EX-99..1 2 dp102462_ex9901.htm EXHIBIT 99.1

Exhibit 99.1

 

Press Release                Source: Ultra Clean Holdings, Inc.

 

Ultra Clean Reports Fourth Quarter and Full Year 2018 Financial Results

 

 

HAYWARD, Calif., February 21, 2019 /PRNewswire/ Ultra Clean Holdings, Inc. (Nasdaq: UCTT), today reported its financial results for the fourth quarter and full year ended December 28, 2018.

 

“A full quarter of revenue from our new services business, driven by our acquisition of Quantum, contributed to top line growth for the fourth quarter and delivered greater than 18 percent revenue growth for the year,” said Jim Scholhamer, CEO. “We expect the overall semiconductor industry to remain challenged for the near-term so we are implementing a series of rigorous cost structure improvements. These initiatives will improve profitability without compromising our ability to react quickly by seizing opportunities with IDM’s and OEM’s when industry growth resumes.”

 

Fourth Quarter 2018 GAAP Financial Results

 

Total revenue was $257.4 million, an increase of 10.0% compared to the third quarter and an increase of 3.4% compared to the same period a year ago.

 

Gross margin was 17.9% compared to 15.0% last quarter and 17.7% a year ago. Operating margin was 4.0% compared to 0.4% last quarter and 8.8% for the same period last year.

 

Net loss was $1.1 million or $0.03 per basic and diluted share. This compares to net loss of $6.0 million or $0.15 per basic and diluted share in the previous quarter, and net income of $20.8 million or $0.62 and $0.60 per basic and diluted share last year.

 

Cash and cash equivalents were $144.1 million, a decrease of $16.2 million compared to the end of the third quarter.

 

Fourth Quarter Non-GAAP Financial Results

 

Non-GAAP net income was $8.7 million, or $0.23 per diluted share. This compares to non-GAAP net income of $11.9 million or $0.30 per diluted share in the previous quarter and non-GAAP net income of $20.3 million or $0.59 for the prior year.

 

Non-GAAP operating margin was 6.5% compared to 6.4% in the previous quarter and 9.5% in the same period a year ago.

 

The Company has provided a reconciliation of GAAP to non-GAAP financial measures in the financial statement tables included in this press release.

 

Full Year 2018 GAAP Financial Results

 

Total revenue was $1,096.5 million, an increase of 18.6% from fiscal year 2017. Gross margin was 16.0% compared to 18.1% a year ago. Operating margin was 5.5% compared to 9.7% in fiscal year 2017. Net income was $36.6 million or $0.95 and $0.94 per basic and diluted share. This compares to net income of $75.1 million or $2.25 and $2.19 per basic and diluted share last year.

 

Full Year 2018 Non-GAAP Financial Results

 

Non-GAAP net income was $64.7 million, or $1.66 per diluted share. This compares to non-GAAP net income of $80.3 million or $2.34 per diluted share in the previous fiscal year. Non-GAAP operating margin was 7.8% compared to 10.3% a year ago.

 

 

 

 

First Quarter 2019 Outlook

 

The Company expects revenue to be between $230.0 million to $250.0 million and GAAP diluted net (loss) income per share to be in the range of ($0.03) to $0.07. The Company expects non-GAAP net income per diluted share to be in the range of $0.09 to $0.19.

 

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 (international). No passcode is required. A replay of the call will be available by dialing 1-877-344-7529 or 1-412-317-0088 (international) and entering the confirmation code 10128320. 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 microcontamination analytical services. Ultra Clean is headquartered in Hayward, California. Additional information is available at www.uct.com.

 

Use of Non-GAAP Measures

 

Management uses non-GAAP net income and net income per diluted share 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 of non-GAAP results to U.S. GAAP results are included at the end of this press release. A reconciliation of our guidance for non-GAAP net income per diluted share for the first quarter of 2019 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," 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 our first quarter 2019 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 29, 2017 as filed with the Securities and Exchange Commission and subsequently filed quarterly reports on Form 10-Q. Additional information will also be set forth in our annual report on Form 10-K for the year ended December 28, 2018. 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 

rbennetto@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 28,    December 29,    December 28,    December 29, 
2018   2017 2018   2017
                       
Sales $      257,389   $      248,886   $       1,096,523   $       924,351
Cost of goods sold        211,412          204,819              920,682           756,722
Gross profit          45,977            44,067              175,841           167,629
                       
