Cabot Microelectronics Corporation (Nasdaq:CCMP), the world’s
leading supplier of chemical mechanical planarization (CMP)
polishing slurries and second largest CMP pads supplier to the
semiconductor industry, today reported financial results for its
third quarter of fiscal 2017, which ended June 30, 2017.
Total revenue during the third fiscal quarter
was $128.0 million, 18.3 percent higher than in the same quarter
last year, and a record level for the company. This reflects
significant revenue growth from its tungsten and dielectrics
slurries, and polishing pads product areas; the company achieved
its seventh consecutive quarter of record revenue in CMP pads.
Gross profit margin was 48.9 percent of revenue; non-GAAP gross
profit margin was 49.8 percent, excluding amortization expense
related to the company’s October 2015 acquisition of NexPlanar
Corporation. The company achieved diluted earnings per share of
$0.77; non-GAAP diluted earnings per share were $0.81, excluding
the amortization expense. Cash flow from operations was $32.1
million.
“We are pleased with our strong results this
quarter, reflecting significant revenue growth compared to last
year and a record level of revenue for our company, as well as
continued strong profitability and cash flow,” said David Li,
President and CEO of Cabot Microelectronics. “During the quarter,
we experienced sustained robust demand for our tungsten,
dielectrics and pad CMP solutions across a wide range of memory and
logic applications, including 3D NAND and FinFET technologies. We
believe our performance is evidence of our technology leadership,
operational excellence, and close collaboration with our customers.
Based on our results through nine months, we believe we are
well-positioned to achieve record revenue and profit for full
fiscal year 2017, driven by continued successful execution of our
strategic initiatives, as well as expectations for continued strong
semiconductor demand, based on general commentary from industry
participants.”
Key Financial Information
The company achieved record revenue of $128.0
million in the third fiscal quarter, which represents an increase
of 18.3 percent compared to the same quarter last year. The company
achieved record quarterly revenue in its polishing pads product
area, which grew 25.1 percent year-over-year; revenue from the
company’s tungsten and dielectrics slurries grew 17.5 percent and
19.4 percent, respectively. Year to date revenue of $370.4 million
is 20.3 percent higher than last year.
Gross profit for the quarter was 48.9 percent of
revenue, compared to 48.1 percent reported in the same quarter a
year ago. Gross profit this quarter includes $1.2 million of
NexPlanar amortization expense; excluding this, non-GAAP gross
profit was 49.8 percent of revenue. Factors impacting gross profit
this quarter compared to last year include higher sales volume and
a higher valued product mix, partially offset by higher fixed
manufacturing costs, including higher incentive compensation
expense. Year to date, gross profit was 49.7 percent of revenue,
compared to 48.5 percent last year. Gross profit this year includes
$3.6 million of amortization expense related to NexPlanar.
Excluding this, non-GAAP gross profit for the first nine months of
the fiscal year was 50.7 percent of revenue. The company currently
expects its GAAP gross profit margin for the full fiscal year to be
between 49 and 50 percent of revenue; its prior full year guidance
range was 49 to 51 percent of revenue. This includes approximately
100 basis points of NexPlanar amortization expense.
Operating expenses, which include research,
development and technical, selling and marketing, and general and
administrative expenses, were $35.6 million in the third fiscal
quarter, including $0.5 million of NexPlanar amortization expense.
Operating expenses were $5.7 million higher than the $29.9 million
reported in the same quarter a year ago, mainly due to higher
staffing related expenses, primarily incentive compensation
expense. Year to date, total operating expenses were $105.1
million, including $1.4 million of amortization expense related to
NexPlanar. The company currently expects its GAAP operating
expenses for the full fiscal year to be between $140 million and
$142 million; the company’s prior guidance range was $137 million
to $142 million. This includes approximately $2 million of
NexPlanar amortization expense.
The company’s effective tax rate for the third
fiscal quarter was 22.4 percent, compared to 9.6 percent in the
same quarter last year. The increase is primarily related to
changes in the jurisdictional mix of the company’s earnings, and a
tax benefit recognized in the same quarter last year. Year to date,
the effective tax rate was 21.1 percent. The company currently
expects its effective tax rate for the full fiscal year to be
within the range of 21 to 22 percent. Previously, the company had
estimated 19 to 22 percent for the full fiscal year.
Net income for the quarter was $19.9 million, or
$21.0 million on a non-GAAP basis, excluding amortization expense
related to NexPlanar. Net income was 6.6 percent higher than the
$18.7 million reported in the same quarter last year. The increase
was primarily due to higher revenue and a higher gross profit
margin, partially offset by higher operating expenses and a higher
tax rate. Year to date, net income was $60.4 million, or $63.7
million on a non-GAAP basis, excluding the referenced amortization
expense. This is 54.4 percent higher than the $39.1 million
reported last year.
