Cabot Microelectronics Corporation (Nasdaq:CCMP), the world’s
leading supplier of chemical mechanical planarization (CMP)
polishing slurries and second largest CMP pad supplier to the
semiconductor industry, today reported financial results for its
second quarter of fiscal 2018, which ended March 31, 2018.
Key Quarter HighlightsDuring
the second fiscal quarter, the company delivered total revenue of
$143.0 million, which is 20.0% higher than in the same quarter last
year and is a record level for the company. Second quarter revenue
was driven by growth across all product areas compared to last
year, primarily in tungsten slurries, dielectrics slurries, and CMP
pads. Net income for the quarter was a record $29.7 million, which
is $11.5 million, or 62.7%, higher than the same quarter last
year. Diluted earnings per share (EPS) was a record $1.14,
which is $0.43, or 60.6%, higher than in the same quarter last
year. Cash flow from operations was $36.5 million. As of
March 31, 2018, the company had $461.4 million of cash and $137.5
million of debt on its balance sheet. In April, the company paid
off its remaining outstanding Term Loan.
“Our second quarter results represent continued
strong financial performance with record revenue for the fourth
consecutive quarter, as well as record net income and EPS for our
company,” said David Li, President and CEO of Cabot
Microelectronics. “These results were supported by strong
semiconductor industry demand, primarily in memory, as well as our
sustained focus on executing our strategic initiatives. Looking
ahead, we believe we remain well-positioned for continued
profitable growth, benefiting from the ongoing ramp of 3D NAND and
FinFET technologies, and our ability to deliver innovative,
high-quality CMP solutions to our customers worldwide.”
Key Financial Information – Second
Fiscal QuarterRevenue was $143.0 million, which is $23.8
million, or 20.0%, higher compared to the same quarter last year.
The company achieved record quarterly revenue in dielectrics
slurries and pads, which grew 24.0% and 22.6% year-over-year,
respectively. Revenue from tungsten slurries grew 16.6%
year-over-year.
Gross profit margin for the quarter was 52.5%,
compared to 50.4% reported in the same quarter a year ago. Gross
profit margin this quarter included $1.3 million of NexPlanar
amortization expense. Excluding this, non-GAAP gross profit margin
was 53.4%. Gross profit margin this quarter benefited from higher
sales volume and a high-value product mix, partially offset by
higher fixed manufacturing costs, including higher incentive
compensation expense.
Operating expenses, which include research,
development and technical, selling and marketing, and general and
administrative expenses, were $38.0 million in the second fiscal
quarter. Operating expenses were $1.9 million higher than the same
quarter a year ago, primarily due to higher incentive compensation
and annual merit increases.
Net income for the quarter was $29.7 million,
which is $11.5 million, or 62.7%, higher than in the same quarter
last year. Net income increased primarily due to higher revenue and
a higher gross profit margin, partially offset by higher operating
expenses. Non-GAAP net income was $31.3 million, which is $11.9
million, or 61.6%, higher than the prior year.
Diluted EPS was $1.14 this quarter, which is
$0.43, or 60.6%, higher than in the second quarter of fiscal 2017.
On a non-GAAP basis, diluted EPS was $1.19, which is $0.43, or
56.6%, higher than last year.
Key Financial Information – Year to
Date
- Revenue for the first half of the fiscal year was $283.0
million, which is $40.5 million, or 16.7%, higher than last
year.
- Gross profit margin was 52.7% of revenue, compared to 50.1%
last year. Non-GAAP gross profit margin for the first half of the
fiscal year, excluding the NexPlanar amortization expense, was
53.6%.
- Total operating expenses were $74.9 million, which is $5.4
million higher than the prior year. Operating expenses include
approximately $0.9 million of the referenced amortization expense.
- Net income was $26.7 million, which is $13.9 million, or 34.2%,
lower than the same period last year. Net income includes the
one-time impact of the enactment of the U.S. Tax Cuts and Jobs Act
(“tax reform”), and the referenced amortization expense.
Non-GAAP net income was $62.3 million, which is $19.7 million, or
46.1%, higher than the same period last year.
- Diluted EPS was $1.02, which is $0.58, or 36.3%, lower than the
same period last year, and includes the impact of tax reform.
Year to date, non-GAAP diluted EPS was $2.39, which is $0.71, or
42.3%, higher than last year.
Guidance Update and Capital Deployment
DetailsThe company now expects its GAAP gross profit
margin for the full fiscal year to be between 51% and 53%, an
increase from the company’s prior full year guidance range of 50%
to 52%. This includes approximately 100 basis points of NexPlanar
amortization expense.
The company now expects GAAP operating expenses
for the full fiscal year to be between $148 million and $153
million, an increase from the company’s prior full year guidance
range of $145 to $150 million. This includes approximately $1.9
million of NexPlanar amortization expense.
