Highlights for the
- Revenue of
$2.50 billion . U.S. GAAP gross margin of 46.6%,U.S. GAAP operating income as a percentage of revenue of 27.7%, andU.S. GAAP diluted EPS of$3.88 .- Non-GAAP gross margin of 46.3%, non-GAAP operating income as a percentage of revenue of 26.9%, and non-GAAP diluted EPS of
$3.98 .
Key Financial Data for the Quarters Ended
(in thousands, except per-share data, percentages, and basis points)
March 2020 | December 2019 | Change Q/Q | |||||||||
Revenue | $ | 2,503,625 | $ | 2,583,501 | - 3 | % | |||||
Gross margin as percentage of revenue | 46.6 | % | 45.7 | % | + 90 bps | ||||||
Operating income as percentage of revenue | 27.7 | % | 26.6 | % | + 110 bps | ||||||
Diluted EPS | $ | 3.88 | $ | 3.43 | + 13 | % | |||||
Non-GAAP | |||||||||||
March 2020 | December 2019 | Change Q/Q | |||||||||
Revenue | $ | 2,503,625 | $ | 2,583,501 | - 3 | % | |||||
Gross margin as percentage of revenue | 46.3 | % | 45.7 | % | + 60 bps | ||||||
Operating income as percentage of revenue | 26.9 | % | 27.1 | % | - 20 bps | ||||||
Diluted EPS | $ | 3.98 | $ | 4.01 | - 1 | % |
For the
Non-GAAP Financial Results
For the
“Extraordinary efforts by Lam’s global teams helped to mitigate the operational impact of the COVID-19 pandemic, resulting in solid financial performance in the March quarter,” said
Balance Sheet and Cash Flow Results
Cash and cash equivalents, short-term investments, and restricted cash and investments balances increased to
Revenue
The geographic distribution of revenue during the
Region | Revenue | |
32% | ||
23% | ||
21% | ||
10% | ||
9% | ||
3% | ||
2% |
The following table presents revenue disaggregated between system and customer support-related revenue:
Three Months Ended | Nine Months Ended | ||||||||||||||
2020 |
2019 |
2020 |
2019 |
||||||||||||
(In thousands) | |||||||||||||||
System revenue | $ | 1,647,560 | $ | 1,612,382 | $ | 4,759,881 | $ | 4,880,731 | |||||||
Customer support-related revenue and other | 856,065 | 826,666 | 2,492,991 | 2,411,681 | |||||||||||
$ | 2,503,625 | $ | 2,439,048 | $ | 7,252,872 | $ | 7,292,412 |
System revenue includes sales of new leading-edge equipment in deposition, etch and clean markets.
Customer support-related revenue includes sales of customer service, spares, upgrades, and non-leading-edge equipment from our Reliant product line.
Use of Non-GAAP Financial Results
In addition to
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
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 impact of the COVID-19 outbreak on our operations and financial results; macroeconomic conditions; the status of the industry supply chain; customer demand for our equipment; industry conditions; the long–term resiliency of the semiconductor industry; the relevance of our technology to our customers; our positioning within the industry; and our ability to outperform. Some factors that may affect these forward-looking statements include: the severity, magnitude and duration of the COVID–19 pandemic (and the related governmental, public health, business and community responses to it), and their impacts on our business, results of operations and financial condition, are evolving and are highly uncertain and unpredictable; 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
About
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 | ||||||||||||||||||
2020 |
2019 |
2019 |
2020 |
2019 |
|||||||||||||||
Revenue | $ | 2,503,625 | $ | 2,583,501 | $ | 2,439,048 | $ | 7,252,872 | $ | 7,292,412 | |||||||||