Operating expenses:                      
  Research and development           4,059             3,264                13,287             11,666
  Sales and marketing           5,032             3,684                16,306             13,748
  General and administrative          26,676            15,162                85,544             52,818
    Total operating expenses          35,767            22,110              115,137             78,232
Income from operations          10,210            21,957                60,704             89,397
  Interest and other income (expense), net          (5,187)               (378)                 (8,436)              (2,455)
Income before provision for income taxes           5,023            21,579                52,268             86,942
  Income tax provision           5,335                730                15,319             11,857
Net income (loss)             (312)            20,849                36,949             75,085
  Net income (loss) attributable to non-controlling interest              796                    -                    353                      -
Net income (loss) attributable to Ultra Clean Holdings, Inc.  $        (1,108)   $        20,849   $            36,596   $         75,085
                       
Net income (loss) per share attributable to Ultra Clean Holdings, Inc. common stockholders:                      
  Basic  $         (0.03)    $          0.62       $              0.95    $           2.25
  Diluted  $           (0.03)    $            0.60       $                0.94    $              2.19
Shares used in computing net income (loss) per share:                      
  Basic          39,009            33,602                38,366             33,409
  Diluted          39,009            34,500                38,919             34,303

 

 

 

 

 

ULTRA CLEAN HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; in thousands)
             
    December 28,   December 29,
2018 2017
ASSETS            
Current assets:            
  Cash and cash equivalents   $         144,145   $          68,306
  Accounts receivable, net of allowance             108,024              90,213
  Inventory             186,116            236,840
  Other current assets               21,088              12,089
    Total current assets             459,373            407,448
             
Equipment and leasehold improvements, net             142,922              32,246
Goodwill             155,472              85,248
Purchased intangibles, net             193,707              31,587
Deferred tax assets, net                2,323                4,951
Other non-current assets                8,110                1,932
Total assets   $         961,907   $        563,412
             
LIABILITIES AND STOCKHOLDERS’ EQUITY            
Current liabilities:            
  Bank borrowings   $            9,671   $          12,381
  Accounts payable               99,011            173,521
  Other current liabilities               33,542              21,445
    Total current liabilities             142,224            207,347
             
Bank borrowings, net of current portion             331,549              39,893
Deferred tax liability                7,990                9,981
Other long-term liabilities               28,497                5,886
    Total liabilities             510,260            263,107
             
Stockholders’ equity:            
  Common stock             287,127            185,336
  Retained earnings             149,718            113,122
  Accumulated other comprehensive income (loss)                  (886)                1,847
  Ultra Clean Holdings, Inc. stockholders' equity             435,959            300,305
  Noncontrolling interest               15,688                     -   
    Total stockholders’ equity             451,647            300,305
Total liabilities and stockholders’ equity   $         961,907   $        563,412

 

 

 

 

 

ULTRA CLEAN HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited; in thousands)
       
  Twelve Months Ended
  December 28,   December 29,
  2018   2017
Cash flows from operating activities:      
Net income including noncontrolling interests  $        36,949    $        75,085
Adjustments to reconcile net income to net cash provided by operating activities (excluding assets acquired and liabilities assumed):      
Depreciation and amortization           21,907             10,865
Stock-based compensation           10,272               7,757
Others               (308)                 (206)
Changes in assets and liabilities:      
Accounts receivable             7,694            (14,930)
Inventories           50,151           (131,874)
Prepaid expenses and other            (2,407)              (4,911)
Deferred income taxes                 (82)              (3,755)
Other non-current assets               (162)                 (582)
Accounts payable          (82,951)             99,569
Accrued compensation and related benefits             2,048               2,777
Income taxes payable                798               8,177
Other liabilities             1,474                  933
Net cash provided by operating activities           45,383             48,905
Cash flows from investing activities:      
Purchases of equipment and leasehold improvements          (29,487)            (16,149)
Acquisition of Quantum, net of cash acquired         (319,781)                    —
Net cash used for investing activities         (349,268)            (16,149)
Cash flows from financing activities:      
Proceeds from bank borrowings          387,054             15,076
Proceeds from issuance of common stock           94,611               1,816
Principal payments on bank borrowings          (86,354)            (31,248)
Debt issuance costs paid          (12,144)                    —
Employees’ taxes paid upon vesting of restricted stock units            (3,092)              (2,714)
Net cash provided by (used for) financing activities          380,075            (17,070)
Effect of exchange rate changes on cash and cash equivalents               (351)                  155
Net increase in cash and cash equivalents  $        75,839    $        15,841
Cash and cash equivalents at beginning of period           68,306             52,465
Cash and cash equivalents at end of period  $      144,145    $        68,306

