Ultra Clean Reports First Quarter 2019 Financial Results

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Ultra Clean Reports First Quarter 2019 Financial Results

PR Newswire

HAYWARD, Calif., May 2, 2019 /PRNewswire/ -- Ultra Clean Holdings, Inc. (Nasdaq: UCTT), today reported its financial results for the first quarter ended ­­­­­­March 29, 2019.

(PRNewsfoto/Ultra Clean Holdings, Inc.)

"Solid execution of our plan resulted in a strong start to the year as we delivered revenue and non-GAAP EPS above our expectations," said Jim Scholhamer, CEO. "We continue to make strategic investments, such as our recent acquisition of Dynamic Manufacturing Solutions, which broaden our product portfolio and drive profitable growth."  

UCT has elected to change its organizational and reporting structure to capture efficiencies and operating leverage as a result of the Quantum acquisition in August 2018. The Company will now report results for two operating segments: Semiconductor Products and Solutions ("SPS") and Semiconductor Services Business ("SSB"). The Company has provided a reconciliation of GAAP to non-GAAP segment financial measures in the financial statement tables included in this press release.

First Quarter 2019 GAAP Financial Results

Consolidated revenue was $260.1 million, an increase of 1.1% compared to the prior quarter and a decrease of 17.4% over the same period a year ago. SPS contributed $200.2 million and SSB added $59.9 million. Total gross margin was 17.2% compared to 17.9% last quarter and 15.5% a year ago.

Net income was $0.6 million or $0.02 per basic and diluted share. This compares to a net loss of $1.1 million or $0.03 per basic and diluted share in the previous quarter, and net income of $24.7 million or $0.67 and $0.66 per basic and diluted share last year.

First Quarter 2019 Non-GAAP Financial Results

Non-GAAP net income was $8.1 million or $0.21 per diluted share. This compares to $8.7 million, or $0.23 per diluted share in the previous quarter and $25.7 million or $0.69 for the prior year. 

Non-GAAP operating margin was 6.1% compared to 6.5% in the previous quarter and 9.2% 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.

Second Quarter 2019 Outlook

The Company expects revenue in the range of $245.0 million to $265.0 million and GAAP diluted net (loss) income per share to be between ($0.02) and $0.08. The Company expects non-GAAP net income per diluted share to be in the range of $0.12 to $0.22.

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 10130907. 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 second 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 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


March 29, 


March 30, 

2019


2018







Revenues

$

260,141


$

314,842

Cost of goods sold


215,344



266,038

Gross profit


44,797



48,804







Operating expenses:






  Research and development


3,431



3,029

  Sales and marketing


5,395



3,805

  General and administrative


27,791



15,062

    Total operating expenses


36,617



21,896

Income from operations


8,180



26,908

  Interest and other income (expense), net


(5,319)



326

Income before provision for income taxes


2,861



27,234

  Income tax provision


1,507



2,493

Net income 


1,354



24,741

Net income attributable to non-controlling interest


749



-

Net income attributable to Ultra Clean Holdings, Inc. 

$

605


$

24,741







Net income per share attributable to Ultra Clean Holdings, Inc. common stockholders:






  Basic

$

0.02


$

0.67

  Diluted

$

0.02


$

0.66

Shares used in computing net income per share:






  Basic


39,122



36,723

  Diluted


39,448



37,491


 

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in thousands)








March 29,


December 28,

2019

2018

ASSETS






Current assets:






  Cash and cash equivalents

$

154,774


$

144,145

  Accounts receivable, net of allowance


110,971



106,956

  Inventory


180,299



186,116

  Other current assets


28,056



25,708

    Total current assets


474,100



462,925







Equipment and leasehold improvements, net


141,082



143,459

Goodwill


150,226



150,226

Purchased intangibles, net


188,653



193,507

Deferred tax assets, net


10,201



10,167

Operating lease right-of-use assets


32,892



Other non-current assets


6,091



5,193

Total assets

$

1,003,245


$

965,477







LIABILITIES AND STOCKHOLDERS' EQUITY






Current liabilities:






  Bank borrowings

$

9,686


$

9,671

  Accounts payable


99,204



99,011

  Operating lease liabilities


10,554



  Other current liabilities


37,249



30,616

    Total current liabilities


156,693



139,298







Bank borrowings, net of current portion


329,810



331,549

Deferred tax liability


15,834



15,834

Operating lease liabilities


25,132



Other long-term liabilities


22,247



27,808

    Total liabilities


549,716



514,489







Stockholders' equity:






  Common stock


289,190



287,127

  Retained earnings


150,323



149,718

  Accumulated other comprehensive loss


(1,423)



(547)

  Ultra Clean Holdings, Inc. stockholders' equity


438,090



436,298

  Noncontrolling interest


15,439



14,690

    Total stockholders' equity


453,529



450,988

Total liabilities and stockholders' equity

$

1,003,245


$

965,477

 

