“The semiconductor capital equipment market continued to show strength as reflected in our solid third quarter performance,” said Jim Scholhamer, President and CEO. “During this dynamic time in the industry, we are broadening our presence on customers’ platforms, increasing our business in Asia and expanding our SAM. Ongoing momentum from multiple technological advances is driving the semiconductor industry and we continue to be excited about the prospects for UCT.”

GAAP Financial Results
Total revenue for the third quarter of 2017 was $242.6 million, an increase of 6.3% compared to the second quarter of 2017 and 66.0% compared to the same period a year ago. Semiconductor revenue increased 5.7% compared to the second quarter of 2017 and 71.8% compared to the same period a year ago. Total revenue from outside the U.S. rose 11.3% sequentially and 81.6% compared to the same period a year ago. Gross margin for the third quarter of 2017 was 17.6% compared to 19.0% for the prior quarter and 16.1% for the same period a year ago. Net income for the third quarter was $19.7 million, or $0.59 and $0.57 per basic and diluted share, compared to net income of $20.2 million, or $0.60 and $0.59 per basic and diluted share in the previous quarter, and net income of $2.6 million, or $0.08 per basic and diluted share for the same period a year ago.

Net cash for the third quarter 2017 increased $9.9 million compared to the second quarter of 2017. Cash and cash equivalents were $65.9 million, an increase of $6.4 million compared to the second quarter of 2017. Outstanding debt was $57.3 million, a decrease of $3.5 million compared to the second quarter of 2017.

Non-GAAP Financial Results
Non-GAAP net income for the third quarter of 2017 was $21.3 million, or $0.62 per diluted share. Non-GAAP net income and non-GAAP net income per diluted share exclude pre-tax charges of $1.2 million for intangible assets amortization in addition to the corresponding increase in tax expense of approximately $0.4 million.

This compares to non-GAAP net income for the second quarter of 2017 of $21.3 million, or $0.62 per diluted share, and non-GAAP net income for the third quarter of 2016 of $5.7 million, or $0.17 per diluted share.

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

Fourth Quarter 2017 Outlook
The Company expects revenue to be between $240.0 million to $250.0 million and GAAP diluted net income per share to be in the range of $0.54 to $0.60. The Company expects non-GAAP net income per diluted share to be in the range of $0.57 to $0.63.

Conference Call
UCT will conduct a conference call today, Wednesday, October 25, 2017, beginning at 1:45 p.m. PDT. The call-in number is (844) 826-3034 (domestic) and (412) 317-5179 (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 10113052 (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 and flat panel 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 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 fourth quarter of 2017 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,” “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 fourth quarter 2017 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 30, 2016 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:
Sheri Savage
UCT Senior VP Finance, CFO
510-576-4705

Annie Leschin
Investor Relations
415-775-1788

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in thousands, except per share data)

Three months ended

Nine months ended

September 29,

September 23,

September 29,

September 23,

2017

2016

2017

2016

Sales

$

242,610

$

146,154

$

675,465

$

388,214

Cost of goods sold

199,914

122,663

551,903

331,132

Gross profit

42,696

23,491

123,562

57,082

Operating expenses:

  Research and development

2,722

2,447

8,402

7,082

  Sales and marketing

3,662

2,819

10,064

8,537

  General and administrative

13,050

11,525

37,656

31,742

    Total operating expenses

19,434

16,791

56,122

47,361

Income from operations

23,262

6,700

67,440

9,721

Interest and other income (expense), net

(19)

(1,336)

(2,077)

(3,263)

Income before provision for income taxes

23,243

5,364

65,363

6,458

Income tax provision

3,527

2,750

11,127

6,360

Net income

$

19,716

$

2,614

$

54,236

$

98

Net income per share:

  Basic

$

0.59

$

0.08

$

1.63

$

0.00

  Diluted

$

0.57

$

0.08

$

1.59

$

0.00

Shares used in computing net income per share:

  Basic

33,540

32,759

33,342

32,544

  Diluted

34,360

33,100

34,216

32,887

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in thousands)

September 29,

December 30,

2017

2016

ASSETS

Current assets:

