Reading Time: 9 minutes
  • Record Total Company Revenue of $290.5 Million, 2.2% Higher than Last Year and 0.9% Higher Sequentially
  • Electronic Materials Segment Revenue of $242.5 million, 10.8% Higher than Last Year and 2.4% Higher Sequentially
  • Expecting Total Company Revenue for Third Quarter Fiscal 2021 to be Up Mid to High Single Digits Sequentially
  • Full Year Adjusted EBITDA Guidance Range Increased to Between $370 Million and $390 Million

AURORA, Ill., May 05, 2021 (GLOBE NEWSWIRE) — CMC Materials, Inc. (Nasdaq: CCMP), a leading global supplier of consumable materials primarily to semiconductor manufacturers, today reported financial results for its second quarter of fiscal 2021, which ended March 31, 2021.

“We are pleased to announce another quarter of record revenue driven by our continued technology leadership and execution, particularly in our Electronic Materials segment. We have completed the acquisition of International Test Solutions which we believe is a great addition to our Electronic Materials portfolio that expands our growth opportunities in critical consumables and services used in the semiconductor packaging and test areas,” said David Li, President and CEO of CMC Materials. “Looking ahead to our third fiscal quarter, we expect to again deliver sequential growth above this record quarter, across both segments.”

Key Highlights for the Second Quarter

The company’s revenue of $290.5 million, an increase of 2.2% compared to the same quarter last year, and another quarter of record revenue, was driven by continued robust demand in the company’s Electronic Materials segment, which represents more than 80% of the company’s revenue. In the company’s Performance Materials segment, pipeline and industrial materials (PIM) products showed continued stability sequentially, yet continues to be adversely impacted by the COVID-19 Pandemic (“Pandemic”). The ongoing impact of the Pandemic on the PIM business has resulted in the company recording a non-cash, pre-tax goodwill impairment charge of $201.5 million. In addition, the company recorded a $6.7 million charge for the wood treatment business related to the previously announced strategic decision to exit this business by approximately the end of calendar year 2021. These charges resulted in a quarterly net loss of $149.8 million compared to net income of $32.9 million in the prior year. Adjusted EBITDA1 was $84.8 million, compared to $85.9 million in the prior year. Year to date, the company generated $123.5 million in cash flow from operations, and $298.5 million in the last twelve months.

Key Financial Information for the Second Quarter

  • Revenue was $290.5 million, 2.2% higher than the same quarter last year. Revenue was up 0.9% sequentially primarily due to higher revenue in CMP slurries and CMP pads.
  • Net loss was $149.8 million compared to net income of $32.9 million last year. Adjusted net income1 was $50.7 million, 2.7% lower compared to the prior year, as higher revenue and lower interest expense was offset by higher costs.
  • Loss per diluted share was $5.13. Adjusted diluted EPS1 was $1.71, 2.3% lower compared to the same quarter last year.
  • Adjusted EBITDA1 was $84.8 million, down 1.3% compared to last year. Adjusted EBITDA margin1 for the quarter was 29.2%, compared to adjusted EBITDA margin of 30.2% in the same quarter last year.

1 Refer to financial tables and “Use of Certain GAAP, non-GAAP Adjusted Financial Information” below for information about these non-GAAP financial measures and reconciliations of these non-GAAP measures to their most comparable GAAP measure.

Electronic Materials – Revenue was $242.5 million for the quarter, 10.8% higher than revenue in the same quarter last year due to continued strength across all business units. Revenue was 2.4% higher sequentially. Adjusted EBITDA was $81.3 million, or 33.5% of revenue.

Performance Materials Revenue was $48.0 million for the quarter, 26.5% lower than revenue in the same quarter last year, driven primarily by the impact of the pandemic on demand for PIM products. Revenue was 6.0% lower sequentially, mainly due to timing of sales in the QED and wood treatment businesses, while PIM demand remained stable. Adjusted EBITDA was $18.8 million, or 39.1% of revenue.

Current Financial Guidance

Sequentially, the company currently expects revenue in the third quarter of fiscal 2021 to be up mid to high single digits compared to revenue in the second quarter. Electronic Materials revenue is expected to be up mid single digits and Performance Materials revenue is expected to be up high single digits for the third fiscal quarter.

