Lam Research Corporation Reports Financial Results for the Quarter Ended June 26, 2016
/EINPresswire.com/ -- FREMONT, CA--(Marketwired - July 27, 2016) - Lam Research Corp. (NASDAQ: LRCX) today announced financial results for the quarter ended June 26, 2016 (the "June 2016 quarter").
Highlights for the June 2016 quarter were as follows:
- Shipments of $1,587 million and revenue of $1,546 million.
- GAAP gross margin of 45.2%, GAAP operating margin of 20.0%, and GAAP diluted EPS of $1.46.
- Non-GAAP gross margin of 46.6%, non-GAAP operating margin of 23.2%, and non-GAAP diluted EPS of $1.80.
Key Financial Data for the Quarters Ended June 26, 2016 and March 27, 2016
(in thousands, except per-share data, percentages, and basis points)
U.S. GAAP
----------------------------------------------------------------------------
Change
June 2016 March 2016 Q/Q
----------- ----------- ---------
Shipments $ 1,587,417 $ 1,446,002 + 10%
Revenue $ 1,546,261 $ 1,314,055 + 18%
Gross margin as percentage of revenue 45.2% 43.5% + 170 bps
Operating margin as percentage of
revenue 20.0% 14.5% + 550 bps
Diluted EPS $ 1.46 $ 0.82 + 78%
Non-GAAP
----------------------------------------------------------------------------
Change
June 2016 March 2016 Q/Q
----------- ----------- ---------
Shipments $ 1,587,417 $ 1,446,002 + 10%
Revenue $ 1,546,261 $ 1,314,055 + 18%
Gross margin as percentage of revenue 46.6% 45.1% + 150 bps
Operating margin as percentage of
revenue 23.2% 18.4% + 480 bps
Diluted EPS $ 1.80 $ 1.18 + 53%
U.S. GAAP Financial Results
For the June 2016 quarter, revenue was $1,546 million, gross margin was $699 million, or 45.2% of revenue, operating expenses were $390 million, operating margin was 20.0% of revenue, and net income was $259 million, or $1.46 per diluted share on a GAAP basis. This compares to revenue of $1,314 million, gross margin of $571 million, or 43.5% of revenue, operating expenses of $381 million, operating margin of 14.5% of revenue, and net income of $143 million, or $0.82 per diluted share, for the quarter ended March 27, 2016 (the "March 2016 quarter").
Non-GAAP Financial Results
For the June 2016 quarter, non-GAAP gross margin was $720 million or 46.6% of revenue, non-GAAP operating expenses were $361 million, non-GAAP operating margin was 23.2% of revenue, and non-GAAP net income was $315 million, or $1.80 per diluted share. This compares to non-GAAP gross margin of $593 million or 45.1% of revenue, non-GAAP operating expenses of $350 million, non-GAAP operating margin of 18.4% of revenue, and non-GAAP net income of $203 million, or $1.18 per diluted share for the March 2016 quarter.
"The June quarter was characterized by very positive momentum as the Company met or exceeded expectations across the board," said Martin Anstice, Lam Research's President and Chief Executive Officer. "Sequential quarterly operating profit growth of approximately 500 basis points is a strong endorsement of Lam's opportunity and execution capabilities. Our guidance for record shipments in September and outlook for second half 2016 growth confirms our increased strategic relevance, strong customer trust and the differentiation of our core values. We believe that our underlying fundamentals and multi-year outperformance opportunity remain strong on a standalone basis, and subsequent to closing our merger with KLA-Tencor we are focused on further strengthening that position and accelerating innovation for the benefit of our customers."
Balance Sheet and Cash Flow Results
Cash and cash equivalents, short-term investments, and restricted cash and investments balances increased to $7.1 billion at the end of the June 2016 quarter compared to $4.8 billion at the end of the March 2016 quarter. This increase was primarily the result of approximately $1.9 billion in debt proceeds, net repayments of maturing debt, combined with $424 million of cash generated in operating activities.
