Loading, Please Wait...

CST: 07/12/2019 04:17:46   

Lam Research Corporation Reports Financial Results for the Quarter Ended March 31, 2019

226 Days ago

FREMONT, Calif., April 24, 2019 (GLOBE NEWSWIRE) -- Lam Research Corporation (the "Company," "Lam," "Lam Research") today announced financial results for the quarter ended March 31, 2019 (the “March 2019 quarter”).

Highlights for the March 2019 quarter were as follows:

  • Revenue of $2.44 billion.
  • U.S. GAAP gross margin of 44.0%, U.S. GAAP operating income as a percentage of revenue of 23.2%, and U.S. GAAP diluted EPS of $3.47.
  • Non-GAAP gross margin of 45.1%, non-GAAP operating income as a percentage of revenue of 25.1%, and non-GAAP diluted EPS of $3.70.


Key Financial Data for the Quarters Ended
March 31, 2019 and December 23, 2018
(in thousands, except per-share data, percentages, and basis points)

U.S. GAAP
    March 2019   December 2018   Change Q/Q
Revenue   $ 2,439,048     $ 2,522,673     - 3 %
Gross margin as percentage of revenue   44.0 %   45.4 %   - 140  bps
Operating income as percentage of revenue   23.2 %   27.4 %   - 420  bps
Diluted EPS   $ 3.47     $ 3.51     - 1 %
             
Non-GAAP
    March 2019   December 2018   Change Q/Q
Revenue   $ 2,439,048     $ 2,522,673     - 3 %
Gross margin as percentage of revenue   45.1 %   46.3 %   - 120  bps
Operating income as percentage of revenue   25.1 %   28.8 %   - 370  bps
Diluted EPS   $ 3.70     $ 3.87     - 4 %


U.S. GAAP Financial Results

For the March 2019 quarter, revenue was $2,439 million, gross margin was $1,074 million, or 44.0% of revenue, operating expenses were $509 million, operating income was 23.2% of revenue, and net income was $547 million, or $3.47 per diluted share on a U.S. GAAP basis. This compares to revenue of $2,523 million, gross margin of $1,145 million, or 45.4% of revenue, operating expenses of $455 million, operating income of 27.4% of revenue, and net income of $569 million, or $3.51 per diluted share, for the quarter ended December 23, 2018 (the “December 2018 quarter”). The March 2019 quarter included 14 weeks; the December 2018 quarter included 13 weeks.

Non-GAAP Financial Results

For the March 2019 quarter, non-GAAP gross margin was $1,100 million or 45.1% of revenue, non-GAAP operating expenses were $488 million, non-GAAP operating income was 25.1% of revenue, and non-GAAP net income was $584 million, or $3.70 per diluted share. This compares to non-GAAP gross margin of $1,167 million or 46.3% of revenue, non-GAAP operating expenses of $440 million, non-GAAP operating income of 28.8% of revenue, and non-GAAP net income of $628 million, or $3.87 per diluted share for the December 2018 quarter.

“Lam’s March quarter results demonstrate strong execution in a challenging near-term industry environment,” said Timothy Archer, Lam Research’s President and Chief Executive Officer. “By continuing to focus on customer needs and investing to extend differentiation in our product and services portfolio, Lam is well positioned to emerge stronger as market conditions improve.”

Balance Sheet and Cash Flow Results

Cash and cash equivalents, short-term investments, and restricted cash and investments balances increased to $6.4 billion at the end of the March 2019 quarter as compared to $3.9 billion at the end of the December 2018 quarter. This increase was primarily the result of approximately $2.5 billion of proceeds from issuance of senior notes during the March 2019 quarter.

Deferred revenue and deferred profit at the end of the March 2019 quarter decreased to $441 million and $378 million, respectively, as compared to $493 million and $432 million, respectively, at the end of the December 2018 quarter. Lam’s deferred revenue balance does not include shipments to customers in Japan, to whom title does not transfer until customer acceptance. Shipments to customers in Japan are classified as inventory at cost until the time of acceptance. The estimated future revenue from shipments to customers in Japan was approximately $80 million as of March 31, 2019 and $262 million as of December 23, 2018.

