Lam Research Corporation Reports Financial Results for the Quarter Ended December 26, 2021

FREMONT, Calif., Jan. 26, 2022 (GLOBE NEWSWIRE) -- Lam Research Corporation (the "Company," "Lam," "Lam Research") today announced financial results for the quarter ended December 26, 2021 (the “December 2021 quarter”).

Highlights for the December 2021 quarter were as follows:

  • Revenue of $4.23 billion.
  • U.S. GAAP gross margin of 46.8%, U.S. GAAP operating income as a percentage of revenue of 31.7%, and U.S. GAAP diluted EPS of $8.44.
  • Non-GAAP gross margin of 46.8%, non-GAAP operating income as a percentage of revenue of 32.0%, and non-GAAP diluted EPS of $8.53.

Key Financial Data for the Quarters Ended
December 26, 2021 and September 26, 2021 
(in thousands, except per-share data, percentages, and basis points) 

U.S. GAAP
    December 2021   September 2021   Change Q/Q
Revenue   $ 4,226,604     $ 4,304,465     - 2 %
Gross margin as percentage of revenue     46.8 %     45.9 %   + 90 bps
Operating income as percentage of revenue     31.7 %     31.9 %   - 20 bps
Diluted EPS   $ 8.44     $ 8.27     + 2 %
             
Non-GAAP
    December 2021   September 2021   Change Q/Q
Revenue   $ 4,226,604     $ 4,304,465     - 2 %
Gross margin as percentage of revenue     46.8 %     46.0 %   + 80 bps
Operating income as percentage of revenue     32.0 %     32.4 %   - 40 bps
Diluted EPS   $ 8.53     $ 8.36     + 2 %

U.S. GAAP Financial Results

For the December 2021 quarter, revenue was $4,227 million, gross margin was $1,978 million, or 46.8% of revenue, operating expenses were $640 million, operating income was 31.7% of revenue, and net income was $1,195 million, or $8.44 per diluted share on a U.S. GAAP basis. This compares to revenue of $4,304 million, gross margin of $1,977 million, or 45.9% of revenue, operating expenses of $605 million, operating income of 31.9% of revenue, and net income of $1,180 million, or $8.27 per diluted share, for the quarter ended September 26, 2021 (the “September 2021 quarter”).

Non-GAAP Financial Results

For the December 2021 quarter, non-GAAP gross margin was $1,979 million, or 46.8% of revenue, non-GAAP operating expenses were $627 million, non-GAAP operating income was 32.0% of revenue, and non-GAAP net income was $1,207 million, or $8.53 per diluted share. This compares to non-GAAP gross margin of $1,980 million, or 46.0% of revenue, non-GAAP operating expenses of $586 million, non-GAAP operating income of 32.4% of revenue, and non-GAAP net income of $1,192 million, or $8.36 per diluted share, for the September 2021 quarter.

“Lam delivered record calendar year 2021 financial performance within a robust wafer fabrication spending environment” said Tim Archer, Lam Research’s President and Chief Executive Officer. “While supply chain conditions worsened in late December and are causing near-term impacts to our results, we expect wafer fabrication equipment investments to again increase in calendar year 2022, leading to another strong growth year for Lam.”

Balance Sheet and Cash Flow Results

Cash and cash equivalents, short-term investments, and restricted cash and investments balances increased to $5.6 billion at the end of the December 2021 quarter compared to $4.9 billion at the end of the September 2021 quarter. This increase was primarily the result of $1.4 billion of cash generated from operating activities, partially offset by $415 million of share repurchases, including net share settlement of employee stock-based compensation; $211 million of dividends paid to stockholders; and $138 million of capital expenditures.

Deferred revenue at the end of the December 2021 quarter increased to $1,458 million compared to $1,110 million as of the end of the September 2021 quarter. Lam's deferred revenue balance does not include shipments to customers in Japan, to whom title does not transfer until customer acceptances. Shipments to customers in Japan are classified as inventory at cost until the time of acceptance. The estimated future revenue from shipments to customers in Japan was approximately $328 million as of December 26, 2021 and $331 million as of September 26, 2021.

