LRCX
$258.28
Lam Research
($8.47)
(3.18%)
Earnings Details
2nd Quarter December 2019
Wednesday, January 29, 2020 4:05:00 PM
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Summary

Lam Research Beats

Lam Research (LRCX) reported 2nd Quarter December 2019 earnings of $4.01 per share on revenue of $2.6 billion. The consensus earnings estimate was $3.81 per share on revenue of $2.5 billion. The Earnings Whisper number was $3.96 per share. Revenue grew 2.4% on a year-over-year basis.

The company said it expects third quarter earnings of $4.15 to $4.95 per share on revenue of $2.60 billion to $3.00 billion. The current consensus earnings estimate is $4.04 per share on revenue of $2.56 billion for the quarter ending March 31, 2020.

Lam Research Corp is a supplier of wafer fabrication equipment and services to the semiconductor industry.

Results
Reported Earnings
$4.01
Earnings Whisper
$3.96
Consensus Estimate
$3.81
Reported Revenue
$2.58 Bil
Revenue Estimate
$2.50 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Lam Research Corporation Reports Financial Results for the Quarter Ended December 29, 2019

FREMONT, Calif., Jan. 29, 2020 (GLOBE NEWSWIRE) -- Lam Research Corporation (the "Company," "Lam," "Lam Research") today announced financial results for the quarter ended December 29, 2019 (the “December 2019 quarter”).

Highlights for the December 2019 quarter were as follows:

  • Revenue of $2.58 billion.
  • U.S. GAAP gross margin of 45.7%, U.S. GAAP operating income as a percentage of revenue of 26.6%, and U.S. GAAP diluted EPS of $3.43.
  • Non-GAAP gross margin of 45.7%, non-GAAP operating income as a percentage of revenue of 27.1%, and non-GAAP diluted EPS of $4.01.

Key Financial Data for the Quarters Ended
December 29, 2019 and September 29, 2019
(in thousands, except per-share data, percentages, and basis points)

U.S. GAAP
  December 2019 September 2019 Change Q/Q
Revenue $2,583,501  $2,165,746  + 19%
Gross margin as percentage of revenue 45.7% 45.3% + 40 bps
Operating income as percentage of revenue 26.6% 24.8% + 180 bps
Diluted EPS $3.43  $3.09  + 11%
       
Non-GAAP
  December 2019 September 2019 Change Q/Q
Revenue $2,583,501  $2,165,746  + 19%
Gross margin as percentage of revenue 45.7% 45.4% + 30 bps
Operating income as percentage of revenue 27.1% 25.5% + 160 bps
Diluted EPS $4.01  $3.18  + 26%

U.S. GAAP Financial Results

For the December 2019 quarter, revenue was $2,584 million, gross margin was $1,180 million, or 45.7% of revenue, operating expenses were $493 million, operating income was 26.6% of revenue, and net income was $515 million, or $3.43 per diluted share on a U.S. GAAP basis. This compares to revenue of $2,166 million, gross margin of $982 million, or 45.3% of revenue, operating expenses of $444 million, operating income of 24.8% of revenue, and net income of $466 million, or $3.09 per diluted share, for the quarter ended September 29, 2019 (the “September 2019 quarter”).

Non-GAAP Financial Results

For the December 2019 quarter, non-GAAP gross margin was $1,181 million or 45.7% of revenue, non-GAAP operating expenses were $481 million, non-GAAP operating income was 27.1% of revenue, and non-GAAP net income was $602 million, or $4.01 per diluted share. This compares to non-GAAP gross margin of $983 million or 45.4% of revenue, non-GAAP operating expenses of $431 million, non-GAAP operating income of 25.5% of revenue, and non-GAAP net income of $480 million, or $3.18 per diluted share for the September 2019 quarter.

“Lam closed out calendar 2019 with strong December quarter results,” said Tim Archer, Lam Research’s President and Chief Executive Officer. “We are executing at a high level in an improving wafer fabrication equipment environment and building a powerful pipeline of new products to fuel future growth.”

Balance Sheet and Cash Flow Results

Cash and cash equivalents, short-term investments, and restricted cash and investments balances decreased to $4.9 billion at the end of the December 2019 quarter compared to $5.8 billion at the end of the September 2019 quarter. This decrease was primarily the result of $1.0 billion of share repurchases, including net share settlement on employee stock-based compensation, $166.7 million of dividends paid to stockholders, and $62.1 million of capital expenditures, partially offset by $307.9 million of cash generated from operating activities.

Deferred revenue and deferred profit at the end of the December 2019 quarter decreased to $411 million and $366 million, respectively, as compared to $481 million and $407 million, respectively, at the end of the September 2019 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 $91 million as of December 29, 2019 and $47 million as of September 29, 2019.

