Highlights for the
- Shipments of
$3.03 billion and revenue of$3.13 billion . - U.S. GAAP gross margin of 47.3%, U.S. GAAP operating margin of 30.6%, and U.S. GAAP diluted EPS of
$5.82 . - Non-GAAP gross margin of 48.0%, non-GAAP operating margin of 31.8%, and non-GAAP diluted EPS of
$5.31 .
Key Financial Data for the Quarters Ended June 24, 2018 and March 25, 2018 (in thousands, except per-share data, percentages, and basis points) |
|||||||||||
U.S. GAAP | |||||||||||
June 2018 | March 2018 | Change Q/Q | |||||||||
Shipments | $ | 3,028,390 | $ | 3,134,677 | - 3% | ||||||
Revenue | $ | 3,125,928 | $ | 2,892,115 | + 8% | ||||||
Gross margin as percentage of revenue | 47.3 | % | 46.0 | % | + 130 bps | ||||||
Operating margin as percentage of revenue | 30.6 | % | 28.6 | % | + 200 bps | ||||||
Diluted EPS | $ | 5.82 | $ | 4.33 | + 34% | ||||||
Non-GAAP | |||||||||||
June 2018 | March 2018 | Change Q/Q | |||||||||
Shipments | $ | 3,028,390 | $ | 3,134,677 | - 3% | ||||||
Revenue | $ | 3,125,928 | $ | 2,892,115 | + 8% | ||||||
Gross margin as percentage of revenue | 48.0 | % | 46.8 | % | + 120 bps | ||||||
Operating margin as percentage of revenue | 31.8 | % | 30.0 | % | + 180 bps | ||||||
Diluted EPS | $ | 5.31 | $ | 4.79 | + 11% |
U.S. GAAP Financial Results
For the
Non-GAAP Financial Results
For the
“Lam’s June quarter results confirmed 2018 as the strongest fiscal year in our history, with over
Balance Sheet and Cash Flow Results
Cash and cash equivalents, short-term investments, and restricted cash and investments balances decreased to
Deferred revenue at the end of the
Geographic Distribution
The geographic distribution of shipments and revenue during the
Region | Shipments | Revenue | |||
Korea | 29% | 35% | |||
China | 25% | 21% | |||
Japan | 21% | 18% | |||
Taiwan | 11% | 10% | |||
Europe | 5% | 6% | |||
United States | 5% | 5% | |||
Southeast Asia | 4% | 5% |
Outlook
For the
U.S. GAAP | Reconciling Items |
Non-GAAP | |||||||||
Revenue | $2.3 Billion | +/- | $150 Million | — | $2.3 Billion | +/- | $150 Million | ||||
Gross margin | 45.0% | +/- | 1% | $22 Million | 46.0% | +/- | 1% | ||||
Operating margin | 24.3% | +/- | 1% | $38 Million | 26.0% | +/- | 1% | ||||
Net income per diluted share | $2.98 | +/- | $0.20 | $36 Million | $3.20 | +/- | $0.20 | ||||
Diluted share count | 163 Million | — | 163 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, balance sheet valuation adjustments, financing arrangements, other investments, measurement period adjustments associated with U.S. tax reform, 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 - amortization related to intangible assets acquired through business combinations,
$22 million . - Operating margin - amortization related to intangible assets acquired through business combinations,
$38 million . - Earnings per share - amortization related to intangible assets acquired through business combinations,
$38 million ; amortization of note discounts,$1 million ; and associated tax benefit for non-GAAP items($3) million ; totaling$36 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
Management uses non-GAAP gross margin, operating expense, operating income, 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 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
About
Consolidated Financial Tables Follow.
LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data and percentages) |
||||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||||
June 24, 2018 |
March 25, 2018 |
June 25, 2017 |
June 24, 2018 |
June 25, 2017 |
||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (1) | ||||||||||||||||
Revenue | $ | 3,125,928 | $ | 2,892,115 | $ | 2,344,907 | $ | 11,076,998 | $ | 8,013,620 | ||||||||||
Cost of goods sold | 1,646,520 | 1,561,401 | 1,275,946 | 5,911,966 | 4,410,261 | |||||||||||||||
Gross margin | 1,479,408 | 1,330,714 | 1,068,961 | 5,165,032 | 3,603,359 | |||||||||||||||
Gross margin as a percent of revenue | 47.3 | % | 46.0 | % | 45.6 | % | 46.6 | % | 45.0 | % | ||||||||||
Research and development | 327,713 | 305,412 | 285,712 | 1,189,514 | 1,033,742 | |||||||||||||||
Selling, general and administrative | 196,500 | 197,791 | 175,310 | 762,219 | 667,485 | |||||||||||||||
Total operating expenses | 524,213 | 503,203 | 461,022 | 1,951,733 | 1,701,227 | |||||||||||||||
Operating income | 955,195 | 827,511 | 607,939 | 3,213,299 | 1,902,132 | |||||||||||||||
Operating income as a percent of revenue | 30.6 | % | 28.6 | % | 25.9 | % | 29.0 | % | 23.7 | % | ||||||||||
Other income (expense), net | 2,954 | (55,810 | ) | (4,444 | ) | (61,510 | ) | (90,459 | ) | |||||||||||
Income before income taxes | 958,149 | 771,701 | 603,495 | 3,151,789 | 1,811,673 | |||||||||||||||
Income tax benefit (expense) | 62,997 | 7,099 | (77,071 | ) | (771,108 | ) | (113,910 | ) | ||||||||||||
Net income | $ | 1,021,146 | $ | 778,800 | $ | 526,424 | $ | 2,380,681 | $ | 1,697,763 | ||||||||||
Net income per share: | ||||||||||||||||||||
Basic | $ | 6.35 | $ | 4.80 | $ | 3.25 | $ | 14.73 | $ | 10.47 | ||||||||||
Diluted | $ | 5.82 | $ | 4.33 | $ | 2.82 | $ | 13.17 | $ | 9.24 | ||||||||||
Number of shares used in per share calculations: | ||||||||||||||||||||
Basic | 160,916 | 162,378 | 162,213 | 161,643 | 162,222 | |||||||||||||||
Diluted | 175,432 | 179,779 | 186,427 | 180,782 | 183,770 | |||||||||||||||
Cash dividend declared per common share | $ | 1.10 | $ | 0.50 | $ | 0.45 | $ | 2.55 | $ | 1.65 | ||||||||||
(1) Derived from audited financial statements. |
LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) |
||||||||||||
June 24, 2018 |
March 25, 2018 |
June 25, 2017 |
||||||||||
(unaudited) | (unaudited) | (1) | ||||||||||
ASSETS | ||||||||||||
Cash and cash equivalents | $ | 4,512,257 | $ | 4,698,995 | $ | 2,377,534 | ||||||
Investments | 437,338 | 1,785,976 | 3,663,628 | |||||||||
Accounts receivable, net | 2,176,936 | 2,082,632 | 1,673,398 | |||||||||
Inventories | 1,876,162 | 1,693,128 | 1,232,916 | |||||||||
Other current assets | 147,218 | 165,066 | 195,022 | |||||||||
Total current assets | 9,149,911 | 10,425,797 | 9,142,498 | |||||||||
Property and equipment, net | 902,547 | 826,500 | 685,595 | |||||||||
Restricted cash and investments | 256,301 | 256,587 | 256,205 | |||||||||
Goodwill and intangible assets | 1,802,740 | 1,825,891 | 1,796,668 | |||||||||
Other assets | 367,979 | 328,724 | 241,799 | |||||||||
Total assets | $ | 12,479,478 | $ | 13,663,499 | $ | 12,122,765 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
Current portion of convertible debt and capital leases | $ | 610,030 | $ | 1,423,265 | $ | 908,439 | ||||||
Other current liabilities | 2,540,278 | 2,525,155 | 2,041,676 | |||||||||
Total current liabilities | 3,150,308 | 3,948,420 | 2,950,115 | |||||||||
Long-term debt and capital leases | 1,806,562 | 1,781,731 | 1,784,974 | |||||||||
