KLAC
$330.54
K L A-Tencor
($5.88)
(1.75%)
Earnings Details
3rd Quarter March 2022
Thursday, April 28, 2022 4:05:00 PM
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Summary

K L A-Tencor Beats

K L A-Tencor (KLAC) reported 3rd Quarter March 2022 earnings of $5.13 per share on revenue of $2.3 billion. The consensus earnings estimate was $4.80 per share on revenue of $2.2 billion. The Earnings Whisper number was $4.83 per share. Revenue grew 26.9% on a year-over-year basis.

The company said it expects fourth quarter earnings of $4.93 to $6.03 per share on revenue of $2.30 billion to $2.55 billion. The current consensus earnings estimate is $5.35 per share on revenue of $2.36 billion for the quarter ending June 30, 2022.

KLA-Tencor Corp is a supplier of process control and yield management solutions for the semiconductor and related nanoelectronics industries.

Results
Reported Earnings
$5.13
Earnings Whisper
$4.83
Consensus Estimate
$4.80
Reported Revenue
$2.29 Bil
Revenue Estimate
$2.20 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

KLA Corporation Reports Fiscal 2022 Third Quarter Results

  • Total revenues were $2.29 billion, towards the high-end of the range of guidance;
  • GAAP diluted EPS attributable to KLA was $4.83 and non-GAAP diluted EPS attributable to KLA was $5.13, each above the midpoint of the ranges of guidance;
  • Cash flow from operating activities and free cash flow were $818.9 million and $718.6 million, respectively; and
  • Capital returns were $723.7 million with $159.0 million in dividends paid and $564.7 million in share repurchases.

MILPITAS, Calif., April 28, 2022 /PRNewswire/ -- KLA Corporation (NASDAQ: KLAC) today announced operating results for its third quarter of fiscal year 2022, which ended on March 31, 2022 and reported GAAP net income attributable to KLA of $730.6 million and GAAP earnings per diluted share attributable to KLA of $4.83 on revenue of $2.29 billion.

Logo -?https://mma.prnewswire.com/media/806571/KLA_Corporation_Logo.jpg 

"Our March quarter results demonstrate strong execution across multiple areas of our business, delivering revenue, GAAP and non-GAAP earnings per share all above the midpoint of the guidance ranges for the quarter," commented Rick Wallace, president and chief executive officer of KLA Corporation. "The demand environment for KLA products and solutions remains robust amidst a persistently challenging supply chain landscape, and we are focused on navigating this environment to consistently meet customer commitments and delivering on our long-term strategic objectives and financial targets."

 

GAAP Results


Q3 FY 2022

Q2 FY 2022

Q3 FY 2021

Total Revenue

$2,289 million

$2,353 million

$1,804 million

Net Income Attributable to KLA

$731 million

$717 million

$567 million

Net Income per Diluted Share Attributable to KLA

$4.83

$4.71

$3.66





Non-GAAP Results


Q3 FY 2022

Q2 FY 2022

Q3 FY 2021

Net Income Attributable to KLA

$776 million

$851 million

$598 million

Net Income per Diluted Share Attributable to KLA

$5.13

$5.59

$3.85

 

A reconciliation between GAAP operating results and non-GAAP operating results is provided following the financial statements included in this release. KLA will discuss the results for its fiscal year 2022 third quarter, along with its outlook, on a conference call today beginning at 2 p.m. PT. A webcast of the call will be available at: www.kla.com.

Fourth Quarter Fiscal 2022 Guidance

The following details our guidance for the fourth quarter of fiscal 2022 ending in June:

  • Total revenues between $2,300 million to $2,550 million
  • GAAP gross margin is expected to be in a range of 59.5% to 61.7%
  • Non-GAAP gross margin is expected to be in a range of 61.5% to 63.5%
  • GAAP diluted EPS attributable to KLA is expected to be in a range of $4.60 to $5.70
  • Non-GAAP diluted EPS attributable to KLA in a range of $4.93 to $6.03

For additional guidance metrics, please see the company's published Letter to Shareholders and earnings slides on the KLA investor relations website.

