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Lam Research Corporation Reports Financial Results for the Quarter Ended March 27, 2022
Source: Nasdaq GlobeNewswire / 20 Apr 2022 16:05:01 America/New_York
FREMONT, Calif., April 20, 2022 (GLOBE NEWSWIRE) -- Lam Research Corporation (the "Company," "Lam," "Lam Research") today announced financial results for the quarter ended March 27, 2022 (the “March 2022 quarter”).
Highlights for the March 2022 quarter were as follows:
- Revenue of $4.06 billion.
- U.S. GAAP gross margin of 44.7%, U.S. GAAP operating income as a percentage of revenue of 29.4%, and U.S. GAAP diluted EPS of $7.30.
- Non-GAAP gross margin of 44.7%, non-GAAP operating income as a percentage of revenue of 29.4%, and non-GAAP diluted EPS of $7.40.
Key Financial Data for the Quarters Ended
March 27, 2022 and December 26, 2021
(in thousands, except per-share data, percentages, and basis points)U.S. GAAP March 2022 December 2021 Change Q/Q Revenue $ 4,060,416 $ 4,226,604 - 4 % Gross margin as percentage of revenue 44.7 % 46.8 % - 210 bps Operating income as percentage of revenue 29.4 % 31.7 % - 230 bps Diluted EPS $ 7.30 $ 8.44 - 14 % Non-GAAP March 2022 December 2021 Change Q/Q Revenue $ 4,060,416 $ 4,226,604 - 4 % Gross margin as percentage of revenue 44.7 % 46.8 % - 210 bps Operating income as percentage of revenue 29.4 % 32.0 % - 260 bps Diluted EPS $ 7.40 $ 8.53 - 13 % U.S. GAAP Financial Results
For the March 2022 quarter, revenue was $4,060 million, gross margin was $1,817 million, or 44.7% of revenue, operating expenses were $625 million, operating income was 29.4% of revenue, and net income was $1,022 million, or $7.30 per diluted share on a U.S. GAAP basis. This compares to revenue of $4,227 million, gross margin of $1,978 million, or 46.8% of revenue, operating expenses of $640 million, operating income of 31.7% of revenue, and net income of $1,195 million, or $8.44 per diluted share, for the quarter ended December 26, 2021 (the “December 2021 quarter”).
Non-GAAP Financial Results
For the March 2022 quarter, non-GAAP gross margin was $1,815 million, or 44.7% of revenue, non-GAAP operating expenses were $621 million, non-GAAP operating income was 29.4% of revenue, and non-GAAP net income was $1,036 million, or $7.40 per diluted share. This compares to non-GAAP gross margin of $1,979 million, or 46.8% of revenue, non-GAAP operating expenses of $627 million, non-GAAP operating income of 32.0% of revenue, and non-GAAP net income of $1,207 million, or $8.53 per diluted share, for the December 2021 quarter.
“In an extraordinarily difficult supply environment, Lam reported March quarter results within guided ranges,” said Tim Archer, Lam Research’s President and Chief Executive Officer. “We are focused on resolving our supply issues as quickly as possible to support strong customer demand. We remain confident in the secular drivers of wafer fabrication equipment investment as well as Lam's leadership position and expect to return to solid growth as industry constraints ease.”
Balance Sheet and Cash Flow Results
Cash and cash equivalents, short-term investments, and restricted cash and investments balances decreased to $4.6 billion at the end of the March 2022 quarter compared to $5.6 billion at the end of the December 2021 quarter. This decrease was primarily the result of $1.3 billion of share repurchases, including net share settlement of employee stock-based compensation; $211 million of dividends paid to stockholders; and $145 million of capital expenditures, partially offset by $758 million of cash generated from operating activities.
Deferred revenue at the end of the March 2022 quarter increased to $2,069 million compared to $1,458 million as of the end of the December 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 $263 million as of March 27, 2022 and $328 million as of December 26, 2021.
Revenue
The geographic distribution of revenue during the March 2022 quarter is shown in the following table:
Region Revenue China 31 % Korea 24 % Taiwan 16 % Japan 9 % Southeast Asia 9 % United States 8 % Europe 3 % The following table presents revenue disaggregated between system and customer support-related revenue:
Three Months Ended March 27,
2022December 26,
2021March 28,
2021(In thousands) System revenue $ 2,650,842 $ 2,740,173 $ 2,545,306 Customer support-related revenue and other 1,409,574 1,486,431 1,302,348 $ 4,060,416 $ 4,226,604 $ 3,847,654 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 26, 2022, Lam is providing the following guidance:
U.S. GAAP Reconciling
ItemsNon-GAAP Revenue $4.20 Billion +/- $300 Million — $4.20 Billion +/- $300 Million Gross margin as a percentage of revenue 44.5% +/- 1% $ 1 Million 44.5% +/- 1% Operating income as a percentage of revenue 29.2% +/- 1% $ 11 Million 29.5% +/- 1% Net income per diluted share $7.18 +/- $0.75 $ 10 Million $7.25 +/- $0.75 Diluted share count 139 Million — 139 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, $11 million.
