Docoh
Loading...

UCTT Ultra Clean Hldgs

Participants
Rhonda Bennetto IR
James Scholhamer President, CEO & Director
Sheri Savage SVP of Finance, CFO & Secretary
Edwin Mok Needham & Company
Christian Schwab Craig-Hallum Capital Group
Karl Ackerman Cowen and Company
J. Ho Stifel, Nicolaus & Company
Call transcript
Due to licensing restrictions, you must log in to view earnings call transcripts.
Operator

Good afternoon, and welcome to the Ultra Clean Fourth Quarter and Full Year 2017 Earnings Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Rhonda Bennetto, Investor Relations. Please go ahead.

Rhonda Bennetto

you. Thank and full joining call year everyone, fourth for and you and quarter XXXX thank afternoon, us for our webcast. Good earnings conference Sheri are Chief me Jim Chief Officer; With Scholhamer, Financial and Officer. Executive Savage, with begin follow open will up financial and the call for will about questions. the some Jim with we which business, after review, the Sheri remarks will prepared call, on to The about the information Investor along with access replay of at press a the our release found we www.uct.com. issued earlier can of section Relations this and the this how be afternoon, website webcast the Today's capabilities call may company's industry contain views shipments orders, future forward-looking growth. new statements, performance, including financial and regarding on Investors may here. results are and listed risks results forward-looking from uncertainties involve those cause cautioned that to that statements actual differ materially risks to in and Information call. the Form and filings with most contained relating including XX-K XX-Q and uncertainties release periodic today's is SEC, press our our recent the concerning in these assumptions on today's All today, call. based after forward-looking assumes statements them and are projections management's as obligation update UCT of no to and estimates, on be release. non-GAAP and financial measures today's measures referring to found call, will GAAP Also adjusted reconciliations press can to be we today's in over with to And like the Jim. turn I'd call that, to Jim?

James Scholhamer

equipment XXXX was next-generation XD for devices Thank you, and and to deliver that enable incredible for highs. to industry solutions fab good new afternoon, semiconductor UCT. year drove of year Rhonda, way growth capital historic an everyone. the an industry equipment The for race the

the by serve earnings. outside significantly improve from quality and while operations XX%. and our We position deliver By we our the and our faster high customers' managing continued levels increased By critical our XX%, in outperformed global our growth time cost equipment earnings revenues display Our than our on Asia, our XXXX, strength climbed operational business content business. and Xx the efficiencies driven of platforms. the our and in to the leveraging history. power and of non-GAAP proven in continues which company's focusing revenue vastly end to we to manufacture ability performed in by grew XXX%, markets in the effectively grew semiconductor In U.S. revenue. increase by XX% target our design, on at highest our model existing custom equipment and infrastructure, expanding structure, our manufacturing on earnings the Total grew revenue

to devices again, was strong rise year a them of to quarter, same over outside an XX%. from XX% share fourth as the meet Semiconductor the portable outperformed highs. climbed prior to grew WFE year. the wafer fourth proliferation as lighter quarter total up For The revenue such performance period non-GAAP and significantly smaller, revenue the rose XX%, more earnings is suit, The demand, production extraordinary year. of the smartphones, pushing and flex record industry tablets, U.S. our over our ability new devices per to last impressive IoT finish With the support and an revenue XX% to UCT, followed fab equipment of growth. infrastructure the

believe research, recent represent by us backed leads customers, year another from and commentary growth industry. the to XXXX Our bullish WFE for peers industry of will

to a are in UCT's and continuing further more looking we UCT markets. etch that as to like OEM growth, in deposition capacity spending believe increased their their also be will more manufacturing have to these OEMs meet partners and We strong fuel presence demand. With strong stretched,

our with the few enable providing to leveraging That's why platforms solutions proven semiconductor strategy for equipment leading organically UCT is on to a part one product that expand of inorganically. critical customer significant to required This manufacturer the manufacturing. most chip demand accelerating levels advantage. dynamic position next-generation advanced towards a and our new ability and stringent UCT by semiconductor-focused We are competitive existing gives as is migration support important meet the customers content our quality the specialized and devices. manufacturers the our of

