Uct investor-presentation-august-2016

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  • August 2016

    Investor Presentation

  • Safe HarborThis presentation may contain forward-looking statements and management may make additional forward-looking statements in response to your questions. These statements are made under the ''safe harbor'' provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as will, expects, anticipates, future, intends, plans, believes, estimates and similar statements. Statements that are not historical facts, including statements concerning our beliefs, forecasts, estimates and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including risks related to: the risk that our results of operations are cyclical and may fluctuate from period to period; the risk that we rely on a small number of customers for a significant portion of our revenue; the risk that the industries in which we participate are highly competitive and other risks outlined in our public filings with the Securities and Exchange Commission, including as set forth under Risk Factors, Managements Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in our most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K filed with the Securities and Exchange Commission. The forward-looking statements made in this presentation relate only to events or information as of the date on which the statements are made in this presentation. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

    2

  • Non-GAAP Management uses non-GAAP net income and non-GAAP net income per diluted share to evaluate the Company's operating and financial results. The Company believes 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 of non-GAAP results to U.S. GAAP results are included in the Appendix on page 20 and 21.

    3

  • Global leader in design, engineering and manufacturing of critical modules, subsystems and turnkey solutions primarily for the semiconductor capital equipment industry.

    Q216 revenue of $130M, a quarter-over-quarter increase of 15.7% Q216 GAAP diluted EPS of $0.02 and non-GAAP* diluted EPS of $0.10

    Continued recovery expected in Semiconductor Wafer Equipment spending Industry commitment to node transitions in logic (10nm) and DRAM (20nm) Increased capital intensity in deposition and etch for FinFET and 3D NAND

    Building the platform for UCTs growth Strategic investment in capabilities to enable ramp of new business Streamlining business systems and processes

    4

    UCT Highlights

    * Non-GAAP excludes pre-tax charges of $1.4 million for intangible assets amortization costs and $70,000 of costs related to the closure of one of the Companys U.S. facilities, offset partially by a corresponding increase in tax expense of approximately $0.4M, and (ii) $1.4 million of income tax expense related to income tax valuation allowances

  • 5

    From Design to Prototype to Production

    Broad expertise in multiple areas Complete outsourced design

    Gas and liquid delivery Mechanical and electrical assemblies Thermal management

    Quick turn capabilities

    PROTOTYPING/ DEVELOPMENT

    MANUFACTURINGENGINEERING MANUFACTURING

    INTEGRATION & TEST

    SUPPLY CHAIN MANAGEMENT

  • 6

    From Design to Prototype to Production

    Design for manufacturability (DFM) Lower production costs Reduced cycle time

    Partner with customers to meet demanding new product requirements

    Continuous improvement in operational excellence

    MANUFACTURING

    INTEGRATION & TEST

    MANUFACTURINGENGINEERING

    PROTOTYPING/ DEVELOPMENT

    SUPPLY CHAIN MANAGEMENT

  • 7

    From Design to Prototype to Production

    Network of global, strategic partners Reduce customer overhead through UCT expertise

    in qualifying and managing complex supplier base Aggregated buying power Improved customer delivery time

    PROTOTYPING/ DEVELOPMENT

    MANUFACTURING

    INTEGRATION & TEST

    MANUFACTURINGENGINEERING

    SUPPLY CHAIN MANAGEMENT

  • 8

    From Design to Prototype to Production

    Comprehensive new product introduction process Simplify manufacturing process Reduce manufacturing costs Solve production challenges

    Vertically integrated

    MANUFACTURING

    PROTOTYPING/ DEVELOPMENT INTEGRATION & TEST

    MANUFACTURINGENGINEERING

    SUPPLY CHAIN MANAGEMENT

  • 9

    From Design to Prototype to Production

    Sub-system through full tool integration Electrical and mechanical assemblies Ultra-high purity gas systems Fluid delivery systems

    Final test and shipment direct to end users Extended factory to top OEMs

    INTEGRATION & TESTPROTOTYPING/ DEVELOPMENT

    MANUFACTURINGMANUFACTURING

    ENGINEERING

    SUPPLY CHAIN MANAGEMENT

  • OEM Component Suppliers

    34%

    OEM Integration In-Sourcing

    44%

    UCT5% Major Contract

    Manufacturers11%

    Other Contract Manufacturers

    6%

    10

    Semi Equipment Manufacturing Landscape

    Source: UCT estimates.

