• Record Revenue of $284.2 Million, 7.1% Higher than Last Year, Due to Strong Growth in CMP Slurries and Pipeline Performance Products

• Diluted EPS of $1.11; Adjusted Diluted EPS¹ of $1.75, 12.9% Higher than Adjusted EPS¹ Last Year

• Expecting Total Revenue for Third Quarter of Fiscal 2020 to be Approximately Flat to Down Low Single Digits Sequentially

AURORA, Ill., May 06, 2020 (GLOBE NEWSWIRE) -- Cabot Microelectronics Corporation (Nasdaq: CCMP), a leading global supplier of consumable materials to semiconductor manufacturers and pipeline companies, today reported financial results for its second quarter of fiscal 2020, which ended March 31, 2020.

Key Highlights

Total company revenue increased 7.1% over the prior year driven by stronger demand for CMP slurries and pipeline performance products, as well as higher wood treatment revenue. Net income for the quarter was $32.9 million. Adjusted EBITDA was $85.9 million in the quarter, essentially flat compared with the prior year. Year to date, the company generated $112.3 million in cash flow from operations, and had $340.7 million of cash on hand and $1,075.3 million in total debt as of March 31, 2020, which includes $150 million drawn from the company’s revolving credit facility during the quarter.

“During this unprecedented environment of the COVID-19 pandemic, I am extremely thankful for the dedication and efforts of our teams globally to keep our employees safe as well as to continue supporting our customers,” said David Li, President and CEO of Cabot Microelectronics Corporation. “Our results this quarter, including record revenue, demonstrate the strength and resiliency of our business and company. Going forward, we see continued stable financial performance in our third fiscal quarter, but with limited visibility into the second half of the calendar year, we have decided to withdraw our annual EBITDA guidance.”

Key Financial Information for Second Quarter of Fiscal 2020

• Revenue was $284.2 million, 7.1% higher than the revenue reported in the same quarter last year due to stronger demand for CMP slurries and pipeline performance products as well as increased revenue in wood treatment. Revenue was up 0.4% compared to the prior quarter due primarily to higher revenue in wood treatment.

• Net income was $32.9 million. Adjusted net income was $52.1 million, 14.0% higher compared with adjusted net income in the prior year. Adjusted net income benefited from higher revenue, lower interest expense and lower tax expense, partially offset by unfavorable impact from the timing of certain manufacturing costs and higher operating expenses in the quarter, compared to last year.

• Diluted earnings per share (EPS) was $1.11. Adjusted diluted EPS was $1.75, 12.9% higher than adjusted EPS in the same quarter last year.

• Adjusted EBITDA was $85.9 million, essentially flat with adjusted EBITDA in the same quarter last year. Adjusted EBITDA margin for the quarter was 30.2%, compared to adjusted EBITDA margin of 32.2% in the same quarter last year.

Electronic Materials – Revenue was $218.9 million, 2.8% higher than the revenue in the same quarter last year. Higher revenue for CMP slurries offset lower revenue for CMP pads and essentially flat revenue for electronic materials. Adjusted EBITDA was $69.6 million, or 31.8% of revenue.

Performance Materials – Revenue was $65.3 million for the quarter, 24.2% higher than revenue in the same quarter last year. The increase was driven by higher revenue for pipeline performance products and wood treatment products, which more than offset a decline in QED revenue. Adjusted EBITDA was $29.9 million, or 45.8% of revenue.

Guidance for Third Quarter of Fiscal 2020

With uncertainty over the ongoing macroeconomic and industry impact of the COVID-19 pandemic, the company currently expects fiscal third quarter revenue to be approximately flat to down low single digits compared to the company’s revenue in the second quarter of fiscal 2020. Sequentially, Electronic Materials revenue is expected to be approximately flat and Performance Materials revenue is expected to be down 10% to 15%.

The company is withdrawing full fiscal year 2020 adjusted EBITDA guidance given general uncertainty related to the pandemic.

Additional current expectations are provided on slide 9 in the related slide presentation.

