CMC Materials, Inc. (CCMP) 2016 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Cabot Microelectronics first-quarter fiscal-year 2016 earnings call. At this time, all produced that are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions)

I would now like to introduce your host for today's conference, Miss Trisha Tuntland, Director of Investor Relations. Ma'am, you may begin.

Good morning. With me today are David Li, President and CEO, and Bill Johnson, Executive Vice President and CFO. This morning, we reported results for our first quarter of fiscal year 2016, which ended December 31, 2015. A copy of our earnings release is available in the investor relations section of our website, CabotCMP.com, or by calling our investor 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 our website.

Please remember that our discussions today may include may include forward-looking statement 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-K for the fiscal year ended September 30, 2015. We assume no obligation to update any of this forward-looking information.

Also, our prepared remarks this morning reference non-GAAP financial measures. Our earnings release includes a reconciliation of non-GAAP financial measures.

I will now turn the call over to David.

Thanks, Tricia. Good morning, everyone, and thanks for joining us. This morning, we announced solid financial results for our first quarter of fiscal 2016 within a continued soft semiconductor industry and challenging macroeconomic environment, and including a partial-quarter impact of our recent acquisition of NexPlanar, which was completed on October 22, 2015. We discussed these conditions last October, when we reported results for our previous quarter, and we believe this demand environment was in line with what we were seeing then, as well as recent reports by some of our strategic customers and industry analysts.

During the quarter, we achieved revenue of $100.4 million, a gross profit margin of 50% of revenue and diluted earnings per share of $0.46. All of which includes the impact of the NexPlanar acquisition. Excluding acquisition costs and amortization expense related to NexPlanar, our non-GAAP gross profit margin was 51.6% of revenue, which is 70 basis points higher than in the same quarter last year, and non-GAAP earnings per share were $0.56. On this basis, we have now expanded our gross margin year over year for five consecutive quarters. Bill will provide more detail on our financial results later in the call.

To provide some context on our first-quarter results, let me first offer some perspectives on the global semiconductor industry environment. Industry reports and comments made recently by some of our strategic customers suggests that current IC inventories in the foundry and logic segments decreased during the December quarter and now are at or slightly below normal seasonal levels.

Conversely, some reports suggest that inventories in the memory segment, particularly in PC DRAM, are in moderate oversupply due to soft end demand. Industry reports suggest that the strong US dollar and volatile macroeconomic conditions may have dampened demand for ICs during the December quarter. Also, due to these same factors, indications are that consumers remain cautious. However, the demand for smart phones in China and other emerging markets showed some signs of recovery during the quarter.

Consistent with this, our revenue in China grew by approximately 25% compared to the previous quarter.

Looking ahead, the collective view of industry analysts and some of our strategic customers appears to be that softness in semiconductor demand will continue through the March quarter, with demand generally expected to increase during the June quarter.

Based on this outlook, we expect strengthening and overall semiconductor industry demand in the second half of our fiscal year. We have successfully navigated through a wide range of industry demand environments in the past, and we are confident that we can continue to manage our business successfully within the current soft demand environment.

Two weeks ago, I attended SEMI's Industry Strategy Symposium in California. This annual event hosted by SEMI early in the calendar year represents a great opportunity to compare views with other industry participants. The theme of this year's conference was integrating for growth, with a particular focus on markets and the technology ecosystem.

Although there is currently a healthy amount of caution and uncertainty regarding the global economy, the majority of discussion at the conference was focused on a variety of end markets that have the potential to drive increasing semiconductor demand and content over the longer term. For example, smart sensors are expected to enable the Internet of Things, augmented reality and autonomous vehicles. Also, the anticipated exponential growth of data and devices, and the continued expected ramp-up and adoption of 3-D memory, are key focus areas for the industry.

In addition, the future of the semiconductor industry in China is a primary interest for all industry players in light of continued investments by the Chinese government as well as investments into China from Taiwan, Korea and the US. As the semiconductor industry addresses the challenges and opportunities of these growth areas, we believe highly engineered materials like our CMP solutions will play an increasing role, resulting in additional growth opportunities for our Company.

Within that semiconductor industry context, now let me turn to our IC CMP consumables business, starting with our acquisition of NexPlanar, a supplier of advanced CMP pad solutions.

