CMC Materials, Inc. (CCMP) 2012 Q4 法說會逐字稿

Good day, ladies and gentlemen. Welcome to the Cabot Microelectronics fourth quarter and full fiscal year 2012 earnings conference call. My name is Deanna and I will be the operator for today. At this time all participants are in a listen only mode. Later we will conduct a question and answer session.

(Operator Instructions)

As a reminder this conference is being recorded for replay purposes. I would like to turn the conference over to your host for today, Miss Trisha Tuntland, Manager of Investment Relations. Please proceed.

Good morning. With me today are Bill Noglows, Chairman and CEO, and Bill Johnson, Chief Financial Officer. This morning, we reported results for our fourth quarter and full fiscal year 2012, which ended September 30. A copy of our earnings release is available in the investor relations section of our website, www.cabotcmp.com or by calling our inventor relations office at 630-499-2600. A webcast of today's conference call and the script of this morning's formal comments will also be available on our website.

Please remember that our discussions today may include forward-looking statements that involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from these forward-looking statements. These risk factors are discussed in our SEC filings -- including our report filed on Form 10-Q for the third quarter of fiscal 2012, ended June 30, 2012, and Form 10-K for the fiscal year ended September 30, 2011. We assume no obligation to update any of this forward-looking information.

I will now turn the call over to Bill Noglows.

Thanks, Trisha. Good morning, everyone, and thanks for joining us. This morning, we announced solid financial results for our fourth quarter and full fiscal year 2012. During the fourth quarter, we reported revenue of $110.6 million, gross profit margin of 48.6% of revenue and diluted earnings per share of $0.49. For the full fiscal year 2012, we reported annual revenue of $427.7 million, gross profit margin of 47.7%, and earnings per share of $1.75. Our full-year revenue results reflect strengthening demand for our products in the second half of our fiscal year after soft industry demand during the first half of the year. Bill Johnson will provide more detail on our financial results later in the call.

During fiscal year 2012, we continued to execute on our strategies to strengthen and grow our core CMP consumables business, while also further developing our Engineered Surface Finishes business. Despite the challenging microeconomic and semiconductor industry environments in fiscal year 2012, we achieved record revenue levels for our CMP polishing pads and Engineered Surface Finishes businesses; commercialized new products from our research, development and manufacturing facility in South Korea; and continued to receive special recognition by our customers for our ability to provide them with high-quality reliable products. As a leading supplier of CMP consumables to the semiconductor industry, we continue to demonstrate our commitment and ability to provide leading-edge solutions as we collaborate with our customers around the world to pursue and win new business opportunities.

The fiscal year was also highlighted by our new capital management initiative, which included the implementation of a leverage recapitalization with a payment of a $15-per-share special cash dividend in the second fiscal quarter, and a significant increase to our share repurchase organization in the first quarter. As a result of the leverage recapitalization, we achieved a more efficient balance sheet while also distributing approximately 30% of our market value to our shareholders through this special cash dividend. This capital management initiative represents a significant change in our capital allocation strategy, and has enabled us to provide additional value to our shareholders while maintaining the resources necessary to implement business strategies and support future growth opportunities. Ultimately, this capital management initiative exemplifies the confidence we have in the future performance of our company.

Let me now turn to other highlights from the year within our CMP consumables business. Our CMP pads business continued to grow during fiscal 2012. We achieved record annual revenue of $33.7 million in our pad business, representing an 8.6% increase over last year's record level. We also achieved record quarterly revenue in the fourth quarter approximately 33% higher than in the same quarter last year. And this was our third consecutive quarter of revenue growth from our pad products during the year. We believe this momentum in our pads business was fueled by the fundamental value proposition offered by our pad products of providing lower cost of ownership through longer pad life and lower defectivity.

Through the year, our first generation D-100 and second generation D-200 pad products were adopted for a number of advanced node applications. Since reporting our first D-200 pad business win last year, we continue to gain traction with this tuneable platform, which allows us to modify several important properties of the pad material to meet specific customer performance requirements. We believe we have made significant progress in our pads business during the year, and we continue to engage closely with our customers on new business opportunities around the world that are in various stages of evaluation and qualification.