^{[1] Refer to financial tables and “Use of Certain GAAP, non-GAAP Adjusted Financial Information” in the press release below for information about these non-GAAP financial measures and reconciliations of these non-GAAP measures to their most comparable GAAP measure.}

RELATED SLIDE PRESENTATION

A slide presentation related to this press release will be available at ir.cabotcmp.com in the Quarterly Results section of the Investor Relations center at approximately the same time that this press release is issued.

CONFERENCE CALL

Cabot Microelectronics Corporation’s quarterly earnings conference call will be held at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on Thursday, May 7. The conference call will be available via live webcast and replay from the company’s website, www.cabotcmp.com, or by phone at (844) 634-6404. Callers outside the U.S. may dial (825) 312-2296. The conference code for the call is 1383647. 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 a leading global supplier of consumable materials to semiconductor manufacturers and pipeline companies. The company’s products play a critical role in the production of advanced semiconductor devices, helping to enable the manufacture of smaller, faster and more complex devices by its customers. Cabot Microelectronics Corporation is also a leading provider of performance materials to pipeline operators. The company's mission is to create value by delivering high-performing and innovative solutions that solve its customers’ challenges. The company has approximately 2,000 employees globally. For more information about Cabot Microelectronics Corporation, visit www.cabotcmp.com, or contact Colleen Mumford, Vice President, Communications and Marketing, at 630-499-2600.

USE OF CERTAIN GAAP AND NON-GAAP ADJUSTED FINANCIAL INFORMATION

The company presented the following measures considered as non-GAAP by the SEC: adjusted net income, adjusted diluted earnings per share, adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), adjusted EBITDA margin. The adjusted results exclude the impact of non-recurring acquisition and integration related costs, acquisition related amortization expenses, the adjustments related to the effect of the enactment of the Tax Cuts and Jobs Act in December 2017 in the United States (“tax act”) and the final regulations related to the tax act, certain costs related to a warehouse fire at KMG-Bernuth in Tuscaloosa, Alabama, and certain costs related to the COVID-19 pandemic. The non-GAAP adjusted financial information provided in this press release is a supplement to, and not a substitute for, the company’s financial results presented in accordance with U.S. GAAP. These non-GAAP financial measures are provided to enhance the investor's understanding about the company's ongoing operations. Specifically, the company believes the impact of the adjustments related to the effect of the enactment of the Tax Cuts and Jobs Act in December 2017 in the United States (“tax act”) and the final regulations related to the tax act, KMG acquisition and integration-related expenses, certain costs related to a warehouse fire at KMG-Bernuth in Tuscaloosa, Alabama, acquisition-related amortization expenses, and costs related to the COVID-19 pandemic are not indicative of its core operating results, and thus presents these certain metrics excluding these effects. The presentation of non-GAAP adjusted financial information is not meant to be considered in isolation or as a substitute for results prepared and presented in accordance with U.S. GAAP. Reconciliations of non-GAAP measures to their most comparable GAAP measures are included in the financial statements portion of this press release.

Adjusted EBITDA for the Electronic Materials and Performance Materials segments is presented in conformity with Accounting Standards Codification Topic 280, Segment Reporting. This measure is reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance. For these reasons, this measure is excluded from the definition of non-GAAP financial measures under the SEC Regulation G and Item 10(e) of Regulation S-K.