  • 11

    Why Outsource?

    LOWER COST Provides variable cost model

    SCALABILITY Gain ability to quickly scale manufacturing

    OPERATIONAL FOCUS Access to expertise in manufacturing

    SUPPLY CHAIN Ease of supply chain management

    FINANCIAL FLEXIBILITY Achieve reduction of inventory, improved cash flow

    UCT excels at meeting quality, cost and delivery for demanding semiconductor market

  • Total WFE Market OpportunityDeposition & Etch Outpace Semi Market

    2016 WFE Estimate: $33B

    Dep & Etch

    >70%of UCT Semi

    Sales

    Dep & Etch Industry CapEx Spend 9-10% CAGR 2013 - 2018

    Total Industry CapEx Spend~6% CAGR 2013 - 2018

    Thermal & Implant

    5% Deposition25%

    Removal/Etch 25%

    Lithography26%

    Metrology & Inspection

    13%

    Other6%

    15 Source: Gartner 2015 and UCT estimates not based on material non-public information

  • Frames Machining Plastics

    Prototype Machining

    MachiningMetals

    13

    Growing Suite of Critical Process Capabilities

    Manufactured Components Chemical Delivery Sub-Systems

    Frames

    Prototype Machining

    MachiningMetals

    Machining Plastics

    Heaters

    Sheet Metal Forming

    3D Printing

    Complete Assemblies

    GasGASAssembly

    Integration & Test

    Liquid

    AssemblyIntegration

    & Test

    Liquid

    Sheet Metal Forming

    Heaters 3D Printing

  • 14

    Semi Industry Consolidation

    54% 63% 63%

    TOP 10CHIP COMPANIES

    TOP 5WFE COMPANIES

    68%

    2010 2015 2010 2015

    Source: Company Financials, SIA, Gartner 2015 and UCT estimates not based on material non-public information

  • 15

    Supply Chain Consolidation Opportunity

    30%

    TOP 10SUPPLIERS to WFE

    35%

    2010 2015

    Source: Company Financials, SIA, Gartner 2015 and UCT estimates not based on material non-public information

  • 16

    UCT Business Model

    KEY DIFFERENTIATORSHigher value capabilities Improved operational efficienciesLow capital requirements

    OPERATING PROFIT DRIVERS Revenue growth Low operating expenses Strategic acquisitions

    GROSS MARGIN15% - 18%

    Long-term Target

    OPERATING MARGIN

    8% - 10%

  • (in $ millions) Q2 15 Q1 16 Q2 16

    Sales $117.5 $112.2 $129.8

    Gross Profit $18.8 $14.6 $19.0

    Gross Profit % 16.0% 13.0% 14.7%

    GAAP Net Income (Loss) $2.2 ($3.2) $0.7

    GAAP basic & diluted EPS $0.07 ($0.10) $0.02

    Non-GAAP* Net Income (Loss) $3.2 $0.0 $3.2

    Non-GAAP diluted EPS* $0.10 $0.0 $0.10

    Cash $76.6 $45.5 $44.1

    17

    Select Financial Data

    * Q2 2016 Non-GAAP excludes pre-tax charges of $1.4 million for intangible assets amortization costs and $70,000 of costs related to the closure of one of the Companys U.S. facilities, offset partially by a corresponding increase in tax expense of approximately $0.4M, and (ii) $1.4 million of income tax expense related to income tax valuation allowances

  • Poised to outperform growth of Semi WFE market

    Targeting fastest growing market segments

    Delivering what customers need (OTD, quality, cost)

    Industry trends reinforce leading position as potential supply chain consolidator

    Becoming partner to key customers

    18

    Compelling UCT Opportunity

    WinningStrategy

    Strong GrossMargins

    Improving Profitability

    Solid Cash Generation

  • Thank You

  • (in thousands)Three months ended:

    June 26, 2015 March 25, 2016 June 24, 2016

    Reported net income (loss) on a GAAP basis $2,207 $(3,239) $723

    Amortization of intangible assets (1) $1,355 $1,440 $1,440

    Restructuring charges (2) - $177 $70

    Income tax effect of non-GAAP adjustments (3) $(381) $(385) $(406)

    Income tax