Highlights for the
- Shipments of
$1,708 million and revenue of$1,632 million . - GAAP gross margin of 43.9%, GAAP operating margin of 19.4%, and GAAP diluted EPS of
$1.47 . - Non-GAAP gross margin of 45.2%, non-GAAP operating margin of 22.4%, and non-GAAP diluted EPS of
$1.81 .
Key Financial Data for the Quarters Ended (in thousands, except per-share data, percentages, and basis points) |
||||||||||||
September 2016 | June 2016 | Change Q/Q | ||||||||||
Shipments | $ | 1,708,483 | $ | 1,587,417 | + 8 | % | ||||||
Revenue | $ | 1,632,419 | $ | 1,546,261 | + 6 | % | ||||||
Gross margin as percentage of revenue | 43.9 | % | 45.2 | % | -130 bps | |||||||
Operating margin as percentage of revenue | 19.4 | % | 20.0 | % | - 60 bps | |||||||
Diluted EPS | $ | 1.47 | $ | 1.46 | + 1 | % | ||||||
Non-GAAP | ||||||||||||
September 2016 | June 2016 | Change Q/Q | ||||||||||
Shipments | $ | 1,708,483 | $ | 1,587,417 | + 8 | % | ||||||
Revenue | $ | 1,632,419 | $ | 1,546,261 | + 6 | % | ||||||
Gross margin as percentage of revenue | 45.2 | % | 46.6 | % | - 140 bps | |||||||
Operating margin as percentage of revenue | 22.4 | % | 23.2 | % | - 80 bps | |||||||
Diluted EPS | $ | 1.81 | $ | 1.80 | + 1 | % | ||||||
For the
Non-GAAP Financial Results
For the
"Lam delivered another record quarter in shipments, revenues and non-GAAP net income, validating the importance of having the right products at the right time to address industry enabling technology inflections that are critical to powering a new generation of semiconductor devices in a world that is now clearly, more than Moore," said
Balance Sheet and Cash Flow Results
Cash and cash equivalents, short-term investments, and restricted cash and investments balances increased to
Deferred revenue at the end of the
Geographic Distribution
The geographic distribution of shipments and revenue during the
Region | Shipments | Revenue | |||
26 | % | 26 | % | ||
28 | % | 23 | % | ||
11 | % | 15 | % | ||
11 | % | 14 | % | ||
11 | % | 12 | % | ||
8 | % | 7 | % | ||
5 | % | 3 | % | ||
Outlook
For the
Reconciling Items | Non-GAAP | |||||||||||||||||||
Shipments | +/- | $75 Million | — | +/- | $75 Million | |||||||||||||||
Revenue | +/- | $75 Million | — | +/- | $75 Million | |||||||||||||||
Gross margin | 44.9 | % | +/- | 1 | % | $ | 21 | Million | 46.0 | % | +/- | 1 | % | |||||||
Operating margin | 23.0 | % | +/- | 1 | % | $ | 37 | Million | 25.0 | % | +/- | 1 | % | |||||||
Net income per diluted share | $ | 1.82 | +/- | $ | 0.10 | $ | 60 | Million | $ | 2.18 | +/- | $ | 0.10 | |||||||
Diluted share count | 181 Million | 2 | Million | 179 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, financing arrangements, other investments, or other significant transactions that may be completed after the date of this release. 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 in the Novellus transaction,
$21 million . - Operating margin - amortization related to intangible assets acquired in the Novellus transaction,
$37 million . - Earnings per share - amortization related to intangible assets acquired in the Novellus transaction,
$37 million ; amortization of note discounts,$6 million ; special mandatory redemption fees, accelerated amortization of loan issuance costs and debt discounts, and interest expense, net associated with the early redemption of the KLA-Tencor acquisition funding,$37 million ; and associated tax benefit for non-GAAP items($20) million ; totaling$60 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
Management uses non-GAAP gross margin, operating income, operating expenses, 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