FORWARD LOOKING STATEMENTS

This press release contains forward-looking statements, which address a variety of subjects including, for example, future sales and operating results; growth or contraction, and trends in the industries and markets in which the Company participates; the acquisition of, investment in, or collaboration with other entities, including the Company’s acquisition of KMG Chemicals, Inc. (“KMG”), and the expected benefits and synergies of such acquisition; divestment or disposition, or cessation of investment in certain, of the Company’s businesses; new product introductions; development of new products, technologies and markets; product performance; the financial conditions of the Company's customers; the competitive landscape that relates to the Company’s business; the Company's supply chain; natural disasters; various economic or political factors and international or national events, including related to global public health crises such as the COVID-19 pandemic, and the enactment of trade sanctions, tariffs, or other similar matters; the generation, protection and acquisition of intellectual property, and litigation related to such intellectual property or third party intellectual property; environmental, health and safety laws and regulations, and related compliance; the operation of facilities by Cabot Microelectronics; the Company's management; foreign exchange fluctuation; the Company's current or future tax rate, including the effects of the Tax Cuts and Jobs Act in the United States (“Tax Act”); cybersecurity threats; financing facilities and related debt, pay off or payment of principal and interest, and compliance with covenants and other terms; and, uses and investment of the Company's cash balance, including dividends and share repurchases, which may be suspended, terminated or modified at any time for any reason by the Company, based on a variety of factors. Statements that are not historical facts, including statements about Cabot Microelectronics’ beliefs, plans and expectations, are forward-looking statements. Such statements are based on current expectations of Cabot Microelectronics’ management and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. For information about factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to Cabot Microelectronics’ filings with the Securities and Exchange Commission (“SEC”), including the risk factors contained in Cabot Microelectronics’ Annual Report on Form 10-K for the fiscal year ended September 30, 2019 and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 to be filed by May 11, 2020. Except as required by law, Cabot Microelectronics undertakes no obligation to update forward-looking statements made by it to reflect new information, subsequent events or circumstances.

Contact: Colleen Mumford Vice President, Communications and Marketing Cabot Microelectronics Corporation (630) 499-2600

CABOT MICROELECTRONICS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited and amounts in thousands, except per share amounts)
		Quarter Ended												Six Months Ended
		March 31, 2020				December 31, 2019				March 31, 2019				March 31, 2020				March 31, 2019
Revenue		$284,193				$283,143				$265,391				$567,336				$487,169
Cost of sales			163,091				154,461				150,571				317,552				273,016
Gross profit			121,102				128,682				114,820				249,784				214,153
Operating expenses:
Research, development and technical			13,230				12,811				12,778				26,041				26,818
Selling, general and administrative			56,209				54,439				50,328				110,648				111,456
Total operating expenses			69,439				67,250				63,106				136,689				138,274
Operating income			51,663				61,432				51,714				113,095				75,879
Interest expense			10,753				11,920				13,331				22,673				20,221
Interest income			143				315				568				458				1,587
Other income (expense), net			(1,010	)			(397	)			(1,014	)			(1,407	)			(2,425	)
Income before income taxes			40,043				49,430				37,937				89,473				54,820
Provision for income taxes			7,144				10,881				10,800				18,025				14,240
Net income		$32,899				$38,549				$27,137				$71,448				$40,580
Basic earnings per share		$1.12				$1.32				$0.94				$2.45				$1.45
Diluted earnings per share		$1.11				$1.30				$0.92				$2.41				$1.42
Weighted average basic shares outstanding			29,287				29,137				28,998				29,183				28,066
Weighted average diluted shares outstanding			29,725				29,694				29,479				29,666				28,607

CABOT MICROELECTRONICS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited and amounts in thousands)
					March 31, 2020				September 30, 2019
			ASSETS:
Current assets:
Cash and cash equivalents					$340,702				$188,495
Accounts receivable, net						151,959				146,113
Inventories						157,872				145,278
Prepaid expenses and other current assets						25,768				28,670
Total current assets						676,301				508,556
Property, plant and equipment, net						320,846				276,818
Other long-term assets						1,462,813				1,476,392
Total assets					$2,459,960				$2,261,766
			LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable					$58,803				$54,529
Short-term debt						150,000				-
Current portion of long-term debt						10,650				13,313
Accrued expenses, income taxes payable and other current liabilities						109,389				103,618
Total current liabilities						328,842				171,460
Long-term debt, net of current portion						914,617				928,463
Other long-term liabilities						207,091				181,466
Total liabilities						1,450,550				1,281,389
Stockholders' equity						1,009,410				980,377
Total liabilities and stockholders' equity					$2,459,960				$2,261,766

