- Revenue of $99.5 Million, In Line with Industry Demand
Patterns
- Gross Profit Margin of 46.8 Percent of Revenue;
Non-GAAP 48.9 Percent, Excluding Asset Impairment
Charge
- Earnings Per Share of 40 Cents; Non-GAAP 46 Cents,
Excluding Impairment
- Increase in Authorized Share Purchase Program to $150
Million from Previously Remaining $62 Million
Cabot Microelectronics Corporation (Nasdaq:CCMP), the world's
leading supplier of chemical mechanical planarization (CMP)
polishing slurries and a growing CMP pad supplier to the
semiconductor industry, today reported financial results for its
second quarter of fiscal 2014, which ended March 31, 2014.
Total revenue during the second fiscal quarter was $99.5
million. This reflects a decrease of 0.9 percent compared to the
same quarter last year due to continued softness in demand within
the global semiconductor industry. The company recorded a gross
profit margin of 46.8 percent of revenue in the second fiscal
quarter, which includes the adverse effect of a $2.1 million asset
impairment charge; non-GAAP gross profit margin was 48.9 percent of
revenue, excluding this impairment, which is 70 basis points higher
than in the same quarter last year. The company recorded diluted
earnings per share of $0.40 for the second fiscal quarter.
Excluding the impairment charge, non-GAAP diluted earnings per
share were $0.46, which represents an increase of 15.0 percent
compared to the prior year quarter. The company's balance sheet
reflects a cash balance of $239.1 million and $157.5 million of
debt outstanding as of March 31, 2014. During the quarter, the
company purchased $20.0 million of stock under its share repurchase
program, compared to $10.0 million in the same quarter last
year.
"We are pleased with our solid financial performance this
quarter in light of continued soft demand within the global
semiconductor industry," said William Noglows, Chairman and CEO of
Cabot Microelectronics. "Within this environment, and excluding the
impact of an asset impairment charge this quarter, we improved our
gross margin, and also grew our net income by 23 percent
year-over-year, on slightly lower revenue; on this basis, we have
now expanded gross margins year-over-year for five consecutive
quarters."
Mr. Noglows continued, "As a result of our intensive focus on
supporting our customers, as well as excellence in our global
supply chain management and in our quality systems, during the
quarter we earned a number of awards from our customers for our
performance in 2013. We are proud to have earned Intel's most
prestigious award for suppliers, the Supplier Continuous Quality
Improvement Award, for the second consecutive year. In addition, we
are honored to have received SMIC's Best Quality Award, HHGrace's
Best Service Supplier Award, and Huali's Outstanding Supplier
Award. Our close collaborations with our customers in China
resulted in approximately 23 percent revenue growth there compared
to the same quarter last year. We look forward to continuing our
efforts to consistently exceed our customers' requirements."
Mr. Noglows concluded, "Through our strong historical financial
performance, we have established a track record of delivering
significant value to our shareholders, and in further support of
this our Board of Directors has authorized an increase in our
existing share repurchase program to $150 million from the
previously remaining level of $62 million. We remain committed to
continuing to provide value to our shareholders."
Key Financial Information
Total second fiscal quarter revenue of $99.5 million represents
a 0.9 percent decrease from the $100.4 million reported in the same
quarter last year. The company believes revenues reflect continued
soft demand within the global semiconductor industry that began to
appear late in the fourth fiscal quarter of 2013, as well as a $1.0
million adverse impact associated with foreign exchange rate
changes, primarily the weaker Japanese yen versus the U.S. dollar.
Compared to the same quarter last year, revenue from the company's
CMP slurry products for polishing aluminum, tungsten and advanced
dielectrics increased, and the company's CMP polishing pads
business achieved revenue growth of 4.8 percent. Revenue from all
other major business areas decreased. Revenue for the first half of
the fiscal year totaled $200.0 million, which is 3.3 percent lower
than in the prior year. Year to date revenue includes a $2.8
million adverse impact associated with foreign exchange rate
changes, primarily the weaker Japanese yen.
Gross profit, expressed as a percentage of revenue, was 46.8
percent this quarter, which includes a $2.1 million asset
impairment charge related to certain manufacturing assets.
