Ultra Clean Holdings, Inc. (Nasdaq: UCTT), today reported its financial results for the third quarter ended September 30, 2022
HAYWARD, Calif., Oct. 26, 2022 /PRNewswire/ -- Ultra Clean Holdings, Inc. (Nasdaq: UCTT), today reported its financial results for the third quarter ended September 30, 2022.
"Third quarter revenue surpassed our expectations due to solid performance," said Jim Scholhamer, CEO. "We are working closely with our customers regarding the new export restrictions to China and, as a result, are maintaining a wide guidance range. We are confident in the long-term prospects for the Semiconductor Industry and UCT's ability to perform well within a broad range of market scenarios. We also recognize our commitment to deploy capital toward opportunities that drive the greatest return for our shareholders. Strong cash flows have enabled us to initiate a share repurchase program for a total of $150 million over a three year period."
Third Quarter 2022 GAAP Financial Results
Total revenue was $635.0 million. Products contributed $556.3 million and Services added $78.7 million. Total gross margin was 19.6%, operating margin was 5.7%, and net income was $9.7 million or $0.21 per basic and diluted share. This compares to total revenue of $608.7 million, gross margin of 19.4%, operating margin of (0.9)%, and net loss of $25.1 million or $0.56 per share, in the prior quarter. The financial results for the third quarter include a $20.8 million pre-tax loss related to the divestiture of certain non-core subsidiary entities.
Third Quarter 2022 Non-GAAP Financial Results
On a non-GAAP basis, gross margin was 20.6%, operating margin was 11.7%, and net income was $48.6 million or $1.06 per diluted share. This compares to gross margin of 20.3%, operating margin of 11.1%, and net income of $47.4 million or $1.04 per diluted share in the prior quarter.
Fourth Quarter 2022 Outlook
The Company expects revenue in the range of $600 million to $650 million and GAAP diluted net income per share to be between $0.61 and $0.79. The Company expects non-GAAP diluted net income per share to be between $0.94 and $1.14.
The conference call and webcast will take place on Wednesday, October 26 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 9906379. 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.
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, stock-based compensation, restructuring charges, VAT settlement, acquisition activity costs, loss on divestitures, Covid-19 related costs, fair value adjustments, 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.
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 31, 2021 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.
ULTRA CLEAN HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in thousands, except per share data)
General and administrative
Other income (expense), net
Income before provision for income taxes
Provision for income taxes
Less: Net income attributable to noncontrolling interests
Net income attributable to UCT
Net income per share attributable to UCT common stockholders:
Shares used in computing net income per share:
ULTRA CLEAN HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; in thousands)
Cash and cash equivalents
Accounts receivable, net of allowance
Prepaid expenses and other current assets
Property, plant and equipment, net
Operating lease right-of-use assets
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued compensation and related benefits
Operating lease liabilities
Other current liabilities
Total current liabilities
Bank borrowings, net of current portion
Operating lease liabilities
UCT stockholders' equity:
Accumulated other comprehensive loss
Total UCT stockholders' equity
Total liabilities and stockholders' equity
ULTRA CLEAN HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in thousands)
Cash flows from operating activities:
Adjustments to reconcile net income to net cash provided by operating
activities (excluding assets acquired and liabilities assumed):
Depreciation and amortization
Change in the fair value of financial instruments
Gain from insurance proceeds
Changes in assets and liabilities, net of effects of acquisitions and divestitures:
Prepaid expenses and other current assets
Accrued compensation and related benefits
Operating lease assets and liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Purchases of property, plant and equipment
Proceeds from sale of property and equipment, including insurance proceeds
Divestiture of subsidiaries
Acquisition of business, net of cash acquired
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from bank borrowings
Proceeds from issuance of common stock
Payments on bank borrowings
Payments of debt issuance costs
Employees' taxes paid upon vesting of restricted stock units
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
ULTRA CLEAN HOLDINGS, INC.
