UCTT - Earnings call transcript Q3 2021 | Ultra Clean Holdings, Inc.

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Operator

Good day and welcome to the UCT third quarter 2021 conference call and webcast. All participants will be in a listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions.. Please note, this event is being recorded. to conference like Bennetto. to now would turn over the Rhonda I go Please ahead.

Rhonda Bennetto

about Good thank Executive everyone us. you remarks Jim afternoon risks statements Thank the financial operator. some with questions. call and and the Savage, Financial Today's will and that we then call a today and with prepared Sheri Jim will forward-looking are begin for Sheri to subject With will uncertainties. business contains are you follow Scholhamer, and review open up Chief Officer Chief Officer. me joining for

For after Factors on and forward-looking that, today more over SEC the will call. press our in found this and a basis. can information, A to statements our please would in All today's of them with turn refer Jim? I as results we like to GAAP Discussion be call of assume website. non-GAAP projections reconciliation the non-GAAP to of filings. financial Jim. And be estimates, assumptions section on Risk no release are obligation on based posted presented update to our to

Jim Scholhamer

a multiple Thank will the has then performance of WFE over execution call UCT quarters. over UCT turn thank you I for with all this us our I companywide raise to our that, for After open the industry will to Rhonda expansion continues and am we and through serve. up financial thoughts start solid outperform of for we review to markets third the growth the demonstrated performance extended you today. quarter questions. Sheri on my consistently and going how share joining the and review and on ceiling call

and $XXX.X seeing revenue highest approximately for tremendous and business in. midpoint guidance, earnings XXXX we UCT's share year-over-year quarter XX% of of the $X.XX our results QX EPS we Revenue of XX%. end trajectory The the fourth worldwide. per recorded growth the rising for is are anticipate growth customers strength of history. reflect accelerating. Using Our quarter are and by of from the our market million our the of demand

growing our This is to to advances have and levels sustainable ongoing shift and significantly several extraordinary outperformance of expanding. Our year for term shaping drive opportunity years the for continue and pipeline Technology performance UCT. result foreseeable past of in few XXXX. of base UCT's high long truly chips remarkable a continue strength advantages. competitive the semiconductors. trajectory will We for was so for a and see upward that continue uses customer of is our demand need be is the per the future. Because of the we market underlying over WFE to believe will the increases products up number evolve, into the is services

of the variety make of elements to broader chips the We important services. is indirectly the production broad wide touch electronic sub-segments make most within a fluctuations equipment to the and our production the navigate the and entire make of construction, machines have the technology semiconductor the fab ecosystem in ecosystem. go critical able and One better into thing products presence We UCT's notable that next-generation that diversification many devices. of support most semiconductor us of process. a the exposure buildout of

to optimized With business and leverage are requirements. with able are customers' by additional customers. of shipped last and time early at fist began capacity as to for our ability our meet manufacturing September Malaysia new increasing integrated over we our extraordinary worldwide, our customers timing is advantage product crucial important network to in our our in two for on we dozen our locations vertically our execution. leverage The is continuity manufacturing scale global production product and provides Initial facility time Another September. a it

output revenue our ramp working continue will are to production with customers XXXX. We accelerate through to and and actively

forecasting have making customers' pressure. more our at ability strategy. I dedicated never to In unique situated last levels. model our XX more fabs team has been requirements employees to to is and has output break and our recognized and with many who also our UCT a worldwide call for to growth engage are collaborative ground the high and delivery to role with ideally that expand other it meet our and key chips. in products. using markets. accomplishment We a to summary, strategic capability even on increase investments maximize enabled of actively by We across customers engagement volume plans ongoing our least our vital their for demand time specifically and strategic long new support complexity high procurement medium in truly partners our play value, for want UCT in I exceptional be manufacturers planning Semiconductor to our XXXX low-volume, acknowledge to present capabilities, quarter accelerating highlight for on an like under the us The suppliers our our time would our was understand deliver term success. high

ability call us and for turn consistent to Sheri hard partners forward We employees, work. with commitment us I relevant. urgent we performance. activities most strategically again partnership, in even meet our over semiconductor growth the few to And their financial UCT's and suppliers in everyone and leading look for very to manufacturer. And with sincerely incredibly as customers' you a are months. become sustainable review speaking will our the of as that, excited of term about to thank I opportunity want the positions our semiconductor long needs front more