Excluding the impairment charge, non-GAAP gross profit was 48.9
percent of revenue, which is 70 basis points higher than the 48.2
percent of revenue reported in the same quarter a year ago. Other
factors impacting gross profit this quarter compared to last year
include benefits associated with a weaker Japanese yen and lower
incentive compensation costs, partially offset by higher variable
manufacturing costs, including higher raw material costs. Year to
date, gross profit represented 47.1 percent of revenue. Excluding
the impairment charge, year to date non-GAAP gross profit was 48.1
percent, which represents a 50 basis point improvement over the
first six months of fiscal 2013. In light of first half results,
including the impairment, the company currently expects its gross
profit for the full fiscal year to be near the lower end of its
guidance range of 48 to 50 percent of revenue.
Operating expenses, which include research, development and
technical, selling and marketing, and general and administrative
expenses, were $31.9 million in the second fiscal quarter, or $2.5
million lower than the $34.4 million reported in the same quarter a
year ago, primarily due to lower staffing related costs, including
incentive compensation costs. Year to date, total operating
expenses were $63.9 million, or 5.7 percent lower than the previous
fiscal year. The company is lowering its full fiscal year guidance
range for operating expenses to $127 million to $131 million; this
is $4 million lower than the company's prior guidance range of $131
million to $135 million.
Net income for the quarter was $10.1 million, or $11.6 million
on a non-GAAP basis, excluding the referenced asset impairment, up
from $9.4 million reported in the same quarter last year. Net
income was higher than in the same quarter last year, primarily due
to lower operating expenses, partially offset by a lower gross
profit margin. Year to date, net income was $21.4 million.
Excluding the asset impairment, year to date non-GAAP net
income was $22.9 million, which is up 19.6 percent compared to the
prior year. Last year's results include an adverse $1.7
million foreign tax adjustment.
Diluted earnings per share were $0.40 this quarter, or $0.46 on
a non-GAAP basis, excluding the asset impairment, compared to $0.40
reported in the second quarter of fiscal 2013. Year to date,
diluted earnings per share were $0.86, or $0.92 on a non-GAAP
basis, excluding the impairment, compared to $0.81 last year, which
included the adverse impact of $0.07 due to last year's foreign tax
adjustment.
On April 22 the company's Board of Directors authorized an
increase in the company's existing share repurchase program to $150
million, from the previously remaining approximately $62 million,
which is consistent with the company's strategy to return value to
shareholders. Over the last decade, the company has purchased
roughly $270 million of stock under several share repurchase
programs, and also distributed approximately $347 million to
shareholders in 2012 as a special cash dividend as part of the
company's capital management initiative. The company's key
priorities for capital allocation continue to be funding organic
growth opportunities, share repurchases and acquisition
opportunities in closely related areas.
CONFERENCE CALL
Cabot Microelectronics Corporation's quarterly earnings
conference call will be held today at 9:00 a.m. Central
Time. The conference call will be available via live webcast
and replay from the company's website, www.cabotcmp.com, or by
phone at (877) 359-9508. Callers outside the U.S. can dial
(224) 357-2393. The conference code for the call is
24389352. A transcript of the formal comments made during the
conference call will also be available in the Investor Relations
section of the company's website.
USE OF NON-GAAP FINANCIAL INFORMATION
The company presented the following measures considered as
non-GAAP by the U.S. Securities and Exchange Commission:
gross profit margin, net income and diluted earnings per
share excluding the effects of an asset impairment charge related
to certain manufacturing assets. The non-GAAP financial
information provided in this press release is a supplement to, and
not a substitute for, the company's financial results presented in
accordance with U.S. GAAP. These non-GAAP financial measures
are provided to enhance the investor's understanding about the
company's ongoing operations. Specifically, the company
believes the asset impairment charge is not indicative of its core
operating results, and thus presents its gross profit margin, net
income and diluted earnings per share excluding the effects of such
asset impairment charge. The presentation of non-GAAP
financial information is not meant to be considered in isolation or
as a substitute for results prepared and presented in accordance
with U.S. GAAP. A reconciliation table of GAAP to non-GAAP
gross profit percentage, net income and diluted earnings per share
is contained in this press release.