The company increased the full fiscal year 2021 expectation for its Adjusted EBITDA range to between $370 million and $390 million.

With respect to this guidance, and additional current expectations provided in the company’s related slide presentation and prepared commentary, the company notes the continued uncertainty as to the ongoing macroeconomic environment and the impact of the pandemic on the industries in which the company participates.

RELATED SLIDE PRESENTATION AND PREPARED COMMENTARY

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

CONFERENCE CALL

CMC Materials’ quarterly earnings conference call will be held at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on Thursday, May 6. The conference call will be available via live webcast and replay from the company’s website, cmcmaterials.com, or by phone at (833) 714-0937. Callers outside the U.S. may dial (778) 560-2685. The conference code for the call is 4281916. 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 CMC MATERIALS, INC.

CMC Materials, Inc., headquartered in Aurora, Illinois, is a leading global supplier of consumable materials to primarily semiconductor manufacturers. 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. CMC Materials, Inc. 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 2,100 employees globally. For more information about CMC Materials, Inc., visit www.cmcmaterials.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’s financial results are provided in accordance with accounting principles generally accepted in the United States of America (GAAP) and using certain non-GAAP financial measures. In particular, the Company presents the following non-GAAP financial measures: adjusted net income, adjusted diluted earnings per share, adjusted EBITDA, adjusted EBITDA margin, free cash flow, and net debt. Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation and amortization, and excludes certain items that affect comparability from period to period. Adjusted EBITDA margin is defined as adjusted EBITDA as a percentage of revenue.

The non-GAAP financial measures provided in this press release are 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 impairment charges, acquisitions, such as expenses incurred to complete an acquisition and related integration and acquisition-related amortization expenses, costs of restructuring related to the wood treatment business, costs incurred related to the COVID-19 pandemic (“Pandemic”) net of grants received, costs related to the KMG-Bernuth warehouse fire net of insurance recoveries and the effects of Tax Cuts and Jobs Act in December 2017 in the United States (“Tax Act”) and the issued final regulations related to the Tax Act, are not indicative of its core operating results and thus presents these certain measures excluding these effects. The presentation of non-GAAP financial measures 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 such as the semiconductor, and oil and gas, industries; the acquisition of, investment in, or collaboration with other entities, and the expected benefits and synergies of such acquisitions; 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 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 the company; the company’s management; foreign exchange fluctuation; the company’s current or future tax rate, including the effects of changes to tax laws in the jurisdictions in which the company operates; 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 CMC Materials’ beliefs, plans and expectations, are forward-looking statements. Such statements are based on current expectations of CMC Materials’ 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 CMC Materials’ filings with the Securities and Exchange Commission (“SEC”), including the risk factors contained in CMC Materials’ Annual Report on Form 10-K for the fiscal year ended September 30, 2020 filed on November 17, 2020, and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, which the Company expects to file by May 10, 2021. Except as required by law, CMC Materials 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
CMC Materials, Inc.
(630) 499-2600

CMC MATERIALS, INC.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited and amounts in thousands, except per share amounts)

  Quarter Ended   Six Months Ended
  March 31, 2021   December 31, 2020   March 31, 2020   March 31, 2021   March 31, 2020
Revenue $ 290,528     $ 287,863     $ 284,193     $ 578,391     $ 567,336  
Cost of sales 166,782     164,959     163,091     331,741     317,552  
Gross profit 123,746     122,904     121,102     246,650     249,784  
                   
Operating expenses:                  
Research, development and technical 12,925     12,428     13,230     25,353     26,041  
Selling, general and administrative 58,538     55,920     56,209     114,458     110,648  
Impairment charges 208,221     7,347         215,568      
Total operating expenses 279,684     75,695     69,439     355,379     136,689  
                   
Operating (loss) income (155,938 )   47,209     51,663     (108,729 )   113,095  
Interest expense 9,508     9,608     10,753     19,116     22,673  
Interest income 13     23     143     36     458  
Other income (expense), net (484 )   1,452     (1,010 )   968     (1,407 )
(Loss) income before income taxes (165,917 )   39,076     40,043     (126,841 )   89,473  
(Benefit from) provision for income taxes (16,109 )   7,546     7,144     (8,563 )   18,025  
                   
