Ultra Clean Reports Second Quarter 2019 Financial Results
HAYWARD, Calif., July 31, 2019 /PRNewswire/ -- Ultra Clean Holdings, Inc. (Nasdaq: UCTT), today reported its financial results for the second quarter ended June 28, 2019.
"UCT delivered a strong second quarter, surpassing the top-end of our guided range for revenue, and reflecting solid execution despite ongoing market uncertainty," said Jim Scholhamer, CEO. "In light of these market dynamics, we will continue to optimize for cash generation through operational efficiencies and work to align our cost structure with the prevailing business environment."
Second Quarter 2019 GAAP Financial Results
Consolidated revenue was $265.4 million, an increase of 2.0% compared to the prior quarter and a decrease of 8.6% over the same period a year ago. SPS contributed $210.4 million and SSB added $55.0 million. Total gross margin was 18.2% compared to 17.2% last quarter and 15.9% for the same period a year ago.
Net loss was $0.2 million or $0.01 per basic and diluted share. This compares to net income of $0.6 million or $0.02 per basic and diluted share in the previous quarter, and net income of $19.0 million or $0.49 and $0.48 per basic and diluted share for the same period last year.
Second Quarter 2019 Non-GAAP Financial Results
Non-GAAP net income was $8.2 million or $0.21 per diluted share. This compares to $8.1 million, or $0.21 per diluted share in the previous quarter and $21.5 million or $0.55 for the prior year.
Non-GAAP operating margin was 6.2% compared to 6.1% in the previous quarter and 8.7% 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.
Third Quarter 2019 Outlook
The Company expects revenue in the range of $235.0 million to $255.0 million and GAAP diluted net income per share to be between $0.00 and $0.10. The Company expects non-GAAP diluted net income per share to be between $0.11 and $0.21.
Conference Call
The call will take place at 3:15 p.m. PT today 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 10133370. For international replay numbers, please select from this link https://services.choruscall.com/ccforms/replay.html. 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 following 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," 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 28, 2018 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:
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 28, | June 29, | June 28, | June 29, | ||||||||
2019 | 2018 | 2019 | 2018 | ||||||||
Revenues | $ | 265,367 | $ | 290,213 | $ | 525,508 | $ | 605,055 | |||
Cost of goods sold | 217,198 | 244,148 | 432,542 | 510,186 | |||||||
Gross profit | 48,169 | 46,065 | 92,966 | 94,869 | |||||||
Operating expenses: | |||||||||||
Research and development | 3,921 | 2,915 | 7,352 | 5,944 | |||||||
Sales and marketing | 5,366 | 3,630 | 10,761 | 7,435 | |||||||
General and administrative | 29,911 | 16,856 | 57,702 | 31,918 | |||||||
Total operating expenses | 39,198 | 23,401 | 75,815 | 45,297 | |||||||
Income from operations | 8,971 | 22,664 | 17,151 | 49,572 | |||||||
Interest and other income (expense), net | (6,390) | (809) | (11,709) | (483) | |||||||
Income before provision for income taxes | 2,581 | 21,855 | 5,442 | 49,089 | |||||||
Income tax provision | 2,835 | 2,895 | 4,342 | 5,388 | |||||||
Net income | (254) | 18,960 | 1,100 | 43,701 | |||||||