Geographic Distribution

The geographic distribution of revenue during the March 2019 quarter is shown in the following table:

Region Revenue
Korea 25 %
Taiwan 23 %
Japan 17 %
China 17 %
United States 9 %
Southeast Asia 5 %
Europe 4 %

Outlook

For the June 2019 quarter, Lam is providing the following guidance:

  U.S. GAAP   Reconciling Items   Non-GAAP
Revenue $2.35 Billion +/- $150 Million     $2.35 Billion +/- $150 Million
Gross margin as a percentage of revenue   45.4 % +/-   1 %   $ 3   Million     45.5 % +/-   1 %
Operating income as a percentage of revenue   25.3 % +/-   1 %   $ 16   Million     26.0 % +/-   1 %
Net income per diluted share $ 3.31   +/- $ 0.20     $ 14   Million   $ 3.40   +/- $ 0.20  
Diluted share count 155 Million     155 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, restructuring, 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 as a percentage of revenue - amortization related to intangible assets acquired through business combinations, $3 million.
  • Operating income as a percentage of revenue - amortization related to intangible assets acquired through business combinations, $16 million.
  • Earnings per share - amortization related to intangible assets acquired though business combinations, $16 million; amortization of note discounts, $1 million; and associated tax benefit for non-GAAP items ($3 million); totaling $14 million.

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 March 2019 and December 2018 quarters exclude amortization related to intangible assets acquired through business combinations, restructuring charges, amortization of note discounts, income tax benefit of non-GAAP items, and income tax benefit on the conclusion of tax matters related to a prior business combination. Additionally, the December 2018 quarter non-GAAP results exclude estimated income tax impacts associated with U.S. tax reform.

Management uses non-GAAP gross margin, operating expense, operating income, 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: our focus on customer needs; our investments to extend differentiation in our products and services; the estimated future revenue from shipments to customers in Japan; the timing and amount of revenue and profit earned from any booked deferred revenue and profit; market trends and semiconductor demand; our technology leadership; our installed base growth; our positioning as market conditions change; technology demand trends; the legal and business factors that may affect our future tax rate; our engineering capabilities; our commitment to customer success; our continued ability to accelerate innovation and enhance device performance; and our guidance for revenue, gross margin (both as a dollar value and a percentage of revenue), operating income (both as a dollar value and a percentage of revenue), net income or earnings per diluted share, and diluted share count. Some factors that may affect these forward-looking statements include: business, political and/or regulatory 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 24, 2018 and our quarterly report on Form 10-Q for the fiscal quarters ended September 23, 2018 and December 23, 2018. 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 Corporation 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. 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 CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data and percentages)
(unaudited)

  Three Months Ended   Nine Months Ended
  March 31,
 2019
  December 23,
2018
  March 25,
 2018
  March 31,
 2019
  March 25,
 2018
Revenue $ 2,439,048     $ 2,522,673     $ 2,892,115     $ 7,292,412     $ 7,951,070  
Cost of goods sold 1,364,711     1,377,640     1,561,401     4,014,844     4,265,446  
Gross margin 1,074,337     1,145,033     1,330,714     3,277,568     3,685,624  
Gross margin as a percent of revenue 44.0 %   45.4 %   46.0 %   44.9 %   46.4 %
Research and development 318,514     285,556     305,412     895,742     861,801  
Selling, general and administrative 190,306     169,098     197,791     534,179     565,719  
Total operating expenses 508,820     454,654     503,203     1,429,921     1,427,520  
Operating income 565,517     690,379     827,511     1,847,647     2,258,104  
Operating income as a percent of revenue 23.2 %   27.4 %   28.6 %   25.3 %   28.4 %
Other income (expense), net 20,532     (30,649 )   (55,810 )   (10,494 )   (64,464 )
Income before income taxes 586,049     659,730     771,701     1,837,153     2,193,640  
Income tax (expense) benefit (38,659 )   (90,875 )   7,099     (187,548 )   (834,105 )
Net income $ 547,390     $ 568,855     $ 778,800     $ 1,649,605     $ 1,359,535  
Net income per share:                  
Basic $ 3.62     $ 3.67     $ 4.80     $ 10.72     $ 8.40  
Diluted $ 3.47     $ 3.51     $ 4.33     $ 10.20     $ 7.45  
Number of shares used in per share calculations:                  
Basic 151,201     155,022     162,378     153,891     161,885  
Diluted 157,849     162,170     179,779     161,683     182,565  
Cash dividend declared per common share $ 1.10     $ 1.10     $ 0.50     $ 3.30     $ 1.45  


LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

  March 31,
 2019
  December 23,
2018
  June 24,
 2018
  (unaudited)   (unaudited)   (1 )
ASSETS          
Cash and cash equivalents $ 4,931,611     $ 3,359,793     $ 4,512,257  
Investments 1,209,315     275,670     437,338  
Accounts receivable, net 1,522,273     1,868,842     2,176,936  
Inventories 1,622,242     1,703,307     1,876,162  
Prepaid expenses and other current assets 156,800     148,233     147,218  
Total current assets 9,442,241     7,355,845     9,149,911  
Property and equipment, net 1,040,329     1,013,306     902,547  
Restricted cash and investments 255,774     255,292     256,301  
Goodwill and intangible assets 1,707,930     1,736,468     1,802,740  
Other assets 448,988     407,547     367,979  
Total assets $ 12,895,262     $ 10,768,458     $ 12,479,478  
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current portion of convertible notes, capital leases and commercial paper $ 964,107     $ 187,102     $ 610,030  
Other current liabilities 1,841,521     1,979,735     2,540,278  
Total current liabilities 2,805,628     2,166,837     3,150,308  
Long-term debt and capital leases 3,801,514     1,813,190     1,806,562  
Income taxes payable 863,155     859,232     851,936  
Other long-term liabilities 83,986     87,827     90,629  
Total liabilities 7,554,283     4,927,086     5,899,435  
Temporary equity, convertible notes 49,783     57,009     78,192  
Stockholders’ equity (2) 5,291,196     5,784,363     6,501,851  
Total liabilities and stockholders’ equity $ 12,895,262     $ 10,768,458     $ 12,479,478  


(1 ) Derived from audited financial statements.
(2 ) Common shares issued and outstanding were 149,886 as of March 31, 2019, 153,961 as of December 23, 2018, and 156,892 as of June 24, 2018.


LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)

  Three Months Ended   Nine Months Ended
  March 31,
 2019
  December 23,
2018
  March 25,
 2018
  March 31,
 2019
  March 25,
 2018
CASH FLOWS FROM OPERATING ACTIVITIES:                  
Net income $ 547,390     $ 568,855     $ 778,800     $ 1,649,605     $ 1,359,535  
Adjustments to reconcile net income to net cash provided by operating activities:                  
Depreciation and amortization 82,274     81,794     82,236     243,873     241,276  
Deferred income taxes (12,401 )   20,797     19,060     (75,105 )   (209,214 )
Equity-based compensation expense 53,240     38,806     41,095     142,389     125,002  
Impairment of investment         42,456         42,456  
Amortization of note discounts and issuance costs 2,861     1,031     4,342     5,137     13,469  
Other, net (1,494 )   (1,343 )   17,866     (646 )   23,327  
Changes in operating assets and liabilities 260,951     (67,521 )   64,524     330,273     341,538  
Net cash provided by operating activities 932,821     642,419     1,050,379     2,295,526     1,937,389  
CASH FLOWS FROM INVESTING ACTIVITIES:                  
Capital expenditures and intangible assets (75,522 )   (105,923 )   (49,057 )   (237,543 )   (193,814 )
Business acquisition, net of cash acquired                 (115,697 )
Net (purchase) sale of available-for-sale securities (931,380 )   773,223     2,134,886     (770,740 )   1,811,411  
Other, net (1,269 )   (369 )   638     (5,288 )   (14,358 )
Net cash (used for) provided by investing activities (1,008,171 )   666,931     2,086,467     (1,013,571 )   1,487,542  
CASH FLOWS FROM FINANCING ACTIVITIES:                  
Principal payments on debt (30,225 )   (6,440 )   (228,166 )   (116,496 )   (577,415 )
Net proceeds (repayments) from issuance of commercial paper 297,850     (359,518 )   199,024     (61,754 )   997,971  
Proceeds from borrowings on revolving credit facility                 750,000  
Repayments of borrowings on revolving credit facility                 (750,000 )
Proceeds from issuance of long-term debt, net of issuance costs 2,476,720             2,476,720      
Treasury stock purchases (934,637 )   (1,519 )   (80,105 )   (2,672,051 )   (1,346,940 )
Dividends paid (171,196 )   (167,907 )   (79,739 )   (513,475 )   (225,604 )
Reissuance of treasury stock related to employee stock purchase plan     32,920         32,920     34,057  
Proceeds from issuance of common stock 5,010     109     2,517     5,119     6,632  
Other, net     (13,198 )   7     (13,207 )   11  
Net cash provided by (used for) financing activities 1,643,522     (515,553 )   (186,462 )   (862,224 )   (1,111,288 )
Effect of exchange rate changes on cash, cash equivalents, and restricted cash 4,128     (2,721 )   4,041     (904 )   8,200  
Net increase in cash, cash equivalents, and restricted cash 1,572,300     791,076     2,954,425     418,827     2,321,843  
Cash, cash equivalents, and restricted cash at beginning of period 3,615,085     2,824,009     2,001,157     4,768,558     2,633,739  
Cash, cash equivalents, and restricted cash at end of period $ 5,187,385     $ 3,615,085     $ 4,955,582     $ 5,187,385     $ 4,955,582  


