Cabot Microelectronics Corporation Reports Record Results for

Cabot Microelectronics Corporation Reports Record Results for Fourth Quarter and Full Fiscal Year 2017

For the Fourth Fiscal Quarter:
- Record Quarterly Revenue of $137 Million, 11.5 Percent Higher Than Last Year
- GAAP Gross Profit Margin of 51.2 Percent of Revenue, Up 140 Basis Points Year-Over-Year; Non-GAAP 52.1 Percent
- Record GAAP Earnings Per Share of $1.03, Up 24.1 Percent Compared to Last Year; Non-GAAP $1.07
For the Full Fiscal Year:
- Record Annual Revenue of $507 Million, 17.8 Percent Higher Than Last Year
- GAAP Gross Profit Margin of 50.1 Percent of Revenue, Up 130 Basis Points Year-Over-Year; Non-GAAP 51.1 Percent
- Record GAAP Earnings Per Share of $3.40, Up 39.9 Percent Compared to Last Year; Non-GAAP $3.56

AURORA, Ill., Oct. 26, 2017 (GLOBE NEWSWIRE) -- Cabot Microelectronics Corporation (Nasdaq:CCMP), the world’s leading supplier of chemical mechanical planarization (CMP) polishing slurries and second largest CMP pads supplier to the semiconductor industry, today reported financial results for its fourth quarter and full fiscal year 2017, which ended September 30.

Total revenue during the fourth fiscal quarter was $136.8 million, 11.5 percent higher than in the same quarter last year, and a record level for the company. This reflects record quarterly revenue from tungsten and dielectrics slurries, and the eighth consecutive quarter of record revenue in CMP pads. Gross profit margin was 51.2 percent of revenue, an increase of 140 basis points over the same quarter last year; non-GAAP gross profit margin was 52.1 percent, excluding amortization expense related to the company’s October 2015 acquisition of NexPlanar Corporation. The company achieved record diluted earnings per share of $1.03, representing an increase of 24.1 percent compared to the same quarter last year; non-GAAP diluted earnings per share were $1.07, excluding the referenced amortization expense. Cash flow from operations was a record $51.4 million.

For the full fiscal year, the company generated record revenue of $507.2 million, 17.8 percent higher than last year, including record annual revenue in its tungsten slurry and polishing pads product areas. The company achieved a gross profit margin of 50.1 percent of revenue, or 130 basis points higher than last year; non-GAAP gross profit margin was 51.1 percent of revenue, excluding the amortization expense. The company achieved record diluted earnings per share of $3.40, representing an increase of 39.9 percent compared to last year; non-GAAP diluted earnings per share were $3.56, excluding the amortization expense. Cash flow from operations was a record $141.4 million for the full fiscal year, representing an increase of $46.2 million compared to the prior year. As of September 30, 2017, the company’s balance sheet reflected a cash balance of $397.9 million and $143.9 million of debt outstanding.

“We are very proud of our strong performance in fiscal 2017, and in particular, our results for the fourth fiscal quarter,” said David Li, President and CEO of Cabot Microelectronics. “The sustained successful execution of our strategic initiatives, coupled with strong semiconductor industry demand, enabled us to grow revenue well in excess of industry growth. We achieved record revenue and profit for both the quarter and for the full fiscal year, with full year earnings per share up by almost 40 percent compared to the prior year.”

Mr. Li continued, “Fiscal 2017 was highlighted by double-digit revenue growth in our three key product areas – tungsten slurries, dielectrics slurries and polishing pads. This year we achieved record tungsten and CMP pads revenue, and also expanded the adoption of our higher performing, higher profitability ceria and colloidal silica-based slurry solutions for dielectrics applications. During the year, we experienced robust demand for our CMP solutions across a wide range of memory and logic applications, including 3D NAND and FinFET technologies, driven by our unrelenting focus on, and ongoing delivery of, a differentiated, value-added total customer experience.”

Mr. Li concluded, “As we enter fiscal 2018, I am confident that we are well-positioned for continued profitable growth given the significant momentum in our tungsten and dielectrics slurries, and polishing pads product areas. We believe that based on our effective execution in these areas, along with our global resources, capabilities and infrastructure, we are differentiated among leading suppliers of specialty materials to the semiconductor industry, and poised to continue to grow faster than the industry.”

