Ultra Clean Reports Second Quarter 2016 Financial Results
HAYWARD, Calif., July 28, 2016 /PRNewswire/ -- Ultra Clean Holdings, Inc. (Nasdaq: UCTT), a leading developer and supplier of critical systems and subsystems for the semiconductor capital equipment, flat panel, medical, energy and research industries, today reported its financial results for the second quarter ended June 24, 2016.
"The second quarter saw double digit sequential revenue growth, reflecting continued strength in the semiconductor capital equipment market," said Jim Scholhamer, UCT's Chief Executive Officer. "We again made strides on our strategic initiatives as an integrated manufacturing partner through our continued investments to better meet our customers' needs. With the ongoing transition to 3D semiconductor device architectures and 10nm investments, our exposure to these high growth areas presents us with more opportunities to play an integral role with our customers."
GAAP Financial ResultsTotal revenue for the second quarter of 2016 was $129.8 million, an increase of 15.7% compared to the first quarter of 2016 and 10.4% compared to the same period a year ago. Semiconductor revenue increased 10.6% compared to the first quarter of 2016 and 6.0% compared to the same period a year ago. Total revenue from outside the U.S. in the second quarter of 2016 rose 18.9% sequentially and 52.6% compared to the same period a year ago.
Gross margin for the second quarter of 2016 was 14.7%, compared to 13.0% for the first quarter of 2016 and 16.0% for the same period a year ago.
Net income for the second quarter of fiscal 2016 was $0.7 million, or $0.02 per share (basic and diluted), compared to net loss of $3.2 million, or $0.10 per share (basic and diluted), in the previous quarter and net income of $2.2 million, or $0.07 per share (basic and diluted), for the same period a year ago.
Net cash increased $2.2 million compared to the first quarter of 2016. Cash and cash equivalents at the end of the second quarter of 2016 were $44.1 million, a decrease of $1.5 million compared to the first quarter of 2016. Outstanding debt was $69.9 million at the end of the second quarter of 2016, a decrease of $3.7 million compared to the first quarter of 2016.
Non-GAAP Financial ResultsNon-GAAP net income for the second quarter of 2016 was $3.2 million and non-GAAP net income per diluted share was $0.10 for the second quarter of 2016. Non-GAAP net income and non-GAAP net income per diluted share for the second quarter of 2016 exclude (i) pre-tax charges of $1.4 million for intangible assets amortization costs and $70,000 of costs related to the closure of one of the Company's U.S. facilities, offset partially by a corresponding increase in tax expense of approximately $0.4 million, and (ii) $1.4 million of income tax expense related to income tax valuation allowances. This compares to non-GAAP net income and non-GAAP net income per diluted share of approximately breakeven for the first quarter of 2016 and non-GAAP net income of $3.2 million and non-GAAP net income per diluted share of $0.10 for the second quarter of 2015.
The Company has provided a reconciliation of GAAP to non-GAAP financial measures in the financial statement tables included in this press release.
Third Quarter 2016 OutlookThe Company expects revenue to be between $133.0 million to $138.0 million and GAAP diluted net income per share to be approximately breakeven. The Company expects non-GAAP net income per diluted share, which excludes pre-tax charges for intangible assets amortization costs of $1.4 million and costs associated with the executive transition of $1.2 million to be in the range of $0.11 to $0.14.
Conference CallUCT will conduct a conference call today, Thursday, July 28, 2016, beginning at 1:45 p.m. PDT. The call-in number is (877) 870-4263 (domestic) and (412) 317-0790 (international). A replay of the conference will be available for seven days following the call at (877) 344-7529 (domestic) and (412) 317-0088 (international). The confirmation number for live broadcast and replay is 10089596 (all callers).
About Ultra Clean Holdings, Inc. Ultra Clean Holdings, Inc. is a leading developer and supplier of critical systems and subsystems for the semiconductor capital equipment, flat panel, medical, energy and research industries. Ultra Clean offers its customers an integrated outsourced solution for gas delivery systems and other subassemblies, improved design-to-delivery cycle times, component neutral design and manufacturing and component testing capabilities. Ultra Clean's customers are primarily original equipment manufacturers for the semiconductor capital equipment, flat panel, medical, energy and research industries. Ultra Clean is headquartered in Hayward, California. Additional information is available at www.uct.com.