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; economic and market conditions in the industry and their impact on technology inflections; our growth revenue and performance outlooks and their drivers: the extent of our underlying fundamentals and multi-year outperformance opportunities and our ability to strengthen those positions and accelerate innovation for the benefit of our customers; 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
About
Consolidated Financial Tables Follow.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data and percentages) (unaudited) |
|||||||||||
Three Months Ended | |||||||||||
2016 |
2016 |
2015 |
|||||||||
Revenue | $ | 1,632,419 | $ | 1,546,261 | $ | 1,600,043 | |||||
Cost of goods sold | 916,222 | 847,477 | 877,680 | ||||||||
Gross margin | 716,197 | 698,784 | 722,363 | ||||||||
Gross margin as a percent of revenue | 43.9 | % | 45.2 | % | 45.1 | % | |||||
Research and development | 235,240 | 237,255 | 234,209 | ||||||||
Selling, general and administrative | 165,010 | 152,288 | 152,726 | ||||||||
Total operating expenses | 400,250 | 389,543 | 386,935 | ||||||||
Operating income | 315,947 | 309,241 | 335,428 | ||||||||
Operating income as a percent of revenue | 19.4 | % | 20.0 | % | 21.0 | % | |||||
Other expense, net | (23,154 | ) | (27,249 | ) | (27,121 | ) | |||||
Income before income taxes | 292,793 | 281,992 | 308,307 | ||||||||
Income tax expense | (28,958 | ) | (23,053 | ) | (19,628 | ) | |||||
Net income | $ | 263,835 | $ | 258,939 | $ | 288,679 | |||||
Net income per share: | |||||||||||
Basic | $ | 1.64 | $ | 1.62 | $ | 1.82 | |||||
Diluted | $ | 1.47 | $ | 1.46 | $ | 1.66 | |||||
Number of shares used in per share calculations: | |||||||||||
Basic | 160,607 | 159,862 | 158,352 | ||||||||
Diluted | 180,017 | 177,649 | 174,374 | ||||||||
Cash dividend declared per common share | $ | 0.30 | $ | 0.30 | $ | 0.30 |
CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) |
||||||||||||||||||||
2016 |
2016 |
2015 |
||||||||||||||||||
(unaudited) | (1 | ) | (unaudited) | |||||||||||||||||
ASSETS | ||||||||||||||||||||
Cash and cash equivalents | $ | 5,861,701 | $ | 5,039,322 | $ | 1,744,325 | ||||||||||||||
Investments | 1,352,775 | 1,788,612 | 2,587,474 | |||||||||||||||||
Accounts receivable, net | 1,290,317 | 1,262,145 | 1,088,942 | |||||||||||||||||
Inventories | 931,581 | 971,911 | 916,683 | |||||||||||||||||
Other current assets | 162,628 | 151,160 | (3 | ) | 177,668 | (3 | ) | |||||||||||||
Total current assets | 9,599,002 | 9,213,150 | 6,515,092 | |||||||||||||||||
Property and equipment, net | 649,587 | 639,608 | 636,769 | |||||||||||||||||
Restricted cash and investments | 255,640 | 250,421 | 183,455 | |||||||||||||||||
1,912,431 | 1,951,197 | 2,076,164 | ||||||||||||||||||
Other assets | 219,702 | 209,939 | (3 | ) | 177,859 | (3 | ) | |||||||||||||
Total assets | $ | 12,636,362 | $ | 12,264,315 | $ | 9,589,339 | ||||||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||||
Current portion of convertible notes and capital leases | $ | 952,999 | $ | 947,733 | (3 | ) | $ | 968,503 | (3 | ) | ||||||||||
Other current liabilities | 1,533,253 | 1,470,308 | 1,312,549 | |||||||||||||||||
Total current liabilities | 2,486,252 | 2,418,041 | 2,281,052 | |||||||||||||||||
Long-term debt and capital leases | 3,378,179 | 3,378,129 | (3 | ) | 1,396,412 | (3 | ) | |||||||||||||
Income taxes payable | 241,671 | 231,514 | 247,448 | |||||||||||||||||
Other long-term liabilities | 142,910 | 134,562 | 127,607 | |||||||||||||||||
Total liabilities | 6,249,012 | 6,162,246 | 4,052,519 | |||||||||||||||||
Temporary equity, convertible notes | 202,467 | 207,552 | 178,665 | |||||||||||||||||