Turning to our CMP slurry business, highlights included winning new business across our slurry product portfolio, and continued progress on developing reliable and innovative solutions to address both performance and cost of ownership. Our collaborative efforts with customers in the development and commercialization of high-quality, high-performing products and solutions were rewarded with customer adoptions of our slurry products for tungsten, advanced tile electrics, copper, and data storage applications. We are also pleased with the growth we're seeing with our slurry products for polishing aluminum, and we look forward to continuing to leverage our technology within this important emerging application.

Let me now take a few moments to discuss our progress towards commercializing and qualifying products and solutions from our new research, development and manufacturing facility in Korea. We are pleased with the performance of our business in Korea, where we achieved annual revenue growth of 22% year over year. South Korea is the second-largest CMP consumables market in the world, and we have placed strategic emphasis over the past several years on increasing our business there. We believe our revenue growth demonstrates that we have been successful in this endeavor.

During fiscal 2012, we commercialized and qualified several advanced dielectric products from our Korean facility, and we're actively leveraging our expanded capabilities to qualify additional products with an emphasis on advanced dielectrics for memory applications. We expect this region to continue to provide strong growth opportunities for our business going forward.

Other notable business highlights for fiscal 2012 relate to our Engineered Surface Finishes or ESF business, where we're leveraging our technology for perfecting surfaces within the semiconductor industry into other demanding surface applications. Within our ESF business, QED, which is a leader in polishing and metrology systems for precision optics applications, achieved another year of record revenue, following a record revenue performance last year. We also made progress during the year commercializing slurries for silicon wafer polish applications to meet the needs of customers in an approximately $200 million market, adjacent to the CMP consumables market.

Finally, during the fiscal year, we were delighted to have received Intel's preferred quality supplier award for the third consecutive year, demonstrating our ability to provide industry-leading technology and performance. In addition, we were recently rewarded SMIC's Best Supplier award for providing CMP's polishing slurries deemed essential to their success and for our support of SMIC's operations in Beijing, Shanghai, and Tianjin. We believe these supplier awards reflect the recognition of our underlying commitment to consistently delivering high-quality, reliable CMP solutions through our robust supply chain.

Now, let me provide a few comments on the overall semiconductor industry. After softness in the first half of fiscal 2012, we saw strengthening demand in our business in our third quarter and continued firm demand into our fourth quarter; however, we are now seeing early signs of some potential softening in the near-term. Further, some of our strategic customers are cautioning that they may see softness in their business over the next two quarters with possible strengthening thereafter, similar to the patterns we saw in fiscal 2012.

This uncertainty within the semiconductor industry is being compounded by ongoing macroeconomic uncertainty. However, within this uncertain near-term environment, we see attractive longer-term growth opportunities with a continuation of positive trends and mobile connectivity, mobile internet devices, including tablets and smartphones, cloud computing and emerging markets. We believe these trends should drive growth and demand for CMP consumables in the future; however, we remain mindful of the potential impact of global macroeconomic uncertainties on the semiconductor industry, and we intend to continue to proactively manage our business activities so as to be able to respond quickly to changing trends and market conditions.

To conclude my remarks this morning, we participate in a dynamic consumer electronics-driven industry, and we're optimistic about the long-term outlook for growth in the semiconductor industry, which drives demand for our core products. Recognizing the near-term uncertainty, we believe that Cabot Microelectronics is well-positioned as a leading supplier of CMP consumables to the semiconductor industry for continued success, as we leverage our global capabilities to consistently deliver high-quality, reliable, and innovative solutions to our customers around the world.

And with that, I will turn the call over to Bill Johnson.

Thanks, Bill. Total fourth fiscal quarter revenue of $110.6 million represents a 0.8% increase from the same quarter last year and a 4.4% decrease from the record level in the prior quarter. We believe the decrease in revenue from the prior quarter primarily reflects softening demand that we began to see late in the fourth fiscal quarter. Total revenue for the full fiscal year was $427.7 million, which represents a 4% decrease from the record level we achieved in fiscal 2011. As Bill mentioned, despite industry softness in the first half of the fiscal year and our overall year over year revenue reduction, our performance was especially strong in Korea, with revenue growth there of approximately 22% compared to last year.

Drilling down into revenue by business area, tungsten slurries contributed 36.7% of total quarterly revenue, with revenue down 0.9% from the same quarter a year ago and down 3.6% sequentially. For the full-year, tungsten slurry revenue decreased by 1.4%. Dielectric slurries provided 28.5% of our revenue this quarter with sales up 6.6% from the same quarter a year ago and down 3% sequentially. For the full-year, dielectric slurry revenue decreased by 1.8%.

