Cabot Microelectronics Corporation Reports Results for First Quarter of Fiscal Year 2008

Business Wire, Jan 24, 2008

AURORA, Ill. -- Cabot Microelectronics Corporation (Nasdaq:CCMP):

* Record Quarterly Revenue of $93.4 Million

* Strong Quarterly Profitability with Diluted EPS of $0.51

* Meaningful Polishing Pad Contributions

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 first quarter of fiscal 2008, which ended December 31, 2007.

Total revenue during the first fiscal quarter was $93.4 million, which represents the third sequential quarterly record for the company. Revenue was 3.3 percent higher than in the prior quarter and 14.1 percent higher than the $81.8 million in revenue reported in the same quarter last year. The sequential revenue increase primarily reflects solid business performance, strong industry conditions during the first fiscal quarter and contributions from the company's growing polishing pad business. Sales of slurry for tungsten applications reached a third consecutive quarter of record revenue. Revenue from the company's dielectric and pad businesses also increased sequentially, while revenue from other business areas declined sequentially.

The average selling price for the company's slurry products sold in the first fiscal quarter was slightly higher than in the prior quarter, and was 1.9 percent higher than in the same quarter last year mainly as a result of a higher-priced product mix, partially offset by lower selling prices in certain areas.

Gross profit, expressed as a percentage of revenue, was 47.9 percent this quarter, which is near the upper end of the company's full fiscal year guidance range of 46 to 48 percent of revenue. Comparable gross profit percentages were 49.1 percent in the prior quarter and 48.1 percent in the same quarter last year. The sequential decrease in gross profit percentage this quarter was largely due to higher fixed manufacturing costs, including some incremental costs related to the company's planned closure of its smallest slurry production facility, which is located in the United Kingdom, as well as higher staffing related costs in the company's pad business as additional employees were hired to meet an increase in demand.

Operating expenses, consisting of research, development and technical, selling and marketing, and general and administrative expenses, were $28.5 million in the first quarter, which is in the middle of the company's quarterly guidance range of $27 to $30 million. This was $1.8 million lower than the $30.3 million reported last quarter, primarily due to lower staffing related costs. Operating expenses this quarter were $1.4 million higher than the $27.1 million reported in the same quarter last year, driven primarily by higher professional fees and staffing related costs. These increases were partially offset by lower depreciation expense and lower costs for clean room materials used in the company's research and development activities.

Net income for the quarter was $12.2 million, up 20.1 percent from the $10.2 million reported last quarter and up 33.7 percent from $9.1 million in the same quarter last year.

Diluted earnings per share were $0.51 this quarter, up from $0.43 in the previous quarter and $0.38 in the first quarter of fiscal 2007.

"We are pleased with our strong financial performance this quarter, which we believe reflects the continued successful execution of our strategic initiatives, strong demand within the semiconductor industry in the quarter just ended, and contributions from our polishing pad business. Additionally, in recognition of our strong balance sheet and cash flow, we completed our $40 million share repurchase program during the quarter, and this week, our Board of Directors authorized a new $75 million share repurchase program," stated William Noglows, Chairman and CEO of Cabot Microelectronics. "We are especially proud of our strong profitability this quarter. While demand for our CMP products was strong in our first fiscal quarter, given general concerns regarding the U.S. economy as well as the semiconductor industry, there is some uncertainty over what to expect in our business in future quarters. However, we believe we are well positioned to operate successfully over a range of potential industry and economic environments, and believe that we have a solid track-record in this regard."

Mr. Noglows added, "With recorded commercial pad sales to eleven customers, we achieved our first quarter of meaningful revenue in our polishing pad business. Our innovative D100 polishing pad technology, solid operations, and customer relationships have all contributed to this success. I am excited about the many opportunities for continued growth in this business area, given the broad applicability and strength of our product offering."

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) 322-2803. Callers outside the U.S. can dial (617) 614-4925. The conference code for the call is 12542390. A replay will be available through February 21, 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.