Income taxes payable | 851,936 | 818,700 | 120,178 | |||||||||
Other long-term liabilities | 90,629 | 230,620 | 280,186 | |||||||||
Total liabilities | 5,899,435 | 6,779,471 | 5,135,453 | |||||||||
Temporary equity, convertible notes | 78,192 | 80,973 | 169,861 | |||||||||
Stockholders’ equity (2) | 6,501,851 | 6,803,055 | 6,817,451 | |||||||||
Total liabilities and stockholders’ equity | $ | 12,479,478 | $ | 13,663,499 | $ | 12,122,765 | ||||||
(1) Derived from audited financial statements. | ||||||||||||
(2) Common shares issued and outstanding were 156,892 as of June 24, 2018, 164,100 as of March 25, 2018 and 161,723 as of June 25, 2017. |
LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) |
||||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||||
June 24, 2018 |
March 25, 2018 |
June 25, 2017 |
June 24, 2018 |
June 25, 2017 |
||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (1) | ||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||||||
Net income | $ | 1,021,146 | $ | 778,800 | $ | 526,424 | $ | 2,380,681 | $ | 1,697,763 | ||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||
Depreciation and amortization | 85,119 | 82,236 | 79,036 | 326,395 | 306,905 | |||||||||||||||
Deferred income taxes | 212,260 | 19,060 | 35,069 | 3,046 | 104,936 | |||||||||||||||
Equity-based compensation expense | 47,214 | 41,095 | 43,802 | 172,216 | 149,975 | |||||||||||||||
Impairment of investment | — | 42,456 | — | 42,456 | — | |||||||||||||||
(Gain) Loss on early extinguishment of debt | — | — | (73 | ) | — | 36,252 | ||||||||||||||
Amortization of note discounts and issuance costs | 959 | 4,342 | 6,114 | 14,428 | 25,282 | |||||||||||||||
Other, net | 10,391 | 17,866 | 8,224 | 33,718 | 19,001 | |||||||||||||||
Changes in operating assets and liabilities | (658,731 | ) | 64,524 | 30,676 | (317,193 | ) | (310,832 | ) | ||||||||||||
Net cash provided by operating activities | 718,358 | 1,050,379 | 729,272 | 2,655,747 | 2,029,282 | |||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||||||
Capital expenditures and intangible assets | (79,655 | ) | (49,057 | ) | (34,811 | ) | (273,469 | ) | (157,419 | ) | ||||||||||
Business acquisitions, net of cash acquired | — | — | — | (115,697 | ) | — | ||||||||||||||
Net sale (purchase) of available-for-sale securities | 1,341,475 | 2,134,886 | 93,858 | 3,152,886 | (1,883,886 | ) | ||||||||||||||
Transfers of restricted cash and investments | 286 | (603 | ) | (48 | ) | (96 | ) | (5,784 | ) | |||||||||||
Other, net | (826 | ) | 638 | 103 | (15,184 | ) | (11,524 | ) | ||||||||||||
Net cash provided by (used for) investing activities | 1,261,280 | 2,085,864 | 59,102 | 2,748,440 | (2,058,613 | ) | ||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||||||
Principal payments on long-term debt and capital lease obligations and payments for debt issuance costs | (178,279 | ) | (228,166 | ) | (2,445 | ) | (755,694 | ) | (1,688,313 | ) | ||||||||||
Net (repayment) proceeds from commercial paper | (638,367 | ) | 199,024 | — | 359,604 | — | ||||||||||||||
Proceeds from borrowings on revolving credit facility | — | — | — | 750,000 | — | |||||||||||||||
Repayments of borrowings on revolving credit facility | — | — | — | (750,000 | ) | — | ||||||||||||||
Excess tax benefit on equity-based compensation plans | — | — | 38,635 | — | 38,635 | |||||||||||||||
Treasury stock purchases | (1,306,309 | ) | (80,105 | ) | (525,778 | ) | (2,653,249 | ) | (811,672 | ) | ||||||||||
