Press Release

Press Release

Printer Friendly Version View printer-friendly version
<< Back
Cabot Microelectronics Corporation Reports Record Revenue, Record Net Income, and Record EPS for Second Quarter of Fiscal 2018
  • Record Revenue of $143.0 Million, $23.8 Million or 20.0% Higher Than Last Year
  • Gross Profit Margin of 52.5%; Non-GAAP Gross Profit Margin of 53.4%; Annual Gross Profit Margin Guidance Range Raised
     
  • Record Net Income of $29.7 Million, $11.5 Million or 62.7% Higher Than Last Year; Non-GAAP Net Income of $31.3 Million
     
  • Record Earnings Per Share of $1.14; $0.43 or 60.6% Higher Than Last Year; Non-GAAP Earnings Per Share of $1.19

AURORA, Ill., April 26, 2018 (GLOBE NEWSWIRE) -- 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 Highlights

During 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 Quarter

Revenue 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 Details

The 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 SLIDES
Slides 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 CALL
Cabot 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 INFORMATION
The 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 CORPORATION
Cabot 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 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; 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.

 


     
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      
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          
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 April 26, 2018.
               
    Three Months Ended March 31, 2018 Six Months Ended March 31, 2018
               
    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.
   

Colleen Mumford
Director of Investor Relations
Cabot Microelectronics Corporation 
(630) 499-2600

 

Primary Logo

Cabot Microelectronics Corporation