Cabot Microelectronics Corporation Reports Strong Results for

Cabot Microelectronics Corporation Reports Strong Results for Fourth Quarter and Full Fiscal Year 2016

For the Fourth Fiscal Quarter:
- Record Quarterly Revenue of $123 Million, 22.5 Percent Higher Than Last Year
- GAAP Gross Profit Margin of 49.8 Percent of Revenue; Non-GAAP 50.9 Percent
- Record GAAP Earnings Per Share of $0.83, Up 66.0 Percent Compared to Last Year; Non-GAAP $0.91
For the Full Fiscal Year:
- Annual Revenue of $430 Million, 3.9 Percent Higher Than Last Year
- GAAP Gross Profit Margin of 48.8 Percent of Revenue; Non-GAAP 50.0 Percent
- Record GAAP Earnings Per Share of $2.43, Up 7.5 Percent Compared to Last Year; Non-GAAP $2.68

AURORA, Ill., Oct. 27, 2016 (GLOBE NEWSWIRE) -- Cabot Microelectronics Corporation (Nasdaq:CCMP), the world’s leading supplier of chemical mechanical planarization (CMP) polishing slurries and a growing CMP pad supplier to the semiconductor industry, today reported financial results for its fourth quarter and full fiscal year 2016, which ended September 30.

Total revenue during the fourth fiscal quarter was $122.7 million, 22.5 percent higher than in the same quarter last year, and a record level for the company. The company achieved year-over-year revenue growth in all of its major product areas, and record quarterly revenue in its Tungsten slurry, Pads and Engineered Surface Finishes (ESF) product areas; revenue in the Pads area benefited from the October 2015 acquisition of NexPlanar Corporation. Gross profit margin was 49.8 percent of revenue; non-GAAP gross profit margin was 50.9 percent of revenue, excluding amortization expense related to NexPlanar. The company achieved record diluted earnings per share of $0.83, representing an increase of 66.0 percent compared to the same quarter last year; non-GAAP diluted earnings per share were $0.91, excluding NexPlanar amortization expense and an impairment charge for a NexPlanar intangible asset related to a technology under development. Cash flow from operations was $37.5 million.

For the full fiscal year, the company generated revenue of $430.4 million, 3.9 percent higher than last year, including record annual revenue in its Tungsten slurry and Pads product areas. The company achieved a gross profit margin of 48.8 percent of revenue; non-GAAP gross profit margin was 50.0 percent of revenue, excluding NexPlanar amortization expense and acquisition-related costs. The company achieved record diluted earnings per share of $2.43, representing an increase of 7.5 percent compared to last year; non-GAAP diluted earnings per share were $2.68, excluding amortization expense, acquisition-related costs and the impairment charge related to NexPlanar. Cash flow from operations was $95.2 million for the full fiscal year. As of September 30, 2016, the company’s balance sheet reflected a cash balance of $287.5 million and $155.3 million of debt outstanding.

“We are very pleased with our performance in the fourth quarter of our fiscal year, as we achieved record levels of revenue and profit,” said David Li, President and CEO of Cabot Microelectronics. “Further, continued successful execution of our strategic initiatives, along with stronger industry demand in the second half of the fiscal year, enabled us to grow revenue for the full fiscal year by four percent, and achieve a record level of profit for our company, representing approximately eight percent earnings growth compared to the prior year.”

Mr. Li continued, “Fiscal 2016 was highlighted by strong revenue growth from our slurries for polishing tungsten, as we partnered closely with our strategic customers to support their transitions to advanced memory and logic applications. We also advanced customer adoption of our high-performing colloidal silica and ceria-based dielectrics slurries. In addition, in the fourth fiscal quarter we achieved record revenue in Pads and completed the integration of NexPlanar Corporation, which we acquired in October 2015 to strengthen our Pads product area.”

Mr. Li concluded, “As we enter fiscal 2017, I am confident that we are well-positioned for continued profitable growth given the strong momentum in our Tungsten, Dielectrics and Pads product areas. In addition, we believe that our focused business model, and our global resources, capabilities and infrastructure, differentiate us among leading suppliers of specialty materials to the semiconductor industry.”