CABOT MICROELECTRONICS CORPORATION
Reconciliation of Certain GAAP Financial Measures to Certain Non-GAAP Financial Measures
(Unaudited and amounts in thousands, except per share and percentage amounts)
Unaudited Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income
		Three Months Ended
		March 31, 2020						March 31, 2019
GAAP Net income		$32,899						$27,137
Amortization of acquisition related intangibles			22,012						16,957
Acquisition and integration-related expenses			2,285						2,904
Costs related to the COVID-19 (Pandemic)			237						-
Costs related to KMG-Bernuth warehouse fire			206						-
Impact of U.S. Tax Cuts and Jobs Act (Tax Act)			13						-
Charges for fair value write-up of acquired inventory sold			-						4,566
Tax effect on adjustments to net income			(5,529	)					(5,832	)
Adjusted Net income		$52,123						$45,732
Unaudited Reconciliation of GAAP Revenue to Non-GAAP Adjusted Gross Profit/ Gross Margin
		Three Months Ended
		March 31, 2020						March 31, 2019
GAAP revenue		$284,193						$265,391
Cost of sales			163,091						150,571
Gross profit/margin		$121,102			42.6	%		$114,820			43.3	%
Adjustments:
Amortization of acquisition related intangibles			3,380		1.2	%			3,480		1.3	%
Costs related to KMG-Bernuth warehouse fire			206		0.1	%			-		0.0	%
Costs related to the Pandemic			31		0.0	%			-		0.0	%
Charges for fair value write-up of acquired inventory sold			-		0.0	%			4,566		1.7	%
Adjusted gross profit/gross margin		$124,719			43.9	%		$122,866			46.3	%
Unaudited Reconciliation of GAAP Operating expenses to Non-GAAP Adjusted Operating expenses
		Three Months Ended
		March 31, 2020						March 31, 2019
GAAP Research, development and technical		$13,230						$12,778
GAAP Selling, general, and administrative			56,209						50,328
Operating expenses		$69,439						$63,106
Adjustments *:
Amortization of acquisition related intangibles			(18,632	)					(13,477	)
Acquisition and integration-related expenses			(2,285	)					(2,904	)
Costs related to the Pandemic			(206	)					-
Adjusted operating expenses		$48,316						$46,725
* All the adjustments are related to the Selling, general and administrative expenses.
Unaudited Reconciliation of GAAP Diluted Earnings Per Share to Non-GAAP Adjusted Diluted Earnings Per Share
		Three Months Ended
		March 31, 2020						March 31, 2019
GAAP Diluted earnings per share		$1.11						$0.92
Adjustments (net of tax):
Amortization of acquisition related intangibles			0.57						0.44
Acquisition and integration-related expenses			0.05						0.07
Costs related to KMG-Bernuth warehouse fire			0.01						-
Costs related to the Pandemic			0.01						-
Charges for fair value write-up of acquired inventory sold			-						0.12
Adjusted Diluted earnings per share		$1.75						$1.55
Unaudited Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA/ EBITDA Margin
		Three Months Ended
		March 31, 2020						March 31, 2019
GAAP net income		$32,899						$27,137
Interest expense			10,753						13,331
Interest income			(143	)					(568	)
Provision for income taxes			7,144						10,800
Depreciation & Amortization			32,550						27,348
GAAP EBITDA **/ EBITDA margin		$83,203			29.3	%		$78,048			29.4	%
Adjustments (pre-tax):
Acquisition and integration-related expenses			2,285		0.8	%			2,904		1.1	%
Costs related to the Pandemic			237		0.1	%			-		0.0	%
Costs related to KMG-Bernuth warehouse fire			206		0.0	%			-		0.0	%
Charge for fair value write-up of acquired inventory sold			-		0.0	%			4,566		1.7	%
Adjusted EBITDA ***/EBITDA margin		$85,931			30.2	%		$85,518			32.2	%
** EBITDA represents earnings before interest, taxes, depreciation and amortization.
*** Adjusted EBITDA is calculated by excluding items from EBITDA that are believed to be infrequent or not indicative
of the company's continuing operating performance.