Lam Research Corp. (Nasdaq:LRCX) today announced financial results
for the quarter ended September 24, 2017 (the “September 2017
quarter”).
Highlights for the September 2017 quarter were as follows:
- Shipments of $2.38 billion and revenue of $2.48 billion.
- U.S. GAAP gross margin of 46.4%, U.S. GAAP operating margin of
28.0%, and U.S. GAAP diluted EPS of $3.21.
- Non-GAAP gross margin of 47.2%, non-GAAP operating margin of
29.6%, and non-GAAP diluted EPS of $3.46.
|
Key Financial Data for the Quarters
EndedSeptember 24, 2017 and June 25,
2017 (in thousands, except per-share data,
percentages, and basis points) |
|
U.S. GAAP |
|
|
September 2017 |
|
June 2017 |
|
Change Q/Q |
Shipments |
|
$ |
2,381,565 |
|
|
$ |
2,542,664 |
|
|
- 6 |
% |
Revenue |
|
$ |
2,478,140 |
|
|
$ |
2,344,907 |
|
|
+ 6 |
% |
Gross margin as
percentage of revenue |
|
46.4 |
% |
|
45.6 |
% |
|
+ 80 bps |
Operating margin as
percentage of revenue |
|
28.0 |
% |
|
25.9 |
% |
|
+ 210 bps |
Diluted EPS |
|
$ |
3.21 |
|
|
$ |
2.82 |
|
|
+ 14 |
% |
|
Non-GAAP |
|
|
September 2017 |
|
June 2017 |
|
Change Q/Q |
Shipments |
|
$ |
2,381,565 |
|
|
$ |
2,542,664 |
|
|
- 6 |
% |
Revenue |
|
$ |
2,478,140 |
|
|
$ |
2,344,907 |
|
|
+ 6 |
% |
Gross margin as
percentage of revenue |
|
47.2 |
% |
|
46.5 |
% |
|
+ 70 bps |
Operating margin as
percentage of revenue |
|
29.6 |
% |
|
27.7 |
% |
|
+ 190 bps |
Diluted EPS |
|
$ |
3.46 |
|
|
$ |
3.11 |
|
|
+ 11 |
% |
U.S. GAAP Financial Results
For the September 2017 quarter, revenue was $2,478 million,
gross margin was $1,149 million, or 46.4% of revenue, operating
expenses were $456 million, operating margin was 28.0% of revenue,
and net income was $591 million, or $3.21 per diluted share on a
U.S. GAAP basis. This compares to revenue of $2,345 million, gross
margin of $1,069 million, or 45.6% of revenue, operating expenses
of $461 million, operating margin of 25.9% of revenue, and net
income of $526 million, or $2.82 per diluted share, for the quarter
ended June 25, 2017 (the “June 2017 quarter”).
Non-GAAP Financial Results
For the September 2017 quarter, non-GAAP gross margin was $1,171
million or 47.2% of revenue, non-GAAP operating expenses were $438
million, non-GAAP operating margin was 29.6% of revenue, and
non-GAAP net income was $628 million, or $3.46 per diluted share.
This compares to non-GAAP gross margin of $1,090 million or 46.5%
of revenue, non-GAAP operating expenses of $440 million, non-GAAP
operating margin of 27.7% of revenue, and non-GAAP net income of
$566 million, or $3.11 per diluted share for the June 2017
quarter.
“Lam delivered another record quarter for revenue and non-GAAP
income in September and our positive momentum continues, with
calendar year shipments on track to grow nearly double the rate of
2017 industry growth,” said Martin Anstice, Lam Research’s
President and Chief Executive Officer. “The foundation of silicon
in an economy that is increasingly data driven, combined with
disciplined investment and more diversified demand drivers, points
to sustainable semiconductor industry capital spending. Lam’s
differentiated products and services are increasingly relevant to
the success of our customers, and that remains a core element of
our strategic focus. For more than five years, we have consistently
reported outperformance and this track record, combined with our
commitment to invest in our future with a focus on disruptive
technologies and enabling roadmaps, sets the stage for what we see
as a very exciting future for the company.”