About KLA:

KLA Corporation ("KLA") develops industry-leading equipment and services that enable innovation throughout the electronics industry. We provide advanced process control and process-enabling solutions for manufacturing wafers and reticles, integrated circuits, packaging, printed circuit boards and flat panel displays. In close collaboration with leading customers across the globe, our expert teams of physicists, engineers, data scientists and problem-solvers design solutions that move the world forward. Investors and others should note that KLA announces material financial information including SEC filings, press releases, public earnings calls and conference webcasts using an investor relations website (ir.kla.com). Additional information may be found at: www.kla.com.

Note Regarding Forward-Looking Statements:

Statements in this press release other than historical facts, such as statements pertaining to total revenues, GAAP and non-GAAP gross margin and GAAP and non-GAAP diluted EPS attributable to KLA for the quarter ending June 30, 2022 are forward-looking statements and subject to the Safe Harbor provisions created by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current information and expectations and involve a number of risks and uncertainties. Actual results may differ materially from those projected in such statements due to various factors, including but not limited to: the impact of the COVID-19 pandemic on the global economy and on our business, financial condition and results of operations, including the supply chain constraints we are experiencing as a result of the pandemic; economic, political and social conditions in the countries in which we, our customers and our suppliers operate, including rising inflation and interest rates, Russia's invasion of Ukraine and global trade policies; disruption to our manufacturing facilities or other operations, or the operations of our customers, due to natural catastrophic events, health epidemics or terrorism; ongoing changes in the technology industry, and the semiconductor industry in particular, including future growth rates, pricing trends in end-markets, or changes in customer capital spending patterns; our ability to timely develop new technologies and products that successfully anticipate or address changes in the semiconductor industry; our ability to maintain our technology advantage and protect our proprietary rights; our ability to compete with new products introduced by our competitors; our ability to attract and retain key personnel; cybersecurity threats, cyber incidents affecting our and our service providers' systems and networks and our ability to access critical information systems for daily business operations; liability to our customers under indemnification provisions if our products fail to operate properly or contain defects or our customers are sued by third parties due to our products; exposure to a highly concentrated customer base; availability and cost of the wide range of materials used in the production of our products; our ability to operate our business in accordance with our business plan; legal, regulatory and tax environments in which we perform our operations and conduct our business and our ability to comply with relevant laws and regulations; our ability to pay interest and repay the principal of our current indebtedness is dependent upon our ability to manage our business operations, our credit rating and the ongoing interest rate environment, among other factors; instability in the global credit and financial markets; our exposure to currency exchange rate fluctuations, or declining economic conditions in those countries where we conduct our business; changes in our effective tax rate resulting from changes in the tax rates imposed by jurisdictions where our profits are determined to be earned and taxed, expiration of tax holidays in certain jurisdictions, resolution of issues arising from tax audits with various authorities or changes in tax laws or the interpretation of such tax laws; and our ability to identify suitable acquisition targets and successfully integrate and manage acquired businesses. For other factors that may cause actual results to differ materially from those projected and anticipated in forward-looking statements in this press release, please refer to KLA Corporation's Annual Report on Form 10-K for the year ended June 30, 2021, and other subsequent filings with the Securities and Exchange Commission (including, but not limited to, the risk factors described therein). KLA Corporation assumes no obligation to, and does not currently intend to, update these forward-looking statements.

 

KLA Corporation




Condensed Consolidated Unaudited Balance Sheets








(In thousands)

March 31, 2022


June 30, 2021

ASSETS




Current assets:




     Cash and cash equivalents

$               1,415,172


$     1,434,610

     Marketable securities

1,162,724


1,059,912

     Accounts receivable, net

1,618,867


1,305,479

     Inventories

1,982,297


1,575,380

     Other current assets

403,657


320,867

          Total current assets

6,582,717


5,696,248

Land, property and equipment, net

808,874


663,027

Goodwill

2,314,471


2,011,172

Deferred income taxes

614,957


270,461

Purchased intangible assets, net

1,255,672


1,185,311

Other non-current assets

441,121


444,905

          Total assets

$             12,017,812


$   10,271,124

LIABILITIES, NON-CONTROLLING INTEREST AND STOCKHOLDERS' EQUITY



Current liabilities:




