Ultra Clean Earnings 2021-03-26

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

uctt-10q_20210326.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 26, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 000-50646

Ultra Clean Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware		61-1430858
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

26462 Corporate Avenue, Hayward, California		94545
(Address of principal executive offices)		(Zip Code)

(510) 576-4400

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.001 per share

UCTT

The Nasdaq Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares outstanding of the issuer’s common stock as of April 23, 2021: 43.8 million

ULTRA CLEAN HOLDINGS, INC.

TABLE OF CONTENTS


	PART I. FINANCIAL INFORMATION
ITEM 1.	UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	3
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	24
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	31
ITEM 4.	CONTROLS AND PROCEDURES	31
	PART II. OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	32
ITEM 1A.	RISK FACTORS	32
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	32
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	32
ITEM 4.	MINE SAFETY DISCLOSURES	32
ITEM 5.	OTHER INFORMATION	32
ITEM 6.	EXHIBITS	32
SIGNATURES		33

- 2 -

PART I. FINANCIAL INFORMATION

ITEM 1.

Financial Statements

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	March 26,			December 25,
(In millions, except par value)	2021			2020
ASSETS
Current assets:
Cash and cash equivalents	$	264.3		$	200.3
Accounts receivable, net of allowance for doubtful accounts of $0.2 and $0.3 at March 26, 2021 and December 25, 2020, respectively		168.0			145.5
Inventories		189.2			180.4
Prepaid expenses and other current assets		14.7			18.9
Total current assets		636.2			545.1
Property, plant and equipment, net		157.3			159.2
Goodwill		171.1			171.1
Intangibles assets, net		155.6			160.5
Deferred tax assets, net		22.3			23.5
Operating lease right-of-use assets		41.7			37.8
Other non-current assets		6.4			5.3
Total assets	$	1,190.6		$	1,102.5
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Bank borrowings	$	8.0		$	7.4
Accounts payable		164.9			121.3
Accrued compensation and related benefits		30.9			34.5
Operating lease liabilities		12.4			11.7
Other current liabilities		46.9			26.3
Total current liabilities		263.1			201.2
Bank borrowings, net of current portion		259.8			261.6
Deferred tax liabilities		33.6			33.6
Operating lease liabilities		33.9			31.1
Other liabilities		23.6			23.8
Total liabilities		614.0			551.3
Commitments and contingencies (See Note 10)
Equity:
UCT stockholders’ equity:
Preferred stock — $0.001 par value, 10.0 shares authorized; none outstanding	—			—
Common stock — $0.001 par value, 90.0 shares authorized; 40.6 shares issued and outstanding at March 26, 2021 and December 25, 2020		0.1			0.1
Additional paid-in capital		316.3			312.8
Common shares held in treasury, at cost, 0.6 shares at March 26, 2021 and December 25, 2020		(3.3	)		(3.3	)
Retained earnings		242.9			217.9
Accumulated other comprehensive gain		1.6			5.1
Total UCT stockholders' equity		557.6			532.6
Noncontrolling interests		19.0			18.6
Total equity		576.6			551.2
Total liabilities and stockholders' equity	$	1,190.6		$	1,102.5

(See accompanying Notes to Condensed Consolidated Financial Statements)

- 3 -

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended
	March 26,			March 27,
(In millions, except per share amounts)	2021			2020
Revenues:
Products	$	345.6		$	259.4
Services		72.0			61.5
Total revenues		417.6			320.9
Cost of revenues:
Products		283.6			214.7
Services		47.1			40.5
Total cost of revenues	330.7				255.2
Gross profit		86.9			65.7
Operating expenses:
Research and development	4.2			3.4
Sales and marketing		7.6		5.8
General and administrative		34.7		33.9
Total operating expenses		46.5		43.1
Income from operations		40.4			22.6
Interest income		0.1			0.3
Interest expense		(3.6	)		(5.2	)
Other income (expense), net		(4.3	)		(2.7	)
Income before provision for income taxes		32.6			15.0
Provision for income taxes		7.0		4.5
Net income		25.6			10.5
Less: Net income attributable to noncontrolling interests		0.6			1.1
Net income attributable to UCT	$	25.0		$	9.4

Net income per share attributable to UCT common stockholders:
Basic	$	0.62		$	0.24
Diluted	$	0.60		$	0.23
Shares used in computing net income per share:
Basic		40.6			39.8
Diluted		41.6			40.7