Dividends paid | (82,005 | ) | (79,739 | ) | (73,709 | ) | (307,609 | ) | (243,495 | ) | ||||||||||
Re-issuance of treasury stock related to employee stock purchase plan | 41,567 | — | 23,120 | 75,624 | 59,663 | |||||||||||||||
Proceeds from issuance of common stock | 2,626 | 2,517 | 369 | 9,258 | 12,913 | |||||||||||||||
Other, net | (2 | ) | 7 | (1 | ) | 9 | (125 | ) | ||||||||||||
Net cash used for financing activities | (2,160,769 | ) | (186,462 | ) | (539,809 | ) | (3,272,057 | ) | (2,632,394 | ) | ||||||||||
Effect of exchange rate changes on cash and cash equivalents | (5,607 | ) | 4,041 | 399 | 2,593 | (63 | ) | |||||||||||||
Net (decrease) increase in cash and cash equivalents | (186,738 | ) | 2,953,822 | 248,964 | 2,134,723 | (2,661,788 | ) | |||||||||||||
Cash and cash equivalents at beginning of period | 4,698,995 | 1,745,173 | 2,128,570 | 2,377,534 | 5,039,322 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 4,512,257 | $ | 4,698,995 | $ | 2,377,534 | $ | 4,512,257 | $ | 2,377,534 | ||||||||||
(1) Derived from audited financial statements. |
Non-GAAP Financial Summary (in thousands, except percentages and per share data) (unaudited) |
|||||||
Three Months Ended | |||||||
June 24, 2018 |
March 25, 2018 |
||||||
Revenue | $ | 3,125,928 | $ | 2,892,115 | |||
Gross margin | $ | 1,501,750 | $ | 1,353,056 | |||
Gross margin as percentage of revenue | 48.0 | % | 46.8 | % | |||
Operating expenses | $ | 507,416 | $ | 486,022 | |||
Operating income | $ | 994,334 | $ | 867,034 | |||
Operating margin as a percentage of revenue | 31.8 | % | 30.0 | % | |||
Net income | $ | 931,956 | $ | 851,795 | |||
Net income per diluted share | $ | 5.31 | $ | 4.79 | |||
Shares used in per share calculation - diluted | 175,432 | 177,786 |
Reconciliation of U.S. GAAP Net Income to Non-GAAP Net Income and U.S. GAAP number of dilutive shares to Non-GAAP number of dilutive shares (in thousands, except per share data) (unaudited) |
|||||||
Three Months Ended | |||||||
June 24, 2018 |
March 25, 2018 |
||||||
U.S. GAAP net income | $ | 1,021,146 | $ | 778,800 | |||
Pre-tax non-GAAP items: | |||||||
Amortization related to intangible assets acquired through certain business combinations - cost of goods sold | 22,342 | 22,342 | |||||
Amortization related to intangible assets acquired through certain business combinations -selling, general and administrative | 16,069 | 17,074 | |||||
Business combination acquisition and integration related costs - selling, general and administrative | 728 | 107 | |||||
Amortization of note discounts - other expense, net | 1,851 | 2,860 | |||||
Realized loss on sale or impairment of investments - other expense, net | — | 46,641 | |||||
Net income tax benefit on non-GAAP items | (4,686 | ) | (11,518 | ) | |||
Income tax benefit on conclusion of certain tax matters | (9,656 | ) | (4,511 | ) | |||
Income tax benefit associated with U.S. tax reform | (115,838 | ) | — | ||||
Non-GAAP net income | $ | 931,956 | $ | 851,795 | |||
Non-GAAP net income per diluted share | $ | 5.31 | $ | 4.79 | |||
GAAP net income per diluted share | $ | 5.82 | $ | 4.33 | |||
U.S. GAAP number of shares used for per diluted share calculation | 175,432 | 179,779 | |||||
Effect of convertible note hedge | — | (1,993 | ) | ||||
Non-GAAP number of shares used for per diluted share calculation | 175,432 | 177,786 | |||||
Reconciliation of U.S. GAAP Net Income to Non-GAAP Net Income and U.S. GAAP number of dilutive shares to Non-GAAP number of dilutive shares (in thousands, except per share data) (unaudited) |