Sales of copper products, including slurries for polishing barrier and aluminum, represented 15.5% of our total revenue and increased 6.1% from the same quarter last year, and decreased 4.1% sequentially. For the full-year, our copper product revenue decreased by 12%, reflecting lower utilization at certain foundry customers and our intentional cannibalization of some of our lower margin legacy products with our higher gross profit margin, more advanced concentrated products that we have discussed in the past.

Sales of polishing pads represented 8.9% of our total revenue for the quarter and increased 32.8% from the same quarter last year and 8.6% sequentially. For the full-year, polishing pad revenue was up by 8.6%. As Bill indicated, our pads business achieved record revenue levels for both the quarter and full fiscal year. Data storage products represented 4.3% of our quarterly revenue. This revenue was down 30.1% from the same quarter last year and down 10% sequentially. For the full-year, revenue for data storage slurries decreased by 25.1%. All of these comparisons reflect the aftermath of severe flooding in Thailand that significantly impacted the hard disk drive industry, as well as the soft global PC market.

Finally, revenue from our ESF business, which includes QED, generated 6% of our total quarterly sales. Our ESF revenue is down 23.6% from the same quarter last year and down 23.7% sequentially. For the full-year, ESF revenue increased by 0.8%. Recall that most of our QED business is capital equipment-related, and so revenue can fluctuate significantly quarter-to-quarter. Having said that, our QED business achieved a record revenue level again in fiscal 2012.

Our gross profit this quarter represented 48.6% of revenue compared to 46.4% in the same quarter last year and 47.7% last quarter. Compared to the year-ago quarter, gross profit percentage increased, primarily due to increased utilization of our manufacturing capacity and lower variable manufacturing costs, partially offset by pricing impacts. The increase in gross profit percentage versus the third fiscal quarter was primarily due to lower manufacturing costs and lower sample costs, partially offset by pricing impacts.

For the full fiscal year, gross profit represented 47.7% of revenue, which is near the upper end of our full fiscal year guidance range of 46% to 48% of revenue. Gross profit margin decreased from 48.1% of revenue in fiscal 2011, primarily due to higher fixed manufacturing costs, pricing impacts, and lower sales and production volume, partially offset by lower variable manufacturing costs and higher manufacturing yields. For the full fiscal year 2013, we expect our gross profit margin to be between 46% and 48% of revenue, unchanged from our guidance for full fiscal year 2012.

Now, I will turn to operating expenses, which include research, development and technical; selling and marketing, and general and administrative costs. Operating expenses this quarter of $33.3 million were $0.8 million lower than in the same quarter a year ago, and $0.3 million lower than in the previous quarter. The year over year decrease was driven primarily by lower professional fees and lower staffing-related costs.

For the full fiscal year, total operating expenses were $137.5 million, which is within our guidance range for full fiscal year 2012 of $135 million to $140 million. Operating expenses were $3.8 million higher than fiscal year 2011, primarily due to bad debt expenses related to a customer bankruptcy reported during the second fiscal quarter; costs associated with our leverage recapitalization with a special cash dividend; and higher research and development supplies expense, partially offset by lower staffing-related costs. Looking forward, we expect our operating expenses for full fiscal year 2013 to be in the range of $132 million to $136 million.

Diluted earnings per share were $0.49 this quarter, up from $0.40 in the same quarter last year, and down from $0.55 reported in the previous quarter. Compared to the same quarter last year, earnings per share increased, primarily due to a higher gross profit margin and a lower effective tax rate. The decrease compared to the prior quarter was primarily due to lower revenue and a higher effective tax rate, partially offset by a higher gross profit margin. Diluted earnings per share for the full year were $1.75, which is down by $0.45 from our record level of $2.20 last year.

Earnings per share this year reflect $0.20 of adverse items, including bad debt expense from the customer bankruptcy and costs associated with our leverage recapitalization with the special cash dividend, which we recorded earlier in the fiscal year. It also includes $0.06 related to interest expense from our term loan that funded a portion of our special cash dividend, which was not a factor in last year's results.