Net (loss) income $ (149,808 )   $ 31,530     $ 32,899     $ (118,278 )   $ 71,448  
                   
Basic (loss) earnings per share $ (5.13 )   $ 1.08     $ 1.12     $ (4.06 )   $ 2.45  
                   
Diluted (loss) earnings per share $ (5.13 )   $ 1.07     $ 1.11     $ (4.06 )   $ 2.41  
                   
Weighted average basic shares outstanding 29,210     29,123     29,287     29,164     29,183  
                   
Weighted average diluted shares outstanding 29,210     29,598     29,725     29,164     29,666  


CMC MATERIALS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited and amounts in thousands)

  March 31, 2021   September 30, 2020
ASSETS:      
       
Current assets:      
Cash and cash equivalents $ 324,836     $ 257,354  
Accounts receivable, net 146,238     134,023  
Inventories 161,771     159,134  
Prepaid expenses and other current assets 30,082     26,558  
Total current assets 662,927     577,069  
       
Property, plant and equipment, net 358,708     362,067  
Other long-term assets 1,204,311     1,437,331  
Total assets $ 2,225,946     $ 2,376,467  
       
LIABILITIES AND STOCKHOLDERS’ EQUITY:      
       
Current liabilities:      
Accounts payable $ 53,194     $ 49,254  
Current portion of long-term debt 10,650     10,650  
Accrued expenses, income taxes payable and other current liabilities 123,508     121,442  
Total current liabilities 187,352     181,346  
       
Long-term debt, net of current portion 906,902     910,764  
Other long-term liabilities 172,863     210,044  
Total liabilities 1,267,117     1,302,154  
       
Stockholders’ equity 958,829     1,074,313  
Total liabilities and stockholders’ equity $ 2,225,946     $ 2,376,467  


CMC MATERIALS, INC.
Unaudited Reconciliation of Certain GAAP Financial Measures to Certain Non-GAAP Financial Measures
(Unaudited and amounts in thousands, except per share and percentage amounts)

Reconciliation of GAAP Net (Loss) Income to Non-GAAP Adjusted Net Income
  Three Months Ended
  March 31, 2021   March 31, 2020
Net (loss) income $ (149,808 )   $ 32,899  
       
Amortization of acquisition related intangibles 19,695     22,012  
Acquisition and integration-related expenses 2,167     2,285  
Costs related to KMG-Bernuth warehouse fire, net of insurance recovery (1,076 )   206  
Net costs related to restructuring of wood treatment business 46      
Costs related to Pandemic, net of grants received (421 )   237  
U.S. tax reform     13  
Impairment charges 208,221      
Tax effect on adjustments to net income1 (28,109 )   (5,529 )
Adjusted Net income $ 50,715     $ 52,123  

Reconciliation of GAAP Diluted (Loss) Earnings Per Share to Non-GAAP Adjusted Diluted Earnings Per Share
  Three Months Ended
  March 31, 2021   March 31, 2020
Diluted (loss) earnings per share $ (5.13 )   $ 1.11  
Adjustments (net of tax)2 :      
Amortization of acquisition related intangibles 0.52     0.57  
Acquisition and integration-related expenses 0.06     0.05  
Costs related to KMG-Bernuth warehouse fire, net of insurance recovery (0.03 )   0.01  
Costs related to the Pandemic, net of grants received (0.01 )   0.01  
U.S. tax reform      
Impairment charges 6.22      
Adjustment for the dilutive impact of shares 0.08      
Adjusted Diluted earnings per share $ 1.71     $ 1.75  
       
Diluted common shares outstanding 29,210     29,725  
Effect of dilutive securities 444      
Adjusted diluted common shares outstanding 29,654     29,725  

Reconciliation of GAAP Revenue to Non-GAAP Adjusted Gross Profit and Gross Margin
  Three Months Ended
  March 31, 2021   March 31, 2020
Revenue $ 290,528     $ 284,193  
Cost of sales 166,782     163,091  
Gross profit $ 123,746     $ 121,102  
Gross margin 42.6 %   42.6 %
       
