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Form 8-K LAM RESEARCH CORP For: Apr 21

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April 21, 2021 4:09 PM EDT

Exhibit 99.1
FOR IMMEDIATE RELEASE        
Lam Research Corporation Reports Financial Results for the Quarter Ended March 28, 2021
FREMONT, Calif., April 21, 2021 - Lam Research Corporation (the "Company," "Lam," "Lam Research") today announced financial results for the quarter ended March 28, 2021 (the “March 2021 quarter”).
Highlights for the March 2021 quarter were as follows:
•Revenue of $3.85 billion.
•U.S. GAAP gross margin of 46.3%, U.S. GAAP operating income as a percentage of revenue of 31.1%, and U.S. GAAP diluted EPS of $7.41.
•Non-GAAP gross margin of 46.3%, non-GAAP operating income as a percentage of revenue of 31.6%, and non-GAAP diluted EPS of $7.49.
Key Financial Data for the Quarters Ended
March 28, 2021 and December 27, 2020
(in thousands, except per-share data, percentages, and basis points) 
U.S. GAAP
   March 2021December 2020Change Q/Q
Revenue  $3,847,654 $3,456,237 + 11%
Gross margin as percentage of revenue  46.3 %46.4 %- 10 bps
Operating income as percentage of revenue  31.1 %29.2 %+ 190 bps
Diluted EPS  $7.41 $5.96 + 24%
Non-GAAP
   March 2021December 2020Change Q/Q
Revenue  $3,847,654 $3,456,237 + 11%
Gross margin as percentage of revenue  46.3 % 46.6 %- 30 bps
Operating income as percentage of revenue  31.6 % 30.3 %+ 130 bps
Diluted EPS  $7.49  $6.03 + 24%

U.S. GAAP Financial Results
For the March 2021 quarter, revenue was $3,848 million, gross margin was $1,780 million, or 46.3% of revenue, operating expenses were $585 million, operating income was 31.1% of revenue, and net income was $1,071 million, or $7.41 per diluted share on a U.S. GAAP basis. This compares to revenue of $3,456 million, gross margin of $1,604 million, or 46.4% of revenue, operating expenses of $594 million, operating income of 29.2% of revenue, and net income of $869 million, or $5.96 per diluted share, for the quarter ended December 27, 2020 (the “December 2020 quarter”).
Non-GAAP Financial Results
For the March 2021 quarter, non-GAAP gross margin was $1,783 million, or 46.3% of revenue, non-GAAP operating expenses were $567 million, non-GAAP operating income was 31.6% of revenue, and non-GAAP net income was $1,084 million, or $7.49 per diluted share. This compares to non-GAAP gross margin of $1,611 million, or 46.6% of revenue, non-GAAP operating expenses of $563 million, non-GAAP operating income of 30.3% of revenue, and non-GAAP net income of $880 million, or $6.03 per diluted share, for the December 2020 quarter.
“Lam’s growth trajectory continues with record revenue and earnings per share delivered in the March quarter” said Tim Archer, Lam Research’s President and Chief Executive Officer. “Semiconductors are reaching new heights of strategic relevance, and Lam’s differentiated ability to meet our customers’ scaling challenges positions us well amid a strong wafer fabrication spending environment.”





Balance Sheet and Cash Flow Results
Cash and cash equivalents, short-term investments, and restricted cash and investments balances decreased to $6.0 billion at the end of the March 2021 quarter compared to $6.3 billion at the end of the December 2020 quarter. This decrease was primarily the result of $1.1 billion of share repurchases, including net share settlement of employee stock-based compensation; $186.6 million of dividends paid to stockholders; and $89.6 million of capital expenditures, partially offset by $1.2 billion of cash generated from operating activities.
Revenue
The geographic distribution of revenue during the March 2021 quarter is shown in the following table:
RegionRevenue
China32%
Korea31%
Taiwan14%
Japan7%
Southeast Asia7%
United States5%
Europe4%
The following table presents revenue disaggregated between system and customer support-related revenue:
Three Months EndedNine Months Ended
March 28,
2021		December 27,
2020		March 29,
2020		March 28,
2021		March 29,
2020
(In thousands)
System revenue$2,545,306 $2,307,421 $1,647,560 $7,000,968 $4,759,881 
Customer support-related revenue and other1,302,348 1,148,816 856,065 3,480,003 2,492,991 
$3,847,654 $3,456,237 $2,503,625 $10,480,971 $7,252,872 
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.
Outlook

For the quarter ended June 27, 2021, Lam is providing the following guidance:

U.S. GAAPReconciling ItemsNon-GAAP
Revenue$4.0 Billion+/-$250 Million—$4.0 Billion+/-$250 Million
Gross margin as a percentage of revenue46.5%+/-1%$1 Million46.5%+/-1%
Operating income as a percentage of revenue31.7%+/-1%$13 Million32.0%+/-1%
Net income per diluted share$7.42+/-$0.50$12 Million$7.50+/-$0.50
Diluted share count144 Million—144 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, gains or losses on equity investments, other investments, or other significant arrangements that may be completed or realized 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, $1 million.