Turning now to cash and balance sheet-related items, capital investments for the quarter were $5.3 million, bringing our full-year capital spending to $19.6 million, which is slightly below our prior guidance range of $20 million to $25 million. For fiscal 2013, we expect capital spending to be between $20 million and $25 million. Depreciation and amortization expense for the quarter was $6 million, and in addition, we purchased $10 million of our stock during the quarter. We ended the quarter with a cash balance of $178.5 million and had $172.8 million of debt outstanding.

I'll conclude my remarks with a few comments on recent sales and order patterns.

Examining revenue patterns within the three months of our fourth fiscal quarter, we saw demand for our CMP consumables products in July and August had roughly the average of the three months in our June quarter. Then we saw CMP consumable sales in the month of September down somewhat. As we observe orders for our CMP consumables products received to date in October, we expect to ship by the end of the month, we see October results at a level similar to what we saw in the month of September. However, I would caution, as I always do, that several weeks of CMP-related orders out of a quarter represent only a limited window on full quarter results.

Now, I will turn the call back to the operator as we prepare to take your questions.

(Operator Instructions)

We'll take our first question, please.

Your first question will come from the line of Avinash Kant, D.A. Davidson & Co.

So, the first question, Bill, I had for you, is historically, we have talked about meaningful correlation of your revenues with TSMC, which is your -- one of the large customers. Now in the current quarter, TSMC's revenues were actually up meaningfully while your revenues seem to have declined on a sequential basis. Now what we are trying to figure out, we have the guidance of THMC going forward, was there something that was inventory-related that was the reason for the differentiation here? Or how should we think of the next quarter, given that there was a bifurcation already this quarter?

No, that's a great question, Avinash. Let me just try to give you some background. So we've been talking over the last couple of quarters, I think I described it as the Apple effect a couple of quarters ago.

What we're seeing -- so if you look inside our business, our account sales to the foundries in Taiwan pretty closely track the sales trends of both of those companies. So, within the Company, we continue on that trend and we continue to correlate with TSMC and UMC. However, what we're seeing is a slowdown on the memory side, driven by the reduction in PC sales and the reduction -- the associated reduction in DRAM sales, which is pulling down the sales that we make to the memory sector overall. So we have a negative drag there, that is hiding or blinding the correlation that had existed before this shift in capacity and suppliers to Apple.

What we see now, is TSMC -- and again, we continue to track them very closely, if you look at our account sales inside the Company, but TSMC has made significant progress with their 28-nanometer technology, which we are enjoying the growth of. I think what we will find is, as we get more information, is that their revenue growth has exceeded their unit growth because they have such a unique position with 28-nanometer technology. I think they are premium pricing that -- those wafers as they come out of the foundry.

But --- so what I want to summarize -- and what is interesting, we will report in our K that TSMC is now an 18% of our revenue customer for the year, and that is up from 17% last year. As importantly, Samsung is 13%, which is up from 10% last year.

So we have seen a bit of a shift in the relative growth of our customer base with TSMC clearly outpacing the foundries and doing a fantastic job. We see the memory business -- remember, we sell to all of the memory customers, so it's not just Samsung and Hynix, it's everybody. We have seen a significant drop-off, which has slowed our overall aggregate Company growth rates.

Okay.

Avinash, it's Bill Johnson. Let me add a little bit more color with respect to revenue and some recent trends. So for example, from April through August, we saw a monthly revenue rate of approximately $38 million per month over that five-month period and then we hit September. As I described, we had a slight turn down in CMP consumables orders, and we had revenue during the month of September of $35 million. Down from that five-month trend of $38 million. And then as I mentioned during my comments today, in October, we're seeing progression through the month and it looks similar to what we saw in September.

Right. And given the visibility that you have, do you think you have at least one or two months or three months worth of visibility or even less?

I think at best we have a quarter. You know, I think we all saw THMC's report this morning and they are predicting a soft calendar fourth quarter.

Right.

Some inventory destocking. I had the opportunity to spend some time with Samsung earlier this week and they were predicting a slowdown in the fourth quarter as well. You know, their visibility and transparency is somewhat limited, but I think their -- the big capital-spending leaders are hunkering down right now and deferring capital to see what is going to happen in the world.

So what I'm saying is should we take the guidance from TSMC at the face value at this point and should be modeled accordingly? Or there was something in the quarter that caused a specific lag that you had and maybe there is some catch-up effect in Q4?

