8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest eventreported): July 29, 2020

ULTRA CLEAN HOLDINGS, INC.

(Exact Name of Registrant

as Specified in Charter)

	Delaware
	(State or Other Jurisdiction of Incorporation)
000-50646		61-1430858
(Commission File Number)		(IRS Employer Identification No.)
26462 CORPORATE AVENUE<br><br><br> <br>HAYWARD, CA		94545
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including

area code: (510) 576-4400

n/a

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading<br><br><br> <br>Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.001 per share	UCTT	The NASDAQ Stock Market LLC<br><br><br> <br>(NASDAQ Global Select Market)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition

On July 29, 2020, Ultra Clean Holdings, Inc. (“UCT”, the “Company” or “We”) issued a press release announcing its financial results for its second fiscal quarter ended June 26, 2020. A copy of the Company’s press release is attached hereto as Exhibit 99.1.

The information furnished under Item 2.02 of this Current Report on Form 8-K, including the exhibit, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference into the Company’s filings with the SEC under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit<br><br><br> <br>No.	Exhibit Description
99.1	Press Release dated July 29, 2020
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		ULTRA CLEAN HOLDINGS, INC.
Date:	July 29, 2020	By:	/s/ Paul Y. Cho
			Name:	Paul Y. Cho
			Title:	General Counsel and Corporate Secretary

Exhibit 99.1

Press Release	Source: Ultra Clean Holdings, Inc.

Ultra Clean Reports Second Quarter 2020 Financial Results

HAYWARD, Calif., July 29, 2020 /PRNewswire/ Ultra Clean Holdings, Inc. (Nasdaq: UCTT), today reported its financial results for the second quarter ended June 26, 2020.

“UCT delivered record revenue and profitability in the second quarter on increased demand across all areas of our business,” said Jim Scholhamer, CEO. “A recovery in wafer starts drove our Services business upwards, and ongoing momentum in the equipment market led to an increase in our Products business. I want to thank our dedicated employees worldwide for their commitment to quality and solid execution in a challenging environment. UCT’s results are a powerful testament to the engagement and loyalty of our customers, demonstrating growth across the board.”

Second Quarter 2020 GAAP Financial Results

Total revenue was $344.8 million. SPS contributed $277.9 million and SSB added $66.9 million. Total gross margin was 21.4%, operating margin was 8.9%, and net income was $21.3 million or $0.53 and $0.52 per basic and diluted share. This compares to total revenue of $320.9 million, gross margin of 20.5%, operating margin of 7.0%, and net income of $9.4 million or $0.24 and $0.23 per basic and diluted share in the prior quarter.

Second Quarter 2020 Non-GAAP Financial Results

On a non-GAAP basis, gross margin was 22.0%, operating margin was 11.7%, and net income was $30.5 million or $0.75 per diluted share. This compares to gross margin of 20.9%, operating margin of 9.9%, and net income of $21.0 million or $0.52 per diluted share in the prior quarter.

Third Quarter 2020 Outlook

Due to limited visibility resulting from the pandemic, the Company has widened its guidance ranges to reflect the heightened uncertainty in the marketplace. The Company expects revenue in the range of $320.0 million to $360.0 million and GAAP diluted net income per share to be between $0.40 and $0.56. The Company expects non-GAAP diluted net income per share to be between $0.56 and $0.72.

Conference Call

The call will take place at 3:30 p.m. PT and can be accessed by dialing 1-844-826-3034 or 1-412-317-5179. No passcode is required. A replay of the call will be available by dialing 1-877-344-7529 or 1-412-317-0088 and entering the confirmation code 10145593. The Webcast will be available on the Investor Relations section of the Company's website at http://uct.com/investors/events/.

About Ultra Clean Holdings, Inc.

Ultra Clean Holdings, Inc. is a leading developer and supplier of critical subsystems, ultra-high purity cleaning and analytical services primarily for the semiconductor industry. Ultra Clean offers its customers an integrated outsourced solution for major subassemblies, improved design-to-delivery cycle times, design for manufacturability, prototyping and component manufacturing, and tool chamber parts cleaning and coating, as well as micro-contamination analytical services. Ultra Clean is headquartered in Hayward, California. Additional information is available at www.uct.com.

