CMC Materials, Inc. (Nasdaq: CCMP), a leading global supplier of
consumable materials primarily to semiconductor manufacturers,
today reported financial results for its fourth quarter and full
year fiscal 2021, which ended September 30, 2021.
“Today, CMC Materials reported results for fiscal 2021, our
fifth consecutive year of record revenue, driven by strong growth
in our Electronic Materials segment,” said David Li, President and
CEO of CMC Materials. “Our team showed resilience while navigating
a challenging operating environment, especially during the second
half of our fiscal year.”
“Our CMP slurries business delivered strong performance, with
14% growth over last year, advancing ahead of the market. As
previously discussed, we experienced some order pattern variation
in China in the third and fourth quarters which we believe has now
normalized. In this important region, our slurries business
increased nearly 40% in fiscal year 2021, and we continue to expect
our business to grow as our participation and customer base
expands,” said Mr. Li. “We are well positioned to win new
opportunities and support our customers as they expand capacity and
transition to the most advanced nodes.”
Global Price Increases and Strategic Cost Optimization
Program
To counter the impact of rapidly rising raw materials, freight
and logistics costs, the company implemented global price
increases, which took effect during the first quarter of fiscal
year 2022, and is prepared to implement further pricing actions if
needed to offset additional inflationary headwinds.
The company also has initiated a strategic cost optimization
program named “Future Forward.” The program is designed to
implement structural changes to enhance operational efficiencies,
while maintaining strong focus on technology innovation and
customer partnerships. “Future Forward” includes targeted position
eliminations, footprint optimization and other actions to reduce
expenses. This program is targeted to drive savings of
approximately $15 million in fiscal year 2022, which should be a
direct benefit to the company’s Adjusted EBITDA, and ongoing
annualized savings in the range of $20 million-$25 million by
approximately the end of fiscal year 2023.
“We are excited about CMC Materials’ future growth
opportunities, especially given our advantaged positions and
customers’ significant expected additions to semiconductor
capacity. We believe the initiatives announced today will position
us for critical growth opportunities and contribute to our long
track record of financial strength,” said Mr. Li.
Key Financial Highlights
The company’s record quarterly revenue of $311.9 million
reflects an increase of 13.8% compared to the same quarter last
year, and was driven by continued growth in all businesses in the
Electronic Materials segment, which represents more than 80% of the
company’s revenue. This strong performance is reflective of the
company’s differentiators, including a highly formulated and broad
product portfolio, commitment to technological innovation, close
customer partnerships, global infrastructure and ability to manage
complex requirements across global supply chains.
In the Performance Materials segment, the wood treatment and QED
businesses reported strong revenue growth year-over-year. The
pipeline and industrial materials (PIM) business increased modestly
compared to the same quarter last year but underperformed
expectations as the ongoing effects and related factors of the
COVID-19 Pandemic (“Pandemic”), logistics constraints and slower
than expected ramps of new customer positions negatively impacted
the business.
Net income was $16.1 million compared to $36.9 million in the
prior year. In the quarter, the company recorded an $11.7 million
impairment charge for the wood treatment business related to the
previously announced strategic decision to exit this business.
Adjusted EBITDA1 was $86.0 million, compared to $84.0 million in
the prior year. The company repurchased 822,251 shares of common
stock for $104.9 million during the quarter.
Revenue for the company’s fiscal year 2021 was a record $1,199.8
million, an increase of 7.5% compared to the prior year, as 11.5%
growth in the company’s Electronic Materials segment was partially
offset by a 7.9% decline in the Performance Materials segment. Net
loss was $68.6 million compared to net income of $142.8 million
last year. Adjusted EBITDA1 was $358.3 million, compared to $357.8
million in the prior year. During the year, the company generated
$270.6 million in cash flow from operations. The company had $186.0
million of cash on hand and $916.3 million in total debt as of the
end of the fiscal year.
Key Financial Information for the Fourth
Quarter
- Revenue was $311.9 million, 13.8% higher than the same quarter
last year due to growth in both the company’s segments. Revenue was
up 0.8% sequentially.
- Net income was $16.1 million compared to $36.9 million in the
same quarter last year. Adjusted net income1 was $47.3 million,
18.4% lower compared to the prior year, as higher revenue was more
than offset primarily by higher raw materials, freight, and
logistics costs.
