ATMI Inc. (ATMI, Financial) filed Quarterly Report for the period ended 2009-03-31.
ATMI Inc. is a leading supplier of materials equipment and related services used worldwide in the manufacture of semiconductor devices. The company specifically target the ``front-end`` semiconductor materials market. Their customers include most of the leading semiconductor manufacturers in the world including Intel Taiwan Semiconductor Hyundai Texas Instruments and IBM. ATMI Inc. has a market cap of $562.8 million; its shares were traded at around $17.95 with a P/E ratio of 24.2 and P/S ratio of 1.7. ATMI Inc. had an annual average earning growth of 43.8% over the past 5 years.
Revenues declined 59.7 percent to $37.4 million in the first quarter of 2009 from $92.8 million in the first quarter of 2008. The decline in revenues occurred in both our microelectronics and life sciences product lines, but was more pronounced in the microelectronics product lines, and was primarily the result of the global economic downturn, and which was magnified by excess inventory in the SDS distribution channel. Revenues in our microelectronics product lines declined 62.9 percent to $31.7 million in the first quarter of 2009 from $85.5 million in the first quarter of 2008. The primary drivers of the decline in microelectronics revenues were significant reductions in fab utilization rates (reductions in wafer starts), as demand for consumer electronics devices fell significantly since the first quarter of last year, and by excess inventory in the SDS and flat-panel display channels, driven by our customers aggressive management of their inventories. Consumer electronics spending, the primary driver of wafer start growth and fab utilization rates, has declined dramatically since the same quarter of the previous year, and it is difficult to predict when this demand trend will improve. Reductions in average selling prices accounted for approximately 1 percent of the decline in microelectronics revenues. Revenues in our life sciences product lines decreased 22.2 percent in the first quarter of 2009 to $5.7 million compared to $7.3 million in the first quarter of 2008. The decline in life sciences revenues is primarily attributable to global macroeconomic conditions and reductions in capital spending and aggressive management of inventories by biopharmaceutical companies as a result of economic uncertainties.
Gross profit decreased 85.1 percent to $6.9 million in the first quarter of 2009 from $46.4 million in the first quarter of 2008. Our gross margin percentage decreased during this time period from 50.0 percent in the first quarter of 2008 to 18.6 percent in the first quarter of 2009. Gross profit in our microelectronics product lines decreased 88.3 percent to $5.1 million in the first quarter of 2009 from $43.3 million in the first quarter of 2008. Gross profit margins in our microelectronics product lines were approximately 16 percent in the first quarter of 2009 compared to approximately 51 percent in the first quarter of 2008. Gross profit in the first quarter of 2009 includes a $2.9 million asset impairment charge, due primarily to the planned idling of manufacturing capacity of gas products, which manufacturing we currently expect to transition to a manufacturing and distribution partner to eliminate a redundant cost structure. We have also recognized a $1.1 million charge to increase our reserves for excess and obsolete inventories to cover expected chemical shelf-life issues in our microelectronics product lines. Sales volume reductions as a result of the global recession were the primary driver of the remainder of the decline in gross profit. Gross profit in our life sciences product lines decreased 40 percent to $1.9 million in the first quarter of 2009 compared to $3.1 million in the first quarter of 2008. Gross profit margins in our life sciences product lines declined to approximately 33 percent in the first quarter of 2009 from approximately 42 percent in the first quarter of 2008, driven primarily by lower revenue volumes due to the global recession.
Research and development (R&D) expense increased 37.2 percent to $11.7 million in the first quarter of 2009 from $8.5 million in the first quarter of 2008. The increase in R&D spending was primarily caused by planned increases in spending associated with HPD activities related to cleans chemistries (including $1.7 million of higher licensing and outsourced development costs) and a $1.5 million asset impairment charge related primarily to idled equipment. As a percentage of revenues, R&D expense was 31.2 percent in the first quarter of 2009 compared to 9.2 percent in the first quarter of 2008. The spending in 2009 was higher as a percent of revenues than we had planned, primarily because revenues were lower than expected for the reasons noted above. As a result of the global economic recession and related impact on our business, we amended an alliance agreement, which will reduce expenses for the remainder of 2009 by $3.0 million in order to better align the timing of HPD platform support activities to the expected timing of our customer integration activities. The amendment reduces the amount we will pay for support in 2009 and confirms commitments to pay for incremental activities in 2010. We plan to continue to actively invest in our HPD capabilities in the foreseeable future, because we believe this investment will drive significant new opportunities in cleans chemistries and other new products and will be a competitive advantage for ATMI.
