Ultra Clean Technology Stifel Technology, Internet & Media - - PowerPoint PPT Presentation

June 7, 2016

Ultra Clean Technology

Stifel Technology, Internet & Media Conference

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,” “believes,” “estimates” and similar statements. Statements that are not historical facts, including statements concerning

• ur 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”, “Management’s 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.

External Use 2

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

• Q1’16 revenue of $112M, a quarter-over-quarter increase of 8.5%

– Earnings call Q2’16 revenue guidance $123 – 128M and EPS* $0.05 – $0.08

• Continued recovery 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 UCT’s growth

– Strategic investment in capabilities to enable ramp of new business – Streamlining business systems and processes

External Use 3

UCT Highlights

* Pro forma earnings per share, adding back amortization.

External Use 4

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 MANUFACTURING ENGINEERING MANUFACTURING INTEGRATION & TEST SUPPLY CHAIN MANAGEMENT

External Use 5

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 MANUFACTURING ENGINEERING PROTOTYPING/ DEVELOPMENT SUPPLY CHAIN MANAGEMENT

External Use 6

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 MANUFACTURING ENGINEERING SUPPLY CHAIN MANAGEMENT

External Use 7

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 MANUFACTURING ENGINEERING SUPPLY CHAIN MANAGEMENT

External Use 8

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 & TEST PROTOTYPING/ DEVELOPMENT MANUFACTURING MANUFACTURING ENGINEERING SUPPLY CHAIN MANAGEMENT

OEM Component Suppliers 34% OEM Integration In-Sourcing 44%

UCT 5%

Major Contract Manufacturers 11% Other Contract Manufacturers 6%

External Use 9

Semi Equipment Manufacturing Landscape

Source: UCT estimates.

External Use 10

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

External Use

Total WFE Market Opportunity

Deposition & Etch Outpace Semi Market

2016 WFE Estimate: $33B

Dep & Etch

>70%

• f UCT Semi

Sales

Dep & Etch CapEx Spend

9-10% CAGR

2013 - 2018

Total CapEx Spend

~6% CAGR

2013 - 2018

Thermal & Implant 5%

Deposition 25% Removal/Etch 25%

Lithography 26%

Metrology & Inspection 13% Other 6%

11

Source: Gartner 2015 and UCT estimates

Frames Machining Plastics Prototype Machining Machining Metals

External Use 12

Growing Suite of Critical Process Capabilities

Manufactured Components Chemical Delivery Sub-Systems Frames Prototype Machining Machining Metals Machining Plastics Heaters Sheet Metal Forming 3D Printing Complete Assemblies Gas

GAS

Assembly Integration & Test Liquid Assembly Integration & Test Liquid Sheet Metal Forming Heaters 3D Printing

External Use 13

Semi Industry Consolidation

54% 63% 63% TOP 10

CHIP COMPANIES

TOP 5

WFE COMPANIES

68%

2010 2015 2010 2015

Source: Company Financials, SIA, Gartner 2015 and UCT estimates

• Large number of small, highly specialized suppliers
• Management of suppliers growing unwieldy given tech requirements
• Sustainability of some suppliers
• Short product cycles driving quality and delivery cost challenges

External Use 14

Supply Chain Consolidation Opportunity

30% TOP 10

SUPPLIERS to WFE

35%

2010 2015

Source: Company financials, UCT estimates

External Use 15

UCT Business Model

KEY DIFFERENTIATORS

• Higher value capabilities
• Improved operational efficiencies
• Low capital requirements

OPERATING PROFIT DRIVERS

• Revenue growth
• Low operating expenses
• Strategic acquisitions

GROSS MARGIN

15% - 18% Targeted

OPERATING MARGIN

8% - 10%

(in $ millions) Q2'15 Q3'15* Q4’15 Q1’16 Sales $117.5 $122.8 $103.4 $112.2 Gross Profit $18.8 $18.9 $13.3 $14.6 Gross Profit % 16.0% 15.4% 12.9% 13.0% Operating Income/(Loss) $4.8 $5.1 ($0.5) $0.9 Operating Income/(Loss) % 4.1% 4.1% (0.5%) 0.8% Cash $76.6 $59.8 $50.1 $45.5 Inventory $64.6 $75.6 $72.7 $82.0 Accounts Receivable $57.5 $57.5 $59.1 $66.7

External Use 16

Select Financial Data

Pro forma financials adding back amortization. * Note: Q3'15 represents the first (partial) quarter of combined operations between UCT and Miconex. All prior quarters represent UCT operating results only

• 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

External Use 17

Compelling UCT Opportunity

Winning Strategy Strong Gross Margins Improving Profitability Solid Cash Generation

Ultra Clean Technology

Stifel Technology, Internet & Media Conference June 7, 2016

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