CMC Materials, Inc. (Nasdaq: CCMP), a leading global supplier of
consumable materials primarily to semiconductor manufacturers,
today reported financial results for its second quarter of fiscal
2021, which ended March 31, 2021.
“We are pleased to announce another quarter of record revenue
driven by our continued technology leadership and execution,
particularly in our Electronic Materials segment. We have completed
the acquisition of International Test Solutions which we believe is
a great addition to our Electronic Materials portfolio that expands
our growth opportunities in critical consumables and services used
in the semiconductor packaging and test areas,” said David Li,
President and CEO of CMC Materials. “Looking ahead to our third
fiscal quarter, we expect to again deliver sequential growth above
this record quarter, across both segments.”
Key Highlights for the Second Quarter
The company’s revenue of $290.5 million, an increase of 2.2%
compared to the same quarter last year, and another quarter of
record revenue, was driven by continued robust demand in the
company’s Electronic Materials segment, which represents more than
80% of the company’s revenue. In the company’s Performance
Materials segment, pipeline and industrial materials (PIM) products
showed continued stability sequentially, yet continues to be
adversely impacted by the COVID-19 Pandemic (“Pandemic”). The
ongoing impact of the Pandemic on the PIM business has resulted in
the company recording a non-cash, pre-tax goodwill impairment
charge of $201.5 million. In addition, the company recorded a $6.7
million charge for the wood treatment business related to the
previously announced strategic decision to exit this business by
approximately the end of calendar year 2021. These charges resulted
in a quarterly net loss of $149.8 million compared to net income of
$32.9 million in the prior year. Adjusted EBITDA1 was $84.8
million, compared to $85.9 million in the prior year. Year to date,
the company generated $123.5 million in cash flow from operations,
and $298.5 million in the last twelve months.
Key Financial Information for the Second
Quarter
- Revenue was $290.5 million, 2.2% higher than the same quarter
last year. Revenue was up 0.9% sequentially primarily due to higher
revenue in CMP slurries and CMP pads.
- Net loss was $149.8 million compared to net income of $32.9
million last year. Adjusted net income1 was $50.7 million, 2.7%
lower compared to the prior year, as higher revenue and lower
interest expense was offset by higher costs.
- Loss per diluted share was $5.13. Adjusted diluted EPS1 was
$1.71, 2.3% lower compared to the same quarter last year.
- Adjusted EBITDA1 was $84.8 million, down 1.3% compared to last
year. Adjusted EBITDA margin1 for the quarter was 29.2%, compared
to adjusted EBITDA margin of 30.2% in the same quarter last
year.
1 Refer to financial tables and “Use of Certain GAAP,
non-GAAP Adjusted Financial Information” below for information
about these non-GAAP financial measures and reconciliations of
these non-GAAP measures to their most comparable GAAP measure.
Electronic Materials – Revenue was $242.5
million for the quarter, 10.8% higher than revenue in the same
quarter last year due to continued strength across all business
units. Revenue was 2.4% higher sequentially. Adjusted EBITDA was
$81.3 million, or 33.5% of revenue.
Performance Materials –
Revenue was $48.0 million for the quarter, 26.5% lower than revenue
in the same quarter last year, driven primarily by the impact of
the pandemic on demand for PIM products. Revenue was 6.0% lower
sequentially, mainly due to timing of sales in the QED and wood
treatment businesses, while PIM demand remained stable. Adjusted
EBITDA was $18.8 million, or 39.1% of revenue.
Current Financial Guidance
Sequentially, the company currently expects revenue in the third
quarter of fiscal 2021 to be up mid to high single digits compared
to revenue in the second quarter. Electronic Materials revenue is
expected to be up mid single digits and Performance Materials
revenue is expected to be up high single digits for the third
fiscal quarter.
The company increased the full fiscal year 2021 expectation for
its Adjusted EBITDA range to between $370 million and $390
million.