Sheri Savage

will to and Thanks X.X% the only. prior up today's very revenue referring everyone. total In Jim record us. joining good Thanks for quarter I afternoon of non-GAAP the to am numbers pleased for report discussion, be from $XXX.Xmillion, quarter. I

million, our $XXX.X includes of from which X.X% first full to $XX.X revenue of up was division products quarter Our million. Ham-Let

gross quarter. to XX.X% variances volume, delayed margin And for compared to were the services slightly with remains to down margin mostly site, to XX.X% and Products shortages of we the rose challenged for to Operating be gross compared last quarter $XX.X influenced expenses due Total which was quarter. been was shipments concentration, and compared our with customer now rose increased to division high million third million at quarter will at be have in $XX.X resolved. quarter. labor XX.X% last by model to XX.X% to product quarter-to-quarter. XX.X% million XX.X% our can mix compared end last so QX. the there as Margins Hillsboro $XX.X geography, services Our

expense XX.X% increased services compared net to for to the to compared the margin division net compared for the quarter. due in Operating products lower in our million revenue, $X.XX quarter. to XX.X% income quarter. division quarter was quarter. from the earnings percentage from our operating declined XX.X% improved in to XX.X% to per slightly $XX.X margin in of the on prior the shares Based share a the in quarter income prior on As increased $X.XX X.X% to to Margin second prior XX.X% volumes. $XX.X to prior compared of on XX.X% of quarter million to outstanding, X.X% operating Total compared XX.X million

last was XX.X% the Our tax XX.X% compared for to rate quarter quarter.

to expect teens. high for the tax to rate We our XXXX in mid stay

the Turning balance sheet. to

the last to were Our end of cash $X.X to equivalents $XXX million by $XXX.X quarter $XX.X Cash increased $XX.X from at the million and million prior third million compared million in quarter. to the compared cash operations quarter.

million. amount in of the payment quarter, made on B During our $XX the another the our brining loan Term we for to third $XX voluntary payment year million,

fourth we periodically, anticipate expect we to million with the year-end the of calendar physical need $XXX an the XX.X% million, of in the range and And to we align $XXX. using year-end. the between quarter, For increase $XXX revenue $X.XX midpoint. our EPS

XX result, As a quarter turn the would quarter weeks. to fourth week versus XX be And call that, like a the to will I operator for usual with the questions. over the

Operator

ahead. the Stifel. Please Ho [Operator from Patrick with And Instructions]. today question first go comes

Patrick Ho

execution itself? the that much particularly were on relates were of supply to challenges to in you your Thank Jim, customers? as ensure expectations. the really the given react the you you maybe deliver, you and key able necessary chain, off, it obviously congrats a some were products difficult what very side, on to first environment. But one, of to nice secondly, moving chain terms the parts outperformed in to you how able that, parts faced supply And the results,

Jim Scholhamer

that in three Yes. Hi bottleneck Patrick. week a weeks. It's of A bottleneck one different the lot are interesting. parts are

difference trouble. So is, can sometimes the like be big I even can cable things think such

help to can into planning. better actually the that as big the think working the best suppliers far I as So and difference with we backward long are they what POs we to to future give try them really forecast are is them

one that keys. think of I that was the

we that have are is to, stuff. key another able we think I

over We two have mention. dozen like sites, I

we in I hats ace bottlenecks team when one site. to, able we and to able off have But were place, it kind our supply move chain our different to to and of think a around our procurement team. So are

but they throughout multiple quarter. down and freight various down they knocked challenges really think challenges knocked I flexible were they different including the as really thing multiple another

Patrick Ho

you my issues environment elevated line costs. as freight balance to able well I and really just follow margins the mentioned, that these up costs, creating is how Sheri. the chain the But in seeing, to procuring situation parts, of just Great. maybe get as difficult also for guess a margin expectations? And above were performed challenges. you question lot guys gross gross given you supply incremental Again, manage

Sheri Savage

Yes.

well our continued fact out that Asia obviously volumes facilities of as quite our I grow total a first as to things off. a think the few big in that's we revenue. as percentage of role this have play shipping a

freight up. seen have We go costs

a in on XXXX we X.X% Just revenue freight. magnitude, were spending as about of order of back

upwards X.X% quarter. of it's the upon Now X.X%, depending

good volume But So as the Ham-Let. They our new those very gone of well well. as as it significantly up significantly. I think have acquisition have gross obviously margins quite costs into plays

really that addition. in So helps

Patrick Ho

Great. much. Thank you very

Jim Scholhamer

Thanks Patrick.