recently fund expansion. a market. Through completed our capture sufficiently $XXX strong potential financing strategy, part and As to equipment is we required market help semiconductor capitalized the growth to size, million future the this UCT growth sheet believe in with balance the scale of capital and we now raise, strategically

on business, the existing are expanding continues We opportunities of our critical disruption for be the growth our a another our increasing customers year and up strategically is enhance and footprint. global capabilities, to leverage transform platforms industry. as UCT digital including to enhance of and exploring to number new XXXX shaping our content to

devices Turning drive expanding business. move of to adoption with is non-semi advanced market. OLED continues and coming various both rise display towards to Gen electronics consumer technologies display this TV the efficiencies from large-screen Increased market. The our seen rapidly for demand the growing in the in adoption XX.X

in for demand be end semiconductor by equipment the guidance QX for opportunities, In coupled evidenced future. strategic of strong confidence will us our remain of to XXXX summary, revenue that to year our for XX.X%. of display growth market, is our foreseeable This expect the pursuit with revenue gives another capital growth XX.X% We healthy UCT.

while by to demand, to look our profitable future to exceed consistently strategic continue our maximize current customers' call. forward next for position We on meet our working you market making investments earnings I capabilities updating growth. and and

Now in call I over to then would to the and review call open like more Sheri? our results questions. detail, Sheri turn for financial to the

Sheri Savage

$XXX.X increasing record over XX% last discussion, solid XX.X%, and businesses reached today's numbers year-over-year, momentum only. high to semiconductor Total saw In will non-GAAP of referring XXXX respectively. be year Both and outstanding non-semiconductor XX.X% year. Jim. Thanks, growing an revenue was UCT. million, I a for

at to gains continue model operations business optimize of power. significant our to As volumes, the we these in earnings leverage led

of X.X% that XXXX. operating doubling Xx almost record margin EPS faster and and our more $X.XX, XXXX year, of to doubled a from the non-GAAP revenue reached For XX.X% in than growing than

operations, in million year, million we generated far from the generated the For in XXXX. cash $XX.X $XX.X surpassing

results. revenue million, $XXX.X to quarter for an prior a turn of me was sequential fourth X.X% increase million, fourth to the quarter. the X.X%. increase grew of Total from $XXX.X revenue let Now quarter Semiconductor

total As U.S. a new close the to XX.X% a the of in quarter, our reached Revenue the revenue, million advantage to percentage quarter. $XXX last high million from demonstrating increased semiconductor being customers. located third compared XX.X% to $XXX.X from of strategically of outside

quarter was due to range million roughly quarter. Our non-semiconductor in quarter. and accounting business. X.X% This margin expenses quarter $XX.X typical targeted quarter targeted This or XX.X%, XX.X% Gross non-semiconductor third revenue $XX.X are compared near growth XX% the the in of and in the investment flat increase for $XX.X was in of the in fourth the fourth our operating total development the to increased the resulted X.X% in the X.X% high million to quarter. a with million, with million Incremental X.X%, providing business or X.X% last for third of platform XX% the operating of or for quarter of business. of at the prior margin research Fourth quarter. was revenue for compared range fluctuations our for of higher end our the quarter from with to accommodate anticipated end $XX.X

X% as high more operating range these between our to expect margins forward, $XX.X expenses, to net income of increase $XX.X historical million share and percentage the of XX% levels. our return levels million the Fourth This X% I revenue revenue, Going $X.XX to end at X% as operating our expenses, to mentioned. of per range, of targeted to quarter or primarily at guided per or operating in third the compared we and within quarter. a due remain was share, $X.XX to in was just

approximately for liability legislation, incurred tax related Our tax to of to in the XXXX. U.S. tax $X.X payable will $XXX,XXX payable years. be that XX.X% Of the quarter last compared Due to next the rate one-time quarter. new the approximately a million, was eight tax over we XX.X% repatriation amount,

continue estimates will our during to We measurement the period. XX-month evaluate tax

