Lam Research Corporation Reports Financial Results for the Quarter Ended December 27, 2020

FREMONT, Calif., Jan. 27, 2021 (GLOBE NEWSWIRE) -- Lam Research Corporation (the "Company," "Lam," "Lam Research") today announced financial results for the quarter ended December 27, 2020 (the “December 2020 quarter”).

Highlights for the December 2020 quarter were as follows:

  • Revenue of $3.46 billion.
  • U.S. GAAP gross margin of 46.4%, U.S. GAAP operating income as a percentage of revenue of 29.2%, and U.S. GAAP diluted EPS of $5.96.
  • Non-GAAP gross margin of 46.6%, non-GAAP operating income as a percentage of revenue of 30.3%, and non-GAAP diluted EPS of $6.03.

Key Financial Data for the Quarters Ended
December 27, 2020 and September 27, 2020 
(in thousands, except per-share data, percentages, and basis points) 

U.S. GAAP
    December 2020   September 2020   Change Q/Q
Revenue   $ 3,456,237     $ 3,177,080     + 9 %
Gross margin as percentage of revenue   46.4 %   47.4 %   - 100 bps  
Operating income as percentage of revenue   29.2 %   30.2 %   - 100 bps  
Diluted EPS   $ 5.96     $ 5.59     + 7 %
             
Non-GAAP
    December 2020   September 2020   Change Q/Q
Revenue   $ 3,456,237     $ 3,177,080     + 9 %
Gross margin as percentage of revenue   46.6 %   47.5 %   - 90 bps  
Operating income as percentage of revenue   30.3 %   31.1 %   - 80 bps  
Diluted EPS   $ 6.03     $ 5.67     + 6 %
                       

U.S. GAAP Financial Results

For the December 2020 quarter, revenue was $3,456 million, gross margin was $1,604 million, or 46.4% of revenue, operating expenses were $594 million, operating income was 29.2% of revenue, and net income was $869 million, or $5.96 per diluted share on a U.S. GAAP basis. This compares to revenue of $3,177 million, gross margin of $1,506 million, or 47.4% of revenue, operating expenses of $545 million, operating income of 30.2% of revenue, and net income of $823 million, or $5.59 per diluted share, for the quarter ended September 27, 2020 (the “September 2020 quarter”).

Non-GAAP Financial Results

For the December 2020 quarter, non-GAAP gross margin was $1,611 million, or 46.6% of revenue, non-GAAP operating expenses were $563 million, non-GAAP operating income was 30.3% of revenue, and non-GAAP net income was $880 million, or $6.03 per diluted share. This compares to non-GAAP gross margin of $1,511 million, or 47.5% of revenue, non-GAAP operating expenses of $523 million, non-GAAP operating income of 31.1% of revenue, and non-GAAP net income of $835 million, or $5.67 per diluted share, for the September 2020 quarter.

“Lam’s December quarter closed out the most successful year in our 40-year history,” said Tim Archer, Lam Research’s President and Chief Executive Officer. “In calendar 2020, our global teams displayed resiliency amid the pandemic, leading the company to set new financial records and deliver ground-breaking new products that enable key technology advances. With strong secular demand for semiconductors driving increased wafer fabrication equipment spending, Lam enters 2021 with solid momentum for continued growth and expanded leadership across our markets.”

Balance Sheet and Cash Flow Results

Cash and cash equivalents, short-term investments, and restricted cash and investments balances decreased to $6.3 billion at the end of the December 2020 quarter compared to $6.9 billion at the end of the September 2020 quarter. This decrease was primarily the result of $723.3 million of share repurchases, including net share settlement of employee stock-based compensation; $187.9 million of dividends paid to stockholders; and $92.1 million of capital expenditures, partially offset by $344.6 million of cash generated from operating activities.

