CMC Materials, Inc. (CCMP) 2018 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Cabot Microelectronics Fourth Quarter Fiscal 2018 Earnings Conference Call. (Operator Instructions) As a reminder, this conference call may be recorded.

女士們先生們，美好的一天，歡迎來到卡博特微電子 2018 財年第四季度收益電話會議。（操作員說明）提醒一下，這個電話會議可能會被錄音。

I would now like to introduce your host for today's conference, Ms. Colleen Mumford, Director of Investor Relations. Please go ahead.

現在我想介紹一下今天會議的主持人，投資者關係總監 Colleen Mumford 女士。請繼續。

Great, thank you. Good morning. With me today are David Li, President and CEO; and Scott Beamer, Vice President and CFO.

太好了謝謝。早上好。今天和我在一起的是總裁兼首席執行官李大維；和副總裁兼首席財務官 Scott Beamer。

Last night, we reported results for our fourth quarter and fiscal year 2018, which ended September 30, 2018. Whether you're joining us online or over the phone, we encourage you to review the investor slide presentation that we've made available under the Quarterly Results section of the Investor Relations center on our website, cabotcmp.com.

昨晚，我們報告了截至 2018 年 9 月 30 日的第四季度和 2018 財年的業績。無論您是在線還是通過電話加入我們，我們都鼓勵您查看我們在我們網站 cabotcmp.com 投資者關係中心的季度業績部分下提供的投資者幻燈片演示。

A webcast of today's conference call and the script of this morning's prepared comments will also be available on our website shortly after this live conference call. You may request any of the information by calling our Investor Relations office at (630) 499-2600.

今天電話會議的網絡直播和今天上午準備好的評論的腳本也將在這次現場電話會議後不久在我們的網站上提供。您可以致電 (630) 499-2600 致電我們的投資者關係辦公室索取任何信息。

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 Form 10-K for the fiscal year ended September 30, 2017.

請記住，我們今天的討論可能包括前瞻性陳述，這些陳述涉及許多風險、不確定性和其他因素，可能導致實際結果與這些前瞻性陳述存在重大差異。這些風險因素在我們提交給美國證券交易委員會的文件中進行了討論，包括我們截至 2017 年 9 月 30 日的財政年度的 10-K 表格。

We assume no obligation to update any of this forward-looking information.

我們不承擔更新任何此類前瞻性信息的義務。

Also, our remarks this morning reference non-GAAP financial measures. Our earnings release and slide presentation include a reconciliation of GAAP to non-GAAP financial measures.

此外，我們今天上午的評論提到了非 GAAP 財務指標。我們的收益發布和幻燈片演示包括 GAAP 與非 GAAP 財務指標的對賬。

Additionally, data is represented by rounded values throughout this discussion and in the supporting materials.

此外，在整個討論和支持材料中，數據由四捨五入的值表示。

I would also like to inform you that Cabot Microelectronics has filed a Form S-4 registration statement with the SEC that includes a proxy statement prospectus regarding the KMG transaction. You are urged to read the proxy statement prospectus and other documents related to the transaction because they will contain important information about the transaction. In addition, Cabot Microelectronics and KMG and their directors and officers may be deemed to be participating in a solicitation of proxies in favor of the proposed transaction.

我還想通知您，卡博特微電子公司已向美國證券交易委員會提交了一份 S-4 表格註冊聲明，其中包括一份關於 KMG 交易的委託書招股說明書。強烈建議您閱讀委託書招股說明書和其他與交易相關的文件，因為它們將包含有關交易的重要信息。此外，Cabot Microelectronics 和 KMG 及其董事和高級職員可能被視為參與了有利於擬議交易的代理權徵集。

You can find information about the Cabot Microelectronics and KMG directors and executive officers in each company's proxy statement filed with the SEC. You may obtain a copy of these documents through the SEC's website, the Cabot Microelectronics and KMG websites or by requesting a copy from either company's Investor Relations department.

您可以在每家公司向美國證券交易委員會提交的代理聲明中找到有關 Cabot Microelectronics 和 KMG 董事和執行官的信息。您可以通過 SEC 網站、Cabot Microelectronics 和 KMG 網站或通過向任一公司的投資者關係部門索取副本來獲取這些文件的副本。

I will now turn the call over to Dave.

我現在將把電話轉給戴夫。

Thanks, Colleen. Good morning, everyone, and thanks for joining us.

謝謝，科琳。大家早上好，感謝您加入我們。

Last night, we announced record quarterly and annual results for revenue, gross margin, net income and earnings per share for our fourth quarter and full fiscal year 2018. Fourth quarter revenue increased 15% while adjusted earnings per share were up 38% as compared to the same period last year. This is the sixth consecutive quarter of record revenue for the company.

昨晚，我們公佈了 2018 年第四季度和整個財年的收入、毛利率、淨收入和每股收益的季度和年度業績。與去年同期相比，第四季度收入增長 15%，調整後每股收益增長 38%。這是該公司連續第六個季度創紀錄的收入。

Our full year revenue was up 16% over fiscal 2017, which we believe reflects growth well above that of the semiconductor industry.

我們的全年收入比 2017 財年增長了 16%，我們認為這反映了遠高於半導體行業的增長。

Our profitability has also improved significantly, with record gross margins contributing to record net income and earnings per share in fiscal 2018. This is our fourth consecutive year of record earnings per share and second consecutive year of record revenue.

我們的盈利能力也顯著提高，創紀錄的毛利率促成了 2018 財年創紀錄的淨收入和每股收益。這是我們連續第四年創紀錄的每股收益和連續第二年創紀錄的收入。

We believe that achieving record financial performance in fiscal years 2015 through 2018 is evidence of the strength of our consumable-based business model, our continued technology leadership and a strong industry demand environment. We are proud of our sustained performance, which we believe is the result of successful execution of our strategic initiatives. This has allowed us to achieve our stated corporate objectives to expand profitability and grow revenue faster than the industry.

我們認為，2015 至 2018 財年創紀錄的財務業績證明了我們基於消費品的業務模式的實力、我們持續的技術領先地位和強勁的行業需求環境。我們為我們的持續表現感到自豪，我們相信這是成功執行我們的戰略舉措的結果。這使我們能夠實現既定的企業目標，以比行業更快的速度擴大盈利能力和增加收入。

Scott will provide additional details about our financial results later in the call.

斯科特將在稍後的電話會議中提供有關我們財務業績的更多詳細信息。

I will now turn to our view of the global semiconductor industry environment. On the memory side, some recent reports have indicated that softening memory chip prices have caused certain customers to delay capital equipment purchases related to future capacity expansions. Further, on the logic side, several major logic and foundry customers have noted delays or difficulties in achieving further shrinks to smaller technology nodes. Within this environment, it is important to remember that our customers continue to operate their factories at nearly full utilization, which supports our consumables-based business model. As Scott will discuss, we are seeing increases in demand for our products in our current quarter coming off this sixth record quarter.

我現在將談談我們對全球半導體行業環境的看法。在內存方面，最近的一些報告表明，內存芯片價格走軟導致某些客戶推遲與未來產能擴張相關的資本設備採購。此外，在邏輯方面，一些主要的邏輯和代工客戶已經註意到在進一步縮小到更小的技術節點方面存在延遲或困難。在這種環境下，重要的是要記住，我們的客戶繼續以幾乎滿負荷運轉他們的工廠，這支持我們基於消耗品的商業模式。正如 Scott 將要討論的那樣，我們看到本季度對我們產品的需求增長已經超過了第六個創紀錄的季度。

We currently expect solid demand for our products to continue as we consider our outlook for fiscal 2019. We remain optimistic about long-term industry growth potential with higher demand for both memory and logic applications.

我們目前預計，在我們考慮 2019 財年的前景時，對我們產品的強勁需求將繼續存在。我們對長期行業增長潛力保持樂觀，對內存和邏輯應用的需求更高。

Our products support increasing storage and processing power requirements to enable existing and emerging applications such as Internet of Things, autonomous driving, industrial automation, cloud and high-performance computing, virtual reality and 5G.

我們的產品支持不斷增長的存儲和處理能力要求，以實現物聯網、自動駕駛、工業自動化、雲和高性能計算、虛擬現實和 5G 等現有和新興應用。

In addition to these favorable industry trends, we continue to benefit from the 2D to 3D NAND memory conversion, which requires approximately twice the number of CMP steps. We believe the transition is still approximately 50% to 60% complete, which should provide a continued revenue tailwind in the next few years. We also expect to benefit from customer transitions to advanced logic architecture and the next generation of 3D memory, which also requires additional CMP steps and should remain a demand driver for our slurry solutions for the foreseeable future.

