51,976 34,532

Operating lease liabilities 18,203 11,721

Other current liabilities 46,260 26,335

Total current liabilities 411,007 201,277

Bank borrowings, net of current portion 545,085 261,619

Deferred tax liabilities 44,400 33,571

Operating lease liabilities 69,470 31,050

Other liabilities 13,671 23,812

Total liabilities 1,083,633 551,329

Equity:

UCT stockholders' equity:

Common stock 507,180 309,589

Retained earnings 291,947 217,972

Accumulated other comprehensive gain 911 5,087

Total UCT stockholders' equity 800,038 532,648

Noncontrolling interest 40,325 18,566

Total equity 840,363 551,214

Total liabilities and stockholders' equity $ 1,923,996 $ 1,102,543

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in thousands)

Nine Months Ended

September 24, September 25,

2021 2020

Cash flows from operating activities:

Net income $ 77,599 $ 57,656

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

Depreciation and amortization 50,303 35,064

Stock-based compensation 11,498 9,463

Deferred income taxes 811 (273)

Change in the fair value of financial instruments 12,991 4,376

Gain from insurance proceeds (7,332) -

Others 277 (1,939)

Changes in assets and liabilities:

Accounts receivable (35,358) (32,677)

Inventories (70,513) (2,964)

Prepaid expenses and other current assets (752) 325

Other non-current assets (257) 17

Accounts payable 119,472 (21,919)

Accrued compensation and related benefits 6,981 5,916

Operating lease assets and liabilities (341) (791)

Income taxes payable 1,033 3,169

Other liabilities 3,619 (2,538)

Net cash provided by operating activities 170,031 52,885

Cash flows from investing activities:

Purchases of property, plant and equipment (42,725) (26,535)

Proceeds from sale of equipment, including insurance proceeds 7,577 6,614

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

Net cash used in investing activities (390,303) (19,921)

Cash flows from financing activities:

Proceeds from bank borrowings 394,682 69,670

Proceeds from issuance of common stock 193,106 260

Principal payments on bank borrowings and finance leases (93,909) (85,688)

Payments of debt issuance costs (8,899) -

Employees' taxes paid upon vesting of restricted stock units (7,013) (1,422)

Others (128) (1,428)

Net cash provided by (used in) financing activities 477,839 (18,608)

Effect of exchange rate changes on cash and cash equivalents (861) (756)

Net increase in cash and cash equivalents 256,706 13,600

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

Cash and cash equivalents at end of period $ 456,980 $ 176,131

ULTRA CLEAN HOLDINGS, INC.

REPORTABLE SEGMENTS

GAAP TO NON-GAAP RECONCILIATION

(Unaudited; dollars in thousands)

GAAP Non-GAAP

Three Months Ended Three Months Ended

September 24, 2021 September 24, 2021

Products Services Consolidated Products Services Consolidated

Revenues $ 481,949 $ 71,703 $ 553,652 $ 481,949 $ 71,703 $ 553,652

Gross profit $ 88,606 $ 25,464 $ 114,070 $ 92,870 $ 26,486 $ 119,356

Gross margin 18.4% 35.5% 20.6% 19.3% 36.9% 21.6%

Income from operations $ 43,753 $ 6,831 $ 50,584 $ 57,436 $ 11,057 $ 68,493

Operating margin 9.1% 9.5% 9.1% 11.9% 15.4% 12.4%

Three Months Ended

September 24, 2021

Products Services Consolidated

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

Reported gross profit on a GAAP basis $ 88,606 $ 25,464 $ 114,070

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

Restructuring charges (2) 684 - 684

Stock-based compensation expense (3) 534 - 534

Fair value related adjustments (4) 2,388 - 2,388

Non-GAAP gross profit $ 92,870 $ 26,486 $ 119,356

Reconciliation of GAAP Gross margin to Non-GAAP Gross margin

Reported gross margin on a GAAP basis 18.4% 35.5% 20.6%

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

Restructuring charges (2) 0.2% - 0.2%

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

Fair value related adjustments (4) 0.5% - 0.4%

Non-GAAP gross margin 19.3% 36.9% 21.6%

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

Reported income from operations on a GAAP basis $ 43,753 $ 6,831 $ 50,584

Amortization of intangible assets (1) 5,795 3,717 9,512

Restructuring charges (2) 1,545 35 1,580

Stock-based compensation expense (3) 3,850 474 4,324

Fair value related adjustments (4) 2,388 - 2,388

Acquisition related costs (5) 105 - 105

Non-GAAP income from operations $ 57,436 $ 11,057 $ 68,493

Reconciliation of GAAP Operating margin to Non-GAAP Operating margin

Reported operating margin on a GAAP basis 9.1% 9.5% 9.1%

Amortization of intangible assets (1) 1.2% 5.2% 1.7%

Restructuring charges (2) 0.3% - 0.4%

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

Fair value related adjustments (4) 0.5% - 0.4%

Non-GAAP operating margin 11.9% 15.4% 12.4%

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 adjustments related to inventories