- Diluted EPS was $0.55 compared to $1.25 in the same quarter
last year. Adjusted diluted EPS1 was $1.62, 17.3% lower compared to
the same quarter last year.
- Adjusted EBITDA1 was $86.0 million, up 2.3% compared to the
same quarter last year. Adjusted EBITDA margin1 for the quarter was
27.6%, compared to adjusted EBITDA margin of 30.6% in the same
quarter last year.
1Refer 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 $254.3
million, 14.1% higher than revenue in the same quarter last year
due to growth across all businesses. Revenue was 1.3% higher
sequentially. Adjusted EBITDA was $79.2 million, or 31.2% of
revenue.
Performance Materials –
Revenue was $57.6 million for the quarter, 12.2% higher than
revenue in the same quarter last year, driven primarily by strength
in the QED and wood treatment businesses. Revenue was 1.4% lower
sequentially. Adjusted EBITDA was $20.8 million, or 36.0% of
revenue.
Key Financial Information for the Full Fiscal Year
2021
- Revenue was $1,199.8 million, 7.5% higher than last year due to
growth in both the company’s segments.
- Net loss was $68.6 million compared to net income of $142.8
million last year. In fiscal year 2021, the company recorded $230.4
million in impairment charges for the PIM and wood treatment
businesses. Adjusted net income1 was $210.1 million, 4.9% lower
compared to the prior year, as higher revenue and lower interest
expense were offset by higher costs.
- Diluted loss per share was $2.35 compared to diluted earnings
per share of $4.83 last year. Adjusted diluted EPS1 was $7.11, 4.8%
lower compared to last year.
- Adjusted EBITDA1 was $358.3 million, up 0.1% compared to last
year. Adjusted EBITDA margin1 for the year was 29.9%, compared to
adjusted EBITDA margin of 32.1% last year.
1Refer 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.
Current Financial Guidance
Sequentially, the company currently expects total revenue in the
first quarter of fiscal 2022 to be up low to mid single digits
compared to revenue in the fourth quarter of fiscal 2021.
Electronic Materials revenue is expected to be up low to mid single
digits. Primarily because the company is beginning the previously
announced exit of the wood treatment business, Performance
Materials revenue is expected to be down approximately 10% compared
to the fourth quarter of fiscal 2021.
The company currently expects full fiscal year 2022 Adjusted
EBITDA to be between $355 million to $385 million.
Factored in the company’s outlook is the exit of the wood
treatment business by the end of the second fiscal quarter of 2022,
which is expected to negatively impact Adjusted EBITDA by
approximately $37 million compared to fiscal year 2021. The company
expects to generally offset this impact with organic growth and the
initial benefits from the “Future Forward” strategic cost
optimization program. Price increases are targeted to offset
increased costs for raw materials, freight and logistics.
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,
November 11. 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 8395429. 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 primarily to
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 2,200 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, a charge for an environmental accrual 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 transactions; 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; the targeted benefits of company cost reduction or
