Lam Research Corporation Reports Financial Results for the Quarter Ended March 29, 2015
FREMONT, CA -- (Marketwired) -- 04/20/15 -- Lam Research Corp. (NASDAQ: LRCX) today announced financial results for the quarter ended March 29, 2015 (the "March 2015 quarter").
Highlights for the March 2015 quarter were as follows:
- Shipments of $1,497 million, up 20% from the prior quarter.
- Revenue of $1,393 million, up 13% from the prior quarter.
- GAAP gross margin of 43.1%, GAAP operating margin of 17.2%, and GAAP diluted EPS of $1.16.
- Non-GAAP gross margin of 44.7%, non-GAAP operating margin of 19.9%, and non-GAAP diluted EPS of $1.40.
Lam Research Corporation
Financial Highlights for the Quarters Ended March 29, 2015 and December 28,
2014
(in thousands, except per share data and percentages)
GAAP
----------------------------------------------------------------------------
March 2015 December 2014 Change Q/Q
------------- ------------- ----------
Revenue $ 1,393,333 $ 1,232,241 13%
Gross margin as percentage of revenue 43.1% 43.6% -50 bps
Operating margin as percentage of
revenue 17.2% 15.3% 190 bps
Diluted EPS $ 1.16 $ 1.00 16%
Non-GAAP
----------------------------------------------------------------------------
March 2015 December 2014 Change Q/Q
------------- ------------- ----------
Revenue $ 1,393,333 $ 1,232,241 13%
Gross margin as percentage of revenue 44.7% 45.4% -70 bps
Operating margin as percentage of
revenue 19.9% 18.7% 120 bps
Diluted EPS $ 1.40 $ 1.19 18%
GAAP Financial Results
For the March 2015 quarter, revenue was $1,393.3 million, gross margin was $600.6 million, or 43.1% of revenue, operating expenses were $360.6 million, operating margin was 17.2% of revenue, and net income was $206.3 million, or $1.16 per diluted share on a GAAP basis. This compares to revenue of $1,232.2 million, gross margin of $536.7 million, or 43.6% of revenue, operating expenses of $347.9 million, operating margin of 15.3% of revenue, and net income of $176.9 million, or $1.00 per diluted share, for the quarter ended December 28, 2014 (the "December 2014 quarter").
Non-GAAP Financial Results
For the March 2015 quarter, non-GAAP gross margin was $622.2 million or 44.7% of revenue, non-GAAP operating expenses were $345.0 million, non-GAAP operating margin was 19.9% of revenue, and non-GAAP net income was $244.9 million, or $1.40 per diluted share on a non-GAAP basis. This compares to non-GAAP gross margin of $560.0 million or 45.4% of revenue, non-GAAP operating expenses of $330.2 million, non-GAAP operating margin of 18.7% of revenue, and non-GAAP net income of $207.6 million, or $1.19 per diluted share for the December 2014 quarter.
"Lam's March quarter results reached record levels further extending our outperformance trajectory," said Martin Anstice, Lam Research's president and chief executive officer. "Our differentiated products and services are directly addressing the market driving technology inflections of multi-patterning, 3D device architecture and advanced packaging. Through ever closer collaboration with our customers we are partnering to solve their most critical challenges solidifying our growth opportunity."
Balance Sheet and Cash Flow Results
The successful issuance of $1.0 billion in bonds in the March 2015 quarter helped increase cash and cash equivalents, short-term investments, and restricted cash and investment balances to $4.1 billion at the end of the March 2015 quarter compared to $3.0 billion at the end of the December 2014 quarter. Cash provided by operating activities was utilized for approximately $124.9 million of treasury stock purchases, including net share settlement on employee stock-based compensation, $31.9 million of capital expenditures and $28.7 million of cash dividends paid to stockholders during the March 2015 quarter.