Balance Sheet and Cash Flow Results
Cash and cash equivalents, short-term investments, and
restricted cash and investments balances increased slightly to $6.4
billion at the end of the September 2017 quarter compared to $6.3
billion at the end of the June 2017 quarter. Cash flows from
operating activities during the September 2017 quarter of $858
million were primarily utilized for approximately $155 million of
share repurchases, including net share settlement on employee
stock-based compensation; approximately $302 million of
principal payments on debt, primarily related to our convertible
notes; approximately $73 million of dividends paid to
stockholders; approximately $60 million of capital expenditures;
and approximately $116 million related to a business
acquisition.
Deferred revenue at the end of the September 2017 quarter
decreased to $938 million as compared to $966 million at the end of
the June 2017 quarter. Deferred profit at the end of the September
2017 quarter decreased to $598 million as compared to $608 million
at the end of the June 2017 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 $344 million as of September 24,
2017 and $397 million as of June 25, 2017.
Geographic Distribution
The geographic distribution of shipments and revenue during the
September 2017 quarter is shown in the following table:
Region |
Shipments |
|
Revenue |
Korea |
38 |
% |
|
38 |
% |
Japan |
19 |
% |
|
20 |
% |
Taiwan |
15 |
% |
|
14 |
% |
China |
10 |
% |
|
14 |
% |
United States |
8 |
% |
|
6 |
% |
Southeast Asia |
5 |
% |
|
5 |
% |
Europe |
5 |
% |
|
3 |
% |
Outlook
For the December 2017 quarter, Lam is providing the following
guidance:
|
U.S. GAAP |
|
Reconciling Items |
|
Non-GAAP |
Shipments |
$2.60 Billion |
+/- |
$100 Million |
|
— |
|
$2.60 Billion |
+/- |
$100 Million |
Revenue |
$2.55 Billion |
+/- |
$100 Million |
|
— |
|
$2.55 Billion |
+/- |
$100 Million |
Gross margin |
46.6% |
+/- |
1% |
|
$ |
23 |
|
Million |
|
47.5% |
+/- |
1% |
Operating margin |
28.4% |
+/- |
1% |
|
$ |
41 |
|
Million |
|
30.0% |
+/- |
1% |
Net income per diluted
share |
$3.40 |
+/- |
$0.12 |
|
$ |
38 |
|
Million |
|
$3.65 |
+/- |
$0.12 |
Diluted share
count |
184 Million |
|
2 |
|
Million |
|
182 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 business
combinations, asset acquisitions, divestitures, balance sheet
valuation adjustments, financing arrangements, other investments,
or other significant transactions that may be completed after the
date of this release. U.S. 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 through business combinations, $22 million; business
process reengineering, $1 million; totaling $23 million.
- Operating margin - amortization related to intangible assets
acquired through business combinations, $39 million; business
process reengineering, $2 million; totaling $41 million.
- Earnings per share - amortization related to intangible assets
acquired though business combinations, $39 million; business
process reengineering, $2 million; amortization of note discounts,
$4 million; and associated tax benefit for non-GAAP items ($7
million); totaling $38 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 September 2017 and June 2017 quarters exclude
amortization related to intangible assets acquired through business
combinations, costs associated with business process reengineering,
the amortization of note discounts, tax benefit of non-GAAP items,
and income tax benefit on the conclusion of tax matters related to
a prior business combination. Additionally, the September 2017
quarter non-GAAP results exclude acquisition costs associated with
a business combination.
Management uses non-GAAP gross margin, operating expense,
operating income, 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 revenue, industry, performance and general
outlooks, and their drivers; our future strategic relevance to
customers; our vision of the Company's future; technology demand
trends; the legal and business factors that may affect our future
tax rate; 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: 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 25, 2017.
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. is a global supplier of innovative wafer
fabrication equipment and services to the semiconductor industry.
As a trusted, collaborative partner to the world’s leading
semiconductor companies, we combine superior systems engineering
capability, technology leadership, and unwavering commitment to
customer success to accelerate innovation through enhanced device
performance. In fact, today, nearly every advanced chip is built
with Lam technology. Lam Research (Nasdaq:LRCX) is a FORTUNE 500®
company headquartered in Fremont, Calif., with operations around
the globe. Learn more at www.lamresearch.com. (LRCX-F)
Consolidated Financial Tables Follow.
