HAYWARD, Calif., April 15, 2019 /PRNewswire/ -- Ultra Clean
Holdings, Inc.("UCT") (Nasdaq: UCTT), today announced that it has
purchased substantially all of the assets of Dynamic Manufacturing
Solutions, LLC ("DMS"), a semiconductor weldment and solutions
provider.
Based in Austin, Texas,
adjacent to UCT's existing weldment facility, DMS offers a complete
range of weldment solutions, from build to print outsourcing, to
turnkey design and product realization. DMS provides world class
contract manufacturing in welding solutions, UHP weld assemblies,
gas and chemical delivery solutions, process and facility modules,
engineering services, and electrical and mechanical design and
assembly solutions primarily to the semiconductor industry.
"The acquisition of DMS further enhances UCT's strong position
in the gas delivery market," said Jim
Scholhamer, CEO. "DMS has a history of providing top quality
fabrication of ultra-high purity weldments, which is highly
complementary to UCT's existing offerings and operations. This
transaction should allow us to leverage economies of scale,
strengthen our manufacturing capabilities and enhance our
competitive position. We expect the acquisition to improve UCT's
profitability and be accretive to earnings."
"The combination of DMS and UCT will result in an even stronger
presence in the weldment segment of the WFE industry and
significantly strengthens our ability to provide high-value
solutions for our customers," said Robb
Misso, Co-Founder & CEO of DMS. "In my new position as
Vice President, Global Weldments for UCT, I am excited at the
prospect of capitalizing on the many opportunities to grow our
combined weldment business on a global scale."
Under the terms of the asset purchase Agreement, UCT paid
$30.0 million in cash for DMS,
subject to certain post-closing adjustments as provided in the
acquisition Agreement. UCT may pay up to $12.5 million in additional cash earn-out
payments to the former owners of DMS if the combined weldment
business achieves certain gross profit and gross margin targets for
the twelve months ending June 26,
2020. In 2018, DMS generated revenue of $48.4 million, net income of $2.1 million and Adjusted EBITDA of $5.6 million. This equates to a price multiple of
5.4X 2018 DMS Adjusted EBITDA, not including the potential
earn-out.
Needham & Company, LLC served as financial advisor to UCT in
the acquisition and Davis Polk &
Wardwell LLP served as legal advisor to UCT.
Guidance
We expect this acquisition to generate over $5 million in Adjusted EBITDA in 2019 despite
declines in revenue reflective of overall industry demand. This
transaction is expected to be immediately accretive to UCT's net
income and should add up to $0.02 to
UCT's GAAP EPS and $0.05 to
$0.07 to UCT's non-GAAP EPS in 2019.
UCT expects to incur one-time transaction costs of approximately
$1 million.
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
microcontamination analytical services. Ultra Clean is
headquartered in Hayward,
California. Additional information is available at
www.uct.com.
Non-GAAP Financial Measures
This release and the accompanying table include a discussion of
DMS's Adjusted EBITDA, which is a non-GAAP financial measure that
is provided as a complement to results provided in accordance with
accounting principles generally accepted in the United States of America ("GAAP"). DMS
defines "Adjusted EBITDA" as net income (loss) plus research &
development expense, depreciation expense, interest expense,
provision for (benefit from) franchise taxes, and other one-time
expenses. In addition, the definition of Adjusted EBITDA used in
this press release may not be comparable to the definitions as
reported by other companies. We believe DMS's Adjusted EBITDA is
relevant and useful information because it provides UCT and
investors with additional measurements to analyze DMS's past
operating performance and enterprise value. A reconciliation of
DMS's Adjusted EBITDA to net income is provided in the accompanying
table. Non-GAAP measures should be considered in addition to
results prepared in accordance with GAAP, but should not be
considered a substitute for, or superior to, GAAP results. A
reconciliation of our guidance for DMS's contribution to UCT's
non-GAAP net income per share for 2019 is not available due to the
uncertainty of the timing of the one-time transaction costs and
other items associated with the acquisition and cannot be
reasonably predicted or determined at this time. As a result, such
reconciliation is not available without unreasonable efforts and we
are unable to determine the probable significance of the
unavailable information.
Forward-looking Language
This press release 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", "forecast", "believes," "plan," "expect," "future,"'
"intends," "may," "will," "should," "estimates," "predicts," and
similar expressions to identify these forward-looking statements.
Forward looking statements included in this press release include,
without limitation, statements regarding the acquisition of DMS by
UCT, the benefits of the transaction and future results and
opportunities for the combined company. Forward-looking statements
are subject to known and unknown risks and uncertainties that could
cause actual results to differ materially from those expressed or
implied by such statements. There are a number of important factors
that could cause actual results or events to differ materially from
those indicated by such forward-looking statements, including:
(1) the ability of UCT to successfully integrate DMS's
operations and employees; (4) unexpected costs, charges or expenses
resulting from the transaction; (5) UCT's ability to successfully
grow its or DMS's business; (6) potential adverse reactions or
changes to business relationships resulting from the announcement
of the transaction; (7) the retention of key employees, customers
or suppliers; and (9) legislative, regulatory and economic
developments, including changing business conditions in the
semiconductor industry markets overall and the economy in general
as well. These risks 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 UCT's Form 10-K, Forms 10-Q and other reports and
statements filed with the Securities and Exchange Commission.
Forward-looking statements are made and based on information
available to the company on the date of this press release. The
company assumes no obligation to update the information in this
press release.
Contact:
Rhonda Bennetto
Vice President Investor Relations
250-307-9030
Dynamic
Manufacturing Solutions
Unaudited
Reconciliation of Adjusted EBITDA to Net Income
|
$ in millions
(subject to rounding)
|
|
|
|
|
|
|
|
|
|
|
|
FY'18
|
|
|
|
|
|
|
|
Net Income
|
|
|
|
|
$
|
2.1
|
Research
& Development Expense
|
|
|
|
|
|
1.2
|
Depreciation
|
|
|
|
|
|
1.5
|
Interest
Expense
|
|
|
|
|
|
0.3
|
Franchise Taxes (income)
|
|
|
|
|
|
(0.0)
|
One-time
expenses
|
|
|
|
|
|
0.5
|
Adjusted
EBITDA
|
|
|
|
|
$
|
5.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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SOURCE Ultra Clean Holdings, Inc.