•Operating income as a percentage of revenue - amortization related to intangible assets acquired through business combinations, $13 million.

•Net income per diluted share - amortization related to intangible assets acquired though business combinations, $13 million; amortization of note discounts, $1 million; and associated tax benefit for non-GAAP items ($2 million); totaling $12 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 2021 and December 2020 quarters exclude amortization related to intangible assets acquired through business combinations, the effects of elective deferred compensation-related assets and liabilities, amortization of note discounts, and the income tax benefit of non-GAAP items.
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 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 outlook and guidance for future financial results, including revenue, gross margins, operating income and net income; our growth trajectory; the strategic relevance of semiconductors; our ability to meet our customers’ scaling challenges and the extent to which that ability is differentiated; and the wafer fabrication spending environment and our positioning within that environment. 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; supply chain disruptions or manufacturing capacity constraints may limit our ability to manufacture and sell our products; the actions of our customers and competitors may be inconsistent with our expectations; trade regulations, export controls, trade disputes, and other geopolitical tensions may inhibit our ability to sell our products; 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 Securities and Exchange Commission, including specifically the Risk Factors described in our annual report on Form 10–K for the fiscal year ended June 28, 2020 and our quarterly reports on Form 10-Q for the fiscal quarters ended September 27, 2020 and December 27, 2020. 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.

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. In fact, today, nearly every advanced chip is built with Lam technology. 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 EndedNine Months Ended
 March 28,
2021		December 27,
2020		March 29,
2020		March 28,
2021		March 29,
2020
Revenue$3,847,654 $3,456,237 $2,503,625 $10,480,971 $7,252,872 
Cost of goods sold2,067,523 1,852,442 1,336,618 5,590,866 3,924,511 
Gross margin1,780,131 1,603,795 1,167,007 4,890,105 3,328,361 
Gross margin as a percent of revenue46.3 %46.4 %46.6 %46.7 %45.9 %
Research and development381,120 375,172 307,914 1,111,659 913,602 
Selling, general and administrative203,703 218,899 164,979 612,350 496,679 
Total operating expenses584,823 594,071 472,893 1,724,009 1,410,281 
Operating income1,195,308 1,009,724 694,114 3,166,096 1,918,080 
Operating income as a percent of revenue31.1 %29.2 %27.7 %30.2 %26.4 %
Other expense, net(35,320)(29,941)(64,619)(104,053)(91,271)
Income before income taxes1,159,988 979,783 629,495 3,062,043 1,826,809 
Income tax expense(88,867)(110,554)(54,714)(298,242)(271,729)
Net income$1,071,121 $869,229 $574,781 $2,763,801 $1,555,080 
Net income per share:
Basic$7.51 $6.04 $3.96 $19.20 $10.75 
Diluted$7.41 $5.96 $3.88 $18.94 $10.39 
Number of shares used in per share calculations:
Basic142,676 143,830 145,301 143,925 144,654 
Diluted144,609 145,910 148,165 145,923 149,648 
Cash dividend declared per common share$1.30 $1.30 $1.15 $3.90 $3.45 
 














 LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
March 28,
2021		December 27,
2020		June 28,
2020
(unaudited)(unaudited)(1)
ASSETS
Cash and cash equivalents$3,673,366 $3,687,165 $4,915,172 
Investments2,116,101 2,355,067 1,795,080 
Accounts receivable, net2,809,068 2,900,362 2,097,099 
Inventories2,552,032 2,348,955 1,900,024 
Prepaid expenses and other current assets171,703 176,403 146,160 
Total current assets11,322,270 11,467,952 10,853,535 
Property and equipment, net1,279,836 1,208,285 1,071,499 
Restricted cash and investments253,460 252,807 253,911 
Goodwill and intangible assets1,633,254 1,641,168 1,652,968 
Other assets796,093 800,162 727,134 
Total assets$15,284,913 $15,370,374 $14,559,047 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of long-term debt and finance lease obligations$825,434 $832,847 $839,877 
Other current liabilities2,786,899 2,758,206 2,322,565 
Total current liabilities3,612,333 3,591,053 3,162,442 
Long-term debt and finance lease obligations4,991,613 4,992,496 4,970,848 
Income taxes payable924,629 902,047 909,709 
Other long-term liabilities381,505 376,230 332,559 
Total liabilities9,910,080 9,861,826 9,375,558 
Temporary equity, convertible notes3,217 5,515 10,995 
Stockholders’ equity (2)5,371,616 5,503,033 5,172,494 
Total liabilities and stockholders’ equity$15,284,913 $15,370,374 $14,559,047 
 
(1)Derived from audited financial statements.
(2)
Common shares issued and outstanding were 142,607 as of March 28, 2021, 143,205 as of December 27, 2020, and 145,331 as of June 28, 2020.
 




