CORPORATE PRESENTATION Spring 2020 1
Safe Harbor This 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,” “ bel ieves,” “estimates” and similar statements. Statements that are not historical facts, including statements concerning our beliefs, forecasts, estimates and expectations, and those regarding our expected financial results 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”, “Management’s Discussion and Analysis of Financial Condition and Res ult s of Operations” and elsewhere in our most recent forms 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 Non-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. 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. 2 SLIDE:
Enabling Semiconductor Technology for Nearly 30 Years 2002 2006 2010 2014 2018 Sustainable & profitable growth solving complex problems 3 SLIDE:
Consistently Outperforming Our Served Markets 70% * WFE * 60% * UCT Semi 50% Y/Y Growth Rate 40% 30% 20% 10% 0% 2015 2016 2017 2018 2019 F i r s t Q u a r t e r 2 0 2 0 -10% ~60% Of UCT -20% DEP/ETCH Semi Sales -30% 4 SLIDE: * Source: Company data, UCT estimates based on SEMI WWSEMS Sept 2019 data
Proven Growth Strategy Driving Exceptional Results $ in Millions (FYE) UCT Revenue Op Margin $1,097 $1,066 $924 10.3% $563 7.8% 6.6% 5.4% 2016 2017 2018 2019 5 SLIDE:
Successful Inorganic Growth APRIL, 2019 Purchase price $30.0M EV/EBITDA ~5.4 SEPTEMBER, 2018 Purchase price $342.0M Increased leading EV/EBITDA ~6.6 position in AUGUST, 2015 weldments Purchase price $22.8M Added recurring EV/EBITDA ~6.2 service revenue FEBRUARY, 2015 stream Increased >40% Purchase price $43.6M revenue EV/EBITDA ~11.8 Entered wet chemistry business Increased >50% revenue Maintained attractive margins 6 SLIDE:
Diversified Path To Market Expansion TRANSFER CHAMBER PROCESS CHAMBER GAS PANEL FACTORY INTERFACE SLIDE:
Supplying Many Critical Elements of the Manufacturing Process SEMI MANUFACTURING PROCESS PREP FRONT-END PROCESSING BACK-END PROCESSING PHOTORESIST EPITAXIAL LITHOGRAPHY CMP CERTAIN STEPS POLISHING ETCH REPEATED PACKAGE & TEST 20X – 30X IMPLANT SLICING DEPOSITION INSPECTION ANNEAL INGOT WAFER CLEAN CORE UCT MARKETS ADDITIONAL UCT MARKETS 8 SLIDE:
Industry and Customer Footprint UCT Revenue by Segment UCT Revenue by Customer Service Service * 19% Memory 19% WFE Other Equipment Lam Other 40% Equipment 45% 13% Foundry & Applied Logic WFE 23% 36% 9 SLIDE: * Includes low single digit OEM service revenue
Global Product & Service Footprint Strategically Close To Customers Manufacturing Cleaning & Analysis UK Czech Republic California Texas Israel Korea Oregon China Maine Philippines Arizona Singapore Colorado Taiwan Global presence is a strategic benefit for major customers 10 SLIDE:
Product & Service Market Opportunity OEMs Fabs 11 SLIDE: Company adaptation of Gartner Semiconductor Wafer Fab Equipment (Including Wafer-Level Packaging), Worldwide, Forecast 1Q20 Update, SIA Forecast (April 2020) & UCT estimates
SPS Growth Opportunities Further penetration of current >10% customers Expand presence at other major OEM’s – Goal to add 1-2 >10% customers over next several years Pursue smaller, specialty-device customers to support increasing 200mm demand – Further diversify revenue; leverage new high growth device markets (i.e. 5G, IoT, and automotive) Opportunistic consolidation within fragmented supply chain 12 SLIDE:
SSB Growth Opportunities Introduce proven Atomically Clean Surfaces ™ to new customers Reduce cost of ownership utilizing advanced technology – Longer part life through durable surface encapsulation – Higher tool productivity by chemical & thermal pre-conditioning parts Improve efficiencies by leveraging part cleaning knowledge – Create value by efficiently managing customer spare parts – Utilize part lifecycle data to develop equipment uptime improvement Create integrated solutions across UCT’s core competencies 13 SLIDE:
Cleaning Service Offerings - QuantumClean SEMICONDUCTOR SERVICES BUSINESS CHEMICAL PHYSICAL VAPOR ATOMIC LAYER DIFFUSION ETCHING VAPOR LITHOGRAPHY IMPLANT SUBFAB DEPOSITION DEPOSITION DEPOSITION Parts Cleaning & Coating Growth Drivers – 17 Advance Technology Cleaning – Increase leadership in cleaning of Centers close to customers advanced sub-14nm process parts – New equipment cleaning and – Penetrate top Tier IDM’s and OEM’s ongoing service contracts – Advantage: total wafer starts vs – Onsite logistics and support WFE capital equipment spend Recurring revenue stream BEFORE & AFTER CLEAN 14 SLIDE: Source: Company information.