demand This As $XX.X result, quarter, in tax to $X.X $X.X the as non-GAAP to charges amortization generated for range we our we to in XXXX, from such XX%. operating activities. of working the invested in ongoing XX% compares buildup compensation, a as and intangibles. the noncash in for million XXXX. in million depreciation related incurred of of million to customer in support In $X.X to million quarter, rate million $XX.X stock fourth cash capital inventory we expect third be We

the Turning prior quarter $XX.X to customer to terms. fourth balance XX million increased for sheet. $X.X decreased million. quarter Outstanding liquidity a in XX by due $X.X million to temporary sequentially days the payment grew change in to Net from $XX.X the days and DSOs million. $X.X decreased million to debt cash

meet to days. XX more $XX.X forward, fourth levels by we quarter DSOs the return XXXX. demand approximately Going to million historical expect Inventory increased for early in to of customer

days XX result, increased XX days outstanding payable a in quarter. the to As from previous days

Jim anticipate revenue a $XXX million up XX.X% As to we million. noted, the guidance with start XXXX strong at midpoint to $XXX at

a EPS additional issued per of share. to be the estimated with recent result non-GAAP $X.XX financing, is As shares the between $X.XX to

I'd call shares, $X.XX XX.X% $X.XX like concludes the first the Operator, open to up midpoint have additional EPS our the at non-GAAP to remarks. the for would Excluding questions. up quarter prepared for been per or That share.

Operator

[Operator Instructions].

Mok The Needham. with question Edwin comes first from

Edwin Mok

for Any to when in shift was have Do Or go the might semi, we at and can I it'd the you sometime you be of in how sequential curious, you year wins your had this year? helpful. pipeline that kind first that, resulted design might just especially ramping strong the I'm it it growth way progressive really more with was you question look So win have yield view that 'XX. won for another your year? on kind of growth year? think module every a this or you you one that to guys come and 'XX, customer about this quarter, pipeline talk if year kind start your saw of is, of back in you right, of win you do secured your that have middle

James Scholhamer

as continue and see any. changed. of if as from hasn't our outgrow we we growth. On pipeline There a haven't a WFE the customers, conditions Obviously, market. The to the we expect capacity top year, by more overall Yes. Edwin. Yes, continued strong of just business very added win 'XX lot that, been

all same are And in the so variables place.

expect So to WFE 'XX. to we through continue outgrow

Edwin Mok

start might through that some to working pipeline. are ship are guys you wins So year? this There a

James Scholhamer

pipeline yes, Yes. There of to time. that wins. and But fluctuates of new we new course, and, products have a continue pipeline a always over is

Edwin Mok

baked do business? how you go 'XX, it decline? quarter helpful. Okay. quarter, then with the declined on think start of me -- about this, And way drove let sequentially. actually, this That's what there kind a Is guidance? And and And think non-semi, kind for go in how the to you your first what's -- of through non-semi we then as about as

James Scholhamer

wouldn't I the Yes. decline. use word

stated As and very large we've business many fluctuates it's around it very a range. lumpy times, a

so And there is fundamentally different. nothing

continue a strength to lot see We area. of that in

a has quarter-by-quarter to be in part We area. continue its just very display Nothing a we position the have guide nature, but our good quarter-to-quarter a the very there. out around position changed in tends, position. everything to is don't And to And business, lumpy. by strong it that of very within

others to and we talk through -- think We strength area see continue 'XX. see to I continue as heard Applied lot in of that you've a that

Edwin Mok

your the end front, XX%. of margin quarter your operating of be to expect this very you to then on high range margin the Sheri, at guidance X% clear, And just

range of that. I level towards longer high a quarter, did X.X% similar you term? stays the kind think term think How that's guys revenue in about kind last you of of that long or of terms that end the end at Assuming margin -- level, this sustainable of you do equity operating do high of think

Sheri Savage

Yes.

for that I margin on that -- especially margin. margin and are comfortable -- really the XX%, target really the to margins XX% XX% X% with to think our gross we're operating

think those we with in still ranges. good those about us see target feel these continue And levels, I So we ranges. to

Edwin Mok

drove increasing just, XX% have I Why that? a guess, XX%? to rate tax the What question to I is Last candid question.