Geographic Distribution

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

RegionRevenue
China29%
Taiwan26%
Korea18%
United States9%
Japan8%
Southeast Asia7%
Europe3%

Outlook

For the quarter ended March 29, 2020, Lam is providing the following guidance:

 U.S. GAAP Reconciling Items Non-GAAP
Revenue$2.8 Billion+/-$200 Million  $2.8 Billion+/-$200 Million
Gross margin as a percentage of revenue46.4%+/-1% $2 Million 46.5%+/-1%
Operating income as a percentage of revenue27.5%+/-1% $14 Million 28.0%+/-1%
Net income per diluted share$4.46+/-$0.40 $13 Million $4.55+/-$0.40
Diluted share count149 Million  149 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 arrangements 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, $2 million.
  • Operating income as a percentage of revenue - amortization related to intangible assets acquired through business combinations, $14 million.
  • Net income per diluted share - amortization related to intangible assets acquired though business combinations, $14 million; amortization of note discounts, $1 million; and associated tax benefit for non-GAAP items ($2 million); totaling $13 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 December 2019 and September 2019 quarters exclude amortization related to intangible assets acquired through business combinations, amortization of note discounts, and income tax benefit of non-GAAP items. Additionally, the December 2019 quarter non-GAAP results exclude the cumulative income tax benefit reversal due to the Ninth Circuit decision to deny a rehearing of the Altera stock-based compensation case and the September 2019 quarter non-GAAP results exclude restructuring charges.

Management uses non-GAAP gross margin, operating expense, operating income, operating income as a percentage of revenue, 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 customers in Japan; the timing and amount of revenue and profit earned from any booked deferred revenue and profit; our continuing ability to execute; improvement in the wafer fabrication equipment environment; our ability to develop successful new products and the potential for those products to fuel future growth; the legal and business factors that may affect our future tax rate; 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, on either a GAAP or non-GAAP basis 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; the actions of our customers and competitors may be inconsistent with our expectations; and widespread outbreaks of illness may impact our operations and revenue in affected areas; 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 30, 2019 and our quarterly report on Form 10-Q for the fiscal quarter ended September 29, 2019. 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 Six Months Ended
 December 29,
 2019
 September 29,
2019
 December 23,
 2018
 December 29,
 2019
 December 23,
 2018
Revenue$2,583,501  $2,165,746  $2,522,673  $4,749,247  $4,853,364 
Cost of goods sold1,403,857  1,184,036  1,377,640  2,587,893  2,650,133 
Gross margin1,179,644  981,710  1,145,033  2,161,354  2,203,231 
Gross margin as a percent of revenue45.7% 45.3% 45.4% 45.5% 45.4%
Research and development318,861  286,827  285,556  605,688  577,228 
Selling, general and administrative174,272  157,428  169,098  331,700  343,873 
Total operating expenses493,133  444,255  454,654  937,388  921,101 
Operating income686,511  537,455  690,379  1,223,966  1,282,130 
Operating income as a percent of revenue26.6% 24.8% 27.4% 25.8% 26.4%
Other expense, net(13,924) (12,728) (30,649) (26,652) (31,026)
Income before income taxes672,587  524,727  659,730  1,197,314  1,251,104 
Income tax expense(158,077) (58,938) (90,875) (217,015) (148,889)
Net income$514,510  $465,789  $568,855  $980,299  $1,102,215 
Net income per share:         
Basic$3.57  $3.22  $3.67  $6.79  $7.10 
Diluted$3.43  $3.09  $3.51  $6.52  $6.73 
Number of shares used in per share calculations:         
Basic143,987  144,673  155,022  144,330  155,340 
Diluted150,097  150,682  162,170  150,389  163,749 
Cash dividend declared per common share$1.15  $1.15  $1.10  $2.30  $2.20 
                    

 LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

 December 29,
 2019
 September 29,
2019
 June 30,
 2019
 (unaudited) (unaudited) (1) 
ASSETS     
Cash and cash equivalents$3,035,887  $4,607,182  $3,658,219 
Investments1,647,867  983,650  1,772,984 
Accounts receivable, net2,030,490  1,635,643  1,455,522 
Inventories1,528,620  1,483,385  1,540,140 
Prepaid expenses and other current assets212,101  124,755  133,544 
Total current assets8,454,965  8,834,615  8,560,409 
Property and equipment, net1,047,254  1,030,168  1,059,077 
Restricted cash and investments253,907  254,654  255,177 
Goodwill and intangible assets1,677,940  1,690,648  1,701,547 
Other assets480,056  533,417  425,123 
Total assets$11,914,122  $12,343,502  $12,001,333 
LIABILITIES AND STOCKHOLDERS’ EQUITY     
Current portion of long-term debt and finance lease obligations$632,292  $645,158  $667,131 
Other current liabilities1,933,209  1,812,524  1,704,519 
Total current liabilities2,565,501  2,457,682  2,371,650 
Long-term debt and finance lease obligations3,786,067  3,788,089  3,822,768 
Income taxes payable872,778  856,895  892,790 
Other long-term liabilities272,043  261,890  190,821 
Total liabilities7,496,389  7,364,556  7,278,029 
Temporary equity, convertible notes38,304  42,553  49,439 
Stockholders’ equity (2)4,379,429  4,936,393  4,673,865 
Total liabilities and stockholders’ equity$11,914,122  $12,343,502  $12,001,333 
            


(1)Derived from audited financial statements.
(2)Common shares issued and outstanding were 142,462 as of December 29, 2019, 144,871 as of September 29, 2019, and 144,433 as of June 30, 2019.
   