除了這些有利的行業趨勢之外，我們繼續受益於 2D 到 3D NAND 存儲器的轉換，這需要大約兩倍的 CMP 步驟。我們認為過渡仍完成了大約 50% 到 60%，這應該會在未來幾年提供持續的收入增長。我們還期望從客戶過渡到高級邏輯架構和下一代 3D 內存中受益，這也需要額外的 CMP 步驟，並且在可預見的未來應該仍然是我們漿料解決方案的需求驅動因素。

Now let me provide some details around our key product area performance in the quarter and full fiscal year. We reported record results for the fourth quarter and full year in all 3 key product areas: tungsten slurries, dielectrics slurries and CMP pads.

現在讓我提供一些有關本季度和整個財政年度關鍵產品領域績效的詳細信息。我們在所有 3 個主要產品領域報告了第四季度和全年的創紀錄業績：鎢漿料、電介質漿料和 CMP 墊。

Our tungsten slurry revenue increased 10% versus the same quarter last year and was up 14% for the full year. This growth was primarily driven by winning solutions for 3D NAND applications at leading memory customers as well as advanced logic applications.

我們的鎢漿收入與去年同期相比增長了 10%，全年增長了 14%。這一增長主要是由領先內存客戶的 3D NAND 應用以及高級邏輯應用的獲勝解決方案推動的。

In dielectrics slurries, revenues increased 12% versus the same quarter last year, and was up 16% in fiscal 2018 versus the prior year. In addition to benefiting from higher overall demand from memory customers, advanced dielectrics slurries grew as a result of the successful adoption of our colloidal silica and ceria based solutions for advanced applications as well as several notable competitive displacements that we have previously discussed. These are higher-performance, higher-margin products that provide lower total cost of ownership to our customers. We expect the transition from legacy to advanced dielectrics products to continue into fiscal 2019, adding to our revenue growth and margin improvement.

在電介質漿料方面，收入比去年同期增長 12%，2018 財年比上年增長 16%。除了受益於內存客戶更高的總體需求外，高級電介質漿料的增長還得益於我們的基於膠體二氧化矽和二氧化鈰的解決方案在高級應用中的成功採用，以及我們之前討論過的幾個顯著的競爭性置換。這些是性能更高、利潤更高的產品，可為我們的客戶提供更低的總擁有成本。我們預計從傳統產品到先進電介質產品的過渡將持續到 2019 財年，從而增加我們的收入增長和利潤率改善。

Turning to CMP pads. Revenue increased 26% year-over-year to a new record level in the quarter. Pads revenue increased 21% to $83 million for the full year, maintaining the trajectory to reach our goal of at least $100 million in annual revenue by the end of fiscal 2019. We expect customer adoption of our NexPlanar product line to remain strong into fiscal 2019, and we are happy to report a new win with a major memory manufacturer, which we expect will benefit revenue growth in fiscal 2019.

轉向 CMP 墊。本季度收入同比增長 26%，創歷史新高。全年護墊收入增長 21% 至 8300 萬美元，保持了到 2019 財年年底實現年收入至少 1 億美元的目標的軌跡。我們預計客戶對我們 NexPlanar 產品線的採用將在 2019 財年保持強勁，我們很高興地報告與一家主要內存製造商的新勝利，我們預計這將有利於 2019 財年的收入增長。

Looking ahead, we are excited about the continued strength of our core businesses. Our tungsten slurries, dielectrics slurries and CMP pads continue to benefit from our technology leadership, our refreshed product offerings and the transition to advanced customer applications.

展望未來，我們對核心業務的持續實力感到興奮。我們的鎢漿、電介質漿和 CMP 墊繼續受益於我們的技術領先地位、我們更新的產品供應以及向高級客戶應用的過渡。

Lastly, I wanted to provide an update on our pending acquisition of KMG Chemicals. We continue to be enthusiastic about the transaction as we prepare to welcome KMG's global employees to our team as well as add their products and technologies to our portfolio. We believe the addition of KMG's Electronic Chemicals business will position us as the premier electronic material supplier to the industry, providing enabling materials to nearly every critical process step in the fab, which will allow us to better address customers' challenges as well as inform our own future development and commercial efforts.

最後，我想提供有關我們即將收購 KMG Chemicals 的最新消息。我們繼續對這筆交易充滿熱情，因為我們準備歡迎 KMG 的全球員工加入我們的團隊，並將他們的產品和技術添加到我們的產品組合中。我們相信，KMG 的電子化學品業務的加入將使我們成為業界首屈一指的電子材料供應商，為工廠中幾乎每個關鍵工藝步驟提供支持材料，這將使我們能夠更好地應對客戶的挑戰，並告知我們的自己未來的發展和商業努力。

In addition, KMG's Performance Materials business is expected to provide additional opportunities to expand our addressable market with several highly attractive, highly profitable leading specialty materials. In particular, KMG's pipeline performance business provides critical materials that enable enhanced customer efficiency and throughput in the fast-growing oil pipeline industry.

此外，KMG 的高性能材料業務預計將提供更多機會，通過幾種極具吸引力、高利潤的領先特種材料來擴大我們的潛在市場。特別是，KMG 的管道性能業務提供關鍵材料，可在快速發展的石油管道行業中提高客戶效率和吞吐量。

The KMG shareholder meeting to approve the transaction is scheduled for November 13. Assuming KMG shareholder approval and the satisfaction of remaining closing conditions, we expect to close the acquisition around November 16. The combination of these 2 world-class companies represents vast opportunities; and we believe that our customers, employees and shareholders will benefit from this acquisition.

批准交易的 KMG 股東大會定於 11 月 13 日舉行。假設 KMG 股東批准並滿足剩餘的成交條件，我們預計將在 11 月 16 日左右完成收購。這兩家世界級公司的結合代表著巨大的機遇；我們相信我們的客戶、員工和股東將從此次收購中受益。

And with that, I will turn the call over to Scott to provide more details on our financial results.

有了這個，我將把電話轉給斯科特，以提供有關我們財務業績的更多細節。

Thanks, Dave. And good morning, everyone. My comments will generally follow the related slide presentation we posted on our website last night, along with our press release.

謝謝，戴夫。大家早上好。我的評論通常會遵循我們昨晚在我們網站上發布的相關幻燈片演示以及我們的新聞稿。

Let's start with an overview of our financial performance this quarter, which is provided on Slide 3. Revenue for the fourth quarter of fiscal 2018 was a record $157 million, which is $20 million or 15% higher than the same quarter last year. As Dave mentioned, the increase was driven by continued strong semiconductor industry demand and the focus on our 3 key product areas. Sequentially, total revenue increased $6 million or 4%, with IC CMP consumables revenue up 2%. While solid overall, fourth quarter revenue was negatively impacted by a typhoon in Japan in September and the timing of some customer shipments that shifted from the September quarter into the December quarter.

讓我們從幻燈片 3 中提供的本季度財務業績概覽開始。2018 財年第四季度的收入達到創紀錄的 1.57 億美元，比去年同期增長 2000 萬美元或 15%。正如 Dave 所提到的，這一增長是由持續強勁的半導體行業需求和對我們 3 個關鍵產品領域的關注推動的。總收入環比增長 600 萬美元或 4%，其中 IC CMP 耗材收入增長 2%。雖然整體穩健，但第四季度收入受到 9 月份日本颱風以及一些客戶出貨時間從 9 月份季度轉移到 12 月份季度的負面影響。

Our net income was $48 million -- of $48 million was also a record, and represented an increase of $22 million or 82% over the same quarter last year. This was driven by higher revenues, increased gross margin and a tax benefit, partially offset by an increase in operating expenses, primarily related to the KMG acquisition. Excluding acquisition-related expenses, NexPlanar amortization and tax adjustments, non-GAAP net income was $39 million, up 41% over the same quarter last year.

我們的淨收入為 4800 萬美元——4800 萬美元也創下歷史新高，比去年同期增加 2200 萬美元或 82%。這是由收入增加、毛利率增加和稅收優惠推動的，但部分被主要與 KMG 收購相關的運營費用增加所抵消。不包括收購相關費用、NexPlanar 攤銷和稅收調整，非 GAAP 淨收入為 3900 萬美元，比去年同期增長 41%。

Our full year revenue of $590 million was a record and an increase of 16%, while IC CMP consumables revenue was up 15%, well above industry growth. Full year non-GAAP net income increased 50% to $137 million driven by strong revenue growth, improved gross margins and strong operating leverage.

