UCTT Ultra Clean Hldgs

Rhonda Bennetto Investor Relations
Jim Scholhamer Chief Executive Officer
Sheri Savage Chief Financial Officer
Charles Shi Needham & Company
Patrick Ho Stifel
Tom Diffely D.A. Davidson
Call transcript
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Good afternoon and welcome to the Ultra Clean Third Quarter Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would like now to turn the conference over to Rhonda Bennetto, Investor Relations. Please go ahead.

Rhonda Bennetto

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

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

Jim Scholhamer

delivery. semiconductor members quality questions. team the time customer expectations All around part profitability our thanks We to our the again to enabled our the exceed financial we'll time performance quarter our to and you, the afternoon, delivered to market. over UCT your a few with us I'll call today. Rhonda recent of our then smoothly of and industry a review on appreciate which world for call strength and Sheri large innovation a of open accomplishments. going review. facilities everyone. and the solid wrap another revenue for I'm the in up of third then for with highlight up good to and and thoughts Then and are Thank exceptional turn running ongoing on commitment quarter start

all one to our work increase in us division customers with to from a customers meet secured saw nearly products sizable needs. their main of as Our continue new award and they for business we an outsourcing

UCT process company lithography And revenue production new facility this This systems. design were generation early the major $XXX new for final awards record on our to manufacturing value reaching million. quarter, as next partner design an for and a and development we products in designated designation continue improved add highlight as addition, tools. business enables milestone our and to In of Singapore hit our the a a new

service year, business Our overall each IDMs at device revenue WIB Using year saw of the have the engagement market annual our all this expanded midpoint will our significantly OEMs. at fourth outperforming our and areas by across of guidance, XX% to for last elevated XXXX. we increased compared quarter we

these performance having the deliver strength, on Our plan past value. to In consistently profitability gain and and all few vastly revenue double our profitability. improve of to quarters we and flexibility model business improved the shareholder share underscores early XXXX, resilience and embarked our growth

other in panel our business. achieve of products margin into Focusing strategic share diversified from business just to chain went pursued approximately on our deeper handful new our a a our three come from track areas of leveraging semiconductor in our of five beyond year with almost $X.X market, adding capabilities goal. business to our our our compared revenue our service XX% times ago. the the gas additional billion. we're place readily XX% equipment of that of surpassing primary and multiple years annual revenue we This by added capabilities revenue Almost while within total on infrastructure together already acquisitions. component the Revenue to business, vertical XXXX and offerings we We higher portfolio value [indiscernible] all maintaining

of maximizing UCT's of implementing footprint. new enables our and being by By and technology The customers. and play more markets role are vast optimizing strengthening inspired procedures, our competitive our a growth large, in demand on of areas to diverse processes building set global our leadership expanding execute with we further operations, our our continue us serve upon our suite We by drivers advantage. key utilization capabilities a multi-year to valuable facilities strategically

sizable broadened our have our We served and presence increased lead our within markets.

gained goals next become than have our Our three broader than to years XXXX from customer second our aspirational tripled since is largest valuable $X [ph] our revenue market within revenue less Xx, virtually while has customer from and we for the WFE largest customers the base. more billion grown traction and doubled

Another their deepened accelerated to division. have This our pivotal engagement a products efforts customer our one growth and years. creating are plan is UCT. results and contribution of with element inflections yield Dynamic and today driving our multi-year expect the exciting in our to to few we industry for year add third business opportunities our new customer reportable within reportable particular revenue next

sustainable can are path our and industry. We maintain we growth confident the outperform

quarter. third While quarter compared the be we expect flat somewhat the fourth to to

for very alignment memory demand new architectures learning industry driving all semiconductor for continued Accelerating drivers and machine the to These performing are mobile XG, of due robust while the higher the enabling will and are support for logic. inflections pandemic, servers We and by by AI the are demand growth content encouraged technology advance CPU enrichment. trends driven XXXX. cloud,

and across balanced businesses Our all products have and service exposure both our device well types. business broad is

the schedule conditions beyond. CapEx build In their edge as profitability leading year out strengthened industry disciplined and fabs at and a it addition, anticipate as next we market customers

execute customers. mindful to may But to speed, I'll thank call I to suppliers of the We the and that, And proven navigate handing at work situation. at scale to over the our hard successfully our Sheri, the with their incredibly can performance. result under employees again remain that Sheri. difficult of and pandemic of call headwinds circumstances. for financial the we want and success ensuring review macro our over innovate turn our Before success have our as arise Sheri

