Press Release


<< Back
Cabot Microelectronics Reports Results for Second Quarter of Fiscal 2007; Continued Industry Softness Adversely Affects Financial Results

AURORA, Ill.--(BUSINESS WIRE)--April 26, 2007--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 second quarter of fiscal 2007, which ended March 31.

Total revenue for the second fiscal quarter was $77.0 million, approximately 5.9 percent lower than the prior quarter's revenue of $81.8 million. The sequential revenue decrease primarily reflects continued softening in industry demand as a number of the company's key customers reduced production to correct excess inventories of semiconductor devices. This industry softness has adversely affected the company's revenue for approximately the last six months. Revenue decreased sequentially in each of the company's business areas, except for slurries for data storage polishing applications. Revenue this quarter was 14.2 percent higher than the $67.4 million in revenue the company reported in the same quarter last year. The year ago quarter was adversely affected by the company's transition to selling directly to customers in Taiwan, rather than through a distributor, and also did not include the recently acquired QED business.

The average selling price for the company's slurry products sold in the second quarter increased by 0.6 percent compared to the prior quarter, due primarily to a higher-priced product mix. The average selling price was 4.9 percent higher than in the same quarter last year mainly as a result of a higher-priced product mix and higher selling prices.

Gross profit for the March quarter was $33.8 million, compared with $39.3 million reported in the prior quarter and $31.5 million in the same quarter a year ago. As a percentage of revenue, gross profit was 43.9 percent this quarter, lower than both the 48.1 percent in the prior quarter and 46.8 percent in the same quarter last year. Year to date, gross profit represents 46.0 percent of revenue, which is consistent with the company's guidance range of 46 to 48 percent for the full fiscal year. The sequential decline in gross profit percentage this quarter was primarily due to lower manufacturing capacity utilization on the lower level of sales, lower yields in the company's manufacturing operations and higher fixed manufacturing costs. These adverse affects were partially offset by a higher-valued product mix.

Operating expenses, consisting of research, development and technical, selling and marketing, and general and administrative expenses, were $28.9 million in the second quarter, which is within the company's guidance range of $27 million to $30 million per quarter. This was $1.7 million higher than the $27.1 million reported last quarter, primarily due to higher professional fees, including costs to enforce the company's intellectual property portfolio, higher costs for clean room materials in the company's research and development activities, and increased compensation related expense typical of the company's second fiscal quarter. Operating expenses this quarter were $4.2 million higher than in the same quarter last year, a quarter that did not include the QED business.

Net income for the quarter was $4.5 million, down from $9.1 million last quarter. Net income in the same quarter last year was $5.4 million.

Diluted earnings per share were $0.19 this quarter, down from both the $0.38 in the previous quarter and $0.22 in the second quarter of fiscal 2006.

William Noglows, Chairman and CEO of Cabot Microelectronics, stated, "Due to the continued weakness that we see in the semiconductor industry, our financial results for the second fiscal quarter were not as strong as we would have liked. We believe these results were primarily a reflection of industry conditions, rather than company-specific issues, and we remain optimistic that an improvement in industry conditions could allow for a stronger second half of the year. Our solid cash flow and strong balance sheet allow us to stay the course in this weak industry environment, as we continue to invest in our core CMP consumables business, as well as our Engineered Surface Finishes growth initiative, to capture future business opportunities. We continue to make inroads with our pads business, where customer interest in our products is growing and our new pad manufacturing capacity is now on line. Finally, on March 27, 2007, we were delighted to be recognized by Intel honoring us with its prestigious Preferred Quality Supplier award for 2006. We feel that this achievement was the result of the hard work and dedication of many people across our organization, as we continued to execute on our three strategic initiatives - technology leadership, operations excellence, and connecting with customers."

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) 800-8649. Callers outside the U.S. can dial (617) 614-2703. The conference code for the call is 95536568. A replay will be available through May 24, 2007 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 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 750 employees who work at research and development labs, sales and business offices, manufacturing facilities and customer service centers in China, France, Germany, Japan, Singapore, South Korea, Taiwan, the United Kingdom and the United States. The company's vision is to become the world leader in shaping, enabling and enhancing the performance of surfaces, so the company is leveraging its expertise in CMP slurry formulation, materials and polishing techniques developed for the semiconductor industry and applying it to demanding surface modification applications in other industries 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) 375-5412.

