KLA-Tencor Reports Fiscal 2019 Third Quarter Results
MILPITAS, Calif., May 6, 2019 /PRNewswire/ -- KLA-Tencor Corporation (NASDAQ: KLAC) today announced operating results for its third quarter of fiscal year 2019, which ended on March 31, 2019, and reported GAAP net income attributable to KLA-Tencor of $193 million and GAAP earnings per diluted share attributable to KLA-Tencor of $1.23 on revenues of $1,097 million.
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"KLA delivered strong results for the March quarter, finishing at the upper end or above the range of guidance for revenue, and GAAP and non-GAAP EPS," commented Rick Wallace, president and CEO of KLA. "We achieved these results despite the challenging near-term demand environment, showcasing the resiliency of KLA's business model and the compelling value of our strategies focused on revenue diversification and operations excellence."
"On February 20, we closed the merger with Orbotech, expanding our reach in the electronics value chain, opening $2 billion of new market opportunity to KLA and enhancing our ability to serve new and existing customers who are exposed to fast-growing end markets, such as 5G infrastructure, smart mobile and automotive," continued Mr. Wallace. "Looking forward, we see extraordinary potential with this combination, including new opportunities for enhanced product offerings and meaningful cost synergies expected within the first 12-24 months."
GAAP Results Q3 FY 2019 Q2 FY 2019 Q3 FY 2018 Revenues $1,097 million $1,120 million $1,021 million --- --- Net Income Attributable to KLA-Tencor $193 million $369 million $307 million --- Earnings per Diluted Share Attributable to KLA- $1.23 $2.42 $1.95 Tencor --- Non-GAAP Results Q3 FY 2019 Q2 FY 2019 Q3 FY 2018 Net Income Attributable to KLA-Tencor $283 million $372 million $318 million --- Earnings per Diluted Share Attributable to KLA- $1.80 $2.44 $2.02 Tencor ---
Effective on the first day of fiscal 2019, the Company adopted Accounting Standards Update 2014-09, Revenue from Contracts with Customers ("ASC 606"). Prior periods were not retrospectively restated, and accordingly, the condensed consolidated unaudited balance sheet as of June 30, 2018, and the condensed consolidated unaudited statements of operations for the three and nine months ended March 31, 2018 and cash flows for the three months ended March 31, 2018 were prepared using accounting standards that were different than those in effect for the three and nine months ended March 31, 2019.
A reconciliation between GAAP operating results and non-GAAP operating results is provided following the financial statements included in this release. Non-GAAP results include the impact of recurring stock-based compensation, but exclude the impact of acquisitions or pending acquisitions, restructuring, severance, merger and other related charges and certain discrete tax items. KLA will discuss the results for its fiscal year 2019 third quarter, along with its outlook, on a conference call today beginning at 2:00 p.m. Pacific Time. A webcast of the call will be available at: www.kla.com.
About KLA:
KLA-Tencor Corporation (aka "KLA Corporation" or "KLA") develops industry-leading equipment and services that enable innovation throughout the electronics industry. We provide advanced process control and process-enabling solutions for manufacturing wafers and reticles, integrated circuits, packaging, printed circuit boards and flat panel displays. In close collaboration with leading customers across the globe, our expert teams of physicists, engineers, data scientists and problem-solvers design solutions that move the world forward. Additional information may be found at https://www.kla-tencor.com/ (KLAC-F).
Use of Non-GAAP Financial Information:
The non-GAAP and supplemental information provided in this press release is a supplement to, and not a substitute for, KLA's financial results presented in accordance with United States GAAP.
To supplement KLA's condensed consolidated financial statements presented in accordance with GAAP, the company provides certain non-GAAP financial information, which is adjusted from results based on GAAP to exclude certain costs and expenses (benefits), as well as other supplemental information. The non-GAAP and supplemental information is provided to enhance the user's overall understanding of KLA's operating performance and its prospects in the future. Specifically, KLA believes that the non-GAAP information provides useful measures to both management and investors regarding financial and business trends relating to KLA's financial performance by excluding certain costs and expenses (benefits) that the company believes are not indicative of its core operating results. The non-GAAP information is among the budgeting and planning tools that management uses for future forecasting. However, because there are no standardized or generally accepted definitions for most non-GAAP financial metrics, definitions of non-GAAP financial metrics (for example, determining which costs and expenses (benefits) to exclude when calculating such a metric) are inherently subject to significant discretion. As a result, non-GAAP financial metrics may be defined very differently from company to company, or even from period to period within the same company, which can potentially limit the usefulness of such information to an investor. The presentation of non-GAAP and supplemental information is not meant to be considered in isolation or as a substitute for results prepared and presented in accordance with United States GAAP.