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited; in thousands)






Three Months Ended


March 29,


March 30,


2019


2018

Cash flows from operating activities:




Net income including noncontrolling interests

$    1,354


$  24,741

Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation and amortization

12,157


2,452

Stock-based compensation

2,913


2,563

Others

(1,225)


(804)

Changes in assets and liabilities:




Accounts receivable

(4,182)


6,839

Inventories

5,579


(24,660)

Prepaid expenses and other

(2,430)


(1,089)

Deferred income taxes

(37)


(46)

Other non-current assets

(943)


(255)

Accounts payable

(626)


(4,214)

Accrued compensation and related benefits

3,087


187

Income taxes payable

1,266


(2,358)

Other liabilities

1,185


1,723

Net cash provided by operating activities

18,098


5,079

Cash flows from investing activities:




Purchases of equipment and leasehold improvements

(4,844)


(5,911)

Proceeds from sale of equipment

646


Net cash used for investing activities

(4,198)


(5,911)

Cash flows from financing activities:




Proceeds from bank borrowings

6,587


10,222

Proceeds from issuance of common stock


94,330

Payments on bank borrowings and finance leases

(8,863)


(7,873)

Employees' taxes paid upon vesting of restricted stock units

(850)


(1,862)

Net cash provided by (used for) financing activities

(3,126)


94,817

Effect of exchange rate changes on cash and cash equivalents

(145)


74

Net increase in cash and cash equivalents

$  10,629


$  94,059

Cash and cash equivalents at beginning of period

144,145


68,306

Cash and cash equivalents at end of period

$154,774


$162,365


 

ULTRA CLEAN HOLDINGS, INC.

REPORTABLE SEGMENTS

GAAP TO NON-GAAP RECONCILIATION 

(Unaudited; Dollars in thousands)
















GAAP


Non-GAAP



Three months ended


Three months ended



March 29, 2019


March 29, 2019



SPS


SSB


Consolidated


SPS


SSB


Consolidated

Revenues


$  200,245


$  59,896


$     260,141


$  200,245


$   59,896


$     260,141

Gross profit


$    25,681


$  19,116


$       44,797


$    26,196


$   20,139


$       46,335

Gross margin


12.8%


31.9%


17.2%


13.1%


33.6%


17.8%

Operating profit


$      4,324


$    3,856


$         8,180


$      8,312


$     7,678


$       15,990

Operating margin


2.2%


6.4%


3.1%


4.2%


12.8%


6.1%






















Three months ended









March 29, 2019









SPS


SSB


Consolidated

Reconciliation of GAAP Gross profit to Non-GAAP Gross profit (in thousands)







Reported gross profit on a GAAP basis


$   25,681


$  19,116


$       44,797

Amortization of intangible assets (1)


-


1,023


1,023

Restructuring charges (2)


515


-


515

Non-GAAP gross profit


$   26,196


$  20,139


$       46,335














Reconciliation of GAAP Gross margin to Non-GAAP Gross margin







Reported gross margin on a GAAP basis


12.8%


31.9%


17.2%

Amortization of intangible assets (1)


0.0%


1.7%


0.4%

Restructuring charges (2)


0.3%


-


0.2%

Non-GAAP gross margin


13.1%


33.6%


17.8%














Reconciliation of GAAP Income from operations to Non-GAAP Income from operations (in thousands)







Reported income from operations on a GAAP basis


$     4,324


$   3,856


$         8,180

Amortization of intangible assets (1)


1,032


3,822


4,854

Restructuring charges (2)


617


-


617

Acquisition costs (3)


2,339


-


2,339

Non-GAAP income from operations


$     8,312


$   7,678


$       15,990














Reconciliation of GAAP Operating margin to Non-GAAP Operating margin







Reported operating margin on a GAAP basis


2.2%


6.4%


3.1%

Amortization of intangible assets (1)


0.5%


6.4%


1.9%

Restructuring charges (2)


0.3%


0.0%


0.2%

Acquisition costs (3)


1.2%


0.0%


0.9%

Non-GAAP operating margin


4.2%


12.8%


6.1%


1    Amortization of intangible assets related to the Company's acquisitions of AIT, Thermal, FDS and QGT

2    Represents severance costs and cost related to facilities closed during the quarter

3    Represents costs related to the QGT and DMS acquisitions


 

ULTRA CLEAN HOLDINGS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS










Three Months Ended



March 29,


March 30,


December 28,



2019


2018


2018

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


$        605


$  24,741


$         (1,108)

Amortization of intangible assets (1)


4,854


1,098


4,973

Restructuring charges (2)


947


1,024


297

Executive transition costs (3)


-


-


418

Acquisition costs (4)


2,339


-


613

Facility lease early exit costs (5)


-


-


117

Income tax effect of non-GAAP adjustments (6)


(1,563)


(262)


(1,101)

Income tax effect of valuation allowance (7)


958


(873)


4,474

Non-GAAP net income attributable to Ultra Clean Holdings, Inc.