optimization initiatives; 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 and costs of
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 and vulnerabilities; and, financing
facilities and related debt, pay off or payment of principal and
interest, and compliance with covenants and other terms, 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, 2021 to be filed by November 12, 2021, its
Annual Report on Form 10-K for the fiscal year ended
September 30, 2020 and its Quarterly Report on Form 10-Q for
the quarter ended June 30, 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 MumfordVice 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)
|
Three Months Ended |
|
Twelve Months Ended |
|
September 30, 2021 |
|
June 30, 2021 |
|
September 30, 2020 |
|
September 30, 2021 |
|
September 30, 2020 |
Revenue |
$ |
311,924 |
|
|
$ |
309,516 |
|
|
$ |
274,207 |
|
|
$ |
1,199,831 |
|
|
$ |
1,116,270 |
|
Cost of sales |
189,601 |
|
|
180,320 |
|
|
157,144 |
|
|
701,662 |
|
|
627,669 |
|
Gross profit |
122,323 |
|
|
129,196 |
|
|
117,063 |
|
|
498,169 |
|
|
488,601 |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
Research, development and technical |
15,188 |
|
|
13,654 |
|
|
14,105 |
|
|
54,195 |
|
|
52,311 |
|
Selling, general and administrative |
58,186 |
|
|
56,242 |
|
|
54,576 |
|
|
228,886 |
|
|
217,071 |
|
Impairment charges |
11,734 |
|
|
3,090 |
|
|
2,314 |
|
|
230,392 |
|
|
2,314 |
|
Total operating expenses |
85,108 |
|
|
72,986 |
|
|
70,995 |
|
|
513,473 |
|
|
271,696 |
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
37,215 |
|
|
56,210 |
|
|
46,068 |
|
|
(15,304 |
) |
|
216,905 |
|
Interest expense, net |
9,740 |
|
|
9,540 |
|
|
9,350 |
|
|
38,360 |
|
|
41,840 |
|
Other expense, net |
(1,671 |
) |
|
(427 |
) |
|
(110 |
) |
|
(1,130 |
) |
|
(1,718 |
) |
Income (loss) before income
taxes |
25,804 |
|
|
46,243 |
|
|
36,608 |
|
|
(54,794 |
) |
|
173,347 |
|
Provision for (benefit from)
income taxes |
9,745 |
|
|
12,601 |
|
|
(247 |
) |
|
13,783 |
|
|
30,519 |
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
16,059 |
|
|
$ |
33,642 |
|
|
$ |
36,855 |
|
|
$ |
(68,577 |
) |
|
$ |
142,828 |
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per
share |
$ |
0.56 |
|
|
$ |
1.15 |
|
|
$ |
1.27 |
|
|
$ |
(2.35 |
) |
|
$ |
4.90 |
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per
share |
$ |
0.55 |
|
|
$ |
1.13 |
|
|
$ |
1.25 |
|
|
$ |
(2.35 |
) |
|
$ |
4.83 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average basic shares
outstanding |
28,922 |
|
|
29,260 |
|
|
29,082 |
|
|
29,126 |
|
|
29,136 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted
shares outstanding |
29,261 |
|
|
29,682 |
|
|
29,520 |
|
|
29,126 |
|
|
29,580 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CMC MATERIALS, INC.CONSOLIDATED
CONDENSED BALANCE SHEETS(Unaudited and amounts in
thousands)
|
September 30, 2021 |
|
September 30, 2020 |
ASSETS: |
|
|
|
|
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
185,979 |
|
|
$ |
257,354 |
|
Accounts receivable, net |
150,099 |
|
|
134,023 |
|
Inventories |
173,464 |
|
|
159,134 |
|
Prepaid expenses and other current assets |
25,439 |
|
|
26,558 |
|
Total current assets |
534,981 |
|
|
577,069 |
|
|
|
|
|
Property, plant and equipment, net |
