Ultra Clean Holdings Inc (UCTT) 2023 Q3 法說會逐字稿

Good day, and welcome to the Ultra Clean Q3 2023 Earnings Call and Webcast. (Operator Instructions) Please note, this event is being recorded.

美好的一天，歡迎參加 Ultra Clean 2023 年第三季財報電話會議和網路廣播。 （操作員說明）請注意，正在記錄此事件。

I would now like to turn the conference over to Rhonda Bennetto, Investor Relations. Please go ahead.

我現在想將會議交給投資者關係部門的朗達·貝內托 (Rhonda Bennetto)。請繼續。

Thank you, operator. Good afternoon, everyone, and thank you for joining us. With me today are Jim Scholhamer, Chief Executive Officer; and Sheri Savage, Chief Financial Officer. Jim will begin with some prepared remarks about the business and Sheri will follow with the financial review. Then we'll open up the call for questions.

謝謝你，接線生。大家下午好，感謝您加入我們。今天與我在一起的有執行長 Jim Scholhamer；和財務長 Sheri Savage。吉姆將首先對業務進行一些準備好的評論，謝裡將隨後進行財務審查。然後我們將開放提問。

Today's call contains forward-looking statements that are subject to risks and uncertainties. For more information, please refer to the Risk Factors section in our SEC filings. All forward-looking statements are based on estimates, projections and assumptions as of today, and we assume no obligation to update them after this call.

今天的電話會議包含前瞻性陳述，這些陳述存在風險和不確定性。欲了解更多信息，請參閱我們向 SEC 提交的文件中的風險因素部分。所有前瞻性陳述均基於截至今天的估計、預測和假設，我們不承擔在本次電話會議後更新這些陳述的義務。

Discussion of our financial results will be presented on a non-GAAP basis. A reconciliation of GAAP to non-GAAP can be found in today's press release posted on our website.

我們的財務業績討論將在非公認會計原則的基礎上進行。 GAAP 與非 GAAP 的調整可以在我們網站上今天發布的新聞稿中找到。

And with that, I'd like to turn the call over to Jim. Jim?

說到這裡，我想把電話轉給吉姆。吉姆？

Thank you, Rhonda. Total revenue for the third quarter came in as expected, increasing 3% over the second quarter. Our product business grew just over 5% as some WFE fundamental dynamics began to show small signs of improvement. We believe that some progress has been made for equipment inventory reduction throughout the system and expect several more quarters until normal levels are achieved. We are aligned with our customers and their customers that while we don't know the pace or the timing of the recovery, we believe the fundamentals are slowly setting the stage for the industry to return to growth.

謝謝你，朗達。第三季總營收符合預期，較第二季成長3%。隨著 WFE 的一些基本面動態開始出現小幅改善跡象，我們的產品業務成長了 5% 以上。我們相信，整個系統的設備庫存減少已經取得了一些進展，預計還需要幾個季度才能達到正常水準。我們與我們的客戶及其客戶保持一致，雖然我們不知道復甦的速度或時間，但我們相信基本面正在慢慢為產業恢復成長奠定基礎。

Our typically high-margin service business saw an abrupt decline in revenue due to a sudden and unexpected large reduction in wafer starts at a primary customer. While this pullback had a detrimental effect on our overall profitability and earnings, we believe that production cuts should help rebalance of supply and demand and a recovery of chip prices.

由於主要客戶的晶圓開工突然且意外大幅減少，我們通常的高利潤服務業務收入突然下降。雖然這種回調對我們的整體獲利能力和收益產生了不利影響，但我們認為減產應該有助於供需重新平衡以及晶片價格的復甦。

For the foreseeable future, we will continue to focus on optimizing our global footprint, driving operational efficiencies and other strategic initiatives to further increase our value for our customers. These efforts will lay the foundation required to capitalize on share gain opportunities heading into the next ramp.

在可預見的未來，我們將繼續專注於優化我們的全球足跡、提高營運效率和其他策略舉措，以進一步增加我們為客戶提供的價值。這些努力將為利用股票收益機會進入下一個階段奠定基礎。

We are in a strong position to increase our semi manufacturing leadership position with the available capacity and geographic flexibility to meet accelerated demand when it returns. Along those lines, we are very pleased to report that we have acquired HIS Innovations Group. They provide design, manufacturing, integration of components, process solutions and fully integrated subsystems to the semiconductor subfab segment. This acquisition adds a higher gross margin and value product offering, increases our vertical capabilities and synergies, extends our reach into the subfab area and expands our addressable market by approximately $1.5 billion. With over 60 fabs under construction globally, this acquisition aligns with our long-term strategy to pursue sustained and profitable growth and will be rolled into our product division.

