Ultra Clean Holdings, Inc. · NASDAQ:UCTT
Ultra Clean — Debt Investor Presentation (February 2021)
38 slides from Ultra Clean's debt investor presentation, Feb 22, 2021
Slide 1: Lender Presentation February 2021
Lender Presentation February 2021
Slide 2: Disclaimer
D i sclaimer Page 1 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. The
Slide 3: Presenters
Presenters Jim Scholhamer Chief Executive Officer and Director Ultra Clean Technology Sheri Savage Senior Vice President of Finance and Chief Financial Officer Ultra Clean Technology Jim Pursiano Head of Corporate Development Ultra Clean Technology Page 2
Slide 4: Transaction Overview
Transaction Overview —_—
Slide 5: Transaction Overview
Transaction Overview Page 3 Ultra Clean Holdings, Inc. (“Ultra Clean” or “UCT”), is a leading developer and supplier of critical subsystems for the semiconductor and display capital equipment industries On December 16, 2020, UCT announced that it had entered into a definitive agreement to acquir
Slide 6: Sources/Uses and Pro Forma Capitalization
Sources/Uses and Pro Forma Capitalization Pro Forma Capitalization Sources and Uses Note: Credit Metrics are calculated based on Management estimates. Financials adjusted for stock based compensation, amortization of acquired intangibles and other one - time items. ($ in millions) Sources $ Amount %
Slide 7: Expected Transaction Timeline
Expected Transaction Timeline Timetable Details Date Event February 22 nd Lender Call March 2 nd Commitments due @ 5pm Week of March 1 st Expected Closing 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 S February 2021 M T W T F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Slide 8: Ultra Clean Technology Update
Ultra Clean Technology Update
Slide 9: Ultra Clean Holdings at a Glance
Ultra Clean Holdings at a Glance Headquarters: Hayward, CA Founded: 2002 Employees: ~4,800 Business Description: A global leader in the design, engineering, and manufacture of production tools, modules and critical subsystems for the semiconductor industry Reports results for two operating segme
Slide 10: Ultra Clean Segments Overview
Ultra Clean Segments Overview Semiconductor Products and Solutions (“SPS”) Semiconductor Services Business (“SSB”) Revenue (FY2020) $1,131mm $267mm Gross Margin (FY2020) 18% 37% Products & Services Critical subsystem engineering and production for wafer fabrication equipment Equipment maintenanc
Slide 11: Ultra Clean Surrounds the Most Critical Stages of the Semiconductor Production Process
Ultra Clean Surrounds the Most Critical Stages of the Semiconductor Production Process Prep Front - end Processing Back - end Processing Semiconductor Manufacturing Process UCT Markets Deposition E tch L i th o g ra p hy Implant C M P P h o tores i st Ingot S li c i ng Polishing E p i ta x i al A n
Slide 12: Then vs. Now: Incredible Progress Made in 2 Years
Source: Company information, Gartner, Wall Street Research. 1 Per Bloomberg; Value represents Enterprise Value; Current as of February 17, 2021. 2 September 2018 metrics PF for QGT; 2020 financials PF for HAML. Then vs. Now: Incredible Progress Made in 2 Years 59 9 EBI T DA Revenue September 2018 (P
Slide 13: Strong Commitment to Ratings and Deleveraging Through Accelerated Debt Repayment
Strong Commitment to Ratings and Deleveraging Through Accelerated Debt Repayment Gross Leverage 6/30/18 – 12/31/20 (FYE 12/31) The company has shown a strong track record of optional debt paydown despite the industry down cycle in 2018 / 2019 The Company generated ~$95mm of free cash flow in 201
Slide 14: Q4'2020 Operational Update