Sheri Savage

was discussion Total I'll referring be $XXX.X quarter. non-GAAP up In prior Thanks us. million the only. numbers X.X% today's from quarter Jim good through everyone. afternoon, joining the Thanks and to for revenue

division products customers. demand from X.X% million $XXX.X our on Our nearly to grew increased all

IBM margin business activity the mix XX.X% maintenance the due Total at board model by was our up end and to our be meet favorable across from services increase Margins and compared demand. quarter. businesses. labor compared remains volume. was quarter. The customer Our both influenced for customer geography, in higher of XX.X% And can Offset at XX% services was on to concentration, margin Products by to X% to to margin contributed expenses XX.X% product our compared gross last the and gross XX% last services to primarily direct business quarter. XX% change on $XX.X OEM increased base. last million need materials

you expenses So last million down were see from variances expect to can million quarter-to-quarter. $XX.X quarter. Operating $XX.X

to our expenses the from for product increase of operating increased end our compared Based quarter improved versus materials XX%. prior quarter. prior compared Total X.X% second an expenses in operating division As operating and was expenses. the decreased current income Margins a compared million at net to million XX.X% income primarily in the in per quarter. X% to The to high was of to long to our margin were Margins $X.XX on $XX.X for at the meet [indiscernible] to of from quarter. on quarter the XX.X% percentage the lower above XX.X% XX.X division versus the XX% services at XX.X% XX% to in in revenue remains due million XX.X% model flat in quarter due our demand. prior of XX.X% to for on stayed and quarter, of volumes shares current to model outstanding the share net $XX.X $X.XX earnings prior XX.X% change

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

high-teens. our XXXX for rate remain We in expect tax the to

quarter. $XXX.X this last our quarter quarter. was compared Turning equivalents cash from from $XX.X $XX.X were million to million the Cash to million million and the balance in up operations sheet, cash $XXX.X prior

additional addition loan to Term made B our our payment bringing we B regular In the to for an million $X.X quarter. million of total payment, $XX Term payment voluntary

$XX B of the structure down years loan amount paid We've growth that to revolver made continue our objective. ensure couple we to over in balance supports overall our significant past addition, at off In our paying ways the Term the look our progress of and million. capital

remains Operator? be of with guidance to million COVID-XX quarter supply range for the adjust and and between to account I'd fourth the that, pandemic steady, possible changes the our questions. anticipate million continue that call uncertainties numerous in And demand, turn EPS surrounding including $XXX the risk unexpected $X.XX. While have demand for $XXX $X.XX operator to to to over revenue to like of chain we interruption. We


[Operator ahead. comes Instructions] our first go Please Sankar Krish with Cowen. from question

Unidentified Participant

calling behalf of This in is [ph] Steven Krish.

beyond looking days commentary is you're still and wide I the compared pandemic quarter question guidance visibility First that ago? all the range relatively given has the has had or still over providing from range. comparable that changed [indiscernible]. XX guess to fairly last I regarding understand situation at customers OEMs it was or I

Jim Scholhamer

Hi this Steven is Jim. [ph],

we things always had our think good We perform. we're predictable a supply of performance a pretty in were to other more have up, customers, become starting might I end tighten But I I think was as suppliers our chain. where and think bit what would definitely pretty clear that understanding unclear things see where well. is

range. point range had is the we think one million think where at $XX down I XX, to even I now a

range beginning we're that as So to tighten well. up

or wave a on other did definitely out any few interruptions. things smoothening see ago. quarters bit We are possible a second new clearer any little wood So things more definitely than we knock regarding

Unidentified Participant

for thanks it, Got that.

a As related a follow-up. I had to China. question

currency any companies sales your against still just through opening from your taking semiconductor much how China OEM related actions US trying to risks your versus exposed administration [indiscernible] stand, if your perspective, of guidance officially As domestic understand to Chinese to continue I domestic companies? guess is customers,

Jim Scholhamer

Yes billion a it's have that. typically with mostly logic foundry moderate. much chips WFP The actually they pretty [indiscernible] of around so billion in we $X played. we so trade China I to running little as exposure actions played around out some to They're kind have $X higher mean bit risk predicted. actually year, do But there's its the relatively and this [ph]. the is run

Unidentified Participant

Okay, thanks Jim.


Our with Needham from comes Please question & go Shi Company. Charles next ahead.