我們的全年收入達到 5.9 億美元，增長 16%，創歷史新高，而 IC CMP 耗材收入增長 15%，遠高於行業增長率。全年非 GAAP 淨收入增長 50% 至 1.37 億美元，這得益於強勁的收入增長、毛利率的提高和強大的運營槓桿。

Now let's drill into revenue, which is shown on Slide 4. As previously stated, we define tungsten slurries, dielectrics slurries and polishing pads as 3 key product areas that are strategically important to us. During the quarter, these accounted for approximately 80% of total revenue, and I'll mention each in order.

現在讓我們深入研究收入，如幻燈片 4 所示。如前所述，我們將鎢漿、電介質漿和拋光墊定義為對我們具有戰略重要性的 3 個關鍵產品領域。在本季度，這些收入約佔總收入的 80%，我將按順序逐一提及。

Tungsten revenue was a record $65 million, an increase of 10% compared to the same quarter last year.

鎢收入達到創紀錄的 6500 萬美元，與去年同期相比增長 10%。

Dielectrics slurries also delivered record revenue of $37 million, up 12% from the same quarter a year ago.

電介質漿料也創造了創紀錄的 3700 萬美元收入，比去年同期增長 12%。

Sales of polishing pads were a record $22 million, up 26% compared to the same quarter last year.

拋光墊的銷售額達到創紀錄的 2200 萬美元，與去年同期相比增長 26%。

Sales of slurries for polishing metals other than tungsten, including copper, aluminum and barrier, represented $18 million, an increase of 10% from the same quarter last year.

用於拋光除鎢以外的金屬（包括銅、鋁和阻擋層）的漿料銷售額為 1800 萬美元，比去年同期增長 10%。

Finally, revenue from our Engineered Surface Finishes products, which includes QED, Data Storage and Electronic Substrates was $14 million, a record, and up approximately 40% from the same quarter last year.

最後，我們的工程表面處理產品（包括 QED、數據存儲和電子基板）的收入為 1400 萬美元，創歷史新高，比去年同期增長約 40%。

Now please refer to Slide 5, which provides some higher level P&L comparisons. Gross margin for the quarter was a record 53.8% compared to 51.2% in the same quarter a year ago. Excluding $1.3 million of amortization expense related to the NexPlanar acquisition, gross margin was 54.7%. Gross margin benefited from leverage on higher volumes across all product lines, increased selling prices, and mix improvement primarily in tungsten and dielectrics slurries.

現在請參閱幻燈片 5，它提供了一些更高級別的 P&L 比較。本季度的毛利率達到創紀錄的 53.8%，而去年同期為 51.2%。不包括與 NexPlanar 收購相關的 130 萬美元攤銷費用，毛利率為 54.7%。毛利率得益於所有產品線的銷量增加、銷售價格上漲以及主要在鎢和電介質漿料中的混合改進。

For the full year, 2018 gross margin was 53.2% compared to 50.1% last year. This includes an adverse impact of $5.2 million related to NexPlanar amortization expense. Gross margin came in slightly above our full year guidance of 52% to 53%. Our gross margin improvement was primarily driven by leverage on higher volumes and mix improvement in tungsten and dielectric product areas, partially offset by higher costs to support the growth.

就全年而言，2018 年的毛利率為 53.2%，而去年為 50.1%。這包括與 NexPlanar 攤銷費用相關的 520 萬美元的不利影響。毛利率略高於我們 52% 至 53% 的全年指引。我們的毛利率提高主要是由於鎢和電介質產品領域產量增加和混合改善的槓桿作用，部分被支持增長的成本增加所抵消。

Operating expenses -- which include research, development and technical, as well as selling and marketing and general and administrative costs -- were $40 million this quarter, an increase of $3 million over the same quarter a year ago. This primarily reflects acquisition-related expenses; and excluding those, operating expenses were $36 million, actually a decrease of $1 million versus prior year.

運營費用——包括研究、開發和技術，以及銷售和營銷以及一般和管理費用——本季度為 4000 萬美元，比去年同期增加 300 萬美元。這主要反映了與收購相關的費用；不包括這些，運營費用為 3600 萬美元，實際上比上一年減少了 100 萬美元。

Full year operating expenses were $154 million, which was within our guidance, and an increase of $12 million primarily due to executive officer transitions and costs related to the pending KMG acquisition. As a percent of revenue, our full year operating expenses declined to 26% compared to 28% last year. Excluding the $4 million in acquisition-related costs, our full year operating expenses would have been $150 million, which would have been at the lower end of our range.

全年運營費用為 1.54 億美元，在我們的指導範圍內，增加了 1200 萬美元，這主要是由於執行官的過渡和與未決的 KMG 收購相關的成本。作為收入的百分比，我們的全年運營費用從去年的 28% 下降到 26%。不包括 400 萬美元的收購相關成本，我們全年的運營費用為 1.5 億美元，處於我們範圍的下限。

Our operating margin was 28.1% in the quarter, an increase of 390 basis points from the same quarter last year. Excluding NexPlanar amortization and KMG acquisition-related expenses, operating margin expanded 630 basis points to 31.7%. This increase was driven by higher gross margins and prudent control of core operating expenses.

我們本季度的營業利潤率為 28.1%，比去年同期增長 390 個基點。不包括 NexPlanar 攤銷和 KMG 收購相關費用，營業利潤率擴大 630 個基點至 31.7%。這一增長是由更高的毛利率和對核心運營費用的審慎控制推動的。

We recorded a tax benefit in the quarter as we adjusted our previously recorded reserves related to U.S. tax reform. But excluding the adjustments, the effective tax rate was 23.3%, which was within our expectation of between 21% and 24%.

由於我們調整了先前記錄的與美國稅制改革相關的儲備金，因此我們在本季度記錄了稅收優惠。但剔除調整後，實際稅率為 23.3%，處於我們預期的 21%至 24%之間。

Diluted EPS was $1.84 this quarter, which was also a record, and represents an increase of 79% over the prior year quarter. Diluted EPS on a non-GAAP basis was $1.48, also a record, and an increase of 38% over the prior year. This was primarily driven by higher revenue, higher gross margins and prudent cost control.

本季度稀釋後每股收益為 1.84 美元，同樣創下歷史新高，比去年同期增長 79%。按非美國通用會計準則計算的稀釋後每股收益為 1.48 美元，也創歷史新高，比上年增長 38%。這主要是由於更高的收入、更高的毛利率和審慎的成本控制。

Full year adjusted EPS was $5.22, a 47% increase over the same period last year.

全年調整後每股收益為 5.22 美元，比去年同期增長 47%。

Now please refer to Slide 6, which provides some balance sheet and cash flow information. We generated cash flow from operations of $65 million. We ended the quarter with a cash balance of $353 million on hand, and no debt outstanding.

現在請參閱幻燈片 6，其中提供了一些資產負債表和現金流量信息。我們從運營中產生了 6500 萬美元的現金流。本季度結束時，我們手頭的現金餘額為 3.53 億美元，並且沒有未償債務。

We have discussed the pending acquisition of KMG Chemicals, and we will partially finance the transaction through term loan B debt of approximately $1.1 billion.

我們已經討論了對 KMG Chemicals 的未決收購，我們將通過約 11 億美元的定期貸款 B 債務為交易提供部分資金。

Capital spending for the quarter was $6 million, bringing our year-to-date total to $21 million. During the quarter, we continued to invest in our pads operations to improve automation, throughput and efficiency to support continued increase in customer demand.

本季度的資本支出為 600 萬美元，使我們年初至今的總額達到 2100 萬美元。在本季度，我們繼續投資於我們的墊操作，以提高自動化、吞吐量和效率，以支持持續增長的客戶需求。

Accordingly, our free cash flow was $59 million for the quarter and $148 million for the full fiscal year.

因此，本季度我們的自由現金流為 5900 萬美元，整個財年為 1.48 億美元。

As previously communicated, our intention has been to return at least 50% of prior year free cash flow to shareholders by way of dividends and share repurchases. During fiscal 2018, we returned $72 million or 60% of prior year's free cash flow, so we have exceeded that target.

正如之前所傳達的那樣，我們的意圖是通過股息和股票回購的方式將上一年自由現金流的至少 50% 返還給股東。在 2018 財年，我們返還了 7200 萬美元或上一年自由現金流的 60%，因此我們已經超過了該目標。

Now please refer to Slide 7 for a list of important milestones for the pending KMG acquisition. We are pleased with the progress and anticipate closing around November 16. We have earned public debt ratings of BB+ on our upcoming term loan B from S&P, and a rating of Ba2 from Moody's. We are currently in the marketing period for our debt.

