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
fourth quarter and full fiscal year 2017, which ended September 30.
Total revenue during the fourth fiscal quarter
was $136.8 million, 11.5 percent higher than in the same quarter
last year, and a record level for the company. This reflects record
quarterly revenue from tungsten and dielectrics slurries, and the
eighth consecutive quarter of record revenue in CMP pads. Gross
profit margin was 51.2 percent of revenue, an increase of 140 basis
points over the same quarter last year; non-GAAP gross profit
margin was 52.1 percent, excluding amortization expense related to
the company’s October 2015 acquisition of NexPlanar Corporation.
The company achieved record diluted earnings per share of $1.03,
representing an increase of 24.1 percent compared to the same
quarter last year; non-GAAP diluted earnings per share were $1.07,
excluding the referenced amortization expense. Cash flow from
operations was a record $51.4 million.
For the full fiscal year, the company generated
record revenue of $507.2 million, 17.8 percent higher than last
year, including record annual revenue in its tungsten slurry and
polishing pads product areas. The company achieved a gross profit
margin of 50.1 percent of revenue, or 130 basis points higher than
last year; non-GAAP gross profit margin was 51.1 percent of
revenue, excluding the amortization expense. The company achieved
record diluted earnings per share of $3.40, representing an
increase of 39.9 percent compared to last year; non-GAAP diluted
earnings per share were $3.56, excluding the amortization expense.
Cash flow from operations was a record $141.4 million for the full
fiscal year, representing an increase of $46.2 million compared to
the prior year. As of September 30, 2017, the company’s balance
sheet reflected a cash balance of $397.9 million and $143.9 million
of debt outstanding.
“We are very proud of our strong performance in
fiscal 2017, and in particular, our results for the fourth fiscal
quarter,” said David Li, President and CEO of Cabot
Microelectronics. “The sustained successful execution of our
strategic initiatives, coupled with strong semiconductor industry
demand, enabled us to grow revenue well in excess of industry
growth. We achieved record revenue and profit for both the quarter
and for the full fiscal year, with full year earnings per share up
by almost 40 percent compared to the prior year.”
Mr. Li continued, “Fiscal 2017 was highlighted
by double-digit revenue growth in our three key product areas –
tungsten slurries, dielectrics slurries and polishing pads. This
year we achieved record tungsten and CMP pads revenue, and also
expanded the adoption of our higher performing, higher
profitability ceria and colloidal silica-based slurry solutions for
dielectrics applications. During the year, we experienced robust
demand for our CMP solutions across a wide range of memory and
logic applications, including 3D NAND and FinFET technologies,
driven by our unrelenting focus on, and ongoing delivery of, a
differentiated, value-added total customer experience.”
Mr. Li concluded, “As we enter fiscal 2018, I am
confident that we are well-positioned for continued profitable
growth given the significant momentum in our tungsten and
dielectrics slurries, and polishing pads product areas. We believe
that based on our effective execution in these areas, along with
our global resources, capabilities and infrastructure, we are
differentiated among leading suppliers of specialty materials to
the semiconductor industry, and poised to continue to grow faster
than the industry.”
Key Financial Information
The company’s record revenue of $136.8 million
in the fourth fiscal quarter represents an increase of 11.5 percent
from $122.7 million in the same quarter last year. The company
achieved record quarterly revenue in its tungsten and dielectrics
slurries, and polishing pads product areas, which grew 18.0
percent, 21.2 percent and 14.0 percent year-over-year,
respectively.
Total revenue for the full fiscal year was a
record $507.2 million, which represents a 17.8 percent increase
from $430.4 million in fiscal 2016. The company achieved record
annual revenue in its tungsten slurry and CMP pads product areas,
which grew 19.5 percent and 31.9 percent year-over-year,
respectively; revenue from the company’s dielectrics slurry product
area grew 21.3 percent. Annual revenue also benefited from record
revenue from the company’s Engineered Surface Finishes business,
which includes QED Technologies; revenue in this area was up 24.7
percent compared to last year.
Gross profit for the quarter was 51.2 percent of
revenue, which is 140 basis points higher than the 49.8 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 52.1 percent of revenue. Factors
impacting gross profit this quarter compared to last year include
benefits of lower raw material costs, higher sales volume and a
higher valued product mix, partially offset by higher fixed
manufacturing costs, including higher incentive compensation
expense.
Gross profit for the full fiscal year was 50.1
percent of revenue, which is 130 basis points higher than the 48.8
percent reported last year and slightly above the company’s prior
full fiscal year guidance for GAAP gross profit of 49 to 50 percent
of revenue. Gross profit this year includes $4.8 million of
amortization expense related to NexPlanar; excluding this, non-GAAP
gross profit was 51.1 percent of revenue. Factors impacting gross
profit this year compared to last year include benefits of higher
sales volume, a higher valued product mix and lower raw material
costs, partially offset by higher fixed manufacturing costs,
including higher incentive compensation expense. For full fiscal
year 2018, the company currently expects its GAAP gross profit
margin to be between 50 and 52 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 $37.0 million in the fourth fiscal
quarter, including $0.5 million of NexPlanar amortization expense.