QuantumClean/ChemTrace Advantaged Position Primary customers engage with Cleaning + Analytical global suppliers Lab Services Market* Large number of regional players serve ~70% of market 17% – Leading position with opportunity 6% to grow 5% 3% 2019 Top 4 IDM 62% Top 4 OEM* 12% Top 2 Foundries 6% KoMiCo Pentagon All Other 20% Cleanpart Others (~90 companies) 15 SLIDE: Source: SSB Management estimates. * Includes top OEM sub-system suppliers
End Market Update Foundry – continuing leading edge investment – 5G infrastructure buildout and handset demand are near and mid-term drivers Logic ramp continued strength – Higher server and PC demand, supporting higher network traffic due to remote working 3D NAND – continuing transition to more layers – Server strength driving near-term demand – Handset content Increase partially offsetting reduced unit demand DRAM – node transitions continuing – Servers and handsets are near- and mid-term demand drivers 16 SLIDE:
China Strategy 2 Sites in China Manufacturing facility in Shanghai ─ Deep partnership with Chinese OEM’s ─ Made in China for China and Asia minimal tariff issues o Cleaning facility in Xi’an ─ Positioned to capitalize on growing service requirements in China as domestic chip production grows 17 SLIDE:
FINANCIAL UPDATE
Q1’20 Key Takeaways Record revenue exceeded guidance Q1’20 $ in Millions EPS high end of guidance Total Revenue $320.9 Improved profitability Semi Revenue $306.4 Maximized capacity at factories Gross Margin 20.9% Operating Margin 9.9% Managed suppliers - minimal disruption to customers Cash Generation $16.0 Cash Balance $208.1 Products Services $ in Millions EPS* $0.52 Revenue $259.4 $61.5 * Excluding intangible amortization expense, non-recurring costs and SBC Gross Margin 17.4% 35.9% Operating Margin 9.5% 11.9% 19 SLIDE:
Q2 Guidance Expecting demand similar to Q1 2020 Q2’20 Guidance $ in Millions Focus on optimizing margins Revenue $290.0-$330.0 Tax rate for 2020 expected in high teens EPS (excl SBC) $0.40-$0.56 Wider guidance; uncertainty in COVID-19 impact to supply chain 20 SLIDE:
Updated Margin Model * $0.8 - $1.0B $1.0 - $1.5B $1.5 -$2.0B Consolidated Performance Model Non-GAAP Gross Margin 15% - 18% 17% - 20% 18% - 21% Non-GAAP Operating Margin 5% - 8% 7% - 10% 9% - 12% SPS SSB Business Unit Target Model Non-GAAP Gross Margin 15% - 18% 33% - 36% Non-GAAP Operating Margin 8% - 10% 12% - 15% * Subject to semiconductor market cycle direction, product and service mix and other macro events beyond UCT’s control 21 SLIDE:
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