LAM RESEARCH
CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(in thousands, except per share data and
percentages)(unaudited) |
|
|
|
Three Months Ended |
|
September 24, 2017 |
|
June 25, 2017 |
|
September 25, 2016 |
Revenue |
$ |
2,478,140 |
|
|
$ |
2,344,907 |
|
|
$ |
1,632,419 |
|
Cost of goods sold |
1,328,797 |
|
|
1,275,946 |
|
|
916,222 |
|
Gross
margin |
1,149,343 |
|
|
1,068,961 |
|
|
716,197 |
|
Gross
margin as a percent of revenue |
46.4 |
% |
|
45.6 |
% |
|
43.9 |
% |
Research and
development |
275,078 |
|
|
285,712 |
|
|
235,240 |
|
Selling, general and
administrative |
181,043 |
|
|
175,310 |
|
|
165,010 |
|
Total
operating expenses |
456,121 |
|
|
461,022 |
|
|
400,250 |
|
Operating
income |
693,222 |
|
|
607,939 |
|
|
315,947 |
|
Operating
income as a percent of revenue |
28.0 |
% |
|
25.9 |
% |
|
19.4 |
% |
Other expense, net |
(5,502 |
) |
|
(4,444 |
) |
|
(23,154 |
) |
Income
before income taxes |
687,720 |
|
|
603,495 |
|
|
292,793 |
|
Income tax expense |
(97,030 |
) |
|
(77,071 |
) |
|
(28,958 |
) |
Net
income |
$ |
590,690 |
|
|
$ |
526,424 |
|
|
$ |
263,835 |
|
Net income per
share: |
|
|
|
|
|
Basic |
$ |
3.64 |
|
|
$ |
3.25 |
|
|
$ |
1.64 |
|
Diluted |
$ |
3.21 |
|
|
$ |
2.82 |
|
|
$ |
1.47 |
|
Number of shares used
in per share calculations: |
|
|
|
|
|
Basic |
162,141 |
|
|
162,213 |
|
|
160,607 |
|
Diluted |
183,880 |
|
|
186,427 |
|
|
180,017 |
|
Cash dividend declared
per common share |
$ |
0.45 |
|
|
$ |
0.45 |
|
|
$ |
0.30 |
|
LAM RESEARCH
CORPORATIONCONDENSED CONSOLIDATED BALANCE
SHEETS(in thousands) |
|
|
September 24, 2017 |
|
June 25,2017 |
|
September 25, 2016 |
|
(unaudited) |
|
(1) |
|
(unaudited) |
ASSETS |
|
|
|
|
|
Cash and cash
equivalents |
$ |
2,406,462 |
|
|
$ |
2,377,534 |
|
|
$ |
5,861,701 |
|
Investments |
3,775,925 |
|
|
3,663,628 |
|
|
1,352,775 |
|
Accounts receivable,
net |
1,530,762 |
|
|
1,673,398 |
|
|
1,290,317 |
|
Inventories |
1,328,297 |
|
|
1,232,916 |
|
|
931,581 |
|
Other current
assets |
187,334 |
|
|
195,022 |
|
|
162,628 |
|
Total
current assets |
9,228,780 |
|
|
9,142,498 |
|
|
9,599,002 |
|
Property and equipment,
net |
745,600 |
|
|
685,595 |
|
|
649,587 |
|
Restricted cash and
investments |
256,045 |
|
|
256,205 |
|
|
255,640 |
|
Goodwill and intangible
assets |
1,904,389 |
|
|
1,796,668 |
|
|
1,912,431 |
|
Other assets |
263,812 |
|
|
241,799 |
|
|
219,702 |
|
Total
assets |
$ |
12,398,626 |
|
|
$ |
12,122,765 |
|
|
$ |
12,636,362 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
Current portion of
convertible notes and capital leases |
$ |
639,907 |
|
|
$ |
908,439 |
|
|
$ |
952,999 |
|
Other current
liabilities |
2,148,724 |
|
|
2,041,676 |
|
|
1,533,253 |
|
Total
current liabilities |
2,788,631 |
|
|
2,950,115 |
|
|
2,486,252 |
|
Long-term debt and
capital leases |
1,793,477 |
|
|
1,784,974 |
|
|
3,378,179 |
|
Income taxes
payable |
129,611 |
|
|
120,178 |
|
|
241,671 |
|
Other long-term
liabilities |
278,733 |
|
|
280,186 |
|
|
142,910 |
|
Total
liabilities |
4,990,452 |
|
|
5,135,453 |
|
|
6,249,012 |
|
Temporary equity,
convertible notes |
136,996 |
|
|
169,861 |
|
|
202,467 |
|
Stockholders’ equity
(2) |
7,271,178 |
|
|
6,817,451 |
|
|
6,184,883 |
|
Total