Use of Non-GAAP MeasuresManagement uses non-GAAP net income and net income per diluted share to evaluate the Company's operating and financial results. The Company believes 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.
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", "forecast", "believes," "plan," "expect," "future,"' "intends," "may," "will," "estimates," "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 with respect to our third quarter 2016 revenue, diluted net income per share and non-GAAP net income per diluted share. 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, 2015 as filed with the Securities and Exchange Commission and subsequently filed quarterly reports on Form 10-Q. 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:Ultra Clean Holdings, Inc.Sheri BrummSenior VP Finance and Chief Financial Officer(510) 576-4704
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ULTRA CLEAN HOLDINGS, INC. | |||||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||
|
(Unaudited; in thousands, except per share data) | |||||||||||
|
Three months ended |
Six months ended | ||||||||||
|
June 24, |
June 26, |
June 24, |
June 26, | ||||||||
|
2016 |
2015 |
2016 |
2015 | ||||||||
|
Sales |
$ |
129,831 |
$ |
117,549 |
$ |
242,060 |
$ |
242,867 | |||
|
Cost of goods sold |
110,810 |
98,727 |
208,469 |
204,126 | |||||||
|
Gross profit |
19,021 |
18,822 |
33,591 |
38,741 | |||||||
|
Operating expenses: |
|||||||||||
|
Research and development |
2,359 |
2,401 |
4,635 |
4,967 | |||||||
|
Sales and marketing |
2,785 |
2,805 |
5,718 |
5,650 | |||||||
|
General and administrative |
10,158 |
10,188 |
20,217 |
22,048 | |||||||
|
Total operating expenses |
15,302 |
15,394 |
30,570 |
32,665 | |||||||
|
Income from operations |
3,719 |
3,428 |
3,021 |
6,076 | |||||||
|
Interest and other income (expense), net |
(836) |
(359) |
(1,927) |
(1,315) | |||||||
|
Income before provision for income taxes |
2,883 |
3,069 |
1,094 |
4,761 | |||||||
|
Income tax provision |
2,160 |
862 |
3,610 |
1,381 | |||||||
|
Net income (loss) |
$ |
723 |
$ |
2,207 |
$ |
(2,516) |
$ |
3,380 | |||
|
Net income (loss) per share: |
|||||||||||
|
Basic |
$ |
0.02 |
$ |
0.07 |
$ |
(0.08) |
$ |
0.11 | |||
|
Diluted |
$ |
0.02 |
$ |
0.07 |
$ |
(0.08) |
$ |
0.11 | |||
|
Shares used in computing net income (loss) per share: |
|||||||||||
|
Basic |
32,565 |
31,615 |
32,437 |
31,042 | |||||||
|
Diluted |
32,792 |
31,777 |
32,437 |
31,358 | |||||||
|
ULTRA CLEAN HOLDINGS, INC. | ||||||
|
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
|
(Unaudited; in thousands) | ||||||
|
June 24, |
December 25, | |||||
|
2016 |
2015 | |||||
|
ASSETS |
||||||
|
Current assets: |
||||||
|
Cash and cash equivalents |
$ |
44,053 |
$ |
50,103 | ||
|
Accounts receivable, net of allowance |
73,069 |
59,148 | ||||
|
Inventory |
90,302 |
72,716 | ||||
|
Other current assets |
6,891 |
8,172 | ||||
|
Total current assets |
214,315 |
190,139 | ||||
|
Equipment and leasehold improvements, net |
18,117 |
17,267 | ||||
|
Goodwill |
85,248 |
85,248 | ||||
|
Purchased intangibles, net |
39,903 |
42,782 | ||||
|
Other non-current assets |
753 |
717 | ||||
|
Total assets |
$ |
358,336 |
$ |
336,153 | ||
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||
|
Current liabilities: |
||||||
|
Bank borrowings |
$ |
12,992 |
$ |
12,744 | ||
|
Accounts payable |
64,712 |
39,660 | ||||
|
Other current liabilities |
15,188 |
12,307 | ||||
|
Total current liabilities |
92,892 |
64,711 | ||||
|