Stockholders' equity (2) | 6,184,883 | 5,894,517 | 5,358,155 | |||||||||||||||||
Total liabilities and stockholders' equity | $ | 12,636,362 | $ | 12,264,315 | $ | 9,589,339 |
(1 | ) | Derived from audited financial statements | |
(2 | ) | Common shares issued and outstanding were 161,706 as of |
|
(3 | ) | Adjusted for effects of retrospective implementation of ASU 2015-3, regarding the simplification of the presentation of bond issuance costs, which requires that bond issuance costs related to a recognized liability be presented on the balance sheet as a direct reduction from the carrying amount of that debt liability, consistent with debt discounts. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, unaudited) |
|||||||||||
Three Months Ended | |||||||||||
September 25, 2016 |
June 26, 2016 |
September 27, 2015 |
|||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
Net income | $ | 263,835 | $ | 258,939 | $ | 288,679 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 74,562 | 74,976 | 70,590 | ||||||||
Deferred income taxes | 7,633 | (46,708 | ) | (5,563 | ) | ||||||
Equity-based compensation expense | 38,595 | 39,288 | 35,774 | ||||||||
Income tax benefit on equity-based compensation plans | — | (8,048 | ) | 3,545 | |||||||
Excess tax benefit on equity-based compensation plans | — | 9,035 | (3,572 | ) | |||||||
Amortization of note discounts and issuance costs | 6,830 | 14,584 | 9,831 | ||||||||
Gain on sale of assets | — | (15,223 | ) | — | |||||||
Other, net | 16,807 | 17,929 | 10,011 | ||||||||
Changes in operating assets and liabilities | 64,962 | 79,052 | 39,702 | ||||||||
Net cash provided by operating activities | 473,224 | 423,824 | 448,997 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
Capital expenditures and intangible assets | (41,979 | ) | (51,726 | ) | (49,454 | ) | |||||
Net sale (purchase) of available-for-sale securities | 431,750 | 605,891 | (28,203 | ) | |||||||
Proceeds from sale of assets | — | 79,730 | — | ||||||||
Transfer of restricted cash and investments | (5,219 | ) | (112,381 | ) | — | ||||||
Other, net | (7,800 | ) | — | (1,500 | ) | ||||||
Net cash provided by (used for) investing activities | 376,752 | 521,514 | (79,157 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
Principal payments on long-term debt and capital lease obligations and payments for debt issuance costs | (371 | ) | (450,624 | ) | (96 | ) | |||||
Proceeds from issuance of long-term debt, net of issuance costs | — | 2,374,220 | — | ||||||||
Excess tax benefit on equity-based compensation plans | — | (9,035 | ) | 3,572 | |||||||
(1,854 | ) | (27,114 | ) | (98,385 | ) | ||||||
Dividends paid | (48,052 | ) | (47,308 | ) | (47,659 | ) | |||||
Reissuance of treasury stock related to employee stock purchase plan | 19,320 | 20,360 | 19,245 | ||||||||
Proceeds from issuance of common stock | 1,459 | 1,547 | 377 | ||||||||
Other, net | (10 | ) | (159 | ) | (300 | ) | |||||
Net cash (used for) provided by financing activities | (29,508 | ) | 1,861,887 | (123,246 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents | 1,911 | 76 | (3,808 | ) | |||||||
Net increase in cash and cash equivalents | 822,379 | 2,807,301 | 242,786 | ||||||||
Cash and cash equivalents at beginning of period | 5,039,322 | 2,232,021 | 1,501,539 | ||||||||
Cash and cash equivalents at end of period | $ | 5,861,701 | $ | 5,039,322 | $ | 1,744,325 |
Non-GAAP Financial Summary (in thousands, except percentages and per share data) (unaudited) |
|||||||
Three Months Ended | |||||||
September 25, 2016 |
June 26, 2016 |
||||||
Revenue | $ | 1,632,419 | $ | 1,546,261 | |||
Gross margin | $ | 737,447 | $ | 720,162 | |||