Sheri Savage

Yes.

XX% approximately With before. in rate corporate from that a perspective that in that's coming percent the in we tax valuation the but U.S., had we XX-some-odd the had before, versus was it's new allowance a place

tax our was incredibly low, So U.S. if zero. rate not

released we So valuation as allowance. legislation, of a in our result with the change part

a back so tax where pay we actually on now position And basis. are U.S. a to have we quarterly into

a that So as the bit result. little a tax raises up rate

Edwin Mok

Okay. Great. Yes.

Sorry, comment about on prepared the remarks. loss valuation I your catch didn't your

it. Okay. That's all have. I That's

Sheri Savage

Edwin. Thanks, Okay.

James Scholhamer

Edwin. Thanks,

Operator

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

Christian Schwab

Jim, the front in would end growth industry did in you like wafer XXXX, expect to 'XX? you outgrow

James Scholhamer

Yes.

Christian Schwab

that recent have opportunity received regarding Excellent. just maybe answer equity versus take to that any raise the question more. that. That's question so question. Maybe want question, And just to investors and the the I this most don't to then about a that with doing important I've from something

Sheri Savage

raise which to and heavily Christian. Definitely, looking Yes. growth business sheet is the The obviously growth. the part strategy our grow well quite we're as via balance M&A overall equity strengthen of at as over XXXX, organic

things we acquisition in sure obviously, away of was, to we our had larger kind we quick nature, of risk us position to make us if sheet so M&A quickly. having or very that some kind setting that enough of sheet, strengthening and cash, the that really was the took the key one make up So a making either those something balance in make an is be acquisitions financing to transaction. to best balance allowed a But wanted strong of

Operator

with from Cowen. Karl comes question The next Ackerman

Karl Ackerman

on XXXX ask the first If I different just in road this on way. a for outlook maybe just could and focus

March Given we times, hoping elaborate levels guidance think half XXXX. year, quarters, first few increased have over see you a follow-up, visibility I very lead could expectations for given just your robust strong and WFE And very your I you've for the on versus this second I quarter please. for the mentioned the maybe half on last the should was

James Scholhamer

going Karl, quarter. half Obviously, to visibility have strong, Yes. and is the we with the into especially the second quarter, first be

the and downstream. to comfortable because out, have we And We course, very get another we reasons in confident our have customers bottoms-up our forecast But whole way information it's being we overall with And the out two there. guide enough very of been and, one little year fundamentals So that. a of year. why The we first feel far hard. half. from of market, that is with the do strong up don't guide market, of confident overall XXXX remain don't also in so the the customers very murkier, don't end very the an the the the quarters

the obviously, strength see we excited obviously, step-up So big we good very we're in a feel about year. and Obviously, QX, which entire very about, that continuing.

'XX was about As that and the there on, year you the And it back-end of remember, front-end as went was concern into 'XX. we went loaded and continued.

away. we got went As more visibility, that

hope we will happen the have same visibility. So that thing in just but we half, don't back the

Karl Ackerman

Understood. I guess, for question. my multipart follow-up, it's a

break I'll down. it So I guess,

on to free it you And the to I toward working this comfortable around sequentially operations And can rate an Could your much why is as And faster inventory is you cash growing to think leverage inorganic comments, March for like of particularly about about M&A just the control we run appears year, at invest back follow-up to capital? a do for you more And degree this that, opportunity for cash of more you how be areas secondarily, question. on to need the going First business? than the trajectory you, how flow think of housekeeping sales a elaborate day-to-day I a what basis? rose, the capital I XX% think, quarter? allocation. focus Because do wanted quarter. guess, as