Since we completed the acquisition in late October, our first-quarter results include a partial-quarter benefit of NexPlanar. Our total pad revenue was approximately $10 million this quarter, including approximately $4 million from NexPlanar. As a result, revenue from our CMP pads area grew nearly 20% year over year. Our acquisition of NexPlanar represents an important element in the execution of our strategy to continue to strengthen and grow our CMP consumables business and, in particular, our CMP pads product area.

For a number of years, we have placed a high priority on growing our revenue in the CMP pads area, which is a large and very closely adjacent opportunity to CMP slurries, where we are the leader. Combining our organic and NexPlanar pad technologies enables us to deliver a broad range of CMP solutions to cover the full range of applications and technology nodes, including slurry and pad consumable sets. During the quarter, we made progress on integrating NexPlanar into our CMP consumables business, and we are pleased with where we stand.

In the last several weeks, our team has visited all of our strategics customers, and customer reactions to the acquisition have been extremely positive. We have created a new global pads team, combining elements from NexPlanar and our organization, and are beginning to see the benefits of leveraging our global infrastructure, research and technical resources, supply chain capabilities and quality systems.

NexPlanar achieved enviable revenue growth over the last several years with a sharp focus on winning business with the industry's technology leaders for advanced CMP applications. We believe that with our global capabilities, we are well-equipped to support our customers with these advanced technology applications, as well as offering solutions to the broader semiconductor industry. We think this will speed the introduction and adoption of NexPlanar solutions and provide meaningful, profitable growth for our Company in the future.

We currently believe we can achieve revenue from our pads product area of around $70 million to $90 million in fiscal 2018. After the first year of integration, we expect synergies of approximately $10 million per year. We look forward to updating you in the future on our progress in CMP pads as we continue to integrate NexPlanar into our business.

Turning to CMP slurries, during the quarter we made notable progress on the transformation of our dielectric slurry product area. We continue the broad rollout of our new family of innovative dielectric slurry products, which we believe provides our customers much higher performance in terms of significantly lower defectivity at a much lower cost.

Our customers are currently ramping applications from opportunities we secured several quarters ago, both replacing our own legacy products or displacing competitive offerings, and we expect that related demand will gradually increase through the rest of the fiscal year.

In addition, customers are evaluating and qualifying these solution for other applications, and we remain encouraged by the positive customer feedback and performance across a range of technology nodes and on both 200-millimeter and 300-millimeter platforms. As a result, during the quarter we secured additional business. We expect this dielectrics transformation will be another driver a profitable growth for our Company over the next several years.

Let me now provide a few comments on our capital deployment strategy. Over more than 15 years as a public Company, we have achieved a track record of strong profitability, which combined with the low capital intensity in our business has driven strong cash flow generation. In turn, this has enabled us to invest to increase our capabilities and expand our global footprint to better serve our customers around the world while also generating cash well in excess of our operational needs.

We have deployed cash through a balanced capital allocation strategy. Over the years, we have invested around $320 million in organic investments, approximately $230 million in acquisitions, repurchased nearly $350 million of our stock and also distributed nearly $350 million to our shareholders through a leveraged recapitalization with a special cash dividend.

In further support of this balanced capital deployment strategy, on January 7, we announced that our Board of Directors has authorized the initiation of a regular quarterly cash dividend program with a declaration of an initial quarterly dividend of $0.18 per share. This represents an annualized amount of approximately $18 million, equivalent to roughly 30% and 20% of our fiscal-year 2015 net income and free cash flow, respectively.

In addition, our Board increased the authorization of our existing share repurchase program to $150 million from the approximately $75 million that was available as of December 31. We believe that our initiation of a quarterly dividend, coupled with our expanded share repurchase program, demonstrates our confident in our future cash generation capabilities and represents a continuation of our historical commitment to distributing capital to our shareholders. Our priorities for capital deployment are funding organic growth opportunities, dividends, share repurchases and acquisition opportunities in closely related areas.

We continue to believe that our focused business model, along with our global resources, capabilities and infrastructure, differentiate our Company as a leader among suppliers to the semiconductor industry and position us well for future success.

Looking ahead, we will continue to focus on close partnerships with our technology-leaning customers to deliver innovative solutions to drive continued profitable growth for our Company.

With that, I will turn the call over to Bill for more detail on our financial results.