Revenue

The geographic distribution of revenue during the December 2020 quarter is shown in the following table:

Region Revenue
China 35 %
Korea 21 %
Taiwan 17 %
Japan 10 %
Southeast Asia 10 %
United States 4 %
Europe 3 %
     

The following table presents revenue disaggregated between system and customer support-related revenue:

  Three Months Ended   Six Months Ended
  December 27,
2020
  September 27,
2020
  December 29,
2019
  December 27,
2020
  December 29,
2019
  (In thousands)
System revenue $ 2,307,421     $ 2,148,241     $ 1,747,093     $ 4,455,662     $ 3,112,321  
Customer support-related revenue and other 1,148,816     1,028,839     836,408     2,177,655     1,636,926  
  $ 3,456,237     $ 3,177,080     $ 2,583,501     $ 6,633,317     $ 4,749,247  
                                       

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 March 28, 2021, Lam is providing the following guidance:

  U.S. GAAP   Reconciling Items   Non-GAAP
Revenue $3.7 Billion +/- $200 Million     $3.7 Billion +/- $200 Million
Gross margin as a percentage of revenue 46.0% +/- 1%   $1 Million   46.0% +/- 1%
Operating income as a percentage of revenue 30.1% +/- 1%   $13 Million   30.5% +/- 1%
Net income per diluted share $6.47 +/- $0.40   $12 Million   $6.55 +/- $0.40
Diluted share count 145 Million     145 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, other investments, or other significant arrangements that may be completed 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 December 2020 and September 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; the ability of our products to enable technology advances; the strength of secular demand for semiconductors and its impact on wafer fabrication equipment spending; and our momentum for continued growth and expanded leadership across our markets. 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; trade regulations, export controls, and trade disputes 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 report on Form 10-Q for the fiscal quarter ended September 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 Ended   Six Months Ended
  December 27,
2020
  September 27,
2020
  December 29,
2019
  December 27,
2020
  December 29,
2019
Revenue $ 3,456,237     $ 3,177,080     $ 2,583,501     $ 6,633,317     $ 4,749,247  
Cost of goods sold 1,852,442     1,670,901     1,403,857     3,523,343     2,587,893  
Gross margin 1,603,795     1,506,179     1,179,644     3,109,974     2,161,354  
Gross margin as a percent of revenue 46.4 %   47.4 %   45.7 %   46.9 %   45.5 %
Research and development 375,172     355,367     318,861     730,539     605,688  
Selling, general and administrative 218,899     189,748     174,272     408,647     331,700  
Total operating expenses 594,071     545,115     493,133     1,139,186     937,388  
Operating income 1,009,724     961,064     686,511     1,970,788     1,223,966  
Operating income as a percent of revenue 29.2 %   30.2 %   26.6 %   29.7 %   25.8 %
Other expense, net (29,941 )   (38,792 )   (13,924 )   (68,733 )   (26,652 )
Income before income taxes 979,783     922,272     672,587     1,902,055     1,197,314  
Income tax expense (110,554 )   (98,821 )   (158,077 )   (209,375 )   (217,015 )
Net income $ 869,229     $ 823,451     $ 514,510     $ 1,692,680     $ 980,299  
Net income per share:                  
Basic $ 6.04     $ 5.67     $ 3.57     $ 11.71     $ 6.79  
Diluted $ 5.96     $ 5.59     $ 3.43     $ 11.55     $ 6.52  
Number of shares used in per share calculations:                  
Basic 143,830     145,267     143,987     144,549     144,330  
Diluted 145,910     147,248     150,097     146,579     150,389  
Cash dividend declared per common share $ 1.30     $ 1.30     $ 1.15     $ 2.60     $ 2.30  
                                       

 LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

  December 27,
2020
  September 27,
2020
  June 28,
2020
  (unaudited)   (unaudited)   (1)
ASSETS          
Cash and cash equivalents $ 3,687,165     $ 4,129,067     $ 4,915,172  
Investments 2,355,067     2,528,841     1,795,080  
Accounts receivable, net 2,900,362     2,317,922     2,097,099  
Inventories 2,348,955     2,138,050     1,900,024  
Prepaid expenses and other current assets 176,403     161,003     146,160  
Total current assets 11,467,952     11,274,883     10,853,535  
Property and equipment, net 1,208,285     1,133,529     1,071,499  
Restricted cash and investments 252,807     253,458     253,911  
Goodwill and intangible assets 1,641,168     1,646,343     1,652,968  
Other assets 800,162     748,795     727,134  
Total assets $ 15,370,374     $ 15,057,008     $ 14,559,047  
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current portion of long-term debt and finance lease obligations $ 832,847     $ 834,138     $ 839,877  
Other current liabilities 2,758,206     2,572,730     2,322,565  
Total current liabilities 3,591,053     3,406,868     3,162,442  
Long-term debt and finance lease obligations 4,992,496     4,993,495     4,970,848  
Income taxes payable 902,047     879,870     909,709  
Other long-term liabilities 376,230     351,283     332,559  
Total liabilities 9,861,826     9,631,516     9,375,558  
Temporary equity, convertible notes 5,515     6,307     10,995  
Stockholders’ equity (2) 5,503,033     5,419,185     5,172,494  
Total liabilities and stockholders’ equity $ 15,370,374     $ 15,057,008     $ 14,559,047  


(1)   Derived from audited financial statements.
(2)   Common shares issued and outstanding were 143,205 as of December 27, 2020, 144,593 as of September 27, 2020, and 145,331 as of June 28, 2020.
     

LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)

  Three Months Ended   Six Months Ended
  December 27,
2020
  September 27,
2020
  December 29,
2019
  December 27,
2020
  December 29,
2019
CASH FLOWS FROM OPERATING ACTIVITIES:                  
Net income $ 869,229     $ 823,451     $ 514,510     $ 1,692,680     $ 980,299  
Adjustments to reconcile net income to net cash provided by operating activities:                  
Depreciation and amortization 76,389     72,912     65,530     149,301     130,194  
Deferred income taxes (2,462 )   (1,850 )   77,508     (4,312 )   74,516  
Equity-based compensation expense 52,109     55,988     45,725     108,097     88,630  
Amortization of note discounts and issuance costs 1,417     1,422     1,575     2,839     3,250  
Other, net 5,273     2,917     (327 )   8,190     3,699  
Changes in operating assets and liabilities (657,318 )   (312,329 )   (396,593 )   (969,647 )   (508,613 )
Net cash provided by operating activities 344,637     642,511     307,928     987,148     771,975  
CASH FLOWS FROM INVESTING ACTIVITIES:                  
Capital expenditures and intangible assets (92,072 )   (62,806 )   (62,054 )   (154,878 )   (101,310 )
Net sale (purchase) of available-for-sale securities 168,102     (737,074 )   (662,287 )   (568,972 )   128,191  
Other, net (6,090 )   (1,786 )   (9,988 )   (7,876 )   (10,528 )
Net cash provided by (used for) investing activities 69,940     (801,666 )   (734,329 )   (731,726 )   16,353  
CASH FLOWS FROM FINANCING ACTIVITIES:                  
Principal payments on debt (4,596 )   (19,173 )   (17,987 )   (23,769 )   (46,952 )
Treasury stock purchases (723,297 )   (448,581 )   (1,005,067 )   (1,171,878 )   (1,083,199 )
Dividends paid (187,927 )   (167,129 )   (166,721 )   (355,056 )   (325,589 )
Reissuance of treasury stock related to employee stock purchase plan 41,434         38,447     41,434     38,447  
Proceeds from issuance of common stock 8,108     5,538     632     13,646     4,501  
Other, net 961     (2,140 )       (1,179 )    
Net cash used for financing activities (865,317 )   (631,485 )   (1,150,696 )   (1,496,802 )   (1,412,792 )
Effect of exchange rate changes on cash, cash equivalents, and restricted cash 8,187     4,082     5,055     12,269     862  
Net decrease in cash, cash equivalents, and restricted cash (442,553 )   (786,558 )   (1,572,042 )   (1,229,111 )   (623,602 )
Cash, cash equivalents, and restricted cash at beginning of period 4,382,525     5,169,083     4,861,836     5,169,083     3,913,396  
Cash, cash equivalents, and restricted cash at end of period $ 3,939,972     $ 4,382,525     $ 3,289,794     $ 3,939,972     $ 3,289,794  
                                       