Key Financial Information

The company’s record revenue of $136.8 million in the fourth fiscal quarter represents an increase of 11.5 percent from $122.7 million in the same quarter last year. The company achieved record quarterly revenue in its tungsten and dielectrics slurries, and polishing pads product areas, which grew 18.0 percent, 21.2 percent and 14.0 percent year-over-year, respectively.

Total revenue for the full fiscal year was a record $507.2 million, which represents a 17.8 percent increase from $430.4 million in fiscal 2016. The company achieved record annual revenue in its tungsten slurry and CMP pads product areas, which grew 19.5 percent and 31.9 percent year-over-year, respectively; revenue from the company’s dielectrics slurry product area grew 21.3 percent. Annual revenue also benefited from record revenue from the company’s Engineered Surface Finishes business, which includes QED Technologies; revenue in this area was up 24.7 percent compared to last year.

Gross profit for the quarter was 51.2 percent of revenue, which is 140 basis points higher than the 49.8 percent reported in the same quarter a year ago. Gross profit this quarter includes $1.2 million of NexPlanar amortization expense; excluding this, non-GAAP gross profit was 52.1 percent of revenue. Factors impacting gross profit this quarter compared to last year include benefits of lower raw material costs, higher sales volume and a higher valued product mix, partially offset by higher fixed manufacturing costs, including higher incentive compensation expense.

Gross profit for the full fiscal year was 50.1 percent of revenue, which is 130 basis points higher than the 48.8 percent reported last year and slightly above the company’s prior full fiscal year guidance for GAAP gross profit of 49 to 50 percent of revenue. Gross profit this year includes $4.8 million of amortization expense related to NexPlanar; excluding this, non-GAAP gross profit was 51.1 percent of revenue. Factors impacting gross profit this year compared to last year include benefits of higher sales volume, a higher valued product mix and lower raw material costs, partially offset by higher fixed manufacturing costs, including higher incentive compensation expense. For full fiscal year 2018, the company currently expects its GAAP gross profit margin to be between 50 and 52 percent of revenue. This includes approximately 100 basis points of NexPlanar amortization expense.

Operating expenses, which include research, development and technical, selling and marketing, and general and administrative expenses, were $37.0 million in the fourth fiscal quarter, including $0.5 million of NexPlanar amortization expense. Operating expenses were $1.7 million higher than the $35.4 million reported in the same quarter a year ago, primarily due to higher incentive compensation expense, partially offset by a gain on the sale of surplus research and development equipment, and the absence of an impairment charge recorded last year for a NexPlanar intangible asset related to a technology under development.

For the full year, total operating expenses were $142.1 million, including $1.9 million of amortization expense related to NexPlanar. Previously, the company had expected its GAAP operating expenses for the full fiscal year to be between $140 million and $142 million. Operating expenses were $6.4 million higher than the $135.7 million reported in fiscal 2016, primarily due to higher incentive compensation expense. The company currently expects its GAAP operating expenses for full fiscal year 2018 to be between $142 million and $147 million. This includes approximately $2 million of NexPlanar amortization expense.

Operating income for the fourth fiscal quarter represented 24.2 percent of revenue, which was 320 basis points higher than in the same quarter last year. Operating income for the full fiscal year of 22.1 percent of revenue was 480 basis points higher than in fiscal 2016. The significant year-over-year increases represent operating leverage driven by revenue growth combined with the company’s ongoing attention to controlling costs.

The company’s effective tax rate for the fourth fiscal quarter was 19.0 percent, compared to 16.5 percent in the same quarter last year. For the full fiscal year, the effective tax rate was 20.5 percent, which is below the company’s expected effective tax rate range for the full fiscal year of 21 to 22 percent, compared to 15.0 percent in fiscal 2016. The comparative increases are primarily due to the absence of last year’s retroactive reinstatement of the research and experimentation tax credit, and changes in the jurisdictional mix of the company’s earnings. The company currently expects its effective tax rate for full fiscal year 2018 to be within the range of 24 to 27 percent; the expected increase versus the rate for full fiscal year 2017 is primarily due to the expiration of the tax holiday benefit in South Korea based on the company’s investment in new facilities there in fiscal year 2011.

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