Operator

D.A. Tom from Davidson. comes ahead. with question next The go Please Diffely

Tom Diffely

few And some cost, XXX next near point permanent add a basis to you that the going you that do Or When quarters? term, question, at a follow-up the that just Patrick's on longer point to term Yes. over could at just Thank consider that's look as mid away Sheri. increase? view more freight point you. go in term basis increase you or

Sheri Savage

it think the will down bit over I couple of quarters. next a come

I the right supply obviously seen of have those planes enough we some think now. There chain issues of There not are are factors. and one is key are height of the drivers. have enough that in not freight we truck

I quarters, think see levels XXXX to down costs but anticipate. I then hopefully But out once come work that would some down. think come So I over we couple can come of should down not those it the next starts itself of to may they

Tom Diffely

to is Okay. And customers' that have through meet have to that reimbursable the customer? needs, foreign shipment when you you to expedite bill? foot do a Or

Sheri Savage

whether depends. with for or It some have demand obviously actually depends managing. an to chain supply something that are their accelerating us meet on reason we they IT issue we if are for the

upon But So of in situation. dependent it's very we had it that. obviously the customers can't get pulled able for just one reimbursed quickly, really to is our be

Tom Diffely

Great.

Okay. And then new the Malaysia, congratulations Jim facility of on out the there. shipment

or been hearing COVID your ramp has this though there? has with ramp been that have I an your wonder from Malaysia. if in We labor that issue others impacted scheduled

Jim Scholhamer

not. has It No.

Malaysia. are we in are related A sovereign of lot We part other of the northern COVID of issues are fortunate two those regions Malaysia. in the

we our America, hasn't just revenue this significant flare have it we that so even Philippine to place an think At contribute a yet. switch been you we dexterity plant continue of doesn't know North impact can I China, keep that amount Malaysia, that just are But to COVID may between never So going as obviously, Singapore, need, fortunate to very our where point been because up. in us.

Tom Diffely

Yes. Helpful.

can to up the And finally, business, running, extension get do at when go of the qualifications? capacity you the it increase new then view the how the you some through view year? maybe you look and rollout quickly next over do tooling you Ham-Let how How time Okay. of to takes

Jim Scholhamer

the very Yes. is qualification. that it's tooling, process. And renewed about Mostly simple

around that have the three Typically, on nothing the closed of in most time did four investment So April. the of a customer these quarters. batch lead even delayed We tools deal installation is before in to approve cases. and

we made come So end, the of year other may ramping that by start and investments we those in ramping very will we up we online of some this revenue. in think quarter, will start are then few that up way to like the next nicely. first been tail-end the coming of second and It's in seeing more a very year. the expect able quarter be we along But

this get some of some the I been starting more revenue able and see out expect first increase we a squeezed in But year. have through to in efficiency gains bigger to We quarter next quarter.

Tom Diffely

Okay. time today. Well, thank thanks for and you your

Jim Scholhamer

Thanks Tom.

Sheri Savage

you. Thank

Operator

The Sankar with Please line if ask next you ahead. question comes open questions. from is would Cowen. your Krish go like Krish, to

Bryan Bergin

This sort behalf there other greater on Krish. Maybe a supply Hi. in patterns any could taking of that that industry Bryan carry is at have worry any quick Bergin, inventory your question. or large. just just follow-up ramps into customers be could a the builds? for Thanks by that ordering on Is effect chain issues your at impacted facilities of where my

Jim Scholhamer

followed I your I question. not am sure

plant Malaysia am question. sure being OEMs customers, or like facilities? ramping added that followed mean capacity I Applied. more up bringing the I at other not Our by You Lam