現在請參閱幻燈片 7，了解即將完成的 KMG 收購的重要里程碑列表。我們對進展感到滿意，並預計在 11 月 16 日左右結束。我們即將獲得的標準普爾 B 定期貸款的公共債務評級為 BB+，穆迪的評級為 Ba2。我們目前正處於債務的營銷期。

We provide some closing remarks on Slide 8; and fiscal first quarter and full year 2019 financial guidance on Slide 9.

我們提供了幻燈片 8 的一些結束語；以及幻燈片 9 上的 2019 財年第一季度和全年財務指導。

From a financial perspective, we achieved very strong performance this quarter and this fiscal year, including record revenue, net income and EPS. And I would like to highlight the operating leverage we continue to see on our revenue growth. In the fourth quarter, revenue increased $22 million (sic - see slide 8, "$20 million ") from the prior year while operating expenses decreased; and operating income increased $15 million, excluding acquisition-related expenses. This implies that approximately 3/4 of our incremental revenue dropped directly to operating income. Year-to-date, our sales increased $83 million; while operating income, excluding acquisition-related expenses, increased $52 million, implying a full year operating leverage rate of 63%.

從財務角度來看，我們在本季度和本財年取得了非常強勁的業績，包括創紀錄的收入、淨收入和每股收益。我想強調我們在收入增長中繼續看到的運營槓桿。第四季度，收入比上一年增加了 2200 萬美元（原文如此 - 參見幻燈片 8，“2000 萬美元”），而運營費用減少了；營業收入增加了 1500 萬美元，不包括與收購相關的費用。這意味著我們大約 3/4 的增量收入直接下降到營業收入。年初至今，我們的銷售額增加了 8300 萬美元；而不包括收購相關費用的營業收入增加了 5200 萬美元，這意味著全年營業槓桿率為 63%。

For expectations, I'll address our current business only, and these will not represent expectations for total results once we close the KMG acquisition. Moving forward, we expect to report results for at least 2 reporting segments like KMG's structure today. We will provide further information at the appropriate time after closing.

對於預期，我將只談及我們目前的業務，這些並不代表我們完成對 KMG 收購後的總體業績預期。展望未來，我們預計將報告至少 2 個報告部分的結果，例如 KMG 今天的結構。我們將在關閉後的適當時間提供進一步的信息。

At the highest level, we remain confident in our ability to grow revenue faster than the semiconductor industry and continue to improve margins during fiscal 2019. For the first quarter of fiscal 2019, we expect our IC CMP consumables business to show a low to mid-single-digit increase sequentially compared to our record fourth quarter 2018 results. Given mixed commentary about operating conditions by some players in the industry, we would like to emphasize the resilience of our consumables-based business.

在最高層面，我們仍然相信我們有能力比半導體行業更快地增長收入，並在 2019 財年繼續提高利潤率。對於 2019 財年第一季度，我們預計我們的 IC CMP 耗材業務與我們創紀錄的 2018 年第四季度業績相比將呈現中低個位數增長。鑑於業內一些參與者對經營狀況的評論不一，我們想強調我們基於消耗品的業務的彈性。

As we think about the full year fiscal 2019, we expect solid demand conditions for our products. At the same time, we'll continue to focus on operating expenses and further improve the profitability of our business.

當我們考慮 2019 財年全年時，我們預計我們的產品需求狀況穩定。同時，我們將繼續關注運營費用，進一步提高我們業務的盈利能力。

We currently expect full fiscal year gross margins to be between 53% and 55% on a GAAP basis compared to 53.2% reported in fiscal 2018. This guidance includes $5.2 million of NexPlanar amortization expense.

我們目前預計整個財年的毛利率在 GAAP 基礎上介於 53% 和 55% 之間，而 2018 財年報告的毛利率為 53.2%。該指南包括 520 萬美元的 NexPlanar 攤銷費用。

We also expect the operating expenses for the full fiscal year to be between $154 million and $158 million compared to $150 million reported in fiscal 2018, excluding acquisition-related expenses. Again, this guidance does not include any potential KMG acquisition-related expenses.

我們還預計整個財年的運營費用將在 1.54 億美元至 1.58 億美元之間，而 2018 財年報告的運營費用為 1.5 億美元，不包括收購相關費用。同樣，本指南不包括任何潛在的 KMG 收購相關費用。

We expect our effective tax rate to be in the range of 21% to 24% while our capital spending expectation for the full fiscal year is between $23 million and $26 million, an increase from the prior year as we continue to invest in organic growth for our company.

我們預計我們的有效稅率將在 21% 至 24% 之間，而我們對整個財政年度的資本支出預期在 2300 萬美元至 2600 萬美元之間，比上一年有所增加，因為我們繼續投資於有機增長我們公司。

In summary, we have delivered strong financial performance, including record revenue, gross margin, net income and earnings per share for our fourth quarter and full fiscal 2018, which we believe demonstrates the continued focus on execution of our strategic initiatives.

總之，我們在第四季度和整個 2018 財年實現了強勁的財務業績，包括創紀錄的收入、毛利率、淨收入和每股收益，我們認為這表明我們繼續專注於執行我們的戰略舉措。

For fiscal 2019, we remain confident in our ability to drive continued revenue growth, improved gross margin performance and maintain disciplined management of operating costs, which should result in net income growth. We look forward to building upon our success by combining Cabot Microelectronics with KMG to provide innovative, high-quality solutions that solve our customers' most demanding challenges.

對於 2019 財年，我們對推動收入持續增長、提高毛利率表現和保持對運營成本的嚴格管理的能力充滿信心，這應該會帶來淨收入增長。我們期待通過將 Cabot Microelectronics 與 KMG 結合來提供創新的高質量解決方案來解決我們客戶最苛刻的挑戰，從而在我們的成功基礎上再接再厲。

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

現在，在我們準備回答您的問題時，我會將電話轉回給接線員。

(Operator Instructions) Our first question comes from Mike Harrison with Seaport Global Securities.

（操作員說明）我們的第一個問題來自 Seaport Global Securities 的 Mike Harrison。

Was wondering if you could talk a little bit about the G&A number for this quarter? It looks like a drop to below 11% of sales. It was closer to 13% in sales last quarter. Was there something unusual driving the G&A number this quarter?

想知道您是否可以談談本季度的 G&A 數字？看起來下降到銷售額的 11% 以下。上個季度的銷售額接近 13%。本季度的 G&A 數字是否存在異常？

Not necessarily, Mike. The prior year quarter last year had a few additional costs in them. So the comparison, prior year to this year, looks favorable as those items did not recur. But as we think about operating expenses for the full -- if you look at our operating income as a percent of sales for the full year on a non-GAAP basis, it's about 29%. And as you're thinking about those expectations for next year and think about we give the revenue from one quarter, but we give a margin guidance that's improving for next year; operating expenses, we give you that number. So as you're thinking about operating income and modeling things for the full year, I think you can think about we have an expectation to continue to improve that and continue to control our operating expenses in line, similarly to how we've done that this year.

不一定，邁克。去年上一季度有一些額外費用。因此，今年前一年的比較看起來不錯，因為這些項目沒有再次出現。但是，當我們考慮全部運營費用時——如果您將我們的營業收入作為非 GAAP 基礎上全年銷售額的百分比來看，它約為 29%。當你考慮明年的這些預期時，想想我們給出一個季度的收入，但我們給出的利潤率指導明年會有所改善；營業費用，我們給你那個數字。因此，當您考慮全年的營業收入和建模時，我想您可以考慮我們期望繼續改進並繼續控制我們的營業費用，就像我們所做的那樣今年。

Got it. The growth rate in tungsten and dielectrics is decelerating a little bit. I know the comps are getting more difficult here, but could you comment at all on whether you're seeing some slowing in the underlying growth rate of those businesses?

知道了。鎢和電介質的增長率略有放緩。我知道這裡的競爭變得越來越困難，但你能否評論一下你是否看到這些企業的潛在增長率有所放緩？

Yes. Thanks, Mike. And I think you hit it with your first -- the first part of your question is it's a tough comp. So we're really pleased with the results. We saw tungsten, dielectrics and pads all records this year, all up sequentially as well.