ABOUT CABOT MICROELECTRONICS CORPORATION
Cabot Microelectronics Corporation, headquartered in Aurora,
Illinois, is the world's leading supplier of CMP polishing slurries
and a growing CMP pad supplier to the semiconductor
industry. The company's products play a critical role in the
production of advanced semiconductor devices, enabling the
manufacture of smaller, faster and more complex devices by its
customers. The company's mission is to create value by
developing reliable and innovative solutions, through close
customer collaboration, that solve today's challenges and help
enable tomorrow's technology. Since becoming an independent
public company in 2000, the company has grown to approximately
1,050 employees on a global basis. For more information about
Cabot Microelectronics Corporation, visit www.cabotcmp.com or
contact Trisha Tuntland, Manager of Investor Relations at
630-499-2600.
SAFE HARBOR STATEMENT
This news release may include statements that constitute
"forward looking statements" within the meaning of federal
securities regulations. These forward-looking statements
include statements related to: future sales and operating
results; company and industry growth, contraction or trends; growth
or contraction of the markets in which the company participates;
international events, regulatory or legislative activity, or
various economic factors; product performance; the generation,
protection and acquisition of intellectual property, and litigation
related to such intellectual property; new product introductions;
development of new products, technologies and markets; natural
disasters; the acquisition of or investment in other entities; uses
and investment of the company's cash balance; financing facilities
and related debt, payment of principal and interest, and compliance
with covenants and other terms; the company's capital structure;
and the construction and operation of facilities by Cabot
Microelectronics Corporation. These forward-looking statements
involve a number of risks, uncertainties, and other factors,
including those described from time to time in Cabot
Microelectronics' filings with the Securities and Exchange
Commission (SEC), that could cause actual results to differ
materially from those described by these forward-looking
statements. In particular, see "Risk Factors" in the company's
quarterly report on Form 10-Q for the quarter ended December 31,
2013 and in the company's annual report on Form 10-K for the fiscal
year ended September 30, 2013, both filed with the SEC. Cabot
Microelectronics assumes no obligation to update this
forward-looking information.
CABOT MICROELECTRONICS
CORPORATION |
CONSOLIDATED STATEMENTS
OF INCOME |
(Unaudited and amounts in
thousands, except per share amounts) |
|
|
|
Quarter Ended |
Six Months Ended |
|
March 31, |
December 31, |
March 31, |
March 31, |
March 31, |
|
2014 |
2013 |
2013 |
2014 |
2013 |
|
|
|
|
|
|
Revenue |
$ 99,456 |
$ 100,515 |
$ 100,364 |
$ 199,971 |
$ 206,897 |
|
|
|
|
|
|
Cost of goods sold |
52,931 |
52,801 |
52,019 |
105,732 |
108,513 |
|
|
|
|
|
|
Gross profit |
46,525 |
47,714 |
48,345 |
94,239 |
98,384 |
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
Research, development &
technical |
14,364 |
14,571 |
15,073 |
28,935 |
30,389 |
|
|
|
|
|
|
Selling & marketing |
6,471 |
6,707 |
7,046 |
13,178 |
14,155 |
|
|
|
|
|
|
General &
administrative |
11,076 |
10,726 |
12,287 |
21,802 |
23,241 |
|
|
|
|
|
|
Total operating expenses |
31,911 |
32,004 |
34,406 |
63,915 |
67,785 |
|
|
|
|
|
|
Operating income |
14,614 |
15,710 |
13,939 |
30,324 |
30,599 |
|
|
|
|
|
|
Interest expense |
843 |
872 |
872 |
1,715 |
1,825 |
|
|
|
|
|
|
Other income, net |
103 |
