Ultra Clean Holdings, Inc. designs, develops, prototypes, engineers, manufactures, and tests production tools, modules, and subsystems for the semiconductor capital equipment and equipment industry segments primarily in North America, Asia, and Europe. It offers precision robotic systems that are used when accurate controlled motion is required; gas delivery systems, which include one or more gas lines consisting of small diameter internally polished stainless steel tubing products, filters, mass flow controllers, regulators, pressure transducers and valves, component heaters, and an integrated electronic and/or pneumatic control system; and various industrial and automation production equipment products. The company also provides subsystems, such as wafer cleaning sub-systems; chemical delivery modules that deliver gases and reactive chemicals in a liquid or gaseous form from a centralized subsystem to the reaction chamber; frame assemblies, which are support structures fabricated from steel tubing or folded sheet metal; and top-plate assemblies. In addition, it offers liquid delivery systems; process modules, which are the subsystems of semiconductor manufacturing tools that process integrated circuits onto wafers; and other high level assemblies. The company primarily serves original equipment manufacturing customers in the semiconductor capital equipment, consumer, medical, energy, industrial, flat panel, and research industries. Ultra Clean Holding, Inc. was founded in 1991 and is headquartered in Hayward, California.
(Summary) (Company) (Chart)
4 April 2017
1yr Target $16.75
Payout Ratio ---
1yr Cap Gain 1.14%
1yr Tot Return 1.14%
EPS (ttm) $0.29
EPS next yr $1.33
Forward P/E 12.42
EPS next 5yr 20.00%
1yr Price Support $26.60
Market Cap $542.17 Mil
Revenues $562.80 Bil
Earnings $10.10 Mil
Profit Margin 1.79%
Quick Ratio 1.30
Current Ratio 1.30
1yr RevGR 19.96%
3yr RevGR 8.13%
5yr RevGR 4.45%
1yr EarnGR ---
3yr EarnGR -5.84%
5yr EarnGR -21.56%
1yr DivGR ---
3yr DivGR ---
5yr DivGR ---
Ultra Clean Holdings, Inc. was founded in November 2002 to acquire Ultra Clean Technology Systems and Services, Inc. a US-based company founded in 1991 by Mitsubishi Corporation and operated as a subsidiary of Mitsubishi, and became a publicly traded company in March 2004. In 2006, the company acquired Sieger Engineering, Inc. to better position themselves as a subsystem supplier to the semiconductor, research, flat panel, energy and medical equipment industries.
To facilitate Asia operations, Ultra Clean Technology (Shanghai) and Ultra Clean Micro-Electronics Equipment (Shanghai) were established in China in 2005 and 2007, respectively, and Ultra Clean Asia Pacific was established in Singapore in 2008. The July 2012 American Integration Technologies LLC acquisition added to the company's existing customer base in the semiconductor and medical spaces and provided additional manufacturing capabilities. In 2014, the company launched Prototype Asia, their 3D printing business in Singapore, to develop additive manufacturing capabilities for their customer base.
In February 2015, the company acquired Marchi Thermal Systems, Inc. and in July 2015, acquired MICONEX, both privately held companies with a majority of their sales in the semiconductor market. Marchi designs and manufactures specialty heaters, thermocouples and temperature controllers, delivering flexible heating elements and thermal solutions to our customers. The company believes heaters are increasingly critical in equipment design for the most advanced semiconductor nodes. Miconex is a provider of advanced precision fabrication of plastics that has expanded the company's capabilities with existing customers.
Ultra Clean Holdings is also a global leader in the design, engineering, and manufacture of production tools, modules and subsystems for the semiconductor capital equipment and equipment industry segments with similar requirements including flat panel display, consumer, and medical. The company provides their customers specialized engineering and manufacturing solutions for highly complex, highly configurable, limited volume applications.
Ultra Clean Holdings's focus is on providing specialized engineering and manufacturing solutions for highly complex, highly configurable, limited volume systems. The company enables ther customers to realize lower manufacturing costs and reduced design-to-delivery cycle times while maintaining high quality standards. The company offers their customers:
- Vertically integrated solution for complex and highly configurable systems. The company provides original equipment manufacturing customers a complete outsourced solution for the development, design, component sourcing, prototyping, engineering, turnkey manufacturing and testing of advanced systems. The company utilizes theyr machining, sheet metal, and frame fabrication capabilities with highly specialized engineering, global supply chain management, and assembly capabilities to produce high performance products that are customized to meet the needs of our customers, as well as their respective end users. The company minimizes the overall number of suppliers and manages their global supply chain logistics to reduce inventory levels that customers would otherwise be required to manage.