Key Financial Information

The company’s record revenue of $122.7 million in the fourth fiscal quarter represents an increase of 22.5 percent from the same quarter last year, including 20.5 percent growth from its IC CMP consumables products. The company achieved record quarterly revenue in its Tungsten slurry product area, which grew 8.8 percent year-over-year; revenue from the company’s Pads product area grew 131.8 percent compared to the same quarter last year, including $7.7 million from NexPlanar; revenue from the company’s Dielectrics slurry product area grew 22.8 percent; and sales of slurries for polishing other metals grew 5.4 percent. Quarterly revenue also benefited from particularly strong performance from the company’s ESF area – within ESF, QED Technologies contributed a record $8.2 million of revenue.

Total revenue for the full fiscal year was $430.4 million, which represents a 3.9 percent increase from $414.1 million in fiscal 2015. Revenue from the company’s IC CMP consumables products grew 5.7 percent. The company achieved record annual revenue in its Tungsten slurry and Pads product areas.

Gross profit for the quarter was 49.8 percent of revenue, including $1.4 million of NexPlanar amortization expense. Excluding this amortization expense, non-GAAP gross profit was 50.9 percent of revenue, compared to 52.0 percent of revenue reported in the same quarter a year ago. Other factors impacting gross profit this quarter compared to last year include higher fixed manufacturing costs, including costs related to NexPlanar, and higher material costs, partially offset by the benefit of a higher valued product mix and higher sales volume.

Gross profit for the full fiscal year was 48.8 percent of revenue, consistent with the company’s prior full fiscal year guidance for GAAP gross profit of around 49 percent of revenue, including NexPlanar. Annual gross profit includes $4.5 million of amortization expense and $0.7 million of acquisition-related costs associated with NexPlanar. Excluding these costs, non-GAAP gross profit was 50.0 percent of revenue, compared to 51.3 percent in fiscal 2015. Other factors impacting gross profit compared to last year were higher fixed manufacturing costs, including costs related to NexPlanar, and higher material costs, partially offset by the benefit of a higher valued product mix and lower incentive compensation costs. For full fiscal year 2017, the company currently expects its GAAP gross profit margin to be between 48 and 50 percent of revenue.

Operating expenses, which include research, development and technical, selling and marketing, and general and administrative expenses, were $35.4 million in the fourth fiscal quarter, or $1.2 million higher than the $34.2 million reported in the same quarter a year ago, primarily due to higher staffing related costs, including costs related to NexPlanar and severance costs, and the $1.0 million impairment charge for a NexPlanar intangible asset related to a technology under development. These factors were partially offset by lower incentive compensation costs, lower clean room materials expense and the absence of costs associated with last year’s CEO transition.

For the full year, total operating expenses were $135.7 million, which includes $1.8 million of amortization expense, $1.6 million of acquisition-related costs, and the $1.0 million impairment charge, all related to NexPlanar. Previously, the company had expected its GAAP operating expenses for the full fiscal year to be between $133 million and $135 million, including NexPlanar. Operating expenses were $1.5 million lower than the $137.2 million reported in fiscal 2015, primarily due to lower incentive compensation costs, lower clean room materials expense and the absence of costs associated with last year’s CEO transition. These factors were partially offset by higher staffing related costs, including costs related to NexPlanar. The company currently expects its GAAP operating expenses for full fiscal year 2017 to be between $137 million and $142 million.

Net income for the quarter was a record $20.7 million, or $22.5 million on a non-GAAP basis, excluding amortization expense and the impairment charge related to NexPlanar. Net income was 65.2 percent higher than the $12.5 million reported in the same quarter last year. Net income increased primarily due to higher revenue. Net income for the full fiscal year was a record $59.8 million, or $66.0 million on a non-GAAP basis, excluding the amortization expense, acquisition-related costs and impairment charge related to NexPlanar. Net income increased by 6.6 percent from $56.1 million in fiscal 2015, primarily due to higher revenue and a lower effective tax rate, partially offset by a lower gross profit margin.

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