     Accounts payable

$                  424,128


$         342,083

     Deferred system revenue

428,723


295,192

     Deferred service revenue

350,429


284,936

     Short-term debt


20,000

     Other current liabilities

1,625,703


1,161,016

          Total current liabilities

2,828,983


2,103,227

Long-term debt

3,699,799


3,422,767

Deferred tax liabilities

660,816


650,623

Deferred service revenue

107,424


87,575

Other non-current liabilities

642,166


631,290

          Total liabilities

7,939,188


6,895,482

Stockholders' equity:




     Common stock and capital in excess of par value

2,179,229


2,175,988

     Retained earnings

1,972,611


1,277,123

     Accumulated other comprehensive loss

(71,533)


(75,557)

          Total KLA stockholders' equity

4,080,307


3,377,554

Non-controlling interest in consolidated subsidiaries

(1,683)


(1,912)

          Total stockholders' equity

4,078,624


3,375,642

          Total liabilities and stockholders' equity

$             12,017,812


$   10,271,124

 

KLA Corporation








Condensed Consolidated Unaudited Statements of Operations








Three Months Ended March 31,


Nine Months Ended March 31,

(In thousands, except per share amounts)

2022


2021


2022


2021

Revenues:








     Product

$     1,800,659


$     1,375,320


$     5,326,316


$     3,758,838

     Service

488,017


428,453


1,398,828


1,234,425

          Total revenues

2,288,676


1,803,773


6,725,144


4,993,263

Costs and expenses:








     Costs of revenues

892,091


709,629


2,613,877


1,999,924

     Research and development

285,189


238,957


808,373


687,059

     Selling, general and administrative

216,489


183,040


623,229


537,580

     Interest expense

39,978


39,092


116,142


117,358

     Other expense (income), net

8,644


(7,348)


23,985


(269)

Income before income taxes

846,285


640,403


2,539,538


1,651,611

Provision for income taxes

115,625


73,233


22,876


207,316

Net income

730,660


567,170


2,516,662


1,444,295

     Less: Net income (loss) attributable to non-controlling interest

88


(326)


229


(1,019)

Net income attributable to KLA

$         730,572


$         567,496


$      2,516,433


$      1,445,314

Net income per share attributable to KLA:








     Basic

$               4.87


$               3.69


$             16.64


$               9.36

     Diluted

$               4.83


$               3.66


$             16.52


$               9.28

Weighted-average number of shares:








     Basic

150,145


153,801


151,250


154,457

     Diluted

151,186


155,159


152,346


155,789

 

KLA Corporation

Condensed Consolidated Unaudited Statements of Cash Flows


Three Months Ended March 31,

(In thousands)

2022


2021

Cash flows from operating activities:




     Net income

$               730,660


$               567,170

     Adjustments to reconcile net income to net cash provided by operating activities:




          Depreciation and amortization

92,127


84,365

          Unrealized foreign exchange (gain) loss and other

(7,059)


5,231

          Asset impairment charges


(23)

          Stock-based compensation expense

37,087


30,327

          Deferred income taxes

(11,747)


(151)

          Gain on sale of business


(4,422)

          Changes in assets and liabilities, net of assets acquired and liabilities assumed in business acquisitions:




               Accounts receivable

126,414


16,055

               Inventories

(156,513)


(34,169)

               Other assets

(25,972)


(20,700)

               Accounts payable

41,797


32,735

               Deferred system revenue

(4,734)


57,820

               Deferred service revenue

47,748


11,507

               Other liabilities

(50,930)


(99,595)

                    Net cash provided by operating activities

818,878


646,150

Cash flows from investing activities:




          Proceeds from sale of business


16,833

          Business acquisitions, net of cash acquired

(432,901)


          Capital expenditures

(100,304)


(61,183)

          Purchases of available-for-sale securities

(207,546)


(303,076)

          Proceeds from sale of available-for-sale securities

26,713


14,962

          Proceeds from maturity of available-for-sale securities

151,724


159,120

          Purchases of trading securities

(43,000)


(48,495)

          Proceeds from sale of trading securities

35,820


45,251

               Net cash used in investing activities

(569,494)


(176,588)

Cash flows from financing activities:




          Proceeds from revolving credit facility

300,000


          Repayment of debt

(45,000)


(20,000)

          Common stock repurchases

(564,666)


(273,441)

          Payment of dividends to stockholders

(158,976)


(139,338)

          Tax withholding payments related to vested and released restricted stock units

(16,661)


(6,674)

          Contingent consideration payable and other, net

(1,100)