Non-GAAP Financial Summary
(in thousands, except percentages and per share data)
(unaudited)

  Three Months Ended
  March 31,
 2019
  December 23,
2018
Revenue $ 2,439,048     $ 2,522,673  
Gross margin $ 1,099,550     $ 1,167,375  
Gross margin as percentage of revenue 45.1 %   46.3 %
Operating expenses $ 488,389     $ 439,808  
Operating income $ 611,161     $ 727,567  
Operating income as a percentage of revenue 25.1 %   28.8 %
Net income $ 584,350     $ 628,196  
Net income per diluted share $ 3.70     $ 3.87  
Shares used in per share calculation - diluted 157,849     162,170  


Reconciliation of U.S. GAAP Net Income to Non-GAAP Net Income
(in thousands, except per share data)
(unaudited)

  Three Months Ended
  March 31, 2019   December 23, 2018
U.S. GAAP net income $ 547,390     $ 568,855  
Pre-tax non-GAAP items:      
Amortization related to intangible assets acquired through certain business combinations - cost of goods sold 22,342     22,342  
Restructuring charges - cost of goods sold 2,871      
Restructuring charges - research and development 4,698      
Amortization related to intangible assets acquired through certain business combinations - selling, general and administrative 12,446     12,490  
Restructuring charges - selling, general and administrative 3,287     2,356  
Amortization of note discounts - other expense, net 956     886  
Net income tax benefit on non-GAAP items (6,718 )   (5,704 )
Income tax benefit on the conclusion of certain tax matters (2,922 )   (1,635 )
Income tax expense associated with U.S. tax reform     28,606  
Non-GAAP net income $ 584,350     $ 628,196  
Non-GAAP net income per diluted share $ 3.70     $ 3.87  
GAAP net income per diluted share $ 3.47     $ 3.51  
U.S. GAAP number of shares used for per diluted share calculation 157,849     162,170  


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
  March 31,
 2019
  December 23,
2018
U.S. GAAP gross margin $ 1,074,337     $ 1,145,033  
Pre-tax non-GAAP items:      
Amortization related to intangible assets acquired through certain business combinations 22,342     22,342  
Restructuring charges 2,871      
Non-GAAP gross margin $ 1,099,550     $ 1,167,375  
U.S. GAAP gross margin as a percentage of revenue 44.0 %   45.4 %
Non-GAAP gross margin as a percentage of revenue 45.1 %   46.3 %
U.S. GAAP operating expenses $ 508,820     $ 454,654  
Pre-tax non-GAAP items:              
Amortization related to intangible assets acquired through certain business combinations (12,446 )   (12,490 )
Restructuring charges (7,985 )   (2,356 )
Non-GAAP operating expenses $ 488,389     $ 439,808  
U.S. GAAP operating income $ 565,517     $ 690,379  
Non-GAAP operating income $ 611,161     $ 727,567  
U.S. GAAP operating income as percent of revenue 23.2 %   27.4 %
Non-GAAP operating income as a percent of revenue 25.1 %   28.8 %


Lam Research Corporation Contacts:

Tina Correia, Investor Relations, phone: 510-572-1615, e-mail: investor.relations@lamresearch.com

Is your business listed correctly on America’s largest city directory network of 1,000 portals?