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; 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; and the construction of new or refurbishment of existing 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 December 31, 2006 and in the company's annual report on Form 10-K for the fiscal year ended September 30, 2006, 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            Six Months Ended
                  -------------------------------- -------------------
                  March 31, December 31, March 31, March 31, March 31,
                    2007        2006       2006      2007      2006
                  --------- ------------ --------- --------- ---------

Revenue            $76,987      $81,816   $67,389  $158,803  $148,877

Cost of goods
 sold               43,188       42,501    35,855    85,689    78,906
                  --------- ------------ --------- --------- ---------

     Gross profit   33,799       39,315    31,534    73,114    69,971

Operating
 expenses:

  Research,
   development &
   technical        13,481       12,247    11,321    25,728    22,980

  Selling &
   marketing         5,847        5,476     5,075    11,323    10,101

  General &
   administrative    9,537        9,425     8,244    18,962    16,658
                  --------- ------------ --------- --------- ---------

     Total
      operating
      expenses      28,865       27,148    24,640    56,013    49,739
                  --------- ------------ --------- --------- ---------

Operating income     4,934       12,167     6,894    17,101    20,232

Other income, net    1,260        1,174     1,090     2,434     1,806
                  --------- ------------ --------- --------- ---------

Income before
 income taxes        6,194       13,341     7,984    19,535    22,038

Provision for
 income taxes        1,703        4,216     2,547     5,919     7,030
                  --------- ------------ --------- --------- ---------

     Net income     $4,491       $9,125    $5,437   $13,616   $15,008
                  ========= ============ ========= ========= =========


Basic earnings
 per share           $0.19        $0.38     $0.22     $0.57     $0.62
                  ========= ============ ========= ========= =========

Weighted average
 basic shares
 outstanding        23,708       23,839    24,233    23,774    24,299
                  ========= ============ ========= ========= =========


Diluted earnings
 per share           $0.19        $0.38     $0.22     $0.57     $0.62
                  ========= ============ ========= ========= =========

Weighted average
 diluted shares
 outstanding        23,718       23,841    24,233    23,777    24,299
                  ========= ============ ========= ========= =========


Certain reclassifications of prior fiscal quarter amounts have been
 made to conform with the current period presentation.


CABOT MICROELECTRONICS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited and amounts in thousands)

                                             March 31,   September 30,
                                               2007          2006
                                           ------------- -------------

                    ASSETS:

Current assets:
   Cash, cash equivalents and short-term
    investments                                $163,568      $165,930
   Accounts receivable, net                      47,563        48,028
   Inventories, net                              42,102        40,326
   Other current assets                          11,855         7,221
                                           ------------- -------------
     Total current assets                       265,088       261,505

Property, plant and equipment, net              123,839       130,176
Other long-term assets                           24,573        20,452
                                           ------------- -------------
     Total assets                              $413,500      $412,133
                                           ============= =============


     LIABILITIES AND STOCKHOLDERS' EQUITY:

Current liabilities:
   Accounts payable                              $9,330       $15,104
   Capital lease obligations                      1,297         1,254
   Accrued expenses, income taxes payable
    and other current liabilities                18,710        22,475
                                           ------------- -------------
     Total current liabilities                   29,337        38,833

Capital lease obligations                         3,885         4,420
Other long-term liabilities                       1,263         1,109
                                           ------------- -------------
     Total liabilities                           34,485        44,362

Stockholders' equity                            379,015       367,771
                                           ------------- -------------
     Total liabilities and stockholders'
      equity                                   $413,500      $412,133
                                           ============= =============

CONTACT: Cabot Microelectronics Corporation
Amy Ford, Director of Investor Relations, 630-375-5412

SOURCE: Cabot Microelectronics Corporation

Connect with Cabot Microelectronics


Address
870 N. Commons Drive
Aurora, IL 60504
Contact Us

Technical Resources