As announced in March 2018, the company’s Board
of Directors declared a quarterly cash dividend of $0.40 per share
on the company's common stock, representing an increase of 100%
over the previous quarterly cash dividend. The dividend will be
payable on or about April 30, 2018 to shareholders of record at the
close of business on March 23, 2018. The $0.40 dividend would
represent an annualized rate of $1.60 per share, or approximately
$40 million in aggregate, and equivalent to approximately 33% of
the company’s 2017 fiscal year free cash flow1.
1 Free cash flow is operating cash flow less
capital expenditures.
RELATED SLIDESSlides related to
this press release are available at www.cabotcmp.com under the
Investor Relations center as of approximately the same time that
this press release is issued.
CONFERENCE CALLCabot
Microelectronics Corporation’s quarterly earnings conference call
will be held today at 10:00 a.m. Eastern Time (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. may dial (973) 638-3236.
The conference code for the call is 3685768. 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 one-time effects of the enactment of the
Tax Cuts and Jobs Act in December 2017 in the United States (“tax
reform”), and 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 one-time impact of tax reform and NexPlanar amortization
expenses are not indicative of its core operating results, and thus
presents these certain metrics excluding these effects. 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 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 Colleen Mumford, 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, including
related to the enactment of trade sanctions, tariffs, or other
similar matters; regulatory or legislative activity, including the
enactment of the Tax Cuts and Jobs Act (“tax reform”) in December
2017 in the United States; product performance; the generation,
protection and acquisition of intellectual property, and litigation
related to such intellectual property or third party 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 by the company,
based on a variety of factors; financing facilities and related
debt, pay off or 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, including the effects of
tax reform in the U.S.; 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
December 31, 2017 and in the company’s annual report on Form 10-K
for the fiscal year ended September 30, 2017, 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 |
Six Months Ended |
|
|
|
|
|
|
|
March 31, 2018 |
December 31, 2017 |
March 31, 2017 |
March 31, 2018 |
March 31, 2017 |
|
|
|
|
|
|
Revenue |
$ 142,978 |
$ 139,979 |
|
$ 119,184 |
$ 282,957 |
$ 242,438 |
|
|
|
|
|
|
Cost of goods
sold |
|
67,933 |
|
65,965 |
|
|
59,153 |
|
133,898 |
|
120,902 |
|
|
|
|
|
|
Gross profit |
|
75,045 |
|
74,014 |
|
|
60,031 |
|
149,059 |
|
121,536 |
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
Research,
development & technical |
|
13,368 |
|
12,151 |
|
|
14,090 |
|
25,519 |
|
27,486 |
|
|
|
|
|
|
Selling
& marketing |
|
6,790 |
|
5,836 |
|
|
7,268 |
|
12,626 |
|
14,820 |
|
|
|
|
|
|
General
& administrative |
|
17,799 |
|
18,915 |
|
|
14,699 |
|
36,714 |
|
27,195 |
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
37,957 |
|
36,902 |
|
|
36,057 |
|
74,859 |
|
69,501 |
|
|
|
|
|
|
Operating income |
|
37,088 |
|
37,112 |
|
|
23,974 |
|
74,200 |
|
52,035 |
|
|
|
|
|
|
Interest expense |
|
1,158 |
|
1,132 |
|
|
1,135 |
|
2,290 |
|
2,285 |
|
|
|
|
|
|
Other income, net |
|
1,062 |
|
672 |
|
|
234 |
|
1,734 |
|
1,230 |
|
|
|
|
|
|
Income before income
taxes |
|
36,992 |
|
36,652 |
|
|
23,073 |
|
73,644 |
|
50,980 |
|
|
|
|
|
|
Provision for income
taxes |
|
7,255 |
|
39,735 |
|
|
4,793 |
|
46,990 |
|
10,469 |
|
|
|
|
|
|
Net income (loss) |
$ 29,737 |
$ (3,083 |
) |
$ 18,280 |
$ 26,654 |
$ 40,511 |
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) available
to common shareholders |
$ 29,707 |
$ (3,072 |
) |
$ 18,232 |
$ 26,621 |
$ 40,365 |
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss)
per share |
$ 1.16 |
$ (0.12 |
) |
$ 0.73 |
$ 1.05 |
$ 1.63 |
|
|
|
|
|
|
Weighted average basic
shares outstanding |
|
25,593 |
|
25,326 |
|
|
25,031 |
|
25,474 |
|
24,798 |
|
|
|
|
|
|
Diluted earnings (loss)
per share |
$ 1.14 |
$ (0.12 |
) |
$ 0.71 |
$ 1.02 |
$ 1.60 |
|
|
|
|
|
|
Weighted average
diluted shares outstanding |
|
26,161 |
|
25,326 |
|
|
25,526 |
|
26,076 |
|
25,304 |
|
|
|
|
|
|
|
|
|
|
CABOT
MICROELECTRONICS CORPORATION |
|
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CONSOLIDATED