354,771 |
|
|
362,067 |
|
Other
long-term assets |
1,261,133 |
|
|
1,437,331 |
|
Total assets |
$ |
2,150,885 |
|
|
$ |
2,376,467 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY: |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
$ |
52,748 |
|
|
$ |
49,254 |
|
Current portion of long-term debt |
13,313 |
|
|
10,650 |
|
Accrued expenses and other current liabilities |
139,797 |
|
|
121,442 |
|
Total current liabilities |
205,858 |
|
|
181,346 |
|
|
|
|
|
Long-term debt, net of current portion |
903,031 |
|
|
910,764 |
|
Other
long-term liabilities |
163,059 |
|
|
210,044 |
|
Total liabilities |
1,271,948 |
|
|
1,302,154 |
|
|
|
|
|
Stockholders' equity |
878,937 |
|
|
1,074,313 |
|
Total liabilities and stockholders' equity |
$ |
2,150,885 |
|
|
$ |
2,376,467 |
|
|
|
|
|
|
|
|
|
CMC MATERIALS, INC.CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOWS(Unaudited and amounts
in thousands)
|
Twelve months ended September 30, |
|
2021 |
|
2020 |
Net cash provided by operating activities |
$ |
270,613 |
|
|
$ |
287,284 |
|
|
|
|
|
Cash flows from investing
activities: |
|
|
|
Acquisition of a business, net of cash acquired |
(126,877 |
) |
|
— |
|
Additions to property, plant and equipment |
(42,103 |
) |
|
(125,839 |
) |
Proceeds from the sale of assets |
2,620 |
|
|
1,587 |
|
Net cash used in investing
activities |
(166,360 |
) |
|
(124,252 |
) |
|
|
|
|
Cash flows from financing
activities: |
|
|
|
Repurchases of common stock under Share Repurchase Program |
(120,027 |
) |
|
(35,009 |
) |
Dividends paid |
(53,015 |
) |
|
(50,383 |
) |
Proceeds from issuance of stock |
13,388 |
|
|
14,427 |
|
Repayment of long-term debt |
(7,988 |
) |
|
(23,313 |
) |
Repurchases of common stock withheld for taxes |
(5,560 |
) |
|
(3,229 |
) |
Debt issuance costs |
(1,898 |
) |
|
— |
|
Proceeds from revolving line of credit |
— |
|
|
150,000 |
|
Repayment on revolving line of credit |
— |
|
|
(150,000 |
) |
Other financing activities |
(236 |
) |
|
(149 |
) |
Net cash used in financing
activities |
(175,336 |
) |
|
(97,656 |
) |
|
|
|
|
Effect of exchange rate
changes on cash |
(292 |
) |
|
3,483 |
|
(Decrease) increase in cash
and cash equivalents |
(71,375 |
) |
|
68,859 |
|
Cash and cash equivalents at
beginning of year |
257,354 |
|
|
188,495 |
|
Cash and cash equivalents at
end of year |
$ |
185,979 |
|
|
$ |
257,354 |
|
|
|
|
|
|
|
|
|
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 Income to Non-GAAP Adjusted Net
Income and GAAP Diluted Earnings Per Share to Non-GAAP Adjusted
Diluted Earnings Per Share |
|
Three Months EndedSeptember
30, |
|
Twelve Months EndedSeptember
30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Net income (loss) |
$ |
16,059 |
|
|
$ |
0.55 |
|
|
$ |
36,855 |
|
|
$ |
1.25 |
|
|
$ |
(68,577 |
) |
|
$ |
(2.35 |
) |
|
$ |
142,828 |
|
|
$ |
4.83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of acquisition related intangibles |
20,567 |
|
|
0.70 |
|
|
21,391 |
|
|
0.72 |
|
|
81,083 |
|
|
2.74 |
|
|
85,550 |
|
|
2.89 |
|
Acquisition and integration-related expenses |
2,226 |
|
|
0.08 |
|
|
3,067 |
|
|
0.10 |
|
|
10,115 |
|
|
0.35 |
|
|
10,852 |
|
|
0.37 |
|
Environmental accrual |
2,508 |
|
|
0.09 |
|
|
— |
|
|
— |
|
|
2,508 |
|
|
0.09 |
|
|
— |
|
|
— |
|
Costs related to KMG-Bernuth warehouse fire, net of insurance
recovery |
— |
|
|
— |
|
|
(137 |
) |
|
— |
|
|