With respect to this guidance, and additional current
expectations provided in the company’s related slide presentation
and prepared commentary, the company notes the continued
uncertainty as to the ongoing macroeconomic environment and the
impact of the pandemic on the industries in which the company
participates.
RELATED SLIDE PRESENTATION AND PREPARED
COMMENTARY
A slide presentation and corresponding prepared commentary
related to this press release will be available
at cmcmaterials.com in the Quarterly Results section of the
Investor Relations center at approximately the same time that this
press release is issued.
CONFERENCE CALL
CMC Materials’ quarterly earnings conference call will be held
at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on Thursday,
May 6. The conference call will be available via live webcast and
replay from the company’s website, cmcmaterials.com, or by phone at
(833) 714-0937. Callers outside the U.S. may dial (778) 560-2685.
The conference code for the call is 4281916. 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 CMC MATERIALS, INC.
CMC Materials, Inc., headquartered in Aurora, Illinois, is a
leading global supplier of consumable materials to primarily
semiconductor manufacturers. 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. CMC Materials, Inc. is also a leading
provider of performance materials to pipeline operators. The
company's mission is to create value by delivering high-performing
and innovative solutions that solve its customers’ challenges. The
company has approximately 2,100 employees globally. For more
information about CMC Materials, Inc., visit www.cmcmaterials.com,
or contact Colleen Mumford, Vice President, Communications and
Marketing, at 630-499-2600.
USE OF CERTAIN GAAP AND NON-GAAP ADJUSTED FINANCIAL
INFORMATION
The company’s financial results are provided in accordance with
accounting principles generally accepted in the United States of
America (GAAP) and using certain non-GAAP financial measures. In
particular, the Company presents the following non-GAAP financial
measures: adjusted net income, adjusted diluted earnings per share,
adjusted EBITDA, adjusted EBITDA margin, free cash flow, and net
debt. Adjusted EBITDA is defined as earnings before interest,
income taxes, depreciation and amortization, and excludes certain
items that affect comparability from period to period. Adjusted
EBITDA margin is defined as adjusted EBITDA as a percentage of
revenue.
The non-GAAP financial measures provided in this press release
are 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 impact of the adjustments related to
impairment charges, acquisitions, such as expenses incurred to
complete an acquisition and related integration and
acquisition-related amortization expenses, costs of restructuring
related to the wood treatment business, costs incurred related to
the COVID-19 pandemic (“Pandemic”) net of grants received, costs
related to the KMG-Bernuth warehouse fire net of insurance
recoveries and the effects of Tax Cuts and Jobs Act in December
2017 in the United States (“Tax Act”) and the issued final
regulations related to the Tax Act, are not indicative of its core
operating results and thus presents these certain measures
excluding these effects. The presentation of non-GAAP financial
measures is not meant to be considered in isolation or as a
substitute for results prepared and presented in accordance with
U.S. GAAP. Reconciliations of non-GAAP measures to their most
comparable GAAP measures are included in the financial statements
portion of this press release.
Adjusted EBITDA for the Electronic Materials and Performance
Materials segments is presented in conformity with Accounting
Standards Codification Topic 280, Segment Reporting. This measure
is reported to the chief operating decision maker for purposes of
making decisions about allocating resources to the segments and
assessing their performance. For these reasons, this measure is
excluded from the definition of non-GAAP financial measures under
the SEC Regulation G and Item 10(e) of Regulation S-K.
FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements, which
address a variety of subjects including, for example, future sales
and operating results; growth or contraction, and trends in the
industries and markets in which the company participates such as
the semiconductor, and oil and gas, industries; the acquisition of,
investment in, or collaboration with other entities, and the
expected benefits and synergies of such acquisitions; divestment or
disposition, or cessation of investment in certain, of the
company’s businesses; new product introductions; development of new
products, technologies and markets; product performance; the
financial conditions of the company's customers; the competitive
landscape that relates to the company’s business; the company's
supply chain; natural disasters; various economic or political
factors and international or national events, including related to
global public health crises such as the Pandemic, and the enactment
of trade sanctions, tariffs, or other similar matters; the
generation, protection and acquisition of intellectual property,
and litigation related to such intellectual property or third party
intellectual property; environmental, health and safety laws and
regulations, and related compliance; the operation of facilities by
the company; the company's management; foreign exchange
fluctuation; the company's current or future tax rate, including
the effects of changes to tax laws in the jurisdictions in which
the company operates; cybersecurity threats; financing facilities
and related debt, pay off or payment of principal and interest, and
compliance with covenants and other terms; and, 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 by the company, based on a variety of factors.
Statements that are not historical facts, including statements
about CMC Materials’ beliefs, plans and expectations, are
forward-looking statements. Such statements are based on current
expectations of CMC Materials’ management and are subject to a
number of factors and uncertainties, which could cause actual
results to differ materially from those described in the
forward-looking statements. For information about factors that
could cause actual results to differ materially from those
described in the forward-looking statements, please refer to CMC
Materials’ filings with the Securities and Exchange Commission
(“SEC”), including the risk factors contained in CMC Materials’
Annual Report on Form 10-K for the fiscal year ended September 30,
2020 filed on November 17, 2020, and its Quarterly Report on Form
10-Q for the quarter ended March 31, 2021, which the Company
expects to file by May 10, 2021. Except as required by law, CMC
Materials undertakes no obligation to update forward-looking
statements made by it to reflect new information, subsequent events
or circumstances.
Contact: Colleen MumfordVice President,
Communications and Marketing CMC Materials, Inc. (630) 499-2600
CMC MATERIALS, INC.CONSOLIDATED
STATEMENTS OF INCOME (LOSS)(Unaudited and amounts in
thousands, except per share amounts)
|
Quarter Ended |
|
Six Months Ended |
|
March 31, 2021 |
|
December 31, 2020 |
|
March 31, 2020 |
|
March 31, 2021 |
|
March 31, 2020 |
Revenue |
$ |
290,528 |
|
|
$ |
287,863 |
|
|
$ |
284,193 |
|
|
$ |
578,391 |
|
|
$ |
567,336 |
|
Cost of sales |
166,782 |
|
|
164,959 |
|
|
163,091 |
|
|
331,741 |