 
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
 Three Months EndedNine Months Ended
 March 28,
2021		December 27,
2020		March 29,
2020		March 28,
2021		March 29,
2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income$1,071,121 $869,229 $574,781 $2,763,801 $1,555,080 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization79,453 76,389 67,248 228,754 197,442 
Deferred income taxes(1,136)(2,462)— (5,448)74,516 
Equity-based compensation expense55,746 52,109 47,414 163,843 136,044 
Amortization of note discounts and issuance costs1,412 1,417 1,361 4,251 4,611 
Other, net(2,047)5,273 7,811 6,143 11,510 
Changes in operating assets and liabilities(39,469)(657,318)(157,187)(1,009,116)(665,800)
Net cash provided by operating activities1,165,080 344,637 541,428 2,152,228 1,313,403 
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures and intangible assets(89,596)(92,072)(51,375)(244,474)(152,685)
Net sale (purchase) of available-for-sale securities233,529 168,102 211,159 (335,443)339,350 
Other, net(27,997)(6,090)9,988 (35,873)(540)
Net cash provided by (used for) investing activities115,936 69,940 169,772 (615,790)186,125 
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on debt(16,245)(4,596)(617,637)(40,014)(664,589)
Proceeds from borrowings on revolving credit facility— — 1,250,000 — 1,250,000 
Treasury stock purchases(1,094,571)(723,297)(245,433)(2,266,449)(1,328,632)
Dividends paid(186,551)(187,927)(163,510)(541,607)(489,099)
Reissuance of treasury stock related to employee stock purchase plan— 41,434 — 41,434 38,447 
Proceeds from issuance of common stock9,626 8,108 1,714 23,272 6,215 
Other, net(665)961 328 (1,844)328 
Net cash (used for) provided by financing activities(1,288,406)(865,317)225,462 (2,785,208)(1,187,330)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(5,756)8,187 (10,715)6,513 (9,853)
Net (decrease) increase in cash, cash equivalents, and restricted cash(13,146)(442,553)925,947 (1,242,257)302,345 
Cash, cash equivalents, and restricted cash at beginning of period3,939,972 4,382,525 3,289,794 5,169,083 3,913,396 
Cash, cash equivalents, and restricted cash at end of period$3,926,826 $3,939,972 $4,215,741 $3,926,826 $4,215,741 



 
Non-GAAP Financial Summary
(in thousands, except percentages and per share data)
(unaudited)
Three Months Ended
March 28,
2021		December 27,
2020
Revenue$3,847,654 $3,456,237 
Gross margin$1,783,209 $1,611,154 
Gross margin as percentage of revenue46.3 %46.6 %
Operating expenses$566,507 $563,446 
Operating income$1,216,702 $1,047,708 
Operating income as a percentage of revenue31.6 %30.3 %
Net income$1,083,532 $880,211 
Net income per diluted share$7.49 $6.03 
Shares used in per share calculation - diluted144,609 145,910 
Reconciliation of U.S. GAAP Net Income to Non-GAAP Net Income
(in thousands, except per share data)
(unaudited) 
Three Months Ended
March 28,
2021		December 27,
2020
U.S. GAAP net income$1,071,121 $869,229 
Pre-tax non-GAAP items:
Amortization related to intangible assets acquired through certain business combinations - cost of goods sold1,092 1,270 
Elective deferred compensation ("EDC") related liability valuation increase - cost of goods sold1,986 6,089 
EDC related liability valuation increase - research and development3,575 10,961 
Amortization related to intangible assets acquired through certain business combinations - selling, general and administrative12,357 12,357 
EDC related liability valuation increase - selling, general and administrative2,384 7,307 
Amortization of note discounts - other expense, net998 1,001 
Gain on EDC related asset - other expense, net(7,520)(24,207)
Net income tax benefit on non-GAAP items(2,461)(3,796)
Non-GAAP net income$1,083,532 $880,211 
Non-GAAP net income per diluted share$7.49 $6.03 
U.S. GAAP net income per diluted share$7.41 $5.96 
U.S. GAAP and non-GAAP number of shares used for per diluted share calculation144,609 145,910 



 
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 28,
2021		December 27,
2020
U.S. GAAP gross margin$1,780,131 $1,603,795 
Pre-tax non-GAAP items:
Amortization related to intangible assets acquired through certain business combinations1,092 1,270 
EDC related liability valuation increase1,986 6,089 
Non-GAAP gross margin$1,783,209 $1,611,154 
U.S. GAAP gross margin as a percentage of revenue46.3 %46.4 %
Non-GAAP gross margin as a percentage of revenue46.3 %46.6 %
U.S. GAAP operating expenses$584,823 $594,071 
Pre-tax non-GAAP items:
Amortization related to intangible assets acquired through certain business combinations(12,357)(12,357)
EDC related liability valuation increase(5,959)(18,268)
Non-GAAP operating expenses$566,507 $563,446 
U.S. GAAP operating income$1,195,308 $1,009,724 
Non-GAAP operating income$1,216,702 $1,047,708 
U.S. GAAP operating income as percent of revenue31.1 %29.2 %
Non-GAAP operating income as a percent of revenue31.6 %30.3 %
 
Lam Research Corporation Contacts:
Tina Correia, Investor Relations, phone: 510-572-1615, e-mail: investor.relations@lamresearch.com



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