               Net cash used in financing activities

(486,403)


(439,453)

Effect of exchange rate changes on cash and cash equivalents

(4,866)


(9,425)

Net (decrease) increase in cash and cash equivalents

(241,885)


20,684

Cash and cash equivalents at beginning of period

1,657,057


1,431,466

Cash and cash equivalents at end of period

$            1,415,172


$            1,452,150

Supplemental cash flow disclosures:




          Income taxes paid

$               128,233


$               100,657

          Interest paid

$                 40,020


$                 39,980

Non-cash activities:




          Contingent consideration payable - financing activities

$                      423


$                      178

          Dividends payable - financing activities

$                   1,638


$                   1,536

          Unsettled common stock repurchase - financing activities

$                   6,000


$                   6,000

          Accrued purchase of land, property and equipment - investing activities

$                 22,305


$                 24,392

 

KLA Corporation

Segment Information (Unaudited)

The following is a summary of results for each of our four reportable segments and reconciliation to total revenues for the indicated periods:

 


Three Months Ended March 31,


Nine Months Ended March 31,

(In thousands)

2022


2021


2022


2021

Revenues:








     Semiconductor Process Control

$     1,979,295


$     1,506,140


$     5,810,580


$     4,154,278

     Specialty Semiconductor Process

117,253


91,724


332,020


271,264

     PCB, Display and Component Inspection

192,533


205,202


583,318


565,646

     Other


149



739

Total revenues for reportable segments

2,289,081


1,803,215


6,725,918


4,991,927

     Corporate allocation and effects of foreign exchange rates

(405)


558


(774)


1,336

Total revenues

$     2,288,676


$     1,803,773


$     6,725,144


$     4,993,263

 


KLA Corporation

Condensed Consolidated Unaudited Supplemental Information

 

Reconciliation of GAAP Net Income to Non-GAAP Net Income

 




Three Months Ended


Nine Months Ended


(In thousands, except per share amounts)


March 31,
2022


Dec. 31,
2021


March 31,
2021


March 31,
2022


March 31,
2021

GAAP net income attributable to KLA


$       730,572


$     717,444


$       567,496


$    2,516,433


$     1,445,314

Adjustments to reconcile GAAP net income to non-GAAP net income:












Acquisition-related charges

a

59,898


54,339


52,973


174,405


156,547


Restructuring, severance and other charges

b

2,513



(1,534)


2,638


5,679


Income tax effect of non-GAAP adjustments

c

(18,803)


(16,758)


(17,866)


(55,245)


(52,431)


Discrete tax items

d

1,457


96,016


(2,967)


(299,527)


21,901

Non-GAAP net income attributable to KLA


$        775,637


$     851,041


$        598,102


$    2,338,704


$     1,577,010

GAAP net income per diluted share attributable to KLA


$              4.83


$           4.71


$              3.66


$           16.52


$              9.28

Non-GAAP net income per diluted share attributable to KLA


$              5.13


$           5.59


$              3.85


$           15.35


$            10.12

Shares used in diluted shares calculation


151,186


152,331


155,159


152,346


155,789

 

Pre-tax Impact of GAAP to Non-GAAP Adjustments Included in Condensed Consolidated Unaudited Statements of Operations

 

(In thousands)

Acquisition -
Related
Charges


Restructuring,
Severance and
Other Charges


Total Pre-tax
GAAP to Non-
GAAP Adjustments

Three Months Ended March 31, 2022






Costs of revenues

$       42,576


$                 —


$         42,576

Selling, general and administrative

17,322



17,322

Other expense (income), net


2,513


2,513

Total in three months ended March 31, 2022

$       59,898


$           2,513


$         62,411

Three Months Ended December 31, 2021






Costs of revenues

$       41,115


$                 —


$         41,115

Selling, general and administrative

13,224



13,224

Total in three months ended December 31, 2021

$       54,339


$                 —


$         54,339

Three Months Ended March 31, 2021






Costs of revenues

$       40,309


$               701


$         41,010

Research and development


147


147

Selling, general and administrative

12,664


2,075


14,739

Other expense (income), net


(4,457)


(4,457)

Total in three months ended March 31, 2021

$       52,973


$          (1,534)


$         51,439

 

Free Cash Flow Reconciliation

 


Three Months Ended March 31,

(In thousands)

