UCTT - Earnings call transcript Q1 2019 | Ultra Clean Holdings, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, everyone, and welcome to the Ultra Clean Technology’s First Quarter 2019 Earnings Conference Call. All participants are in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask question. [Operator Instructions] Please also note hat today’s event is being recorded. At this time, I like to turn the conference call over to Rhonda Bennetto, Investor Relations. ahead. go Please

Rhonda Bennetto

with found Good financial us. operator. Officer; and you follow will thank Sheri business, about Thank Sheri Then Relations information press this afternoon, earlier of open and me the about webcast, afternoon, at are call we’ll the issued joining will www.uct.com. up begin Jim Officer. Investor With to Chief with Executive call that prepared Jim for contains remarks release for Savage, and on can the website our the forward-looking be with you, up uncertainties. Financial everyone, some section review. is Scholhamer, questions. the and Chief the risks The Today’s along subject statements

a to SEC of Today’s of refer obligation assume Minneapolis the are basis. factors Conference New the press more to results assumptions today’s May between be reconciliation we projections, can statements forward-looking XX we them non-GAA information, public call. May results All on Conference of after the our discussion management’s based York. estimates, no our be The update GAAP Technology as XX financial in non-GAAP And and please Investor disclosure will in be Institutional and participating found Craig-Hallum finally, will Cowen in Annual on and risk release. and filings. in today, on For today’s on presented

events. find the information I www.uct.com/investor be the livecasting, in Conference presenting Stifel will on and June we Jim. over and conferences to turn now our on Boston, additional Sector addition, can Jim? call Cross XX In will on these you website Insight

Jim Scholhamer

conference joining you everyone. afternoon quarter our good and Rhonda, webcast. and first Thank us for call for you, Thank XXXX

including commentary. with up I’ll a I’m then business, of few that the call a her products update our will semiconductor improvement initiatives recent to review will going highlight and acquisition. on conclude services expand our for continue and open questions. and cost with of on solutions semi-conductor an business our in financial I’ll our Sheri First, results recap we

first strategy the our to million and is approach quarter our customers. for guided above revenue was both our ability diversification of our deliver XXX As indicate, in for Total quarter first terms our results our working, range.

an solutions for $XXX also from and our and products added group our the dropping and to and contributed products sales largest at million pulling EPS saw orders range service as guidance XX $X.XX outperform were in business We Our our on business our quarter. increase Non-GAAP guided IDM exceeded our customer. million. able business executed service our

start me Let with our products business.

visibility direct and customer's significantly change based Our on quarter. even is limited within the orders can

XXXX. not our a should supplier recovery. customer deliver adjustments industry due schedules CapEx performance which measures current last as levels, demand. see for ago. and key into as The and output, industry the from being market XXXX to begun a sign is the orders relatively are same viewed customer Our that quarter the taken us manage minute conditions inventory in as well unchanged and plans supply, to enabled bodes to meet We to for heading has increase remains be a a Industry

realized latter rigorous increase period in we of introduced We while quarter, Also, series Last initiatives our and consolidating these improvement long-term advantage the footprint, broadening optimizing shareholders. the profitability are our our initiatives profitability of The operational of to manufacturing by for year. of being product the these finalize redundant taking capabilities. value majority several should will take by footprint eliminating half a with benefit increase digestion capabilities. cost of the creating to initiatives quarters

way. with plan savings million once to along later $XX $XX million this cost We from year, the our the completed be range margin the annualized to restructuring expect in expansion incremental

DMS we addition, Recently, portfolio of our complete we Manufacturing growing available the announced share equipment Solutions. semiconductor are a acquisition product commodities. Dynamic and in in market our provides key increasing range facility. weldment strategy our of the Texas profitable This to is consistent acquisition solutions, and is core to growth pursue business. our with primarily to industry adjacent Austin, same semiconductor existing in semi our In

complementary with as accretive and our position highly Our technologies, the in increased a us earnings. semiconductor a synergistic space. This acquisition scale equipment weldment together immediately leader was to

over in optimizing brand. add We year to $X.XX demand generate we adjusted expect to million offerings, this By to and during UCT's profitability fleet products our non-GAAP of and improve for will to next the on the expanding our in DMS increases $X.XX EBITDA operations X our EPS. capitalize

update I’d of provide one in our Services due to largest to quarter strong a Now, had increase an demand customers. from business. like on services our an

we will recall, in two revenue ways. derive You

First, to by pick utilization our up. marketing confirmed servicing rates investment. to and the equipment secondly begun from are and that from processing installed fab IDMs have inventory chip declining semi-cap new and base levels intelligence industry Recently, earnings report related indicate research

solution. leading addition, bodes cleaning business us will providing require edge the remain nodes provide opportunities and growth This demand transition and stringent highly our analytical we for summary, upbeat that over in drivers very products In specializes for In technical long-term. the specifications validation. services well Quantum as more about

strengthen look I to stronger and I’ll With now the to thank emerge our profitability, company. to We updating employees on like turn support their our to position, our our our would the improve forward increase call. engagements I Sheri. competitive to deepen next capabilities, and that, over and shareholders you continued are call our taking step customer for much a necessary our