Thanks, Dave, and good morning, everyone. Revenue for the first quarter of fiscal 2016 was $100.4 million, which represents a 10.3% decrease from the same quarter last year. Our first-quarter revenue includes a partial-quarter benefit of the NexPlanar acquisition, but reflects continued softness and demand within the global semiconductor industry, and competitive dynamics within dielectrics and data storage applications, which we previously discussed. Foreign exchange rate changes, primarily the weaker Korean won and Japanese yen versus the US dollar, reduced year-over-year revenue by $1.4 million for the quarter.

Drilling down into revenue by product area, tungsten slurries contributed 44.2% of total quarterly revenue. Revenue was down 1.6% from the same quarter a year ago, reflecting the overall soft industry conditions, but continued strong demand for our tungsten slurries for advanced applications, including 3-D memory and FinFET. These applications require additional CMP steps and, in particular, tungsten, which we are confident will continue to drive profitable growth for our Company. We continue to work closely with strategic customers to support their transitions to these advanced technologies.

Dielectric slurries provided 22.9% of our revenue this quarter, with overall sales down 18.3% from the same quarter a year ago. The revenue decrease primarily reflects the loss of lower-performing legacy dielectric business that we began to see in the first quarter of fiscal 2015, which we have previously discussed.

As Dave mentioned, during the quarter we saw revenue growth from some of our new higher-performing dielectric slurry products in conjunction with our transformation of this product area.

Sales of slurries for polishing metals other than tungsten, including copper, aluminum and barrier, represented 16.3% of our total revenue and decreased 17.8% from the same quarter last year. We believe this decrease was primarily due to customer efficiencies and repurposing capacity for the next technology node, particularly with respect to our aluminum slurries.

Sales of polishing pads, which includes a partial-quarter benefit of our NexPlanar acquisition, represented 10.5% of our total revenue for the quarter and increased 19.9% compared to the same quarter last year. As Dave discussed, we expect this acquisition will accelerate growth in our pads product area and contribute to continued future profitable growth for our Company.

Finally, revenue from our engineered surface finishes area and data storage products represented 3.9% and 2.1% of our quarterly revenue, respectively. Our gross profit this quarter represented 50% of revenue. This reflects the $0.7 million of NexPlanar acquisition-related costs and $0.9 million of amortization expense. Excluding these costs, non-GAAP gross profit was 51.6% of revenue, which is 70 basis points higher than the 50.9% of revenue we reported in the same quarter a year ago.

Other factors impacting gross profit this quarter compared to last year include a higher-value product mix, lower logistics costs and costs related to raw material quality, partially offset by lower sales volume. Our full fiscal-year 2016 GAAP gross profit guidance range of 49% to 51% of revenue, including NexPlanar, remains unchanged.

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 $35.8 million include $2.1 million of NexPlanar acquisition-related costs and $0.4 million of amortization expense. Operating expenses were $1.4 million higher than the $34.4 million we reported in the same quarter a year ago. This reflects costs related to the acquisition partially offset by the absence of costs associated with certain executive officer transitions that occurred in the same quarter last year, which we previously discussed, and lower staffing-related costs, including incentive compensation.

We are lowering our full fiscal-year guidance range for operating expenses to $141 million to $145 million, including NexPlanar. This is $2 million lower than our prior guidance range of $143 million to $147 million.

Diluted earnings per share were $0.46 this quarter, or $0.56 on a non-GAAP basis, excluding costs related to the acquisition that I mentioned. Compared to the record level of $0.80 reported last quarter, primarily due to lower revenue.

Our effective tax rate for the first fiscal quarter was 15.5%, compared to 12.3% last year. Similar to last year, this quarter we saw specific benefit from the reinstatement of the US research and development tax credit. We now expect our effective tax rate for full fiscal-year 2016 to be within the range of 18% to 21%, including NexPlanar. This is lower than our previous estimate of 21% to 24%.

Turning now to cash and balance sheet related items, capital investments for the quarter were $5.1 million. For full fiscal-year 2016, we continue to expect capital spending to be within the range of $15 million to $20 million, including NexPlanar.

Depreciation and amortization expense for the quarter was $6 million, including approximately $1.2 million of amortization expense related to NexPlanar. In addition, we purchased $10 million of our stock during the quarter under our share repurchase program. We ended the quarter with a cash balance of $218.1 million and have $161.9 million of debt outstanding.