Use of Non-GAAP Measures

In addition to providing results that are determined in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP), management uses non-GAAP gross margin, non-GAAP operating margin and non-GAAP net income to evaluate the Company's operating and financial results. We believe the presentation of non-GAAP results is useful to investors for analyzing our core business and business trends and comparing performance to prior periods, along with enhancing

investors' ability to view the Company's results from management's perspective. The presentation of this additional information should not be considered a substitute for results prepared in accordance with GAAP. Tables presenting reconciliations from GAAP results to non-GAAP results are included at the end of this press release.

The Company currently defines non-GAAP net income as net income (loss) before amortization of intangible assets, restructuring charges, executive transition costs, acquisition costs, fair value adjustments, depreciation adjustments, stock-based compensation, and the tax effects of the foregoing adjustments.

A reconciliation of our guidance for non-GAAP net income per diluted share for the following quarter is not available due to fluctuations in the geographic mix of our earnings from quarter to quarter, which impacts our tax rate and cannot be reasonably predicted or determined. As a result, such reconciliation is not available without unreasonable efforts and we are unable to determine the probable significance of the unavailable information.

Safe Harbor Statement

The foregoing information contains, or may be deemed to contain, "forward-looking statements" (as defined in the US Private Securities Litigation Reform Act of 1995) which reflect our current views with respect to future events and financial performance. We use words such as "anticipates," “projection,” “outlook,” “forecast,” "believes," "plan," "expect," "future," "intends," "may," "will," "estimates," “see,” "predicts," “should” and similar expressions to identify these forward-looking statements. Forward looking statements included in this press release include our expectations about the semiconductor capital equipment market and outlook. All forward-looking statements address matters that involve risks and uncertainties. Accordingly, the Company’s actual results may differ materially from the results predicted or implied by these forward-looking statements. These risks, uncertainties and other factors also include, among others, those identified in "Risk Factors,” "Management's Discussion and Analysis of Financial Condition and Results of Operations'' and elsewhere in our annual report on Form 10-K for the year ended December 27, 2019 as filed with the Securities and Exchange Commission. Ultra Clean Holdings, Inc. undertakes no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise unless required by law.

Contact:

Rhonda Bennetto, Vice President Investor Relations

rbennetto@uct.com

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OFOPERATIONS

(Unaudited; in thousands, except per sharedata)

	Three Months Ended						Six Months Ended
	June 26,			June 28,			June 26,			June 28,
	2020			2019			2020			2019
Revenues:
Product	$	277,892		$	210,390		$	537,275		$	410,635
Services		66,890			54,977			128,403			114,873
Total revenues		344,782			265,367			665,678			525,508
Cost of revenues:
Product		229,276			181,073			444,031			355,637
Services		41,628			36,125			82,107			76,905
Total cost of revenues		270,904			217,198			526,138			432,542
Gross profit		73,878			48,169			139,540			92,966
Operating expenses:
Research and development		3,827			3,921			7,251			7,352
Sales and marketing		5,876			5,366			11,668			10,761
General and administrative		33,350			29,911			67,247			57,702
Total operating expenses		43,053			39,198			86,166			75,815
Income from operations		30,825			8,971			53,374			17,151
Interest income		158			151			470			342
Interest expense		(3,773	)		(6,674	)		(8,961	)		(13,263	)
Other income (expense), net		560			133			(2,131	)		1,212
Income before provision for income taxes		27,770			2,581			42,752			5,442
Provision for income taxes		5,691			2,835			10,156			4,342
Net income (loss)		22,079			(254	)		32,596			1,100
Less: Net income (loss) attributable to noncontrolling interests		815			(52	)		1,910			697
Net income (loss) attributable to UCT	$	21,264		$	(202	)	$	30,686		$	403
Net income (loss) per share attributable to UCT common stockholders:
Basic	$	0.53		$	(0.01	)	$	0.77		$	0.01
Diluted	$	0.52		$	(0.01	)	$	0.75		$	0.01
Shares used in computing net income (loss) per share:
Basic		40,087			39,399			39,952			39,261
Diluted		40,834			39,399			40,774			39,556

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in thousands)

