KLA CORPORATION REPORTS FISCAL 2021 THIRD QUARTER RESULTS
•Total revenues were $1.80 billion, finishing at the upper end of the range of guidance;
•GAAP diluted EPS attributable to KLA was $3.66, and non-GAAP diluted EPS attributable to KLA was $3.85, each also finishing at the upper end of the range of guidance;
•Cash flow from operations and free cash flow were both records at $646.2 million and $585.0 million, respectively;
•Capital return was $412.7 million with $139.3 million in dividends and $273.4 million in share repurchases.
MILPITAS, Calif., April 29, 2021 -KLA Corporation (NASDAQ: KLAC) today announced operating results for its third quarter of fiscal year 2021, which ended on March 31, 2021, and reported GAAP net income attributable to KLA of $567 million and GAAP earnings per diluted share attributable to KLA of $3.66 on revenue of $1.80 billion.
'KLA's March quarter results demonstrate strong momentum in our business. We have seen a sharp increase in business levels in each of our major end markets, driven by secular demand trends across a broad range of semiconductor markets and applications,' commented Rick Wallace, president and chief executive officer of KLA Corporation. 'Against this backdrop, KLA continues to demonstrate our ability to meet customer requirements while growing operating profits, generating record free cash flow, and maintaining our long-term strategy of productive capital allocation.'
GAAP Results
Q3 FY 2021
Q2 FY 2021
Q3 FY 2020
Total revenue
$1,804 million
$1,651 million
$1,424 million
Net Income Attributable to KLA
$567 million
$457 million
$78 million
Net Income per Diluted Share Attributable to KLA
$3.66
$2.94
$0.50
Non-GAAP Results
Q3 FY 2021
Q2 FY 2021
Q3 FY 2020
Net Income Attributable to KLA
$598 million
$504 million
$389 million
Net Income per Diluted Share Attributable to KLA
$3.85
$3.24
$2.47
A reconciliation between GAAP operating results and non-GAAP operating results is provided following the financial statements included in this release. KLA will discuss the results for its fiscal year 2021 third quarter, along with its outlook, on a conference call today beginning at 2:00 p.m. Pacific Time. A webcast of the call will be available at: www.kla.com.
Fourth Quarter Fiscal 2021 Guidance
The following details our guidance for the fourth quarter of fiscal 2021 ending in June:
•Total revenue between $1,755 million to $1,955 million
•GAAP gross margin is expected to be in a range of 58% to 61%
•Non-GAAP gross margin is expected to be in a range of 61% to 63%
•GAAP diluted EPS attributable to KLA is expected to be in a range of $3.20 to $4.08
•Non-GAAP diluted EPS attributable to KLA in a range of $3.47 to $4.35
For additional guidance metrics please see the company's published Letter to Shareholders and earnings slides on the KLA investor relations website.
1
About KLA:
KLA Corporation ('KLA') develops industry-leading equipment and services that enable innovation throughout the electronics industry. We provide advanced process control and process-enabling solutions for manufacturing wafers and reticles, integrated circuits, packaging, printed circuit boards and flat panel displays. In close collaboration with leading customers across the globe, our expert teams of physicists, engineers, data scientists and problem-solvers design solutions that move the world forward. Investors and others should note that KLA announces material financial information including SEC filings, press releases, public earnings calls and conference webcasts using an investor relations website (ir.kla.com). Additional information may be found at: www.kla.com.
