Ultra Clean Reports Second Quarter 2014 Financial Results

Monday, July 21, 2014 4:45 pm EDT

Ultra Clean reports revenues at high end of guidance and exceeds EPS guidance for quarter on strong margin performance.

HAYWARD, Calif., July 21, 2014 /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 27, 2014.

Revenue for the second quarter of 2014 was $132.7 million, a decrease of 8.0% compared to the first quarter of 2014 and an increase of 20.5% compared to the same period a year ago. Semiconductor equipment revenue was 76.6% of total revenue and revenue outside the U.S. accounted for 32.8% of total revenue for the second quarter of 2014. Gross margin for the second quarter of 2014 was 15.9%, compared to 16.2% for the previous quarter and 14.6% for the same period a year ago.

The Company recorded net income of $6.0 million, or $0.20 per share (basic and diluted) in the second quarter of 2014 compared to net income of $7.1 million, or $0.24 per share (basic and diluted), in the previous quarter and a net income of $2.3 million, or $0.08 per share (basic and diluted), for the second quarter of 2013. Net income includes pre-tax charges for amortization costs associated with the AIT transaction of $1.2 million, $1.2 million and $1.4 million for the second quarter of 2014, the first quarter of 2014 and the second quarter of 2013, respectively. Excluding these charges the Company would have reported net income of $0.23, $0.27 and $0.12 per diluted share for the second quarter of 2014, first quarter of 2014 and the second quarter of the previous year, respectively. The Company’s tax rate for the second quarter of 2014 was 20.7%.

Cash and cash equivalents at the end of the second quarter of 2014 was $69.4 million, an increase of $9.0 million from the end of fiscal year 2013. Outstanding debt was $55.9 million at the end of the second quarter of 2014, an increase of $0.7 million from the end of fiscal year 2013 and a decrease of $7.9 million from the end of the first quarter of 2014.

Clarence Granger, Ultra Clean’s Chairman and Chief Executive Officer, stated: “I am pleased with our overall performance for the quarter. Despite slowing demand, we were able to achieve revenues at the high end of our guidance and exceed EPS guidance while maintaining our margins within our targeted range of 15% to 18%. Our balance sheet is strong and we achieved the highest net liquidity since our acquisition of AIT two years ago.

Commenting on Ultra Clean’s corporate guidance, Granger noted: “We expect revenue for the third quarter of 2014 to range between $115 million to $120 million, with diluted earnings per share in the range of $0.10 to $0.13. Excluding amortization costs of $1.2 million associated with the merger with AIT we expect diluted earnings per share to be in the range of $0.13 to $0.16. We are forecasting a tax rate of 20% for the third quarter of 2014.”

Ultra Clean will conduct a conference call today, Monday, July 21, 2014, beginning at 1:45 p.m. PDT. The call-in number is (888) 561-5097 (domestic) and (706) 679-7569 (international). A replay of the conference will be available for fourteen days following the call at (855) 859-2056 (domestic) and (404) 537-3406 (international). The confirmation number for live broadcast and replay is 59541239 (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.

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 with respect to third quarter 2014 revenue and earnings per share and our forecasted tax rate for the third quarter of fiscal 2014. 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 27, 2013 as filed with the Securities and Exchange Commission. Additional information will also be set forth in our quarterly report on Form 10-Q for the quarter ended June 27, 2014 to be filed with the Securities and Exchange Commission. Our periodic filings with the Securities and Exchange Commission are publicly available on the Securities and Exchange Commission’s website at www.sec.gov. 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.

Casey Eichler

CFO

510/576-4704

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in thousands, except per share data)

	Three months ended						Six months ended
	June 27,			June 28,			June 27,			June 28,
	2014			2013			2014			2013

Sales	$	132,677		$	110,107		$	276,901		$	210,571
Cost of goods sold		111,525			94,004			232,438			180,645
Gross profit		21,152			16,103			44,463			29,926

Operating expenses:
Research and development		1,798			1,489			3,565			2,746
Sales and marketing		2,592			2,465			5,254			4,784
General and administrative		8,703			8,522			18,424			18,148
Total operating expenses		13,093			12,476			27,243			25,678
Income from operations		8,059			3,627			17,220			4,248

Interest and other income (expense), net		(452	)		(730	)		(1,081	)		(1,687	)
Income before provision for income taxes		7,607			2,897			16,139			2,561
Income tax provision		1,575			581			3,051			556
Net income	$	6,032		$	2,316		$	13,088		$	2,005

Net income per share:
Basic	$	0.20		$	0.08		$	0.45		$	0.07
Diluted	$	0.20		$	0.08		$	0.44		$	0.07
Shares used in computing net income per share:
Basic		29,438			28,370			29,157			28,172
Diluted		29,882			28,757			29,905			28,750

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in thousands, except share amounts)

	June 27, 2014		December 27, 2013
ASSETS
Current assets:
Cash and cash equivalents	$	69,365	$	60,415
Accounts receivable		67,947		67,450
Inventory		67,060		63,942
Other current assets		10,331		8,652
Total current assets		214,703		200,459

Equipment and leasehold improvements, net		8,207		8,534
Goodwill		55,918		55,918
Purchased intangibles, net		19,266		21,708
Other non-current assets		5,733		5,924
Total assets	$	303,827	$	292,543

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Bank borrowings	$	43,857	$	37,705
Accounts payable		45,525		53,962
Other current liabilities		10,301		8,377
Total current liabilities		99,683		100,044

Bank debt and other long-term liabilities		15,012		20,570
Total liabilities		114,695		120,614

Stockholders’ equity:
Common stock		148,683		144,568
Retained Earnings		40,449		27,361
Total stockholders’ equity		189,132		171,929
Total liabilities and stockholders’ equity	$	303,827	$	292,543