	June 26,			December 27,
	2020			2019
ASSETS
Current assets:
Cash and cash equivalents	$	214,364		$	162,531
Accounts receivable, net of allowance		138,886			112,694
Inventories		193,827			172,420
Prepaid expenses and other current assets		18,660			19,400
Total current assets		565,737			467,045
Property, plant and equipment, net		148,143			145,272
Goodwill		171,132			171,087
Intangibles assets, net		170,419			180,318
Deferred tax assets, net		15,517			15,498
Operating lease right-of-use assets		38,895			34,877
Other non-current assets		4,919			5,209
Total assets	$	1,114,762		$	1,019,306
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Bank borrowings	$	7,735		$	8,842
Accounts payable		140,082			133,058
Accrued compensation and related benefits		27,668			24,825
Operating lease liabilities		12,069			13,179
Other current liabilities		39,337			30,694
Total current liabilities		226,891			210,598
Bank borrowings, net of current portion		322,132			283,390
Deferred tax liabilities		25,183			25,183
Operating lease liabilities		33,455			28,828
Other liabilities		18,979			18,800
Total liabilities		626,640			566,799
Equity:
UCT stockholders’ equity:
Common stock		302,721			297,693
Retained earnings		171,053			140,367
Accumulated other comprehensive loss		(3,343	)		(1,334	)
Total UCT stockholders' equity		470,431			436,726
Noncontrolling interest		17,691			15,781
Total equity		488,122			452,507
Total liabilities and equity	$	1,114,762		$	1,019,306

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OFCASH FLOWS

(Unaudited; in thousands)

	Six Months Ended
	June 26,			June 28,
	2020			2019
Cash flows from operating activities:
Net income	$	32,596		$	1,100
Adjustments to reconcile net income to net cash provided by operating activities (excluding assets acquired and liabilities assumed):
Depreciation and amortization		23,403			21,225
Stock-based compensation		6,150			5,777
Deferred income taxes		(17	)		(2,077	)
Change in the fair value of financial instruments and earn-out liability		4,186			52
Others		(239	)		(274	)
Changes in assets and liabilities:
Accounts receivable		(26,040	)		10,001
Inventories		(21,459	)		32,362
Prepaid expenses and other current assets		(1,567	)		3,705
Other non-current assets		290			(566	)
Accounts payable		6,520			(4,704	)
Accrued compensation and related benefits		2,832			3,358
Operating lease assets and liabilities		(510	)		467
Income taxes payable		4,887			(2,206	)
Other liabilities		2,153			(203	)
Net cash provided by operating activities		33,185			68,017
Cash flows from investing activities:
Purchases of property, plant and equipment		(17,049	)		(6,750	)
Acquisition of Dynamic Manufacturing Solutions, LLC		—			(29,873	)
Proceeds from sale of equipment, including insurance proceeds		2,922			458
Net cash used in investing activities		(14,127	)		(36,165	)
Cash flows from financing activities:
Proceeds from bank borrowings		60,478			28,112
Proceeds from issuance of common stock		260			125
Payments on bank borrowings and finance leases		(26,261	)		(32,389	)
Withholding tax on employee equity compensation		(1,382	)		(1,394	)
Net cash provided by (used in) financing activities		33,095			(5,546	)
Effect of exchange rate changes on cash and cash equivalents		(320	)		(2,323	)
Net increase in cash and cash equivalents		51,833			23,983
Cash and cash equivalents at beginning of period		162,531			144,145
Cash and cash equivalents at end of period	$	214,364		$	168,128

ULTRA CLEAN HOLDINGS, INC.

REPORTABLE SEGMENTS

GAAP TO NON-GAAP RECONCILIATION

(Unaudited; dollars in thousands)