Deferred revenue at the end of the March 2015 quarter increased to $485.2 million as compared to $373.7 million at the end of the December 2014 quarter. Deferred profit at the end of the March 2015 quarter increased to $303.3 million as compared to $254.8 million at the end of the December 2014 quarter. Lam's deferred revenue balance does not include shipments to Japanese customers, to whom title does not transfer until customer acceptance. Shipments to Japanese customers are classified as inventory at cost until the time of acceptance. The anticipated future revenue from shipments to Japanese customers was approximately $45.4 million as of March 29, 2015.
Geographic Distribution
The geographic distribution of shipments and revenue during the March 2015 quarter is shown in the following table:
Region Shipments Revenue
------------------------------------------------------ ---------- ----------
Korea 34% 35%
Taiwan 19% 20%
China 19% 15%
Japan 10% 11%
United States 10% 10%
Europe 6% 7%
Southeast Asia 2% 2%
Outlook
For the quarter ending June 28, 2015, Lam is providing the following guidance:
Reconciling
GAAP Items Non-GAAP
-----------------------------------------------------------
Shipments $1.60 $50 $1.60 $50
Billion +/- Million - Billion +/- Million
Revenue $1.46 $50 $1.46 $50
Billion +/- Million - Billion +/- Million
Gross margin 44.1% +/- 1% $21 Million 45.5% +/- 1%
Operating margin 18.5% +/- 1% $37 Million 21.0% +/- 1%
Earnings per
share $1.21 +/- $0.07 $39 Million $1.46 +/- $0.07
Diluted share 174 Million
count 177 Million 3 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, $9 million; and associated tax benefit for non-GAAP items ($7) million; totaling $39 million.
- Diluted share count - impact of a note hedge issued contemporaneously with the convertible notes due in 2016 and 2018, 3 million shares.
Use of Non-GAAP Financial Results
In addition to GAAP results, this press release also contains non-GAAP financial results. The Company's non-GAAP results for both the March 2015 and December 2014 quarters include the impact of the note hedge issued contemporaneously with the convertible notes due in 2016 and 2018 and exclude amortization related to intangible assets acquired in the Novellus transaction; acquisition-related inventory fair value impact; selected restructuring charges, net; the amortization of note discounts; and tax benefit of non-GAAP items. Additionally, the March 2015 quarter non-GAAP results exclude the tax benefit on the successful resolution of certain tax matters. The December 2014 quarter non-GAAP results exclude the net tax benefit on the reinstatement of the research and development credit.
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 GAAP results are included at the end of this press release and on the Company's web site 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 of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate to, but are not limited to, the anticipated revenue from shipments to Japanese customers; our ability to continue to reach record levels and outperform the semiconductor equipment industry; our ability to collaborate with our customers and partner to solve their most critical challenges; our ability to continue to grow our revenue and make progress on our market share objectives; our ability to differentiate our products and services, address market driving technology inflections, and deliver performance that meets or exceeds our plans, including our abilities to execute on our priorities, and deliver growth; the scope of opportunities we have; our ability to expand our served market; the ability of the market to continue to expand and the extent of any such expansion; and our guidance for shipments, revenue, gross margin, operating margin, earnings per 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; the strength of the financial performance of our existing and prospective customers; the introduction of new and innovative technologies; the occurrence and pace of technology transitions and conversions; the actions of our competitors, consumers, semiconductor companies and key suppliers and subcontractors; and the success of research and development and sales and marketing programs. These forward-looking statements are based on current expectations and are subject to uncertainties and changes in condition, significance, value and effect as well as other risks, including those detailed in documents filed by us with the Securities and Exchange Commission, including specifically our report on Form 10-K for the year ended June 29, 2014 and our reports on Form 10-Q for the quarters ended September 28, 2014 and December 28, 2014. These uncertainties and changes could cause actual results to vary from expectations. The Company undertakes no obligation to update the information or statements made in this press release.