Deferred revenue at the end of the June 2016 quarter increased to $566 million as compared to $511 million at the end of the March 2016 quarter. Deferred profit at the end of the June 2016 quarter increased to $349 million as compared to $334 million at the end of the March 2016 quarter. Lam's deferred revenue balance does not include shipments to Japanese customers, to whom title does not transfer until customer acceptance. Shipments to Japanese customers are classified as inventory at cost until the time of acceptance. The estimated future revenue from shipments to Japanese customers was approximately $132 million as of June 26, 2016.
Geographic Distribution
The geographic distribution of shipments and revenue during the June 2016 quarter is shown in the following table:
Region Shipments Revenue
----------------------------------------------- ------------- -------------
China 17% 22%
Southeast Asia 20% 21%
Taiwan 20% 15%
Korea 15% 15%
Japan 14% 14%
United States 10% 10%
Europe 4% 3%
Outlook
For the September 2016 quarter, Lam is providing the following guidance:
Reconciling
U.S. GAAP Items Non-GAAP
----------------------- ----------- -----------------------
Shipments $1.700 $75 $1.700 $75
Billion +/- Million -- Billion +/- Million
Revenue $1.625 $75 $1.625 $75
Billion +/- Million -- Billion +/- Million
Gross margin 44.2% +/- 1% $21 Million 45.5% +/- 1%
Operating margin 20.2% +/- 1% $37 Million 22.5% +/- 1%
Net income per
diluted share $1.48 +/- $0.10 $48 Million $1.77 +/- $0.10
Diluted share
count 178 Million 2 Million 176 million
The information provided above is only an estimate of what the Company believes is realizable as of the date of this release, and does not incorporate the potential impact of any KLA-Tencor related acquisition or integration expenses other than the net interest expense associated with the KLA-Tencor pre-acquisition funding, business combinations, asset acquisitions, divestitures, financing arrangements, other investments, or other significant transactions that may be completed after the date of this release. GAAP to non-GAAP reconciling items provided include only those items that are known and can be estimated as of the date of this release. Actual results will vary from this model and the variations may be material. Reconciling items included above are as follows:
- Gross Margin - amortization related to intangible assets acquired in the Novellus transaction, $21 million.
- Operating margin - amortization related to intangible assets acquired in the Novellus transaction, $37 million.
- Earnings per share - amortization related to intangible assets acquired in the Novellus transaction, $37 million; net interest expense associated with KLA-Tencor pre-acquisition funding, $18 million; amortization of note discounts, $6 million; and associated tax benefit for non-GAAP items ($13) million; totaling $48 million.
- Diluted share count - impact of a note hedge issued contemporaneously with the convertible notes due 2018, 2 million shares.
Use of Non-GAAP Financial Results
In addition to U.S. GAAP results, this press release also contains non-GAAP financial results. The Company's non-GAAP results for both the June 2016 and March 2016 quarters exclude amortization related to intangible assets acquired in the Novellus transaction, restructuring impacts, the amortization of notes discounts, costs associated with the KLA-Tencor acquisition, amortization of bridge loan issuance costs and other related fees associated with the KLA-Tencor acquisition, tax benefit of non-GAAP items, and income tax benefit on resolution of certain tax matters. Additionally, the June 2016 quarter excludes Novellus acquisition transaction related inventory fair value impact, cost associated with campus consolidation, gain on sale of real property net of associated exit costs, KLA-Tencor pre-acquisition funding net interest expense, and change to income tax benefit from court ruling.
Management uses non-GAAP gross margin, operating income, operating expenses, operating margin, net income, and net income per diluted share to evaluate the Company's operating and financial results. The Company believes the presentation of non-GAAP results is useful to investors for analyzing business trends and comparing performance to prior periods, along with enhancing investors' ability to view the Company's results from management's perspective. Tables presenting reconciliations of non-GAAP results to U.S. GAAP results are included at the end of this press release and on the Company's website at http://investor.lamresearch.com.
