Cabot (CCMP) Issues Update on Q2 Guidance
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Cabot Microelectronics Corporation (Nasdaq: CCMP) announced today that the global economic environment continued to adversely affect the company's financial results in its Q2. Consistent with the overall industry, the company's revenue declined significantly in its second fiscal quarter, reflecting the impact of the global economic recession on demand for electronics, a correction of excess semiconductor device inventories, and traditional seasonal weakness.
Sees Q2 sales of $45-$46 million, which compares to the analyst estimate of $46.80 million.
The unprecedented low demand for the company's products resulted in significant underutilization of the company's manufacturing capacity, which materially adversely affected quarterly gross profit. Consequently, the company expects to report gross profit of around 28% of revenue for Q2, and approximately 38 % of revenue for the fiscal year to date. Based on the company's performance for the first half of the fiscal year, it no longer expects to achieve gross profit within what had been its full year guidance range of 46-48% of revenue for FY09.
In addition, the company also expects to report the following pre-tax, non-recurring expenses; these non-cash items adversely impacted operating expenses for Q2:
- $1.5 million write-off of in-process research and development expenses related to its February 2009 acquisition of Epoch Material Co., Ltd (Epoch), as required by purchase accounting rules;
- $1.1 million impairment related to certain research and development equipment; and,
- $1.0 million increase in reserve for bad debt expense due to of the impact of adverse global economic conditions on customer collections.
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