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Cabot Microelectronics Corporation Reports Results for Second Quarter of Fiscal Year 2008
Achieves Record Quarterly Revenue of $94.5 Million on Solid Business Operations and Increased Contributions from Polishing Pad Business
AURORA, Ill., Apr 24, 2008 (BUSINESS WIRE) -- 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 2008, which ended March 31.

Total revenue during the second fiscal quarter was $94.5 million, which represents the fourth consecutive quarter of record revenue for the company. Revenue was 22.7 percent higher than the $77.0 million reported in the same quarter last year and 1.2 percent higher than $93.4 million last quarter. The revenue increase versus both prior periods primarily reflects strong demand for the company's products, as well as strong industry conditions. Sales of slurry for tungsten and dielectric applications increased compared to the year ago quarter, as did revenue from the company's engineered surface finishes and polishing pad businesses. Revenue from the company's other business areas declined.

The average selling price for the company's slurry products sold in the second fiscal quarter was 2.8 percent higher than in the same quarter last year and 1.5 percent higher than in the previous quarter. Increases for both periods were mainly driven by a higher-priced product mix and foreign exchange rate effects.

Gross profit, expressed as a percentage of revenue, was 44.7 percent this quarter, which was up from 43.9 percent in the same quarter a year ago and down from 47.9 percent last quarter. As expected and discussed at the company's Annual Meeting of Stockholders on March 4, lower than optimal manufacturing yields in the growing polishing pad business lowered the gross profit percentage for the quarter. Excluding the adverse effect of the polishing pad business, gross profit as a percentage of revenue for the quarter would have been 3.6 percentage points higher. The year over year increase in gross profit was driven primarily by higher manufacturing capacity utilization on the increased level of sales. Partially offsetting the year over year increase, and contributing to the sequential decrease, were higher fixed manufacturing costs and lower pad manufacturing yields. Year to date, gross profit represents 46.3 percent of revenue, which is consistent with the company's full fiscal year guidance range of 46 to 48 percent of revenue.

Operating expenses, consisting of research, development and technical, selling and marketing, and general and administrative expenses, were $32.2 million in the second fiscal quarter. This is above the company's quarterly guidance range of $27 to $30 million, and is consistent with comments provided by the company at its Annual Meeting. Operating expenses were $3.3 million higher than the $28.9 million reported in the same quarter a year ago, and $3.7 million higher than the $28.5 million reported in the previous quarter. The increase for both periods was driven primarily by higher staffing related costs and professional fees, including costs to enforce the company's intellectual property. Absent the intellectual property enforcement costs, total operating expenses were within the quarterly operating expense guidance range.

Reflecting the company's strong revenue growth and higher operating expenses, net income for the quarter was $7.9 million, up 76.8 percent from the $4.5 million reported in the same quarter last year. Net income was down 34.9 percent from $12.2 million last quarter due to lower gross profit, including the adverse pad yield impact, and higher operating expenses, including the intellectual property enforcement costs.

Diluted earnings per share were $0.34 this quarter, up from $0.19 in the second quarter of fiscal 2007 and down from $0.51 in the previous quarter.

"Guided by our strategic initiatives of technology leadership, operations excellence and connecting with customers, we achieved another record revenue quarter, in what has historically been a seasonally soft period for the industry and our company. We are also excited about the rapid pace of growth in our polishing pad business, with revenue up nearly 85 percent from last quarter," stated William Noglows, Chairman and CEO of Cabot Microelectronics. "Although our overall gross profit percentage this quarter was dampened by lower manufacturing yields in our pads business, which is in the early stages of its life cycle, we are improving the pad manufacturing process to build a robust and profitable new business for the company."

"Execution on our strategic initiatives also led to our achievement on March 18, of Intel's prestigious Preferred Quality Supplier award for 2007. This represents the second consecutive year that we were recognized for our high product performance, consistent quality and excellent customer support from this important and strategic customer," said Mr. Noglows.

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 (800) 299-9086. Callers outside the U.S. can dial (617) 786-2903. The conference code for the call is 19213745. A replay will be available through May 22, 2008 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 800 employees on a global basis. 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) 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; 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; uses and investment of the company's cash balance; and the construction 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 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, 2007 and in the company's annual report on Form 10-K for the fiscal year ended September 30, 2007, 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,
                    2008        2007       2007      2008      2007
                  --------- ------------ --------- --------- ---------

Revenue             $94,488      $93,378   $76,987  $187,866  $158,803

Cost of goods
 sold                52,212       48,605    43,188   100,817    85,689
                  --------- ------------ --------- --------- ---------

   Gross profit      42,276       44,773    33,799    87,049    73,114

Operating
 expenses:

  Research,
   development &
   technical         12,432       11,421    13,481    23,853    25,728

  Selling &
   marketing          6,907        6,284     5,847    13,191    11,323

  General &
   administrative    12,856       10,839     9,537    23,695    18,962
                  --------- ------------ --------- --------- ---------

     Total
      operating
      expenses       32,195       28,544    28,865    60,739    56,013
                  --------- ------------ --------- --------- ---------

Operating income     10,081       16,229     4,934    26,310    17,101

Other income,
 net                  1,689        1,635     1,260     3,324     2,434
                  --------- ------------ --------- --------- ---------

Income before
 income taxes        11,770       17,864     6,194    29,634    19,535

Provision for
 income taxes         3,828        5,665     1,703     9,493     5,919
                  --------- ------------ --------- --------- ---------

  Net income         $7,942      $12,199    $4,491   $20,141   $13,616
                  ========= ============ ========= ========= =========


Basic earnings
 per share            $0.34        $0.51     $0.19     $0.86     $0.57
                  ========= ============ ========= ========= =========

Weighted average
 basic shares
 outstanding         23,402       23,716    23,708    23,555    23,774
                  ========= ============ ========= ========= =========


Diluted earnings
 per share            $0.34        $0.51     $0.19     $0.85     $0.57
                  ========= ============ ========= ========= =========

Weighted average
 diluted shares
 outstanding         23,416       23,768    23,718    23,587    23,777
                  ========= ============ ========= ========= =========

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

                                             March 31,   September 30,
                                               2008          2007
                                           ------------- -------------
      ASSETS:

Current assets:
   Cash, cash equivalents and short-term
    investments                                 $205,602      $212,472
   Accounts receivable, net                       46,538        52,302
   Inventories, net                               49,696        37,266
   Other current assets                           12,010         8,714
                                           ------------- -------------
      Total current assets                       313,846       310,754

Property, plant and equipment, net               124,202       118,454
Other long-term assets                            29,416        25,921
                                           ------------- -------------
      Total assets                              $467,464      $455,129
                                           ============= =============


      LIABILITIES AND STOCKHOLDERS' EQUITY:

Current liabilities:
   Accounts payable                              $17,997       $15,859
   Capital lease obligations                       1,098         1,066
   Accrued expenses, income taxes payable
    and other current liabilities                 19,450        19,638
                                           ------------- -------------
      Total current liabilities                   38,545        36,563

Capital lease obligations                          3,092         3,608
Other long-term liabilities                        2,734         1,754
                                           ------------- -------------
      Total liabilities                           44,371        41,925

Stockholders' equity                             423,093       413,204
                                           ------------- -------------
      Total liabilities and
       stockholders' equity                     $467,464      $455,129
                                           ============= =============

SOURCE: Cabot Microelectronics Corporation

Cabot Microelectronics Corporation
Amy Ford, (630) 499-2600