KLA Corporation Reports Fiscal 2020 First Quarter Results
MILPITAS, Calif., Oct. 30, 2019 /PRNewswire/ -- KLA Corporation (NASDAQ: KLAC) today announced operating results for its first quarter of fiscal year 2020, which ended on Sept. 30, 2019, and reported GAAP net income attributable to KLA of $347 million and GAAP earnings per diluted share attributable to KLA of $2.16 on revenues of $1,413 million.
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"KLA delivered a strong result in the September quarter, with revenue and GAAP and non-GAAP EPS finishing above the range of guidance, a result of solid execution in what continues to be a challenging overall industry environment," commented Rick Wallace, president and CEO of KLA. "As a global leader in process control and supplier of process-enabling solutions for the data era, KLA is at the forefront of the most important industry trends and technology inflections in the electronics industry. Our performance in the September quarter demonstrates KLA is benefiting from our long-term strategies for growth, technology leadership and operational excellence."
GAAP Results
Q1 FY 2020 Q4 FY 2019 Q1 FY 2019
Revenues
$1,413 million
$1,258 million
$1,093 million
--- ---
Net Income
Attributable
to KLA
$347 million
$218 million
$396 million
---
Earnings per
Diluted Share
Attributable
to KLA $2.16 $1.35 $2.54
---
Non-GAAP Results
Q1 FY 2020 Q4 FY 2019 Q1 FY 2019
---
Net Income
Attributable
to KLA
$398 million
$289 million
$384 million
Earnings per
Diluted Share
Attributable
to KLA $2.48 $1.78 $2.46
---
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 2020 first quarter, along with its outlook, on a conference call today beginning at 2 p.m. PT. A webcast of the call will be available at: www.kla.com.
About KLA:
KLA Corporation, formerly known as KLA-Tencor Corporation, (aka "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 http://www.kla.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 Corporation
Condensed Consolidated
Unaudited Balance Sheets
(In thousands) Sept. 30, 2019 June 30, 2019
---
ASSETS
Cash, cash equivalents and
marketable securities $
1,751,522 $
1,739,385
Accounts receivable, net 1,066,188 990,113
Inventories 1,254,240 1,262,500
Other current assets 283,799 323,077
Land, property and equipment,
net 475,210 448,799
Goodwill 2,263,689 2,211,858
Deferred income taxes, non-
current 216,629 206,141
Purchased intangible assets,
net 1,549,201 1,560,670
Other non-current assets 368,921 265,973
Total assets $
9,229,399 $
9,008,516
LIABILITIES, NON-CONTROLLING
INTEREST AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable $
221,388 $
202,416
Deferred system revenue 277,515 282,348
Deferred service revenue 201,245 206,669
Current portion of long-term
debt 250,000 249,999
Other current liabilities 993,299 827,054
Total current liabilities 1,943,447 1,768,486
Non-current liabilities:
Long-term debt 3,174,130 3,173,383
Deferred tax liabilities 688,170 702,285
Deferred service revenue 101,001 98,772
Other non-current liabilities 643,032 587,897
Total liabilities 6,549,780 6,330,823
Stockholders' equity:
Common stock and capital in
excess of par value 1,999,845 2,017,312
Retained earnings 733,173 714,825
Accumulated other comprehensive
income (loss) (71,855) (73,029)
Total KLA stockholders' equity 2,661,163 2,659,108
Non-controlling interest in
consolidated subsidiary 18,456 18,585
Total stockholders' equity 2,679,619 2,677,693
Total liabilities and
stockholders' equity $
9,229,399 $
9,008,516
KLA Corporation
Condensed Consolidated Unaudited Statements of Operations
Three Months Ended Sept. 30,
(In thousands, except
per share amounts) 2019 2018
--- ---
Revenues:
Product $
1,057,975 $
829,227
Service 355,439 264,033
Total revenues 1,413,414 1,093,260
Costs and expenses:
Costs of revenues 604,241 381,387
Research and
development 210,580 153,530
Selling, general and
administrative 188,345 114,438
Interest expense and
other, net 38,732 16,337
Income before income
taxes 371,516 427,568
Provision for income
taxes 25,120 31,624
Net income 346,396 395,944
Less: Net loss
attributable to non-
controlling interest (129)
Net income
attributable to KLA-
Tencor $
346,525 $
395,944
Net income per share attributable to
KLA-Tencor:
Basic $
2.18 $
2.55
Diluted $
2.16 $
2.54
Weighted-average number of shares:
Basic 158,697 155,221
Diluted 160,131 156,083
KLA Corporation
Condensed Consolidated Unaudited Statements of Cash Flow
Three months ended
Sept. 30,
(In thousands) 2019 2018
--- ---
Cash flows from operating activities:
Net income $
346,396 $
395,944
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 98,588 16,087
Loss (gain) on unrealized