Sheri Savage

discussion, joining Thanks us. to today's Jim, be numbers non-GAAP I’ll referring only. and everyone. good afternoon for Thanks In

to have efficiencies quarter, due reporting the capture our operating organizational leverage to structure change acquisition. quantum and to During and we elected this

operating Semiconductor We are or segments. for Semiconductor SPS, results two and SSB. Solutions reporting now and Business Products or Services

of margin million, last meet contributed above to XX.X quarter. release. at guided the and just which in performed XXX.X tables We XXX.X XX.X% was the and and stayed press our gross up includes of million higher XX.X%. revenue, range. generating are SSB providing at X% our reconciliation quarter quarter SPS revenue, late or total revenue SSB added last non-GAAP from margin Total Non-semiconductor segmented well million products SPS labor revenue. and compared and measures cost required X.X% generated services GAAP our financial Higher of impacted in our a Both over to XX.X% in margin. divisions this end gross was XX.X%, million. range to XX.X unanticipated overhead display, of gross demand quarter

decreased before shared to expect be you timing to million compared margins volumes, to $XX.X million, $XX.X by customer should product concentration, initiatives, mix expenses the As quarter-to-quarter. variances quarter. in the influenced we so have our see restructuring and and geography, can prior of X.X% Operating

of compared Operating fees As a Margin from revenue impacted X.X% first percentage to the time and was SSB demand XX.X% tax year-end X.X%, meet XX.X% seasonally OpEx from contributed audit and last higher was for quarter. At and accounting last margins. late quarter to quarter XX.X%, SPS expenses over decreased X.X%. quarter. to payroll was margin employer

million. expect derived million this the to on We $X.X synergies impact realized compares will year. our of were $X.XX together earnings restructuring second XX%, from on of margins for the DMS XX.X the acquisition Based from first per $X.X shares This share recent million outstanding, in half have income plan with of our net and last quarter a positive quarter.

due Tax of XX.X%, increase mix was and was for to rate the income. in the quarter forecasted quarter. pre-tax geographic the U.S. XX.X% the to The compared of last primarily acquisition, tax Our quantum impacts changes Reform the

quarter-to-quarter. expect variances you we the forward, can see mid-to be to Going as but our expect rate to always tax in high teens

of the to cash continue decreased compared to sheet, million an prior during demand. increase balance quarter Turning the we quarter. in we manage with quarter the quarter. $XXX.X $X.X the ended million $XX.X and last operations Cash $XX.X from $XX.X customer match million over to cash inventory million closely was levels will to equivalent, and Inventory million

$XXX between outlook questions. over for in non-GAAP second And assumes and $X.XX with call range like $XXX the I’d million a Our the to the EPS quarter turn $X.XX. to million and operator total to of that, revenue

Operator

question. Company. today ahead Quinn from [Operator Instructions] question & Our first Needham go from with comes Please your Bolton

Quinn Bolton

rescheduling on nice you the ins Sheri, just for QX, that quarter also for were result relative but the first Rhonda. the in both the start guidance notice help about, but Jim, better Congratulations I second of revs pull orders, while for kind its understand can't gain and Hi, Street. with – the talked is the quarter. to Wanted of I better to than that

may some it outlook love this to if where noted performing particularly just get because earnings So, is a strength from, opinion of talk on I logic XX you that days? on the you're like what that the may have have last about peers your of think overall upticked side that little foundry feels have be season I'm reported business of think you kind better. foundry then bit business, the over the some could wondering coming logic of your seeing

Jim Scholhamer

little Yes, was the are majority and thanks more difficult role, technologies well. definitely orders in our but all combination predict. a of bit as yes pull-ins The the happening to a types, leading-edge Quinn. drop-in are chip it know as strength, played you’ve still Yes, key that noted of that a logic you of also some there investments

So, being it’s than logic definitely stronger as on well as all leading-edge types, expected. chip

