Ultra Clean (UCTT) - 2021 Q1 - Quarterly Report

PART I Unaudited Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements, detailing financial performance, position, and cash flows, along with significant accounting policies and subsequent events Condensed Consolidated Balance Sheet Highlights (Q1 2021 vs. YE 2020) | Account | March 26, 2021 (In millions) | December 25, 2020 (In millions) | | :--- | :--- | :--- | | Total Current Assets | $636.2 | $545.1 | | Total Assets | $1,190.6 | $1,102.5 | | Total Current Liabilities | $263.1 | $201.2 | | Total Liabilities | $614.0 | $551.3 | | Total Equity | $576.6 | $551.2 | Condensed Consolidated Statements of Operations (Q1 2021 vs. Q1 2020) | Metric | Q1 2021 (In millions, except EPS) | Q1 2020 (In millions, except EPS) | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $417.6 | $320.9 | +30.1% | | Gross Profit | $86.9 | $65.7 | +32.3% | | Income from Operations | $40.4 | $22.6 | +78.8% | | Net Income Attributable to UCT | $25.0 | $9.4 | +166.0% | | Diluted EPS | $0.60 | $0.23 | +160.9% | Condensed Consolidated Statements of Cash Flows (Q1 2021 vs. Q1 2020) | Cash Flow Activity | Q1 2021 (In millions) | Q1 2020 (In millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $65.6 | $15.7 | | Net cash provided by (used in) investing activities | $0.8 | $(6.7) | | Net cash provided by (used in) financing activities | $(1.6) | $37.0 | | Net increase in cash and cash equivalents | $64.0 | $45.6 | - Subsequent to the quarter's end, on March 31, 2021, the company completed the acquisition of Ham-Let for approximately $351.0 million in cash[124] - In April 2021, the company completed a public offering of common stock, receiving net proceeds of approximately $167.6 million[127] Note 1: Organization and Significant Accounting Policies UCT, a key semiconductor industry supplier, operates through Products and Services segments, with significant revenue concentration from two major customers - The company operates in two segments: the Products division (critical subsystems like chemical and gas delivery systems) and the Services division (parts cleaning, coating, and analytical services)[19] Major Customer Revenue Concentration (Q1 2021) | Customer | Percentage of Total Revenues | | :--- | :--- | | Lam Research Corporation | 45.7% | | Applied Materials, Inc. | 23.5% | | Total | 69.2% | Note 7: Borrowing Arrangements As of March 26, 2021, total bank debt was $267.8 million, primarily from a Term Loan, with an additional $355.0 million borrowed post-quarter for the Ham-Let acquisition - As of March 26, 2021, the company had an outstanding Term Loan of $272.8 million with an interest rate of 4.6%[76] - The company had unused revolving credit facilities totaling approximately $73.2 million across the U.S., Czech Republic, and China[84] - On March 31, 2021, the company borrowed an additional $355.0 million under its credit agreement to finance the acquisition of Ham-Let[86][125] Note 16: Reportable Segments The company reports two operating segments, Products and Services, with the Products segment being the primary driver of revenue and operating profit in Q1 2021 Segment Performance (Q1 2021 vs. Q1 2020) | Segment | Metric (In millions) | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | :--- | | Products | Revenues | $345.6 | $259.4 | | | Operating Profit | $34.2 | $20.3 | | Services | Revenues | $72.0 | $61.5 | | | Operating Profit | $6.2 | $2.3 | Note 17: Subsequent Events Post-quarter, UCT completed the Ham-Let acquisition for $351.0 million via a term loan and raised $167.6 million from a public equity offering - On March 31, 2021, UCT acquired Ham-Let for ~$351.0 million in cash to broaden its serviceable market in the semiconductor fab infrastructure space[124] - To fund the acquisition, the company obtained a $355.0 million senior secured incremental term loan B facility[125] - In April 2021, the company completed a public offering of 3,181,818 shares of common stock, raising net proceeds of approximately $167.6 million[127] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes strong 30.1% year-over-year revenue growth to increased semiconductor demand, with improved gross margin and strengthened liquidity from increased cash from operations Revenue by Segment (Q1 2021 vs. Q1 2020) | Segment | Q1 2021 Revenue (In millions) | Q1 2020 Revenue (In millions) | % Change | | :--- | :--- | :--- | :--- | | Products | $345.6 | $259.4 | 33.2% | | Services | $72.0 | $61.5 | 17.1% | | Total | $417.6 | $320.9 | 30.1% | Gross Margin by Segment (Q1 2021 vs. Q1 2020) | Segment | Q1 2021 Gross Margin | Q1 2020 Gross Margin | | :--- | :--- | :--- | | Products | 17.9% | 17.2% | | Services | 34.6% | 34.1% | | Total Company | 20.8% | 20.5% | - Cash and cash equivalents increased by $64.0 million during the quarter, ending at $264.3 million; net cash from operating activities was $65.6 million, a substantial increase from $15.7 million in the prior-year period[149] - Total contractual obligations as of March 26, 2021, were $660.9 million, which includes operating leases, borrowing arrangements, a common stock purchase obligation, and purchase order commitments[172] Quantitative and Qualitative Disclosures About Market Risk No significant changes were reported regarding the company's quantitative and qualitative market risk disclosures from the prior annual report - There were no significant changes to the company's market risk disclosures during the first quarter of 2021[174] Controls and Procedures Management, including the CEO and CFO, deemed disclosure controls and procedures effective, with no material changes in internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of the end of the period covered by the report[175] - No changes in internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, internal control were identified during the quarter[176] PART II. OTHER INFORMATION Legal Proceedings The company is involved in ordinary course legal proceedings, none of which are anticipated to have a material adverse effect on financial condition or results - The company does not believe that any current legal proceedings or claims will have a material adverse effect on its consolidated financial condition or results of operations[179] Risk Factors No material changes were reported to the risk factors previously disclosed in the company's 2020 Annual Report on Form 10-K, as updated - No material changes to the risk factors disclosed in the 2020 Form 10-K (as updated) were reported during the quarter[180] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds during the period - None reported[181] Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL financial data files - The exhibits filed with the report include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, as well as XBRL documents[185] Signatures