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

 Three Months Ended Six Months Ended
 December 29,
 2019
 September 29,
2019
 December 23,
 2018
 December 29,
 2019
 December 23,
 2018
CASH FLOWS FROM OPERATING ACTIVITIES:         
Net income$514,510  $465,789  $568,855  $980,299  $1,102,215 
Adjustments to reconcile net income to net cash provided by operating activities:         
Depreciation and amortization65,530  64,664  81,794  130,194  161,599 
Deferred income taxes77,508  (2,992) 20,797  74,516  (62,704)
Equity-based compensation expense45,725  42,905  38,806  88,630  89,149 
Amortization of note discounts and issuance costs1,575  1,675  1,031  3,250  2,276 
Other, net(327) 4,026  (1,343) 3,699  848 
Changes in operating assets and liabilities(396,593) (112,020) (67,521) (508,613) 69,322 
Net cash provided by operating activities307,928  464,047  642,419  771,975  1,362,705 
CASH FLOWS FROM INVESTING ACTIVITIES:         
Capital expenditures and intangible assets(62,054) (39,256) (105,923) (101,310) (162,021)
Net (purchase) sale of available-for-sale securities(662,287) 790,478  773,223  128,191  160,640 
Other, net(9,988) (540) (369) (10,528) (4,019)
Net cash (used for) provided by investing activities(734,329) 750,682  666,931  16,353  (5,400)
CASH FLOWS FROM FINANCING ACTIVITIES:         
Principal payments on debt(17,987) (28,965) (6,440) (46,952) (86,271)
Net repayments of commercial paper    (359,518)   (359,604)
Treasury stock purchases(1,005,067) (78,132) (1,519) (1,083,199) (1,737,414)
Dividends paid(166,721) (158,868) (167,907) (325,589) (342,279)
Reissuance of treasury stock related to employee stock purchase plan38,447    32,920  38,447  32,920 
Proceeds from issuance of common stock632  3,869  109  4,501  109 
Other, net    (13,198)   (13,207)
Net cash used for financing activities(1,150,696) (262,096) (515,553) (1,412,792) (2,505,746)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash5,055  (4,193) (2,721) 862  (5,032)
Net (decrease) increase in cash, cash equivalents, and restricted cash(1,572,042) 948,440  791,076  (623,602) (1,153,473)
Cash, cash equivalents, and restricted cash at beginning of period4,861,836  3,913,396  2,824,009  3,913,396  4,768,558 
Cash, cash equivalents, and restricted cash at end of period$3,289,794  $4,861,836  $3,615,085  $3,289,794  $3,615,085 
                    

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

 Three Months Ended
 December 29,
 2019
 September 29,
2019
Revenue$2,583,501  $2,165,746 
Gross margin$1,181,271  $983,338 
Gross margin as percentage of revenue45.7% 45.4%
Operating expenses$480,776  $430,853 
Operating income$700,495  $552,485 
Operating income as a percentage of revenue27.1% 25.5%
Net income$601,810  $479,555 
Net income per diluted share$4.01  $3.18 
Shares used in per share calculation - diluted150,097  150,682 
      

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

 Three Months Ended
 December 29,
2019
 September 29,
2019
U.S. GAAP net income$514,510  $465,789 
Pre-tax non-GAAP items:   
Amortization related to intangible assets acquired through certain business combinations - cost of goods sold1,627  1,628 
Amortization related to intangible assets acquired through certain business combinations - selling, general and administrative12,357  12,357 
Restructuring charges - selling, general and administrative  1,045 
Amortization of note discounts - other expense, net1,158  1,234 
Net income tax benefit on non-GAAP items(2,358) (2,498)
Cumulative income tax benefit reversal due to a court ruling74,516   
Non-GAAP net income$601,810  $479,555 
Non-GAAP net income per diluted share$4.01  $3.18 
U.S. GAAP net income per diluted share$3.43  $3.09 
U.S. GAAP and non-GAAP number of shares used for per diluted share calculation150,097  150,682 
      

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
 December 29,
 2019
 September 29,
2019
U.S. GAAP gross margin$1,179,644  $981,710 
Pre-tax non-GAAP items:   
Amortization related to intangible assets acquired through certain business combinations1,627  1,628 
Non-GAAP gross margin$1,181,271  $983,338 
U.S. GAAP gross margin as a percentage of revenue45.7% 45.3%
Non-GAAP gross margin as a percentage of revenue45.7% 45.4%
U.S. GAAP operating expenses$493,133  $444,255 
Pre-tax non-GAAP items:   
Amortization related to intangible assets acquired through certain business combinations(12,357) (12,357)
Restructuring charges  (1,045)
Non-GAAP operating expenses$480,776  $430,853 
U.S. GAAP operating income$686,511  $537,455 
Non-GAAP operating income$700,495  $552,485 
U.S. GAAP operating income as percent of revenue26.6% 24.8%
Non-GAAP operating income as a percent of revenue27.1% 25.5%

Lam Research Corporation Contact:

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

Lam_Research_logo_color.jpg

Source: Lam Research Corporation