Q4’2020 Operational Update $370 4Q'19 4Q'20 Revenue grew 29% YoY from $286mm in 4Q’2019 to $370mm in 4Q’2020 Adj. EBITDA grew >50% YoY from $33mm in 4Q’2019 to $51mm in 4Q’2020, EBITDA margin increased to 13.8% during the period The Company hasn’t experienced any major COVID - related disrupti
Slide 15: 4Q 2020 Actual vs. Guidance and 1Q 2021 Update
4Q 2020 Actual vs. Guidance and 1Q 2021 Update 4Q 2020 1Q 2021 01/11/2021 ULTRA CLEAN REITERATES FOURTH QUARTER GUIDANCE - PROVIDES OUTLOOK FOR FIRST QUARTER HAYWARD, Calif., Jan. 11, 2021 /PRNewswire/ -- Ultra Clean Holdings, Inc. (Nasdaq: UCTT), today reiterated its guidance for the fourth quarter
Slide 16: Ham-Let Overview
Ham - Let Overview
Slide 17: Ham-Let Business Overview
• Founded : 1950 • Headquarters : Nazareth Illit, Israel • Employees : ~1,100 employees worldwide; Exchange: TASE • Designs and manufactures valves and fittings for high temperature, pressure and vacuum conditions • Operates through 3 segments: ▪ Ultra - Clean : Designs and markets products for ultr
Slide 18: Diverse Product Portfolio
Diverse Product Portfolio World Class Platform Industry leader with over 60 years of engineering experience designing and distributing high quality products • State - of - the - art, computer - controlled manufacturing facilities, innovative approach and comprehensive product portfolio provide solut
Slide 19: Diverse End Markets with Cyclical Durability and Strong Growth Prospects
I ndus t r i al Oil and Gas Key Drivers Secular Tailwinds Greenfield Construction in China Technological advancements Key Drivers Growth in Chinese Market Key Drivers European and Asian power plant growth Key Drivers Renewable energy and storage Shale gas production Key Drivers Cost
Slide 20: Why Ham-Let?
Why Ham - Let? Expands UCT’s semiconductor addressable market by over $2 billion 1 Broadens engagement with UCT’s current customer base, adds new set of customers and reduces customer concentration due to virtually zero overlap 3 4 Strengthens UCT’s leading competitive position in the gas panel mark
Slide 21: Global Product & Service Footprint Strategically Close To Customers
Global Product & Service Footprint Strategically Close To Customers * Ham - Let’s headquarters and primary operational site Manufacturing Cleaning & Analysis Ham - Let* C A LIFORN I A OREGON A RIZO N A C OLO R A D O TEX A S M A INE Page 17 UK KOREA CHINA PHILIPPI N ES TAIWAN SINGAPORE MALAYSIA (2021
Slide 22: Combined Historical Financial Summary
Source: Company Filings. 1 2016 - 2018 UCT financials are PF for QGT. 2 QGT standalone Combined Historical Financial Summary Historical Revenue (1) Adj. EBITDA (1) (3) / Adj. EBITDA Margin $563 $1,142 $1,255 $1,066 $1 , 39 9 $124 $150 $182 $188 $200 $0 $500 $1 , 00 0 $1 , 50 0 $2 , 00 0 2016A 2017A
Slide 23: Credit Highlights
Credit Highlights
Slide 24: Credit Highlights
Credit Highlights 1 Highly Complementary Product Portfolio and Customer Base Enhancing UCT’s Position as a Differentiated Global Solutions Provider to the Semiconductor Industry 3 Proven Organic & Inorganic Growth Strategy Driving Exceptional Results 4 5 Proven Ability to Manage Cost Base, Liquidity
Slide 25: Extremely Strong Secular Tailwinds Going into 2021
Extremely Strong Secular Tailwinds Going into 2021 Supplement Recurring Services Business Source: Company Estimates. 1 $34 $37 $51 $60 $57 1 1% 37% 16% (17 % ) $50 1 5 % 17% 58% 2 2 % (5 % ) 3 1 % - 1 50 % - 1 00 % - 5 0 % 0% 5 0 % 1 0 0 % 2 0 15 2 0 19 2 0 20 2 0 16 2 0 17 Total WFE Spending ($, bn
Slide 26: Acquisition Significantly Expands Served Markets