Cost of goods sold | 1,336,618 | 1,403,857 | 1,364,711 | 3,924,511 | 4,014,844 | ||||||||||||||
Gross margin | 1,167,007 | 1,179,644 | 1,074,337 | 3,328,361 | 3,277,568 | ||||||||||||||
Gross margin as a percent of revenue | 46.6 | % | 45.7 | % | 44.0 | % | 45.9 | % | 44.9 | % | |||||||||
Research and development | 307,914 | 318,861 | 318,514 | 913,602 | 895,742 | ||||||||||||||
Selling, general and administrative | 164,979 | 174,272 | 190,306 | 496,679 | 534,179 | ||||||||||||||
Total operating expenses | 472,893 | 493,133 | 508,820 | 1,410,281 | 1,429,921 | ||||||||||||||
Operating income | 694,114 | 686,511 | 565,517 | 1,918,080 | 1,847,647 | ||||||||||||||
Operating income as a percent of revenue | 27.7 | % | 26.6 | % | 23.2 | % | 26.4 | % | 25.3 | % | |||||||||
Other (expense) income, net | (64,619 | ) | (13,924 | ) | 20,532 | (91,271 | ) | (10,494 | ) | ||||||||||
Income before income taxes | 629,495 | 672,587 | 586,049 | 1,826,809 | 1,837,153 | ||||||||||||||
Income tax expense | (54,714 | ) | (158,077 | ) | (38,659 | ) | (271,729 | ) | (187,548 | ) | |||||||||
Net income | $ | 574,781 | $ | 514,510 | $ | 547,390 | $ | 1,555,080 | $ | 1,649,605 | |||||||||
Net income per share: | |||||||||||||||||||
Basic | $ | 3.96 | $ | 3.57 | $ | 3.62 | $ | 10.75 | $ | 10.72 | |||||||||
Diluted | $ | 3.88 | $ | 3.43 | $ | 3.47 | $ | 10.39 | $ | 10.20 | |||||||||
Number of shares used in per share calculations: | |||||||||||||||||||
Basic | 145,301 | 143,987 | 151,201 | 144,654 | 153,891 | ||||||||||||||
Diluted | 148,165 | 150,097 | 157,849 | 149,648 | 161,683 | ||||||||||||||
Cash dividend declared per common share | $ | 1.15 | $ | 1.15 | $ | 1.10 | $ | 3.45 | $ | 3.30 |
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
2020 |
2019 |
2019 |
||||||||||
(unaudited) | (unaudited) | (1) | ||||||||||
ASSETS | ||||||||||||
Cash and cash equivalents | $ | 3,961,586 | $ | 3,035,887 | $ | 3,658,219 | ||||||
Investments | 1,431,550 | 1,647,867 | 1,772,984 | |||||||||
Accounts receivable, net | 2,191,070 | 2,030,490 | 1,455,522 | |||||||||
Inventories | 1,674,740 | 1,528,620 | 1,540,140 | |||||||||
Prepaid expenses and other current assets | 149,839 | 212,101 | 133,544 | |||||||||
Total current assets | 9,408,785 | 8,454,965 | 8,560,409 | |||||||||
Property and equipment, net | 1,048,619 | 1,047,254 | 1,059,077 | |||||||||
Restricted cash and investments | 254,155 | 253,907 | 255,177 | |||||||||
1,666,732 | 1,677,940 | 1,701,547 | ||||||||||
Other assets | 560,344 | 480,056 | 425,123 | |||||||||
Total assets | $ | 12,938,635 | $ | 11,914,122 | $ | 12,001,333 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
Current portion of long-term debt and finance lease obligations | $ | 42,407 | $ | 632,292 | $ | 667,131 | ||||||
Other current liabilities | 2,063,254 | 1,933,209 | 1,704,519 | |||||||||
Total current liabilities | 2,105,661 | 2,565,501 | 2,371,650 | |||||||||
Long-term debt and finance lease obligations | 5,043,931 | 3,786,067 | 3,822,768 | |||||||||
Income taxes payable | 889,287 | 872,778 | 892,790 | |||||||||
Other long-term liabilities | 350,603 | 272,043 | 190,821 | |||||||||
Total liabilities | 8,389,482 | 7,496,389 | 7,278,029 | |||||||||
Temporary equity, convertible notes | 11,546 | 38,304 | 49,439 | |||||||||
Stockholders’ equity (2) | 4,537,607 | 4,379,429 | 4,673,865 | |||||||||
Total liabilities and stockholders’ equity | $ | 12,938,635 | $ | 11,914,122 | $ | 12,001,333 |