- Improved design-to-delivery cycle times. The company's strong relationships with their customers and familiarity with their product requirements and the ever changing needs of their customer base help them reduce their design-to-delivery cycle times. Ultra Clean has optimized their supply chain management, design and manufacturing coordination and controls to respond rapidly to order requests, enabling us to decrease design-to-delivery cycle times for our customers. Because the engineers work closely with customers’ engineers and understand the fabrication, assembly and testing of their products, Ultra Clean often improves their design for manufacturability, thereby improving their cost, quality and consistency.
- Component neutral design and manufacturing. Ultra Clean does not manufacture components such as mass flow controllers and valves which are selected based on manufacturer published specifications. The company's component neutral position enables them to recommend components on the basis of technology, performance and cost and to optimize customers’ overall designs based on these criteria.
- Component testing capabilities. Ultra Clean utilizes their technical expertise to test and characterize key components and subsystems. The company has made significant investments in advanced analytical and automated test equipment, enabling them to test and qualify key components. The company performs diagnostic tests, design verifications and failure analyses for customers and suppliers. The analytical and testing capabilities of supplier components provide the company the ability to recommend their customers a wide range of appropriate component and design choices for their products.
- Increased integration with OEMs through local presence. The company's local presence in close proximity to the facilities of most of their OEM customers enables the company to remain closely integrated with their design, development and implementation teams. This level of integration enables Ultra Clean to respond quickly and efficiently to customer changes and requests.
- Precision machining capabilities. Ultra Clean manufactures high quality, precision machined parts using equipment capable of efficiently providing complex parts with exacting tolerances. Their diverse precision fabrication equipment enables them to manufacture a broad range of machined parts using a wide range of materials, from exotic metals to high purity plastics. The company's manufacturing capabilities include horizontal and vertical milling, turning, welding and joining, amongst numerous others.
- Precision frame fabrication. The company designs and manufacture frames using tubing or sheet metal in all sizes with exacting standards to meet and exceed their customers’ needs. Ultra Clean utilizes over 25 years of experience in the fabrication of complex frames to provide a cost competitive edge in their vertical integration model. Many of their customers require frames that are powder coated and in 2016, the company added this capability to their Chandler, Arizona frame fabrication facility.
- Precision sheet metal fabrication. Ultra Clean's ability to provide complete sheet metal solutions for our customers enables us to support prototype to volume production, from brackets to sheet metal frames, and from structural to high quality cosmetic finishing of the final product. Their automated equipment and design capabilities allow them to develop accurate prototype and final production products for their customers.
- Custom fabricated heaters. The company's acquisition of Marchi enables them to design and manufacture heaters, sensors, and controllers for precise temperature control. These products are complementary to our gas delivery systems products.
Ultra Clean's objective is to maintain their position as a leading solutions provider in the markets they serve, primarily the semiconductor capital equipment market, while supporting other technologically similar markets in the flat panel, consumer, medical, energy, industrial and research industries. Their strategy is comprised of the following key elements:
- Expand market share with semiconductor capital equipment OEMs. Ultra Clean believes that outsourcing among OEMs creates a significant market opportunity for the company to grow Their business with existing and new customers. The company believes their customers will continue to outsource critical subsystems and that they are well positioned to capture a significant portion of these outsourcing opportunities.
- Develop solutions that allow our customer’s customers to succeed at the latest 2x or 1x nanometer semiconductor processing nodes. The company is expanding the number and type of subsystems that they offer in this advanced semiconductor market.
- Leverage our geographic presence in lower cost manufacturing regions. The company's manufacturing facilities in Shanghai, China allow them to produce in a low cost region. The company's manufacturing facilities in Shanghai house the precision machined parts and subsystem assembly operations. In Singapore the company has a procurement office and substantial manufacturing capabilities.
- Drive profitable growth with our flexible cost structure. The company implements cost containment and capacity enhancement initiatives throughout the semiconductor capital equipment demand cycle and benefit greatly from the global presence and efficiencies of our supply chain. In addition, they believe their Shanghai and Singapore facilities position them to respond effectively to future business demands.
