Ultra Clean (UCTT) 8-K UCT Also Announces Two New Customers

Press Release Source: Ultra Clean Holdings, Inc.

Ultra Clean Technology Reports Third Quarter Revenue and Earnings in Line with Guidance

Monday, October 22, 2007 4:30 pm ET

UCT Also Announces Two New Customers

MENLO PARK, Calif., October  22, 2007 /PRNewswire/ -- Ultra Clean Holdings, Inc. (Nasdaq: UCTT), a leading developer and supplier of critical subsystems for the semiconductor capital equipment industry, today reported its financial results for the third quarter ended September 28, 2007.  Revenue for the third quarter of 2007 totaled $95.5 million, compared to $104.7 million in the second quarter ended June 29, 2007, a decrease of 8.8%, and compared to revenue of $104.1 million for the same period a year ago, an 8.2% decrease.  The company recorded net income of $3.5 million, or $0.16 per diluted share, during the third quarter of 2007, compared to $5.1 million or $0.23 per diluted share, for the second quarter of 2007 and net income of $5.6 million, or $0.25 per diluted share, for the same period a year ago.  Gross margin for the third quarter of 2007 was 14.0%, compared to 15.1% for the second quarter of 2007, and 14.8% for the same period a year ago.

Cash at the end of the third quarter of 2007 was $28.0 million, an increase of $8.1 million from $19.9 million at the end of the second quarter of 2007, and an increase of $9.1 million from $18.9 million at the end of the third quarter of 2006.  Third party debt at the end of the third quarter was also $28.0 million, a decrease of $800,000 from $28.9 million at the end of the second quarter of 2007 and a decrease of $5.4 million from $33.4 million at the end of the third quarter of 2006.

Clarence Granger, UCT’s Chairman and Chief Executive Officer commented:  “While this continues to be a challenging time for the industry, we are pleased with the company’s operating performance and cash generation in the third quarter.  We hit our guidance range for both revenue and earnings per share, despite significantly lower than expected industry demand.  We increased our cash reserves equal to that of our third party debt.  And we continued to execute on the new product awards announced in the first half of this year.”

Granger added, “In addition, we secured orders from two new strategic customers; Axcelis Technologies and Photon Dynamics.  During Q3, we began shipping gas delivery systems to Axcelis Technologies and we were awarded a process module contract from Photon Dynamics.  We expect to ship the first Photon Dynamics process module in Q1 2008 from one of our U.S. facilities and to transfer the manufacturing of this module to our Shanghai facilities in Q2 2008.  These new customer wins reflect further successes toward our stated objectives to grow faster than the overall industry and to expand our operations in Shanghai.”

Commenting on UCT’s corporate outlook, Granger noted, “We expect that revenue for the fourth quarter of 2007 will range between $87 million and $95 million, and net income per share to range between $0.08 and $0.14 per share, inclusive of an expected $0.01 per share charge for amortization of intangibles and $0.04 per share charge related to SFAS 123(R).  This projection reflects the expectation of a further decline in industry demand in the fourth quarter of 2007.  We remain confident in our strategic direction and our long term ability to grow faster than the industry.”

Ultra Clean will conduct a conference call on Monday, October 22, 2007, beginning at 2:00 p.m. PDT at 800/952-6697 (domestic) and 212/231-2901 (international).  A replay of the webcast will be available for fourteen days following the conference call at 800/633-8284 (domestic) and 402/977-9140 (international). The confirmation number for the live broadcast and replays is 21352079 (all callers). The conference call will also be webcast live and be available for fourteen days on our website.

About Ultra Clean Holdings, Inc.

Ultra Clean Holdings, Inc. is a developer and supplier of critical subsystems for the semiconductor capital equipment industry.  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 of semiconductor capital equipment. Ultra Clean is headquartered in Menlo Park, 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 U.S. 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," "believes," "plan," "expect," "future,"' "intends," "may," "will," "should," "estimates," "predicts," "potential," "continue" and similar expressions to identify these forward-looking statements.  Forward looking statements included in the press release include estimates made with respect to our fourth quarter revenue and diluted earnings per share.  All forward-looking statements address matters that involve risks and uncertainties. Accordingly, our actual results may differ materially from the results predicted or implied by these forward- looking statements. These risks, uncertainties and other factors 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 29, 2006 and quarterly report on Form 10-Q for the quarter ended June 29, 2007 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.

	Three months ended						Nine months ended
	September 28, 2007			September 29, 2006			September 28, 2007			September 29, 2006
Sales	$	95,535		$	104,065		$	311,049		$	229,729
Cost of goods sold		82,165			88,694			265,106			195,457
Gross profit		13,370			15,371			45,943			34,272
Operating expenses:
Research and development		648			806			2,275			2,137
Sales and marketing		1,494			1,231			4,253			3,311
General and administrative		5,700			5,284			18,479			11,811
Total operating expenses		7,842			7,321			25,007			17,259
Income from operations		5,528			8,050			20,936			17,013
Interest and other income (expense), net		(460	)		(616	)		(1,450	)		(1,139	)
Income before income taxes		5,068			7,434			19,486			15,874
Income tax provision		1,527			1,874			5,664			4,226
Net income	$	3,541		$	5,560		$	13,822		$	11,648
Net income per share:
Basic	$	0.16		$	0.27		$	0.65		$	0.63
Diluted	$	0.16		$	0.25		$	0.63		$	0.59
Shares used in computing
net income per share:
Basic		22,061			20,737			21,188			18,600
Diluted		22,139			21,879			22,012			19,624

 

	September 28, 2007		December 29, 2006
ASSETS
Current assets:
Cash	$	28,038	$	23,321
Accounts receivable		42,861		44,543
Inventory		51,189		47,914
Other current assets		8,095		5,489
Total current assets		130,183		121,267
Equipment and leasehold improvements, net		11,468		9,433
Goodwill		34,248		33,490
Tradename		21,100		22,112
Other non-current assets		846		745
Total assets	$	197,845	$	187,047
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Bank borrowings	$	3,559	$	4,206
Accounts payable		33,566		37,583
Other current liabilities		7,074		7,891
Total current liabilities		44,199		49,680
Capital lease obligations and other liabilities		27,711		30,199
Total liabilities		71,910		79,879
Commitments and contingencies
Stockholders' equity:
Common stock		87,611		82,046
Retained earnings		38,324		25,122
Total stockholders' equity		125,935		107,168
Total liabilities and stockholders' equity	$	197,845	$	187,047