Ultra Clean Reports Second Quarter 2021 Financial Results

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 Relations
[email protected]

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 interests


917



815



1,545



1,910

Net income attributable to UCT

$

17,098


$

21,264


$

42,095


$

30,686













Net income per share attributable to UCT common stockholders:












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 by operating activities (excluding assets acquired and liabilities 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 from operations (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 business acquisitions

2    Represents severance, retention and costs related to facility closures

3    Represents compensation expense for stock granted to employees and directors

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 from operations (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 Interest and 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 Per Diluted 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 business acquisitions

2    Represents severance, retention and costs related to facility closures

3    Represents compensation expense for stock granted to employees and directors

4    Represents acquisition related fair value adjustments and fair value adjustments of contingent consideration, purchase obligation and 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 rate shown below

8    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.

SOURCE Ultra Clean Holdings, Inc.

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