Charles Shi

my and third really the quarter Jim first is about question Sheri, revenue.

ago You most coming the from from I product quarter. upside the end significant see talked is this is quarter do the Thank of product the to fourth the product and quarter you a that to guidance see I the revenue. that compared you. pulled wondered high being forward can of revenue from the of where side any business there scores of third and

Jim Scholhamer

their in Obviously and Yes, bit on quarter. Samsung across thanks see fab. the been very their moving strength We've nothing nanometer, quarters [indiscernible] quarter definitely a seen has successes not movement significant has board. with fourth Charles. the X investing forward between spending heavily any We been TSMC to do third quite with

strong changed So we've things too pretty in wouldn't that much regard. have say board. seen a I across the

Charles Shi

Okay, thanks.

So from maybe to provide feel on a customers little don't quarter But actually at about with the the and you first your year conversation moment? bit the know OEM looking general next first view quarter What's their the plan. forward this I guidance.

Jim Scholhamer

certainly of give we that right, don't kind You're granularity.

in year All customers are the of XXXX. our strong their of entire forecast for pretty

I movement think be can they're number. growth that any at there rate XX% around and looking all around in that given quarter

would So from it's that that first significant today. really talk to we're in change really the early ramp too there's industry the bonds-up a certainly be But nothing there quarter. from forecast to about to show any

Charles Shi

Got it, thank you.

[indiscernible] sequential there's is quarter. also some mean slightly driven next customers a Definitely the question for quarter IDM concerns rate could for the a by wonder I fourth outlook your on What's just little how especially about quarter? the the memory growth service bit on higher IDM fourth looking [indiscernible] second, maybe mentioned of side strength of nice the about third of your revenue there I that customers. the business. fab affect would utilization of OEM side side very probably and you lot to the utilization good the whether soften. So the and the business

Jim Scholhamer

it. going major where logic expect expecting the logic in division. at drop we presence. XX in have to memory of of there's over and week temporary on do that any do one kind so fab, point the don't from But high quarter and see guide we drop fab rather weakening foundries utilization Yes, XX they're utilization switching be at upgrading nanometer in by utilization We nor space quarter that this of we one a kind one are are we large very to nanometers, don't

we that's drop see see service change wafer we in there utilization really So they small which quarter again starts back only for that the the a first or their quarter [indiscernible]. should conversion, in service the one finish the to resume the quarter business as in the side full fourth

Charles Shi

the Thank color so you. much congratulations results. on the thanks Jim and for Great,


from Our Please Stifel. Patrick next comes question go with Ho ahead.

Patrick Ho

product maybe off of the Jim, on first business. side the

able customers been your deliver to Given that you've to above expectations.

the capacity inventory as business situation do to and look you on we on well. the trends into your building XXXX. You've be managed products? go need that they're continue healthy comments customers your at do some the as of potentially any And But secondly, by capacity given build current how One, inventory? your in you grow

Jim Scholhamer

Thanks Patrick.

The inventory of which specific. customized most type are second very products equipment make of not are the like part, for products, kind we they're customer really

that. So of I don't see a lot

certainly up to go in capacity question. up on capacity capacity We your or first levels. can XX% not temporarily go but current sustainable the significantly ability part have the have definitely the start above our ability first XX% start we We that year, very comfortable year. and Malaysia facility in we we're third to capacity expect quarter increases capability meet any next adding with our we'll see of next the so that It's demand in to

Patrick Ho

follow-up that's also Great, and Jim. my question maybe helpful you, for as

In things. services of terms business cleaning side the parts of and

with that you're for NAND that can NAND. deposition etch your are into in and rates a pick probably business of then as lot intensive the parts of go through XXXX know and side the a benefit Is up. how monitoring that recovery you go and capital helps utilization the They you? something in that As that very as business incrementally FLASH we XD closely potential market

Jim Scholhamer

America, definitely where is that there we [Indiscernible] majority available carefully as and increases. business, broad those we of have that our really capacity JVs burned in coming support that adding the those monitor capacity customers now our to Korea, we're that's to with owned and have support work around as increasing in pays and have large fabs we off. all And North in which we it footprint the we building Patrick, [indiscernible], that building right We're capacity our Kyontech such that [ph]. some a adding sites online well Samsung where is replaced in of Yes capacity and some in move to footprint to capacity.

and demand example, Oregon seen of fall, factory, as really there Arizona For our factories to get some we Charleston where closer to that the in our divert haven't we yet.

in our there. capacity factories we shape need those customer plan all at look definitely we So as for to meet we're and great

Patrick Ho

for and for and did in in you this step big Sheri of you've But question managed terms at final is great model. OpEx we job Is Great to you're potential get me, Actually look should levels? increase? incremental up or maybe mention a the from higher expenses growth term increases that adding seeing. your done just it full business you've in revenues gross that How you're potentially a near some there as that well. margin the

Sheri Savage

the operating top margin model. yes be at feel would still we'll Patrick, of definitely Hi end We now for incremental. say I like it's our

make OpEx of get So be, through. that coming and going to we we're additional with the obviously add we it's sure that benefit incrementally reverence to only careful very just

So top end of still. our model

Patrick Ho

you Thank very much. Right.