Bryan Bergin

there's could supply issues on have their are If with business road? of customers affect that of down with any or patterns with worry inventory any the to impact supply sort sort their sort that to having your any be issues their case Sorry. flexible maybe a ordering in building businesses of chain there up chain from

Jim Scholhamer

working are Yes. issues customers, our everyone, the is our peers, mean chain affecting those even supply issues. everyone I through

that's it So not a delaying few fourth need the you to first But of customer I getting at It have change. close it's still kind of any what is don't an needs. the worse. date out you pretty it's of nuisance you inconvenience start typically tends to think in work to stabilized think getting better. quarter or And new. It shipments the get to the weeks. think where dramatic more get year. a level be But I next quarter a nothing the should to that hard we I or mentioneXd, Maybe

Bryan Bergin

that. Okay. Thank on you. I appreciate the color

Jim Scholhamer

are You welcome.

Operator

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

Christian Schwab

visibility, Hi. remind it is across than usually Can given of changing chain changed us you Or Congratulations lead typical? quarters? current your guys supply visibility your remind on the last Can it time us you better please? Is board? really the longer and execution. than in is? of the Or just the it has few fairly that,

Jim Scholhamer

of The little quarter Christian. with variable, normal time specifically that in a one Hi and even as we looking forward the Yes. spongy. that environment reading third had is typically around we month lead quarter a bit the are is

visibility I the through quarter seeing we first think into we the Now pretty are good strength and have continued second quarter.

bottoms getting strong So to pretty our close purchase up pretty three visibility forward. good quarters is around going and a forecasts orders of

Christian Schwab

fair and Right. And aggressively hand that have in you increased to like the having? it dots also that Is visibility go kind eliminate to then bottlenecks but of is had maybe that it of allows your seems that for, procure orders from to people you other some suppliers purchase that connects say? been

Jim Scholhamer

the through chain. supply Yes, And with work of our absolutely. and customers we hand-in-hand backwards

make back orders hard our areas have orders don't customers are to liability our for hard that there's our where chain commitment hard with as forecast cover we PO we so on covered us, even make to like So supply they no yet. will

four the think layers three tends working a OEMs the I help, are occur try smartly So visibility the the problem are to possible. deep supply with of as and be It chain. really that to as in chain pretty that far supply to as down given deep

Christian Schwab

Right.

to plan it on brain of general? also is you capacity for? sight Or which that how on as facility? our pretty remind remind in of edge has you lay heavier percentage market of line Do existing gains us years just so grown of us share and combination core your have WFE it a that capacity and fab you from might their time filling heads in And to due few historically additional be n outsourcing customers number a could WFE Can last we historically ability concentrations and us help growth on you the to is? Malaysian disposed much over how

Jim Scholhamer

million $XXX of It's about Sure. in around revenue $XXX capacity. to annually

capability production, also product to that with over using capabilities are have they bring We Ham-Let SAM. capacity part the of

we out maybe lot So $XXX we cost there. we regions see thought the to half of would lower think Malaysia, regions. cost million, higher of to I When two-thirds be filled by opportunity built first to transitioning a

Now bested and the share the have way against gains gains outgrown our where our industry outsourcing a has lot fabrication. get opportunities customers is for on of are seeing share we to

the leading costs actually percentage I we be to more is more growth. and probably transition like, or used of think outsourcing plant that for. to cost anticipate higher from three industry quarters And to smaller regions to I the it's estimate make a opportunity lower market what actually will

Christian Schwab

Great. Okay.

that's other Thanks questions. wonderful. No So guys.

Jim Scholhamer

Thank you Christian. Drive safe.

Operator

Quinn next with comes question Needham go The Instructions]. [Operator & Please ahead. Bolton from Company.