 

 

 

 

ULTRA CLEAN HOLDINGS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS
                     
    Three Months Ended   Twelve Months Ended
    December 28,   December 29,   September 28,   December 28,   December 29,
    2018   2017   2018   2018   2017
Reconciliation of GAAP Net Income (loss) to Non-GAAP Net Income (in thousands)  
Reported net income (loss) attributable to Ultra Clean Holdings, Inc. on a GAAP basis  $               (1,108)    $              20,849    $               (5,997)    $              36,596    $              75,085
Amortization of intangible assets (1)                      4,973                      1,745                      2,411                      9,580                      5,438
Reduction in force (2)                         297                            -                         1,319                      2,640                            -   
Product transition fees (3)                            -                               -                            657                         657                            -   
Executive transition costs (4)                         418                            -                            246                      2,064                            -   
Disposal of business unit (5)                            -                               -                         1,082                      1,082                            -   
Bank transaction costs (6)                            -                               -                              99                           99                            -   
Acquisition costs (7)                         613                            -                         9,391                    10,003                            -   
Facility lease early exit costs (8)                         117                            -                               -                            117                            -   
Income tax effect of non-GAAP adjustments (9)                     (1,101)                        (229)                     (2,220)                     (4,501)                        (714)
Income tax effect of valuation allowance (10)                      4,474                     (2,096)                      4,865                      6,355                         469
Non-GAAP net income attributable to Ultra Clean Holdings, Inc.    $                8,683    $              20,269    $              11,853    $              64,692    $              80,278
                     
Reconciliation of GAAP Income from operations to Non-GAAP Income from operations (in thousands)
Reported income from operations on a GAAP basis    $              10,210    $              21,957    $                   922    $              60,704    $              89,397
Amortization of intangible assets (1)                      4,973                      1,745                      2,411                      9,580                      5,438
Reduction in force (2)                         297                            -                         1,319                      2,640                            -   
Product transition fees (3)                            -                               -                            657                         657                            -   
Executive transition costs (4)                         418                            -                            246                      2,064                            -   
Acquisition costs (7)                         613                            -                         9,391                    10,003                            -   
Facility lease early exit costs (8)                         117                            -                               -                            117                            -   
Non-GAAP income from operations    $              16,628    $              23,702    $              14,946    $              85,765    $              94,835
                     
Reconciliation of GAAP Operating margin to Non-GAAP Operating margin  
Reported operating margin on a GAAP basis   4.0%   8.8%   0.4%   5.5%   9.7%
Amortization of intangible assets (1)   1.9%   0.7%   1.0%   0.9%   0.6%
Reduction in force (2)   0.1%   0.0%   0.6%   0.2%   0.0%
Product transition fees (3)   0.0%   0.0%   0.3%   0.1%   0.0%
Executive transition costs (4)   0.2%   0.0%   0.1%   0.2%   0.0%
Acquisition costs (7)   0.3%   0.0%   4.0%   0.9%   0.0%
Facility lease early exit costs (8)   0.0%   0.0%   0.0%   0.0%   0.0%
Non-GAAP operating margin   6.5%   9.5%   6.4%   7.8%   10.3%
                     
Reconciliation of GAAP Gross profit to Non-GAAP Gross profit (in thousands)                    
Reported gross profit on a GAAP basis    $              45,977    $              44,067    $              34,995    $            175,841    $            167,629
Amortization of intangible assets (1)                      1,363                            -                               -                         1,363                            -   
Reduction in force (2)                         297                            -                         1,197                      2,431                            -   
Product transition fees (3)                            -                               -                            657                         657                            -   
Executive transition costs (4)                         418                            -                               -                            418                            -   
Non-GAAP gross profit    $              48,055    $              44,067    $              36,849    $            180,710    $            167,629
                     
Reconciliation of GAAP Gross margin to Non-GAAP Gross margin                    
Reported gross margin on a GAAP basis   17.9%   17.7%   15.0%   16.0%   18.1%
Amortization of intangible assets (1)   0.5%   0.0%   0.0%   0.1%   0.0%
Reduction in force (2)   0.0%   0.0%   0.4%   0.2%   0.0%
Product transition fees (3)   0.1%   0.0%   0.3%   0.1%   0.0%
Executive transition costs (4)   0.2%   0.0%   0.0%   0.1%   0.0%
Non-GAAP gross margin   18.7%   17.7%   15.7%   16.5%   18.1%
                     