Acquisition Significantly Expands Served Markets $450 b n 2020 2 • The transaction broadens UCT's semiconductor SAM by more than $2 billion and provides access to a new set of customers in the semiconductor fab infrastructure and sub - fab market • The critical subsystem market alone exceeds 19% gro
Slide 27: Improvement in Customer Diversification
Improvement in Customer Diversification LRC X 40% A M AT 28% Ot he r 32% E d w ard s 5% AI X T R ON 5% A M AT 8% Sh a ngha i Wilson 8% Ot he r 74% LRC X 34% A M AT 25% Ot he r 41% PF Combined Acquisition of Ham - Let reduces UCT’s revenue exposure to Lam Research by ~6% of total revenue Moreover
Slide 28: Organic & Inorganic Growth Strategy Driving Exceptional Results
Organic & Inorganic Growth Strategy Driving Exceptional Results 1 Not PF for QGT. $563 $924 $1,097 $1,066 $1,399 2 0 16 2 0 17 2 0 19 2 0 20 ($ mm ) CAGR 2016 – 20 20 UCT 26% W F E 15% 4 August • 2015 Purchase Price $22.8mm EV/EBITDA ~6.2 February • 2015 Purchase price $434mm EV/EBITDA ~11.8x Decemb
Slide 29: Proven Ability to Manage Cost Base, Liquidity and Reduce Leverage
. Source: Company information. 1 Financials for standalone UCT, NOT PF for HAML. Proven Ability to Manage Cost Base, Liquidity and Reduce Leverage Through End Market Modulations $1 , 39 9 $65 LTM as of 12/31/2019 LTM as of 12/31/2020 $333mm CY20A Revenue CY19A $ 1,066 (+31.2%) % Marg in $77mm % Marg
Slide 30: Near Term Synergies Are Accretive to Margins and Free Cash Flow Generation
$16 $100 $66 23% 21% 31% 26% 20% 26% $0 $ 4 0 $ 8 0 C Y 2 0 1 8A ($ mm ) $120 (1) Near Term Synergies Are Accretive to Margins and Free Cash Flow Generation PF Free Cash Flow and Gross Margins CY2019A UCT Gross Margin (3) Source: Company Information. 1 UCT’s GM PF for QGT acquisition. 2 Free Cash Fl
Slide 31: Improved Revenue Visibility with Growth in Recurring Revenue
$1 , 0 16 $841 $1 , 1 31 $267 15% $225 18% 32% 33% 37% 2 0 18 2 0 19 ($ in millions) SPS Revenue SSB Revenue SPS Gross Margin 2 0 20 SSB Gross Margin Segment Breakdown – Products & Services (1) Improved Revenue Visibility with Growth in Recurring Revenue 15% (2) $240 7 2 PF for 8 months of QGT and 4
Slide 32: UCT's Financial Policy
UCT’s Financial Policy —_
Slide 33: UCT's Financial Policy Overview
UCT’s Financial Policy UCT’s Financial Policy Overview Strategic Outlook: Acquisition of Ham - Let provides UCT with complementary source of revenue with strong gross margins, a more diversified customer base, and further stability of cash flow generation Maintain a prudent and disciplined appro
Slide 34: Appendix
Ap p en d ix
Slide 35: Summary Term Sheet: Senior Secured Credit Facilities
Summary Term Sheet: Senior Secured Credit Facilities Page 28 Borrower: Ultra Clean Holdings, Inc. (the “Borrower”) Security: Secured by a first - priority lien on substantially all existing and future assets of the Borrower and the subsidiary Guarantors and 100% of the equity in the Borrower and eac
Slide 36: Ultra Clean Holdings, Inc. Pro Forma Structure
Ultra Clean Holdings, Inc. Pro Forma Structure Ultra Clean Holdings, Inc. (DE) $65 million RCF due 2023 $273 million Term Loan B due 2025 $355 million Incremental Term Loan B due 2025 Quantum Global Technologies, LLC (DE) Ultra Clean Technology Systems and Service, Inc. (CA) UCT Thermal Solutions, I
Slide 37: EBITDA Bridge
EBITDA Bridge 2020A EBITDA Bridge Note: Adj. EBITDA takes into account stock based compensation and related one - time charges. $10mm of synergies are expected to be actioned in the first 12 - months post - close that aligns with credit agreement limitations. $26 Page 30 ( $3 ) $1 $24 $171 $0 $ 5 0
Slide 38: I =D) O >| <a Z/ =x alt. EE
I =D) O >| <a Z/ =x alt. EE
Ultra Clean Holdings — Debt Investor Presentation (February 2021) on 6ix