Revenue

The geographic distribution of revenue during the December 2021 quarter is shown in the following table:

Region Revenue
China 26%
Korea 25%
Taiwan 18%
Japan 12%
Southeast Asia 9%
United States 6%
Europe 4%

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

  Three Months Ended
  December 26,
2021
  September 26,
2021
  December 27,
2020
   
  (In thousands)
System revenue $ 2,740,173   $ 2,924,883   $ 2,307,421
Customer support-related revenue and other   1,486,431     1,379,582     1,148,816
  $ 4,226,604   $ 4,304,465   $ 3,456,237
                 

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 27, 2022, Lam is providing the following guidance:

  U.S. GAAP   Reconciling
Items
  Non-GAAP
Revenue $4.25 Billion +/- $300 Million       $4.25 Billion +/- $300 Million
Gross margin as a percentage of revenue   45.0%   +/-   1%     $ 1 Million     45.0%   +/-   1%  
Operating income as a percentage of revenue   29.2%   +/-   1%     $ 13 Million     29.5%   +/-   1%  
Net income per diluted share $7.36   +/- $0.75     $ 12 Million   $7.45   +/- $0.75  
Diluted share count 141 Million       141 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 or recognized 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 2021 and September 2021 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 margin, operating income and net income; demand and spending for wafer fabrication equipment; supply chain conditions and their impacts on our results; and our prospects for growth. Some factors that may affect these forward-looking statements include: supply chain disruptions and/or manufacturing capacity constraints have limited and are expected to continue to limit our ability to manufacture and sell our products; trade regulations, export controls, trade disputes, and other geopolitical tensions may inhibit our ability to sell our products; 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; 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; 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 27, 2021 and our quarterly report on Form 10-Q for the fiscal quarter ended September 26, 2021. 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. Lam's equipment and services allow customers to build smaller and better performing devices. In fact, today, nearly every advanced chip is built with Lam technology. We combine superior systems engineering, technology leadership, and a strong values-based culture, with an unwavering commitment to our customers. 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 26,
2021
  September 26,
2021
  December 27,
2020
  December 26,
2021
  December 27,
2020
Revenue $ 4,226,604     $ 4,304,465     $ 3,456,237     $ 8,531,069     $ 6,633,317  
Cost of goods sold   2,248,688       2,327,711       1,852,442       4,576,399       3,523,343  
Gross margin   1,977,916       1,976,754       1,603,795       3,954,670       3,109,974  
Gross margin as a percent of revenue   46.8 %     45.9 %     46.4 %     46.4 %     46.9 %
Research and development   403,644       382,327       375,172       785,971       730,539  
Selling, general and administrative   236,133       222,194       218,899       458,327       408,647  
Total operating expenses   639,777       604,521       594,071       1,244,298       1,139,186  
Operating income   1,338,139       1,372,233       1,009,724       2,710,372       1,970,788  
Operating income as a percent of revenue   31.7 %     31.9 %     29.2 %     31.8 %     29.7 %
Other income (expense), net   17,999       (28,857 )     (29,941 )     (10,858 )     (68,733 )
Income before income taxes   1,356,138       1,343,376       979,783       2,699,514       1,902,055  
Income tax expense   (161,308 )     (163,632 )     (110,554 )     (324,940 )     (209,375 )
Net income $ 1,194,830     $ 1,179,744     $ 869,229     $ 2,374,574     $ 1,692,680  
Net income per share:                  
Basic $ 8.50     $ 8.32     $ 6.04     $ 16.82     $ 11.71  
Diluted $ 8.44     $ 8.27     $ 5.96     $ 16.71     $ 11.55  
Number of shares used in per share calculations:                  
Basic   140,630       141,743       143,830       141,187       144,549  
Diluted   141,530       142,612       145,910       142,071       146,579  
Cash dividend declared per common share $ 1.50     $ 1.50     $ 1.30     $ 3.00     $ 2.60  
                                       

 LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

  December 26,
2021
  September 26,
2021
  June 27,
2021
  (unaudited)   (unaudited)     (1)  
ASSETS          
Cash and cash equivalents $ 5,086,544   $ 4,042,151   $ 4,418,263  
Investments   242,590     569,472     1,310,872  
Accounts receivable, net   3,402,840     3,397,180     3,026,430  
Inventories   3,074,177     2,872,141     2,689,294  
Prepaid expenses and other current assets   296,711     263,738     207,528  
Total current assets   12,102,862     11,144,682     11,652,387  
Property and equipment, net   1,503,385     1,372,533     1,303,479  
Restricted cash and investments   250,863     251,448     252,487  
Goodwill and intangible assets   1,601,755     1,614,959     1,622,499  
Other assets   1,226,563     1,181,930     1,061,300  
Total assets $ 16,685,428   $ 15,565,552   $ 15,892,152  
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current portion of long-term debt and finance lease obligations $ 6,201   $ 6,368   $ 11,349  
Other current liabilities   3,856,950     3,402,852     3,516,518  
Total current liabilities   3,863,151     3,409,220     3,527,867  
Long-term debt and finance lease obligations   4,988,121     4,988,964     4,990,333  
Income taxes payable   891,545     881,325     948,037  
Other long-term liabilities   466,830     466,000     398,727  
Total liabilities   10,209,647     9,745,509     9,864,964  
Stockholders’ equity (2)   6,475,781     5,820,043     6,027,188  
Total liabilities and stockholders’ equity $ 16,685,428   $ 15,565,552   $ 15,892,152  
                   


(1)   Derived from audited financial statements.
(2)   Common shares issued and outstanding were 140,275 as of December 26, 2021, 140,811 as of September 26, 2021, and 142,501 as of June 27, 2021.

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

  Three Months Ended   Six Months Ended
  December 26,
2021
  September 26,
2021
  December 27,
2020
  December 26,
2021
  December 27,
2020
CASH FLOWS FROM OPERATING ACTIVITIES:                  
Net income $ 1,194,830     $ 1,179,744     $ 869,229     $ 2,374,574     $ 1,692,680  
Adjustments to reconcile net income to net cash provided by operating activities:                  
Depreciation and amortization   81,705       79,874       76,389       161,579       149,301  
Deferred income taxes   (13,550 )     (13,023 )     (2,462 )     (26,573 )     (4,312 )
Equity-based compensation expense   62,834       58,099       52,109       120,933       108,097  
Other, net   (66,514 )     (8,690 )     6,690       (75,204 )     11,029  
Changes in operating assets and liabilities   181,201       (838,480 )     (657,318 )     (657,279 )     (969,647 )
Net cash provided by operating activities   1,440,506       457,524       344,637       1,898,030       987,148  
CASH FLOWS FROM INVESTING ACTIVITIES:                  
Capital expenditures and intangible assets   (138,493 )     (136,427 )     (92,072 )     (274,920 )     (154,878 )
Net sale (purchase) of available-for-sale securities   325,171       738,043       168,102       1,063,214       (568,972 )
Other, net   (595 )     (4,923 )     (6,090 )     (5,518 )     (7,876 )
Net cash provided by (used for) investing activities   186,083       596,693       69,940       782,776       (731,726 )
CASH FLOWS FROM FINANCING ACTIVITIES:                  
Principal payments on debt   (1,698 )     (6,338 )     (4,596 )     (8,036 )     (23,769 )
Treasury stock purchases   (414,815 )     (1,236,753 )     (723,297 )     (1,651,568 )     (1,171,878 )
Dividends paid   (211,216 )     (185,431 )     (187,927 )     (396,647 )     (355,056 )
Reissuance of treasury stock related to employee stock purchase plan   46,380             41,434       46,380       41,434  
Proceeds from issuance of common stock   3,451       742       8,108       4,193       13,646  
Other, net   (205 )     188       961       (17 )     (1,179 )
Net cash used for financing activities   (578,103 )     (1,427,592 )     (865,317 )     (2,005,695 )     (1,496,802 )
Effect of exchange rate changes on cash, cash equivalents, and restricted cash   (4,678 )     (3,776 )     8,187       (8,454 )     12,269  
Net increase (decrease) in cash, cash equivalents, and restricted cash   1,043,808       (377,151 )     (442,553 )     666,657       (1,229,111 )
Cash, cash equivalents, and restricted cash at beginning of period   4,293,599       4,670,750       4,382,525       4,670,750       5,169,083  
Cash, cash equivalents, and restricted cash at end of period $ 5,337,407     $ 4,293,599     $ 3,939,972     $ 5,337,407     $ 3,939,972  
                                       