|||||||
Twelve Months Ended | |||||||
June 24, 2018 |
June 25, 2017 |
||||||
U.S. GAAP net income | $ | 2,380,681 | $ | 1,697,763 | |||
Pre-tax non-GAAP items: | |||||||
Amortization related to intangible assets acquired through certain business combinations - cost of goods sold | 88,640 | 85,000 | |||||
Product rationalization - cost of goods sold | — | 6,127 | |||||
Product rationalization - research and development | — | 1,650 | |||||
Cost associated with campus consolidation - research and development | — | 3,556 | |||||
Amortization related to intangible assets acquired through certain business combinations - selling, general and administrative | 66,630 | 64,332 | |||||
Costs associated with business process reengineering - selling, general and administrative | 2,078 | 7,487 | |||||
Business combination acquisition and integration related costs - selling, general and administrative | 2,864 | 9,972 | |||||
Litigation settlement - selling, general and administrative | — | 4,000 | |||||
Amortization of note discounts - other expense, net | 12,225 | 22,869 | |||||
Realized loss on sale or impairment of investments - other expense, net | 46,641 | — | |||||
Costs related to early termination of KLA-Tencor acquisition funding - other expense, net | — | 34,518 | |||||
KLA-Tencor pre-acquisition funding interest expense, net - other expense, net | — | 20,391 | |||||
Net income tax benefit on non-GAAP items | (26,722 | ) | (47,941 | ) | |||
Income tax benefit on conclusion of certain tax matters | (14,720 | ) | (109,191 | ) | |||
Income tax expense associated with U.S. tax reform | 641,051 | — | |||||
Non-GAAP net income | $ | 3,199,368 | $ | 1,800,533 | |||
U.S. GAAP net income per diluted share | $ | 13.17 | $ | 9.24 | |||
Non-GAAP net income per diluted share | $ | 17.87 | $ | 9.98 | |||
U.S. GAAP number of shares used for per diluted share calculation | 180,782 | 183,770 | |||||
Effect of convertible note hedge | (1,711 | ) | (3,302 | ) | |||
Non-GAAP number of shares used for per diluted share calculation | 179,071 | 180,468 | |||||
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 | |||||||
June 24, 2018 |
March 25, 2018 |
||||||
U.S. GAAP gross margin | $ | 1,479,408 | $ | 1,330,714 | |||
Pre-tax non-GAAP items: | |||||||
Amortization related to intangible assets acquired through certain business combinations | 22,342 | 22,342 | |||||
Non-GAAP gross margin | $ | 1,501,750 | $ | 1,353,056 | |||
U.S. GAAP gross margin as a percentage of revenue | 47.3 | % | 46.0 | % | |||
Non-GAAP gross margin as a percentage of revenue | 48.0 | % | 46.8 | % | |||
U.S. GAAP operating expenses | $ | 524,213 | $ | 503,203 | |||
Pre-tax non-GAAP items: | |||||||
Amortization related to intangible assets acquired through certain business combinations | (16,069 | ) | (17,074 | ) | |||
Costs associated with business process reengineering | — | — | |||||
Business combination acquisition and integration related costs | (728 | ) | (107 | ) | |||
Non-GAAP operating expenses | $ | 507,416 | $ | 486,022 | |||
Non-GAAP operating income | $ | 994,334 | $ | 867,034 | |||
GAAP operating margin as percent of revenue | 30.6 | % | 28.6 | % | |||
Non-GAAP operating margin as a percent of revenue | 31.8 | % | 30.0 | % |
Lam Research Corporation Contact:
Ram Ganesh, Investor Relations, phone: 510-572-1615, e-mail: investor.relations@lamresearch.com
Source: Lam Research Corporation