Note Regarding Forward-Looking Statements:
Statements in this press release other than historical facts, such as statements pertaining to revenues, GAAP and non-GAAP gross margin and GAAP and non-GAAP diluted EPS for the quarter ending June 30, 2021 are forward-looking statements and subject to the Safe Harbor provisions created by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current information and expectations and involve a number of risks and uncertainties. Actual results may differ materially from those projected in such statements due to various factors, including but not limited to: the future impacts of the COVID-19 pandemic; delays and disruptions in the supply chain; the demand for semiconductors; the financial condition of the global capital markets and the general macroeconomic environment; new and enhanced product and technology offerings by competitors; push-out of deliveries or cancellation of orders by customers; the ability of KLA's research and development teams to successfully innovate and develop technologies and products that are responsive to customer demands; KLA's ability to successfully manage its costs; market acceptance of KLA's existing and newly launched products; changing customer demands; and industry transitions. For other factors that may cause actual results to differ materially from those projected and anticipated in forward-looking statements in this letter, please refer to KLA Corporation's Annual Report on Form 10-K for the year ended June 30, 2020, and other subsequent filings with the Securities and Exchange Commission (including, but not limited to, the risk factors described therein). KLA Corporation assumes no obligation to, and does not currently intend to, update these forward-looking statements.
2
KLA Corporation
Condensed Consolidated Unaudited Balance Sheets
(In thousands)
March 31, 2021
June 30, 2020
ASSETS
Cash, cash equivalents and marketable securities
$
2,442,725
$
1,980,472
Accounts receivable, net
1,201,991
1,107,413
Inventories
1,450,588
1,310,985
Other current assets
309,861
324,675
Land, property and equipment, net
628,438
519,824
Goodwill
2,011,187
2,045,402
Deferred income taxes, non-current
240,822
236,797
Purchased intangible assets, net
1,237,589
1,391,413
Other non-current assets
416,039
362,979
Total assets
$
9,939,240
$
9,279,960
LIABILITIES, NON-CONTROLLING INTEREST AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
295,111
$
264,280
Deferred system revenue
332,296
336,237
Deferred service revenue
252,992
233,493
Short-term debt
20,000
-
Other current liabilities
1,129,067
865,776
Total current liabilities
2,029,466
1,699,786
Non-current liabilities:
Long-term debt
3,422,097
3,469,670
Deferred tax liabilities
629,896
660,885
Deferred service revenue
86,902
96,325
Other non-current liabilities
658,015
672,284
Total liabilities
6,826,376
6,598,950
Stockholders' equity:
Common stock and capital in excess of par value
2,115,205
2,090,268
Retained earnings
1,070,124
654,930
Accumulated other comprehensive income (loss)
(70,473)
(79,774)
Total KLA stockholders' equity
3,114,856
2,665,424
Non-controlling interest in consolidated subsidiaries
(1,992)
15,586
Total stockholders' equity
3,112,864
2,681,010
Total liabilities and stockholders' equity
$
9,939,240
$
9,279,960
3
KLA Corporation
Condensed Consolidated Unaudited Statements of Operations
Three Months Ended March 31,
Nine Months Ended March 31,
(In thousands, except per share amounts)
2021
2020
2021
2020
Revenues:
Product
$
1,375,320
$
1,051,096
$
3,758,838
$
3,253,621
Service
428,453
372,868
1,234,425
1,093,210
Total revenues
1,803,773
1,423,964
4,993,263
4,346,831
Costs and expenses:
Costs of revenues
709,629
590,158
1,999,924
1,828,017
Research and development
238,957
215,433
687,059
646,764
Selling, general and administrative
