Lam Research Corporation Reports Financial Results for the Quarter Ended June 28, 2015
FREMONT, CA -- (Marketwired) -- 07/29/15 -- Lam Research Corp. (NASDAQ: LRCX) today announced financial results for the quarter ended June 28, 2015.
Highlights for the June 2015 quarter were as follows:
- Shipments of $1,616 million, up 8% from the prior quarter
- Revenue of $1,481 million, up 6% from the prior quarter
- GAAP gross margin of 43.3%, GAAP operating margin of 12.9% and GAAP diluted EPS of $0.74
- Non-GAAP gross margin of 45.5%, non-GAAP operating margin of 21.6%, and non-GAAP diluted EPS of $1.50
Financial Highlights for the Quarters Ended June 28, 2015 and March 29,
2015
(in thousands, except per-share data, percentages, and basis points)
U.S. GAAP
---------------------------------------------------------------------------
Change
June 2015 March 2015 Q/Q
---------- ---------- ---------
Revenue $1,481,370 $1,393,333 +6%
Gross margin as percentage of revenue 43.3% 43.1% +20bps
Operating margin as percentage of revenue 12.9% 17.2% -430 bps
Diluted EPS $ 0.74 $ 1.16 -36%
Non-GAAP
---------------------------------------------------------------------------
Change
June 2015 March 2015 Q/Q
---------- ---------- ---------
Revenue $1,481,370 $1,393,333 +6%
Gross margin as percentage of revenue 45.5% 44.7% +80 bps
Operating margin as percentage of revenue 21.6% 19.9% +170 bps
Diluted EPS $ 1.50 $ 1.40 +7%
GAAP Financial Results
For the June 2015 quarter, revenue was $1,481.4 million, gross margin was $641.5 million, or 43.3% of revenue, operating expenses were $450.5 million, operating margin was 12.9% of revenue, and net income was $131.3 million, or $0.74 per diluted share on a GAAP basis. This compares to revenue of $1,393.3 million, gross margin of $600.6 million, or 43.1% of revenue, operating expenses of $360.6 million, operating margin of 17.2% of revenue, and net income of $206.3 million, or $1.16 per diluted share, for the quarter ended March 29, 2015 (the "March 2015 quarter"). The June 2015 operating expenses, operating margin, net income and income per diluted share were negatively impacted by a goodwill impairment charge of $79.4 million. In addition, gross margin, operating margin, net income and income per diluted share were negatively impacted by an impairment charge related to a long-lived asset of $9.8 million.
Non-GAAP Financial Results
For the June 2015 quarter, non-GAAP gross margin was $673.8 million or 45.5% of revenue, non-GAAP operating expenses were $354.5 million, non-GAAP operating margin was 21.6% of revenue, and non-GAAP net income was $260.0 million, or $1.50 per diluted share. This compares to non-GAAP gross margin of $622.2 million or 44.7% of revenue, non-GAAP operating expenses of $345.0 million, non-GAAP operating margin of 19.9% of revenue, and non-GAAP net income of $244.9 million, or $1.40 per diluted share for the March 2015 quarter.
"Lam posted record June quarter results and concluded the strongest fiscal year in our history by delivering over $5 billion in both shipments and revenue and $1 billion in operating income for the first time," said Martin Anstice, Lam Research's president and chief executive officer. "The inflection driven expansion in our served available market over the next several years combined with our enduring focus on supporting our customers' long term success, creates exciting opportunity. Our technology and productivity leadership, our execution discipline and our model of collaboration, we believe, position us for continued outperformance."
Balance Sheet and Cash Flow Results
Cash and cash equivalents, short-term investments, and restricted cash and investment balances increased to $4.2 billion at the end of the June 2015 quarter compared to $4.1 billion at the end of the March 2015 quarter. This increase was primarily the result of approximately $292.1 million in cash flows from operating activities which was partially offset by approximately $74.3 million of treasury stock repurchases, including net share settlement on employee stock-based compensation; approximately $63.1 million of capital expenditures; and approximately $28.7 million of dividends paid to stockholders during the June 2015 quarter.
Deferred revenue and profit balances at the end of June 2015 quarter increased to $518.1 million and $322.1 million, respectively, as compared to $485.2 million and $303.3 million at the end of the March 2015 quarter, respectively. 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 $164.4 million as of June 28, 2015.