(1 | ) | Derived from audited financial statements. |
(2 | ) | Common shares issued and outstanding were 145,156 as of |
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||||||||
2020 |
2019 |
2019 |
2020 |
2019 |
|||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||||
Net income | $ | 574,781 | $ | 514,510 | $ | 547,390 | $ | 1,555,080 | $ | 1,649,605 | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||
Depreciation and amortization | 67,248 | 65,530 | 82,274 | 197,442 | 243,873 | ||||||||||||||
Deferred income taxes | — | 77,508 | (12,401 | ) | 74,516 | (75,105 | ) | ||||||||||||
Equity-based compensation expense | 47,414 | 45,725 | 53,240 | 136,044 | 142,389 | ||||||||||||||
Amortization of note discounts and issuance costs | 1,361 | 1,575 | 2,861 | 4,611 | 5,137 | ||||||||||||||
Other, net | 7,811 | (327 | ) | (1,494 | ) | 11,510 | (646 | ) | |||||||||||
Changes in operating assets and liabilities | (157,187 | ) | (396,593 | ) | 260,951 | (665,800 | ) | 330,273 | |||||||||||
Net cash provided by operating activities | 541,428 | 307,928 | 932,821 | 1,313,403 | 2,295,526 | ||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||||
Capital expenditures and intangible assets | (51,375 | ) | (62,054 | ) | (75,522 | ) | (152,685 | ) | (237,543 | ) | |||||||||
Net sale (purchase) of available-for-sale securities | 211,159 | (662,287 | ) | (931,380 | ) | 339,350 | (770,740 | ) | |||||||||||
Other, net | 9,988 | (9,988 | ) | (1,269 | ) | (540 | ) | (5,288 | ) | ||||||||||
Net cash provided by (used for) investing activities | 169,772 | (734,329 | ) | (1,008,171 | ) | 186,125 | (1,013,571 | ) | |||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||||
Principal payments on debt | (617,637 | ) | (17,987 | ) | (30,225 | ) | (664,589 | ) | (116,496 | ) | |||||||||
Net proceeds (repayments) from issuance of commercial paper | — | — | 297,850 | — | (61,754 | ) | |||||||||||||
Proceeds from borrowings on revolving credit facility | 1,250,000 | — | — | 1,250,000 | — | ||||||||||||||
Proceeds from issuance of long-term debt, net of issuance costs | — | — | 2,476,720 | — | 2,476,720 | ||||||||||||||
(245,433 | ) | (1,005,067 | ) | (934,637 | ) | (1,328,632 | ) | (2,672,051 | ) | ||||||||||
Dividends paid | (163,510 | ) | (166,721 | ) | (171,196 | ) | (489,099 | ) | (513,475 | ) | |||||||||
Reissuance of treasury stock related to employee stock purchase plan | — | 38,447 | — | 38,447 | 32,920 | ||||||||||||||
Proceeds from issuance of common stock | 1,714 | 632 | 5,010 | 6,215 | 5,119 | ||||||||||||||
Other, net | 328 | — | — | 328 | (13,207 | ) | |||||||||||||
Net cash provided by (used for) financing activities | 225,462 | (1,150,696 | ) | 1,643,522 | (1,187,330 | ) | (862,224 | ) | |||||||||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (10,715 | ) | 5,055 | 4,128 | (9,853 | ) | (904 | ) | |||||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | 925,947 | (1,572,042 | ) | 1,572,300 | 302,345 | 418,827 | |||||||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 3,289,794 | 4,861,836 | 3,615,085 | 3,913,396 | 4,768,558 | ||||||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 4,215,741 | $ | 3,289,794 | $ | 5,187,385 | $ | 4,215,741 | $ | 5,187,385 |
Non-GAAP Financial Summary
(in thousands, except percentages and per share data)
(unaudited)
Three Months Ended | |||||||
2020 |
2019 |
||||||
(As Previously Presented) | |||||||
Revenue | $ | 2,503,625 | $ | 2,583,501 | |||