SG&A decreased 2.0 percent to $22.2 million in the first quarter of 2009 from $22.7 million in the first quarter of 2008. SG&A, as a percentage of revenues, increased to 59.5 percent in the first quarter of 2009 compared to 24.5 percent in the first quarter of 2008. The first quarter of 2009 results include a $1.8 million asset impairment charge related primarily to redundant enterprise management software and a $1.5 million charge to increase our reserves for bad debt to cover exposures related to customer bankruptcy filings and uncertainties of collections due to the current general macroeconomic conditions. As a result of the current economic environment, we have implemented cost reduction activities which contributed to the decline in SG&A spending, excluding the charges noted above. These cost reductions include reductions in salaries and incentives ($1.9 million), travel ($1.5 million), and recruiting and relocation ($0.3 million).
We incurred an operating loss of $27.0 million in the first quarter of 2009 compared to operating income of $15.2 million in the first quarter of 2008. This change is from a variety of factors, such as the significant decline in revenues from the global economic downturn and excess inventories in the distribution channel, the $6.2 million impairment charge for long-lived assets, the $1.5 million charge for bad debt expense, the $1.1 million charge for excess and obsolete inventories, and other items as noted above.
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ATMI Inc. is a leading supplier of materials equipment and related services used worldwide in the manufacture of semiconductor devices. The company specifically target the ``front-end`` semiconductor materials market. Their customers include most of the leading semiconductor manufacturers in the world including Intel Taiwan Semiconductor Hyundai Texas Instruments and IBM. ATMI Inc. has a market cap of $562.8 million; its shares were traded at around $17.95 with a P/E ratio of 24.2 and P/S ratio of 1.7. ATMI Inc. had an annual average earning growth of 43.8% over the past 5 years.
Highlight of Business Operations:
During the first quarter of 2009, ATMIs revenues declined by 59.7 percent compared to the first quarter of 2008, primarily due to the global economic downturn, which began in earnest in the second half of 2008 and drove significant declines in demand across most segments of the economy. The decline in our revenues was further magnified by excess inventory in the SDS® distribution channel, as well as our customers aggressive management of their inventories. Future reductions in wafer starts and continued low fab utilization rates in the microelectronics industry, including foundries, and other logic and memory chip manufacturers, are expected to adversely affect the Companys near term results. In the first quarter of 2009 we recognized a $6.2 million ($2.9 million in cost of revenues, $1.5 million in research and development, and $1.8 million in selling, general and administrative) impairment charge for long-lived assets that are being held and used, but are either redundant or being idled due to uncertainties of future demand, a $2.4 million impairment charge for an auction-rate security, $1.5 million of bad debt expense, and a $1.1 million charge for excess and obsolete inventories. As a result of the global recession, we have implemented, and continue to implement, cost-reduction actions to better align the Companys activities with expectations for customer demand for our products and to preserve cash, without hindering our commitment to make investments that we expect to drive future growth. These actions resulted in lower costs in the first quarter of 2009 compared to the first quarter of 2008 in the following areas: salaries and incentives ($3.4 million); travel ($1.9 million), and recruiting and relocation spending ($0.3 million). We also amended an alliance agreement in order to better align the timing of support activities related to our high-productivity development (HPD) platform to the expected timing of our customer integration activities, which will reduce expenses for the remainder of 2009 by $3.0 million. As a result of the global recession and the charges discussed above, we incurred a net loss of $18.4 million ($0.59 per diluted share) in the first quarter of 2009 compared to net income of $10.4 million ($0.32 per diluted share) in the first quarter of 2008.Revenues declined 59.7 percent to $37.4 million in the first quarter of 2009 from $92.8 million in the first quarter of 2008. The decline in revenues occurred in both our microelectronics and life sciences product lines, but was more pronounced in the microelectronics product lines, and was primarily the result of the global economic downturn, and which was magnified by excess inventory in the SDS distribution channel. Revenues in our microelectronics product lines declined 62.9 percent to $31.7 million in the first quarter of 2009 from $85.5 million in the first quarter of 2008. The primary drivers of the decline in microelectronics revenues were significant reductions in fab utilization rates (reductions in wafer starts), as demand for consumer electronics devices fell significantly since the first quarter of last year, and by excess inventory in the SDS and flat-panel display channels, driven by our customers aggressive management of their inventories. Consumer electronics spending, the primary driver of wafer start growth and fab utilization rates, has declined dramatically since the same quarter of the previous year, and it is difficult to predict when this demand trend will improve. Reductions in average selling prices accounted for approximately 1 percent of the decline in microelectronics revenues. Revenues in our life sciences product lines decreased 22.2 percent in the first quarter of 2009 to $5.7 million compared to $7.3 million in the first quarter of 2008. The decline in life sciences revenues is primarily attributable to global macroeconomic conditions and reductions in capital spending and aggressive management of inventories by biopharmaceutical companies as a result of economic uncertainties.
