Cabot Microelectronics Corporation (Nasdaq: CCMP): Annual Revenue
Growth of 11 Percent Annual EPS Growth of 15 Percent Annual Cash
Flow from Operations of $71 million 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
fourth quarter and full fiscal year 2008, which ended September 30.
Total revenue during the fourth fiscal quarter was $90.2 million,
net income was $8.2 million, and diluted earnings per share were
$0.36. For the full year, total revenue was $375.1 million, net
income was $38.3 million, and diluted earnings per share were
$1.64. Cash flow from operations for full fiscal 2008 was $70.8
million. Cash and short term investments totaled $226.4 million as
of September 30, 2008 and the company has no outstanding
borrowings. �We are pleased with the solid performance we achieved
across the company in fiscal 2008, particularly with our growing
pads business and the progress we made in each of our CMP slurry
applications,� said William Noglows, Chairman and CEO of Cabot
Microelectronics. �We believe this year�s growth, amid an uncertain
economic environment, is a tribute to our employees� continued
diligent focus and successful execution of our key initiatives of
Technology Leadership, Operations Excellence, and Connecting with
Customers.� �We aim to continue the break-out momentum we achieved
in fiscal 2008 in our pads business, which generated over $15
million in revenue this year,� continued Mr. Noglows. �We remain
encouraged by the continued strong customer pull for our pads and
the progress we made toward optimizing our pad manufacturing
processes.� Key Financial Information Fourth fiscal quarter total
revenue of $90.2 million was essentially equal to the same quarter
last year and represents a 7.1 percent decrease from the $97.0
million reported last quarter. During the quarter, the company
began to experience some softening in orders as key customers
appeared to lower production in response to reduced end-use demand.
Revenue decreased sequentially for all business areas except sales
of polishing pads, which increased 21.0 percent from last quarter.
Total revenue for the full fiscal year was $375.1 million, which
represents a 10.9 percent increase from the previous fiscal year.
This increase was driven by higher demand for the company�s core
CMP consumables products for semiconductor applications, which
included a nearly $15 million increase in sales of polishing pads.
Revenue for the company�s data storage and engineered surface
finishes (ESF) businesses declined from last year. Gross profit,
expressed as a percentage of revenue, was 46.6 percent this
quarter, which was down from 49.1 percent in the same quarter a
year ago and 46.8 percent last quarter. Compared to the year ago
quarter, gross profit percentage decreased due to the effect of
foreign exchange rate changes, increased logistics costs associated
with higher energy prices, and higher fixed costs related to the
company�s pads business; these effects were partially offset by a
higher valued product mix. Compared to the previous quarter, the
slight gross profit percentage decrease was primarily due to a
lower valued product mix and increased logistics costs, partially
offset by lower manufacturing costs. Gross profit for the full
fiscal year was 46.5 percent of revenue, which is consistent with
the company�s full fiscal year guidance range of 46 to 48 percent
of revenue. Gross profit decreased from 47.3 percent of revenue
reported in fiscal 2007 primarily due to higher fixed manufacturing
costs and lower manufacturing yields, both related to the company's
new pads business, as well as the effect of foreign exchange rate
changes. These effects were partially offset by a higher valued
product mix. Excluding the impact on the company�s gross profit
associated with its emerging polishing pads business, gross profit
percentage would have been slightly higher in fiscal 2008 than in
fiscal 2007. Operating expenses, which include research,
development and technical, selling and marketing, and general and
administrative expenses, were $31.7 million in the fourth fiscal
quarter, which was in line with the company�s expectations.
Operating expenses were $1.4 million higher than the $30.3 million
reported in the same quarter a year ago, driven primarily by
increased expenses for clean room materials and higher professional
fees, including fees related to intellectual property enforcement.