Caution Regarding Forward-Looking Statements
Statements made in this press release that are not of historical fact are forward-looking statements and are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate to, but are not limited to; the estimated future revenue from shipments to Japanese customers; our second half calendar year 2016 growth outlook and its impact on our strategic relevance, customer trust and differentiation of our core values; the extent of our underlying fundamentals and multi-year outperformance opportunities as a standalone entity and our ability to strengthen those positions and accelerate innovation for the benefit of our customers following the proposed acquisition of KLA-Tencor Corporation ("KLA-Tencor"); the legal and business factors that may affect our future tax rate; our ability to close the proposed acquisition of KLA-Tencor; and our guidance for shipments, revenue, gross margin, operating margin, net income or earnings per diluted share, and diluted share count. Some factors that may affect these forward-looking statements include: the proposed transaction with KLA-Tencor may not close and if it does close we may not receive the expected benefits of the proposed transaction, such as the scale and breadth of critical technologies and better financial performance for our stockholders; business conditions in the consumer electronics industry, the semiconductor industry and the overall economy may deteriorate or change; and the actions of our customers and competitors may be inconsistent with our expectations, as well as the other risks and uncertainties that are described in the documents filed or furnished by us with the Securities and Exchange Commission, including specifically the Risk Factors described in our annual report on Form 10-K for the fiscal year ended June 28, 2015 and quarterly reports on Form 10-Q for the fiscal quarters ended September 27, 2015, December 27, 2015 and March 27, 2016. These uncertainties and changes could materially affect the forward looking statements and cause actual results to vary from expectations in a material way. The Company undertakes no obligation to update the information or statements made in this release.
About Lam Research
Lam Research Corp. (NASDAQ: LRCX) is a trusted global supplier of innovative wafer fabrication equipment and services to the semiconductor industry. Lam's broad portfolio of market-leading deposition, etch, and clean solutions helps customers achieve success on the wafer by enabling device features that are 1,000 times smaller than a grain of sand, resulting in smaller, faster, more powerful, and more power-efficient chips. Through collaboration, continuous innovation, and delivering on commitments, Lam is transforming atomic-scale engineering and enabling its customers to shape the future of technology. Based in Fremont, Calif., Lam Research is a Nasdaq-100 Index® and S&P 500® company whose common stock trades on the Nasdaq Global Select Market℠ under the symbol LRCX. For more information, please visit http://www.lamresearch.com. (LRCX-F)
Consolidated Financial Tables Follow.
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data and percentages)
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data and percentages)
Three Months Ended Twelve Months Ended
---------------------------------- ----------------------
June 26, March 27, June 28, June 26, June 28,
2016 2016 2015 2016 2015
---------- ---------- ---------- ---------- ----------
(unaudited) (unaudited) (unaudited) (unaudited) (1)
Revenue $1,546,261 $1,314,055 $1,481,370 $5,885,893 $5,259,312