Net income attributable to non-controlling interest | (52) | - | 697 | - | |||||||
Net income attributable to Ultra Clean Holdings, Inc. | $ | (202) | $ | 18,960 | $ | 403 | $ | 43,701 | |||
Net income per share attributable to Ultra Clean Holdings, Inc. common stockholders: | |||||||||||
Basic | $ | (0.01) | $ | 0.49 | $ | 0.01 | $ | 1.16 | |||
Diluted | $ | (0.01) | $ | 0.48 | $ | 0.01 | $ | 1.14 | |||
Shares used in computing net income per share: | |||||||||||
Basic | 39,399 | 38,802 | 39,261 | 37,763 | |||||||
Diluted | 39,399 | 39,297 | 39,556 | 38,418 | |||||||
ULTRA CLEAN HOLDINGS, INC. | ||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
(Unaudited; in thousands) | ||||||
June 28, | December 28, | |||||
2019 | 2018 | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 168,128 | $ | 144,145 | ||
Accounts receivable, net of allowance | 98,306 | 106,956 | ||||
Inventory | 164,055 | 186,116 | ||||
Other current assets | 24,102 | 25,708 | ||||
Total current assets | 454,591 | 462,925 | ||||
Equipment and leasehold improvements, net | 144,505 | 143,459 | ||||
Goodwill | 166,654 | 150,226 | ||||
Purchased intangibles, net | 190,500 | 193,507 | ||||
Deferred tax assets, net | 12,244 | 10,167 | ||||
Operating lease right-of-use assets | 34,721 | — | ||||
Other non-current assets | 5,743 | 5,193 | ||||
Total assets | $ | 1,008,958 | $ | 965,477 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities: | ||||||
Bank borrowings | $ | 7,203 | $ | 9,671 | ||
Accounts payable | 97,288 | 99,011 | ||||
Operating lease liabilities | 11,295 | — | ||||
Other current liabilities | 39,183 | 30,616 | ||||
Total current liabilities | 154,969 | 139,298 | ||||
Bank borrowings, net of current portion | 330,895 | 331,549 | ||||
Deferred tax liability | 21,449 | 15,834 | ||||
Operating lease liabilities | 25,656 | — | ||||
Other long-term liabilities | 21,501 | 27,808 | ||||
Total liabilities | 554,470 | 514,489 | ||||
Stockholders' equity: | ||||||
Common stock | 291,635 | 287,127 | ||||
Retained earnings | 150,121 | 149,718 | ||||
Accumulated other comprehensive loss | (2,655) | (547) | ||||
Ultra Clean Holdings, Inc. stockholders' equity | 439,101 | 436,298 | ||||
Noncontrolling interest | 15,387 | 14,690 | ||||
Total stockholders' equity | 454,488 | 450,988 | ||||
Total liabilities and stockholders' equity | $ | 1,008,958 | $ | 965,477 | ||
ULTRA CLEAN HOLDINGS, INC. | |||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
(unaudited; in thousands) | |||
Six Months Ended | |||
June 28, | June 29, | ||
2019 | 2018 | ||
Cash flows from operating activities: | |||
Net income including noncontrolling interests | $ 1,100 | $ 43,701 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 21,225 | 5,188 | |
Stock-based compensation | 5,777 | 4,920 | |
Others | (222) | (27) | |
Changes in assets and liabilities: | |||
Accounts receivable | 10,001 | (8,758) | |
Inventories | 32,362 | 7,766 | |
Prepaid expenses and other | 3,705 | (3,558) | |
Deferred income taxes | (2,077) | (113) | |
Other non-current assets | (566) | (313) | |
Accounts payable | (4,704) | (59,490) | |
Accrued compensation and related benefits | 3,358 | (1,332) | |
Income taxes payable | (2,206) | (3,933) | |
Other liabilities | 264 | 3,903 | |
Net cash provided by (used for) operating activities | 68,017 | (12,046) | |
Cash flows from investing activities: | |||