Adjustments:      
Amortization of acquisition related intangibles 3,130     3,380  
Costs related to KMG-Bernuth warehouse fire, net of insurance recovery (1,076 )   206  
Net costs related to restructuring of wood treatment business 46      
Costs related to the Pandemic, net of grants received 8     31  
Adjusted gross profit $ 125,854     $ 124,719  
Adjusted gross margin 43.3 %   43.9 %

Reconciliation of GAAP Operating expenses to Non-GAAP Adjusted Operating expenses
  Three Months Ended
  March 31, 2021   March 31, 2020
Research, development and technical $ 12,925     $ 13,230  
Selling, general, and administrative 58,538     56,209  
Impairment charges 208,221      
Operating expenses $ 279,684     $ 69,439  
Adjustments2 :      
Amortization of acquisition related intangibles (16,565 )   (18,632 )
Acquisition and integration-related expenses (2,167 )   (2,285 )
Costs related to the Pandemic, net of grants received 429     (206 )
Impairment charges (208,221 )    
Adjusted operating expenses $ 53,160     $ 48,316  

Reconciliation of GAAP Net (Loss) Income to Non-GAAP Adjusted EBITDA and EBITDA Margin
         
    Three Months Ended
    March 31, 2021   March 31, 2020
Net (loss) income   $ (149,808 )   $ 32,899  
Interest expense   9,508     10,753  
Interest income   (13 )   (143 )
(Benefit from) provision for income taxes   (16,109 )   7,144  
Depreciation & amortization   32,289     32,550  
EBITDA   (124,133 )   83,203  
EBITDA margin   (42.7 %)   29.3 %
         
Adjustments (pre-tax):        
Acquisition and integration-related expenses   2,167     2,285  
Costs related to KMG-Bernuth warehouse fire, net of insurance recovery   (1,076 )   206  
Net costs related to restructuring of wood treatment business   46      
Costs related to the Pandemic, net of grants received   (421 )   237  
Impairment charges   208,221      
Adjusted EBITDA   $ 84,804     $ 85,931  
Adjusted EBITDA margin   29.2 %   30.2 %

Fiscal Year 2021 Guidance Reconciliation 3
       
  Fiscal Year 2021   Fiscal Year 2021
  Low   High
Net income $ (39,000 )   $ (25,000 )
Interest expense, net4 38,000     38,000  
Provision for income taxes4 14,000     19,500  
Depreciation4 52,500     52,500  
Amortization 85,000     85,000  
EBITDA (Consolidated) $ 150,500     $ 170,000  
Acquisition and integration-related expenses5 4,536     4,536  
Costs related to KMG-Bernuth warehouse fire, net of insurance recovery (1,076 )   (1,076 )
Net costs related to restructuring of wood treatment business5 72     72  
Costs related to the Pandemic, net of grants received5 841     841  
Impairment charges5 215,568     215,568  
Adjusted EBITDA Guidance – Consolidated $ 370,441     $ 389,941  
       

Reconciliation of Cash Flow From Operations to Free Cash Flow
       
  Six Months Ended
  March 31, 2021   March 31, 2020
Net cash provided by operating activities $ 123,508     $ 112,339  
Less: Capital expenditures 21,119     59,192  
Free cash flow $ 102,389     $ 53,147  
       
Net cash used in investing activities $ (20,756 )   $ (57,605 )
       
Net cash (used in) provided by financing activities $ (36,671 )   $ 98,077  

Reconciliation of GAAP Debt to Net Debt
       
  March 31, 2021   September 30, 2020
Total short-term and long-term debt $ 917,552     $ 921,414  
Less: Cash and cash equivalents 324,836     257,354  
Total net debt $ 592,716     $ 664,060  

1 Tax effect on the adjustments were calculated using the U.S. Federal and state blended tax rate for the respective periods as the related adjustments are mainly U.S. driven.
2 All the adjustments are related to the Selling, general and administrative expenses.
3 This is a reconciliation of our indicated full year net income to our adjusted EBITDA. The amounts above may not reflect certain future charges costs and/or gains that are inherently difficult to predict and estimate due to their unknown timing, effect and/or significance, including impairment charges associated with the anticipated closure of our wood treatment business.
4 Amounts represent the mid-point of the current financial guidance provided on November 11, 2020.
5 Amounts represent actual Non-GAAP adjustments in the second quarter fiscal year 2021.

Powered by WPeMatico