|
|
317,552 |
|
Gross profit |
123,746 |
|
|
122,904 |
|
|
121,102 |
|
|
246,650 |
|
|
249,784 |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
Research, development and
technical |
12,925 |
|
|
12,428 |
|
|
13,230 |
|
|
25,353 |
|
|
26,041 |
|
Selling, general and
administrative |
58,538 |
|
|
55,920 |
|
|
56,209 |
|
|
114,458 |
|
|
110,648 |
|
Impairment charges |
208,221 |
|
|
7,347 |
|
|
— |
|
|
215,568 |
|
|
— |
|
Total operating expenses |
279,684 |
|
|
75,695 |
|
|
69,439 |
|
|
355,379 |
|
|
136,689 |
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income |
(155,938 |
) |
|
47,209 |
|
|
51,663 |
|
|
(108,729 |
) |
|
113,095 |
|
Interest expense |
9,508 |
|
|
9,608 |
|
|
10,753 |
|
|
19,116 |
|
|
22,673 |
|
Interest income |
13 |
|
|
23 |
|
|
143 |
|
|
36 |
|
|
458 |
|
Other income (expense),
net |
(484 |
) |
|
1,452 |
|
|
(1,010 |
) |
|
968 |
|
|
(1,407 |
) |
(Loss) income before income
taxes |
(165,917 |
) |
|
39,076 |
|
|
40,043 |
|
|
(126,841 |
) |
|
89,473 |
|
(Benefit from) provision for
income taxes |
(16,109 |
) |
|
7,546 |
|
|
7,144 |
|
|
(8,563 |
) |
|
18,025 |
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
$ |
(149,808 |
) |
|
$ |
31,530 |
|
|
$ |
32,899 |
|
|
$ |
(118,278 |
) |
|
$ |
71,448 |
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings per
share |
$ |
(5.13 |
) |
|
$ |
1.08 |
|
|
$ |
1.12 |
|
|
$ |
(4.06 |
) |
|
$ |
2.45 |
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss) earnings per
share |
$ |
(5.13 |
) |
|
$ |
1.07 |
|
|
$ |
1.11 |
|
|
$ |
(4.06 |
) |
|
$ |
2.41 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average basic shares
outstanding |
29,210 |
|
|
29,123 |
|
|
29,287 |
|
|
29,164 |
|
|
29,183 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted
shares outstanding |
29,210 |
|
|
29,598 |
|
|
29,725 |
|
|
29,164 |
|
|
29,666 |
|
CMC MATERIALS, INC.CONSOLIDATED
CONDENSED BALANCE SHEETS(Unaudited and amounts in
thousands)
|
March 31, 2021 |
|
September 30, 2020 |
ASSETS: |
|
|
|
|
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
324,836 |
|
|
$ |
257,354 |
|
Accounts receivable, net |
146,238 |
|
|
134,023 |
|
Inventories |
161,771 |
|
|
159,134 |
|
Prepaid expenses and other current assets |
30,082 |
|
|
26,558 |
|
Total current assets |
662,927 |
|
|
577,069 |
|
|
|
|
|
Property, plant and equipment,
net |
358,708 |
|
|
362,067 |
|
Other long-term assets |
1,204,311 |
|
|
1,437,331 |
|
Total assets |
$ |
2,225,946 |
|
|
$ |
2,376,467 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY: |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
53,194 |
|
|
$ |
49,254 |
|
Current portion of long-term debt |
10,650 |
|
|
10,650 |
|
Accrued expenses, income taxes payable and other current
liabilities |
123,508 |
|
|
121,442 |
|
Total current liabilities |
187,352 |
|
|
181,346 |
|
|
|
|
|
Long-term debt, net of current
portion |
906,902 |
|
|
910,764 |
|
Other long-term liabilities |
172,863 |
|
|
210,044 |
|
Total liabilities |
1,267,117 |
|
|
1,302,154 |
|
|
|
|
|
Stockholders' equity |
958,829 |
|
|
1,074,313 |
|
Total liabilities and stockholders' equity |
$ |
2,225,946 |
|
|
$ |
2,376,467 |
|
CMC MATERIALS, INC.Unaudited
Reconciliation of Certain GAAP Financial Measures to Certain
Non-GAAP Financial Measures (Unaudited and amounts in
thousands, except per share and percentage amounts)
Reconciliation of GAAP Net (Loss) Income to Non-GAAP