(1,050 |
) |
|
(0.04 |
) |
|
1,078 |
|
|
0.04 |
|
Net costs related to restructuring of wood treatment business |
27 |
|
|
— |
|
|
72 |
|
|
— |
|
|
123 |
|
|
— |
|
|
(216 |
) |
|
(0.01 |
) |
Costs related to Pandemic, net of grants received |
(152 |
) |
|
(0.01 |
) |
|
500 |
|
|
0.02 |
|
|
489 |
|
|
0.01 |
|
|
849 |
|
|
0.03 |
|
U.S. tax reform |
— |
|
|
— |
|
|
9 |
|
|
— |
|
|
— |
|
|
— |
|
|
47 |
|
|
— |
|
Impairment charge |
11,734 |
|
|
0.40 |
|
|
2,314 |
|
|
0.08 |
|
|
230,392 |
|
|
7.80 |
|
|
2,314 |
|
|
0.08 |
|
Tax effect on adjustments to net income1 |
(5,637 |
) |
|
(0.19 |
) |
|
(6,092 |
) |
|
(0.21 |
) |
|
(45,028 |
) |
|
(1.52 |
) |
|
(22,456 |
) |
|
(0.76 |
) |
Adjustment for the dilutive impact of shares |
|
|
— |
|
|
|
|
— |
|
|
|
|
0.03 |
|
|
|
|
— |
|
Adjusted Net income |
$ |
47,332 |
|
|
$ |
1.62 |
|
|
$ |
57,979 |
|
|
$ |
1.96 |
|
|
$ |
210,055 |
|
|
$ |
7.11 |
|
|
$ |
220,846 |
|
|
$ |
7.47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
common shares outstanding |
|
|
29,261 |
|
|
|
|
29,520 |
|
|
|
|
29,126 |
|
|
|
|
29,580 |
|
Effect
of dilutive securities |
|
|
— |
|
|
|
|
— |
|
|
|
|
416 |
|
|
|
|
— |
|
Adjusted
diluted common shares outstanding |
|
|
29,261 |
|
|
|
|
29,520 |
|
|
|
|
29,542 |
|
|
|
|
29,580 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Revenue to Non-GAAP Adjusted Gross
Profit and Gross Margin |
|
Three Months EndedSeptember
30, |
|
Twelve Months EndedSeptember
30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Revenue |
$ |
311,924 |
|
|
$ |
274,207 |
|
|
$ |
1,199,831 |
|
|
$ |
1,116,270 |
|
Cost of
sales |
189,601 |
|
|
157,144 |
|
|
701,662 |
|
|
627,669 |
|
Gross
profit |
$ |
122,323 |
|
|
$ |
117,063 |
|
|
$ |
498,169 |
|
|
$ |
488,601 |
|
Gross
margin |
39.2 |
% |
|
42.7 |
% |
|
41.5 |
% |
|
43.8 |
% |
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
Amortization of acquisition related intangibles |
3,761 |
|
|
3,487 |
|
|
13,877 |
|
|
13,552 |
|
Costs related to KMG-Bernuth warehouse fire, net of insurance
recovery |
— |
|
|
(137 |
) |
|
(1,050 |
) |
|
1,078 |
|
Net costs related to restructuring of wood treatment business |
27 |
|
|
72 |
|
|
123 |
|
|
(216 |
) |
Costs related to the Pandemic, net of grants received |
18 |
|
|
277 |
|
|
1,196 |
|
|
506 |
|
Adjusted
gross profit |
$ |
126,129 |
|
|
$ |
120,762 |
|
|
$ |
512,315 |
|
|
$ |
503,521 |
|
Adjusted
gross margin |
40.4 |
% |
|
44.0 |
% |
|
42.7 |
% |
|
45.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Operating expenses to Non-GAAP
Adjusted Operating expenses |
|
Three Months EndedSeptember
30, |
|
Twelve Months EndedSeptember
30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Research, development and technical |
$ |
15,188 |
|
|
$ |
14,105 |
|
|
$ |
54,195 |
|
|
$ |
52,311 |
|
Selling,
general, and administrative |
58,186 |
|
|
54,576 |
|
|
228,886 |
|
|
217,071 |
|
Impairment charge |
11,734 |
|
|
2,314 |
|
|
230,392 |
|
|
2,314 |
|
Operating expenses |
$ |
85,108 |
|
|
$ |
70,995 |
|
|
$ |
513,473 |
|
|
$ |
271,696 |
|
Adjustments: |
|
|
|
|
|
|
|
Amortization of acquisition related intangibles2 |
(16,806 |
) |
|
(17,904 |
) |
|
(67,206 |
) |
|
(71,998 |
) |
Acquisition and integration-related expenses2 |
(2,226 |
) |
|
(3,067 |
) |
|
(10,115 |
) |
|
(10,852 |
) |
Environmental accrual2 |
(2,508 |
) |
|
— |
|
|
(2,508 |
) |
|
— |
|
Costs related to the Pandemic, net of grants received2 |