Purchases of equipment and leasehold improvements | (6,750) | (9,666) | |
Acquisition of DMS | (29,873) | — | |
Proceeds from sale of equipment | 458 | — | |
Net cash used for investing activities | (36,165) | (9,666) | |
Cash flows from financing activities: | |||
Proceeds from bank borrowings | 28,112 | 21,886 | |
Proceeds from issuance of common stock | 125 | 94,454 | |
Payments on bank borrowings and finance leases | (32,389) | (19,148) | |
Employees' taxes paid upon vesting of restricted stock units | (1,394) | (2,618) | |
Net cash provided by (used for) financing activities | (5,546) | 94,574 | |
Effect of exchange rate changes on cash and cash equivalents | (2,323) | (22) | |
Net increase in cash and cash equivalents | $ 23,983 | $ 72,840 | |
Cash and cash equivalents at beginning of period | 144,145 | 68,306 | |
Cash and cash equivalents at end of period | $168,128 | $141,146 | |
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 28, 2019 | June 28, 2019 | |||||||||||
SPS | SSB | Consolidated | SPS | SSB | Consolidated | |||||||
Revenues | $ 210,390 | $ 54,977 | $ 265,367 | $ 210,390 | $ 54,977 | $ 265,367 | ||||||
Gross profit | $ 29,316 | $ 18,853 | $ 48,169 | $ 30,432 | $ 19,560 | $ 49,992 | ||||||
Gross margin | 13.9% | 34.3% | 18.2% | 14.5% | 35.6% | 18.8% | ||||||
Operating profit | $ 6,368 | $ 2,603 | $ 8,971 | $ 10,324 | $ 6,066 | $ 16,390 | ||||||
Operating margin | 3.0% | 4.7% | 3.4% | 4.9% | 11.0% | 6.2% | ||||||
Three months ended | ||||||||||||
June 28, 2019 | ||||||||||||
SPS | SSB | Consolidated | ||||||||||
Reconciliation of GAAP Gross profit to Non-GAAP Gross profit (in thousands) | ||||||||||||
Reported gross profit on a GAAP basis | $ 29,316 | $ 18,853 | $ 48,169 | |||||||||
Amortization of intangible assets (1) | - | 1,023 | 1,023 | |||||||||
Restructuring charges (2) | 350 | - | 350 | |||||||||
Fair value adjustments (5) | 766 | - | 766 | |||||||||
Depreciation adjustments (6) | - | (316) | (316) | |||||||||
Non-GAAP gross profit | $ 30,432 | $ 19,560 | $ 49,992 | |||||||||
Reconciliation of GAAP Gross margin to Non-GAAP Gross margin | ||||||||||||
Reported gross margin on a GAAP basis | 13.9% | 34.3% | 18.2% | |||||||||
Amortization of intangible assets (1) | 0.0% | 1.9% | 0.4% | |||||||||
Restructuring charges (2) | 0.2% | - | 0.1% | |||||||||
Fair value adjustments (5) | 0.4% | - | 0.2% | |||||||||
Depreciation adjustments (6) | 0.0% | -0.6% | -0.1% | |||||||||
Non-GAAP gross margin | 14.5% | 35.6% | 18.8% | |||||||||
Reconciliation of GAAP Income from operations to Non-GAAP Income from operations (in thousands) | ||||||||||||
Reported income from operations on a GAAP basis | $ 6,368 | $ 2,603 | $ 8,971 | |||||||||
Amortization of intangible assets (1) | 1,230 | 3,823 | 5,053 | |||||||||
Restructuring charges (2) | 367 | - | 367 | |||||||||
Executive transition costs (3) | 382 | - | 382 | |||||||||
Acquisition costs (4) | 1,211 | - | 1,211 | |||||||||
Fair value adjustments (5) | 766 | - | 766 | |||||||||
Depreciation adjustments (6) | - | (360) | (360) | |||||||||
Non-GAAP income from operations | $ 10,324 | $ 6,066 | $ 16,390 | |||||||||
Reconciliation of GAAP Operating margin to Non-GAAP Operating margin | ||||||||||||
Reported operating margin on a GAAP basis | 3.0% | 4.7% | 3.4% | |||||||||
Amortization of intangible assets (1) | 0.6% | 7.0% | 1.9% | |||||||||