Cost of goods
sold 847,477 742,790 839,832 3,266,971 2,974,976
---------- ---------- ---------- ---------- ----------
Gross margin 698,784 571,265 641,538 2,618,922 2,284,336
Gross margin
as a percent
of revenue 45.2% 43.5% 43.3% 44.5% 43.4%
Research and
development 237,255 221,494 221,675 913,712 825,242
Selling, general
and
administrative 152,288 159,018 149,384 630,954 591,611
Goodwill
Impairment -- -- 79,444 -- 79,444
---------- ---------- ---------- ---------- ----------
Total
operating
expenses 389,543 380,512 450,503 1,544,666 1,496,297
---------- ---------- ---------- ---------- ----------
Operating
income 309,241 190,753 191,035 1,074,256 788,039
Operating
income as a
percent of
revenue 20.0% 14.5% 12.9% 18.3% 15.0%
Other expense,
net (27,249) (29,834) (20,353) (114,139) (47,189)
---------- ---------- ---------- ---------- ----------
Income before
income taxes 281,992 160,919 170,682 960,117 740,850
Income tax
expense (23,053) (17,468) (39,411) (46,068) (85,273)
---------- ---------- ---------- ---------- ----------
Net income $ 258,939 $ 143,451 $ 131,271 $ 914,049 $ 655,577
========== ========== ========== ========== ==========
Net income per
share:
Basic $ 1.62 $ 0.90 $ 0.83 $ 5.75 $ 4.11
========== ========== ========== ========== ==========
Diluted $ 1.46 $ 0.82 $ 0.74 $ 5.22 $ 3.70
========== ========== ========== ========== ==========
Number of shares
used in per
share
calculations:
Basic 159,862 159,039 158,590 158,919 159,629
========== ========== ========== ========== ==========
Diluted 177,649 174,373 176,575 175,159 177,067
========== ========== ========== ========== ==========
Cash dividend
declared per
common share $ 0.30 $ 0.30 $ 0.30 $ 1.20 $ 0.84
========== ========== ========== ========== ==========
(1) Derived from audited financial statements.
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 26, March 27, June 28,
2016 2016 2015
------------ ------------ ------------
(unaudited) (unaudited) (1)
ASSETS
Cash and cash equivalents $ 5,039,322 $ 2,232,021 $ 1,501,539
Investments 1,788,612 2,306,718 2,574,947
Accounts receivable, net 1,262,145 1,236,617 1,093,582
Inventories 971,911 934,932 943,346
Other current assets 152,921 231,277 157,435
------------ ------------ ------------
Total current assets 9,214,911 6,941,565 6,270,849
Property and equipment, net 639,608 664,424 621,418
Restricted cash and investments 250,421 227,838 170,969
Goodwill and intangible assets 1,951,197 1,999,338 2,115,649
Other assets 215,391 191,097 185,763
------------ ------------ ------------
Total assets $ 12,271,528 $ 10,024,262 $ 9,364,648
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of convertible notes
and capital leases $ 949,494 $ 978,982 $ 1,359,650
Other current liabilities 1,470,308 1,363,204 1,271,711
------------ ------------ ------------
Total current liabilities 2,419,802 2,342,186 2,631,361
Long-term debt and capital leases 3,383,581 1,407,250 1,001,382
Income taxes payable 231,514 266,681 202,930
Other long-term liabilities 134,562 137,017 184,023
------------ ------------ ------------
Total liabilities 6,169,459 4,153,134 4,019,696
------------ ------------ ------------
Temporary equity, convertible notes 207,552 178,789 241,808
Stockholders' equity (2) 5,894,517 5,692,339 5,103,144
------------ ------------ ------------
Total liabilities and
stockholders' equity $ 12,271,528 $ 10,024,262 $ 9,364,648
============ ============ ============
(1) Derived from audited financial statements.
(2) Common shares issued and outstanding were 160,201 as of June 26, 2016,
159,319 as of March 27, 2016 and 158,531 as of June 28, 2015.
