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Press release from GlobeNewswire (a Nasdaq OMX company)

Cabot Microelectronics Corporation Reports Strong Results for Fourth Quarter and Full Fiscal Year 2013

Tuesday, October 29, 2013

Cabot Microelectronics Corporation Reports Strong Results for Fourth Quarter and Full Fiscal Year 2013

03:00 EDT Tuesday, October 29, 2013
  • Record Quarterly Revenue of $116.3 Million; Annual Revenue of $433.1 Million
  • Fourth Quarter Gross Profit Margin of 50.9 Percent; Annual Gross Profit Margin of 49.0 Percent is Above Guidance
  • Fourth Quarter Earnings Per Share of $0.70; Full Year EPS 23.4 Percent Higher Than Prior Year

AURORA, Ill., Oct. 29, 2013 (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 2013, which ended September 30.

Total revenue during the fourth fiscal quarter was $116.3 million, which represents a record revenue level for the company. This reflects an increase of 5.1 percent compared to the same quarter last year and an increase of 5.7 percent from the prior quarter, on solid demand for the company's products. The company achieved a gross profit margin of 50.9 percent of revenue in the fourth fiscal quarter, which is the highest level since December 2009, and diluted earnings per share of $0.70, an increase of 42.9 percent compared to the prior year quarter. For the full fiscal year, the company achieved revenue of $433.1 million, a gross profit margin of 49.0 percent of revenue, which is the highest level since full fiscal 2010, and diluted earnings per share of $2.16, 23.4 percent higher than in the prior year. The company's balance sheet reflects a cash balance of $226.0 million, which is $24.4 million higher than in the prior quarter and $47.6 million higher than last year, and $161.9 million of debt outstanding as of September 30, 2013.

"We are pleased with our strong financial performance for the quarter and full fiscal year, despite soft semiconductor industry conditions in the first half, and we believe the execution of our long-term strategic initiatives continues to create value for our customers and our shareholders," said William Noglows, Chairman and CEO of Cabot Microelectronics. "From a technology standpoint, we are now focusing more heavily on collaborating with our customers to provide innovative solutions for leading edge applications, and the recent growth in revenues from our CMP solutions for polishing aluminum and advanced dielectrics are specific examples of our ability to innovate to meet our customers' challenging product performance requirements for leading edge applications. From a customer standpoint, we believe the supplier excellence awards we earned during the fiscal year exemplify our ongoing commitment to collaborating with our customers and consistently delivering innovative, high performing and high-quality products. Finally, on the operations side, we continued to improve our productivity this year, and also ramped production at our facility in South Korea, contributing to our strong margin performance and profitability."

Mr. Noglows continued, "Based on this sound execution of our strategic initiatives in fiscal 2013, we believe we are well positioned for continued success in fiscal 2014. While a number of industry analysts and certain customers are forecasting some softness in demand early in our fiscal year, we are confident in our ability to continue delivering attractive results across a variety of industry demand environments."

Key Financial Information

The company's record revenue of $116.3 million in the fourth fiscal quarter represents a 5.1 percent increase from the $110.6 million reported in the same quarter last year, and a 5.7 percent increase from $110.0 million in the prior quarter. Compared to the same quarter last year, revenue from all the company's business areas increased except for its Tungsten and Pads businesses. Compared to the prior quarter, revenue from all the company's business areas increased, except for its Data Storage business.

Total revenue for the full fiscal year was $433.1 million, which represents a 1.3 percent increase from $427.7 million in fiscal 2012. Full year revenue results reflect strengthening in demand for the company's products in the second half of the fiscal year after soft industry conditions in the first half of the year, and include an adverse foreign exchange impact of $5.9 million.

Gross profit, expressed as a percentage of revenue, was 50.9 percent this quarter, compared to 48.6 percent in the same quarter a year ago and 49.7 percent in the prior quarter. Compared to the year ago quarter, gross profit percentage increased primarily due to lower fixed manufacturing costs and benefits associated with a weaker Japanese yen versus the U.S. dollar. The increase in gross profit percentage versus the previous quarter was primarily due to lower variable manufacturing costs, despite higher costs associated with the transition to a new raw material supply contract with an existing supplier that the company discussed last quarter, and higher sales volume, partially offset by higher fixed manufacturing costs.

Gross profit margin for the full fiscal year was 49.0 percent of revenue, which is above the company's full year guidance range of 46 to 48 percent of revenue. Gross profit margin increased from 47.7 percent of revenue in fiscal 2012, primarily due to the favorable impact of the weaker Japanese yen and lower fixed manufacturing costs. For full fiscal year 2014, the company is increasing its gross profit margin guidance range to between 48 and 50 percent of revenue.

Operating expenses, which include research, development and technical, selling and marketing, and general and administrative expenses, were $35.5 million in the fourth fiscal quarter, or $2.2 million higher than the $33.3 million reported in the same quarter a year ago, primarily due to higher staffing related expenses, including incentive compensation costs related to the strong financial results, partially offset by lower depreciation expense and clean room materials expense. Operating expenses were $3.1 million higher than the $32.4 million reported in the previous quarter, primarily due to higher staffing related costs, including incentive compensation costs.

