Cabot Microelectronics Corporation (Nasdaq:CCMP), the world's
leading supplier of chemical mechanical planarization (CMP)
polishing slurries to the semiconductor industry, today reported
financial results for its second quarter of fiscal 2006, which
ended March 31. Total revenue for the second fiscal quarter was
$67.4 million, compared with $81.5 million in the first fiscal
quarter and $64.5 million in the same quarter a year ago. The
sequential decline was primarily due to the company's previously
announced transition to selling directly to customers in Taiwan
rather than through a distributor. As anticipated, during the
transition period the distributor sold its remaining inventory of
the company's products to customers and the company built inventory
needed to serve those customers directly, with a resulting
short-term interruption in the company's sales estimated in the
range of $10 million to $11 million. Primarily related to this
transition, revenues for all of the company's major applications
decreased sequentially. Average selling price fell by 2.5% compared
with the prior quarter, primarily due to selected price reductions
and a lower-priced product mix. Consistent with the impact of the
direct sales transition in Taiwan, gross profit for the quarter was
lower at $31.5 million, compared with $38.4 million in the prior
quarter. Gross profit was $29.8 million in the same quarter a year
ago. As a percentage of revenue, gross profit was 46.8% this
quarter compared with 47.2% in the prior quarter and 46.2% in the
same quarter last year. The sequential decline in the gross profit
percentage was primarily due to lower pricing, partially offset by
benefits of a higher-valued product mix. Operating expenses of
$24.6 million, consisting of research, development and technical,
selling and marketing, and general and administrative expenses,
decreased by $0.5 million sequentially from $25.1 million last
quarter, and were $3.2 million higher than the $21.4 million in the
same quarter last year. The sequential decrease was primarily due
to lower costs for cleanroom materials in the company's research
and development activities and lower professional fees, partially
offset by higher travel costs. The year-over-year increase in
operating expenses was primarily due to new accounting rules that
required the company to begin recording stock option expense in
fiscal 2006. The company recorded total pre-tax stock option
expense of $2.5 million this quarter, of which $2.3 million was
included in operating expenses. Net income for the quarter was $5.4
million, down from $9.6 million last quarter primarily due to the
company's direct sales transition. Net income was $6.1 million in
the same quarter last year, a period not impacted by either the
direct sales transition or approximately $1.7 million in after-tax
stock option expense the company reported this quarter. Diluted
earnings per share were $0.22 this quarter, which included $0.07 of
stock option expense. Earnings per share were $0.17 less than the
$0.39 in the previous quarter. The company had previously estimated
an adverse impact of $0.17 due to the direct sales transition.
Earnings per share in the second quarter of fiscal 2005 of $0.25
were not impacted by either the direct sales transition or the
stock option expense recorded in the second fiscal quarter of 2006.
William Noglows, Chairman and CEO of Cabot Microelectronics,
stated, "We completed what we believe is another solid quarter,
benefiting from continued strength in the semiconductor and data
storage industries. We manage our business for the long-term, and
we achieved a number of accomplishments in the current quarter that
we anticipate will provide benefits in the future. Our transition
to a direct sales model in Taiwan was smooth and the related
financial effects were generally as we had expected. We
commercialized two new products and are close to finalizing a
third. We also earned significant wins for new tungsten
applications with two big memory players. In addition, we continue
to pursue our growth initiative to transfer our expertise in CMP
for semiconductors into other demanding polishing applications
beyond this industry. We are pleased with our performance and look
forward to building on our momentum in the future." CONFERENCE CALL
Cabot Microelectronics Corporation's quarterly earnings conference
call will be held today at 9:00 a.m. Central Time. The live
conference call will be available via webcast from the company's
website, www.cabotcmp.com, or by phone at (866) 356-4123. Callers
outside the U.S. can dial (617) 597-5393. A replay will be
available through May 24, 2006 via webcast at www.cabotcmp.com. 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. ABOUT CABOT MICROELECTRONICS CORPORATION Cabot
Microelectronics Corporation, headquartered in Aurora, Illinois, is
the world's leading supplier of CMP slurries used in semiconductor
and data storage manufacturing. The company's products play a
critical role in the production of advanced semiconductor devices,
enabling its customers to manufacture smaller, faster and more
complex devices. Along with the company's focus on its core CMP
business, it is also looking beyond the semiconductor industry to
pursue its vision to "be the world leader in shaping, enabling and
enhancing the performance of surfaces". For more information about
Cabot Microelectronics Corporation visit www.cabotcmp.com or
contact Barbara Ven Horst, Director of Investor Relations at (630)
375-5412. 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 and trends, growth of the
markets in which the company participates, international events,
product performance, new product introductions, development of new
products, technologies and markets, the acquisition of or
investment in other entities, and the construction of new
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 Other Information
in our quarterly report on Form 10-Q for the quarter ended December
31, 2005, and "Risks Relating to Our Business" in Management's
Discussion and Analysis in our annual report on Form 10-K for the
fiscal year ended September 30, 2005, both filed with the SEC.