I will conclude my remarks with a few comments on recent sales and order patterns. During the first fiscal quarter, we saw a 2% increase in revenue from our CMP consumables products compared to the fourth quarter of fiscal 2015 primarily due to the partial-quarter benefit of our acquisition of NexPlanar. Orders to date in January for our CMP consumables product, including NexPlanar, are trending slightly above the average rate in our first fiscal quarter. Recall that lunar new year, which begins on February 8, typically introduces some order fluctuation around this holiday period. As Dave discussed, our expectation is for continued soft demand during our second fiscal quarter, based on recent reports by some of our strategic customers and industry analysts. I would caution that we have limited visibility to near-term revenue.

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

(Operator Instructions) Edwin Mok, Needham and Company.

First question on the gross margin, just to clarify, you said that that is a GAAP gross margin guidance. So if I assume you're going to have -- that includes your amortization expense. If I just take your December number, that would imply that there is a (inaudible) that we should back out on that guidance of -- for non-GAAP? Is that the right way to think about that? In terms of gross margin trend, how do you now think about your gross margin beyond the March quarter?

Okay, Edwin, the amortization of intangibles related to NexPlanar is split between cost of goods sold and operating expense. So in the first quarter, we had about $0.9 million of amortization related to NexPlanar. So that would have had about a 0.9 percentage point impact on gross profit. And so for the full year, we expect amortization to be related to NexPlanar to be around $5 million, but about 60%, 65% of that in COGS. So, kind of a 0.9% drag on gross margin from a GAAP standpoint.

And then Edwin, going out beyond this quarter, we continue to be confident and strong profitability, but there are several moving parts. We have talked about our continued confidence in tungsten, which we talked about as above our Company gross margin. We also see a lot of growth in pads, as we talked about, which we have characterized as somewhat below Company gross margin. And then this dielectrics transformation, which we are continuing to get traction on, which is going to also improve our profitability. So, a few moving parts there, but overall, very confident and continued strong profitability.

Thanks for answering that. And then on NexPlanar, your revenue was around $4 million last quarter. If I run rate it, that was kind of roughly or maybe a little in line with what you reported previously for NexPlanar. Is that just because of the timing of revenue? Or is it -- I thought that that business was growing a lot faster than flattish to what you have done before.

Right, we had a partial-quarter benefit this quarter, and I do think was a little sluggish in the near term. And if you recall, where they focused on is really on the leading edge. They sell to a small number of customers, six out of the 10 leading customers. And if you look at what is happening in the industry right now, some of the leading edge is a little sluggish and not ramping up as quickly as initially predicted.

But, as you can tell from our prepared comments, we continue to feel really excited and confident about the future. We have talked about growth potential we see in the business in the future, around $70 million to $90 million in the next few years. So, we are only one quarter in, but the other feedback I would give is that we are getting very good feedback from customers and we are encouraged by what we see in the pipeline.

Okay, that's helpful. And then lastly, I think Dave, you mentioned on your prepared remarks China grew around 25%. Which area are we seeing growth in China? And do we think that can continue to have a growth driver for you guys as you guys increase penetration in that market?

It was 25% sequentially. And China is an area where we have traditionally had a very strong position. And as you have probably been following, there is just a lot of interest in China right now, a lot of investments being made by the Chinese government, as well as new capacity being put in by customers in Taiwan, Intel also starting out their Dulan facility. So, just a lot of activity in China, and I think we are well-positioned to grow as China grows overall. So it is kind of an overall strength that we have seen from China so far.

Okay, that's helpful. And then lastly, sorry, just clarification on your new OpEx guidance. Does that include any NexPlanar related or GAAP to non-GAAP? Is that a GAAP or a non-GAAP guidance? Maybe that is the --

Yes, that is a GAAP range, $141 million to $145 million, down $2 million versus what we have previously guided.

Great, that is all I have. Thank you.

Thank you, Edwin. We will take our next question, please.

Dmitry Silversteyn, Longbow Research.

A couple of questions, if I may. First of all, talking about gross margin again, you continued to deliver very nice results there and you have taken up your guidance range partially on NexPlanar I am assuming, but partially on continuing good execution. Can you talk about what is driving that over the last -- not just this quarter, but over the last two or three quarters, given that your volumes are down pretty significantly? And I know you're not a high-fixed-cost manufacturing operation, but I would have thought that with declining volumes, your margins would have not been quite as strong. If you could put it into sort of big buckets as far as foreign exchange impact versus low raw material costs versus this yield improvement that you talked about.