170 |
|
|
(223 |
) |
|
707 |
|
|
(343 |
) |
Impairment charge |
(11,734 |
) |
|
(2,314 |
) |
|
(230,392 |
) |
|
(2,314 |
) |
Adjusted
operating expenses |
$ |
52,004 |
|
|
$ |
47,487 |
|
|
$ |
203,959 |
|
|
$ |
186,189 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Net Income to Non-GAAP Adjusted
EBITDA and EBITDA Margin |
|
|
Three Months EndedSeptember
30, |
|
Twelve Months EndedSeptember
30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Net income |
|
$ |
16,059 |
|
|
$ |
36,855 |
|
|
$ |
(68,577 |
) |
|
$ |
142,828 |
|
Interest expense, net |
|
9,740 |
|
|
9,350 |
|
|
38,360 |
|
|
41,840 |
|
Provision for income
taxes |
|
9,745 |
|
|
(247 |
) |
|
13,783 |
|
|
30,519 |
|
Depreciation &
amortization |
|
34,063 |
|
|
32,221 |
|
|
132,170 |
|
|
127,737 |
|
EBITDA |
|
69,607 |
|
|
78,179 |
|
|
115,736 |
|
|
342,924 |
|
EBITDA margin |
|
22.3 |
% |
|
28.5 |
% |
|
9.6 |
% |
|
30.7 |
% |
|
|
|
|
|
|
|
|
|
Adjustments (pre-tax): |
|
|
|
|
|
|
|
|
Acquisition and integration-related expenses |
|
2,226 |
|
|
3,067 |
|
|
10,115 |
|
|
10,852 |
|
Environmental accrual |
|
2,508 |
|
|
— |
|
|
2,508 |
|
|
— |
|
Costs related to KMG-Bernuth warehouse fire, net of insurance
recovery |
|
— |
|
|
(137 |
) |
|
(1,050 |
) |
|
1,083 |
|
Net costs related to restructuring of wood treatment business |
|
27 |
|
|
72 |
|
|
123 |
|
|
(221 |
) |
Costs related to the Pandemic, net of grants received |
|
(152 |
) |
|
500 |
|
|
489 |
|
|
849 |
|
Impairment charge |
|
11,734 |
|
|
2,314 |
|
|
230,392 |
|
|
2,314 |
|
Adjusted EBITDA |
|
$ |
85,950 |
|
|
$ |
83,995 |
|
|
$ |
358,313 |
|
|
$ |
357,801 |
|
Adjusted EBITDA margin |
|
27.6 |
% |
|
30.6 |
% |
|
29.9 |
% |
|
32.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2022 Guidance Reconciliation
3 |
|
Fiscal Year 2022 |
|
Low |
|
High |
Net income |
$ |
137,000 |
|
|
$ |
166,000 |
|
Interest expense, net5 |
34,000 |
|
|
34,000 |
|
Provision for income taxes4 |
46,000 |
|
|
47,000 |
|
Depreciation4 |
53,000 |
|
|
53,000 |
|
Amortization |
85,000 |
|
|
85,000 |
|
Adjusted EBITDA Guidance -
Consolidated |
$ |
355,000 |
|
|
$ |
385,000 |
|
|
|
|
|
|
|
|
|
Reconciliation of Cash Flow From Operations to Free Cash
Flow |
|
Twelve Months EndedSeptember
30, |
|
2021 |
|
2020 |
Net cash provided by operating activities |
$ |
270,613 |
|
|
$ |
287,284 |
|
Less: Capital expenditures |
42,103 |
|
|
125,839 |
|
Free cash flow |
$ |
228,510 |
|
|
$ |
161,445 |
|
|
|
|
|
Net cash used in investing
activities |
$ |
(166,360 |
) |
|
$ |
(124,252 |
) |
|
|
|
|
Net cash (used in) provided by
financing activities |
$ |
(175,336 |
) |
|
$ |
(97,656 |
) |
|
|
|
|
|
|
|
|
Reconciliation of GAAP Debt to Net Debt |
|
September 30, |
|
2021 |
|
2020 |
Total short-term and long-term debt |
$ |
916,344 |
|
|
$ |
921,414 |
|
Less: Cash and cash equivalents |
185,979 |
|
|
257,354 |
|
Total net debt |
$ |
730,365 |
|
|
$ |
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 Adjustment is 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 future impairment
charges associated with the anticipated closure of our wood
treatment business. 4 Amounts represent the mid-point of the
financial guidance provided on November 10, 2021.5 Amount
represents the mid-point of the current financial guidance provided
on November 10, 2021.
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