Adjusted Net Income |
|
Three Months Ended |
|
March 31, 2021 |
|
March 31, 2020 |
Net (loss) income |
$ |
(149,808 |
) |
|
$ |
32,899 |
|
|
|
|
|
Amortization of acquisition related intangibles |
19,695 |
|
|
22,012 |
|
Acquisition and integration-related expenses |
2,167 |
|
|
2,285 |
|
Costs related to KMG-Bernuth warehouse fire, net of insurance
recovery |
(1,076 |
) |
|
206 |
|
Net costs related to restructuring of wood treatment business |
46 |
|
|
— |
|
Costs related to Pandemic, net of grants received |
(421 |
) |
|
237 |
|
U.S. tax reform |
— |
|
|
13 |
|
Impairment charges |
208,221 |
|
|
— |
|
Tax effect on adjustments to net income1 |
(28,109 |
) |
|
(5,529 |
) |
Adjusted Net income |
$ |
50,715 |
|
|
$ |
52,123 |
|
Reconciliation of GAAP Diluted (Loss) Earnings Per Share to
Non-GAAP Adjusted Diluted Earnings Per Share |
|
Three Months Ended |
|
March 31, 2021 |
|
March 31, 2020 |
Diluted (loss)
earnings per share |
$ |
(5.13 |
) |
|
$ |
1.11 |
|
Adjustments (net of tax)2 : |
|
|
|
Amortization of acquisition related intangibles |
0.52 |
|
|
0.57 |
|
Acquisition and integration-related expenses |
0.06 |
|
|
0.05 |
|
Costs related to KMG-Bernuth warehouse fire, net of insurance
recovery |
(0.03 |
) |
|
0.01 |
|
Costs related to the Pandemic, net of grants received |
(0.01 |
) |
|
0.01 |
|
U.S. tax reform |
— |
|
|
— |
|
Impairment charges |
6.22 |
|
|
— |
|
Adjustment for the dilutive impact of shares |
0.08 |
|
|
— |
|
Adjusted Diluted earnings per share |
$ |
1.71 |
|
|
$ |
1.75 |
|
|
|
|
|
Diluted common shares outstanding |
29,210 |
|
|
29,725 |
|
Effect of dilutive securities |
444 |
|
|
— |
|
Adjusted diluted common shares outstanding |
29,654 |
|
|
29,725 |
|
Reconciliation of GAAP Revenue to Non-GAAP Adjusted Gross
Profit and Gross Margin |
|
Three Months Ended |
|
March 31, 2021 |
|
March 31, 2020 |
Revenue |
$ |
290,528 |
|
|
$ |
284,193 |
|
Cost of sales |
166,782 |
|
|
163,091 |
|
Gross profit |
$ |
123,746 |
|
|
$ |
121,102 |
|
Gross margin |
42.6 |
% |
|
42.6 |
% |
|
|
|
|
Adjustments: |
|
|
|
Amortization of acquisition related intangibles |
3,130 |
|
|
3,380 |
|
Costs related to KMG-Bernuth warehouse fire, net of insurance
recovery |
(1,076 |
) |
|
206 |
|
Net costs related to restructuring of wood treatment business |
46 |
|
|
— |
|
Costs related to the Pandemic, net of grants received |
8 |
|
|
31 |
|
Adjusted gross profit |
$ |
125,854 |
|
|
$ |
124,719 |
|
Adjusted gross margin |
43.3 |
% |
|
43.9 |
% |
Reconciliation of GAAP Operating expenses to Non-GAAP
Adjusted Operating expenses |
|
Three Months Ended |
|
March 31, 2021 |
|
March 31, 2020 |
Research, development and technical |
$ |
12,925 |
|
|
$ |
13,230 |
|
Selling, general, and
administrative |
58,538 |
|
|
56,209 |
|
Impairment charges |
208,221 |
|
|
— |
|
Operating expenses |
$ |
279,684 |
|
|
$ |
69,439 |
|
Adjustments2 : |
|
|
|
Amortization of acquisition related intangibles |
(16,565 |
) |
|
(18,632 |
) |
Acquisition and integration-related expenses |
(2,167 |
) |
|
(2,285 |
) |
Costs related to the Pandemic, net of grants received |
429 |
|
|
(206 |
) |
Impairment charges |
(208,221 |
) |
|
— |
|
Adjusted operating
expenses |
$ |
53,160 |
|
|
$ |
48,316 |
|
Reconciliation of GAAP Net (Loss) Income to Non-GAAP
Adjusted EBITDA and EBITDA Margin |
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, 2021 |
|
March 31, 2020 |