是的。謝謝，邁克。而且我認為你第一次擊中它 - 你問題的第一部分是它是一個艱難的組合。所以我們對結果非常滿意。我們看到今年鎢、電介質和墊的所有記錄都按順序增長。

And if you look at where the industry has been operating and if you use us as a proxy since we're really consumable-based and wafer start-based, this is our sixth consecutive record quarter. We've guided up sequentially, which would imply a seventh. And I think it reflects an industry that's really running at fairly full capacity. And so the ability to continue to grow, although we've continued to grow faster than the industry, I think it's somewhat constrained just by the industry utilization at this point.

而且，如果您查看該行業的運營情況，並且如果您將我們用作代理，因為我們確實是基於消耗品和基於晶圓開始的，那麼這是我們連續第六個創紀錄的季度。我們已經按順序向上引導，這意味著第七個。我認為這反映了一個真正以相當滿負荷運轉的行業。因此，繼續增長的能力，儘管我們的增長速度繼續快於行業，但我認為目前僅受行業利用率的限制。

Got it. And then maybe the last question for now is just related to the new pads customer that you announced. What's the incremental revenue opportunity on an annual basis? And do we see any contribution from that customer in the fourth quarter results?

知道了。然後也許現在的最後一個問題只與您宣布的新護墊客戶有關。每年增加收入的機會是什麼？我們是否在第四季度的業績中看到該客戶的貢獻？

Yes, and pads, again, this is an exciting area for us. We're up 26% year-over-year. We see a lot of runway to go, as well, and continued great traction. And we just want to highlight one of the wins that we had this past quarter. We did see some incremental sales, and we expect that to ramp up really in this current year. We haven't really dimensionalized how much that would contribute in '19 other than to say that we're confident in our ability to really continue to grow this business. And as you've seen over the last several years, we've grown it quite a bit. So pleased with the performance in pads.

是的，還有護墊，這對我們來說是一個令人興奮的領域。我們同比增長 26%。我們也看到很多跑道要走，並且繼續保持強大的牽引力。我們只想強調我們在上個季度取得的勝利之一。我們確實看到了一些增量銷售，我們預計今年會真正增加。除了說我們對我們真正繼續發展這項業務的能力充滿信心之外，我們還沒有真正確定這將在 19 年做出多少貢獻。正如您在過去幾年中看到的那樣，我們已經發展了很多。對護墊的性能非常滿意。

And our next question comes from Dmitry Silversteyn with Buckingham Research.

我們的下一個問題來自白金漢研究中心的 Dmitry Silversteyn。

Can you hear me now?

你能聽到我嗎？

We sure can. I think we might have lost you again.

我們當然可以。我想我們可能又失去了你。

And our next question comes from Amanda Scarnati with Citi.

我們的下一個問題來自花旗的 Amanda Scarnati。

Just a question on the increase in demand that you saw for the CMP product, on both the memory side and the logic side. Is this all sort of on the leading edge? Or were you seeing any sort of demand increases and improvement on the lagging edge? There has been some news in the market recently that there has been some weakness in industrial and automotive. Just want to see what you are seeing out there in the market.

只是一個關於您在內存方面和邏輯方面看到的 CMP 產品需求增加的問題。這一切都處於領先地位嗎？或者您是否看到任何形式的需求增加和落後優勢的改善？最近市場上有消息稱，工業和汽車領域出現了一些疲軟。只是想看看你在市場上看到了什麼。

Amanda, and just to kind of reaffirm what we mentioned in our prepared comments, Scott mentioned that we're seeing -- we expect this quarter to be up low to mid-single digits, and that would be another record quarter for us; so really broad based. We have seen some increases more recently in advanced logic, which I think would be expected. But I think if you just pull up and look fundamentally at our business, it really speaks to the strength of the consumable-based business model versus kind of the CapEx.

阿曼達，為了重申我們在準備好的評論中提到的內容，斯科特提到我們正在看到——我們預計本季度將增長到中低個位數，這對我們來說將是另一個創紀錄的季度；如此廣泛的基礎。我們最近看到了高級邏輯的一些增長，我認為這是意料之中的。但我認為，如果你只是停下來從根本上審視我們的業務，它確實說明了基於消費品的商業模式相對於資本支出的優勢。

There's been a lot of noise recently about equipment pushouts. And I think customers are quick to push out capital expense -- expenses, but really reluctant to take down utilization. I think that's what we're seeing. So we've talked about that for a while around the strength of our business model. We expect that to continue to be resilient, and feel like we're well positioned to perform well and thrive in a variety of different environments.

最近有很多關於設備推出的聲音。而且我認為客戶很快就會推出資本支出——支出，但真的不願意降低利用率。我認為這就是我們所看到的。所以我們已經圍繞我們的商業模式的優勢討論了一段時間。我們希望它繼續保持彈性，並且感覺我們已經做好準備，可以在各種不同的環境中表現出色並蓬勃發展。

And can you quantify the amount, the percentage of sales that's in that leading-edge logic and memory versus trailing edge at this point?

你能量化數量嗎？在這一點上，領先邏輯和內存與落後邊緣的銷售百分比？

Yes, I would just say one indicator could be our sales of advanced tungsten. We talked about that the end of fiscal '17; that was 28%. We did see a significant increase this year. That supports both memory and advanced logic. And so I think by the end of FY '18, it was around 36% or so. That should give you some indication of the strength of the advanced technologies for both advanced logic and memory.

是的，我只想說一個指標可能是我們的高級鎢的銷售額。我們談到了 17 財年的結束；那是 28%。今年我們確實看到了顯著的增長。支持內存和高級邏輯。所以我認為到 18 財年末，這一比例約為 36%。這應該讓您了解高級邏輯和內存的高級技術的強度。

Great. And then the last question I have is just a little bit more broadly speaking in terms of demand increases versus ASP increases. How are you tracking along that? I know with the dielectrics, there's sort of a cannibalization, if you would, of older products you're seeing some ASP boost there. But if you can quantify in any way the strength that you're seeing and how that relates to that ASP lift versus overall demand?

偉大的。然後，我的最後一個問題只是在需求增長與 ASP 增長方面更廣泛地說。你是如何追踪的？我知道對於電介質，如果你願意的話，你會看到舊產品有一些 ASP 提升。但是，如果您能以任何方式量化您所看到的優勢，以及它與 ASP 提升與總體需求的關係如何？

Yes, thanks Amanda. When we think -- we haven't quantified the price impact for the quarter. It was a contributor to our revenue growth. And we feel as being leaders in the marketplace, we're good stewards of price in the marketplace and we're able to price on the high level of value that our products provide to our customers. In terms of quantifying it any further, I think that's a contributing factor to the improved gross margin guidance that we're giving for next year, coming out of this year. Price is not the only piece of that, but it's a contributor to the improved basis points that we're indicating on margin.

是的，謝謝阿曼達。當我們思考時——我們還沒有量化本季度的價格影響。這是我們收入增長的一個貢獻。我們覺得自己是市場的領導者，我們是市場價格的好管家，我們能夠根據我們的產品為客戶提供的高價值定價。就進一步量化而言，我認為這是我們從今年開始為明年提供的改進毛利率指導的一個促成因素。價格不是其中唯一的一部分，但它是我們在保證金上表示的改進基點的一個貢獻者。

Yes, and just to add some color to Scott's comments especially on the dielectrics side, we're really pleased there as well, up 16% year-over-year. And we've been talking about this transition for a while, with our new family of colloidal and ceria-based products. And so it's both cannibalization as well as displacements, and we've kind of noted a few significant competitive displacements throughout the year. And we expect this to continue to grow and gain momentum into fiscal '19. Dielectrics CMP is actually the largest segment for CMP. And so while we have a very strong participation and leadership position there, we also see continued runway for us to displace others with that -- with our new products.

是的，只是為了給斯科特的評論增添一些色彩，尤其是在電介質方面，我們也很高興，同比增長 16%。一段時間以來，我們一直在談論這種轉變，以及我們新的膠體和基於二氧化鈰的產品系列。因此，這既是蠶食又是流離失所，我們已經註意到全年出現了一些重大的競爭性流離失所。我們預計這種情況將繼續增長並在 19 財年獲得動力。電介質 CMP 實際上是 CMP 的最大部分。因此，雖然我們在那裡擁有非常強大的參與和領導地位，但我們也看到了我們用我們的新產品取代其他人的持續跑道。

And our next question comes from Dmitry Silversteyn with Buckingham Research.

我們的下一個問題來自白金漢研究中心的 Dmitry Silversteyn。

You guys hear me now?

你們現在聽到我了嗎？

Yes, we got you, Dmitry.