Operating expenses were $1.7 million higher than the $35.4 million
reported in the same quarter a year ago, primarily due to higher
incentive compensation expense, partially offset by a gain on the
sale of surplus research and development equipment, and the absence
of an impairment charge recorded last year for a NexPlanar
intangible asset related to a technology under development.
For the full year, total operating expenses were
$142.1 million, including $1.9 million of amortization expense
related to NexPlanar. Previously, the company had expected its GAAP
operating expenses for the full fiscal year to be between $140
million and $142 million. Operating expenses were $6.4 million
higher than the $135.7 million reported in fiscal 2016, primarily
due to higher incentive compensation expense. The company currently
expects its GAAP operating expenses for full fiscal year 2018 to be
between $142 million and $147 million. This includes approximately
$2 million of NexPlanar amortization expense.
Operating income for the fourth fiscal quarter
represented 24.2 percent of revenue, which was 320 basis points
higher than in the same quarter last year. Operating income for the
full fiscal year of 22.1 percent of revenue was 480 basis points
higher than in fiscal 2016. The significant year-over-year
increases represent operating leverage driven by revenue growth
combined with the company’s ongoing attention to controlling
costs.
The company’s effective tax rate for the fourth
fiscal quarter was 19.0 percent, compared to 16.5 percent in the
same quarter last year. For the full fiscal year, the effective tax
rate was 20.5 percent, which is below the company’s expected
effective tax rate range for the full fiscal year of 21 to 22
percent, compared to 15.0 percent in fiscal 2016. The comparative
increases are primarily due to the absence of last year’s
retroactive reinstatement of the research and experimentation tax
credit, and changes in the jurisdictional mix of the company’s
earnings. The company currently expects its effective tax rate for
full fiscal year 2018 to be within the range of 24 to 27 percent;
the expected increase versus the rate for full fiscal year 2017 is
primarily due to the expiration of the tax holiday benefit in South
Korea based on the company’s investment in new facilities there in
fiscal year 2011.
Net income for the quarter was a record $26.5
million, which was 28.0 percent higher than the $20.7 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 a higher tax rate and higher operating expenses.
Excluding amortization expense related to NexPlanar, net income
this quarter was $27.6 million on a non-GAAP basis. Net income for
the full fiscal year was a record $87.0 million, which increased by
45.3 percent from $59.8 million in fiscal 2016. The increase was
primarily due to higher revenue and a higher gross profit margin,
partially offset by a higher tax rate and higher operating
expenses. Excluding the referenced amortization expense, net income
this fiscal year was $91.2 million on a non-GAAP basis.
Diluted earnings per share were a record $1.03
this quarter, which was 24.1 percent higher than the $0.83 reported
in the fourth quarter of fiscal 2016. Excluding the amortization
expense related to NexPlanar, diluted earnings per share this
quarter were $1.07 on a non-GAAP basis. The company achieved record
diluted earnings per share of $3.40 for full fiscal year 2017,
which is 39.9 percent higher than the $2.43 reported last year.
Excluding the amortization expense, diluted earnings per share this
fiscal year were $3.56 on a non-GAAP basis.
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 95400341. 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 June 30, 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.
|
|
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|
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, |
|
|
|
|
2017 |
|
|
2017 |
|
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
|
Revenue |
|
$ |
136,784 |
|
$ |
127,957 |
|
|
$ |
122,684 |
|
$ |
507,179 |
|
$ |
430,449 |
|
|
|
|
|
|
|
|
|
Cost of goods
sold |
|
|
66,734 |
|
|
65,414 |
|
|
|
61,598 |
|
|
253,050 |
|
|
220,247 |
|
|
|
|
|
|
|
|
|
Gross
profit |
|
|
70,050 |
|
|
62,543 |
|
|
|
61,086 |
|
|
254,129 |
|
|
210,202 |
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research,
development & technical |
|
|
13,839 |
|
|
14,333 |
|
|
|
15,842 |
|
|
55,658 |
|
|
58,532 |
|
|
|
|
|
|
|
|
|
Selling &
marketing |
|
|
8,680 |
|
|
7,346 |
|
|
|
8,057 |
|
|
30,846 |
|
|
27,717 |
|
|
|
|
|
|
|
|
|
General &
administrative |
|
|
14,489 |
|
|
13,953 |
|
|
|
11,454 |
|
|
55,637 |
|
|
49,445 |
|
|
|
|
|
|
|
|
|
Total operating
expenses |
|
|
37,008 |
|
|