Cabot Microelectronics Corporation assumes no obligation to update
this forward looking information. -0- *T CABOT MICROELECTRONICS
CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited and
amounts in thousands, except per share amounts) Quarter Ended Six
Months Ended ----------------------------- -------------------
March 31, Dec. 31, March 31, March 31, March 31, 2006 2005 2005
2006 2005 --------- --------- --------- --------- --------- Revenue
$67,389 $81,488 $64,502 $148,877 $131,586 Cost of goods sold(1)
35,855 43,051 34,733 78,906 68,205 --------- --------- ---------
--------- --------- Gross profit 31,534 38,437 29,769 69,971 63,381
Operating expenses: Research, development & technical(1) 11,321
11,659 10,857 22,980 20,401 Selling and marketing(1) 5,075 5,026
4,012 10,101 8,188 General and administrative(1) 8,240 8,410 6,457
16,650 12,037 Amortization of intangibles 4 4 85 8 170 ---------
--------- --------- --------- --------- Total operating expenses
24,640 25,099 21,411 49,739 40,796 --------- --------- ---------
--------- --------- Operating income 6,894 13,338 8,358 20,232
22,585 Other income, net 1,090 716 458 1,806 945 ---------
--------- --------- --------- --------- Income before income taxes
7,984 14,054 8,816 22,038 23,530 Provision for income taxes(1)
2,547 4,483 2,762 7,030 7,647 --------- --------- ---------
--------- --------- Net income $5,437 $9,571 $6,054 $15,008 $15,883
========= ========= ========= ========= ========= Basic earnings
per share $0.22 $0.39 $0.25 $0.62 $0.64 ========= =========
========= ========= ========= Weighted average basic shares
outstanding 24,233 24,363 24,642 24,299 24,634 ========= =========
========= ========= ========= Diluted earnings per share $0.22
$0.39 $0.25 $0.62 $0.64 ========= ========= ========= =========
========= Weighted average diluted shares outstanding 24,233 24,363
24,685 24,299 24,698 ========= ========= ========= =========
========= (1)Includes the following amounts related to share-based
compensation expense: Cost of goods sold $163 $150 $- $313 $-
Research, development & technical 243 233 - 476 - Selling and
marketing 259 245 - 504 - General and administrative 1,877 1,762 -
3,639 - Provision for income taxes (811) (762) - (1,573) -
--------- --------- --------- --------- --------- Total share-based
compensation expense, net of tax $1,731 $1,628 $- $3,359 $-
========= ========= ========= ========= ========= CABOT
MICROELECTRONICS CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited and amounts in thousands) March 31, September 30, 2006
2005 -------------- -------------- ASSETS: Current assets: Cash,
cash equivalents, and short-term investments $173,712 $171,041
Accounts receivable, net 34,140 36,759 Inventories, net 32,890
28,797 Other current assets 7,108 9,210 --------------
-------------- Total current assets 247,850 245,807 Property, plant
and equipment, net 134,384 135,784 Other long-term assets 5,262
5,172 -------------- -------------- Total assets $387,496 $386,763
============== ============== LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities: Accounts payable $12,582 $10,236 Capital lease
obligations 1,209 1,170 Accrued expenses, income taxes payable and
other current liabilities 14,467 24,216 --------------
-------------- Total current liabilities 28,258 35,622 Capital
lease obligations 4,937 5,436 Deferred income taxes and other
long-term liabilities 3,815 6,621 -------------- --------------
Total liabilities 37,010 47,679 Stockholders' equity 350,486
339,084 -------------- -------------- Total liabilities and
stockholders' equity $387,496 $386,763 ==============
============== *T
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