About Lam Research
Lam Research Corp. (NASDAQ: LRCX) is a trusted global supplier of innovative wafer fabrication equipment and services to the semiconductor industry. Lam's broad portfolio of market-leading deposition, etch, strip, and wafer cleaning solutions helps customers achieve success on the wafer by enabling device features that are 1,000 times smaller than a grain of sand, resulting in smaller, faster, and more power-efficient chips. Through collaboration, continuous innovation, and delivering on commitments, Lam is transforming atomic-scale engineering and enabling its customers to shape the future of technology. Based in Fremont, Calif., Lam Research is a NASDAQ-100 Index ® and S&P 500 ® company whose common stock trades on the NASDAQ ® Global Select Market™ under the symbol LRCX. For more information, please visit http://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 Ended Nine Months Ended
----------------------------------- -----------------------
March 29, December March 30, March 29, March 30,
2015 28, 2014 2014 2015 2014
----------- ----------- ----------- ----------- -----------
Revenue $1,393,333 $1,232,241 $1,227,392 $3,777,942 $3,358,512
Cost of goods
sold 792,731 695,584 696,594 2,135,144 1,908,067
----------- ----------- ----------- ----------- -----------
Gross margin 600,602 536,657 530,798 1,642,798 1,450,445
Gross margin
as a
percent of
revenue 43.1% 43.6% 43.2% 43.5% 43.2%
Research and
development 217,865 196,768 185,978 603,567 531,022
Selling, general
and
administrative 142,772 151,148 152,883 442,227 457,604
----------- ----------- ----------- ----------- -----------
Total
operating
expenses 360,637 347,916 338,861 1,045,794 988,626
----------- ----------- ----------- ----------- -----------
Operating
income 239,965 188,741 191,937 597,004 461,819
Operating
margin as a
percent of
revenue 17.2% 15.3% 15.6% 15.8% 13.8%
Other expense,
net (11,389) (9,799) (9,855) (26,836) (27,954)
----------- ----------- ----------- ----------- -----------
Income
before
income
taxes 228,576 178,942 182,082 570,168 433,865
Income tax
expense 22,291 2,002 17,686 45,862 34,971
----------- ----------- ----------- ----------- -----------
Net income $ 206,285 $ 176,940 $ 164,396 $ 524,306 $ 398,894
=========== =========== =========== =========== ===========
Net income per
share:
Basic net
income per
share $ 1.30 $ 1.11 $ 1.01 $ 3.28 $ 2.46
=========== =========== =========== =========== ===========
Diluted net
income per
share $ 1.16 $ 1.00 $ 0.96 $ 2.96 $ 2.33
=========== =========== =========== =========== ===========
Number of shares
used in per
share
calculations:
Basic 158,992 159,248 162,238 159,975 161,904
=========== =========== =========== =========== ===========
Diluted 177,531 177,046 171,636 177,231 171,051
=========== =========== =========== =========== ===========
Cash dividend
declared per
share $ 0.18 $ 0.18 $ - $ 0.54 $ -
=========== =========== =========== =========== ===========
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 29, December 28, June 29,
2015 2014 2014
------------- ------------- -------------
(unaudited) (unaudited) (1)
ASSETS
Cash and cash equivalents $ 1,635,636 $ 981,275 $ 1,452,677
Short-term investments 2,313,495 1,902,402 1,612,967
Accounts receivable, net 1,046,800 944,014 800,616
Inventories 919,679 913,390 740,503
Other current assets 145,357 173,731 176,899
------------- ------------- -------------
Total current assets 6,060,967 4,914,812 4,783,662
Property and equipment, net 579,824 585,372 543,496
Restricted cash and investments 164,300 155,455 146,492
Goodwill and intangible assets 2,242,977 2,282,006 2,360,303
Other assets 190,473 173,044 159,353
------------- ------------- -------------
Total assets $ 9,238,541 $ 8,110,689 $ 7,993,306
============= ============= =============
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities $ 1,734,996 $ 1,708,656 $ 1,582,001
------------- ------------- -------------
Long-term debt, convertible notes,
and capital leases $ 1,831,094 $ 830,880 $ 817,202
Income taxes payable 205,536 205,535 258,357
Other long-term liabilities 189,291 183,678 122,662
------------- ------------- -------------
Total liabilities 3,960,917 2,928,749 2,780,222
============= ============= =============
Senior convertible notes 180,569 181,505 183,349
Stockholders' equity (2) 5,097,055 5,000,435 5,029,735
------------- ------------- -------------
Total liabilities and
stockholders' equity $ 9,238,541 $ 8,110,689 $ 7,993,306
============= ============= =============
(1) Derived from audited financial statements
(2) Common shares issued and outstanding were 158,485 shares as of March
29, 2015, 159,294 shares as of December 28, 2014 and 162,350 shares as
of June 29, 2014.