Geographic Distribution
The geographic distribution of shipments and revenue during the June 2015 quarter is shown in the following table:
Region Shipments Revenue
-------------------------------------------- --------------- ---------------
Korea 23% 28%
Taiwan 24% 19%
China 12% 17%
United States 13% 14%
Japan 20% 14%
Europe 4% 4%
Southeast Asia 4% 4%
Outlook
For the September 2015 quarter, Lam is providing the following guidance:
Reconciling
GAAP Items Non-GAAP
------------------------------------------------------------------
Shipments $1.58 Billion +/-$75 Million - $1.58 Billion+/-$75 Million
Revenue $1.60 Billion +/-$75 Million - $1.60 Billion+/-$75 Million
Gross
margin 44.2% +/- 1% $21 Million 45.5% +/- 1%
Operating
margin 20.2% +/- 1% $37 Million 22.5% +/- 1%
Net income
per
diluted
share $1.46 +/- $0.10 $38 Million $1.70 +/- $0.10
Diluted
share
count 177 Million 174 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 ($8) million; totaling $38 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 U.S. GAAP results, this press release also contains non-GAAP financial results. The Company's non-GAAP results for both the June 2015 and March 2015 quarters exclude amortization related to intangible assets acquired in the Novellus transaction, acquisition-related inventory fair value impact, restructuring impacts, the amortization of notes discounts, tax expense (benefit) of non-GAAP items, and net income tax benefit on successful resolution of certain tax matters. Additionally, the June 2015 quarter non-GAAP results exclude long-lived asset impairment, goodwill impairment, and additional accrual for certain tax matters.
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 U.S. 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 successfully execute our growth strategy, our ability to continue to successfully collaborate closely with and to support our customers and their long term success, our ability to achieve market growth and share gains at key inflections, our ability to continue to outperform, our ability to deliver growth and value for our customers and our stockholders, the extent of inflection driven expansion in our served available market, and our guidance for shipments, revenue, gross margin, operating margin, earnings per share, and diluted earnings per share and 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 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 Forms 10-Q for the quarters ended September 28, 2014, December 28, 2014 and March 29, 2015. 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)
Three Months Ended Twelve Months Ended
----------------------------------- -----------------------
June 28, March 29, June 29, June 28, June 29,
2015 2015 2014 2015 2014
----------- ----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited) (1)
Revenue $ 1,481,370 $ 1,393,333 $ 1,248,797 $ 5,259,312 $ 4,607,309
Cost of goods
sold 839,832 792,731 691,761 2,974,976 2,599,828
----------- ----------- ----------- ----------- -----------
Gross
margin 641,538 600,602 557,036 2,284,336 2,007,481
Gross
margin as
a percent
of revenue 43.3% 43.1% 44.6% 43.4% 43.6%
Research and
development 221,675 217,865 185,449 825,242 716,471
Selling,
general and
administrative 149,384 142,772 155,737 591,611 613,341
Goodwill
impairment 79,444 - - 79,444 -
----------- ----------- ----------- ----------- -----------
Total
operating
expenses 450,503 360,637 341,186 1,496,297 1,329,812
----------- ----------- ----------- ----------- -----------
Operating
income 191,035 239,965 215,850 788,039 677,669
Operating
margin as
a percent
of revenue 12.9% 17.2% 17.3% 15.0% 14.7%
Gain on sale of
real estate - - 83,090 - 83,090
Other expense,
net (20,353) (11,389) (9,442) (47,189) (37,396)
----------- ----------- ----------- ----------- -----------
Income
(loss)
before
income
taxes 170,682 228,576 289,498 740,850 723,363
Income tax
expense
(benefit) 39,411 22,291 56,103 85,273 91,074
----------- ----------- ----------- ----------- -----------
Net income $ 131,271 $ 206,285 $ 233,395 $ 655,577 $ 632,289
=========== =========== =========== =========== ===========
Net income per
share:
Basic net
income per
share $ 0.83 $ 1.30 $ 1.44 $ 4.11 $ 3.84
=========== =========== =========== =========== ===========
Diluted net
income per
share $ 0.74 $ 1.16 $ 1.35 $ 3.70 $ 3.62
=========== =========== =========== =========== ===========
Number of
shares used in
per share
calculations:
Basic 158,590 158,992 162,215 159,629 164,741
=========== =========== =========== =========== ===========
Diluted 176,575 177,531 173,345 177,067 174,503
=========== =========== =========== =========== ===========
Cash dividend
declared per
share $ 0.30 $ 0.18 $ 0.18 $ 0.84 $ 0.18
=========== =========== =========== =========== ===========
(1) Derived from audited financial statements
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 28, March 29, June 29,
2015 2015 2014
----------- ----------- -----------
(unaudited) (unaudited) (1)
ASSETS
Cash and cash equivalents $ 1,501,539 $ 1,635,636 $ 1,452,677
Short-term investments 2,574,947 2,313,495 1,612,967
Accounts receivable, net 1,093,582 1,046,800 800,616
Inventories 943,346 919,679 740,503
Other current assets 157,435 145,357 176,899
----------- ----------- -----------
Total current assets 6,270,849 6,060,967 4,783,662
Property and equipment, net 621,418 579,824 543,496
Restricted cash and investments 170,969 164,300 146,492
Goodwill and intangible assets 2,115,649 2,242,977 2,360,303
Other assets 185,763 190,473 159,353
----------- ----------- -----------
Total assets $ 9,364,648 $ 9,238,541 $ 7,993,306
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt,
convertible notes, and capital leases $ 1,359,650 $ 518,267 $ 520,686
Other current liabilities 1,271,711 1,216,729 1,061,315
----------- ----------- -----------
Total current liabilities 2,631,361 1,734,996 1,582,001
Long-term debt and capital leases $ 1,001,382 $ 1,831,094 $ 817,202
Income taxes payable 202,930 205,536 258,357
Other long-term liabilities 184,023 189,291 122,662
----------- ----------- -----------
Total liabilities $ 4,019,696 $ 3,960,917 $ 2,780,222
=========== =========== ===========
Senior convertible notes 241,808 180,569 183,349
Stockholders' equity (2) 5,103,144 5,097,055 5,029,735
----------- ----------- -----------
Total liabilities and stockholders'
equity $ 9,364,648 $ 9,238,541 $ 7,993,306
=========== =========== ===========
(1) Derived from audited financial statements
(2) Common shares issued and outstanding were 158,531 as of June 28, 2015,
158,485 shares as of March 29, 2015, and 162,350 shares as of June 29,
2014.
LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended Twelve Months Ended
----------------------------------- -----------------------
June 28, March 29, June 29, June 28, June 29,
2015 2015 2014 2015 2014
----------- ----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited) (1)
CASH FLOWS FROM
OPERATING
ACTIVITIES:
Net income $ 131,271 $ 206,285 $ 233,395 $ 655,577 $ 632,289
Adjustments to
reconcile net
income to net
cash provided
by operating
activities:
Depreciation
and
amortization 70,177 70,322 71,115 277,920 292,254
Deferred
income taxes (2,694) 1,739 (4,104) 5,551 7,537
Impairment of
long-lived
assets 9,821 - - 9,821 11,632
Equity-based
compensation
expense 39,734 32,948 33,085 135,354 103,700
Income tax
benefit
(expense) on
equity-based
compensation
plans (2,124) 2,438 6,269 11,316 5,973
Excess tax
(benefit)
expense on
equity-based
compensation
plans 1,809 (2,204) (6,361) (11,398) (6,065)
Amortization
of note
discounts
and issuance
costs 11,023 9,409 9,002 37,550 35,482
Gain on sale
of business - - - (7,431) -
Gain on sale
of real
estate - - (83,090) - (83,090)
Goodwill
impairment 79,444 - - 79,444 -
Other, net 3,621 1,902 8,241 12,656 12,669
Changes in
operating
asset and
liabilities: (50,016) (131,802) (21,661) (420,857) (295,332)
----------- ----------- ----------- ----------- -----------
Net cash
provided
by
operating
activities 292,066 191,037 245,891 785,503 717,049
----------- ----------- ----------- ----------- -----------
CASH FLOWS FROM
INVESTING
ACTIVITIES:
Capital
expenditures
and intangible
assets (63,133) (31,898) (41,764) (198,265) (145,503)
Cash paid for
business
acquisition - - (11,839) (1,137) (30,227)
Net purchases
of available-
for-sale
securities (278,379) (359,416) (155,035) (949,740) (283,966)
Proceeds from
sale of
business - - - 41,212 -
Purchase of
other
investment - (2,500) - (2,500) -
Repayments of
notes
receivable - - - 3,978 10,000
Proceeds from
sale of assets - - 134,762 - 156,397
Transfer of
restricted
cash and
investments 1,056 (822) (637) 356 28,085
----------- ----------- ----------- ----------- -----------
Net cash
used for
investing
activities (340,456) (394,636) (74,513) (1,106,096) (265,214)
----------- ----------- ----------- ----------- -----------
CASH FLOWS FROM
FINANCING
ACTIVITIES:
Principal
payments on
long-term debt
and capital
lease
obligations (615) (119) (739) (1,515) (1,658)
Proceeds from
issuance of
long-term
debt, net
issuance costs
and captial
lease
obligations 345 991,880 - 992,225 -
Excess tax
benefit
(expense) on
equity-based
compensation
plans (1,809) 2,204 6,361 11,398 6,065
Treasury stock
purchases (74,339) (124,943) (40,249) (573,240) (244,859)
Dividends paid (28,714) (28,724) - (116,059) -
Reissuances of
treasury stock
related to
employee stock
purchase plan 16,950 14,934 14,597 48,803 42,926
Proceeds from
issuance of
common stock 1,285 7,403 8,657 17,520 34,791
Other (660) - - (660) -
----------- ----------- ----------- ----------- -----------
Net cash
provided
by (used
for)
financing
activities (87,557) 862,635 (11,373) 378,472 (162,735)
----------- ----------- ----------- ----------- -----------
Effect of
exchange rate
changes on
cash 1,850 (4,675) 371 (9,017) 1,104
Net increase
(decrease) in
cash and cash
equivalents (134,097) 654,361 160,376 48,862 290,204
Cash and cash
equivalents at
beginning of
period 1,635,636 981,275 1,292,301 1,452,677 1,162,473
----------- ----------- ----------- ----------- -----------
Cash and cash
equivalents at
end of period $ 1,501,539 $ 1,635,636 $ 1,452,677 $ 1,501,539 $ 1,452,677
=========== =========== =========== =========== ===========
(1) Derived from audited financial statements
Non-GAAP Financial Summary
(in thousands, except percentages and per share data)
(unaudited)
Three Months Three Months
Ended Ended