KLA-Tencor Corporation Condensed Consolidated Unaudited Balance Sheets (In thousands) March 31, 2019 June 30, 2018 --- ASSETS Cash, cash equivalents and marketable securities $ 1,897,268 $ 2,880,318 Accounts receivable, net 958,021 651,678 Inventories 1,317,260 931,845 Other current assets 270,079 85,159 Land, property and equipment, net 411,852 286,306 Goodwill 2,172,902 354,698 Deferred income taxes, non-current 205,820 193,200 Purchased intangible assets, net 1,694,313 19,333 Other non-current assets 260,090 236,082 Total assets $ 9,187,605 $ 5,638,619 LIABILITIES, NON-CONTROLLING INTEREST AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 206,248 $ 169,354 Deferred system revenue 228,745 Deferred service revenue 182,119 69,255 Deferred system profit 279,581 Current portion of long-term debt 249,997 Other current liabilities 833,747 696,080 Total current liabilities 1,700,856 1,214,270 Non-current liabilities: Long-term debt 3,172,649 2,237,402 Deferred tax Liability 762,303 1,197 Deferred service revenue 90,610 71,997 Other non-current liabilities 575,599 493,242 Total liabilities 6,302,017 4,018,108 Stockholders' equity: Common stock and capital in excess of par value 1,989,914 617,999 Retained earnings 928,086 1,056,445 Accumulated other comprehensive income (loss) (68,907) (53,933) Total KLA-Tencor stockholders' equity 2,849,093 1,620,511 Non-controlling interest in consolidated subsidiary 36,495 Total stockholders' equity 2,885,588 1,620,511 Total liabilities and stockholders' equity $ 9,187,605 $ 5,638,619
KLA-Tencor Corporation Condensed Consolidated Unaudited Statements of Operations Three months ended March 31, Nine months ended March 31, (In thousands, except per share amounts) 2019 2018 2019 2018 --- --- Revenues: Product $ 793,224 $ 797,797 $ 2,474,652 $ 2,320,171 Service 304,087 223,497 835,817 646,526 Total revenues 1,097,311 1,021,294 3,310,469 2,966,697 Costs and expenses: Costs of revenues 486,945 368,356 1,276,592 1,068,475 Research and development 184,887 153,239 504,320 456,626 Selling, general and administrative 182,184 113,237 409,084 325,934 Interest expense and other, net 21,905 20,479 55,552 66,220 Income before income taxes 221,390 365,983 1,064,921 1,049,442 Provision for income taxes 28,745 59,102 107,232 595,944 Net income 192,645 306,881 957,689 453,498 Less: Net loss attributable to non-controlling interest (83) (83) Net income attributable to KLA-Tencor $ 192,728 $ 306,881 $ 957,772 $ 453,498 Net income per share attributable to KLA-Tencor: Basic $ 1.23 $ 1.96 $ 6.20 $ 2.90 Diluted $ 1.23 $ 1.95 $ 6.17 $ 2.88 Weighted-average number of shares: Basic 156,349 156,221 154,561 156,547 Diluted 157,182 157,201 155,310 157,539
KLA-Tencor Corporation Condensed Consolidated Unaudited Statements of Cash Flow Three months ended March 31, (In thousands) 2019 2018 --- --- Cash flows from operating activities: Net income $ 192,645 $ 306,881 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 73,445 16,283 Loss (gain) on unrealized foreign exchange and other 73 (338) Share of net earnings of equity method investee - Stock-based compensation expense 34,193 16,210 Changes in assets and liabilities, net of assets acquired and liabilities assumed in business acquisitions: Accounts receivable (72,796) 91,370 Inventories (1,893) (60,487) Other assets (3,068) (66,014) Accounts payable (590) 19,183 Deferred system revenue 32,105 Deferred service revenue (15,371) Deferred system profit - 9,968 Other liabilities (75,149) 19,551 Net cash provided by operating activities 163,594 352,607 Cash flows from investing activities: Acquisition of non-marketable securities (630) Businesses acquisitions, net of cash acquired (1,806,496) Capital expenditures (25,956) (14,994) Purchases of available-for-sale securities - (112,661) Proceeds from sale of available-for-sale securities 40,920 58,429 Proceeds from maturity of available-for-sale securities 60,298 97,809 Purchases of trading securities (30,328) (34,370) Proceeds from sale of trading securities 27,289 31,681 Net cash (used in) provided by investing activities (1,734,903) 25,894 Cash flows from financing activities: Proceeds from issuance of debt, net of issuance costs 1,186,263 Proceeds from revolving credit facility, net of debt issuance costs 900,000 Repayment of debt (902,474) (25,000) Issuance of common stock - (8) Tax withholding payments related to equity awards (381) (428) Common stock repurchases (200,029) (84,724) Payment of contingent consideration payable (513) Payment of dividends to stockholders (113,581) (92,128) Net cash provided by (used in) financing activities 869,285 (202,288) Effect of exchange rate changes on cash and cash equivalents 205 6,075 Net (decrease) increase in cash and cash equivalents (701,819) 182,288 Cash and cash equivalents at beginning of period 1,793,982 1,073,394 Cash and cash equivalents at end of period $ 1,092,163 $ 1,255,682 Supplemental cash flow disclosures: Income taxes paid $ 51,885 $ 74,314 Interest paid $ 3,856 $ 2,330 Non-cash activities: Issuance of common stock for the acquisition of Orbotech Ltd. - financing activities $ 1,330,786 $ Contingent consideration payable - financing activities $ 6,740 $ Dividends payable - financing activities $ 6,494 $ 8,408 Unsettled common stock repurchase - financing activities $ 5,988 $ Accrued debt issuance costs - financing activities $ 2,530 $ Accrued purchase of land, property and equipment - investing activities $ 6,370 $ 9,728
KLA-Tencor Corporation Condensed Consolidated Unaudited Supplemental Information (In thousands, except per share amounts) Reconciliation of GAAP Net Income to Non-GAAP Net Income --- Three months ended Nine months ended March 31, Dec. 31, March 31, March 31, March 31, 2019 2018 2018 2019 2018 GAAP net income attributable to KLA-Tencor $ 192,728 $ 369,100 $ 306,881 $ 957,772 $ 453,498 Adjustments to reconcile GAAP net income to non- GAAP net income: --- Acquisition-related charges a 103,755 4,281 7,413 113,587 10,608 Merger-related charges b 3,015 Income tax effect of non-GAAP adjustments c (21,127) (276) (343) (21,713) (2,407) Discrete tax items d 7,482 (765) 4,184 (10,389) 446,078 Non-GAAP net income attributable to KLA-Tencor $ 282,838 $ 372,340 $ 318,135 $ 1,039,257 $ 910,792 GAAP net income (loss) per diluted share $ 1.23 $ 2.42 $ 1.95 $ 6.17 $ 2.88 attributable to KLA-Tencor Non-GAAP net income per diluted share attributable $ 1.80 $ 2.44 $ 2.02 $ 6.69 $ 5.78 to KLA-Tencor Shares used in diluted shares calculation 157,182 152,648 157,201 155,310 157,539
Pre-tax impact of GAAP to non-GAAP adjustments included in Condensed Consolidated Unaudited Statements of Operations --- Acquisition- related charges Three months ended March 31, 2019 --- Costs of revenues $ 47,659 Research and development 3,328 Selling, general and administrative 52,768 Total in three months ended March 31, 2019 $ 103,755 Three months ended Dec. 31, 2018 --- Costs of revenues $ 967 Selling, general and administrative 3,314 Total in three months ended December 31, 2018 $ 4,281 Three months ended March 31, 2018 --- Costs of revenues $ 1,122 Selling, general and administrative 6,291 Total in three months ended March 31, 2018 $ 7,413
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SOURCE KLA-Tencor Corporation