是的，我們找到你了，德米特里。

All right, great. Still trying to figure out this phone system here. Couple of questions. You mentioned that you're about 50% to 60% into the transition from 3D NAND -- or to 3D NAND from 2D NAND. Can you remind us how long it took you to get to this level? I seem to remember it was something like 6, 7 quarters maybe, if I counted this correctly. And then kind of talk about the pace of adoption or transition. Is it accelerating, is it slowing down as we get to north of 60%? I'm just trying to understand how many more years this is going to be a driver for your tungsten business.

好吧，太好了。仍在嘗試在這裡弄清楚這個電話系統。幾個問題。您提到從 3D NAND 或從 2D NAND 到 3D NAND 的過渡大約有 50% 到 60%。你能提醒我們你花了多長時間才達到這個水平嗎？我似乎記得大概有 6、7 個季度，如果我沒數錯的話。然後談談採用或過渡的速度。當我們到達 60% 以北時，它是在加速還是在減速？我只是想了解這將成為您鎢業務的驅動力還有多少年。

Yes. So Dmitry, what we commented on is just to confirm that is 50% to 60% conversion, that's with our -- at our customers. Those are that are currently producing 2D, we think, 50% to 60% have converted to 3D. And it's been somewhat lumpy. I think it's occurred over the last several years. So obviously, Samsung was the first one out there. And really, I think, the only thing we would say is it continues to transition. And you know the memory business: you have to continue to progress if you want to be competitive, not only from a technology, but also a pricing standpoint from a customer's viewpoint. So we'd expect full conversion.

是的。所以德米特里，我們的評論只是為了確認 50% 到 60% 的轉化率，這是我們的客戶。那些目前正在製作 2D 的，我們認為，50% 到 60% 已經轉換為 3D。它有點凹凸不平。我認為它發生在過去的幾年裡。很明顯，三星是第一個。真的，我認為，我們唯一要說的就是它繼續過渡。你知道內存業務：如果你想保持競爭力，你必須不斷進步，不僅要從技術上，還要從客戶的角度來看定價。所以我們期望完全轉換。

And we saw some of the remarks overnight from Hynix. They're continuing to spend money on equipment, and continue to convert over as well. So I'd say there is still a long runway ahead. How quickly customers convert really depends on who the customer is, how confident they are in their yield. But we're working with all the major memory manufacturers, and I think one thing that we're confident in is that they will all convert over time.

我們看到了海力士一夜之間的一些言論。他們繼續在設備上花錢，並繼續轉換。所以我想說前面還有很長的跑道。客戶轉化的速度實際上取決於客戶是誰，以及他們對收益的信心程度。但我們正在與所有主要內存製造商合作，我認為我們有信心的一件事是他們都會隨著時間的推移而轉變。

And I think, really, since you brought up this subject, there's been a lot of discussion around memory pricing. And I want to just remind that, that is really not a good correlation with how our business would correspond within memory. Because, especially for those memory customers, they really want to continue to fully utilize their fab so they continue running at full utilization. I think they're just trying to balance supply/demand with the pricing environment for memory right now.

而且我認為，真的，自從您提出這個主題以來，圍繞內存定價進行了很多討論。我只想提醒一下，這與我們的業務在內存中的對應方式並沒有很好的相關性。因為，特別是對於那些內存客戶，他們真的希望繼續充分利用他們的晶圓廠，以便他們繼續以充分利用的方式運行。我認為他們現在只是試圖通過內存的定價環境來平衡供需。

Okay, okay, David. So in another words, you really have not seen a slowing in the adoption rate. You can maybe not be able to speak to the acceleration, but at least it's maintaining the lumpy pace it had before, is what you're saying.

好的，好的，大衛。所以換句話說，你真的沒有看到採用率放緩。你可能無法談論加速，但至少它保持了以前的顛簸步伐，這就是你所說的。

Yes, I think things continue to progress there. And the interesting thing is there have been some prognosticators that have actually said that if the NAND price stays low, it could accelerate the cannibalization from hard disk drives to solid state, because the price becomes even closer to that of hard disk drives. So it's an interesting dynamic for us. Obviously, we just continue to work closely with those customers and we're pleased with our strong growth in memory this year.

是的，我認為事情在那裡繼續取得進展。有趣的是，確實有一些預言家表示，如果 NAND 價格保持低位，它可能會加速從硬盤驅動器到固態驅動器的蠶食，因為價格會變得更接近硬盤驅動器。所以這對我們來說是一個有趣的動態。顯然，我們只是繼續與這些客戶密切合作，我們對今年內存的強勁增長感到滿意。

Sounds good. Just to follow up on the last question. The dielectric growth that you guys are seeing, is there any way you can sort of parse out how much of that was kind of a mix improvement from self-cannibalization of the older slurries with the new colloidals and silica-based slurries and ceria-based slurries? And how much of that was sort of pure share gain kind of above and beyond the market growth level?

聽起來不錯。只是跟進最後一個問題。你們所看到的介電增長，有沒有什麼方法可以分析出其中有多少是舊漿料與新膠體和二氧化矽基漿料以及二氧化鈰基漿料的自我蠶食的混合改進泥漿？其中有多少是超出市場增長水平的純份額收益？

Yes, I don't think we've dimensionalized that. I do think we would -- we've said before and it continues to be true -- that the ceria products, the growth there is stronger than the colloidal right now. Ceria is really more focused and preferred by memory customers. So you can infer there's been more gains and more position wins with the memory customers and our new ceria products. But we haven't dimensionalized the advanced dielectrics from more of the legacy. But we've seen strength pretty much all around the portfolio.

是的，我不認為我們已經將其維度化。我確實認為我們會——我們之前說過，這仍然是正確的——二氧化鈰產品，那裡的增長現在比膠體更強勁。Ceria確實更受內存客戶的關注和青睞。因此，您可以推斷出內存客戶和我們的新二氧化鈰產品帶來了更多的收益和更多的位置勝利。但是我們還沒有從更多的遺產中對先進的電介質進行尺寸化。但我們幾乎在整個投資組合中都看到了實力。

Okay, got it. You mentioned several times the high utilization rates at your customers and their fabs. Where are your utilization rates lie right now between -- I guess, it's the 3 plants that you have, maybe a little bit more now -- on the slurries side of the business? You're making investments into the pad side in terms of CapEx, but I'm assuming there's also CapEx going into expanding production of your slurry business. So can you talk about kind of where you are in terms of utilization rates, if there was such a metric that you follow?

好，知道了。您多次提到您的客戶及其晶圓廠的高利用率。在業務的泥漿方面，您的利用率現在位於何處 - 我想，這是您擁有的 3 家工廠，現在可能更多一些？就資本支出而言，您正在對墊方進行投資，但我假設資本支出也將用於擴大您的漿料業務的生產。那麼，如果您遵循這樣的指標，您能否談談您在利用率方面所處的位置？

Yes. For us, Dmitry, as the leader of the industry, our philosophy for slurry has always been we can never run short or even tight capacity. And so we run our plants with a target of not very -- we're not talking 90s; it's more like 60s and 70% utilization. And we like that just because in case there's a surge of demand, we're ready to accommodate that. And that's been our philosophy for many years.

是的。對我們來說，Dmitry，作為行業的領導者，我們對漿料的理念一直是我們永遠不會缺貨甚至產能緊張。因此，我們運營工廠的目標不是很——我們不是在談論 90 年代；它更像是 60 年代和 70% 的利用率。我們之所以喜歡這樣，是因為萬一需求激增，我們已準備好應對。多年來，這一直是我們的理念。

Also, as you know, for us, CapEx is not a significant part of our business. So if we wanted to build a new slurry facility, it's not a significant capital expense for us as well. Our most recent slurry expansion was in Korea. We've expanded that facility several times, which is just an indication of our strength in that region.

另外，如您所知，對我們而言，資本支出並不是我們業務的重要組成部分。因此，如果我們想建造一個新的泥漿設施，這對我們來說也不是一筆可觀的資本支出。我們最近的泥漿擴張是在韓國。我們對該設施進行了多次擴建，這恰恰表明了我們在該地區的實力。

Okay, okay. And then final question, raw materials obviously not a huge part of your cost of goods sold when you look at your gross margin, but it is a part. Everybody in the Street seems to be complaining; and I'm talking about materials industry seems to be complaining about raw material cost. Your margins -- your gross margins don't indicate like you're seeing any pressure. But can you comment on sort of what's going on with your input cost, and how do you look at 2019?