2022


2021

Net cash provided by operating activities

$              818,878


$              646,150

     Capital expenditures

(100,304)


(61,183)

Free cash flow

$              718,574


$              584,967

 

Fourth Quarter Fiscal 2022 Guidance

 

Reconciliation of GAAP Diluted EPS to Non-GAAP Diluted EPS

 



Three Months Ending June 30, 2022

(In millions, except per share amounts)


Low


High

GAAP net income per diluted share attributable to KLA


$4.60


$5.70

     Acquisition-related charges

a

0.46


0.46

     Income tax effect of non-GAAP adjustments

c

(0.13)


(0.13)

Non-GAAP net income per diluted share attributable to KLA


$4.93


$6.03

Shares used in net income per diluted share calculation


149.6


149.6

 

Reconciliation of GAAP Gross Margin to Non-GAAP Gross Margin

 



Three Months Ending June 30, 2022



Low


High

GAAP gross margin


59.5%


61.7%

     Acquisition-related charges

a

2.0%


1.8%

Non-GAAP gross margin


61.5%


63.5%

 

The non-GAAP and supplemental information provided in this press release is a supplement to, and not a substitute for, KLA's financial results presented in accordance with United States GAAP.

To supplement our Condensed Consolidated Financial Statements presented in accordance with GAAP, we provide certain non-GAAP financial information, which is adjusted from results based on GAAP to exclude certain costs and expenses, as well as other supplemental information. The non-GAAP and supplemental information is provided to enhance the user's overall understanding of our operating performance and our prospects in the future. Specifically, we believe that the non-GAAP information, including non-GAAP net income attributable to KLA, non-GAAP net income per diluted share attributable to KLA, non-GAAP gross margin and Free Cash Flow, provides useful measures to both management and investors regarding financial and business trends relating to our financial performance by excluding certain costs and expenses that we believe are not indicative of our core operating results to help investors compare our operating performances with our results in prior periods as well as with the performance of other companies. The non-GAAP information is among the budgeting and planning tools that management uses for future forecasting. However, because there are no standardized or generally accepted definitions for most non-GAAP financial metrics, definitions of non-GAAP financial metrics are inherently subject to significant discretion (for example, determining which costs and expenses to exclude when calculating such a metric). As a result, non-GAAP financial metrics may be defined very differently from company to company, or even from period to period within the same company, which can potentially limit the usefulness of such information to an investor. The presentation of non-GAAP and supplemental information is not meant to be considered in isolation or as a substitute for results prepared and presented in accordance with United States GAAP. The following are descriptions of the adjustments made to reconcile GAAP net income attributable to KLA to non-GAAP net income attributable to KLA:

a. Acquisition-related charges primarily include amortization of intangible assets and other acquisition-related adjustments including adjustments for the fair valuation of inventory and backlog, and transaction costs associated with our acquisitions.

b. Restructuring, severance and other charges primarily include costs associated with employee severance, acceleration of certain stock-based compensation arrangements, charges related to liquidation of legal entities and other exit costs.

c. Income tax effect of non-GAAP adjustments includes the income tax effects of the excluded items noted above.

d. Discrete tax items in the three months ended March 31, 2022 include a tax impact relating to the amortization of certain intellectual property as a result of an internal restructuring of ownership rights to align with how our business operates. Discrete tax items in the three months ended December 31, 2021 consist primarily of a tax expense of $163.7 million from an increase in deferred tax liabilities on unremitted foreign earnings due to a change in tax law, partially offset by a net benefit of $69.2 million from an internal restructuring. Discrete tax items in the three months ended March 31, 2021 primarily relate to a tax benefit of $3.0 million due to a decrease in deferred tax liability on purchased intangibles relating to a decrease in the effective income tax rate in Israel. Discrete tax items in the nine months ended March 31, 2022 primarily include the aforementioned items as well as a one-time tax benefit of $394.5 million resulting from changes made to our international structure to better align ownership of certain intellectual property rights with how our business operates. Discrete tax items in the nine months ended March 31, 2021 primarily include the aforementioned item, a tax expense of $14.0 million due to an increase in deferred tax liability on purchased intangibles relating to an increase in the United Kingdom statutory income tax rate and a $4.0 million tax expense from an internal restructuring.

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SOURCE KLA Corporation