CONDENSED BALANCE SHEETS |
|
|
|
(Unaudited and amounts
in thousands) |
|
|
|
|
|
|
|
March 31, 2018 |
September 30, 2017 |
|
|
|
|
|
|
|
ASSETS: |
|
|
|
|
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ 461,434 |
$ 397,890 |
|
Accounts
receivable, net |
|
70,086 |
|
64,793 |
|
Inventories, net |
|
76,813 |
|
71,873 |
|
Other
current assets |
|
22,853 |
|
16,426 |
|
Total current assets |
|
631,186 |
|
550,982 |
|
|
|
|
|
Property, plant and
equipment, net |
|
109,292 |
|
106,361 |
|
Other long-term
assets |
|
158,495 |
|
176,757 |
|
Total assets |
$ 898,973 |
$ 834,100 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY: |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ 18,216 |
$ 17,624 |
|
Current
portion of long-term debt |
|
13,125 |
|
10,938 |
|
Accrued
expenses, income taxes payable and other current liabilities |
|
62,492 |
|
62,651 |
|
Total current liabilities |
|
93,833 |
|
91,213 |
|
|
|
|
|
Long-term debt, net of
current portion |
|
124,373 |
|
132,997 |
|
Other long-term
liabilities |
|
45,256 |
|
14,853 |
|
Total liabilities |
|
263,462 |
|
239,063 |
|
|
|
|
|
Stockholders'
equity |
|
635,511 |
|
595,037 |
|
Total liabilities and stockholders' equity |
$ 898,973 |
$ 834,100 |
|
|
|
|
|
|
|
|
|
|
|
CABOT MICROELECTRONICS CORPORATION |
|
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|
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) |
|
|
|
|
|
|
|
|
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|
The
following presents reconciliation of the Non-GAAP financial
measures included in the Cabot Microelectronics Corporation press
release dated April 26, 2018. |
|
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|
|
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Three Months Ended March 31, 2018 |
Six Months Ended March 31, 2018 |
|
|
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|
|
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|
|
U.S. GAAP |
Adjustments |
Non-GAAP |
U.S. GAAP |
Adjustments |
Non-GAAP |
Gross
profit |
$ 75,045 |
|
$ 1,309 |
$ 76,354 |
|
$ 149,059 |
|
$ 2,545 |
$ 151,604 |
|
Gross
profit as a percentage of revenue (1) |
|
52.5 |
% |
|
|
53.4 |
% |
|
52.7 |
% |
|
|
53.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income |
|
37,088 |
|
|
1,777 |
|
38,865 |
|
|
74,200 |
|
|
3,480 |
|
77,680 |
|
Operating
Income as a percentage of revenue (2) |
|
25.9 |
% |
|
|
27.2 |
% |
|
26.2 |
% |
|
|
27.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(3) |
$ 29,737 |
|
$ 1,529 |
$ 31,266 |
|
$ 26,654 |
|
$ 35,672 |
$ 62,326 |
|
|
|
|
|
|
|
|
Diluted
earnings per share (4) |
$ 1.14 |
|
$ 0.05 |
$ 1.19 |
|
$ 1.02 |
|
$ 1.37 |
$ 2.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Non-GAAP gross profit as a percentage of revenue for the
three months ended March 31, 2018 excludes $1,309 of NexPlanar
amortization expense. |
Non-GAAP
gross profit as a percentage of revenue for the six months ended
March 31, 2018 excludes $2,545 of NexPlanar amortization
expense. |
|
(2) Non-GAAP operating income for the three months ended March
31, 2018 excludes the item mentioned above in (1) plus $468 of
NexPlanar amortization expense recorded in operating
expenses. |
Non-GAAP
operating income for the six months ended March 31, 2018 excludes
the item mentioned above in (1) plus $935 of NexPlanar amortization
expense recorded in operating expenses. |
|
(3) Non-GAAP net income for the three months ended March 31,
2018 excludes the items mentioned above in (1) and (2) plus $212
for a change in estimated withholding taxes and re-measurement of
U.S. deferred tax assets and liabilities recorded in the first
quarter of fiscal 2018 related to U.S. Tax Cuts and Jobs Act (Tax
Act) enacted on December 22, 2017. These adjustments are partially
offset by a $460 increase in the provision for income taxes related
to excluding NexPlanar amortization. |
Non-GAAP
net income for the six months ended March 31, 2018 excludes the
items mentioned above in (1) and (2) plus $33,092 of one-time tax
expense due to Tax Act. These adjustments are partially offset by a
$900 increase in the provision for income taxes related to
excluding NexPlanar amortization. |
|
(4) Non-GAAP diluted earnings per share is calculated based
upon Non-GAAP net income. The one-time impact of the Tax Act
reduced diluted earnings per share by $0.01 and $1.27 for the three
and six months ended March 31, 2018, respectively. |
|
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Colleen MumfordDirector of Investor RelationsCabot
Microelectronics Corporation (630) 499-2600
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