liabilities and stockholders’ equity |
$ |
12,398,626 |
|
|
$ |
12,122,765 |
|
|
$ |
12,636,362 |
|
(1 |
) |
Derived from audited
financial statements. |
(2 |
) |
Common shares issued
and outstanding were 162,144 as of September 24, 2017, 161,723 as
of June 25, 2017, and 161,706 as of September 25, 2016. |
LAM RESEARCH
CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS(in thousands,
unaudited) |
|
|
|
Three Months Ended |
|
September 24, 2017 |
|
June 25, 2017 |
|
September 25, 2016 |
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
|
Net income |
$ |
590,690 |
|
|
$ |
526,424 |
|
|
$ |
263,835 |
|
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
Depreciation and amortization |
79,142 |
|
|
79,036 |
|
|
74,562 |
|
Deferred
income taxes |
43,204 |
|
|
35,069 |
|
|
7,633 |
|
Equity-based compensation expense |
41,783 |
|
|
43,802 |
|
|
38,595 |
|
Amortization of note discounts and issuance costs |
4,588 |
|
|
6,114 |
|
|
6,830 |
|
Other,
net |
6,569 |
|
|
8,151 |
|
|
16,807 |
|
Changes in operating
assets and liabilities |
92,330 |
|
|
30,676 |
|
|
64,962 |
|
Net cash
provided by operating activities |
858,306 |
|
|
729,272 |
|
|
473,224 |
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
|
Capital expenditures
and intangible assets |
(60,064 |
) |
|
(34,811 |
) |
|
(41,979 |
) |
Business acquisitions,
net of cash acquired |
(115,613 |
) |
|
— |
|
|
— |
|
Net (purchase) sale of
available-for-sale securities |
(117,774 |
) |
|
93,858 |
|
|
431,750 |
|
Transfers of restricted
cash and investments |
160 |
|
|
(48 |
) |
|
(5,219 |
) |
Other, net |
(10,600 |
) |
|
103 |
|
|
(7,800 |
) |
Net cash
(used for) provided by investing activities |
(303,891 |
) |
|
59,102 |
|
|
376,752 |
|
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
Principal payments on
long-term debt and capital lease obligations and payments for debt
issuance costs |
(301,727 |
) |
|
(2,445 |
) |
|
(371 |
) |
Excess tax benefit on
equity-based compensation plans |
— |
|
|
38,635 |
|
|
— |
|
Treasury stock
purchases |
(155,385 |
) |
|
(525,778 |
) |
|
(1,854 |
) |
Dividends paid |
(72,738 |
) |
|
(73,709 |
) |
|
(48,052 |
) |
Reissuance of treasury
stock related to employee stock purchase plan |
— |
|
|
23,120 |
|
|
19,320 |
|
Proceeds from issuance
of common stock |
1,042 |
|
|
369 |
|
|
1,459 |
|
Other, net |
4 |
|
|
(1 |
) |
|
(10 |
) |
Net cash
used for financing activities |
(528,804 |
) |
|
(539,809 |
) |
|
(29,508 |
) |
Effect of exchange rate
changes on cash and cash equivalents |
3,317 |
|
|
399 |
|
|
1,911 |
|
Net increase in cash
and cash equivalents |
28,928 |
|
|
248,964 |
|
|
822,379 |
|
Cash and cash
equivalents at beginning of period |
2,377,534 |
|
|
2,128,570 |
|
|
5,039,322 |
|
Cash and cash
equivalents at end of period |
$ |
2,406,462 |
|
|
$ |
2,377,534 |
|
|
$ |
5,861,701 |
|
Non-GAAP Financial Summary(in
thousands, except percentages and per share
data)(unaudited) |
|
|
|
Three Months Ended |
|
September 24, 2017 |
|
June 25, 2017 |
Revenue |
$ |
2,478,140 |
|
|
$ |
2,344,907 |
|
Gross margin |
$ |
1,170,905 |
|
|
$ |
1,090,211 |
|
Gross margin as
percentage of revenue |
47.2 |
% |
|
46.5 |
% |
Operating expenses |
$ |
438,056 |
|
|
$ |
440,126 |
|