Quinn Bolton

and and wondering their then process part the to your than large it’s ability most one generate in to your is from of gas rather there your or sales Okay, about tool And on field, out talked any new I'm track OEM upgrades had Lam go the through does business components call channels I questions benefit that the great. upgrade tool the revenue whether shipment? of customers chambers field to might new of sales

Jim Scholhamer

is either businesses gas action also that lot reconfigurations a the visible. new Good if the gas many all yes. ads the in business, of important an upgrade question. of roughly as panel is our would material you upgrades also or and less happening require so shorter with on And new well, of it’s lead visible definitely chamber tools, same require It’s and less new would panels part you time. as a A

Quinn Bolton

assume of just that seeing the business? that XXXX I bigger of same you’re in upgrade, a – that part becoming trend that sort did

Jim Scholhamer

Yes.

Quinn Bolton

some great. talked you logic the assume just And digest industry, customers, from side, way mentioned the wafer Quantum some the about to of a if on impact have had that’s the Okay, of try of on if to Quantum’s reducing your reduced starts seen at memory wondering side question, leading then probably I in manufacturers wondering situation last wafer you starts? strength memory the over-capacity a one have of saw business as

Jim Scholhamer

detail, Obviously, No. we break seen it material on out that haven't don't side. but in we anything

Quinn Bolton

XX us I dollar] think quarter, for thinking June press million just range? [XX-ish announced maybe that revenue contribution DMS can was obviously when the be overall and Great better be something last you a the rate, in last what was in think you demand give we year run year Okay. then the million transaction you it the about lastly, will release should

Sheri Savage

Yes, give that’s for right. that $X.XX they’ll us to We the about year. assume $X.XX

maybe quarter. next approximately for $X.XX So, contribution this

Quinn Bolton

Great.

Thanks Okay. very much.

Sheri Savage

you. Thank

Operator

your Ackerman with Our next question Please Company. comes question. and ahead Karl from from go Cowen

Karl Ackerman

Sheri. Hi, be all good seeing for in the my around is but a you areas overall, you continue afternoon year, see towards kind and wafer opportunity, greatest know trends we and have a gas not really the opportunities teens pickup [indiscernible] you which slowdown have is outsourcing your transfer market opportunities of should question toolset high closing each in the know both across if of demand or seen at panel? Jim as on Congrats down on mid-to softened, you this mechanical DMS, the chamber are for your the to of

Jim Scholhamer

continued it outsourcing XXXX the period in on during being ago quarters several I several a abated So, actually down Yes, saw went questions, saw of the and opportunities. one saw, – that great the during think output as that we acceleration obviously upturn obviously XXXX we outsourcing bit. we and first to

already in definitely So, our outsourced, of reflective and outsourcing a kind project is the in that basis, we rate being on occurs XXXX things XXXX outsourcing saw of business. accelerated by still project but of

while a so the see of it where and areas, more in that around require in Obviously, hit tool I space. activities? our second around systems chambers your when the upgrades and lot seeing action process increased increase gas panels, activity part you all side it chamber think part, the see is process obviously of we of is the business The but we’re question

Karl Ackerman

That’s helpful. very

is And of You pull-ins your know, over at perhaps think today? about guess of do in order not, couple mentioned what kind visibility what you that’s we of and briefly I improved the months? rates level last, all

Jim Scholhamer

difficult. in gotten the even months actually is and more last low, it’s The visibility few

of a one pull-in reasons that’s And in that or supplier as that. think is react we and – our call the ability drop it take go I to and the a tends to during our the churn especially moving customers higher is now to the be industry market like the it to further is up, and slower more churn stable a in period forecast out. than when view

have visibility. We more

So, able benefiting a that our to of we’re the – but from those visibility go we’re is the of lot lower our supplier global turnaround right presence with orders. now, our that broad the on capabilities in we’re sudden fact

Karl Ackerman

Understand. And question if I last may.

view One one the displays display up you at know the but you. ended used type it I your half, know of providers new the least both form your at business Thank and is display with more forward? going upside in your business quarters where panel an panel several display factors of your what is utilizing small to – traditional large EMS and business of second buying ago, not be

Jim Scholhamer

is OLED, we're The as as the the you expand, the tools levels that spread obviously you and and the kind investment in the there still that mentioned smaller the TVs. seeing and there obviously was large seeing then but continued display the making at in are not Gen some so size sizes we're running of activity, tools OLED XX.X it’s, panel very – the know is are before, TV large between and activity

from X forward, going we used a see quarter our reach levels, to we million I expansions, to so, pre-displays you display. million know think X And used to

years, kind see forward. XX few or we million right – of of end now. that’s bouncing in around kind that it to last X the around we our the During are lower of going bouncing And where million range