183,040
185,760
537,580
566,358
Goodwill impairment
-
256,649
-
256,649
Interest expense
39,092
39,231
117,358
120,053
Loss on extinguishment of debt
-
22,538
-
22,538
Other expense (income), net
(7,348)
(1,004)
(269)
(5,190)
Income before income taxes
640,403
115,199
1,651,611
911,642
Provision for income taxes
73,233
37,190
207,316
106,932
Net income
567,170
78,009
1,444,295
804,710
Less: Net loss attributable to non-controlling interest
(326)
(443)
(1,019)
(822)
Net income attributable to KLA
$
567,496
$
78,452
$
1,445,314
$
805,532
Net income per share attributable to KLA:
Basic
$
3.69
$
0.50
$
9.36
$
5.12
Diluted
$
3.66
$
0.50
$
9.28
$
5.08
Weighted-average number of shares:
Basic
153,801
156,067
154,457
157,356
Diluted
155,159
157,172
155,789
158,586
4
KLA Corporation
Condensed Consolidated Unaudited Statements of Cash Flows
Three Months Ended
March 31,
(In thousands)
2021
2020
Cash flows from operating activities:
Net income
$
567,170
$
78,009
Adjustments to reconcile net income to net cash provided by operating activities:
Goodwill impairment
-
256,649
Depreciation and amortization
84,365
81,990
Loss on extinguishment of debt
-
22,538
(Gain) loss on unrealized foreign exchange and other
5,231
(5,950)
Asset impairment charges
(23)
-
Stock-based compensation expense
30,327
31,270
Gain on sale of business
(4,422)
-
Settlement of treasury lock agreement
-
(21,518)
Changes in assets and liabilities, net of assets acquired and liabilities assumed in business acquisitions:
Accounts receivable
16,055
73,103
Inventories
(34,169)
(11,640)
Other assets
(20,851)
(23,899)
Accounts payable
32,735
(12,904)
Deferred system revenue
57,820
89,280
Deferred service revenue
11,507
10,691
Other liabilities
(99,595)
(125,591)
Net cash provided by operating activities
646,150
442,028
Cash flows from investing activities:
Proceeds from sale of business
16,833
-
Business acquisitions, net of cash acquired
-
(70)
Capital expenditures
(61,183)
(43,445)
Purchases of available-for-sale securities
(303,076)
(156,173)
Proceeds from sale of available-for-sale securities
14,962
69,034
Proceeds from maturity of available-for-sale securities
159,120
133,819
Purchases of trading securities
(48,495)
(46,784)
Proceeds from sale of trading securities
45,251
45,407
Net cash used in (provided by) investing activities
(176,588)
1,788
Cash flows from financing activities:
Proceeds from issuance of debt, net of issuance costs
-
742,004
Repayment of debt
(20,000)
(721,033)
Common stock repurchases
(273,441)
(315,995)
Payment of dividends to stockholders
(139,338)
(133,327)
Issuance of common stock
-
672
Tax withholding payments related to equity awards
(6,674)
(4,958)
Net cash used in financing activities
(439,453)
(432,637)
Effect of exchange rate changes on cash and cash equivalents
(9,425)
(4,868)
Net increase (decrease) in cash and cash equivalents
20,684
6,311
Cash and cash equivalents at beginning of period
1,431,466
939,864
Cash and cash equivalents at end of period
$
1,452,150
$
946,175
Supplemental cash flow disclosures:
Income taxes paid
$
100,657
$
91,972
Interest paid
$
39,980
$
35,176
Non-cash activities:
Accrued purchase of land, property and equipment - investing activities
The following is a summary of results for each of our four reportable segments and reconciliation to total revenues for the indicated periods:
Three Months Ended March 31,
Nine Months Ended March 31,
(In thousands)
2021
2020
2021
2020
Revenues:
Semiconductor Process Control
$
1,506,140
$
1,177,777
$
4,154,278
$
3,588,839
Specialty Semiconductor Process
91,724
85,083
271,264
229,328
PCB, Display and Component Inspection
205,202
160,411
565,646
525,242
Other
149
469
739
3,217
Total revenues for reportable segments
1,803,215
1,423,740
4,991,927
4,346,626