For the full year, total operating expenses decreased 1.4 percent to $135.6 million, and were within the company's guidance range for full fiscal year 2013 of $132 million to $136 million. The company expects its operating expense for full fiscal year 2014 to be between $131 million and $135 million.

Net income for the quarter was $16.8 million, up from $11.6 million in the same quarter last year and $15.5 million in the prior quarter. Compared to the same quarter last year, net income was higher primarily due to the company's higher level of sales, higher gross profit margin and a lower effective tax rate, partially offset by higher operating expenses. Compared to the prior quarter, net income was up mainly due to the company's higher revenue and higher gross profit margin, partially offset by higher operating expenses. Net income for the full fiscal year was $51.4 million, up from $40.8 million in fiscal 2012 primarily due to a higher gross profit margin, a lower effective tax rate, a favorable impact of the weaker Japanese yen reflected in other income, and a higher level of sales.

Diluted earnings per share were $0.70 this quarter, up from $0.49 reported in the fourth quarter of fiscal 2012 and $0.65 reported in the previous quarter. Earnings per share for full fiscal year 2013 were $2.16, up from $1.75 reported in the previous fiscal year.

CONFERENCE CALL

Cabot Microelectronics Corporation's quarterly earnings conference call will be held today at 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 (866) 700-6293. Callers outside the U.S. can dial (617) 213-8835. The conference code for the call is 36031930. 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 polishing slurries and a growing CMP pad supplier to the semiconductor industry. The company's products play a critical role in the production of advanced semiconductor devices, enabling the manufacture of smaller, faster and more complex devices by its customers. The company's mission is to create value by developing reliable and innovative solutions, through close customer collaboration, that solve today's challenges and help enable tomorrow's technology. Since becoming an independent public company in 2000, the company has grown to approximately 1,050 employees on a global basis. For more information about Cabot Microelectronics Corporation, visit www.cabotcmp.com or contact Trisha Tuntland, Manager 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, contraction or trends; growth or contraction of the markets in which the company participates; international events, regulatory or legislative activity, or various economic factors; 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; natural disasters; the acquisition of or investment in other entities; uses and investment of the company's cash balance; financing facilities and related debt, payment of principal and interest, and compliance with covenants and other terms; the company's capital structure; and the construction and 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 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 June 30, 2013 and in the company's annual report on Form 10-K for the fiscal year ended September 30, 2012, 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 Twelve Months Ended
  September 30, June 30, September 30, September 30, September 30,
  2013 2013 2012 2013 2012
           
Revenue  $ 116,266  $ 109,968  $ 110,621  $ 433,131  $ 427,657
           
Cost of goods sold  57,143 55,359 56,883 221,015 223,630
           
 Gross profit 59,123 54,609 53,738 212,116 204,027
           
Operating expenses:          
           
 Research, development & technical  15,835 15,149 15,401 61,373 58,642
           
 Selling & marketing  7,360 6,470 7,288 27,985 29,516
           
 General & administrative  12,270 10,776 10,572 46,287 49,345
           
 Total operating expenses 35,465 32,395 33,261 135,645 137,503
           
Operating income 23,658 22,214 20,477 76,471 66,524
           
Interest expense 911 907 961 3,643 2,309
           
Other income (expense), net (173) 248 (681) 1,392 (1,344)
           
Income before income taxes 22,574 21,555 18,835 74,220 62,871
           
Provision for income taxes  5,805 6,062 7,196 22,835 22,045
           
 Net income  $ 16,769  $ 15,493  $ 11,639  $ 51,385  $ 40,826
           
Basic earnings per share  $0.73 $0.68 $0.51 $2.24 $1.81
           
Weighted average basic shares outstanding  23,041 22,951 22,920 22,924 22,506
           
Diluted earnings per share  $0.70 $0.65 $0.49 $2.16 $1.75
           
Weighted average diluted shares outstanding  24,072 23,776 23,706 23,802 23,280
     
     
CABOT MICROELECTRONICS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited and amounts in thousands)
     
  September 30, September 30,
  2013 2012
ASSETS:    
     
Current assets:    
 Cash and cash equivalents  $ 226,029  $ 178,459
 Accounts receivable, net   54,640  53,506
 Inventories, net  63,786  66,472
 Other current assets  21,257  19,451
 Total current assets 365,712 317,888
     
Property, plant and equipment, net  111,985  125,020
Other long-term assets  76,809  74,917
 Total assets  $ 554,506  $ 517,825
     
     
LIABILITIES AND STOCKHOLDERS' EQUITY:    
     
Current liabilities:    
 Accounts payable  $ 16,663  $ 19,542
 Current portion of long-term debt  10,938  10,937
 Capital lease obligations  --  2
 Accrued expenses, income taxes payable and other current liabilities  39,899  32,738
 Total current liabilities 67,500 63,219
     
Long-term debt, net of current portion  150,937  161,875
Capital lease obligations, net of current portion  --  19
Other long-term liabilities  8,992  9,121
 Total liabilities  227,429  234,234
     
Stockholders' equity  327,077  283,591
 Total liabilities and stockholders' equity  $ 554,506  $ 517,825
CONTACT: Trisha Tuntland
Manager of Investor Relations
630-499-2600

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