LRCX
$187.18
Lam Research
$.27
.14%
Earnings Details
3rd Quarter March 2019
Wednesday, April 24, 2019 4:05:00 PM
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Summary

Lam Research Beats

Lam Research (LRCX) reported 3rd Quarter March 2019 earnings of $3.70 per share on revenue of $2.4 billion. The consensus earnings estimate was $3.38 per share on revenue of $2.4 billion. The Earnings Whisper number was $3.41 per share. Revenue fell 15.7% compared to the same quarter a year ago.

The company said it expects fourth quarter earnings of $3.20 to $3.60 per share on revenue of $2.20 billion to $2.50 billion. The current consensus earnings estimate is $3.28 per share on revenue of $2.32 billion for the quarter ending June 30, 2019.

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

Results
Reported Earnings
$3.70
Earnings Whisper
$3.41
Consensus Estimate
$3.38
Reported Revenue
$2.44 Bil
Revenue Estimate
$2.40 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

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

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:

RegionRevenue
Korea25%
Taiwan23%
Japan17%
China17%
United States9%
Southeast Asia5%
Europe4%

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 count155 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 sold1,364,711  1,377,640  1,561,401  4,014,844  4,265,446 
Gross margin1,074,337  1,145,033  1,330,714  3,277,568  3,685,624 
Gross margin as a percent of revenue44.0% 45.4% 46.0% 44.9% 46.4%
Research and development318,514  285,556  305,412  895,742  861,801 
Selling, general and administrative190,306  169,098  197,791  534,179  565,719 
Total operating expenses508,820  454,654  503,203  1,429,921  1,427,520 
Operating income565,517  690,379  827,511  1,847,647  2,258,104 
Operating income as a percent of revenue23.2% 27.4% 28.6% 25.3% 28.4%
Other income (expense), net20,532  (30,649) (55,810) (10,494) (64,464)
Income before income taxes586,049  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:         
Basic151,201  155,022  162,378  153,891  161,885 
Diluted157,849  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 
Investments1,209,315  275,670  437,338 
Accounts receivable, net1,522,273  1,868,842  2,176,936 
Inventories1,622,242  1,703,307  1,876,162 
Prepaid expenses and other current assets156,800  148,233  147,218 
Total current assets9,442,241  7,355,845  9,149,911 
Property and equipment, net1,040,329  1,013,306  902,547 
Restricted cash and investments255,774  255,292  256,301 
Goodwill and intangible assets1,707,930  1,736,468  1,802,740 
Other assets448,988  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 liabilities1,841,521  1,979,735  2,540,278 
Total current liabilities2,805,628  2,166,837  3,150,308 
Long-term debt and capital leases3,801,514  1,813,190  1,806,562 
Income taxes payable863,155  859,232  851,936 
Other long-term liabilities83,986  87,827  90,629 
Total liabilities7,554,283  4,927,086  5,899,435 
Temporary equity, convertible notes49,783  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 amortization82,274  81,794  82,236  243,873  241,276 
Deferred income taxes(12,401) 20,797  19,060  (75,105) (209,214)
Equity-based compensation expense53,240  38,806  41,095  142,389  125,002 
Impairment of investment    42,456    42,456 
Amortization of note discounts and issuance costs2,861  1,031  4,342  5,137  13,469 
Other, net(1,494) (1,343) 17,866  (646) 23,327 
Changes in operating assets and liabilities260,951  (67,521) 64,524  330,273  341,538 
Net cash provided by operating activities932,821  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 paper297,850  (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 costs2,476,720      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 stock5,010  109  2,517  5,119  6,632 
Other, net  (13,198) 7  (13,207) 11 
Net cash provided by (used for) financing activities1,643,522  (515,553) (186,462) (862,224) (1,111,288)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash4,128  (2,721) 4,041  (904) 8,200 
Net increase in cash, cash equivalents, and restricted cash1,572,300  791,076  2,954,425  418,827  2,321,843 
Cash, cash equivalents, and restricted cash at beginning of period3,615,085  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 revenue45.1% 46.3%
Operating expenses$488,389  $439,808 
Operating income$611,161  $727,567 
Operating income as a percentage of revenue25.1% 28.8%
Net income$584,350  $628,196 
Net income per diluted share$3.70  $3.87 
Shares used in per share calculation - diluted157,849  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 sold22,342  22,342 
Restructuring charges - cost of goods sold2,871   
Restructuring charges - research and development4,698   
Amortization related to intangible assets acquired through certain business combinations - selling, general and administrative12,446  12,490 
Restructuring charges - selling, general and administrative3,287  2,356 
Amortization of note discounts - other expense, net956  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 calculation157,849  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 combinations22,342  22,342 
Restructuring charges2,871   
Non-GAAP gross margin$1,099,550  $1,167,375 
U.S. GAAP gross margin as a percentage of revenue44.0% 45.4%
Non-GAAP gross margin as a percentage of revenue45.1% 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 revenue23.2% 27.4%
Non-GAAP operating income as a percent of revenue25.1% 28.8%


Lam Research Corporation Contacts:

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

Lam_Research_logo_color.jpg

Source: Lam Research Corporation