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

September 24, September 25, June 25,

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 $ 31,880 $ 24,365 $ 17,098

Amortization of intangible assets (1) 9,512 4,949 9,511

Restructuring charges (2) 1,580 400 (28)

Stock-based compensation expense (3) 4,324 3,284 3,724

Fair value related adjustments (4) 2,288 200 8,583

Acquisition related costs (5) 105 - 8,093

Gain on the sale of property (6) - (1,352) -

Income tax effect of non-GAAP adjustments (7) (2,760) (1,352) (5,259)

Income tax effect of valuation allowance (8) 1,828 (616) 1,956

Non-GAAP net income attributable to UCT $ 48,757 $ 29,878 $ 43,678

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

Reported income from operations on a GAAP basis $ 50,584 $ 34,822 $ 31,947

Amortization of intangible assets (1) 9,512 4,949 9,511

Restructuring charges (2) 1,580 260 (28)

Stock-based compensation expense (3) 4,324 3,284 3,724

Fair value related adjustments (4) 2,388 - 7,183

Acquisition related costs (5) 105 - 8,093

Gain on the sale of property (6) - (1,352) -

Non-GAAP income from operations $ 68,493 $ 41,963 $ 60,430

Reconciliation of GAAP Operating margin to Non-GAAP Operating margin

Reported operating margin on a GAAP basis 9.1% 9.6% 6.2%

Amortization of intangible assets (1) 1.7% 1.4% 1.8%

Restructuring charges (2) 0.4% 0.1% -

Stock-based compensation expense (3) 0.8% 0.9% 0.7%

Fair value related adjustments (4) 0.4% - 1.4%

Acquisition related costs (5) - - 1.6%

Gain on the sale of property (6) - -0.4% -

Non-GAAP operating margin 12.4% 11.6% 11.7%

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

Reported gross profit on a GAAP basis $ 114,070 $ 74,576 $ 99,883

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

Restructuring charges (2) 684 260 201

Stock-based compensation expense (3) 534 383 414

Fair value related adjustments (4) 2,388 - 7,183

Non-GAAP gross profit $ 119,356 $ 76,241 $ 109,361

Reconciliation of GAAP Gross margin to Non-GAAP Gross margin

Reported gross margin on a GAAP basis 20.6% 20.5% 19.4%

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

Restructuring charges (2) 0.2% 0.1% -

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

Fair value related adjustments (4) 0.4% - 1.4%

Non-GAAP gross margin 21.6% 21.0% 21.2%

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 $ (8,233) $ (4,986) $ (7,711)

Restructuring charges (2) - 140 -

Fair value related adjustments (4) (100) 200 1,400

Non-GAAP interest and other income (expense) $ (8,333) $ (4,646) $ (6,311)

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

Reported net income on a GAAP basis $ 0.70 $ 0.59 $ 0.39

Amortization of intangible assets (1) 0.21 0.12 0.22

Restructuring charges (2) 0.03 0.01 -

Stock-based compensation expense (3) 0.10 0.08 0.09

Fair value related adjustments (4) 0.05 - 0.19

Acquisition related costs (5) - - 0.18

Gain on the sale of property (6) - (0.03) -

Income tax effect of non-GAAP adjustments (7) (0.06) (0.03) (0.12)

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

Non-GAAP net income $ 1.07 $ 0.73 $ 0.99

Weighted average number of diluted shares (thousands) on a non-GAAP basis 45,404 41,149 44,253

ULTRA CLEAN HOLDINGS, INC.

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

Three Months Ended

September 24, September 25, June 25,

2021 2020 2021

(in thousands, except percentages)

Provision for income taxes on a GAAP basis $ 8,392 $ 4,776 $ 6,221

Income tax effect of non-GAAP adjustments (7) 2,760 1,352 5,259

Income tax effect of valuation allowance (8) (1,828) 616 (1,956)

Non-GAAP provision for income taxes $ 9,324 $ 6,744 $ 9,524

Income before income taxes on a GAAP basis $ 42,351 $ 29,836 $ 24,236

Amortization of intangible assets (1) 9,512 4,949 9,511

Restructuring charges (2) 1,580 400 (28)

Stock-based compensation expense (3) 4,324 3,284 3,724

Fair value related adjustments (4) 2,288 200 8,583

Acquisition related costs (5) 105 - 8,093

Gain on the sale of property (6) (100) (1,352) -

Non-GAAP income before income taxes $ 60,060 $ 37,317 $ 54,119

Effective income tax rate on a GAAP basis 19.8% 16.0% 25.7%

Non-GAAP effective income tax rate 15.5% 18.1% 17.6%

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 adjustments related to inventories andfair value adjustments of purchase obligation

5 Represents costs related to acquisitions

6 Represents gain realized on the sale of land in South Korea

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

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.