EX-99.1 2 dp160463_ex9901.htm EXHIBIT 99.1

 

Exhibit 99.1

 

Press Release                                                                                Source: Ultra Clean Holdings, Inc.

 

Ultra Clean Reports Third Quarter 2021 Financial Results

 

HAYWARD, Calif., October 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 Relations

rbennetto@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 by operating activities (excluding assets acquired and liabilities 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 from operations (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%

 

1Amortization of intangible assets related to the Company's business acquisitions

2Represents severance, retention and costs related to facility closures

3Represents compensation expense for stock granted to employees and directors

4Represents acquisition fair value adjustments related to inventories

5Represents 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 from operations (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 Interest and 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 Per Diluted 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%

 

1Amortization of intangible assets related to the Company's business acquisitions

2Represents severance, retention and costs related to facility closures

3Represents compensation expense for stock granted to employees and directors

4Represents acquisition fair value adjustments related to inventories and fair value adjustments of purchase obligation

5Represents costs related to acquisitions

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

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

8The 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.