Karl Ackerman

you. thank Right,

Operator

Our Christian question. next your Schwab Capital from question from ahead Group. Craig-Hallum go with comes Please

Christian Schwab

but year. be better you caveat thanks And the the my than expect of question. the would half half? to first calendar know with to for visibility, of start the the second taking Hi, Great I limited year

Jim Scholhamer

Yes.

are You year roughly know we these purposes around whole for levels. is that the assuming planning bouncing

the our business we have it pessimism for think base second to I half, this level more continue see will of that through than optimism assumptions XXXX. are but

Christian Schwab

then half you we versus margin that improvement first And second type of what should highlighted? expect the just guys Perfect. half

Sheri Savage

the think is year rate by we to think Christian reductions, of a I we had thing, calls talked XX mentioned million that coming of we about in the be our million at cost would cost key end I of some that run out. at previous XX the the

the So, some seeing going as timing that but doing, half. little seeing that bit the half and second in will a depends definitely on everything, it ramp of help we’re first as we’re of of are and the half. of Obviously, the execution they margins we cost second do compared that the improvement up as the initiatives to some see to in well

Christian Schwab

Okay, that's you. questions. great, no other Thank

Jim Scholhamer

Thanks, Christian.

Operator

from comes Our question. David ahead next Duley question Securities. Instructions] Steelhead to [Operator Please go from

David Duley

my taking for Thanks questions.

business should the goes, the as QX? QX versus two act how pieces QX as far in Just of your

Sheri Savage

to as percentages. quarter. fairly Very From breakdown similar of revenue, this compared a it’s similar

David Duley

you goes to much then mentioned it of see from no us, more as opportunity you And have intense examples how have you much a shrinks any might be large [indiscernible] as might Okay. that customers? be revenue do node node how or more of your you

Jim Scholhamer

mis in is a there going what’s on. Obviously,

across all the We’re notes. activity seeing

single would a it’s why many the services investments roughly service many factor well break difficult think different factored digits, I is in applications don't combination out leading wafer of from guess clean, industry, why the starts business platforms the guess why so is as from each year, in up edge business up it’s the the the [indiscernible] grow to different out of the at the as the I platform. obviously, growth. last will of of think that but believe I much going I frequency, it’s the for is increased how frequency the is and trend As to due far our half mid-to-high could of it’s of we, of the It as break there impact that and increased the frequency node. so we part we

David Duley

And XX% during you have customers the great. any Okay, did quarter?

Jim Scholhamer

least At two. yes. Oh

Sheri Savage

so Applied. typical our quarters typically highest Lam put be, continue The to or in be customers that most XX-K the we continue to we into have that two and

David Duley

quarterly on And breakout the a don't I'm that you I recall, basis, don't percentages, just sorry.

Sheri Savage

Okay, is no around XX. is Lam the worries. XX% Applied Generally, and close to

David Duley

planning basis on you as the or overall say, is And for – let's year? what Okay. what decline this for as purposes Jim annual then speculate just you're the number you the if on WFE far an could that just, planning think

Jim Scholhamer

roughly or XXs XXXX. from XX% low about So, drop

David Duley

compare you assume and bit would to your starts when the And revenue your by your business [lithography] large services held core revenue more drop OEMs. it that just WFE, because is core overall to that of little WFE a

So, if drop? your they dropped core XX% think what will we business might

Jim Scholhamer

close. attracting pretty actually That’s

You our know, litho it’s not we footprint do as top XX, have, space we our do the in in well. have although

first bigger few the forth. so and the the inventory quarters us and customers in the so chain, think I all the was their customers the our and and impact our down through between customers chain on and way in

I relatively So, do but I overall, we are in-line you with overall WFE. – math, if the the think

David Duley

Alright, thank you.

Sheri Savage

you. Thank

Jim Scholhamer

you. Thank

Operator

that And closing session. conference the I’d over remarks. turn ladies question-and-answer will any our like to to call and conclude management gentlemen for

Jim Scholhamer

Well, for quarterly you to forward next and thank the you us, we joining on call. speaking look to

Operator

that, thank you gentlemen, And today's attending conference ladies and do We presentation. conclude for we’ll with today's call.

disconnect now lines. your You may

Ultra Clean (UCTT) 2 May 192019 Q1 Earnings call transcript