我們處於有利地位，可以利用可用產能和地理靈活性來提高我們的半製造領導地位，以滿足需求回歸時的加速需求。因此，我們非常高興地宣布，我們已經收購了 HIS Innovations Group。他們為半導體晶圓廠部門提供設計、製造、組件整合、製程解決方案和完全整合的子系統。此次收購增加了更高的毛利率和價值產品供應，增強了我們的垂直能力和協同效應，將我們的業務範圍擴展到了晶圓廠區域，並將我們的潛在市場擴大了約 15 億美元。全球有超過 60 座晶圓廠在建，此次收購符合我們追求持續獲利成長的長期策略，並將納入我們的產品部門。

Lastly, we are deeply saddened and concerned by the current events in the Middle East. We are taking the situation very seriously, and I'm relieved to say that all our employees are accounted for and we're doing all we can to assist with their safety and well-being. Both of our facilities in Israel are running at the capacity required to meet production targets. Our commitment to support our customers worldwide remains a priority. Israel's policy ensures business continuity across the industrial segment. Some ports and airports are currently functioning, and we can ship and receive the products and raw materials required to meet customer demand. We're also working together with other multinational companies that have substantial operations in Israel to ensure we are aligned and supporting each other.

最後，我們對當前中東局勢深感悲痛與關切。我們非常嚴肅地對待這一情況，我可以放心地說，我們所有的員工都已經安全，我們正在盡一切努力幫助他們的安全和福祉。我們在以色列的兩個工廠都在以達到生產目標所需的產能運作。我們對支持全球客戶的承諾仍然是我們的首要任務。以色列的政策確保整個工業領域的業務連續性。一些港口和機場目前已投入運營，我們可以運送和接收滿足客戶需求所需的產品和原材料。我們也與在以色列擁有大量業務的其他跨國公司合作，以確保我們保持一致並相互支持。

Overall, we are navigating through the demand variability in the current environment. Longer term, our increased scale, operational efficiencies, expanded capacity and new capabilities position us well to maintain our leadership position and outperform the industry.

總體而言，我們正在應對當前環境中的需求變化。從長遠來看，我們規模的擴大、營運效率的提高、產能的擴大和新能力的增強使我們能夠保持領先地位並超越行業。

And with that, I will turn the call over to Sheri.

然後，我會將電話轉給 Sheri。

Thanks, Jim, and good afternoon, everyone. Thanks for joining us. In today's discussion, I will be referring to non-GAAP numbers only. As Jim noted, our products business performed well from a revenue standpoint in the third quarter. Our services business, however, was impacted by a sudden larger-than-expected reduction in wafer starts in Q3 that impacted our overall profitability and earnings.

謝謝吉姆，大家下午好。感謝您加入我們。在今天的討論中，我將僅提及非 GAAP 數字。正如吉姆指出的那樣，從第三季的收入角度來看，我們的產品業務表現良好。然而，我們的服務業務受到第三季晶圓開工量突然大幅減少的影響，影響了我們的整體獲利能力和收益。

Total revenue for the third quarter was $435 million compared to $421.5 million in the prior quarter. Revenue from products increased 5.1% to $380.9 million compared to $362.5 million last quarter. Services revenue was $54.1 million compared to $59 million in Q2 due to the scale back and wafer starts, as I just mentioned.

第三季總營收為 4.35 億美元，上一季為 4.215 億美元。產品營收成長 5.1%，達到 3.809 億美元，上一季為 3.625 億美元。正如我剛才提到的，由於規模縮減和晶圓開工，服務收入為 5,410 萬美元，而第二季為 5,900 萬美元。

Total gross margin for the third quarter was 15.5% compared to 16.7% last quarter. Although product revenue grew sequentially, gross margin came in at 13.8% compared to 14.5% in the prior quarter, and services was 27.4% compared to 30.3% in Q2.

第三季總毛利率為 15.5%，上一季為 16.7%。儘管產品收入較上季成長，但毛利率為 13.8%，而上一季為 14.5%；服務毛利率為 27.4%，而第二季為 30.3%。

The reduction in margin was due to lower volumes for service and overall mix within each business unit. We continue to focus on cost improvements and operational efficiencies to strengthen profitability.

利潤率下降是由於每個業務部門的服務量和整體組合下降。我們繼續專注於成本改進和營運效率以增強獲利能力。

Operating expenses for the quarter was $48.6 million compared with $49.4 million in Q2 and decreased as a percentage of revenue to 11.2% from 11.7%. Total operating margin for the quarter was 4.4% compared to 5% in the second quarter.

本季營運費用為 4,860 萬美元，而第二季為 4,940 萬美元，佔營收的比例從 11.7% 下降至 11.2%。本季總營業利潤率為 4.4%，而第二季為 5%。

Margins from our Products division was 4.5% compared to 4.3% in the prior quarter and services margin was 3.7% compared to 9.3% in the prior quarter. The drop in services margin was due to lower volumes and mix. Based on 45 million shares outstanding, earnings per share for the quarter was $0.04 on net income of $2 million compared to $0.16 on net income of $7.1 million in the prior quarter.

我們的產品部門利潤率為 4.5%，上一季為 4.3%；服務利潤率為 3.7%，上一季為 9.3%。服務利潤率下降是由於銷量和組合下降。以 4,500 萬股流通股計算，本季每股收益為 0.04 美元，淨利潤為 200 萬美元，而上一季的每股收益為 0.16 美元，淨利潤為 710 萬美元。

Our tax rate for the quarter was 37.3% due to a shift in profits by geography. Our tax rate was trued up in Q3 for year-to-date expense and we expect our tax rate for Q4 and 2023 to be approximately 20%.