Gross margin as percentage of revenue | 45.2 | % | 46.6 | % | |||
Operating expenses | $ | 371,634 | $ | 361,490 | |||
Operating income | $ | 365,813 | $ | 358,672 | |||
Operating margin as a percentage of revenue | 22.4 | % | 23.2 | % | |||
Net income | $ | 322,074 | $ | 314,806 | |||
Net income per diluted share | $ | 1.81 | $ | 1.80 | |||
Shares used in per share calculation - diluted | 177,628 | 175,052 |
Reconciliation of (in thousands, except per share data) (unaudited) |
|||||||
Three Months Ended | |||||||
2016 |
2016 |
||||||
$ | 263,835 | $ | 258,939 | ||||
Pre-tax non-GAAP items: | |||||||
Amortization related to intangible assets acquired in Novellus transaction - cost of goods sold | 21,250 | 21,250 | |||||
Novellus acquisition-related inventory fair value impact - cost of goods sold | — | 128 | |||||
Costs associated with campus consolidation - research and development | 2,561 | 7,763 | |||||
Restructuring charges - research and development | — | 43 | |||||
Amortization related to intangible assets acquired in Novellus transaction -selling, general and administrative | 16,083 | 16,083 | |||||
KLA-Tencor acquisition-related costs - selling, general and administrative | 9,972 | 19,270 | |||||
Restructuring charges - selling, general and administrative | — | 117 | |||||
Gain on sale of real property, net of associated exit costs - selling, general and administrative | — | (15,223 | ) | ||||
KLA-Tencor acquisition funding interest expense, net - other expense, net | 17,709 | 3,821 | |||||
Amortization of note discounts - other expense, net | 5,913 | 7,492 | |||||
Amortization of bridge loan issuance costs and other related fees - other expense, net | — | 6,938 | |||||
Net income tax benefit on non-GAAP items | (15,249 | ) | (8,413 | ) | |||
Income tax benefit on resolution of certain tax matters | — | (2,515 | ) | ||||
Change to income tax benefit from court ruling | — | (887 | ) | ||||
Non-GAAP net income | $ | 322,074 | $ | 314,806 | |||
Non-GAAP net income per diluted share | $ | 1.81 | $ | 1.80 | |||
180,017 | 177,649 | ||||||
Effect of convertible note hedge | (2,389 | ) | (2,597 | ) | |||
Non-GAAP number of shares used for per diluted share calculation | 177,628 | 175,052 |
Reconciliation of (in thousands, except percentages) (unaudited) |
|||||||
Three Months Ended | |||||||
2016 |
2016 |
||||||
$ | 716,197 | $ | 698,784 | ||||
Pre-tax non-GAAP items: | |||||||
Amortization related to intangible assets acquired in Novellus transaction | 21,250 | 21,250 | |||||
Novellus acquisition-related inventory fair value impact | — | 128 | |||||
Non-GAAP gross margin | $ | 737,447 | $ | 720,162 | |||
43.9 | % | 45.2 | % | ||||
Non-GAAP gross margin as a percentage of revenue | 45.2 | % | 46.6 | % | |||
$ | 400,250 | $ | 389,543 | ||||
Pre-tax non-GAAP items: | |||||||
Amortization related to intangible assets acquired in Novellus transaction | (16,083 | ) | (16,083 | ) | |||
KLA-Tencor acquisition-related costs | (9,972 | ) | (19,270 | ) | |||
Costs associated with campus consolidation | (2,561 | ) | (7,763 | ) | |||
Restructuring charges | — | (160 | ) | ||||
Gain on sale of real property, net of associated exit costs | — | 15,223 | |||||
Non-GAAP operating expenses | $ | 371,634 | $ | 361,490 | |||
Non-GAAP operating income | $ | 365,813 | $ | 358,672 | |||
GAAP operating margin as percent of revenue | 19.4 | % | 20.0 | % | |||
Non-GAAP operating margin as a percent of revenue | 22.4 | % | 23.2 | % |
Lam Research Corporation Contacts:Satya Kumar , Investor Relations, phone: 510-572-1615, e-mail: investor.relations@lamresearch.com
Source: Lam Research
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