Sure. So, one of the things that we have talked about, even in a soft industry environment, we have had really strong performance in our tungsten CMP flurry area. So, for example, in fiscal year 2015, year over year that grew by about 13%, even as our overall Company revenues are relatively flat. And given the strong position in tungsten and strong profitability in that product area, that has been a driver of some of the gross profit performance.

In addition, we talked about foreign exchange. And the weak Japanese yen helped us in fiscal 2015. I think that was a lift on the order of 100 basis points year over year from 2014 to 2015.

And then, we talked about the loss of some lower-performing dielectrics business that was pretty significant but relatively low margin on that product. And so that loss of that business sort of increased the product mix, and therefore that drove a bit of gross margin lift as well.

So, if I put all that together, with the yen flattening out, it was probably that benefit not getting much better in 2016 than it was in 2015. And it sounded like that dielectric sale exit basically anniversaried in the December quarter, so it will not be much of a driver into 2016. The margin drivers for 20 -- for 2016, with that be continuing growth of tungsten above the growth of other businesses? And then savings from NexPlanar? Is that how I should think about that?

Two things there, Dmitry. As you mentioned, tungsten continues. We see a really bright future there with ramp-ups of FinFET, but not only in the logic and foundry side. But on the memory side as customers ramp up 3-D, that has represented an opportunity for us in tungsten, dielectrics and pads. But obviously, a strong position in tungsten.

And then, we have talked about this transformation of our dielectrics portfolio, and we are really encouraged by what we see with the new products in dielectrics that were -- we've introduced. And starting to get some really good traction in the market, so that should also be a driver of profitability as well.

Okay. So, David, to follow up on that, am I correct from your comments that the exit of the low-margin legacy dielectrics is pretty much over this quarter that you just reported, as far as the big impact on top line, and we should see a more -- better performance? I don't know if it is necessarily growth, but certainly more moderate declines in volumes of dielectrics then you have seen in 2015?

Yes, that's correct. We first talked about that impact in the first quarter of 2015 -- fiscal 2015. So now we have calendarized that and we should see really that all behind us. Even within the reduction in dielectrics revenue, with some of the higher-performing products, we have seen growth. But it has just been disguised by sort of the reduction of the revenue on these lower-performing legacy products.

Right. So Bill, if I -- so basically starting with the March quarter, you should start seeing either reduced negative comps and maybe, about the second half of calendar year, actually positive comps in that business?

That's correct.

If I look at your pad revenue excluding the $4 million or so that you got from NexPlanar, it looks like your revenues on the legacy pads were down about 30% year over year. This is the second quarter of this magnitude loss. What's going on there? Are we going through a couple of more quarters like this until you anniversary some business loss or customer loss? Or is this sort of normal quarter-to-quarter volatility just happens to be two quarters in a row, down 30% plus?

Yes, Dmitry, I think you do the math right, and it is obviously competitive there. We would say that obviously also that, to the extent that we have exposure to the foundry area, that was pretty soft this quarter, and we didn't lose any significant customers.

But again, that is really one of the reasons why we are really excited about the addition of NexPlanar, because it really rounds out our pad portfolio. And when we see the feedback from customers, it really is a growth story for us. And as time goes on, we will stop referring to NexPlanar and start just referring it to the overall pads business, which we expect to grow to $70 million to $90 million. So -- and we are looking at what are the synergies between our organic technologies and pads, and also with NexPlanar. So it is going to quickly come together over the next several quarters. (multiple speakers) And it is just a combined pad business.

Thank you very much. That is all the questions I have.

(Operator Instructions) Chris Kapsch, BB&T Capital Markets.

Just a follow-up on the pad business and excluding the NexPlanar acquisition contribution. And given that year-over-year decline in effectively what are your legacy pad products now, the D100, D200, you mentioned the soft foundry conditions, which presumably means fewer pad change-outs. But has the adoption or incremental process of record wins from those products, has been stalled out? Are you still -- do you still have a nice pipeline of POR qualifications for those legacy products? And so, notwithstanding the tough environment, can those legacy products continue to grow over time and over cycles?