Net (loss) income |
|
$ |
(149,808 |
) |
|
$ |
32,899 |
|
Interest expense |
|
9,508 |
|
|
10,753 |
|
Interest income |
|
(13 |
) |
|
(143 |
) |
(Benefit from) provision for income taxes |
|
(16,109 |
) |
|
7,144 |
|
Depreciation & amortization |
|
32,289 |
|
|
32,550 |
|
EBITDA |
|
(124,133 |
) |
|
83,203 |
|
EBITDA margin |
|
(42.7 |
%) |
|
29.3 |
% |
|
|
|
|
|
Adjustments (pre-tax): |
|
|
|
|
Acquisition and integration-related expenses |
|
2,167 |
|
|
2,285 |
|
Costs related to KMG-Bernuth warehouse fire, net of insurance
recovery |
|
(1,076 |
) |
|
206 |
|
Net costs related to restructuring of wood treatment business |
|
46 |
|
|
— |
|
Costs related to the Pandemic, net of grants received |
|
(421 |
) |
|
237 |
|
Impairment charges |
|
208,221 |
|
|
— |
|
Adjusted EBITDA |
|
$ |
84,804 |
|
|
$ |
85,931 |
|
Adjusted EBITDA margin |
|
29.2 |
% |
|
30.2 |
% |
Fiscal Year 2021 Guidance Reconciliation
3 |
|
|
|
|
|
Fiscal Year 2021 |
|
Fiscal Year 2021 |
|
Low |
|
High |
Net income |
$ |
(39,000 |
) |
|
$ |
(25,000 |
) |
Interest expense, net4 |
38,000 |
|
|
38,000 |
|
Provision for income taxes4 |
14,000 |
|
|
19,500 |
|
Depreciation4 |
52,500 |
|
|
52,500 |
|
Amortization |
85,000 |
|
|
85,000 |
|
EBITDA (Consolidated) |
$ |
150,500 |
|
|
$ |
170,000 |
|
Acquisition and integration-related expenses5 |
4,536 |
|
|
4,536 |
|
Costs related to KMG-Bernuth warehouse fire, net of insurance
recovery |
(1,076 |
) |
|
(1,076 |
) |
Net costs related to restructuring of wood treatment business5 |
72 |
|
|
72 |
|
Costs related to the Pandemic, net of grants received5 |
841 |
|
|
841 |
|
Impairment charges5 |
215,568 |
|
|
215,568 |
|
Adjusted EBITDA Guidance -
Consolidated |
$ |
370,441 |
|
|
$ |
389,941 |
|
|
|
|
|
Reconciliation of Cash Flow From Operations to Free Cash
Flow |
|
|
|
|
|
Six Months Ended |
|
March 31, 2021 |
|
March 31, 2020 |
Net cash provided by operating activities |
$ |
123,508 |
|
|
$ |
112,339 |
|
Less: Capital expenditures |
21,119 |
|
|
59,192 |
|
Free cash flow |
$ |
102,389 |
|
|
$ |
53,147 |
|
|
|
|
|
Net cash used in investing
activities |
$ |
(20,756 |
) |
|
$ |
(57,605 |
) |
|
|
|
|
Net cash (used in) provided by
financing activities |
$ |
(36,671 |
) |
|
$ |
98,077 |
|
Reconciliation of GAAP Debt to Net Debt |
|
|
|
|
|
March 31, 2021 |
|
September 30, 2020 |
Total short-term and long-term debt |
$ |
917,552 |
|
|
$ |
921,414 |
|
Less: Cash and cash
equivalents |
324,836 |
|
|
257,354 |
|
Total net debt |
$ |
592,716 |
|
|
$ |
664,060 |
|
1 Tax effect on the adjustments were calculated
using the U.S. Federal and state blended tax rate for the
respective periods as the related adjustments are mainly U.S.
driven. 2 All the adjustments are related to the Selling, general
and administrative expenses.3 This is a reconciliation of our
indicated full year net income to our adjusted EBITDA. The amounts
above may not reflect certain future charges costs and/or gains
that are inherently difficult to predict and estimate due to their
unknown timing, effect and/or significance, including impairment
charges associated with the anticipated closure of our wood
treatment business. 4 Amounts represent the mid-point of the
current financial guidance provided on November 11, 2020.5 Amounts
represent actual Non-GAAP adjustments in the second quarter fiscal
year 2021.
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