Diluted earnings per share were $0.77 this
quarter, or $0.81 on a non-GAAP basis, excluding the amortization
expense related to NexPlanar, compared to $0.76 reported in the
third quarter of fiscal 2016. Year to date, diluted earnings per
share were $2.37, or $2.49 on a non-GAAP basis, excluding the
amortization expense. This is 49.1 percent higher than the $1.59
reported last year.
CONFERENCE CALLCabot
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 (844) 825-4410. Callers
outside the U.S. can dial (973) 638-3236. The conference code for
the call is 44617329. 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
INFORMATIONThe 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 amortization expense related to
its October 2015 acquisition of NexPlanar Corporation. 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 NexPlanar amortization expense is not
indicative of its core operating results, and thus presents its
gross profit margin, net income and diluted earnings per share
excluding this expense. 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 financial
measures, including gross profit percentage, net income and diluted
earnings per share, is contained in this press release.
ABOUT CABOT MICROELECTRONICS
CORPORATIONCabot Microelectronics Corporation,
headquartered in Aurora, Illinois, is the world's leading supplier
of CMP polishing slurries and second largest CMP pads supplier to
the semiconductor industry. The company’s products play a critical
role in the production of advanced semiconductor devices, helping
to enable the manufacture of smaller, faster and more complex
devices by its customers. The company's mission is to create value
by delivering high-performing and innovative solutions that solve
its customers’ challenges. The company has approximately 1,150
employees on a global basis. For more information about Cabot
Microelectronics Corporation, visit www.cabotcmp.com or contact
Trisha Tuntland, Director of Investor Relations at
630-499-2600.
SAFE HARBOR STATEMENTThis 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; growth or contraction, and
trends in the industry and markets in which the company
participates; the company’s management; various economic or
political factors and international or national events; regulatory
or legislative activity; 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
company’s supply chain; the financial conditions of the company’s
customers; natural disasters; the acquisition of, investment in, or
collaboration with other entities; uses and investment of the
company’s cash balance, including dividends and share repurchases,
which may be suspended, terminated or modified at any time for any
reason, based on a variety of factors; financing facilities and
related debt, payment of principal and interest, and compliance
with covenants and other terms; the company’s capital structure;
the company’s current or future tax rate; and the 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 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 March 31, 2017 and in the company’s annual report
on Form 10-K for the fiscal year ended September 30, 2016, 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 |
Nine Months Ended |
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
June 30, |
|
2017 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
Revenue |
$ |
127,957 |
|
|
$ |
119,184 |
|
$ |
108,152 |
|
|
$ |
370,395 |
|
$ |
307,765 |
|
|
|
|
|
|
Cost of goods sold |
|
65,414 |
|
|
|
59,153 |
|
|
56,127 |
|
|
|
186,316 |
|
|
158,649 |
|
|
|
|
|
|
Gross
profit |
|
62,543 |
|
|
|
60,031 |
|
|
52,025 |
|
|
|
184,079 |
|
|
149,116 |
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
Research,
development & technical |
|
14,333 |
|
|
|
14,090 |
|
|
12,928 |
|
|
|
41,819 |
|
|
42,690 |
|
|
|
|
|
|
Selling
& marketing |
|
7,346 |
|
|
|
7,268 |
|
|
6,243 |
|
|
|
22,166 |
|
|
19,660 |
|
|
|
|
|
|
General
& administrative |
|
13,953 |
|
|
|
14,699 |
|
|
10,738 |
|
|
|
41,148 |
|
|
37,991 |
|
|
|
|
|
|
Total
operating expenses |
|
35,632 |
|
|
|
36,057 |
|
|
29,909 |
|
|
|
105,133 |
|
|
100,341 |
|
|
|
|
|
|
Operating income |
|
26,911 |
|
|
|
23,974 |
|
|
22,116 |
|
|
|
78,946 |
|
|
48,775 |
|
|
|
|
|
|
Interest expense |
|
1,117 |
|
|
|
1,135 |
|
|
1,178 |
|
|
|
3,402 |
|
|
3,536 |
|
|
|
|
|
|
Other income (expense),
net |
|
(115 |
) |
|
|
234 |
|
|
(246 |
) |
|
|
1,115 |
|
|
396 |
|
|
|
|
|
|
Income before income
taxes |
|
25,679 |
|