- Net income per diluted share - amortization related to intangible assets acquired though business combinations, $11 million; amortization of note discounts, $1 million; and associated tax benefit for non-GAAP items ($2 million); totaling $10 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 2022 and December 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 net 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; customer and industry investment and demand for wafer fabrication equipment and for our products; supply chain conditions and other industry constraints, our efforts to address them and the timing for doing so, and the impacts on our results; and our position in the industry and prospects for growth. Some factors that may affect these forward-looking statements include: supply chain disruptions have limited and are expected to continue to limit our ability to meet demand for our products; supply chain cost increases and other inflationary pressures have impacted and are expected to continue to impact our profitability; 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 December 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.
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LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data and percentages)
(unaudited)Three Months Ended Nine Months Ended March 27,
2022December 26,
2021March 28,
2021March 27,
2022March 28,
2021Revenue $ 4,060,416 $ 4,226,604 $ 3,847,654 $ 12,591,485 $ 10,480,971 Cost of goods sold 2,243,791 2,248,688 2,067,523 6,820,190 5,590,866 Gross margin 1,816,625 1,977,916 1,780,131 5,771,295 4,890,105 Gross margin as a percent of revenue 44.7 % 46.8 % 46.3 % 45.8 % 46.7 % Research and development 407,120 403,644 381,120 1,193,091 1,111,659 Selling, general and administrative 217,408 236,133 203,703 675,735 612,350 Total operating expenses 624,528 639,777 584,823 1,868,826 1,724,009 Operating income 1,192,097 1,338,139 1,195,308 3,902,469 3,166,096 Operating income as a percent of revenue 29.4 % 31.7 % 31.1 % 31.0 % 30.2 % Other income (expense), net (57,402 ) 17,999 (35,320 ) (68,260 ) (104,053 ) Income before income taxes 1,134,695 1,356,138 1,159,988 3,834,209 3,062,043 Income tax expense (112,917 ) (161,308 ) (88,867 ) (437,857 ) (298,242 ) Net income $ 1,021,778 $ 1,194,830 $ 1,071,121 $ 3,396,352 $ 2,763,801 Net income per share: Basic $ 7.34 $ 8.50 $ 7.51 $ 24.17 $ 19.20 Diluted $ 7.30 $ 8.44 $ 7.41 $ 24.02 $ 18.94 Number of shares used in per share calculations: Basic 139,229 140,630 142,676 140,534 143,925 Diluted 140,057 141,530 144,609 141,400 145,923 Cash dividend declared per common share $ 1.50 $ 1.50 $ 1.30 $ 4.50 $ 3.90 LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)March 27,
2022December 26,
2021June 27,
2021(unaudited) (unaudited) (1) ASSETS Cash and cash equivalents $ 4,194,719 $ 5,086,544 $ 4,418,263 Investments 160,072 242,590 1,310,872 Accounts receivable, net 3,702,320 3,402,840 3,026,430 Inventories 3,479,332 3,074,177 2,689,294 Prepaid expenses and other current assets 351,658 296,711 207,528 Total current assets 11,888,101 12,102,862 11,652,387 Property and equipment, net 1,561,875 1,503,385 1,303,479 Restricted cash and investments 251,036 250,863 252,487 Goodwill and intangible assets 1,627,035 1,601,755 1,622,499 Other assets 1,260,984 1,226,563 1,061,300 Total assets $ 16,589,031 $ 16,685,428 $ 15,892,152 LIABILITIES AND STOCKHOLDERS’ EQUITY Current portion of long-term debt and finance lease obligations $ 7,689 $ 6,201 $ 11,349 Other current liabilities 4,187,052 3,856,950 3,516,518 Total current liabilities 4,194,741 3,863,151 3,527,867 Long-term debt and finance lease obligations 5,000,657 4,988,121 4,990,333 Income taxes payable 916,668 891,545 948,037 Other long-term liabilities 450,475 466,830 398,727 Total liabilities 10,562,541 10,209,647 9,864,964 Stockholders’ equity (2) 6,026,490 6,475,781 6,027,188 Total liabilities and stockholders’ equity $ 16,589,031 $ 16,685,428 $ 15,892,152 (1 ) Derived from audited financial statements. (2 ) Common shares issued and outstanding were 138,707 as of March 27, 2022, 140,275 as of December 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 Nine Months Ended March 27,
2022December 26,
2021March 28,
2021March 27,
2022March 28,
