Press Release

Lam Research Corporation Reports Financial Results for the Quarter Ended March 28, 2021

April 21, 2021

FREMONT, Calif., April 21, 2021 (GLOBE NEWSWIRE) -- 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 2021   December 2020   Change 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 2021   December 2020   Change 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:

Region Revenue
China 32%
Korea 31%
Taiwan 14%
Japan 7%
Southeast Asia 7%
United States 5%
Europe 4%

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

  Three Months Ended   Nine 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 other 1,302,348     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. GAAP   Reconciling Items   Non-GAAP
Revenue $4.0 Billion +/- $250 Million     $4.0 Billion +/- $250 Million
Gross margin as a percentage of revenue 46.5% +/- 1%     $1 Million   46.5% +/- 1%
Operating income as a percentage of revenue 31.7% +/- 1%     $13 Million   32.0% +/- 1%
Net income per diluted share $7.42 +/- $0.50     $12 Million   $7.50 +/- $0.50
Diluted share count 144 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 Ended   Nine 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 sold 2,067,523     1,852,442     1,336,618     5,590,866     3,924,511  
Gross margin 1,780,131     1,603,795     1,167,007     4,890,105     3,328,361  
Gross margin as a percent of revenue 46.3 %   46.4 %   46.6 %   46.7 %   45.9 %
Research and development 381,120     375,172     307,914     1,111,659     913,602  
Selling, general and administrative 203,703     218,899     164,979     612,350     496,679  
Total operating expenses 584,823     594,071     472,893     1,724,009     1,410,281  
Operating income 1,195,308     1,009,724     694,114     3,166,096     1,918,080  
Operating income as a percent of revenue 31.1 %   29.2 %   27.7 %   30.2 %   26.4 %
Other expense, net (35,320 )   (29,941 )   (64,619 )   (104,053 )   (91,271 )
Income before income taxes 1,159,988     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:                  
Basic 142,676     143,830     145,301     143,925     144,654  
Diluted 144,609     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  
Investments 2,116,101     2,355,067     1,795,080  
Accounts receivable, net 2,809,068     2,900,362     2,097,099  
Inventories 2,552,032     2,348,955     1,900,024  
Prepaid expenses and other current assets 171,703     176,403     146,160  
Total current assets 11,322,270     11,467,952     10,853,535  
Property and equipment, net 1,279,836     1,208,285     1,071,499  
Restricted cash and investments 253,460     252,807     253,911  
Goodwill and intangible assets 1,633,254     1,641,168     1,652,968  
Other assets 796,093     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 liabilities 2,786,899     2,758,206     2,322,565  
Total current liabilities 3,612,333     3,591,053     3,162,442  
Long-term debt and finance lease obligations 4,991,613     4,992,496     4,970,848  
Income taxes payable 924,629     902,047     909,709  
Other long-term liabilities 381,505     376,230     332,559  
Total liabilities 9,910,080     9,861,826     9,375,558  
Temporary equity, convertible notes 3,217     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 Ended   Nine 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 amortization 79,453     76,389     67,248     228,754     197,442  
Deferred income taxes (1,136 )   (2,462 )       (5,448 )   74,516  
Equity-based compensation expense 55,746     52,109     47,414     163,843     136,044  
Amortization of note discounts and issuance costs 1,412     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 activities 1,165,080     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 securities 233,529     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 activities 115,936     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 stock 9,626     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 period 3,939,972     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 revenue 46.3 %   46.6 %
Operating expenses $ 566,507     $ 563,446  
Operating income $ 1,216,702     $ 1,047,708  
Operating income as a percentage of revenue 31.6 %   30.3 %
Net income $ 1,083,532     $ 880,211  
Net income per diluted share $ 7.49     $ 6.03  
Shares used in per share calculation - diluted 144,609     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 sold 1,092     1,270  
Elective deferred compensation ("EDC") related liability valuation increase - cost of goods sold 1,986     6,089  
EDC related liability valuation increase - research and development 3,575     10,961  
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 2,384     7,307  
Amortization of note discounts - other expense, net 998     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 calculation 144,609     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 combinations 1,092     1,270  
EDC related liability valuation increase 1,986     6,089  
Non-GAAP gross margin $ 1,783,209     $ 1,611,154  
U.S. GAAP gross margin as a percentage of revenue 46.3 %   46.4 %
Non-GAAP gross margin as a percentage of revenue 46.3 %   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 revenue 31.1 %   29.2 %
Non-GAAP operating income as a percent of revenue 31.6 %   30.3 %
           

Lam Research Corporation Contacts:

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


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Source: Lam Research Corporation

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