James Scholhamer

That question. right. a You're was multipart

keep see control I inventory, me eye very Let And doing is, our close tightly could the if process customers. we with a working our In start. capital. we're on the and that

operated we that levels put a So it again, a our great is on our bottoms-up demand. view. we to performed we capitalize That's hand-in-hand and and and through working with demand well the see in that position how very from, really inventory capital us 'XX,

pretty never percent very always a don't is percent. we're tight. to quarter, going dramatically fall within going And QX it's Things a for the and quarter. nicely inventory, up So obviously, be

of a that positive demand sign seeing. is going near-term the up. inventory the we're It's actually So

of I the think, for was part Sheri. question, Second

Sheri Savage

Yes.

asked cash about So flow. you free

continued being with to able how And amount much a So obviously, what pretty a year, versus we very strong continue free upon, did for the generation a year we flow. would previous have XXXX from had. I if see CapEx years year, good cash flow see us obviously, happens spend we've that careful generate cash we free during of to depending throughout We're perspective. the

in yearly spend of that making are to We about but X% revenue about CapEx talked we've on basis. X% investment an beyond generally a we that before, on SAP

over the So we would year From in acquisition leverage but the take of it on to depending make. we're business, more. capital-intensive the the I a low want think that more general. could course size we'd a we would I something take decide upon we think that as I It result, M&A, think obviously, leverage. of depend And that's could -- pretty perspective, a on on on depend would

very a acquisitions key make really additional easily that debt. have acquisitions shareholders is conservative to we acquisitions balance we're the financing having with make to And make. very we could the the general. But setup now and We in the thing return really sheet, our did with with that

Operator

Nicolaus. question with next from The comes Ho Patrick Stifel,

J. Ho

describe this Jim, WFE the acquisitions them off, expanded date, maybe whether that growth delivery you, expanding overall new in a you of you've of the is that's the and industry I Marchi acquisitions guess, which of lot and of upturn? first you're Obviously, environment gas those rate? And helped some outpace this sales how include you're to Miconex. made Can today. some system terms panel they've seeing current driving during period customers into during the

James Scholhamer

it the had taking been new Thanks, customer two panel-based. to Yes. we Yes. customers, is gas as heavily within Especially I presence. where mentioned, had penetrating expanding acquisition, very a base would that, highly we Patrick. but call already think I Those successful. Marchi acquisitions not further have the

gas of lot are customers panels. has so that a And a of handful that utilizing

and half to and went were quite of that more those But more 'XX focused such we the really but share growth as function organic But forward, now, businesses, have an bandwidth obviously, do that into latter some do these we with on they past. front we've we us 'XX going we to well continue step see those incredibly acquisitions on so good. wanting because executing so to we did area and huge organic of we growth And to that of the continue to stayed our in in going dramatic see saw of revenue. expand in we're that been our great to in do able

J. Ho

question for as the That's follow-up specifically. Great. helpful. of terms maybe And Sheri, in gross my margin,

to You're at of end target, your range. high XX% the the XX%

levels be the environment variable swing anything Given can is I be one biggest the as today, that else gross is other current and, revenue such Or margins may revenue and to or the today? guess, other product you able that or absorption the there variables mix way detail?

Sheri Savage

talked before. mean, I it Yes. I've about

the product definitely margin obviously, mix I of higher helped from as have end the of well it location. definitely out it's think be where as geographic at shipped a us being plays with But volumes into range. And our able think our volumes, as operating see our margin -- about I talked revenue. that as especially grown be in we'll we OpEx these I that, quickly the perspective, we not as have the just to past, because on

our Just our to has grown greater OpEx XXX%. our -- the has XX%, margin over or profits XX% alone, op than margin and XX% whereas from our of XX%, this year course have grown -- grew revenue

So OpEx growth, lot quickly. we've but taken had a not up we've of our

see continued. margin So leverage area you're op the the as going to result, in a

J. Ho

clear. make just it I to So want

is on So than margin margins, operating more this are your end kind that seeing the at levels a lot maybe high of more side the we're gross today at which today? expansion the of

Sheri Savage

Correct.

Operator

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

James Scholhamer

updating We us Thank time QX to on you, earnings your joining today. look everyone, you our and appreciate call. for forward

Operator

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

may You disconnect. now