好吧好吧。然後是最後一個問題，當您查看毛利率時，原材料顯然不是您銷售商品成本的很大一部分，但它是一部分。街上的每個人似乎都在抱怨；我說的材料行業似乎在抱怨原材料成本。你的利潤——你的毛利率並不表明你看到了任何壓力。但是你能評論一下你的投入成本是怎麼回事嗎？你如何看待 2019 年？

Yes, our raw materials, Dmitry, are generally -- have been pretty stable. We have long-term contracts at silica; it's items that are drilled out at the ground, essentially. So they're not petroleum based. They're not impacted by swings in oil prices and things of a more volatile nature. So we've seen some stability our -- out of our COGS. Our materials are about 50%, and that's been relatively -- that's been stable, as I mentioned. And again, with our turning over of our product line, moving our customers to more advanced type of technologies, and then also the stewardship aspect of price in the marketplace, that's helped us to be able to contribute and to expand gross margins over time.

是的，我們的原材料德米特里一般都非常穩定。我們在二氧化矽有長期合同；本質上，它是在地面上鑽出的物品。所以它們不是以石油為基礎的。它們不受油價波動和波動性更大的因素的影響。因此，我們已經看到了我們的 COGS 的一些穩定性。正如我提到的，我們的材料大約佔 50%，這是相對穩定的。再一次，隨著我們產品線的轉變，將我們的客戶轉移到更先進的技術類型，以及市場價格的管理方面，這有助於我們能夠隨著時間的推移做出貢獻並擴大毛利率。

I get the fact that your mineral-based raw materials, and particles that you make out of them, probably haven't moved that much. But your products have gone to more and more chemistry and less and less abrasives, so I thought maybe some etchants or assets or some of the more esoteric products may have started to move on you. So that's why I was asking.

我知道你的礦物原料和你用它們製成的顆粒可能沒有移動那麼多。但是你的產品越來越多地使用化學物質，越來越少的研磨劑，所以我想也許一些蝕刻劑或資產或一些更深奧的產品可能已經開始對你產生影響。所以這就是我問的原因。

Yes, and I think, Dmitry, we have a really great team in our supplier management function that really spends a lot of time not only working on commercial, but also the quality arrangements we have with our key suppliers. It is true; we've gone away from high particle loading and more towards chemistry. But if you look at the contribution of even the chemistries into our products, it's pretty minimal. So I think we've done a good job maintaining and even offsetting some -- any increases we may have seen in the market.

是的，我認為，德米特里，我們在供應商管理職能方面擁有一支非常出色的團隊，他們不僅花費大量時間從事商業工作，而且還與我們的主要供應商進行質量安排。是真的;我們已經從高顆粒負載轉向化學。但是，如果您查看化學對我們產品的貢獻，就會發現它非常小。所以我認為我們在維持甚至抵消一些方面做得很好——我們可能在市場上看到的任何增長。

(Operator Instructions) Our next question comes from Chris Kapsch with Loop Capital Markets.

（操作員說明）我們的下一個問題來自 Loop Capital Markets 的 Chris Kapsch。

So one follow-up just to clarify on this transition to 3D NAND. You said 50% to 60% of that transition has happened. But just to -- did you say -- I just want to -- I'm assuming it's 50% of the -- 50% to 60% of the installed capacity, because I think you said 50% to 60% of the customers. I know it's a subtle nuance. But if your -- the biggest customers obviously have a disproportionate amount of the installed capacity. So just trying to make sure I understand that.

因此，一個後續行動只是為了澄清向 3D NAND 的過渡。你說 50% 到 60% 的轉變已經發生。但只是 - 你說過 - 我只是想 - 我假設它是裝機容量的 50% - 50% 到 60%，因為我想你說的是 50% 到 60% 的客戶.我知道這是一個微妙的細微差別。但是，如果您的 - 最大的客戶顯然擁有不成比例的裝機容量。所以只是想確保我理解這一點。

Yes, it is related to capacity; not customers, Chris. Thanks.

是的，這與能力有關；不是顧客，克里斯。謝謝。

Yes, okay. And then just on, if you -- is there a way to think about the transition to the advanced dielectrics? Is there a way to think about that transition in that context, as well, in terms of -- I don't know that you'd expect like 100% of all dielectric applications to eventually transition to these advanced dielectrics slurries. I mean, that would be amazing if it did, I guess. But is there a way to think about how far along the transition is in terms of the adoption of the advanced colloidal and advanced ceria-based dielectrics slurries?

是的，好的。然後繼續，如果你 - 有沒有辦法考慮向高級電介質的過渡？有沒有一種方法可以在這種情況下考慮這種轉變，以及——我不知道你會期望所有電介質應用中的 100% 最終過渡到這些先進的電介質漿料。我的意思是，我想，如果它真的發生了，那就太棒了。但是，在採用先進的膠體和先進的基於二氧化鈰的電介質漿料方面，是否有一種方法可以考慮過渡的進展情況？

Yes. We haven't quantified it, but I'd say there is still a lot of runway. And the reason for that is, one, as I mentioned earlier, the dielectrics TAM is largest of all the CMP areas. So obviously, just a lot of room for us to either displace others or replace our own products.

是的。我們還沒有量化它，但我想說還有很多跑道。原因之一是，正如我之前提到的，電介質 TAM 是所有 CMP 區域中最大的。很明顯，我們有很大的空間來取代他人或更換我們自己的產品。

The other thing is some of those products are being specced into the most advanced applications for memory and logic. So for the latest 3D NAND or DRAM or advanced logic, they also have a lot of dielectric polishing; and obviously they need new solutions for that. So that's part of where those advanced dielectric solutions go.

另一件事是其中一些產品被指定用於最先進的內存和邏輯應用程序。所以對於最新的3D NAND或者DRAM或者高級邏輯，他們也有很多介質拋光；顯然他們需要新的解決方案。這就是那些先進的電介質解決方案的一部分。

And then the other part, which is probably where you're more focused is how are we doing displacing others, displacing ourselves with the legacy area. And I think there, there's also still a lot of runway. And it's really up for customers to decide whether they're using an existing product, whether it's CMC or otherwise, we think these new products can provide them lower cost of ownership, better performance. And obviously they're better -- in terms of manufacturability, profitability -- for us, better as well. So that's an ongoing conversation. We think that there's a couple -- several years still to go with that conversion, and we're excited both on the legacy side as well as continue to work with customers on their new technologies.

然後另一部分，您可能更關注的是我們如何取代他人，用遺留領域取代我們自己。而且我認為那裡還有很多跑道。客戶真的可以決定他們是否使用現有產品，無論是 CMC 還是其他，我們認為這些新產品可以為他們提供更低的擁有成本和更好的性能。顯然，它們在可製造性和盈利能力方面更好，對我們來說也更好。所以這是一個持續的對話。我們認為這種轉換還有幾年 - 幾年時間，我們對遺留方面感到興奮，並繼續與客戶合作開發他們的新技術。

Well, David, just to follow up on that. You encouraged customers to make that analysis a little bit more closely by introducing a price increase to some of these legacy dielectric products, I believe, I don't know if that's 4 or 5 months ago. So just wondering if you're seeing evidence that, that's actually accelerated the transition in terms of qualifications or adoption of the advanced dielectric? Or customers that just don't want to change their process of record, maybe don't have the tool time to do it -- are they just begrudgingly taking the price increase in some of the legacy products? Any change in the dynamic based on that introduction of a price increase?

好吧，大衛，只是為了跟進。您鼓勵客戶通過對其中一些傳統電介質產品提價來更仔細地進行分析，我相信，我不知道那是 4 個月還是 5 個月前。所以只是想知道您是否看到證據表明，這實際上加速了先進電介質在資格或採用方面的轉變？或者只是不想更改其記錄流程的客戶可能沒有工具時間來執行此操作——他們是否只是不情願地接受某些遺留產品的價格上漲？基於價格上漲的引入，動態有任何變化嗎？

Yes, I think it helps with conversations, and every customer is different. So some customer -- I think overall, I would say, it just emphasizes the stickiness of the consumables once they're being used in high-volume manufacturing. But I do think it's allowed us to have conversations at different levels of the customer. We've also used that -- leveraged that opportunity to talk about consumable sets; and not only introducing new slurries, but also pads along with that. So we're pleased so far with that effort. It's early, but it's just -- that was just one aspect of the price increase that we talked about.