Well, again, the lag that you saw that (multiple speakers) --- the lag that you all saw that differed from the correlation of our sales with the foundry sales in Taiwan is related to the softness on the memory side of our business. I want to be clear, our internal sales to UMC and THMC continue to track the correlation as we have always discussed.

Okay.

I don't think anything, if you're looking for some event or some catalyst that caused this, I just -- we don't see it.

Okay. So could you break down your sales to memories, logic, and foundry, if you --?

In broad strokes, it's around 50% foundry, 30% memory, 20% advanced logic, for IDM.

Perfect. Thank you so much.

Thank you.

Thank you, Avinash. We'll take our next question, please.

Your next question comes from the line of Eugene Fedotoff, Longbow Research.

Bill, could we talk about the impact on your business as the result of growing demand for mobile devices and declining PC sales?

Well, I think we're seeing it now. I mean, there's --- there is a lot of memory requirements in PCs that doesn't exist in mobile computing technology and the memory is all in the cloud. So, the decline we're seeing today in the DRAM side of our business and the memory side of our business is, I think, is a direct result of the slowing PC sales around the world. You know, the growth we're seeing on the foundry side is directly related to the mobile computing world, the smartphones and the tablets. That's the impact. I mean, we're living with it today, we're living with it this quarter. And depending on how PCs go and what the future looks like for ultrabooks and tablets, it will continue to drive those sorts of trends.

So we're watching those very carefully. I know our big customers are paying very careful attention to what is happening in the PC world and the tablet world, and what the ultimate outcome will be.

Okay, a question on your 2013 guidance. You're assuming higher operating expenses and, at the same time, you had abad debt expense in 2012 and [recapitalization] costs. So I would assume that 2013 expenses would go down somewhat. But this is not impacted -- or reflected in your guidance. What is driving higher expense assumptions there?

Actually costs really are -- our guidance is down a bit. We had guidance of $135 million to $140 million for fiscal year 2012, and came in at $137 million and change. Our guidance for next year is $132 million to $136 million, so down slightly. I think we're taking a cautious approach with respect to operating expense in light of the uncertain environment.

You can remember back to the severe downturn in 2009 where we watched operating expenses prudently, but we didn't take a real aggressive kind of slash and burn approach because we know that we need the capabilities when the industry strengthens. And I think we will take the same approach. But we do -- our guidance is for modestly lower costs in 2013, compared to 2012.

Okay. Bill, can you also talk about tax rate in the quarter and your expectations for tax rate in 2013?

Right. We -- you saw a bit of a spike in our effective tax rate in the fourth quarter of 2012. And so in conjunction with our year-end tax review, we had a number of adjustments in fourth quarter. They were non-material but they were adjustments. This resulted in a quarterly tax rate of about 38%.

As we do tax accounting through the year, the effective tax rate is always an estimate and, quarter-by-quarter, you true up the estimate based on how your remaining full year forecast. And so we did have sort of a true up in the fourth quarter -- similar to what we saw but a little bit lower in the fourth quarter of 2011. So, for the full year, we're at 35% effective tax rate, and I think our expectation for 2013 will be between 34% and 35%.

Okay. Great. And just the last question, I guess, what are your thoughts on regular dividend or continuing the share repurchases in 2013?

We have --- we feel like we have a lot of flexibility with our strong financial model and our ability to generate a lot of cash and a pretty efficient balance sheet now. We think there are a number of things we can do. We have a lot of authorization remaining under our share repurchase program, I think $130 million. That is a lot of run room there. We felt like we're really happy with the results of the special cash dividend that we did. That helped to get our balance sheet more efficient. We now have $173 million of debt on our balance sheet that we will need to repay over time or refinance.

And so as we look forward, our strong -- presumed and continued strong cash generation, we could continue share repurchases, we could prepay debt, we could consider a regular ongoing dividend, given our cash flow capabilities. Then also, we're continuing to look at M&As. So I think we have quite a range of flexibility and know -- I think we'll monitor those alternatives quarter-by-quarter.

Great. Thank you.

Thank you.

Thank you, Eugene. We'll take our next question, please.

Your next question comes from Jairam Nathan, Sidoti.

Thanks for taking my questions. So I just wanted to concentrate on the pad business. We saw -- we are seeing continued increases sequentially despite the down industry. So I just -- is it all related to market share? And if can you tell us, what your current market share is on the pad business.