Gross profit decreased 85.1 percent to $6.9 million in the first quarter of 2009 from $46.4 million in the first quarter of 2008. Our gross margin percentage decreased during this time period from 50.0 percent in the first quarter of 2008 to 18.6 percent in the first quarter of 2009. Gross profit in our microelectronics product lines decreased 88.3 percent to $5.1 million in the first quarter of 2009 from $43.3 million in the first quarter of 2008. Gross profit margins in our microelectronics product lines were approximately 16 percent in the first quarter of 2009 compared to approximately 51 percent in the first quarter of 2008. Gross profit in the first quarter of 2009 includes a $2.9 million asset impairment charge, due primarily to the planned idling of manufacturing capacity of gas products, which manufacturing we currently expect to transition to a manufacturing and distribution partner to eliminate a redundant cost structure. We have also recognized a $1.1 million charge to increase our reserves for excess and obsolete inventories to cover expected chemical shelf-life issues in our microelectronics product lines. Sales volume reductions as a result of the global recession were the primary driver of the remainder of the decline in gross profit. Gross profit in our life sciences product lines decreased 40 percent to $1.9 million in the first quarter of 2009 compared to $3.1 million in the first quarter of 2008. Gross profit margins in our life sciences product lines declined to approximately 33 percent in the first quarter of 2009 from approximately 42 percent in the first quarter of 2008, driven primarily by lower revenue volumes due to the global recession.
Research and development (R&D) expense increased 37.2 percent to $11.7 million in the first quarter of 2009 from $8.5 million in the first quarter of 2008. The increase in R&D spending was primarily caused by planned increases in spending associated with HPD activities related to cleans chemistries (including $1.7 million of higher licensing and outsourced development costs) and a $1.5 million asset impairment charge related primarily to idled equipment. As a percentage of revenues, R&D expense was 31.2 percent in the first quarter of 2009 compared to 9.2 percent in the first quarter of 2008. The spending in 2009 was higher as a percent of revenues than we had planned, primarily because revenues were lower than expected for the reasons noted above. As a result of the global economic recession and related impact on our business, we amended an alliance agreement, which will reduce expenses for the remainder of 2009 by $3.0 million in order to better align the timing of HPD platform support activities to the expected timing of our customer integration activities. The amendment reduces the amount we will pay for support in 2009 and confirms commitments to pay for incremental activities in 2010. We plan to continue to actively invest in our HPD capabilities in the foreseeable future, because we believe this investment will drive significant new opportunities in cleans chemistries and other new products and will be a competitive advantage for ATMI.
SG&A decreased 2.0 percent to $22.2 million in the first quarter of 2009 from $22.7 million in the first quarter of 2008. SG&A, as a percentage of revenues, increased to 59.5 percent in the first quarter of 2009 compared to 24.5 percent in the first quarter of 2008. The first quarter of 2009 results include a $1.8 million asset impairment charge related primarily to redundant enterprise management software and a $1.5 million charge to increase our reserves for bad debt to cover exposures related to customer bankruptcy filings and uncertainties of collections due to the current general macroeconomic conditions. As a result of the current economic environment, we have implemented cost reduction activities which contributed to the decline in SG&A spending, excluding the charges noted above. These cost reductions include reductions in salaries and incentives ($1.9 million), travel ($1.5 million), and recruiting and relocation ($0.3 million).
We incurred an operating loss of $27.0 million in the first quarter of 2009 compared to operating income of $15.2 million in the first quarter of 2008. This change is from a variety of factors, such as the significant decline in revenues from the global economic downturn and excess inventories in the distribution channel, the $6.2 million impairment charge for long-lived assets, the $1.5 million charge for bad debt expense, the $1.1 million charge for excess and obsolete inventories, and other items as noted above.
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