	GAAP						Non-GAAP
	Three Months Ended						Three Months Ended
	June 26, 2020						June 26, 2020
	SPS		SSB		Consolidated		SPS		SSB		Consolidated
Revenues	$	277,892	$	66,890	$	344,782	$	277,892	$	66,890	$	344,782
Gross profit	$	48,616	$	25,262	$	73,878	$	49,595	$	26,284	$	75,879
Gross margin		17.5%		37.8%		21.4%		17.8%		39.3%		22.0%
Income from operations	$	24,269	$	6,556	$	30,825	$	29,042	$	11,408	$	40,450
Operating margin		8.7%		9.8%		8.9%		10.5%		17.1%		11.7%
	Three Months Ended
---	---	---	---	---	---	---	---	---	---
	June 26, 2020
	SPS			SSB			Consolidated
Reconciliation of GAAP Gross profit to Non-GAAP Gross profit (in thousands)
Reported gross profit on a GAAP basis	$	48,616		$	25,262		$	73,878
Amortization of intangible assets (1)		-			1,022			1,022
Restructuring charges (2)		253			-			253
Stock-based compensation expense (3)		726			-			726
Non-GAAP gross profit	$	49,595		$	26,284		$	75,879
Reconciliation of GAAP Gross margin to Non-GAAP Gross margin
Reported gross margin on a GAAP basis		17.5	%		37.8	%		21.4	%
Amortization of intangible assets (1)		0.0	%		1.5	%		0.3	%
Restructuring charges (2)		0.1	%		-			0.1	%
Stock-based compensation expense (3)		0.2	%		-			0.2	%
Non-GAAP gross margin		17.8	%		39.3	%		22.0	%
Reconciliation of GAAP Income from operations to Non-GAAP Income from operations (in thousands)
Reported income from operations on a GAAP basis	$	24,269		$	6,556		$	30,825
Amortization of intangible assets (1)		1,173			3,776			4,949
Restructuring charges (2)		654			918			1,572
Stock-based compensation expense (3)		2,946			158			3,104
Non-GAAP income from operations	$	29,042		$	11,408		$	40,450
Reconciliation of GAAP Operating margin to Non-GAAP Operating margin
Reported operating margin on a GAAP basis		8.7	%		9.8	%		8.9	%
Amortization of intangible assets (1)		0.4	%		5.6	%		1.4	%
Restructuring charges (2)		0.3	%		1.4	%		0.5	%
Stock-based compensation expense (3)		1.1	%		0.3	%		0.9	%
Non-GAAP operating margin		10.5	%		17.1	%		11.7	%
1	Amortization of intangible assets related to the Company's acquisitions of Thermal, FDS, QGT and DMS
---	---
2	Represents severance, retention and costs related to facility closures
---	---
3	Represents compensation expense for stock granted to employees and directors
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ULTRA CLEAN HOLDINGS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAPADJUSTED RESULTS

	Three Months Ended
	June 26,			June 28,			March 27,
	2020			2019			2020
Reconciliation of GAAP Net Income (loss) to Non-GAAP Net Income (in thousands)
Reported net income (loss) attributable to UCT on a GAAP basis	$	21,264		$	(202	)	$	9,423
Amortization of intangible assets (1)		4,949			5,053			4,951
Restructuring charges (2)		1,572			774			1,600
Stock-based compensation expense (3)		3,104			3,091			2,752
Fair value adjustments (4)		1,209			766			2,948
Acquisition related costs (5)		-			1,211			-
Depreciation adjustments (6)		-			(360	)		-
Income tax effect of non-GAAP adjustments (7)		(2,037	)		(1,991	)		(2,291	)
Income tax effect of valuation allowance (8)		470			2,344			1,663
Non-GAAP net income attributable to UCT	$	30,531		$	10,686		$	21,046
Reconciliation of GAAP Income from operations to Non-GAAP Income from operations (in thousands)
Reported income from operations on a GAAP basis	$	30,825		$	8,971		$	22,550
Amortization of intangible assets (1)		4,949			5,053			4,951
Restructuring charges (2)		1,572			749			1,600
Stock-based compensation expense (3)		3,104			3,091			2,752
Fair value adjustments (4)		-			766			-
Acquisition related costs (5)		-			1,211			-
Depreciation adjustments (6)		-			(360	)		-
Non-GAAP income from operations	$	40,450		$	19,481		$	31,853
Reconciliation of GAAP Operating margin to Non-GAAP Operating margin
Reported operating margin on a GAAP basis		8.9	%		3.4	%		7.0	%
Amortization of intangible assets (1)		1.4	%		1.9	%		1.5	%
Restructuring charges (2)		0.5	%		0.2	%		0.5	%
Stock-based compensation expense (3)		0.9	%		1.2	%		0.9	%
Fair value adjustments (4)		0.0	%		0.3	%		0.0	%
Acquisition related costs (5)		0.0	%		0.5	%		0.0	%
Depreciation adjustments (6)		0.0	%		-0.1	%		0.0	%
Non-GAAP operating margin		11.7	%		7.4	%		9.9	%
Reconciliation of GAAP Gross profit to Non-GAAP Gross profit (in thousands)
Reported gross profit on a GAAP basis	$	73,878		$	48,169		$	65,662
Amortization of intangible assets (1)		1,022			1,023			1,023
Restructuring charges (2)		253			350			233
Stock-based compensation expense (3)		726			509			307
Fair value adjustments (4)		-			766			-
Depreciation adjustments (6)		-			(316	)		-
Non-GAAP gross profit	$	75,879		$	50,501		$	67,225
Reconciliation of GAAP Gross margin to Non-GAAP Gross margin
Reported gross margin on a GAAP basis		21.4	%		18.2	%		20.5	%
Amortization of intangible assets (1)		0.3	%		0.4	%		0.3	%
Restructuring charges (2)		0.1	%		0.1	%		0.0	%
Stock-based compensation expense (3)		0.2	%		0.2	%		0.1	%
Fair value adjustments (4)		0.0	%		0.2	%		0.0	%
Depreciation adjustments (6)		0.0	%		-0.1	%		0.0	%
Non-GAAP gross margin		22.0	%		19.0	%		20.9	%
Reconciliation of GAAP Interest and other income (expense) to Non-GAAP Interest and other income (expense) (in thousands)
Reported interest and other income (expense) on a GAAP basis	$	(3,055	)	$	(6,390	)	$	(7,567	)
Restructuring charges (2)		-			(25	)		-
Fair value adjustments (4)		1,209			-			2,948
Non-GAAP interest and other income (expense)	$	(1,846	)	$	(6,415	)	$	(4,619	)