|
|
23,073 |
|
|
20,692 |
|
|
|
76,659 |
|
|
45,635 |
|
|
|
|
|
|
Provision for income
taxes |
|
5,740 |
|
|
|
4,793 |
|
|
1,990 |
|
|
|
16,209 |
|
|
6,493 |
|
|
|
|
|
|
Net
income |
$ |
19,939 |
|
|
$ |
18,280 |
|
$ |
18,702 |
|
|
$ |
60,450 |
|
$ |
39,142 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income available to
common shareholders |
$ |
19,887 |
|
|
$ |
18,232 |
|
$ |
18,592 |
|
|
$ |
60,259 |
|
$ |
38,882 |
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share |
$ |
0.79 |
|
|
$ |
0.73 |
|
$ |
0.78 |
|
|
$ |
2.42 |
|
$ |
1.62 |
|
|
|
|
|
|
Weighted average basic
shares outstanding |
|
25,228 |
|
|
|
25,031 |
|
|
23,929 |
|
|
|
24,941 |
|
|
24,023 |
|
|
|
|
|
|
Diluted earnings per
share |
$ |
0.77 |
|
|
$ |
0.71 |
|
$ |
0.76 |
|
|
$ |
2.37 |
|
$ |
1.59 |
|
|
|
|
|
|
Weighted average
diluted shares outstanding |
|
25,721 |
|
|
|
25,526 |
|
|
24,325 |
|
|
|
25,450 |
|
|
24,403 |
CABOT
MICROELECTRONICS CORPORATION |
|
|
|
CONSOLIDATED
CONDENSED BALANCE SHEETS |
|
|
|
(Unaudited and amounts
in thousands) |
|
|
|
|
|
|
|
|
|
June 30, |
|
September 30, |
|
|
2017 |
|
2016 |
ASSETS: |
|
|
|
|
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
|
$ |
363,902 |
|
$ |
287,479 |
Accounts
receivable, net |
|
|
66,338 |
|
|
62,830 |
Inventories, net |
|
|
70,759 |
|
|
72,123 |
Other
current assets |
|
|
16,803 |
|
|
14,398 |
Total
current assets |
|
|
517,802 |
|
|
436,830 |
|
|
|
|
Property, plant and
equipment, net |
|
|
106,162 |
|
|
106,496 |
Other long-term
assets |
|
|
177,310 |
|
|
183,904 |
Total
assets |
|
$ |
801,274 |
|
$ |
727,230 |
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY: |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
|
$ |
15,958 |
|
$ |
16,834 |
Current
portion of long-term debt |
|
|
9,844 |
|
|
7,656 |
Accrued
expenses, income taxes payable and other current liabilities
|
|
|
49,295 |
|
|
41,395 |
Total
current liabilities |
|
|
75,097 |
|
|
65,885 |
|
|
|
|
Long-term debt, net of
current portion |
|
|
137,309 |
|
|
146,961 |
Other long-term
liabilities |
|
|
13,846 |
|
|
16,736 |
Total
liabilities |
|
|
226,252 |
|
|
229,582 |
|
|
|
|
Stockholders'
equity |
|
|
575,022 |
|
|
497,648 |
Total
liabilities and stockholders' equity |
|
$ |
801,274 |
|
$ |
727,230 |
CABOT MICROELECTRONICS CORPORATION |
|
|
|
|
|
U.S. GAAP to
Non-GAAP Reconciliation |
|
|
|
|
|
|
Gross Profit as a Percentage of Revenue, Net Income and
Diluted Earnings Per Share |
|
|
|
(Unaudited and amounts in thousands, except per share and
percentage amounts) |
|
|
|
|
|
|
|
|
|
|
The
following presents reconciliation of the Non-GAAP financial
measures included in the Cabot |
|
|
Microelectronics Corporation press release dated July 27,
2017. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2017 |
Nine Months Ended June 30, 2017 |
|
|
|
|
|
|
|
|
U.S. GAAP |
Adjustments |
Non-GAAP |
U.S. GAAP |
Adjustments |
Non-GAAP |
Gross profit |
$ |
62,543 |
|
$ |
1,199 |
$ |
63,742 |
|
$ |
184,079 |
|
$ |
3,595 |
$ |
187,674 |
|
Gross profit as a
percentage of revenue (1) |
|
48.9 |
% |
|
|
49.8 |
% |
|
49.7 |
% |
|
|
50.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (2) |
$ |
19,939 |
|
$ |
1,067 |
$ |
21,006 |
|
$ |
60,450 |
|
$ |
3,202 |
$ |
63,652 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share (3) |
$ |
0.77 |
|
$ |
0.04 |
$ |
0.81 |
|
$ |
2.37 |
|
$ |
0.12 |
$ |
2.49 |
|
|
|
|
|
|
|
|
(1)
Non-GAAP gross profit as a percentage of revenue for the three
months ended June 30, 2017 excludes $1,199 of NexPlanar
amortization expense. |
Non-GAAP gross profit as a percentage of revenue for
the nine months ended June 30, 2017 excludes $3,595 of NexPlanar
amortization expense. |
|
|
|
|
|
|
|
(2)
Non-GAAP net income for the three months ended June 30, 2017
excludes the item mentioned above in (1) plus $467 of NexPlanar
amortization |
expense recorded in operating expenses. These
adjustments are partially offset by a $599 related increase in the
provision for income taxes. |
Non-GAAP net income for the nine months ended June 30,
2017 excludes the item mentioned above in (1) plus $1,403 of
NexPlanar amortization |
expense recorded in operating expenses. These
adjustments are partially offset by a $1,796 related increase in
the provision for income taxes. |
|
|
|
|
|
|
|
(3)
Non-GAAP diluted earnings per share is calculated based upon
Non-GAAP net income. |
|
|
|
Trisha Tuntland
Director of Investor Relations
630-499-2600
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