35,632 |
|
|
|
35,353 |
|
|
142,141 |
|
|
135,694 |
|
|
|
|
|
|
|
|
|
Operating income |
|
|
33,042 |
|
|
26,911 |
|
|
|
25,733 |
|
|
111,988 |
|
|
74,508 |
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
1,127 |
|
|
1,117 |
|
|
|
1,187 |
|
|
4,529 |
|
|
4,723 |
|
|
|
|
|
|
|
|
|
Other income (expense),
net |
|
|
798 |
|
|
(115 |
|
) |
|
257 |
|
|
1,913 |
|
|
653 |
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
|
32,713 |
|
|
25,679 |
|
|
|
24,803 |
|
|
109,372 |
|
|
70,438 |
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
|
6,211 |
|
|
5,740 |
|
|
|
4,096 |
|
|
22,420 |
|
|
10,589 |
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
26,502 |
|
$ |
19,939 |
|
|
$ |
20,707 |
|
$ |
86,952 |
|
$ |
59,849 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income available to
common shareholders |
|
$ |
26,434 |
|
$ |
19,887 |
|
|
$ |
20,589 |
|
$ |
86,696 |
|
$ |
59,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share |
|
$ |
1.05 |
|
$ |
0.79 |
|
|
$ |
0.85 |
|
$ |
3.47 |
|
$ |
2.47 |
|
|
|
|
|
|
|
|
|
Weighted average basic
shares outstanding |
|
|
25,236 |
|
|
25,228 |
|
|
|
24,234 |
|
|
25,015 |
|
|
24,077 |
|
|
|
|
|
|
|
|
|
Diluted earnings per
share |
|
$ |
1.03 |
|
$ |
0.77 |
|
|
$ |
0.83 |
|
$ |
3.40 |
|
$ |
2.43 |
|
|
|
|
|
|
|
|
|
Weighted average
diluted shares outstanding |
|
|
25,710 |
|
|
25,721 |
|
|
|
24,678 |
|
|
25,512 |
|
|
24,477 |
|
|
|
CABOT
MICROELECTRONICS CORPORATION |
|
|
|
CONSOLIDATED
CONDENSED BALANCE SHEETS |
|
|
|
(Unaudited and amounts
in thousands) |
|
|
|
|
|
|
|
|
September 30, |
September 30, |
|
|
|
2017 |
|
|
2016 |
|
ASSETS: |
|
|
|
|
|
|
|
Current assets: |
|
|
|
Cash and cash
equivalents |
$ |
397,890 |
|
$ |
287,479 |
|
Accounts
receivable, net |
|
64,793 |
|
|
62,830 |
|
Inventories,
net |
|
71,873 |
|
|
72,123 |
|
Other current
assets |
|
16,426 |
|
|
14,398 |
|
Total current assets |
|
550,982 |
|
|
436,830 |
|
|
|
|
|
Property, plant and
equipment, net |
|
106,361 |
|
|
106,496 |
|
Other long-term
assets |
|
176,757 |
|
|
183,904 |
|
Total assets |
$ |
834,100 |
|
$ |
727,230 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY: |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
17,624 |
|
$ |
16,834 |
|
Current portion
of long-term debt |
|
10,938 |
|
|
7,656 |
|
Accrued
expenses, income taxes payable and other current liabilities |
|
62,651 |
|
|
41,395 |
|
Total current liabilities |
|
91,213 |
|
|
65,885 |
|
|
|
|
|
Long-term debt, net of
current portion |
|
132,997 |
|
|
146,961 |
|
Other long-term
liabilities |
|
14,853 |
|
|
16,736 |
|
Total liabilities |
|
239,063 |
|
|
229,582 |
|
|
|
|
|
Stockholders'
equity |
|
595,037 |
|
|
497,648 |
|
Total liabilities and stockholders' equity |
$ |
834,100 |
|
$ |
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 October 26,
2017. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2017 |
Twelve Months Ended September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP |
Adjustments |
Non-GAAP |
U.S. GAAP |
Adjustments |
Non-GAAP |
|
|
Gross profit |
$ |
70,050 |
|
$ |
1,199 |
$ |
71,249 |
|
$ |
254,129 |
|
$ |
4,794 |
$ |
258,923 |
|
|
|
Gross profit as a
percentage of revenue (1) |
|
51.2 |
% |
|
|
52.1 |
% |
|
50.1 |
% |
|
|
51.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (2) |
$ |
26,502 |
|
$ |
1,063 |
$ |
27,565 |
|
$ |
86,952 |
|
$ |
4,265 |
$ |
91,217 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share (3) |
$ |
1.03 |
|
$ |
0.04 |
$ |
1.07 |
|
$ |
3.40 |
|
$ |
0.16 |
$ |
3.56 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Non-GAAP gross profit as a percentage of revenue for the three
months ended September 30, 2017 excludes $1,199 of NexPlanar
amortization expense. |
Non-GAAP gross profit as a percentage of revenue for the twelve
months ended September 30, 2017 excludes $4,794 of NexPlanar
amortization expense. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)
Non-GAAP net income for the three months ended September 30, 2017
excludes the item mentioned above in (1) plus $468 of NexPlanar
amortization |
expense recorded in operating expenses. These adjustments are
partially offset by a $604 related increase in the provision for
income taxes. |
|
Non-GAAP net income for the twelve months ended September 30, 2017
excludes the item mentioned above in (1) plus $1,871 of NexPlanar
amortization |
expense recorded in operating expenses. These adjustments are
partially offset by a $2,400 related increase in the provision for
income taxes. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
Non-GAAP diluted earnings per share is calculated based upon
Non-GAAP net income. |
|
|
|
|
Trisha TuntlandDirector of
Investor Relations630-499-2600
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