$    8,140


$  25,728


$          8,683








Reconciliation of GAAP Income from operations to Non-GAAP Income from operations (in thousands)





Reported income from operations on a GAAP basis


$    8,180


$  26,908


$        10,210

Amortization of intangible assets (1)


4,854


1,098


4,973

Restructuring charges (2)


617


1,024


297

Executive transition costs (3)


-


-


418

Acquisition costs (4)


2,339


-


613

Facility lease early exit costs (5)


-


-


117

Non-GAAP income from operations


$  15,990


$  29,030


$        16,628








Reconciliation of GAAP Operating margin to Non-GAAP Operating margin







Reported operating margin on a GAAP basis


3.1%


8.5%


4.0%

Amortization of intangible assets (1)


1.9%


0.4%


1.9%

Restructuring charges (2)


0.2%


0.3%


0.1%

Executive transition costs (3)


0.0%


0.0%


0.2%

Acquisition costs (4)


0.9%


0.0%


0.3%

Facility lease early exit costs (5)


0.0%


0.0%


0.0%

Non-GAAP operating margin


6.1%


9.2%


6.5%








Reconciliation of GAAP Gross profit to Non-GAAP Gross profit (in thousands)







Reported gross profit on a GAAP basis


$  44,797


$  48,804


$        45,977

Amortization of intangible assets (1)


1,023


-


1,363

Restructuring charges (2)


515


937


297

Executive transition costs (3)


-


-


418

Non-GAAP gross profit


$  46,335


$  49,741


$        48,055








Reconciliation of GAAP Gross margin to Non-GAAP Gross margin







Reported gross margin on a GAAP basis


17.2%


15.5%


17.9%

Amortization of intangible assets (1)


0.4%


0.0%


0.5%

Restructuring charges (2)


0.2%


0.3%


0.1%

Executive transition costs (3)


0.0%


0.0%


0.2%

Non-GAAP gross margin


17.8%


15.8%


18.7%








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


$   (5,319)


$        326


$         (5,187)

Restructuring charges (2)


(330)


-


-

Non-GAAP interest and other income (expense)


$   (5,649)


$        326


$         (5,187)


1    Amortization of intangible assets related to the Company's acquisitions of AIT, Thermal, FDS and QGT

2    Represents severance costs and cost related to facilities closed during the quarter

3    Represents termination benefits paid to a former executive of the Company

4    Represents costs related to the QGT and DMS acquisitions

5    Represents lease related costs due to the early exit of a facility

6    Tax effect of items (1) through (5) above based on the non-GAAP tax rate shown below

7    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



March 29,


March 30,


December 28,



2019


2018


2018

Reconciliation of GAAP Earnings Per Diluted Share to Non-GAAP Earnings Per Diluted Share







Reported net income (loss) on a GAAP basis


$       0.02


$       0.66


(0.03)

Amortization of intangible assets


0.12


0.03


0.13

Restructuring charges


0.03


0.03


0.01

Executive transition costs


-


-


0.01

Acquisition costs


0.06


-


0.02

Facility lease early exit costs


-


-


0.00

Income tax effect of non-GAAP adjustments


(0.04)


(0.01)


(0.03)

Income tax effect of valuation allowance


0.02


(0.02)


0.12

Non-GAAP net income


$       0.21


$       0.69


$             0.23

Weighted average number of diluted shares (thousands)

39,448


37,491


39,009

 

ULTRA CLEAN HOLDINGS, INC.




UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP EFFECTIVE INCOME TAX RATE










Three Months Ended




March 29,



March 30,



December 28,




2019



2018



2018


(in thousands, except percentages)










Provision for income taxes on a GAAP basis


$    1,507



$    2,493



$          5,335


Income tax effect of non-GAAP adjustments (1)


1,563



262



1,101


Income tax effect of valuation allowance (2)


(958)



873



(4,474)


Non-GAAP provision for income taxes


$    2,112



$    3,628



$          1,962












Income (loss) before income taxes on a GAAP basis


$    2,861



$  27,234



$          5,023


Amortization of intangible assets


4,854



1,098



4,973


Restructuring charges


947



1,024



297


Executive transition costs


-



-



418


Acquisition costs


2,339



-



613


Facility lease early exit costs


-



-



117


Non-GAAP income before income taxes


$  11,001



$  29,356



$        11,441


Effective income tax rate on a GAAP basis


52.7

%


9.2

%


106.2

%

Non-GAAP effective income tax rate


19.2

%


12.4

%


17.2

%


1    Tax effect of items (1) through (5) 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. 

 

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/ultra-clean-reports-first-quarter-2019-financial-results-300843018.html

SOURCE Ultra Clean Holdings, Inc.

Copyright CNW Group 2019

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