GAAP TO NON-GAAP RECONCILIATION
(Unaudited; dollars in thousands)
Reconciliation of GAAP Gross profit to Non-GAAP Gross profit (in thousands)
Reported gross profit on a GAAP basis
Amortization of intangible assets (1)
Stock-based compensation expense (2)
Restructuring charges (3)
Reconciliation of GAAP Gross margin to Non-GAAP Gross margin
Reported gross margin on a GAAP basis
Amortization of intangible assets (1)
Stock-based compensation expense (2)
Restructuring charges (3)
Reconciliation of GAAP Income (loss) from operations to Non-GAAP Income from operations (in thousands)
Reported income (loss) from operations on a GAAP basis
Amortization of intangible assets (1)
Stock-based compensation expense (2)
Restructuring charges (3)
Acquisition related costs (5)
Net loss on divestitures (6)
Non-GAAP income from operations
Reconciliation of GAAP Operating margin to Non-GAAP Operating margin
Reported operating margin on a GAAP basis
Amortization of intangible assets (1)
Stock-based compensation expense (2)
Restructuring charges (3)
Acquisition related costs (5)
Net loss on divestitures (6)
Non-GAAP operating margin
1 Amortization of intangible assets related to the Company's business acquisitions
2 Represents compensation expense for stock granted to employees and directors
3 Represents severance, retention and costs related to facility closures
4 Represents impact of value added tax ruling
5 Represents acquisition activity costs
6 Represents the net loss on the divestiture of certain non-core subsidiary entities
ULTRA CLEAN HOLDINGS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (in thousands)
Reported net income (loss) attributable to UCT on a GAAP basis
Amortization of intangible assets (1)
Stock-based compensation expense (2)
Restructuring charges (3)
Acquisition related costs (5)
Net loss on divestitures (6)
Covid-19 related costs (7)
Fair value related adjustments (8)
Income tax effect of non-GAAP adjustments (9)
Income tax effect of valuation allowance (10)
Non-GAAP net income attributable to UCT
Reconciliation of GAAP Income (Loss) from operations to Non-GAAP Income from operations (in thousands)
Reported income (loss) from operations on a GAAP basis
Amortization of intangible assets (1)
Stock-based compensation expense (2)
Restructuring charges (3)
Acquisition related costs (5)
Net loss on divestitures (6)
Covid-19 related costs (7)
Fair value related adjustments (8)
Non-GAAP income from operations
Reconciliation of GAAP Operating margin to Non-GAAP Operating margin
Reported operating margin on a GAAP basis
Amortization of intangible assets (1)
Stock-based compensation expense (2)
Restructuring charges (3)
Acquisition related costs (5)
Net loss on divestitures (6)
Covid-19 related costs (7)
Fair value related adjustments (8)
Non-GAAP operating margin
Reconciliation of GAAP Gross profit to Non-GAAP Gross profit (in thousands)
Reported gross profit on a GAAP basis
Amortization of intangible assets (1)
Stock-based compensation expense (2)
Restructuring charges (3)
Covid-19 related costs (7)
Fair value related adjustments (8)
Reconciliation of GAAP Gross margin to Non-GAAP Gross margin
Reported gross margin on a GAAP basis
Amortization of intangible assets (1)
Stock-based compensation expense (2)
Restructuring charges (3)
Covid-19 related costs (7)
Fair value related adjustments (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
Fair value related adjustments (8)
Non-GAAP interest and other income (expense)
Reconciliation of GAAP Earnings Per Diluted Share to Non-GAAP Earnings Per Diluted Share
Reported net income (loss) on a GAAP basis
Amortization of intangible assets (1)
Stock-based compensation expense (2)
Restructuring charges (3)
Acquisition related costs (5)
Net loss on divestitures (6)
Covid-19 related costs (7)
Fair value related adjustments (8)
Income tax effect of non-GAAP adjustments (9)
Income tax effect of valuation allowance (10)
Weighted average number of diluted shares (thousands) on a
non-GAAP basis
ULTRA CLEAN HOLDINGS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP EFFECTIVE INCOME TAX RATE
(in thousands, except percentages)
Provision for income taxes on a GAAP basis
Income tax effect of non-GAAP adjustments (9)
Income tax effect of valuation allowance (10)
Non-GAAP provision for income taxes
Income (loss) before income taxes on a GAAP basis
Amortization of intangible assets (1)
Stock-based compensation expense (2)
Restructuring charges (3)
Acquisition related costs (5)
Net loss on divestitures (6)
Covid-19 related costs (7)
Fair value related adjustments (8)
Non-GAAP income before income taxes
Effective income tax rate on a GAAP basis
Non-GAAP effective income tax rate
1 Amortization of intangible assets related to the Company's business acquisitions
2 Represents compensation expense for stock granted to employees and directors
3 Represents severance, retention and costs related to facility closures
4 Represents impact of value added tax ruling
5 Represents acquisition activity costs
6 Represents the net loss on the divestiture of certain non-core subsidiary entities
7 Covid-19 related costs incurred during the period
8 Adjustments related to the fair values of inventories related to Fluid Solutions and purchase obligation related to Services
9 Tax effect of items (1) through (8) above based on the non-GAAP tax rate
10 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
SOURCE Ultra Clean Holdings, Inc.