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended Twelve Months Ended
---------------------------------- -----------------------
June 26, March 27, June 28, June 26, June 28,
2016 2016 2015 2016 2015
---------- ---------- ---------- ---------- -----------
(unaudited) (unaudited) (unaudited) (unaudited) (1)
CASH FLOWS FROM
OPERATING
ACTIVITIES:
Net income $ 258,939 $ 143,451 $ 131,271 $ 914,049 $ 655,577
Adjustments to
reconcile net
income to net
cash provided
by operating
activities:
Depreciation
and
amortization 74,976 73,664 70,177 291,028 277,920
Deferred
income taxes (46,708) (4,908) (2,694) (49,003) 5,551
Impairment of
long-lived
assets -- -- 9,821 -- 9,821
Equity-based
compensation
expense 39,288 34,716 39,734 142,348 135,354
Income tax
benefit on
equity-based
compensation
plans (8,048) 1,312 (2,124) (1,023) 11,316
Excess tax
benefit on
equity-based
compensation
plans 9,035 (2,262) 1,809 1,020 (11,398)
Amortization
of note
discounts and
issuance
costs 14,584 22,458 11,023 70,522 37,550
Gain on sale
of business -- -- -- -- (7,431)
Gain on sale
of assets (15,223) -- -- (15,223) --
Goodwill
impairment -- -- 79,444 -- 79,444
Other, net 17,929 10,256 3,621 48,788 12,656
Changes in
operating
assets and
liabilities 79,052 (95,776) (50,016) (52,229) (420,857)
---------- ---------- ---------- ---------- -----------
Net cash
provided by
operating
activities 423,824 182,911 292,066 1,350,277 785,503
---------- ---------- ---------- ---------- -----------
CASH FLOWS FROM
INVESTING
ACTIVITIES:
Capital
expenditures
and intangible
assets (51,726) (46,007) (63,133) (175,330) (198,265)
Business
acquisitions,
net of cash
acquired -- -- -- -- (1,137)
Net sale
(purchase) of
available-for-
sale securities 605,891 181,938 (278,379) 798,828 (949,740)
Proceeds from
sale of
business — -- -- -- 41,212
Proceeds from
sale of assets 79,730 -- -- 79,730 3,978
Transfers of
restricted cash
and investments (112,381) -- 1,056 (112,381) 356
Other, net -- (200) -- 1,636 (2,500)
---------- ---------- ---------- ---------- -----------
Net cash
provided by
(used for)
investing
activities 521,514 135,731 (340,456) 592,483 (1,106,096)
---------- ---------- ---------- ---------- -----------
CASH FLOWS FROM
FINANCING
ACTIVITIES:
Principal
payments on
long-term debt
and capital
lease
obligations (450,624) (107) (615) (451,497) (1,515)
Proceeds from
issuance of
long-term debt,
net of issuance
costs 2,374,220 (8,372) 345 2,338,144 992,225
Excess tax
benefit on
equity-based
compensation
plans (9,035) 2,262 (1,809) (1,020) 11,398
Treasury stock
purchases (27,114) (20,092) (74,339) (158,389) (573,240)
Dividends paid (47,308) (47,539) (28,714) (190,402) (116,059)
Re-issuance of
treasury stock
related to
employee stock
purchase plan 20,360 16,387 16,950 55,992 48,803
Proceeds from
issuance of
common stock 1,547 308 1,285 3,405 17,520
Other, net (159) (7) (660) (488) (660)
---------- ---------- ---------- ---------- -----------
Net cash
provided by
(used for)
financing
activities 1,861,887 (57,160) (87,557) 1,595,745 378,472
---------- ---------- ---------- ---------- -----------
Effect of
exchange rate
changes on cash
and cash
equivalents 76 2,666 1,850 (722) (9,017)
Net increase
(decrease) in
cash and cash
equivalents 2,807,301 264,148 (134,097) 3,537,783 48,862
Cash and cash
equivalents at
beginning of
period 2,232,021 1,967,873 1,635,636 1,501,539 1,452,677
---------- ---------- ---------- ---------- -----------
Cash and cash
equivalents at
end of period $5,039,322 $2,232,021 $1,501,539 $5,039,322 $ 1,501,539
========== ========== ========== ========== ===========
(1) Derived from audited financial statements.
Non-GAAP Financial Summary
(in thousands, except percentages and per share data)
(unaudited)
Three Months Ended
--------------------------
June 26, March 27,
2016 2016
------------ ------------
Revenue $ 1,546,261 $ 1,314,055
Gross margin $ 720,162 $ 592,515
Gross margin as percentage of revenue 46.6% 45.1%
Operating expenses $ 361,490 $ 350,235
Operating income $ 358,672 $ 242,280
Operating margin as a percentage of revenue 23.2% 18.4%
Net income $ 314,806 $ 202,821
Net income per diluted share $ 1.80 $ 1.18
Shares used in per share calculation - diluted 175,052 172,153
Reconciliation of U.S. GAAP Net Income to Non-GAAP Net Income and U.S.