Corporate allocation and effects of foreign exchange rates
558
224
1,336
205
Total revenues
$
1,803,773
$
1,423,964
$
4,993,263
$
4,346,831
KLA Corporation
Condensed Consolidated Unaudited Supplemental Information
Reconciliation of GAAP Net Income and GAAP Earnings Per Diluted Share to Non-GAAP Net Income and Non-GAAP Earnings Per Diluted Share
Three Months Ended
Nine Months Ended
(In thousands, except per share amounts)
March 31,
2021
December 31,
2020
March 31,
2020
March 31,
2021
March 31,
2020
GAAP net income attributable to KLA
$
567,496
$
457,251
$
78,452
$
1,445,314
$
805,532
Adjustments to reconcile GAAP net income to non-GAAP net income:
Acquisition-related charges
a
52,973
53,099
55,022
156,547
188,778
Restructuring, severance and other charges
b
(1,534)
3,960
5,432
5,679
8,218
Goodwill impairment
c
-
-
256,649
-
256,649
Loss on extinguishment of debt
d
-
-
22,538
-
22,538
Income tax effect of non-GAAP adjustments
e
(17,866)
(17,552)
(23,604)
(52,431)
(67,375)
Discrete tax items
f
(2,967)
7,381
(5,551)
21,901
(5,551)
Non-GAAP net income attributable to KLA
$
598,102
$
504,139
$
388,938
$
1,577,010
$
1,208,789
GAAP net income per diluted share attributable to KLA
$
3.66
$
2.94
$
0.50
$
9.28
$
5.08
Non-GAAP net income per diluted share attributable to KLA
$
3.85
$
3.24
$
2.47
$
10.12
$
7.62
Shares used in diluted shares calculation
155,159
155,560
157,172
155,789
158,586
6
Pre-tax impact of GAAP to non-GAAP adjustments included in Condensed Consolidated Unaudited Statements of Operations
(In thousands)
Acquisition - Related Charges
Restructuring, Severance and Other Charges
Goodwill Impairment
Debt Extinguishment Loss
Total pre-tax GAAP to non-GAAP Adjustments
Three months ended March 31, 2021
Costs of revenues
$
40,309
$
701
$
-
$
-
$
41,010
Research and development
-
147
-
-
147
Selling, general and administrative
12,664
2,075
-
-
14,739
Other expense (income), net
-
(4,457)
-
-
(4,457)
Total in three months ended March 31, 2021
$
52,973
$
(1,534)
$
-
$
-
$
51,439
Three months ended December 31, 2020
Costs of revenues
$
38,738
$
765
$
-
$
-
$
39,503
Research and development
-
1,432
-
-
1,432
Selling, general and administrative
14,361
2,450
-
-
16,811
Other expense (income), net
-
(687)
-
-
(687)
Total in three months ended December 31, 2020
$
53,099
$
3,960
$
-
$
-
$
57,059
Three months ended March 31, 2020
Costs of revenues
$
36,850
$
483
$
-
$
-
$
37,333
Research and development
-
685
-
-
685
Selling, general and administrative
18,172
4,264
-
-
22,436
Goodwill impairment
-
-
256,649
-
256,649
Loss on extinguishment of debt
-
-
-
22,538
22,538
Total in three months ended March 31, 2020
$
55,022
$
5,432
$
256,649
$
22,538
$
339,641
Free Cash Flow Reconciliation
Three Months Ended March 31,
(In thousands)
2021
2020
Net cash provided by operating activities
$
646,150
$
442,028
Capital expenditures
(61,183)
(43,445)
Free Cash Flow
$
584,967
$
398,583
Fourth Quarter Fiscal 2021 Guidance
Reconciliation of GAAP Diluted EPS to Non-GAAP Diluted EPS
Three Months Ending June 30, 2021
(In millions, except per share amounts)
Low
High
GAAP net income per diluted share attributable to KLA
$3.20
$4.08
Acquisition-related charges
a
0.34
0.34
Restructuring, severance and other charges
b
0.04
0.04
Income tax effect of non-GAAP adjustments
e
(0.11)
(0.11)
Non-GAAP net income per diluted share attributable to KLA
$3.47
$4.35
Shares used in net income per diluted share calculation
154.5
154.5
7
Reconciliation of GAAP Gross Margin to Non-GAAP Gross Margin
Three Months Ending June 30, 2021
Low
High
GAAP gross margin
58%
61%
Acquisition-related charges
a
3%
2%
Non-GAAP gross margin
61%
63%
The Non-GAAP and supplemental information provided in this press release is a supplement to, and not a substitute for, KLA's financial results presented in accordance with United States GAAP.