Bank borrowings, net of current portion |
56,934 |
62,795 | ||||
|
Other long-term liabilities |
8,232 |
7,704 | ||||
|
Total liabilities |
158,058 |
135,210 | ||||
|
Stockholders' equity: |
||||||
|
Common stock |
174,828 |
172,975 | ||||
|
Retained earnings |
25,470 |
27,986 | ||||
|
Accumulated other comprehensive loss |
(20) |
(18) | ||||
|
Total stockholders' equity |
200,278 |
200,943 | ||||
|
Total liabilities and stockholders' equity |
$ |
358,336 |
$ |
336,153 | ||
|
ULTRA CLEAN HOLDINGS, INC. | ||||||
|
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS | ||||||
|
Three Months Ended | ||||||
|
June 24, 2016 |
March 25, 2016 |
June 26, 2015 | ||||
|
(in thousands) |
||||||
|
Reconciliation of GAAP Net Income to Non-GAAP Net Income |
||||||
|
Reported net income (loss) on a GAAP basis |
$ 723 |
$ (3,239) |
$ 2,207 | |||
|
Amortization of intangible assets (1) |
1,440 |
1,440 |
1,355 | |||
|
Restructuring charges (2) |
70 |
177 |
- | |||
|
Income tax effect of non-GAAP adjustments (3) |
(406) |
(385) |
(381) | |||
|
Income tax effect of valuation allowance (4) |
1,384 |
1,876 |
- | |||
|
Non-GAAP net income (loss) |
$ 3,211 |
$ (131) |
$ 3,181 | |||
|
1 |
Amortization of intangible assets related to the Company's acquisitions of AIT, Marchi and Miconex | ||||||
|
2 |
Adjustment to previous restructuring reserve related to the abandonment of one of the Company's facilities | ||||||
|
3 |
Tax effect on amortization of intangible assets and restructuring charges based on non-gaap tax rate | ||||||
|
4 |
The Company's GAAP tax expense is substantially 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 | ||||||
|
June 24, 2016 |
March 25, 2016 |
June 26, 2015 | ||||
|
Reconciliation of GAAP Earnings Per Diluted Share to Non-GAAP |
||||||
|
Earnings Per Diluted Share |
||||||
|
Reported net income (loss) on a GAAP basis |
$ 0.02 |
$ (0.10) |
$ 0.07 | |||
|
Amortization of intangible assets |
0.05 |
0.04 |
0.04 | |||
|
Restructuring charges |
0.00 |
0.01 |
- | |||
|
Income tax effect of non-GAAP adjustments |
(0.01) |
(0.01) |
(0.01) | |||
|
Income tax effect of valuation allowance |
0.04 |
0.06 |
- | |||
|
Non-GAAP net income (loss) |
$ 0.10 |
$ (0.00) |
$ 0.10 | |||
|
Weighted average number of diluted shares (in thousands) |
32,792 |
32,309 |
31,777 | |||
|
ULTRA CLEAN HOLDINGS, INC. | ||||
|
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP EFFECTIVE INCOME TAX RATE | ||||
|
Three Months Ended |
Three Months Ended | |||
|
June 24, 2016 |
March 25, 2016 | |||
|
(in thousands, except percentages) |
||||
|
Provision for income taxes on a GAAP basis |
$ 2,160 |
$ 1,450 | ||
|
Income tax effect of non-GAAP adjustments (1) |
406 |
385 | ||
|
Income tax effect of valuation allowance (2) |
(1,384) |
(1,876) | ||
|
Non-GAAP provision for income taxes |
$ 1,182 |
$ (41) | ||
|
Income before income taxes on a GAAP basis |
$ 2,883 |
$ (1,789) | ||
|
Amortization of intangible assets |
1,440 |
1,440 | ||
|
Restructuring charges |
70 |
177 | ||
|
Non-GAAP income before income taxes |
4,393 |
(172) | ||
|
Effective income tax rate on a GAAP basis |
74.9% |
(81.1%) | ||
|
Non-GAAP effective income tax rate |
26.9% |
23.9% | ||
|
1 |
Tax effect on amortization of intangible assets and restructuring charges based on non-gaap tax rate | ||||||
|
2 |
The Company's GAAP tax expense is substantially 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. | ||||||
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SOURCE Ultra Clean Holdings, Inc.