(See accompanying Notes to Condensed Consolidated Financial Statements)

- 4 -

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Three Months Ended
	March 26,			March 27,
(In millions)	2021			2020
Net income	$	25.6		$	10.5
Other comprehensive loss:
Change in cumulative translation adjustment		(2.8	)		(3.2	)
Change in fair value of derivatives		(0.7	)		(0.1	)
Total other comprehensive loss		(3.5	)		(3.3	)
Other comprehensive income, attributable to noncontrolling interests	0.6				1.1
Comprehensive income attributable to UCT	$	21.5		$	6.1

(See accompanying Notes to Condensed Consolidated Financial Statements)

- 5 -

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended
	March 26,			March 27,
(In millions)	2021			2020
Cash flows from operating activities:
Net income	$	25.6		$	10.5
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		6.5			6.4
Amortization of intangible assets		4.9			4.9
Stock-based compensation		3.5			3.1
Amortization of debt issuance costs		0.4			0.4
Gain from insurance proceeds		(7.3	)		—
Deferred income taxes		1.2			1.0
Change in the fair value of financial instruments and earn-out liability		11.6			3.0
Others		0.1			—
Changes in assets and liabilities:
Accounts receivable		(22.5	)		(0.7	)
Inventories		(8.8	)		(14.7	)
Prepaid expenses and other current assets		3.0			(0.2	)
Other non-current assets		(1.0	)		0.3
Accounts payable		43.3			(4.1	)
Accrued compensation and related benefits		(3.6	)		0.2
Income taxes payable		2.8			1.6
Operating lease assets and liabilities		(0.3	)		(0.4	)
Other liabilities		6.2			4.4
Net cash provided by operating activities		65.6			15.7
Cash flows from investing activities:
Purchases of property, plant and equipment		(6.5	)		(6.7	)
Insurance proceeds		7.3			—
Net cash provided by (used in) investing activities		0.8			(6.7	)
Cash flows from financing activities:
Proceeds from bank borrowings		6.6			51.5
Principal payments on bank borrowings and finance leases		(8.2	)		(14.5	)
Net cash provided by (used in) financing activities		(1.6	)		37.0
Effect of exchange rate changes on cash and cash equivalents		(0.8	)		(0.4	)
Net increase in cash and cash equivalents		64.0			45.6
Cash and cash equivalents at beginning of period		200.3			162.5
Cash and cash equivalents at end of period		264.3		$	208.1
Supplemental cash flow information:
Income taxes paid, net of income tax refunds	$	2.7		$	2.0
Interest paid	$	4.3		$	4.8
Non-cash investing and financing activities:
Property, plant and equipment purchased included in accounts payable and other liabilities	$	3.5		$	2.9

(See accompanying Notes to Condensed Consolidated Financial Statements)

- 6 -

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

	Common Stock				Additional Paid-in		Treasury shares					Retained		Accumulated Other Comprehensive			Total Stockholders’			Noncontrolling			Total
(In millions)	Shares		Amount		Capital		Shares		Amount			Earnings		Income (Loss)			Equity of UCT			Interests			Equity
Balance December 25, 2020		40.6	$	0.1	$	312.8		0.6	$	(3.3	)	$	217.9	$	5.1		$	532.6		$	18.6		$	551.2
Stock-based compensation expense	—		—			3.5	—		—			—		—				3.5		—				3.5
Net income	—		—		—		—		—				25.0	—				25.0			0.6			25.6
Dividend payments to a joint venture shareholder	—		—		—		—		—			—		—			—				(0.2	)		(0.2	)
Other comprehensive loss	—		—		—		—		—			—			(3.5	)		(3.5	)	—				(3.5	)
Balance March 26, 2021		40.6	$	0.1	$	316.3		0.6	$	(3.3	)	$	242.9	$	1.6		$	557.6		$	19.0		$	576.6

	Common Stock				Additional Paid-in		Treasury shares					Retained		Accumulated Other Comprehensive			Total Stockholders’			Noncontrolling			Total
(In millions)	Shares		Amount		Capital		Shares		Amount			Earnings		Income (Loss)			Equity of UCT			Interests			Equity
Balance December 27, 2019		39.9	$	0.1	$	300.9		0.6	$	(3.3	)	$	140.3	$	(1.3	)	$	436.7		$	15.8		$	452.5
Stock-based compensation expense	—		—			3.1	—		—			—		—				3.1		—				3.1
Net income	—		—		—		—		—				9.4	—				9.4			1.1			10.5
Other comprehensive loss	—		—		—		—		—