GAAP number of dilutive shares to Non-GAAP number of dilutive shares
(in thousands, except per share data)
(unaudited)
Three Months Ended
--------------------------
June 26, March 27,
2016 2016
------------ ------------
U.S. GAAP net income $ 258,939 $ 143,451
Pre-tax non-GAAP items:
Amortization related to intangible assets
acquired in Novellus transaction - cost of
goods sold 21,250 21,250
Novellus acquisition-related inventory fair
value impact - cost of goods sold 128 --
Restructuring charges - research and
development 43 72
Cost associated with campus consolidation -
research and development 7,763 --
KLA-Tencor acquisition-related costs -
selling, general and administrative 19,270 14,323
Gain on sale of assets, net associated exit
costs - selling, general and administrative (15,223) --
Amortization related to intangible assets
acquired in Novellus transaction -selling,
general and administrative 16,083 16,084
Restructuring charges (benefit) - selling,
general and administrative 117 (202)
Amortization of note discounts - other
expense, net 7,492 9,333
Amortization of bridge loan issuance costs
and other related fees - other expense, net 6,938 13,332
KLA-Tencor pre-acquisition funding interest
expense, net - other expense, net 3,821 --
Net income tax benefit on non-GAAP items (8,413) (14,320)
Income tax benefit on resolution of certain
tax matters (2,515) (502)
Change to income tax benefit due to a court
ruling (887) --
------------ ------------
Non-GAAP net income 314,806 202,821
============ ============
Non-GAAP net income per diluted share $ 1.80 $ 1.18
============ ============
U.S. GAAP number of shares used for per
diluted share calculation 177,649 174,373
Effect of convertible note hedge (2,597) (2,220)
------------ ------------
Non-GAAP number of shares used for per diluted
share calculation 175,052 172,153
============ ============
Reconciliation of U.S. GAAP Gross Margin, Operating Expenses and Operating
Income to Non-GAAP Gross Margin, Operating Expenses and Operating Income
(unaudited)
Three Months Ended
--------------------------
June 26, March 27,
2016 2016
------------ ------------
U.S. GAAP gross margin $ 698,784 $ 571,265
Pre-tax non-GAAP items:
Amortization related to intangible assets
acquired in Novellus transaction 21,250 21,250
Novellus acquisition-related inventory fair
value impact 128 --
------------ ------------
Non-GAAP gross margin $ 720,162 $ 592,515
============ ============
U.S. GAAP gross margin as a percentage of
revenue 45.2% 43.5%
Non-GAAP gross margin as a percentage of revenue 46.6% 45.1%
U.S. GAAP operating expenses $ 389,543 $ 380,512
Pre-tax non-GAAP items:
Restructuring charges (43) (72)
Cost associated with campus consolidation (7,763) --
KLA-Tencor acquisition-related costs (19,270) (14,323)
Gain on sale of assets, net associated exit
costs 15,223 --
Amortization related to intangible assets
acquired in Novellus transaction (16,083) (16,084)
Restructuring (charges) benefit (117) 202
------------ ------------
Non-GAAP operating expenses $ 361,490 $ 350,235
============ ============
Non-GAAP operating income $ 358,672 $ 242,280
============ ============
GAAP operating margin as percent of revenue 20.0% 14.5%
Non-GAAP operating margin as a percent of
revenue 23.2% 18.4%
Lam Research Corporation Contacts:
Satya Kumar
Investor Relations
phone: 510-572-3232
e-mail: satya.kumar@lamresearch.com
Legal Disclaimer:
EIN Presswire provides this news content "as is" without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.