2021CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,021,778 $ 1,194,830 $ 1,071,121 $ 3,396,352 $ 2,763,801 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 84,228 81,705 79,453 245,807 228,754 Deferred income taxes (56,878 ) (13,550 ) (1,136 ) (83,451 ) (5,448 ) Equity-based compensation expense 68,543 62,834 55,746 189,476 163,843 Other, net (3,121 ) (66,514 ) (635 ) (78,325 ) 10,394 Changes in operating assets and liabilities (356,840 ) 181,201 (39,469 ) (1,014,119 ) (1,009,116 ) Net cash provided by operating activities 757,710 1,440,506 1,165,080 2,655,740 2,152,228 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures and intangible assets (145,368 ) (138,493 ) (89,596 ) (420,288 ) (244,474 ) Net sale (purchase) of available-for-sale securities 79,184 325,171 233,529 1,142,398 (335,443 ) Other, net (28,380 ) (595 ) (27,997 ) (33,898 ) (35,873 ) Net cash (used for) provided by investing activities (94,564 ) 186,083 115,936 688,212 (615,790 ) CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on debt (1,821 ) (1,698 ) (16,245 ) (9,857 ) (40,014 ) Treasury stock purchases (1,338,006 ) (414,815 ) (1,094,571 ) (2,989,574 ) (2,266,449 ) Dividends paid (210,587 ) (211,216 ) (186,551 ) (607,234 ) (541,607 ) Reissuance of treasury stock related to employee stock purchase plan — 46,380 — 46,380 41,434 Proceeds from issuance of common stock 492 3,451 9,626 4,685 23,272 Other, net 214 (205 ) (665 ) 197 (1,844 ) Net cash used for financing activities (1,549,708 ) (578,103 ) (1,288,406 ) (3,555,403 ) (2,785,208 ) Effect of exchange rate changes on cash, cash equivalents, and restricted cash (5,090 ) (4,678 ) (5,756 ) (13,544 ) 6,513 Net (decrease) increase in cash, cash equivalents, and restricted cash (891,652 ) 1,043,808 (13,146 ) (224,995 ) (1,242,257 ) Cash, cash equivalents, and restricted cash at beginning of period 5,337,407 4,293,599 3,939,972 4,670,750 5,169,083 Cash, cash equivalents, and restricted cash at end of period $ 4,445,755 $ 5,337,407 $ 3,926,826 $ 4,445,755 $ 3,926,826 Non-GAAP Financial Summary
(in thousands, except percentages and per share data)
(unaudited)Three Months Ended March 27,
2022December 26,
2021Revenue $ 4,060,416 $ 4,226,604 Gross margin $ 1,814,910 $ 1,979,000 Gross margin as percentage of revenue 44.7 % 46.8 % Operating expenses $ 620,636 $ 627,445 Operating income $ 1,194,274 $ 1,351,555 Operating income as a percentage of revenue 29.4 % 32.0 % Net income $ 1,036,359 $ 1,207,340 Net income per diluted share $ 7.40 $ 8.53 Shares used in per share calculation - diluted 140,057 141,530 Reconciliation of U.S. GAAP Net Income to Non-GAAP Net Income
(in thousands, except per share data)
(unaudited)Three Months Ended March 27,
2022December 26,
2021U.S. GAAP net income $ 1,021,778 $ 1,194,830 Pre-tax non-GAAP items: Amortization related to intangible assets acquired through certain business combinations - cost of goods sold 1,153 1,092 Elective deferred compensation ("EDC") related liability valuation decrease - cost of goods sold (2,868 ) (8 ) EDC related liability valuation decrease - research and development (5,161 ) (15 ) Amortization related to intangible assets acquired through certain business combinations - selling, general and administrative 12,494 12,357 EDC related liability valuation decrease - selling, general and administrative (3,441 ) (10 ) Amortization of note discounts - other income (expense), net 695 689 Loss on EDC related asset - other income (expense), net 13,118 56 Net income tax benefit on non-GAAP items (1,409 ) (1,651 ) Non-GAAP net income $ 1,036,359 $ 1,207,340 Non-GAAP net income per diluted share $ 7.40 $ 8.53 U.S. GAAP net income per diluted share $ 7.30 $ 8.44 U.S. GAAP and non-GAAP number of shares used for per diluted share calculation 140,057 141,530 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 27,
2022December 26,
2021U.S. GAAP gross margin $ 1,816,625 $ 1,977,916 Pre-tax non-GAAP items: Amortization related to intangible assets acquired through certain business combinations 1,153 1,092 EDC related liability valuation decrease (2,868 ) (8 ) Non-GAAP gross margin $ 1,814,910 $ 1,979,000 U.S. GAAP gross margin as a percentage of revenue 44.7 % 46.8 % Non-GAAP gross margin as a percentage of revenue 44.7 % 46.8 % U.S. GAAP operating expenses $ 624,528 $ 639,777 Pre-tax non-GAAP items: Amortization related to intangible assets acquired through certain business combinations (12,494 ) (12,357 ) EDC related liability valuation decrease 8,602 25 Non-GAAP operating expenses $ 620,636 $ 627,445 U.S. GAAP operating income $ 1,192,097 $ 1,338,139 Non-GAAP operating income $ 1,194,274 $ 1,351,555 U.S. GAAP operating income as percent of revenue 29.4 % 31.7 % Non-GAAP operating income as a percent of revenue 29.4 % 32.0 % Lam Research Corporation Contacts:
Tina Correia, Investor Relations, phone: 510-572-1615, e-mail: investor.relations@lamresearch.com
Source: Lam Research Corporation###