------------- -------------
June 28, March 29,
2015 2015
------------- -------------
Revenue $ 1,481,370 $ 1,393,333
Gross margin $ 673,837 $ 622,196
Gross margin as percentage of revenue 45.5% 44.7%
Operating expenses $ 354,542 $ 345,049
Operating income $ 319,295 $ 277,147
Operating margin as a percentage of revenue 21.6% 19.9%
Net income $ 260,023 $ 244,911
Net income per diluted share $ 1.50 $ 1.40
Shares used in per share calculation - diluted 173,641 174,471
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 Three Months
Ended Ended
------------- -------------
June 28, March 29,
2015 2015
------------- -------------
U.S. GAAP net income $ 131,271 $ 206,285
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 1,192 308
Impairment of long lived asset - cost of goods
sold 9,821 -
Amortization related to intangible assets
acquired in Novellus transaction - operating
expenses 16,083 16,083
Restructuring charges/(benefits) - operating
expenses 434 (495)
Goodwill impairment - operating expenses 79,444 -
Amortization of note discounts - other
expense, net 9,019 8,749
Net tax benefit on non-GAAP items (9,605) (7,181)
Net income tax expense (benefit) on resolution
or additional accrual for certain tax matters 1,078 (124)
------------- -------------
Non-GAAP net income $ 260,023 $ 244,911
============= =============
Non-GAAP net income per diluted share $ 1.50 $ 1.40
============= =============
U.S. GAAP number of shares used for diluted per
share calculation 176,575 177,531
Effect of convertible note hedge (2,934) (3,060)
------------- -------------
Non-GAAP number of shares used for diluted per
share calculation 173,641 174,471
============= =============
Reconciliation of U.S. GAAP Gross Margin, Operating Expenses and Operating
Income to Non-GAAP Gross Margin, Operating Expenses and Operating Income
(unaudited)
Three Months Three Months Three Months Three Months
Ended Ended Ended Ended
------------ ------------ ------------- -------------
June 28, March 29, December 28, September 28,
2015 2015 2014 2014
------------ ------------ ------------- -------------
U.S. GAAP gross
margin $ 641,538 $ 600,602 $ 536,657 $ 505,539
Pre-tax non-GAAP
items:
Amortization
related to
intangible
assets acquired
in Novellus
transaction -
cost of goods
sold 21,286 21,286 21,286 20,893
Acquisition-
related
inventory fair
value impact -
cost of goods
sold 1,192 308 2,101 -
Impairment of
long lived
asset - cost of
goods sold 9,821 - - -
Costs associted
with
rationalization
of certain
product
configurations
- cost of goods
sold - - - 1,600
------------ ------------ ------------- -------------
Non-GAAP gross
margin $ 673,837 $ 622,196 $ 560,044 $ 528,032
============ ============ ============= =============
U.S. GAAP gross
margin as a
percentage of
revenue 43.3% 43.1% 43.6% 43.9%
Non-GAAP gross
margin as a
percentage of
revenue 45.5% 44.7% 45.4% 45.8%
U.S. GAAP
operating
expenses $ 450,503 $ 360,637 $ 347,916 $ 337,241
Pre-tax non-GAAP
items:
Amortization
related to
intangible
assets acquired
in Novellus
transaction -
operating
expenses (16,083) (16,083) (16,083) (16,083)
Restructuring
(charges)/benef
its - operating
expenses (434) 495 (1,620) -
Goodwill
impairment -
operating
expenses (79,444) - - -
------------ ------------ ------------- -------------
Non-GAAP operating
expenses $ 354,542 $ 345,049 $ 330,213 $ 321,158
============ ============ ============= =============
Non-GAAP operating
income $ 319,295 $ 277,147 $ 229,831 $ 206,874
============ ============ ============= =============
GAAP operating
margin as percent
of revenue 12.9% 17.2% 15.3% 14.6%
Non-GAAP operating
margin as a
percent of
revenue 21.6% 19.9% 18.7% 18.0%
Lam Research Corporation Contacts:Audrey CharlesInvestor Relationsphone: 510-572-1615e-mail: [email protected]
Source: Lam Research Corporation