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
---------------------------------- ----------------------
March 29, December March 30, March 29, March 30,
2015 28, 2014 2014 2015 2014
---------- ---------- ---------- ---------- ----------
CASH FLOWS FROM
OPERATING
ACTIVITIES:
Net income $ 206,285 $ 176,940 $ 164,396 $ 524,306 $ 398,894
Adjustments to
reconcile net
income to net
cash provided
by operating
activities:
Depreciation
and
amortization 70,322 69,536 73,256 207,743 221,139
Deferred
income taxes 1,739 3,320 (816) 8,245 11,641
Impairment of
long-lived
asset - - 4,000 - 11,632
Equity-based
compensation
expense 32,948 30,632 24,334 95,620 70,615
Income tax
benefit on
equity-based
compensation
plans 2,438 1,141 - 13,440 -
Excess tax
benefit on
equity-based
compensation
plans (2,204) (599) - (13,207) -
Amortization
of
convertible
note discount 8,749 8,609 8,313 25,867 24,652
Gain on sale
of business - - - (7,431) -
Other, net 1,902 1,607 2,741 9,035 4,428
Changes in
operating
assets and
liabilities: (131,142) (129,947) 13,986 (370,181) (271,843)
---------- ---------- ---------- ---------- ----------
Net cash
provided by
operating
activities 191,037 161,239 290,210 493,437 471,158
---------- ---------- ---------- ---------- ----------
CASH FLOWS FROM
INVESTING
ACTIVITIES:
Capital
expenditures
and intangible
assets (31,898) (61,363) (41,638) (135,132) (103,739)
Cash paid for
business
acquisition - - - (1,137) (18,388)
Net purchases of
available-for-
sale securities (359,416) (321,590) (82,744) (671,361) (128,931)
Purchase of
other
investment (2,500) - - (2,500) -
Repayment of
notes
receivable - 3,978 - 3,978 10,000
Proceeds from
sale of
business, net - - - 41,212 -
Proceeds from
sale of assets - - - - 21,635
Transfer of
restricted cash
and investments (822) 100 28,572 (700) 28,722
---------- ---------- ---------- ---------- ----------
Net cash
used for
investing
activities (394,636) (378,875) (95,810) (765,640) (190,701)
---------- ---------- ---------- ---------- ----------
CASH FLOWS FROM
FINANCING
ACTIVITIES:
Principal
payments on
long-term debt
and capital
lease
obligations (119) (674) (112) (900) (919)
Proceeds from
issuance of
long-term debt,
net issuance
costs 991,880 - - 991,880 -
Excess tax
benefit
(expense) on
equity-based
compensation
plans 2,204 599 (296) 13,207 (296)
Treasury stock
purchases (124,943) (65,536) (52,415) (498,901) (204,610)
Dividends paid (28,724) (29,381) - (87,345) -
Reissuances of
treasury stock
related to
employee stock
purchase plan 14,934 - 13,210 31,853 28,329
Proceeds from
issuance of
common stock 7,403 4,223 5,111 16,235 26,134
---------- ---------- ---------- ---------- ----------
Net cash
provided by
(used for)
financing
activities 862,635 (90,769) (34,502) 466,029 (151,362)
---------- ---------- ---------- ---------- ----------
Effect of
exchange rate
changes on cash (4,675) (3,998) (152) (10,867) 733
Net increase
(decrease) in
cash and cash
equivalents 654,361 (312,403) 159,746 182,959 129,828
Cash and cash
equivalents at
beginning of
period 981,275 1,293,678 1,132,555 1,452,677 1,162,473
---------- ---------- ---------- ---------- ----------
Cash and cash
equivalents at
end of period $1,635,636 $ 981,275 $1,292,301 $1,635,636 $1,292,301
========== ========== ========== ========== ==========
Non-GAAP Financial Summary