是的，我認為它有助於對話，每個客戶都是不同的。所以一些客戶——我認為總的來說，我會說，它只是強調了消耗品一旦用於大批量製造時的粘性。但我確實認為它讓我們能夠在不同層次的客戶中進行對話。我們還利用了這一點——利用這個機會來討論消耗品套裝；不僅引入了新的漿料，還引入了墊子。所以到目前為止，我們對這一努力感到滿意。現在還早，但這只是 - 這只是我們談到的價格上漲的一個方面。

Can I ask a question about the sort of full year guidance for '19 on the gross margin line, looking pretty amazing, the sustained improvement there. I don't know that you want to parse out the drivers of that. But is it simply a function of your -- the highest growth coming from your highest-margin products? Or is there something else above and beyond that, that's contributing here?

我能問一個關於毛利率線上 19 年全年指導的問題嗎，看起來非常驚人，那裡的持續改善。我不知道您想解析出它的驅動程序。但這僅僅是您的函數——最高利潤率產品帶來的最高增長嗎？還是有其他東西在這之外做出了貢獻？

Yes. You're right, Chris. We're going to be reluctant to dimensionalize too precisely here. But price is a contributor. A mix improvement, particularly in tungsten and dielectrics, as we move to more advanced technologies, is a contributor. And then there's also a volume leverage aspect to that, as plants are running hard. Dave mentioned where we are from a capacity utilization perspective, very comfortable with that. But as volumes continue to grow, you get a volume leverage aspect in your manufacturing operations that helps contribute to that, too.

是的。你是對的，克里斯。我們將不願意在這裡過於精確地維度化。但價格是一個貢獻者。隨著我們轉向更先進的技術，混合改進，特別是在鎢和電介質方面，是一個貢獻者。然後還有一個數量槓桿方面，因為工廠正在努力運行。Dave 提到了我們從容量利用率的角度來看，對此非常滿意。但隨著產量的持續增長，您在製造業務中獲得了產量槓桿方面的幫助，這也有助於實現這一目標。

Yes, and then just, lastly, Chris, I'd just add to Scott's comments that I think we're executing well, whether it's being leaders in terms of taking pricing actions when we should be, or improving and refreshing our product portfolio, that's also another aspect. So I think there's -- if you look just generally, you have tungsten, which is, we've talked about it, higher than corporate gross margin; dielectrics, which we have the transition going on ,and so that also could be a tailwind for gross margin; and then pads, which is incremental gross margin dollars positive, but not as high as the corporate gross margin. So there's also some moving parts on mix. On top of that, I think there's just been some really good execution from the commercial teams and the supplier management teams and operations.

是的，最後，克里斯，我想補充一下斯科特的評論，我認為我們執行得很好，無論是在我們應該採取定價行動方面處於領先地位，還是在改進和更新我們的產品組合方面，這也是另一方面。所以我認為 - 如果你只是一般地看，你有鎢，我們已經談到它，高於公司毛利率；電介質，我們正在進行轉型，因此這也可能成為毛利率的順風；然後是 pads，這是增量毛利率美元正數，但不如公司毛利率高。所以混音中也有一些活動部件。最重要的是，我認為商業團隊、供應商管理團隊和運營部門的執行非常出色。

Okay. Last question, and it's totally off-topic. But as you're approaching this -- the approval and closure date for the KMG acquisition, are you guys contemplating changing the name of the company? I mean, just -- I'm asking; I'm not really tongue-in-cheek; but you're diversifying into some completely industrial businesses. And so I just don't know -- I was just curious if that's something you're contemplating because -- or will those businesses simply be part of a sort of Cabot Microelectronics portfolio, but operate brand -- under their existing brands in those markets?

好的。最後一個問題，這完全是題外話。但是當你接近這個 - KMG 收購的批准和結束日期時，你們是否正在考慮更改公司名稱？我的意思是，只是——我在問；我不是真的開玩笑；但你正在多元化發展到一些完全工業化的企業。所以我只是不知道——我只是很好奇你是否正在考慮這件事，因為——或者這些業務只是卡博特微電子產品組合的一部分，但運營品牌——在他們現有的品牌下市場？

Right, so on the KMG acquisition, we're really excited about it. Since you brought up the topic, let me just mention a few things. We're really excited about taking 2 world-class materials businesses and putting them together. And I think the resulting combination, one is it gives us significant size, scale and presence in electronic materials; and we're going to be supplying materials to just about every critical process step. And then also, as we talked about and you mentioned participation in new markets like pipeline that have been growing strongly, we're really excited about that, and we anticipate the close to be approximately around November 16.

是的，所以對於 KMG 的收購，我們真的很興奮。既然你提到了這個話題，那我就簡單說幾句吧。我們真的很高興能收購兩家世界級的材料企業並將它們整合在一起。我認為由此產生的組合，一個是它給了我們顯著的規模、規模和電子材料的存在；我們將為幾乎每個關鍵工藝步驟提供材料。然後，正如我們談到的那樣，你提到了對管道等新市場的參與，這些市場一直在強勁增長，我們對此感到非常興奮，我們預計收盤時間大約在 11 月 16 日左右。

As far as the name change goes, stay tuned. But obviously it's something that we have thought about over time. We also recognize the Cabot Microelectronics brand has obviously recognition and value from our customers' standpoint. So it's something that we'll consider in its entirety as we get beyond the close of the acquisition.

至於名字的變化，敬請期待。但顯然這是我們隨著時間的推移而考慮的事情。我們還認識到，從客戶的角度來看，卡博特微電子品牌具有明顯的認可度和價值。因此，這是我們在收購結束後會全面考慮的事情。

And our next question comes from Mike Harrison with Seaport Global Securities.

我們的下一個問題來自 Seaport Global Securities 的 Mike Harrison。

I just had a quick one. We don't usually talk much about the Engineering Surface Finishes business, but 40% growth this quarter, 33% growth for the full year. Can you talk about some of the drivers there and maybe touch on the sustainability of that growth rate? If this flattens out, when might we expect that to happen?

我剛吃了一個。我們通常不會過多談論工程表面處理業務，但本季度增長 40%，全年增長 33%。你能談談那裡的一些驅動因素，並可能談談這種增長率的可持續性嗎？如果這種情況趨於平緩，我們預計什麼時候會發生這種情況？

Yes, Mike. The biggest part of that business is the QED business, which is a small portion. It's about 6% of our total revenue. It's actually an equipment-based product, whereas the rest of our -- the 94% or so of our company is consumables based. So there's a little more volatility in that sub-segment than we have in the rest of our consumables-based business.

是的，邁克。該業務的最大部分是 QED 業務，這是一小部分。這大約占我們總收入的 6%。它實際上是一種基於設備的產品，而我們公司的其餘部分——我們公司 94% 左右的產品都是基於消耗品的。因此，與我們其他基於消耗品的業務相比，該子細分市場的波動性更大。

And QED had a -- did have a strong quarter. We sell that equipment into a range of different industries: general optics; semi, of course; and also some other, like defense. So there is some more volatility in that sub-segment that's driving that number. And it's a small portion of our total business, nonconsumables based, so it becomes a little bit more difficult to predict going forward.

QED 有一個 - 確實有一個強勁的季度。我們將該設備銷售到一系列不同的行業：通用光學；當然是半；還有一些其他的，比如防禦。因此，推動該數字的子細分市場存在更大的波動性。而且它只占我們全部業務的一小部分，基於非消耗品，因此預測未來變得有點困難。

That said, I have say that the team at QED has done a great job continuing to drive performance of that business. We see a healthy backlog. But as Scott mentioned, it's volatile and lumpy because it's an equipment-based business. It's the only equipment-based business that we have in our portfolio.

也就是說，我說過 QED 的團隊在繼續推動該業務的績效方面做得很好。我們看到了健康的積壓。但正如 Scott 所提到的，它不穩定且起伏不定，因為它是一項基於設備的業務。這是我們投資組合中唯一基於設備的業務。

Thank you. Ladies and gentlemen, this concludes our question-and-answer session for today's call.

謝謝。女士們，先生們，今天的電話會議問答環節到此結束。

I would now like to turn the call back over to Colleen Mumford for any further remarks.

我現在想將電話轉回給 Colleen Mumford 以徵求進一步意見。

Great, thank you. That is all the questions that we have this morning. Thank you for your time and your continued interest in Cabot Microelectronics. Have a great day.

太好了謝謝。這就是我們今天早上的所有問題。感謝您抽出寶貴時間以及對卡博特微電子的持續關注。祝你有美好的一天。

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

女士們，先生們，感謝你們參加今天的會議。這確實結束了今天的節目，你們都可以斷開連接。每個人，祝你有美好的一天。