Restructuring charges (2) | 0.2% | 0.0% | 0.1% | |||||||||
Executive transition costs (3) | 0.2% | 0.0% | 0.1% | |||||||||
Acquisition costs (4) | 0.6% | 0.0% | 0.5% | |||||||||
Fair value adjustments (5) | 0.4% | 0.0% | 0.3% | |||||||||
Depreciation adjustments (6) | 0.0% | -0.7% | -0.1% | |||||||||
Non-GAAP operating margin | 4.9% | 11.0% | 6.2% | |||||||||
1 Amortization of intangible assets related to the Company's acquisitions of AIT, Thermal, FDS, QGT and DMS | ||||||||||||
2 Represents severance costs and cost related to facility closures | ||||||||||||
3 Represents termination benefits paid to a former executive of the Company | ||||||||||||
4 Represents costs related to the QGT and DMS acquisitions | ||||||||||||
5 Fair value adjustment related to DMS' sold inventories | ||||||||||||
6 Depreciation adjustments related to QGT's fixed assets | ||||||||||||
ULTRA CLEAN HOLDINGS, INC. | |||||||
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS | |||||||
Three Months Ended | |||||||
June 28, | June 29, | March 29, | |||||
2019 | 2018 | 2019 | |||||
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 | $ (202) | $ 18,960 | $ 605 | ||||
Amortization of intangible assets (1) | 5,053 | 1,098 | 4,854 | ||||
Restructuring charges (2) | 392 | - | 947 | ||||
Executive transition costs (3) | 382 | 1,400 | - | ||||
Acquisition costs (4) | 1,211 | - | 2,339 | ||||
Fair value adjustments (5) | 766 | - | - | ||||
Depreciation adjustments (6) | (360) | - | - | ||||
Income tax effect of non-GAAP adjustments (7) | (1,407) | (296) | (1,563) | ||||
Income tax effect of valuation allowance (8) | 2,344 | 303 | 958 | ||||
Non-GAAP net income attributable to Ultra Clean Holdings, Inc. | $ 8,179 | $ 21,465 | $ 8,140 | ||||
Reconciliation of GAAP Income from operations to Non-GAAP Income from operations (in thousands) | |||||||
Reported income from operations on a GAAP basis | $ 8,971 | $ 22,664 | $ 8,180 | ||||
Amortization of intangible assets (1) | 5,053 | 1,098 | 4,854 | ||||
Restructuring charges (2) | 367 | - | 617 | ||||
Executive transition costs (3) | 382 | 1,400 | - | ||||
Acquisition costs (4) | 1,211 | - | 2,339 | ||||
Fair value adjustments (5) | 766 | - | - | ||||
Depreciation adjustments (6) | (360) | - | - | ||||
Non-GAAP income from operations | $ 16,390 | $ 25,162 | $ 15,990 | ||||
Reconciliation of GAAP Operating margin to Non-GAAP Operating margin | |||||||
Reported operating margin on a GAAP basis | 3.4% | 7.8% | 3.1% | ||||
Amortization of intangible assets (1) | 1.9% | 0.4% | 1.9% | ||||
Restructuring charges (2) | 0.1% | 0.0% | 0.2% | ||||
Executive transition costs (3) | 0.1% | 0.5% | 0.0% | ||||
Acquisition costs (4) | 0.5% | 0.0% | 0.9% | ||||
Fair value adjustments (5) | 0.3% | 0.0% | 0.0% | ||||
Depreciation adjustments (6) | -0.1% | 0.0% | 0.0% | ||||
Non-GAAP operating margin | 6.2% | 8.7% | 6.1% | ||||
Reconciliation of GAAP Gross profit to Non-GAAP Gross profit (in thousands) | |||||||
Reported gross profit on a GAAP basis | $ 48,169 | $ 46,065 | $ 44,797 | ||||
Amortization of intangible assets (1) | 1,023 | - | 1,023 | ||||
Restructuring charges (2) | 350 | - | 515 | ||||
Fair value adjustments (5) | 766 | - | - | ||||
Depreciation adjustments (6) | (316) | ||||||
Non-GAAP gross profit | $ 49,992 | $ 46,065 | $ 46,335 | ||||
Reconciliation of GAAP Gross margin to Non-GAAP Gross margin | |||||||