Price	14.49	EPS	0
Shares	40	P/E	284
MCap	580	P/FCF	7
Net Debt	-159	EBIT	15
TEV	421	TEV/EBIT	29
TTM 2019-09-27, in MM, except price, ratios

10-Q	2021-03-26	Filed 2021-05-05
10-K	2020-12-25	Filed 2021-02-23
10-Q	2020-09-25	Filed 2020-11-04
10-Q	2020-06-26	Filed 2020-08-03
10-Q	2020-03-27	Filed 2020-05-06
10-K	2019-12-27	Filed 2020-03-11
10-Q	2019-09-27	Filed 2019-11-05
10-Q	2019-06-28	Filed 2019-08-07
10-Q	2019-03-29	Filed 2019-05-08
10-K	2018-12-28	Filed 2019-03-22
10-Q	2018-09-28	Filed 2018-11-07
10-Q	2018-06-29	Filed 2018-08-08
10-Q	2018-03-30	Filed 2018-05-09
10-K	2017-12-29	Filed 2018-03-14
10-Q	2017-09-29	Filed 2017-11-08
10-Q	2017-06-30	Filed 2017-08-09
10-Q	2017-03-31	Filed 2017-05-10
10-K	2016-12-30	Filed 2017-03-15
10-Q	2016-09-23	Filed 2016-11-01
10-Q	2016-06-24	Filed 2016-08-03
10-Q	2016-03-25	Filed 2016-05-02
10-K	2015-12-25	Filed 2016-03-09
10-Q	2015-09-25	Filed 2015-11-04
10-Q	2015-06-26	Filed 2015-08-05
10-Q	2015-03-27	Filed 2015-05-04
10-K	2014-12-26	Filed 2015-03-11
10-Q	2014-09-26	Filed 2014-11-03
10-Q	2014-06-27	Filed 2014-08-04
10-Q	2014-03-28	Filed 2014-05-05
10-K	2013-12-27	Filed 2014-03-12
10-Q	2013-09-27	Filed 2013-11-01
10-Q	2013-06-28	Filed 2013-08-02
10-Q	2013-03-29	Filed 2013-05-03
10-K	2012-12-28	Filed 2013-03-13
10-Q	2012-09-28	Filed 2012-11-07
10-Q	2012-06-29	Filed 2012-08-07
10-Q	2012-03-30	Filed 2012-05-07
10-K	2011-12-30	Filed 2012-03-21
10-Q	2011-09-30	Filed 2011-11-03
10-Q	2011-07-01	Filed 2011-08-03
10-Q	2011-04-01	Filed 2011-05-06
10-K	2010-12-31	Filed 2011-03-16
10-Q	2010-10-01	Filed 2010-11-09
10-Q	2010-07-02	Filed 2010-08-09
10-Q	2010-04-02	Filed 2010-05-14
10-K	2010-01-01	Filed 2010-03-30

8-K	2020-10-28
8-K	2020-07-29
8-K	2020-06-02
8-K	2020-04-29
8-K	2020-02-19
8-K	2019-12-17
8-K	2019-10-30
8-K	2019-07-31
8-K	2019-05-30
8-K	2019-05-28
8-K	2019-05-23
8-K	2019-05-02
8-K	2019-03-25
8-K	2019-02-21
8-K	2018-11-06
8-K	2018-10-26
8-K	2018-10-01
8-K	2018-09-05
8-K	2018-08-27
8-K	2018-07-26
8-K	2018-07-24
8-K	2018-06-01
8-K	2018-06-01
8-K	2018-05-15
8-K	2018-04-25
8-K	2018-03-29
8-K	2018-02-21
8-K	2018-02-06
8-K	2018-01-30
8-K	2018-01-29
8-K	2018-01-16

EX-31.1	uctt-ex311_6.htm
EX-31.2	uctt-ex312_7.htm
EX-32.1	uctt-ex321_8.htm

UCTT 10Q Quarterly Report

Ultra Clean Earnings 2021-03-26