Non-GAAP Financial Summary
(in thousands, except percentages and per share data)
(unaudited)

  Three Months Ended
  December 27,
2020
  September 27,
2020
Revenue $ 3,456,237     $ 3,177,080  
Gross margin $ 1,611,154     $ 1,510,673  
Gross margin as percentage of revenue 46.6 %   47.5 %
Operating expenses $ 563,446     $ 523,086  
Operating income $ 1,047,708     $ 987,587  
Operating income as a percentage of revenue 30.3 %   31.1 %
Net income $ 880,211     $ 835,066  
Net income per diluted share $ 6.03     $ 5.67  
Shares used in per share calculation - diluted 145,910     147,248  
           

Reconciliation of U.S. GAAP Net Income to Non-GAAP Net Income
(in thousands, except per share data)
(unaudited) 

  Three Months Ended
  December 27,
2020
  September 27,
2020
U.S. GAAP net income $ 869,229     $ 823,451  
Pre-tax non-GAAP items:      
Amortization related to intangible assets acquired through certain business combinations - cost of goods sold 1,270     1,270  
Elective deferred compensation ("EDC") related liability valuation increase - cost of goods sold 6,089     3,224  
EDC related liability valuation increase - research and development 10,961     5,803  
Amortization related to intangible assets acquired through certain business combinations - selling, general and administrative 12,357     12,357  
EDC related liability valuation increase - selling, general and administrative 7,307     3,869  
Amortization of note discounts - other expense, net 1,001     1,011  
Gain on EDC related asset - other expense, net (24,207 )   (12,927 )
Net income tax benefit on non-GAAP items (3,796 )   (2,992 )
Non-GAAP net income $ 880,211     $ 835,066  
Non-GAAP net income per diluted share $ 6.03     $ 5.67  
U.S. GAAP net income per diluted share $ 5.96     $ 5.59  
U.S. GAAP and non-GAAP number of shares used for per diluted share calculation 145,910     147,248  
           

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
  December 27,
2020
  September 27,
2020
U.S. GAAP gross margin $ 1,603,795     $ 1,506,179  
Pre-tax non-GAAP items:      
Amortization related to intangible assets acquired through certain business combinations 1,270     1,270  
EDC related liability valuation increase 6,089     3,224  
Non-GAAP gross margin $ 1,611,154     $ 1,510,673  
U.S. GAAP gross margin as a percentage of revenue 46.4 %   47.4 %
Non-GAAP gross margin as a percentage of revenue 46.6 %   47.5 %
U.S. GAAP operating expenses $ 594,071     $ 545,115  
Pre-tax non-GAAP items:      
Amortization related to intangible assets acquired through certain business combinations (12,357 )   (12,357 )
EDC related liability valuation increase (18,268 )   (9,672 )
Non-GAAP operating expenses $ 563,446     $ 523,086  
U.S. GAAP operating income $ 1,009,724     $ 961,064  
Non-GAAP operating income $ 1,047,708     $ 987,587  
U.S. GAAP operating income as percent of revenue 29.2 %   30.2 %
Non-GAAP operating income as a percent of revenue 30.3 %   31.1 %
           

Lam Research Corporation Contacts:

Tina Correia, Investor Relations, phone: 510-572-1615, e-mail: investor.relations@lamresearch.com


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Source: Lam Research Corporation

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