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    $               (5,187)    $                  (378)    $               (2,766)    $               (8,436)    $               (2,455)
Disposal of business unit (5)                            -                               -                         1,082                      1,082                            -   
Bank transaction costs (6)                            -                               -                              99                           99                            -   
Non-GAAP interest and other income (expense)    $               (5,187)    $                  (378)    $               (1,585)    $               (7,255)    $               (2,455)
                     
1      Amortization of intangible assets related to the Company's acquisitions of AIT, Thermal, FDS and QGT                
2      Represents severance costs related to the company’s reduction in force during the quarter                
3      One-time product transition payment                      
4      Represents termination benefits paid to a former executive of the Company                    
5      Represents the loss on disposal of the Company's 3D printing operations in Singapore                
6      Represents the writeoff of debt issuance costs, bank fees related to the payoff of remaining debt with East West Bank.            
7      Represents costs related to the acquisition of QGT                    
8      Represents lease related costs due to the early exit of a facility                    
9      Tax effect of items (1) through (8) above based on the non-GAAP tax rate shown below                  
10    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.         

 

 

 

 

    Three Months Ended   Twelve Months Ended
    December 28,   December 29,   September 28,   December 28,   December 29,
    2018   2017   2018   2018   2017
Reconciliation of GAAP Earnings Per Diluted Share to Non-GAAP Earnings Per Diluted Share  
Reported net income (loss) on a GAAP basis                       (0.03)    $                  0.60    $                 (0.15)    $                  0.94    $                  2.19
Amortization of intangible assets                        0.13                        0.05                        0.06                        0.25                        0.16
Reduction in force                        0.01                            -                           0.03                        0.07                            -   
Product transition fees                            -                               -      0.02                        0.02                            -   
Executive transition costs                        0.01                            -      0.01                        0.05                            -   
Disposal of business unit                             -                               -                           0.03                        0.03                            -   
Bank transaction costs                            -                               -                               -                           0.00                            -   
Acquisition costs                        0.02                            -                           0.24                        0.26                            -   
Facility lease early exit costs                        0.00                            -                               -                           0.00                            -   
Income tax effect of non-GAAP adjustments                       (0.03)                       (0.01)                       (0.06)                       (0.12)                       (0.02)
Income tax effect of valuation allowance                        0.12                       (0.05)                        0.12                        0.16                        0.01
Non-GAAP net income    $                  0.23    $                  0.59    $                  0.30    $                  1.66    $                  2.34
Weighted average number of diluted shares (thousands)                  39,009                    34,500                    38,930                    38,919                    34,303
                     
ULTRA CLEAN HOLDINGS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP EFFECTIVE INCOME TAX RATE
 
    Three Months Ended   Twelve Months Ended
    December 28,   December 29,   September 28,   December 28,   December 29,
    2018   2017   2018   2018   2017
(in thousands, except percentages)                    
Provision for income taxes on a GAAP basis    $                5,335    $                   730    $                4,596    $              15,319    $              11,857
Income tax effect of non-GAAP adjustments (1)                      1,101                         229                      2,220                      4,501                         714
Income tax effect of valuation allowance (2)                     (4,474)                      2,096                     (4,865)                     (6,355)                        (469)
Non-GAAP provision for income taxes    $                1,962    $                3,055    $                1,951    $              13,465    $              12,102
                     
Income (loss) before income taxes on a GAAP basis    $                5,023    $              21,579    $               (1,844)    $              52,268    $              86,942
Amortization of intangible assets                      4,973                      1,745                      2,411                      9,580                      5,438
Reduction in force                         297                            -                         1,319                      2,640                            -   
Product transition fees                            -                               -                            657                         657                            -   
Executive transition costs                         418                            -                            246                      2,064                            -   
Disposal of business unit                            -                               -                         1,082                      1,082                            -   
Bank transaction costs                            -                               -                              99                           99                            -   
Acquisition costs                         613                            -                         9,391                    10,003                            -   
Facility lease early exit costs                         117                            -                               -                            117                            -   
Non-GAAP income before income taxes    $              11,441    $              23,324    $              13,361    $              78,510    $              92,380
Effective income tax rate on a GAAP basis   106.2%   3.4%   -249.2%   29.3%   13.6%
Non-GAAP effective income tax rate   17.2%   13.1%   14.6%   17.2%   13.1%
1  Tax effect of items (1) through (8) above based on the non-GAAP tax rate                    
2  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.