- Continue to selectively pursue strategic acquisitions. The company will continue to consider strategic acquisitions that will enable them to expand their geographic presence, secure new customers and diversify into complementary products and markets as well as broaden technological capabilities in the markets they serve.
- Develop unique solutions to enhance our customers’ manufacturing. With the acquisition of Marchi, the company is able to provide additional thermal products, leveraging the company's core capability in heaters, thermocouples and controllers. With the acquisition of Miconex, they further expanded our capabilities to include manufacturing services in advanced precision milling and welding of plastics.
- Expand our market share in other industries. The company believes they can leverage the attributes and skill sets to succeed in the semiconductor capital equipment industry and to increase our market share in technologically similar markets including medical, flat panel and research equipment.
Ultra Clean designs, develops, prototypes, manufactures and tests subsystems, primarily for semiconductor capital equipment. They also support customers in the flat panel, consumer, medical, energy, industrial, and research industries. Their products include precision robotic solutions, gas delivery systems, a variety of industrial and automation production equipment products; subsystems that includes wafer cleaning sub-systems, chemical delivery modules, top-plate assemblies, frame assemblies, and process modules.
- Chemical delivery modules: Chemical delivery modules deliver gases and reactive chemicals in a liquid or gaseous form from a centralized subsystem to the reaction chamber. The module may be a gas delivery system in combination with liquid and vapor precursor delivery systems or may be a liquid delivery system in combination with a liquid storage system.
- Frame assemblies: Frame assemblies are support structures fabricated from steel tubing or folded sheet metal and form the backbone to which all other assemblies are attached. The complexity of the frames includes powder coating, pneumatic harnesses and cables that connect other critical subsystems together.
- Gas delivery systems: A typical OEM gas delivery system consists of one or more gas lines, comprised of small diameter internally polished stainless steel tubing, filters, mass flow controllers, regulators, pressure transducers and valves, component heaters, and an integrated electronic and/or pneumatic control system. These systems are mounted on a pallet and are typically enclosed in a sheet metal encasing. Our gas delivery system designs are developed in collaboration with our customers and are customized to meet the needs of specific processing requirements for OEMs. Our customers either specify the particular brands of components they want incorporated into a particular system or rely on our design expertise and component characterization capabilities to help them select the appropriate components for their particular system.
- Liquid delivery system: A typical OEM liquid delivery system consists of one or more chemical delivery units, comprised of small diameter high purity PFA tubing, filters, flow controllers, regulators, component heaters, and an integrated electronic and/or pneumatic control system. These units are typically contained in a plastic enclosure and further integrated into a frame. Our liquid delivery system designs are developed in collaboration with our customers and are customized to meet the needs of specific processing requirement for OEMs. Our customers either specify the particular materials and the brands of components they want incorporated into a particular system or rely on our design expertise and component characterization capabilities to help them select the appropriate components for their particular system.
- Precision robotics: Precision robotic systems are used when accurate controlled motion is required. Some of the systems that employ robotic systems are: semiconductor wafer and chip handling, wire bonding and industrial equipment.
- Process modules: Process modules refer to the larger subsystems of semiconductor manufacturing tools that process integrated circuits onto wafers. Process modules include several smaller subsystems such as the frame assembly, top-plate assembly and gas and chemical delivery modules, as well as the chamber and electronic, pneumatic and mechanical subsystems.
- Other high level assemblies: Other high level assemblies refer to large subsystems used in semiconductor manufacturing, medical, energy, industrial, flat panel and research industries.
This is truly an investment in inertia. This stock has been moving higher since the beginning of 2016 where it bottomed after hitting a high of $15 per share in early 2014. As the stock recently broke through resistance at $15 and moved higher, that was the signal for me to begin buying. There's no doubt at this point that the stock is showing every sign of being overbought but there's no sign that the stock wants to go anywhere but higher.
What I've done is initiate a "Buy, Write" strategy while monitoring the position with a constant eye. I believe this company will continue to head higher and I will continue to sell covered calls with the intent of losing the shares at a nice profit. I can normally get a 3-4% return on the options over a 4 week period along with the possibility of loosing the shares during any option period at an 8-10% profit.
I see this as nothing more than a short term income producer while at anytime selling out at a nice profit. This obviously does not fit into any of my dividend growth strategies but it is a nice trade for a nimble trader. All others might want to look elsewhere.