Reported gross margin on a GAAP basis | 18.2% | 15.9% | 17.2% | ||||
Amortization of intangible assets (1) | 0.4% | 0.0% | 0.4% | ||||
Restructuring charges (2) | 0.1% | 0.0% | 0.2% | ||||
Fair value adjustments (5) | 0.2% | 0.0% | 0.0% | ||||
Depreciation adjustments (6) | -0.1% | 0.0% | 0.0% | ||||
Non-GAAP gross margin | 18.8% | 15.9% | 17.8% | ||||
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 | $ (6,390) | $ (809) | $ (5,319) | ||||
Restructuring charges (2) | (25) | - | (330) | ||||
Non-GAAP interest and other income (expense) | $ (6,415) | $ (809) | $ (5,649) | ||||
1 Amortization of intangible assets related to the Company's acquisitions of AIT, Thermal, FDS, QGT and DMS | |||||||
2 Represents severance costs and cost related to facility closures | |||||||
3 Represents termination benefits paid to a former executive of the Company | |||||||
4 Represents costs related to the QGT and DMS acquisitions | |||||||
5 Fair value adjustment related to DMS' sold inventories | |||||||
6 Depreciation adjustments related to QGT's fixed assets | |||||||
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. | |||||||
Three Months Ended | |||||||
June 28, | June 29, | March 29, | |||||
2019 | 2018 | 2019 | |||||
Reconciliation of GAAP Earnings Per Diluted Share to Non-GAAP Earnings Per Diluted Share | |||||||
Reported net income (loss) on a GAAP basis | $ (0.01) | $ 0.48 | $ 0.02 | ||||
Amortization of intangible assets | 0.13 | 0.03 | 0.12 | ||||
Restructuring charges | 0.01 | - | 0.03 | ||||
Executive transition costs | 0.01 | 0.04 | - | ||||
Acquisition costs | 0.03 | - | 0.06 | ||||
Fair value adjustments | 0.02 | - | - | ||||
Depreciation adjustments | (0.01) | - | - | ||||
Income tax effect of non-GAAP adjustments | (0.03) | (0.01) | (0.04) | ||||
Income tax effect of valuation allowance | 0.06 | 0.01 | 0.02 | ||||
Non-GAAP net income | $ 0.21 | $ 0.55 | $ 0.21 | ||||
Weighted average number of diluted shares (thousands) on a non-gaap basis | 39,734 | 39,297 | 39,448 | ||||
ULTRA CLEAN HOLDINGS, INC. | |||||||
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP EFFECTIVE INCOME TAX RATE | |||||||
Three Months Ended | |||||||
June 28, | June 29, | March 29, | |||||
2019 | 2018 | 2019 | |||||
(in thousands, except percentages) | |||||||
Provision for income taxes on a GAAP basis | $ 2,835 | $ 2,895 | $ 1,507 | ||||
Income tax effect of non-GAAP adjustments (1) | 1,407 | 296 | 1,563 | ||||
Income tax effect of valuation allowance (2) | (2,344) | (303) | (958) | ||||
Non-GAAP provision for income taxes | $ 1,898 | $ 2,888 | $ 2,112 | ||||
Income (loss) before income taxes on a GAAP basis | $ 2,581 | $ 21,855 | $ 2,861 | ||||
Amortization of intangible assets | 5,053 | 1,098 | 4,854 | ||||
Restructuring charges | 392 | - | 947 | ||||
Executive transition costs | 382 | 1,400 | - | ||||
Acquisition costs | 1,211 | - | 2,339 | ||||
Fair value adjustments | 766 | - | - | ||||
Depreciation adjustments | (360) | - | - | ||||
Non-GAAP income before income taxes | $ 10,025 | $ 24,353 | $ 11,001 | ||||
Effective income tax rate on a GAAP basis | 109.8% | 13.2% | 52.7% | ||||
Non-GAAP effective income tax rate | 18.9% | 11.9% | 19.2% | ||||
1 Tax effect of items (1) through (4) 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. | |||||||
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SOURCE Ultra Clean Holdings, Inc.