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Cabot Microelectronics Reports Results for First Quarter of Fiscal 2005
Business Wire - January 27, 2005 07:15

AURORA, Ill., Jan 27, 2005 (BUSINESS WIRE) -- Cabot Microelectronics Corporation (Nasdaq:CCMP), the leading supplier of chemical mechanical planarization (CMP) polishing slurries to the semiconductor industry, today reported financial results for its first quarter of fiscal 2005, which ended December 31, 2004.

Total revenue for the first fiscal quarter was $67.1 million, down 18.9% from $82.7 million in the prior quarter and down 12.1% from $76.3 million in the first quarter a year ago. The sequential revenue decrease was primarily due to lower demand for the company's products used in dielectric and tungsten applications, the combined revenue of which declined by 19.4% sequentially. The company attributes the decrease in demand to a reduction in wafer starts during the quarter by a number of customers. Revenue from slurries for copper polishing applications was down sequentially by 25.8% due to the remaining impact of lost business with one customer, which the company previously disclosed, as well as selected price reductions. Revenue from the company's products for data storage applications increased sequentially by 21.3%. Average selling price decreased by 2.9% this quarter compared to the prior quarter, primarily due to price reductions, which were partially offset by a higher valued product mix.

Gross profit for the quarter was $33.6 million, down 16.4% from the prior quarter's $40.2 million, and down 9.8% from $37.3 million in the year ago quarter. As a percentage of revenue, gross profit increased to 50.1% this quarter from 48.6% last quarter and 48.8% in the same quarter last year. Gross profit as a percentage of revenue benefited this quarter from a higher valued product mix, as well as higher yields in the company's manufacturing operations. These benefits were partially offset by the effects of price reductions and lower utilization of the company's manufacturing capacity.

Operating expenses of $19.4 million, consisting of research and development, selling and marketing, and general and administrative expenses, decreased by $1.3 million sequentially from $20.7 million last quarter, and were $0.3 million lower than the $19.7 million reported in the same quarter last year.

Net income for the quarter was $9.8 million, down 25.4% from $13.2 million last quarter and down 15.3% from $11.6 million in the same quarter last year. Diluted earnings per share were $0.40 this quarter, compared to $0.53 in the previous quarter and $0.46 in the year ago quarter.

"We believe that the sequential decrease in revenue that we experienced this quarter, which followed two consecutive quarters of record revenue, primarily reflects the impact of a reduction in semiconductor industry output on our business, which is principally wafer-start based," stated William P. Noglows, Cabot Microelectronics' Chairman and CEO. "In our view, this decrease in semiconductor production to reduce excess product inventories was primarily focused on communications devices that represent more mature technologies. Although broad based, the reduction in output was particularly evident among the foundries, which represent a significant portion of our business. As a result, sales of our products for tungsten and oxide polishing applications decreased significantly. Further, although we also experienced a sharp sequential decrease in revenue from our copper slurries, sales volume remained solid, adjusting for the loss of one customer which we have discussed in previous quarters. Despite the challenging industry conditions this quarter, we are particularly encouraged by results of our efforts to improve productivity and quality through our Six Sigma initiatives, as demonstrated by our improved manufacturing yields within this lower revenue environment, as well as our control of costs throughout the organization. In particular, we believe these improvements contributed to the increase in gross margin as a percentage of revenue that we achieved this quarter. From our perspective, these improvements, along with our demonstrated business model, position us well for continued profitability and strong cash generation."

CONFERENCE CALL

Cabot Microelectronics' quarterly earnings conference call will be held today at 9:00 a.m. Central Time. The live conference call will be available to all interested parties via webcast from the company's website, www.cabotcmp.com, or by phone at [phone]. Callers outside the U.S. can dial [phone]. For those who cannot listen to the live broadcast, a replay will be available through February, 17, 2005 by calling [phone] or [phone], and using access code 3166676, or via webcast at www.cabotcmp.com. A transcript of the formal comments made during the conference call will be available in the Investor Relations section of the company's website.