由於利潤按地域的變化，我們本季的稅率為 37.3%。我們在第三季對年初至今的費用進行了調整，我們預計第四季和 2023 年的稅率約為 20%。

Turning to the balance sheet. Our cash and cash equivalents were $342 million, an increase of $21.2 million over Q2. Cash from operations was $36.2 million similar to last quarter at $36.4 million. As we navigate through the current cycle, we will continue to manage our working capital. Given macroeconomic and geopolitical uncertainty and current industry dynamics, we are keeping our guidance range wide.

轉向資產負債表。我們的現金和現金等價物為 3.42 億美元，比第二季增加 2,120 萬美元。營運現金為 3,620 萬美元，與上季的 3,640 萬美元類似。在我們度過當前週期的過程中，我們將繼續管理我們的營運資金。鑑於宏觀經濟和地緣政治的不確定性以及當前的行業動態，我們將保持較寬的指導範圍。

With the addition of HIS Innovations Group, we project total revenue for the fourth quarter of 2023 between $420 million and $470 million. We expect EPS in the range of $0.02 to $0.22. This includes approximately $10 million of revenue and $0.01 of EPS for 2 months of operations from the acquisition.

隨著 HIS Innovations Group 的加入，我們預計 2023 年第四季的總營收將在 4.2 億美元至 4.7 億美元之間。我們預計每股收益在 0.02 美元至 0.22 美元之間。這包括約 1,000 萬美元的收入和收購後 2 個月營運的 0.01 美元每股收益。

And with that, I'd like to turn the call over to the operator for questions.

因此，我想將電話轉給接線員詢問問題。

(Operator Instructions) The first question comes from Krish Sankar with TD Cowen.

（操作員說明）第一個問題來自 Krish Sankar 和 TD Cowen。

This is Robert Mertens on behalf of Krish. Let's see. First, just in terms of the service sales this quarter, I know they're a bit weaker on utilization rates last quarter, and you mentioned the sudden reduction of wafer starts impacting in September. Was there -- was that the main qualifier for this quarter? Or was there anything else in maybe just in terms of the mix that goes into the service division, if you've ever broken that down.

我是羅伯特‧默滕斯 (Robert Mertens)，代表克里什 (Krish)。讓我們來看看。首先，就本季的服務銷售而言，我知道上季的使用率有點弱，您提到了 9 月晶圓開工突然減少的影響。這是本季的主要預選賽嗎？或者，如果您曾經將其分解過的話，可能只是就進入服務部門的組合而言，還有其他事情嗎？

Yes. Robert, the first part, we have seen reductions in wafer starts across the broad spectrum of fabs prior to this last quarter. What we saw early in the third quarter was one particular chip maker ratchet down mostly their memory fab pretty dramatically. They've been holding that up for half the time when others had already brought their utilizations down. So that was, I guess, you'd say, the last one to really fall. So that was the main impact there. As far as your second question around the mix, I think maybe my answer on the first might answer that. But service is typically more dependent on logic than memory, but this is a rather large memory fab and had an outsized impact.

是的。羅伯特，第一部分，在上個季度之前，我們已經看到各種晶圓廠的晶圓開工量減少。我們在第三季初看到的是，一家特定的晶片製造商大幅削減了其大部分記憶體工廠的產能。當其他人已經降低了利用率時，他們已經堅持了一半的時間。所以，我想，你會說，那是最後一個真正倒下的。這就是那裡的主要影響。至於你關於混合的第二個問題，我想也許我對第一個問題的回答可以回答這個問題。但服務通常更依賴邏輯而不是內存，但這是一個相當大的內存工廠，並且產生了巨大的影響。

Great. And then maybe just real quick in terms of the timing of seeing the ramp down of that one customer is there any indication of maybe when the sales would pick back up? Is that something you think services would be growing next quarter or something more into calendar year '24?

偉大的。然後，就看到該客戶數量下降的時間而言，也許真的很快，是否有任何跡象表明銷售額何時會回升？您認為服務會在下個季度或 24 日曆年繼續成長嗎？

Yes, really difficult to predict. We're starting to see some of the fundamentals of supply and demand of these chips start to now move towards a better balance. We start to see some ASP on some of these chips start to recover a bit. So things are moving in the right direction. But as far as when the customers will start ramping up the supply side of the chips and use their -- pull their utilizations up, it's still unclear. But I would say it's doubtful to see anything meaningful within this year.

是的，確實很難預測。我們開始看到這些晶片的供需基本面現在開始走向更好的平衡。我們開始看到其中一些晶片的 ASP 開始有所恢復。所以事情正在朝著正確的方向發展。但至於客戶何時開始增加晶片的供應量並提高其利用率，目前還不清楚。但我想說的是，今年內看不到任何有意義的事情是值得懷疑的。

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

（操作員說明）我們的問答環節到此結束。我想請吉姆·斯科哈默（Jim Scholhamer）發表閉幕詞。

Thank you all for joining us today, and we look forward to speaking to you again next quarter.

感謝大家今天加入我們，我們期待下個季度再次與您交談。

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

會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。