Operating income |
$ |
732,849 |
|
|
$ |
650,085 |
|
Operating margin as a
percentage of revenue |
29.6 |
% |
|
27.7 |
% |
Net income |
$ |
627,754 |
|
|
$ |
565,518 |
|
Net income per diluted
share |
$ |
3.46 |
|
|
$ |
3.11 |
|
Shares used in per
share calculation - diluted |
181,412 |
|
|
182,093 |
|
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 |
|
September 24, 2017 |
|
June 25, 2017 |
U.S. GAAP net
income |
$ |
590,690 |
|
|
$ |
526,424 |
|
Pre-tax non-GAAP
items: |
|
|
|
Amortization related to intangible assets acquired through certain
business combinations - cost of goods sold |
21,562 |
|
|
21,250 |
|
Amortization related to intangible assets acquired through certain
business combinations - selling, general and administrative |
16,413 |
|
|
16,083 |
|
Costs
associated with business process reengineering - selling, general
and administrative |
716 |
|
|
4,813 |
|
Business
combination acquisition-related costs - selling, general and
administrative |
936 |
|
|
— |
|
Amortization of note discounts - other expense, net |
4,104 |
|
|
5,631 |
|
Net income tax benefit
on non-GAAP items |
(6,114 |
) |
|
(5,697 |
) |
Income tax benefit on
conclusion of certain tax matters |
(553 |
) |
|
(2,986 |
) |
Non-GAAP net
income |
$ |
627,754 |
|
|
$ |
565,518 |
|
Non-GAAP net income per
diluted share |
$ |
3.46 |
|
|
$ |
3.11 |
|
U.S. GAAP number of
shares used for per diluted share calculation |
183,880 |
|
|
186,427 |
|
Effect of convertible
note hedge |
(2,468 |
) |
|
(4,334 |
) |
Non-GAAP number of
shares used for per diluted share calculation |
181,412 |
|
|
182,093 |
|
Reconciliation of U.S. GAAP Gross Margin,
Operating Expenses and Operating Income to Non-GAAP Gross Margin,
Operating Expenses and Operating Income(in
thousands, except
percentages)(unaudited) |
|
|
|
Three Months Ended |
|
September 24, 2017 |
|
June 25, 2017 |
U.S. GAAP gross
margin |
$ |
1,149,343 |
|
|
$ |
1,068,961 |
|
Pre-tax non-GAAP
items: |
|
|
|
Amortization related to intangible assets acquired through certain
business combinations |
21,562 |
|
|
21,250 |
|
Non-GAAP gross
margin |
$ |
1,170,905 |
|
|
$ |
1,090,211 |
|
U.S. GAAP gross margin
as a percentage of revenue |
46.4 |
% |
|
45.6 |
% |
Non-GAAP gross margin
as a percentage of revenue |
47.2 |
% |
|
46.5 |
% |
U.S. GAAP operating
expenses |
$ |
456,121 |
|
|
$ |
461,022 |
|
Pre-tax non-GAAP
items: |
|
|
|
Amortization related to intangible assets acquired through certain
business combinations |
(16,413 |
) |
|
(16,083 |
) |
Costs
associated with business process reengineering |
(716 |
) |
|
(4,813 |
) |
Business
combination acquisition-related costs |
(936 |
) |
|
— |
|
Non-GAAP operating
expenses |
$ |
438,056 |
|
|
$ |
440,126 |
|
Non-GAAP operating
income |
$ |
732,849 |
|
|
$ |
650,085 |
|
U.S. GAAP operating
margin as percent of revenue |
28.0 |
% |
|
25.9 |
% |
Non-GAAP operating
margin as a percent of revenue |
29.6 |
% |
|
27.7 |
% |
Lam Research Corporation Contacts:
Satya Kumar, Investor Relations, phone: 510-572-1615, e-mail:
investor.relations@lamresearch.com
Lam Research (NASDAQ:LRCX)
Historical Stock Chart
From Aug 2024 to Sep 2024
Lam Research (NASDAQ:LRCX)
Historical Stock Chart
From Sep 2023 to Sep 2024