Welcome to the Cabot Microelectronics Fourth Quarter and Fiscal 2016 Earnings Conference Call. [Operator Instructions]. I would now like to introduce your host for today's conference Ms. Trisha Tuntland, Director of Investor Relations. Ma’am, you may begin.

Good morning. With me today are David Li, President and CEO, who is participating in our call from our office in Shanghai and Bill Johnson, Executive Vice President and CFO. This morning we reported results for our fourth quarter and full fiscal year 2016, which ended September 30. 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 on our website. Please remember that our discussions today may include forward-looking statements that involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from these forward-looking statements. These risk factors are discussed in our SEC filings, including our report filed on Form 10-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 Trisha, good morning everyone and thanks for joining us. This morning we announced strong results for our fourth quarter and full fiscal 2016. During the quarter we achieved record revenue of $122.7 million approximately 23% higher than in the same quarter last year and record diluted earnings per share of $0.83 which represents an increase of 66% compared to last year. In addition we continued our strong cash flow generation trend with cash flow from operations of $37.5 million. For full fiscal year 2016 we achieved revenue of $430.4 million, approximately 4% higher than last year. Record diluted earnings per share of $2.43 which represents an increase of approximately 8% compared to last year and cash flow from operations of $95.2 million. We believe our record earnings performance this fiscal year after also achieving record earnings last year is evidence of our continued successful execution of our strategy initiatives and the strength of our focused business model. Bill will provide more detail on our financial results later in the call. Let me start with some prospects on the global semi-conductor industry environment. As forecast by several of our customers and industry analysts, industry demand remained strong during the September quarter and our results are consistent with this and also with the expectations we discussed during our third quarter conference call in July. You may recall that at the end of the June quarter most IC inventories related to smartphone, wireless, network, automotive and gaming markets were at normal seasonal levels. And reports suggest that exiting the September quarter inventories related to these markets are now lean. Certain industry participants have indicated that this is due to the stronger than normal seasonal demand during the third calendar quarter. In particular, it appears that this was driven by new product launches…

Thanks, Dave. Good morning everyone. Revenue for the fourth quarter of fiscal 2016 was a record $122.7 million which represents a 22.5% increase from the same quarter last year including the benefit of our NexPlanar acquisition. We generated 20.5% year-over-year revenue growth from our IC CMP consumables products. Total revenue for the full fiscal year of $430.4 million represents a 3.9% increase from the prior year. Our fourth quarter and full year revenue results reflect stronger global semiconductor industry demand in the second half of the fiscal year, drilling down into revenue by product area, tungsten slurries contributed 41.2% of total quarterly revenue. We achieved record revenue for the quarter with revenue up 8.8% compared to the same quarter last year and also record revenue for the full year up 3.7% compared to last year. Our tungsten growth was driven by strong demand from both memory and logic applications. Dielectrics slurries provided 22.1% of our revenue this quarter with sales up 22.8% from the same quarter a year ago, for the full year dielectrics slurry revenue increased by 2.9%. As Dave mentioned earlier during the fiscal year we saw strong demand for some of our new high performing colloidal silica and ceria-based dielectric slurries products. Sales of slurries for polishing metals other than tungsten including copper, aluminum and barrier represented 14.2% of our total revenue and increased 5.4% from the same quarter last year. For the full year revenue here revenue decreased by 10.7%, the decrease was primarily in our aluminum slurries due to customer efficiencies and repurposing of production capacity for the next technology node which we previously discussed. Sales of polishing pads which include our NexPlanar acquisition represented 12.7% of our total revenue for the quarter and increased 131.8% compared to the same quarter last year. Our pads…

[Operator Instructions]. Our first question comes from the line of Amanda Scarnati with Citi. Your line is open. Please go ahead.

Just kind of going to the percentage of sales to 3D NAND. I think it was mentoned David, it was 20% of tungsten sales were too advanced technologies versus 13% in fiscal '15. Is the majority of that to 3D or does that include 3D and 10 nanometer [indiscernible] how would you quantify your expectation where that number going forward?

We're really obviously pleased with our continued execution tungsten which is obviously a really important part of our company and you know as you mentioned the growth is really also giving us you know we're really encouraged to see that. So we mentioned 20% of our revenue in tungsten this fiscal year came from supporting advanced technologies versus 13% last year of that 20% it's relatively balanced between 3D NAND and advanced logic FinFet but I would say from a trajectory standpoint that 3D NAND is at a much higher growth rate going forward.

And moving into the CapEx addition for 2017, a majority of that was into the Korea -- is there also some expansion in China and capabilities there with the revenue growing so strongly there and the opportunity quite significantly and I assume there would be some expansion there as well?

The guidance we provided for capital spending in 2017 is $20 million to $25 million and you’re aware that in ordinary year that might be on the order of 15 million or so million and it's higher than that when we add bricks and mortar or some other initiative. So last year we saw a little bit higher spending on the NexPlanar acquisition and Dave mentioned we’re expanding some production capacity there, but the real increase from 2016 to 2017 is the $8 million project we have are expanding in South Korea. You referred to China and we've achieved really strong revenue growth there. We don't have manufacturing capabilities there but in the light of the industry and a strong growth expectations there we’re constantly conserving ways to secure the existing position and grow with the market as we expected to grow there in the future.

The next question comes from the line as Dmitry Silversteyn with Longbow Research. Your line is open. Please go ahead.

You provided the guidance for the gross margin on the GAAP basis, do you expect there to be kind of a similar 1.5 and 2 point GAAP or so between GAAP and non-GAAP results because of NexPlanar. So I mean on the adjusted basis should I be thinking more like 49 to 51 as the range for gross margin for next year?

Yes so the non-GAAP adjustments we have made were a couple of things, one was related to amortization expense and that will continue at the current or the rate in fiscal '16 continue into the fiscal '17. There's also some transaction related cost up front but if you look at our third and fourth fiscal quarter it was about a percentage difference between non-GAAP and GAAP and I think you ought to expect that similar percentage difference going forward.

And then second question sticking with pads, you raised your guidance for 2018 revenues to $80 million to $90 million by my calculations you've done something on the order of $25 million or so from NexPlanar this year buying up on 2015 when they did 22 million. So that's quite an acceleration of growth that you're looking over the next two years from NexPlanar. Is it all based on the order book that you currently have in the trials that you're currently running or there are expectations that the trends that you saw this year will accelerate over the next two years?

Yes Dmitry, it's a bit of both, you know we're really proud of our growth and execution. This quarter and for the year that we've had NexPlanar with us but obviously far from satisfied you can tell we're gaining more confidence in our ability to really grow this business and you mentioned the improved range of $80 million to $90 million by fiscal year '18 and that’s a combination of growth from existing customers ramping, we mentioned we are currently selling eight out of the Top 10 but also new products or new opportunities in the pipeline and we mentioned a new consumable set win that we’re really excited about that's what the major memory manufacturer and within that existing customers as you would imagine as they get the pad in and get comfortable with its performance and it's just low cost of ownership, they're able to take that to different applications and proliferate it across their different fabs and different applications and that's what we're seeing. So it's a bit of both a growth with existing customers but also a really full pipeline of opportunities in different stages of qualification.

[Operator Instructions]. And I'm showing no further questions on the phone line.

Thank you for your time and your interest in Cabot Microelectronics.