617 |
463 |
720 |
1,317 |
|
|
|
|
|
|
Income before income taxes |
13,874 |
15,455 |
13,530 |
29,329 |
30,091 |
|
|
|
|
|
|
Provision for income taxes |
3,779 |
4,147 |
4,110 |
7,926 |
10,968 |
|
|
|
|
|
|
Net income |
$ 10,095 |
$ 11,308 |
$ 9,420 |
$ 21,403 |
$ 19,123 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income available to common shareholders |
$ 9,962 |
$ 11,181 |
$ 9,420 |
$ 21,200 |
$ 19,123 |
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
$ 0.42 |
$ 0.47 |
$ 0.41 |
$ 0.89 |
$ 0.84 |
|
|
|
|
|
|
Weighted average basic shares
outstanding |
23,982 |
23,590 |
22,974 |
23,775 |
22,914 |
|
|
|
|
|
|
Diluted earnings per share |
$ 0.40 |
$ 0.45 |
$ 0.40 |
$ 0.86 |
$ 0.81 |
|
|
|
|
|
|
Weighted average diluted shares
outstanding |
24,897 |
24,623 |
23,871 |
24,749 |
23,755 |
|
CABOT MICROELECTRONICS
CORPORATION |
CONSOLIDATED CONDENSED
BALANCE SHEETS |
(Unaudited and amounts in
thousands) |
|
|
March 31, |
September 30, |
|
2014 |
2013 |
ASSETS: |
|
|
|
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 239,147 |
$ 226,029 |
Accounts receivable, net |
53,133 |
54,640 |
Inventories, net |
71,574 |
63,786 |
Other current assets |
26,093 |
21,257 |
Total current assets |
389,947 |
365,712 |
|
|
|
Property, plant and equipment, net |
106,178 |
111,985 |
Other long-term assets |
70,392 |
76,809 |
Total assets |
$ 566,517 |
$ 554,506 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY: |
|
|
|
|
|
Current liabilities: |
|
|
Accounts payable |
$ 14,331 |
$ 16,663 |
Current portion of long-term
debt |
13,125 |
10,938 |
Accrued expenses, income taxes
payable and other current liabilities |
24,191 |
39,899 |
Total current liabilities |
51,647 |
67,500 |
|
|
|
Long-term debt, net of current portion |
144,375 |
150,937 |
Other long-term liabilities |
10,172 |
8,992 |
Total liabilities |
206,194 |
227,429 |
|
|
|
Stockholders' equity |
360,323 |
327,077 |
Total liabilities and
stockholders' equity |
$ 566,517 |
$ 554,506 |
|
CABOT MICROELECTRONICS
CORPORATION |
Reconciliation of
Non-GAAP Financial Measures |
|
The following presents
reconciliation of the non-GAAP financial measures included in the
Cabot |
Microelectronics Corporation
press release dated April 24, 2014. |
|
Reconciliation of
Non-GAAP Gross Profit Percentage |
|
|
|
Quarter Ended |
Six Months Ended |
|
March 31, |
March 31, |
March 31, |
March 31, |
|
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
GAAP gross profit % |
46.8% |
48.2% |
47.1% |
47.6% |
Impact of asset impairment charge on gross
profit % |
2.1% |
-- |
1.0% |
-- |
Gross profit % excluding asset impairment
charge |
48.9% |
48.2% |
48.1% |
47.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Non-GAAP Net Income Presentation |
|
|
|
|
|
|
Quarter Ended |
Six Months Ended |
|
March 31, |
March 31, |
March 31, |
March 31, |
|
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
GAAP net income |
$ 10,095 |
$ 9,420 |
$ 21,403 |
$ 19,123 |
Impact of asset impairment charge on net
income |
1,475 |
-- |
1,475 |
-- |
Net income excluding asset impairment
charge |
$ 11,570 |
$ 9,420 |
$ 22,878 |
$ 19,123 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Non-GAAP Diluted Earnings Per Share (EPS)
Presentation |
|
|
|
|
|
|
Quarter Ended |
Six Months Ended |
|
March 31, |
March 31, |
March 31, |
March 31, |
|
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
GAAP diluted EPS |
$ 0.40 |
$ 0.40 |
$ 0.86 |
$ 0.81 |
Impact of asset impairment charge on diluted
EPS |
0.06 |
-- |
0.06 |
-- |
Diluted EPS excluding asset impairment
charge |
$ 0.46 |
$ 0.40 |
$ 0.92 |
$ 0.81 |
CONTACT: Trisha Tuntland
Manager, Investor Relations
(630) 499-2600
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