You know, I can't remember exactly what the last number we disclosed for market share was. Bill is tapping away on his calculator -- around 6%. Any sale we make, any incremental sale we make of a CMP pad is a market share gain for us. I mean, it's all upside for Cabot Microelectronics. It's a market that we have not served in the past, and we're excited about where we are today, and the technologies that we're bringing to the market and the reception that we're getting from our customers. It's exciting and we continue to see it as the single largest incremental growth opportunity for the Company today.

It's -- to give you a little more color, it's a much more difficult qualification process than maybe we expected when we entered the market. It's challenging from the perspective that our customers tend to be very risk-averse at the pad level, and a pad qualification is a long and somewhat cumbersome process. But we're working our way through it. The performance is there, our customers are seeing the value. And I think we are -- again, we remain very optimistic about our ability to continue to penetrate the market and bring value to our customers in the form of longer pad life and lower defects. Did I answer your question?

Yes. Thanks. Just a follow-up on gross margins. I know you have touched on this in your prepared remarks, but can you explain what drove the 100 basis point increase, sequential increase? Was that mix or --?

No, it wasn't so much mix. We had lower manufacturing costs and lower sampling costs, partially offset by pricing impacts. So no single significant driver. Just several factors there.

Okay. Thanks a lot. That is all I had.

Thank you, Jairam.

(Operator Instructions)

Our next question comes from the line of Chris Kapsch, Topeka Capital Markets.

Yes, hi, Bill. I wanted to follow up on the commentary around the pad business and the risk-aversion of your customers in terms of getting qualified. Are you finding that the momentum that you have in that business, is it more skewed towards mature legacy nodes or are you having more success on the advanced nodes? Or is it really across the board?

It's across the board. If I had to lean in any one direction, I would say that our focus has been on advanced node technology, particularly with our D200 technology, which is our next generation technology that we spoke of in the scripted comments this morning. But we have one pad business from legacy positions; we've displaced competitors at legacy positions. We have one business at Advance Technology, as we spoke about this morning. So it is across the board.

I think, you know, our D100, our first pad offering -- which has been in the market for four years now, is -- we targeted that very broadly in the hard pad market, both legacy positions and advancing node technologies. Our D200 is more -- because of the ability we have to tailor some of the properties of that pad, we, perhaps, focus more on driving that pad at the advanced node technologies where our customers really need that capability. And that capability brings them a lot of value to be able to tune that pad technology to get exactly the performance they need on the wafer.

But again, we have been able to target and win business in all those areas, Chris. We continue to be very aggressive about trying to win as many positions as we can win.

Got you. So, I mean, just to follow up, if you could try to further characterize the risk-aversion that you alluded to. Are you suggesting -- it sounds like maybe they're --- they may even be less risk-averse on the advanced nodes, given that they need more customization and tuneability? I don't know if that is fair.

No, no, that is very fair. In fact, when our customers are moving to the next -- they are transitioning to the next node, and again, this happens, for instance, if we were transitioning to a node today, the work would've started two or three years ago to begin to qualify suppliers for that node technology.

So as -- and when that process occurs, our customers are very open to consider new technologies that will either enhance performance or reduce costs, or both. That really is the opportunity window for us to get our pads qualified and eventually into high-volume manufacturing, and our customers in those node transition.

Got you. And then just one last follow-up. Just looking at the mix for your customers for the bad business, I understand it's a lot more nascent than obviously the slurry business. But does the mix of customers mirror that mix that you just described for the overall consumable business, you know, half foundries, 30% memory, 20% IDM? Or is it more skewed towards foundries, perhaps?

Well, right now, it's more skewed towards foundries, because foundries has done such an amazing job over the last five years of growing. And we -- fortunately, we positioned our Company, what I think is pretty successfully to take advantage of that growth in Taiwan. We sell products to essentially everyone in the world that makes a semiconductor device today. In some cases, we sell a lot of products; in other cases, we might sell one product.

So we have what I would describe as a very broad exposure to the overall semiconductor market, but we have clearly tried to focus on the areas where we think the highest growth will come, which takes you back to our investments in Taiwan three, four, five years ago, and our current investments in South Korea in the last two or three years. Our intent is to be wherever the growth is, and right now the growth is in places like Taiwan and South Korea.

Okay. Thank you. Thanks, guys.

Thank you, Chris. That is all the questions we have this morning. Thank you for your time and your interest in Cabot Microelectronics.