To supplement our Condensed Consolidated Financial Statements presented in accordance with GAAP, we provide certain non-GAAP financial information, which is adjusted from results based on GAAP to exclude certain costs and expenses, as well as other supplemental information. The non-GAAP and supplemental information is provided to enhance the user's overall understanding of our operating performance and our prospects in the future. Specifically, we believe that the non-GAAP information, including non-GAAP net income attributable to KLA, non-GAAP net income per diluted share attributable to KLA and Free Cash Flow, provides useful measures to both management and investors regarding financial and business trends relating to our financial performance by excluding certain costs and expenses that we believe are not indicative of our core operating results to help investors compare our operating performances with our results in prior periods as well as with the performance of other companies. The non-GAAP information is among the budgeting and planning tools that management uses for future forecasting. However, because there are no standardized or generally accepted definitions for most non-GAAP financial metrics, definitions of non-GAAP financial metrics are inherently subject to significant discretion (for example, determining which costs and expenses to exclude when calculating such a metric). As a result, non-GAAP financial metrics may be defined very differently from company to company, or even from period to period within the same company, which can potentially limit the usefulness of such information to an investor. The presentation of non-GAAP and supplemental information is not meant to be considered in isolation or as a substitute for results prepared and presented in accordance with United States GAAP. The following are descriptions of the adjustments made to reconcile GAAP net income attributable to KLA to non-GAAP net income attributable to KLA:
a.Acquisition-related charges primarily include amortization of intangible assets and other acquisition-related adjustments including adjustments for the fair valuation of inventory and backlog, and transaction costs associated with our acquisitions, primarily Orbotech.
b.Restructuring, severance and other charges primarily include costs associated with employee severance, acceleration of certain stock-based compensation arrangements, and other exit costs.
c.Goodwill impairment included non-cash expense recognized as a result of KLA's annual testing for goodwill impairment performed in the third quarter of the prior fiscal year. The impairment charge resulted from the downward revision of financial outlook for the acquired Orbotech business as well as the impact of elevated risk and macroeconomic slowdown driven by the COVID-19 pandemic.
d.Loss on extinguishment of debt included a pre-tax loss on early extinguishment of the $500 million 4.125% Senior Notes due in November 2021.
e.Income tax effect of non-GAAP adjustments includes the income tax effects of the excluded items noted above.
f.Discrete tax items in the three months ended March 31, 2021 primarily relate to a tax benefit of $3.0 million due to a decrease in deferred tax liability on purchased intangibles relating to a decrease in the effective income tax rate in Israel. Discrete tax items in the three months ended December 31, 2020 consist primarily of a tax expense of $4.0 million from an internal restructuring. Discrete tax items in the nine months ended March 31, 2021 primarily include the aforementioned items as well as a tax expense of $14.0 million due to an increase in deferred tax liability on purchased intangibles relating to an increase in the United Kingdom statutory income tax rate. Discrete tax items in the three months and nine months ended March 31, 2020 include a decrease in deferred tax liability for an unrealized gain on investments held for sale by subsidiaries of the acquired Orbotech business.
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KLA-Tencor Corporation published this content on 29 April 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 April 2021 21:29:06 UTC.
KLA Corporation is one of the world leaders in the design, production and marketing of control and improvement procedures for semiconductor production processes. Net sales break down by family of products and services as follows:
- inspection systems (41.3%): for the detection, counting, classification and characterization of defects linked to the manufacture of silicon wafers and semiconductors;
- metrology and extreme ultraviolet lithography systems (26.6%): for the control of lithography, coating, and engraving processes;
- services (20.2%): consulting, technical assistance, installation, maintenance, etc.;
- advanced vacuum deposition and etching process tools (4.7%);
- printed circuit board, display and electronic component inspection systems (3.6%);
- other (3.6%): primarily defect analysis equipment and software.
Net sales are distributed geographically as follows: North America (12%), China (27.3%), Taiwan (23.8%), Korea (18%), Japan (8.4%), Europe and Israel (6.5%) and Asia (4%).