Operating expenses were $0.8 million lower than the $32.5 million
reported in the previous quarter, mostly due to lower travel
expenses and professional fees. For the full year, operating
expenses were $125.0 million, which represents a 9.5 percent
increase from the $114.2 million reported in fiscal 2007. Nearly
half of this increase was driven by higher costs to enforce the
company�s intellectual property. In addition, the company incurred
higher staffing related costs and travel expenses, which were
partially offset by lower costs for materials used in its clean
room activities. Net income for the quarter was $8.2 million, down
from $10.2 million in the same quarter last year, primarily due to
higher manufacturing costs associated with the pads business and
higher operating expenses related to intellectual property
enforcement. Net income was down from $10.0 million in the previous
quarter, mainly due to lower revenue. Net income for the full
fiscal year was $38.3 million, up 13.3 percent from $33.8 million
in fiscal 2007. Diluted earnings per share were $0.36 this quarter,
down from $0.43 reported in both the fourth quarter of 2007 and the
third quarter of fiscal 2008. Earnings per share for full fiscal
year 2008 of $1.64 were up 15.3 percent from $1.42 in the previous
fiscal year. Mr. Noglows commented further, �Given the worldwide
financial situation and its expected impact on consumer and
business spending, it appears that fiscal 2009 will bring a
challenging economic and industry environment. However, we believe
our significant CMP infrastructure and scale, combined with our low
capital intensity and solid balance sheet, make us a strong player
in the CMP consumables industry, and well positioned for continued
success through industry cycles. In fiscal 2009, we plan to
continue to execute our strategy, invest in the growth areas of our
business, and actively manage costs, while capitalizing on the
unique opportunities that may arise in a soft industry environment
to enhance our competitive position.� 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) 362-4666. Callers outside
the U.S. can dial (617) 597-5313. The conference code for the call
is 95391804. A replay will be available through November 20, 2008
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 CMP slurry and pad products
play a critical role in the production of the most advanced
semiconductor devices, enabling the manufacture of smaller, faster
and more complex devices by its customers. Since becoming an
independent public company in 2000, the company has grown to
approximately 800 employees on a global basis. The company is also
leveraging its expertise in CMP slurry formulation, materials and
polishing techniques developed for the semiconductor industry and
applying it to demanding surface modification applications where
shaping, enabling and enhancing the performance of surfaces is
critical to success. For more information about Cabot
Microelectronics Corporation, visit www.cabotcmp.com or contact Amy
Ford, Director 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 or trends; growth of the markets in which the
company participates; international events or various macroeconomic
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; the acquisition of or
investment in other entities; uses and investment of the company�s
cash balance; and the construction 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 June 30, 2008
and in the company�s annual report on Form 10-K for the fiscal year
ended September 30, 2007, 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
Twelve Months Ended September 30, June 30, September 30, September
30, September 30, 2008 2008 2007 2008 2007 � Revenue $ 90,156 $
97,047 $ 90,379 $ 375,069 $ 338,205 � Cost of goods sold 48,141
51,638 45,983 200,596 178,224 � Gross profit 42,015 45,409 44,396
174,473 159,981 � Operating expenses: � Research, development &
technical 12,572 12,730 12,209 49,155 49,970 � Selling &
marketing 7,914 7,176 6,518 28,281 24,310 � General &
administrative 11,258 12,642 11,584 47,595 39,933 � Total operating
expenses 31,744 32,548 30,311 125,031 114,213 � Operating income
10,271 12,861 14,085 49,442 45,768 � Other income, net 885 1,239
1,320 5,448 3,606 � Income before income taxes 11,156 14,100 15,405
54,890 49,374 � Provision for income taxes 2,939 4,120 5,246 16,552
15,538 � Net income $ 8,217 $ 9,980 $ 10,159 $ 38,338 $ 33,836 � �
Basic earnings per share $0.36 $0.43 $0.43 $1.64 $1.42 � Weighted
average basic shares outstanding 23,023 23,132 23,783 23,315 23,748
� � Diluted earnings per share $0.36 $0.43 $0.43 $1.64 $1.42 �
Weighted average diluted shares outstanding 23,085 23,163 23,847
23,348 23,754 � CABOT MICROELECTRONICS CORPORATION CONSOLIDATED
CONDENSED BALANCE SHEETS (Unaudited and amounts in thousands) � �
September 30, September 30, 2008 2007 ASSETS: � Current assets:
Cash, cash equivalents and short-term investments $ 226,417 $
212,472 Accounts receivable, net 41,630 52,302 Inventories, net
47,466 37,266 Other current assets 15,079 8,714 Total current
assets 330,592 310,754 � Property, plant and equipment, net 115,843
118,454 Other long-term assets 31,002 25,921 Total assets $ 477,437
$ 455,129 � � LIABILITIES AND STOCKHOLDERS' EQUITY: � Current
liabilities: Accounts payable $ 13,885 $ 15,859 Capital lease
obligations 1,129 1,066 Accrued expenses, income taxes payable and
other current liabilities 22,787 19,638 Total current liabilities
37,801 36,563 � Capital lease obligations 2,518 3,608 Other
long-term liabilities 2,885 1,754 Total liabilities 43,204 41,925 �
Stockholders' equity 434,233 413,204 Total liabilities and
stockholders' equity $ 477,437 $ 455,129
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