                          

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

  Three Months Ended
  December 26,
2021
  September 26,
2021
Revenue $ 4,226,604     $ 4,304,465  
Gross margin $ 1,979,000     $ 1,979,742  
Gross margin as percentage of revenue   46.8 %     46.0 %
Operating expenses $ 627,445     $ 586,477  
Operating income $ 1,351,555     $ 1,393,265  
Operating income as a percentage of revenue   32.0 %     32.4 %
Net income $ 1,207,340     $ 1,191,561  
Net income per diluted share $ 8.53     $ 8.36  
Shares used in per share calculation - diluted   141,530       142,612  

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

  Three Months Ended
  December 26,
2021
  September 26,
2021
U.S. GAAP net income $ 1,194,830     $ 1,179,744  
Pre-tax non-GAAP items:      
Amortization related to intangible assets acquired through certain business combinations - cost of goods sold   1,092       1,092  
Elective deferred compensation ("EDC") related liability valuation (decrease) increase - cost of goods sold   (8 )     1,896  
EDC related liability valuation (decrease) increase - research and development   (15 )     3,412  
Amortization related to intangible assets acquired through certain business combinations - selling, general and administrative   12,357       12,357  
EDC related liability valuation (decrease) increase - selling, general and administrative   (10 )     2,275  
Amortization of note discounts - other income (expense), net   689       683  
Loss (Gain) on EDC related asset - other income (expense), net   56       (7,437 )
Net income tax benefit on non-GAAP items   (1,651 )     (2,461 )
Non-GAAP net income $ 1,207,340     $ 1,191,561  
Non-GAAP net income per diluted share $ 8.53     $ 8.36  
U.S. GAAP net income per diluted share $ 8.44     $ 8.27  
U.S. GAAP and non-GAAP number of shares used for per diluted share calculation   141,530       142,612  
               

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 26,
2021
  September 26,
2021
U.S. GAAP gross margin $ 1,977,916     $ 1,976,754  
Pre-tax non-GAAP items:      
Amortization related to intangible assets acquired through certain business combinations   1,092       1,092  
EDC related liability valuation (decrease) increase   (8 )     1,896  
Non-GAAP gross margin $ 1,979,000     $ 1,979,742  
U.S. GAAP gross margin as a percentage of revenue   46.8 %     45.9 %
Non-GAAP gross margin as a percentage of revenue   46.8 %     46.0 %
U.S. GAAP operating expenses $ 639,777     $ 604,521  
Pre-tax non-GAAP items:      
Amortization related to intangible assets acquired through certain business combinations   (12,357 )     (12,357 )
EDC related liability valuation decrease (increase)   25       (5,687 )
Non-GAAP operating expenses $ 627,445     $ 586,477  
U.S. GAAP operating income $ 1,338,139     $ 1,372,233  
Non-GAAP operating income $ 1,351,555     $ 1,393,265  
U.S. GAAP operating income as percent of revenue   31.7 %     31.9 %
Non-GAAP operating income as a percent of revenue   32.0 %     32.4 %

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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