  Cash and cash equivalents

$

65,939

$

52,465

  Accounts receivable, net of allowance

107,662

74,663

  Inventory

165,303

103,861

  Other current assets

11,460

6,461

    Total current assets

350,364

237,450

Equipment and leasehold improvements, net

28,943

18,858

Goodwill

85,248

85,248

Purchased intangibles, net

33,331

37,024

Deferred tax asset, net

1,098

1,355

Other non-current assets

1,769

762

Total assets

$

500,753

$

380,697

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

  Bank borrowings

$

15,518

$

16,819

  Accounts payable

130,539

71,189

  Other current liabilities

24,191

13,053

    Total current liabilities

170,248

101,061

Bank borrowings, net of current portion

41,810

50,931

Deferred tax liability

9,607

9,917

Other long-term liabilities

2,408

2,657

    Total liabilities

224,073

164,566

Stockholders’ equity:

  Common stock

182,856

178,477

  Retained earnings

92,273

38,037

  Accumulated other comprehensive income (loss)

1,551

(383)

    Total stockholders’ equity

276,680

216,131

Total liabilities and stockholders’ equity

$

500,753

$

380,697

ULTRA CLEAN HOLDINGS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS

Three Months Ended

September 29,

September 23,

June 30,

2017

2016

2017

Reconciliation of GAAP Net Income to Non-GAAP Net Income (in thousands)

Reported net income on a GAAP basis

$          19,716

$            2,614

$  20,179

Amortization of intangible assets (1)

1,231

1,438

1,231

Restructuring charges (2)

(105)

Executive transition costs (3)

925

Income tax effect of non-GAAP adjustments (4)

(159)

(574)

(163)

Income tax effect of valuation allowance (5)

524

1,391

18

Non-GAAP net income

$          21,312

$            5,689

$  21,265

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

Reported income  from operations on a GAAP basis

$          23,262

$            6,700

$  24,405

Amortization of intangible assets (1)

1,231

1,438

1,231

Restructuring charges (2)

(105)

Executive transition costs (3)

925

Non-GAAP income from operations

$          24,493

$            8,958

$  25,636

Reconciliation of GAAP Operating margin to Non-GAAP Operating margin

Reported operating margin on a GAAP basis

9.6%

4.6%

10.7%

Amortization of intangible assets (1)

0.5%

1.0%

0.5%

Restructuring charges (2)

0.0%

(0.1%)

0.0%

Executive transition costs (3)

0.0%

0.6%

0.0%

Non-GAAP operating margin

10.1%

6.1%

11.2%

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    Represents expense for termination benefits paid to former executives of the Company

4    Tax effect of items (1) through (3) above based on the non-gaap tax rate shown below

5    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

September 29,

September 23,

June 30,

2017

2016

2017

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

Reported net income on a GAAP basis

$              0.57

$              0.08

$      0.59

Amortization of intangible assets

0.04

0.04

0.04

Restructuring charges

Executive transition costs

0.03

Income tax effect of non-GAAP adjustments

(0.01)

(0.02)

(0.01)

Income tax effect of valuation allowance

0.02

0.04

Non-GAAP net income

$              0.62

$              0.17

$      0.62

Weighted average number of diluted shares (thousands)

34,360

33,100

34,064

ULTRA CLEAN HOLDINGS, INC.

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

Three Months Ended

September 29,

September 23,

June 30,

2017

2016

2017

(in thousands, except percentages)

Provision for income taxes on a GAAP basis

$            3,527

$            2,750

$    3,106

Income tax effect of non-GAAP adjustments (1)

159

574

163

Income tax effect of valuation allowance (2)

(524)

(1,391)

(18)

Non-GAAP provision for income taxes

$            3,162

$            1,933

$    3,251

Income before income taxes on a GAAP basis

$          23,243

$            5,364

$  23,285

Amortization of intangible assets

1,231

1,438

1,231

Restructuring charges

(105)

Executive transition costs

925

Non-GAAP income before income taxes

$          24,474

$            7,622

$  24,516

Effective income tax rate on a GAAP basis

15.2%

51.3%

13.3%

Non-GAAP effective income tax rate

12.9%

25.4%

13.3%

1   Tax effect of items (1) through (3) 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.

Related Links

http://www.uct.com

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