(in thousands, except percentages, share, and per share data)
(unaudited)
Three Months Three Months
Ended Ended
------------- -------------
March 29, December 28,
2015 2014
------------- -------------
Revenue $ 1,393,333 $ 1,232,241
Gross margin $ 622,196 $ 560,044
Gross margin as percentage of revenue 44.7% 45.4%
Operating expenses $ 345,049 $ 330,213
Operating income $ 277,147 $ 229,831
Operating margin as a percentage of revenue 19.9% 18.7%
Net income $ 244,911 $ 207,631
Net income per diluted share $ 1.40 $ 1.19
Shares used in per share calculation - diluted 174,471 174,316
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 share and per share data)
(unaudited)
Three Months Three Months
Ended Ended
-------------- --------------
March 29, December 28,
2015 2014
-------------- --------------
U.S. GAAP net income $ 206,285 $ 176,940
Pre-tax non-GAAP items:
Amortization related to intangible assets
acquired in Novellus transaction - cost of
goods sold 21,286 21,286
Acquisition-related inventory fair value
impact - cost of goods sold 308 2,101
Amortization related to intangible assets
acquired in Novellus transaction -
operating expenses 16,083 16,083
Restructuring (benefits) charges - operating
expenses (495) 1,620
Amortization of note discounts - other
expense, net 8,749 8,609
Net tax benefit on non-GAAP items (7,181) (7,914)
Net tax benefit on reinstatement of research
and development credit - (11,094)
Net tax benefit on successful resolution of
certain tax matters (124) -
-------------- --------------
Non-GAAP net income $ 244,911 $ 207,631
============== ==============
Non-GAAP net income per diluted share $ 1.40 $ 1.19
============== ==============
U.S. GAAP number of shares used for diluted
per share calculation 177,531 177,046
Effect of convertible note hedge (3,060) (2,730)
-------------- --------------
Non-GAAP number of shares used for diluted per
share calculation 174,471 174,316
============== ==============
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 Three Months
Ended Ended
-------------- --------------
March 29, December 28,
2015 2014
-------------- --------------
U.S. GAAP gross margin $ 600,602 $ 536,657
Pre-tax non-GAAP items:
Amortization related to intangible assets
acquired in Novellus transaction - cost of
goods sold 21,286 21,286
Acquisition-related inventory fair value
impact - cost of goods sold 308 2,101
-------------- --------------
Non-GAAP gross margin $ 622,196 $ 560,044
============== ==============
U.S. GAAP gross margin as a percentage of
revenue 43.1% 43.6%
Non-GAAP gross margin as a percentage of
revenue 44.7% 45.4%
U.S. GAAP operating expenses $ 360,637 $ 347,916
Pre-tax non-GAAP items:
Amortization related to intangible assets
acquired in Novellus transaction -
operating expenses (16,083) (16,083)
Restructuring benefits (charges) - operating
expenses 495 (1,620)
-------------- --------------
Non-GAAP operating expenses $ 345,049 $ 330,213
============== ==============
Non-GAAP operating income $ 277,147 $ 229,831
============== ==============
GAAP operating margin as a percent of revenue 17.2% 15.6%
Non-GAAP operating margin as a percent of
revenue 19.9% 18.7%
Lam Research Corporation Contact: Audrey CharlesInvestor Relationsphone: 510-572-1615e-mail: [email protected]
Source: Lam Research Corporation