We think they can, Chris. But obviously we were disappointed by our pads' growth in the past, and that was one of the reasons why the NexPlanar opportunity was so compelling to us. So again, looking forward, I think it will be a mix. We see both organic pad opportunities in the pipeline and also NexPlanar. The one thing we have talked about with their technology is it is a little bit -- it is similar to the incumbents' products. So, to that extent, the qualification time, you could assume, would be a little bit faster than potentially some of our organic pad offerings that we've had in the past.

But -- so, but what about the qualification pipeline? Is it just completely evaporate, or is there still a qualification pipeline for the legacy products in addition to the NexPlanar pads?

Yes, there definitely is. And we have talked about it as a strong pipeline. But also as you know, following the Company for a while, it takes a while to get those pad qualifications in place. And now when we go to customers, we are able to offer them not only our D100, D200 family, but also the NexPlanar offering. So, we've just got a broader suite to offer our customers. But you are definitely right that there is a continued pipeline of organic pad opportunities that we are pursuing.

Okay, and then a follow-up on just the commercialization of the new oxide slurry. Can you maybe update us on what you are thinking of as the available market there? And the success that you are having, is it currently more legacy nodes or advanced nodes, or is it really a combination thereof? And then, given the TAM, how much share do you think you can capture?

We're really, really excited about it, Chris. And we talked about it last quarter as being able to address about $100 million of business opportunity. And we are not quite ready to give a breakout of progress there yet, other than to say we are really encouraged by what we see on the sales side. And then, to your question, where it is being applied, broadly applicable across different technology nodes, as well as 200-millimeter, 300-millimeter applications. So, it's broadly applicable to the industry.

I see, okay. And then just to follow up on the tungsten slurries, I get that the increased polishing steps and FinFET and 3-D NAND --. Can you talk about -- presumably -- I don't know if you can discern, but the products that you sell into those nodes, presumably it is still up year over year. Could you just comment on that? And how do you see the production ramp at those advanced nodes over the last couple quarters and looking forward?

Right. So we have talked about -- actually, we gave a number last quarter of around 13% of our tungsten revenue was driven by solutions to -- that go into 3-D memory and FinFET (multiple speakers).

Is that through the full-year, David? Or is that for the fourth (multiple speakers)?

(multiple speakers) for the full year. So it's becoming a significant part of our business. And, as you know, those technologies are still in the early stage. So, quarter to quarter, that is probably not as relevant as what is the year-over-year growth.

But, just a little commentary on the logic and foundry side. I think the 14-, 16-nanometer RAMs are going a little slower than perhaps customers had initially forecasted. And 3-D NAND continues to be a bright spot.

Obviously Samsung is out there already in HVM production with their facility in Xian, China, and other customers are making preparations for ramp. So, both of those, I still think, are in the early stage of ramp-up.

Okay, and then just finally if I could, one last one capital allocation. So just on establishing the dividend, I think that is great. Opens up a broader suite of potential investment -- of investors. But, I was curious about the thoughts on the buyback. You increased the authorization, but the cadence looks like it is no greater than it was prior. I'm just wondering what really the intent is. Is there any intent to increase the repurchase cadence, given all the circumstances? Or is it really just kind of an open authorization that you are going to perpetually just try to prevent share creep?

The Board authorized the increase on January 7, so that was in our second fiscal quarter. And we repurchased $10 million of our stock in the first fiscal quarter. Last year, we repurchased $40 million, and so our first fiscal quarter was kind of on that pace. We have not ever provided any commentary forward-looking on share repurchase projections or outlook, that sort of thing.

But, what you have seen -- and I think about four different share repurchase programs. When our Board has authorized those, we have executed those. And it is not like we put a share repurchase program on the shelf and then don't implement it. So, we -- when we have been in the market in the past, it has been on the order of $10 million per quarter, and you have seen that's been relatively regular. We have not tried to be opportunistic in the past, but we do have now $150 million of authorization. So, a lot of dry powder for share repurchases in the future.

And Chris, capital allocation is something we have talked about with our Board on a very regular basis.

Okay, thanks.

Thank you, Chris. We appreciate your questions this morning. Thank you for your time and your interest in Cabot Microelectronics.

Ladies and gentlemen, take you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a wonderful day.