Lam Research Corporation Reports Financial Results for the Quarter Ended September 24, 2017
FREMONT, Calif., Oct. 17, 2017 (GLOBE NEWSWIRE) -- Lam Research Corp. (Nasdaq:LRCX) today announced financial results for the quarter ended September 24, 2017 (the "September 2017 quarter").
Highlights for the September 2017 quarter were as follows:
Shipments of $2.38 billion and revenue of $2.48 billion.U.S. GAAP gross margin of 46.4%, U.S. GAAP operating margin of 28.0%, and U.S. GAAP diluted EPS of $3.21.Non-GAAP gross margin of 47.2%, non-GAAP operating margin of 29.6%, and non-GAAP diluted EPS of $3.46. | Key Financial Data for the Quarters Ended
September 24, 2017 and June 25, 2017
(in thousands, except per-share data, percentages, and basis points) | | | U.S. GAAP | | | September 2017 | | June 2017 | | Change Q/Q | | Shipments | | $ | 2,381,565 | | | $ | 2,542,664 | | | - 6 | % | | Revenue | | $ | 2,478,140 | | | $ | 2,344,907 | | | + 6 | % | | Gross margin as percentage of revenue | | 46.4 | % | | 45.6 | % | | + 80 bps | | Operating margin as percentage of revenue | | 28.0 | % | | 25.9 | % | | + 210 bps | | Diluted EPS | | $ | 3.21 | | | $ | 2.82 | | | + 14 | % | | | Non-GAAP | | | September 2017 | | June 2017 | | Change Q/Q | | Shipments | | $ | 2,381,565 | | | $ | 2,542,664 | | | - 6 | % | | Revenue | | $ | 2,478,140 | | | $ | 2,344,907 | | | + 6 | % | | Gross margin as percentage of revenue | | 47.2 | % | | 46.5 | % | | + 70 bps | | Operating margin as percentage of revenue | | 29.6 | % | | 27.7 | % | | + 190 bps | | Diluted EPS | | $ | 3.46 | | | $ | 3.11 | | | + 11 | % |
U.S. GAAP Financial Results
For the September 2017 quarter, revenue was $2,478 million, gross margin was $1,149 million, or 46.4% of revenue, operating expenses were $456 million, operating margin was 28.0% of revenue, and net income was $591 million, or $3.21 per diluted share on a U.S. GAAP basis. This compares to revenue of $2,345 million, gross margin of $1,069 million, or 45.6% of revenue, operating expenses of $461 million, operating margin of 25.9% of revenue, and net income of $526 million, or $2.82 per diluted share, for the quarter ended June 25, 2017 (the "June 2017 quarter").
Non-GAAP Financial Results
For the September 2017 quarter, non-GAAP gross margin was $1,171 million or 47.2% of revenue, non-GAAP operating expenses were $438 million, non-GAAP operating margin was 29.6% of revenue, and non-GAAP net income was $628 million, or $3.46 per diluted share. This compares to non-GAAP gross margin of $1,090 million or 46.5% of revenue, non-GAAP operating expenses of $440 million, non-GAAP operating margin of 27.7% of revenue, and non-GAAP net income of $566 million, or $3.11 per diluted share for the June 2017 quarter.
"Lam delivered another record quarter for revenue and non-GAAP income in September and our positive momentum continues, with calendar year shipments on track to grow nearly double the rate of 2017 industry growth," said Martin Anstice, Lam Research's President and Chief Executive Officer. "The foundation of silicon in an economy that is increasingly data driven, combined with disciplined investment and more diversified demand drivers, points to sustainable semiconductor industry capital spending. Lam's differentiated products and services are increasingly relevant to the success of our customers, and that remains a core element of our strategic focus. For more than five years, we have consistently reported outperformance and this track record, combined with our commitment to invest in our future with a focus on disruptive technologies and enabling roadmaps, sets the stage for what we see as a very exciting future for the company."
Balance Sheet and Cash Flow Results
Cash and cash equivalents, short-term investments, and restricted cash and investments balances increased slightly to $6.4 billion at the end of the September 2017 quarter compared to $6.3 billion at the end of the June 2017 quarter. Cash flows from operating activities during the September 2017 quarter of $858 million were primarily utilized for approximately $155 million of share repurchases, including net share settlement on employee stock-based compensation; approximately $302 million of principal payments on debt, primarily related to our convertible notes; approximately $73 million of dividends paid to stockholders; approximately $60 million of capital expenditures; and approximately $116 million related to a business acquisition.
Deferred revenue at the end of the September 2017 quarter decreased to $938 million as compared to $966 million at the end of the June 2017 quarter. Deferred profit at the end of the September 2017 quarter decreased to $598 million as compared to $608 million at the end of the June 2017 quarter. 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 estimated future revenue from shipments to Japanese customers was approximately $344 million as of September 24, 2017 and $397 million as of June 25, 2017.
Geographic Distribution
The geographic distribution of shipments and revenue during the September 2017 quarter is shown in the following table:
| Region | Shipments | | Revenue | | Korea | 38 | % | | 38 | % | | Japan | 19 | % | | 20 | % | | Taiwan | 15 | % | | 14 | % | | China | 10 | % | | 14 | % | | United States | 8 | % | | 6 | % | | Southeast Asia | 5 | % | | 5 | % | | Europe | 5 | % | | 3 | % |
Outlook
For the December 2017 quarter, Lam is providing the following guidance:
| U.S. GAAP | | Reconciling
Items | | Non-GAAP | | Shipments | $2.60 Billion | +/- | $100 Million | | — | | $2.60 Billion | +/- | $100 Million | | Revenue | $2.55 Billion | +/- | $100 Million | | — | | $2.55 Billion | +/- | $100 Million | | Gross margin | 46.6% | +/- | 1% | | $ | 23 | | Million | | 47.5% | +/- | 1% | | Operating margin | 28.4% | +/- | 1% | | $ | 41 | | Million | | 30.0% | +/- | 1% | | Net income per diluted share | $3.40 | +/- | $0.12 | | $ | 38 | | Million | | $3.65 | +/- | $0.12 | | Diluted share count | 184 Million | | 2 | | Million | | 182 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, balance sheet valuation adjustments, financing arrangements, other investments, or other significant transactions 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 - amortization related to intangible assets acquired through business combinations, $22 million; business process reengineering, $1 million; totaling $23 million.Operating margin - amortization related to intangible assets acquired through business combinations, $39 million; business process reengineering, $2 million; totaling $41 million.Earnings per share - amortization related to intangible assets acquired though business combinations, $39 million; business process reengineering, $2 million; amortization of note discounts, $4 million; and associated tax benefit for non-GAAP items ($7 million); totaling $38 million.Diluted share count - impact of a note hedge issued contemporaneously with the convertible notes due 2018, 2 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 September 2017 and June 2017 quarters exclude amortization related to intangible assets acquired through business combinations, costs associated with business process reengineering, the amortization of note discounts, tax benefit of non-GAAP items, and income tax benefit on the conclusion of tax matters related to a prior business combination. Additionally, the September 2017 quarter non-GAAP results exclude acquisition costs associated with a business combination.
Management uses non-GAAP gross margin, operating expense, operating income, 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 website at investor.lamresearch.com.
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