Dick question go next Our from [ph] Ryan [indiscernible]. ahead. from comes Please

Unidentified Participant

scenario? Jim go Sheri, of sort of to aspirational mentioning is you over could and $X under early goals operating what margin, billion of gross that's it [ph] margins think too that few ask is what years,

Sheri Savage

Dick. early too Yes

on I revenue range. organic where it's things. is think many the It obviously also model whether or we that feel via on really But and very of dependent acquisition comfortable is it with growth. depends growth

in be very think exactly right I predict point, would that comfortable we're this So range it's in the model hard we obviously now. that at to what feel margin but

Unidentified Participant

in we should expect payment QX? debt of sort what and Okay

Sheri Savage

But a additional to decision continuing haven't some look down yet. We at we're debt. paying made final

see like have So say, payment at I don't amount last we a this we specific would did quarter. bit point. would probably little of I additional a But

Unidentified Participant

customers. designation Are we two you with with on And little sizable some color an new those litho and to discussion more new the items? Jim, are give in us mentioned able then wins you a OEM

Jim Scholhamer

and one capacity push just so new as been of in see WFE, high actually any continues they highs existing the strategy. their mortar industry brick always you part towards haven't on and volume of outsourcing built new Yes the very to our has customers, can

it's highs to So push now important to industry. we continue new as even more in

been look their things So we've and on some to come projects as last they move the factory, nice bidding quarter. of in sizable of out those ones of the have one through

a their been more yet have that. report our we've were year working ago, with work with engagement customer litho we embedded them long-term been obviously with we're lot of that really And tools them, released. happy engineers the are on a engineers new even So and in kicked about to direct in the and a not

those right exactly market involved release start design revenue helping the rollout. So products unfortunately front while high to volume. of production takes the to they for becoming have what us get and their to do go want for rollout them because the up into tools volume see a product be and is which whole the to then it's for But they get involved to in end as the those the house we

off, see pleased our really being we're really for as production we them. status we're partner pay a there a design and starting the won of and to with So work that

Unidentified Participant

Okay, congratulations great. a quarter. on Thank you and strong

Jim Scholhamer

Thank you, Dick.


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

Tom Diffely

just on story? I XXXX guess litho first what a the was Is engagement? the that timing

Jim Scholhamer

they or of think with ago, the been is of Yes, revenue now customer. a division going current acquisitions years we one the products long-time that through released made company five as six their I company have especially on about

But where on started the tools. that existing that it's some them see are the there engaged with products definitely incremental year So on. up, we rolling new to we the next ramp see they're we production and here revenue on of mid-to-late

Tom Diffely

I Okay, more [indiscernible] your like benefit for with maintenance Cleans conversion [ph] great. things always that, bit lot you when a that do company a through went that, quarter. slow logic actually or when talked And would businesses. was transition little I preventive annual about surprised they thought would of

Jim Scholhamer

definitely of think that the the fact down obviously some element there's the quarter. I of for offsetting the be majority that will FAB

coatings and lot that etching the and So to in reduces a obviously on that come the require go business clean tools. the of our that

lot from the obviously when definitely less some parts But there's cycles isn't to be offset there's yes, a often cleaning coming So running. pre-managed. out also FAB

Tom Diffely

and you also savings increases facility. of the the from shipping about your most final But cost suppliers? talked Obviously reduction. from and cost is capacity logistics on coming question from to new reducing or and nicely. that higher of Malaysian regions closer customers a Okay it more cost being Is output just the

Jim Scholhamer

the manufacturing. logistics of borne in cost as most is reducing place well. our product, But it's for logistics It cost our the Mostly great very door the out of are customers. by a

is straightforward. logistics inbound So and relatively

the have of transitioned being be is produced So Malaysia will where that over majority are a regions cost labor in lower to cost. products higher they

Tom Diffely

appreciate great time your today. I Okay, and

Jim Scholhamer

All you Tom. right, thank


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

Jim Scholhamer

joining for speaking and us you everyone we you. quarter. you Thank again look Thank next forward to with


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

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