Quinn Bolton

result. how to Jim. versus understand you your or another of panel competitor In your I Congratulations the supplier was and results prepared about look last extent response faster am nice I But those to constrained that OEM missed I I in of nearest If a opportunity. you move the that ask some term growing clearly module by mean much script. if question can gain comments. on wondering, questions. from made the near to quickly maybe prepared comments and your much, Malaysia. the share in can competitors operations But gas I the that are Hi are an most constrained, at competitor, a UCT? address your share gains talked apologize wanted that you the But in I to the wondering two

Jim Scholhamer

not our by share are I they more movement. quickly. more move There's talking about planned They lot of don't two are Yes. major like, move am a gains customers. outsourcing they

majeure short issues. our are the having are think type force and obviously clearly peers of of I term that issues some

the and that's those really gains talking mostly some into to opportunities don't unfortunate. of that intended new outsourcing am even not But factory. from about. our are am I it's talking about two customers Malaysia I So our I share maybe winning major straight go think

needing more the is So customers grown they have of so you move dramatically. of biggest because facilities opportunities really more actually and our production look our when at SAM, to out their their

am that's So about. I area major talking the

Quinn Bolton

manufacturers direct any you mean module do do Or one to OEMs to you see I systems competitors whether they larger of demand constrained? or some and the competitors that kind just major contract from quarter But they of the that for to vendor you another? to with from are your next? that supplier stays shift the it are think that think that Do to extent pushes one opportunity

Jim Scholhamer

Yes. Short of each process. term, gains done of a ratio like share planning business term, a in long us. much give how term But the they typically are long job, through

short So are even struggle we something when to that a be one of of term. the might to in or to if XX/XX the balance to our XX/XX those But back resolved. struggle, there were they share or shift after peers from move them tend like issues

are us So where away. focus. close term go own our of and take it what supplies talking things I a don't their between of the a long production facility, I move wins out and is of market down that's When their certain sticky we really a think and But there's capability that Those am to about movement not module really real it they of competitors. the UCT. certain share lot

Quinn Bolton

it. Got

us? you share competitors are up telling from pick like sounds transitory, you pretty any it sounds is what it that like So

Jim Scholhamer

are Celestica, Jabil, that between the only we actually, we competitors are goes have ecosystem. of to Yes. in comments is, and obviously remember, of there's each us customers in to a not we And you all suppliers Benchmark, are but Ichor, also lot other. that

help out lot scenes of end a comments the they on behind of customer the to get what kind So going there's need.

when sure support make times, each issues We end is are of that try delivery. the often we customer we coming So through other to met.

short So the move outsourcing real are amount but revenue that's we opportunity to really the OEM. and really That's see of insourcing things term needs term huge like from focused. obviously, that a still is in might long you the that where bump

Quinn Bolton

in wondering Jim, some a you holding saying especially was. additional were of that quarter coming of so coming Ham-Let I for online ago, Ham-Let. how end get knowing Thank if question qualification the were But the additional And pretty now tooling coming your on starting are the the constrained I second period qualified Ham-Let some think Understood. to given of you you panels, near just you activity to try components additional had still two the aligns and quarters, It is second that tooling the by by more three by qualifications, probably that sounds gas the talked on tooling on well that to am that business constrained term. like off take for color. the Ham-Let quarter. about with was, these on year-end that qualifications end you I

Jim Scholhamer

Yes.

think, ways. very that tool that have about the the making are make into new a you to in quick just qualified very customer, think adding you is same process. qualifications for a are Qualifications, but the different already I you by simple, two but product factory, to

where two run that take few a a That quarters. things that started. not like we And while you used and a qualifications of That does within lot customer quarter, of components have that. The the components three a that's in family that hasn't have to take a past. are weeks. tests to So a lab those within takes to

We with have working the that actually started to we Ham-Let we acquisition, a supplier because as grow. were wanted before that key

ago fast over bring It's very year sell this new a capacity the as to a we product. that's well bring can and we expand. started can we that point, race At can going well. as if out, So capacity

Quinn Bolton

Got it.

what I very to Thank Okay. know. you much. That's wanted

Jim Scholhamer

Thank right. All Quinn. you

Operator

the to turn remarks. any Scholhamer for closing back to Jim like would I conference session. question-and-answer our concludes This over

Jim Scholhamer

joining very talking in Year you the we much. again you and to Thank New XXXX. today look us Thank forward you for to

Operator

Thank now The presentation. attending today's conference concluded. has for you

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Ultra Clean (UCTT) 28 Oct 212021 Q3 Earnings call transcript