Gross margin | $ | 1,159,981 | $ | 1,181,271 | |||
Gross margin as percentage of revenue | 46.3 | % | 45.7 | % | |||
Operating expenses | $ | 486,494 | $ | 480,776 | |||
Operating income | $ | 673,487 | $ | 700,495 | |||
Operating income as a percentage of revenue | 26.9 | % | 27.1 | % | |||
Net income | $ | 590,359 | $ | 601,810 | |||
Net income per diluted share | $ | 3.98 | $ | 4.01 | |||
Shares used in per share calculation - diluted | 148,165 | 150,097 |
Reconciliation of
(in thousands, except per share data)
(unaudited)
Three Months Ended | |||||||||||
2020 |
2019 |
2019 |
|||||||||
(As Previously Presented) | (As Adjusted) | ||||||||||
$ | 574,781 | $ | 514,510 | $ | 514,510 | ||||||
Pre-tax non-GAAP items: | |||||||||||
Amortization related to intangible assets acquired through certain business combinations - cost of goods sold | 1,627 | 1,627 | 1,627 | ||||||||
(Gain) loss on elective deferred compensation ("EDC") - related liability - cost of goods sold | (8,653 | ) | — | 3,587 | |||||||
(Gain) loss on EDC - related liability - research and development | (15,575 | ) | — | 6,456 | |||||||
Amortization related to intangible assets acquired through certain business combinations - selling, general and administrative | 12,357 | 12,357 | 12,357 | ||||||||
(Gain) loss on EDC - related liability - selling, general and administrative | (10,383 | ) | — | 4,304 | |||||||
Amortization of note discounts - other expense, net | 953 | 1,158 | 1,158 | ||||||||
Loss (gain) on EDC - related asset - other expense, net | 33,828 | — | (14,129 | ) | |||||||
Net income tax expense (benefit) on non-GAAP items | 1,700 | (2,358 | ) | (4,029 | ) | ||||||
Income tax benefit on the conclusion of certain tax matters | (276 | ) | — | — | |||||||
Cumulative income tax benefit reversal due to a court ruling | — | 74,516 | 74,516 | ||||||||
Non-GAAP net income | $ | 590,359 | $ | 601,810 | $ | 600,357 | |||||
Non-GAAP net income per diluted share | $ | 3.98 | $ | 4.01 | $ | 4.00 | |||||
$ | 3.88 | $ | 3.43 | $ | 3.43 | ||||||
148,165 | 150,097 | 150,097 |
Reconciliation of
(in thousands, except percentages)
(unaudited)
Three Months Ended | |||||||||||
2020 |
2019 |
2019 |
|||||||||
(As Previously Presented) | (As Adjusted) | ||||||||||
$ | 1,167,007 | $ | 1,179,644 | 1,179,644 | |||||||
Pre-tax non-GAAP items: | |||||||||||
Amortization related to intangible assets acquired through certain business combinations | 1,627 | 1,627 | 1,627 | ||||||||
(Gain) loss on EDC-related liability | (8,653 | ) | — | 3,587 | |||||||
Non-GAAP gross margin | $ | 1,159,981 | $ | 1,181,271 | $ | 1,184,858 | |||||
46.6 | % | 45.7 | % | 45.7 | % | ||||||
Non-GAAP gross margin as a percentage of revenue | 46.3 | % | 45.7 | % | 45.9 | % | |||||
$ | 472,893 | $ | 493,133 | $ | 493,133 | ||||||
Pre-tax non-GAAP items: | |||||||||||
Amortization related to intangible assets acquired through certain business combinations | (12,357 | ) | (12,357 | ) | (12,357 | ) | |||||
Gain (loss) on EDC-related liability | 25,958 | — | (10,760 | ) | |||||||
Non-GAAP operating expenses | $ | 486,494 | $ | 480,776 | $ | 470,016 | |||||
$ | 694,114 | $ | 686,511 | $ | 686,511 | ||||||
Non-GAAP operating income | $ | 673,487 | $ | 700,495 | $ | 714,842 | |||||
27.7 | % | 26.6 | % | 26.6 | % | ||||||
Non-GAAP operating income as a percent of revenue | 26.9 | % | 27.1 | % | 27.7 | % |
Lam Research Corporation Contacts:
Source: Lam Research Corporation