ULTRA CLEAN HOLDINGS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAPADJUSTED RESULTS

	Three Months Ended
	June 26,			June 28,			March 27,
	2020			2019			2020
Reconciliation of GAAP Earnings Per Diluted Share to Non-GAAP Earnings Per<br> Diluted Share
Reported net income (loss) on a GAAP basis	$	0.52		$	(0.01	)	$	0.23
Amortization of intangible assets (1)		0.12			0.13			0.12
Restructuring charges (2)		0.04			0.02			0.04
Stock-based compensation expense (3)		0.08			0.08			0.07
Fair value adjustments (4)		0.03			0.02			0.08
Acquisition related costs (5)		-			0.03			-
Depreciation adjustments (6)		-			(0.01	)		-
Income tax effect of non-GAAP adjustments (7)		(0.05	)		(0.05	)		(0.06	)
Income tax effect of valuation allowance (8)		0.01			0.06			0.04
Non-GAAP net income	$	0.75		$	0.27		$	0.52
Weighted average number of diluted shares (thousands) on a non-GAAP basis		40,834			39,734			40,704

ULTRA CLEAN HOLDINGS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAPEFFECTIVE INCOME TAX RATE

	Three Months Ended
	June 26,			June 28,			March 27,
	2020			2019			2020
(in thousands, except percentages)
Provision for income taxes on a GAAP basis	$	5,691		$	2,835		$	4,465
Income tax effect of non-GAAP adjustments (7)		2,037			1,991			2,291
Income tax effect of valuation allowance (8)		(470	)		(2,344	)		(1,663	)
Non-GAAP provision for income taxes	$	7,258		$	2,482		$	5,093
Income before income taxes on a GAAP basis	$	27,770		$	2,581		$	14,983
Amortization of intangible assets (1)		4,949			5,053			4,951
Restructuring charges (2)		1,572			774			1,600
Stock-based compensation expense (3)		3,104			3,091			2,752
Fair value adjustments (4)		1,209			766			2,948
Acquisition related costs (5)		-			1,211			-
Depreciation adjustments (6)		-			(360	)		-
Non-GAAP income before income taxes	$	38,604		$	13,116		$	27,234
Effective income tax rate on a GAAP basis		20.5	%		109.8	%		29.8	%
Non-GAAP effective income tax rate		18.8	%		18.9	%		18.7	%
1	Amortization of intangible assets related to the Company's<br>acquisitions of AIT, Thermal, FDS, QGT and DMS
---	---
2	Represents severance, retention and costs related to<br>facility closures
---	---
3	Represents compensation expense for stock granted to<br>employees and directors
---	---
4	Fair value adjustments related to contingent consideration,<br>purchase obligation, DMS' sold inventories
---	---
5	Represents costs related to the acquisition of DMS
---	---
6	Depreciation adjustments related to QGT's fixed assets
---	---
7	Tax effect of items (1) through (6) above based on the<br>non-GAAP tax rate shown below
---	---
8	The Company's GAAP tax expense is generally higher than<br>the Company's non-GAAP tax expense, primarily due to losses in the U.S. with full federal and state valuation allowances. The<br>Company's non-GAAP tax rate and resulting non-GAAP tax expense considers the tax implications as if there was no federal or state<br>valuation allowance position in effect.
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