foreign exchange and other 12,794 3,895
Stock-based compensation
expense 26,944 16,138
Changes in assets and liabilities, net of assets
acquired and liabilities assumed in business
acquisitions:
Accounts receivable (75,214) 36,079
Inventories (5,091) (55,738)
Other assets (8,930) (16,853)
Accounts payable 18,885 (14,765)
Deferred system revenue (4,833) (79,810)
Deferred service revenue (4,337) (13,325)
Other liabilities 91,043 93,753
Net cash provided by operating
activities 496,245 381,405
Cash flows from investing activities:
Businesses acquisitions, net of
cash acquired (78,530) (11,787)
Capital expenditures (32,566) (22,330)
Proceeds from disposition of
non-marketable securities 1,086
Purchases of available-for-
sale securities (263,767)
Proceeds from sale of available-
for-sale securities 25,449 91,238
Proceeds from maturity of
available-for-sale securities 198,751 254,757
Purchases of trading securities (9,021) (4,619)
Proceeds from sale of trading
securities 11,905 7,612
Net cash (used in) provided by
investing activities (146,693) 314,871
Cash flows from financing activities:
Common stock repurchases (228,496) (299,974)
Payment of dividends to
stockholders (121,636) (122,757)
Issuance of common stock 114
Tax withholding payments related
to equity awards (23,538) (26,961)
Payment of contingent
consideration payable (57)
Net cash used in financing
activities (373,613) (449,692)
Effect of exchange rate changes
on cash and cash equivalents (3,585) (1,452)
Net (decrease) increase in cash
and cash equivalents (27,646) 245,132
Cash and cash equivalents at
beginning of period 1,015,994 1,404,382
Cash and cash equivalents at end
of period $
988,348 $
1,649,514
Supplemental cash flow disclosures:
Income taxes paid $
19,862 $
24,962
Interest paid $
26,347 $
537
Non-cash activities:
Business acquisition holdback
amounts -investing activities
$ $
440
Contingent consideration payable
-financing activities $
9,366 $
3,102
Dividends payable -financing
activities $
1,552 $
4,783
Unsettled common stock
repurchase -financing
activities $
8,000 $
7,812
Accrued purchase of land,
property and equipment -
investing activities $
16,074 $
9,242
KLA Corporation
Segment Information (Unaudited)
The following is a summary of results for each of our four reportable segments and reconciliation to total revenues for the indicated
periods:
Three months ended
(In thousands) Sept. 30, Sept. 30,
2019 2018
--- ---
Revenues:
Semiconductor Process Control $
1,163,632 $
1,069,959
Specialty Semiconductor
Process 69,139
PCB, Display and Component
Inspection(1) 178,552 23,615
Other 2,231
Total revenues for reportable
segments 1,413,554 1,093,574
Corporate allocation and
effects of foreign exchange
rates (140) (314)
Total revenues $
1,413,414 $
1,093,260
_________
(1) Revenues in the three months
ended Sept. 30, 2019 include
a contribution from the
Orbotech business. Revenues
in the three months ended
Sept. 30, 2018 include the
component inspection business
only.
KLA 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
Sept. 30, June 30, Sept. 30,
2019 2019 2018
GAAP net income attributable to KLA $
346,525 $
217,845 $
395,944
Adjustments to reconcile GAAP net
income to non-GAAP net income:
---
Acquisition-related charges a 73,363 102,807 5,551
Income tax effect of non-GAAP
adjustments b (22,266) (32,930) (310)
Discrete tax items c 983 (17,106)
Non-GAAP net income attributable
to KLA $
397,622 $
288,705 $
384,079
GAAP net income (loss) per diluted
share attributable to KLA $
2.16 $
1.35 $
2.54
Non-GAAP net income per diluted
share attributable to KLA $
2.48 $
1.78 $
2.46
Shares used in diluted shares
calculation 160,131 161,937 156,083
Pre-tax impact of GAAP to non-GAAP
adjustments included in Condensed
Consolidated Unaudited Statements of
Operations
---
Acquisition -
Related Charges
Three months ended
Sept. 30, 2019
---
Costs
of
revenues $
49,999
Selling,
general
and
administrative $
23,364
Total
in
three
months
ended
Sept.
30,
2019 $
73,363
Three months ended
June 30, 2019
---
Costs
of
revenues $
75,805
Selling,
general
and
administrative $
27,002
Total
in
three
months
ended
June
30,
2019 $
102,807
Three months ended
Sept. 30, 2018
---
Costs
of
revenues $
890
Selling,
general
and
administrative $
4,661
Total
in
three
months
ended
Sept.
30,
2018 $
5,551
To supplement our condensed consolidated financial statements presented in accordance with GAAP, we provide certain non-GAAP financial information, which is adjusted from results based on GAAP to exclude certain costs and expenses, as well as other supplemental information. The non-GAAP and supplemental information is provided to enhance the user's overall understanding of our operating performance and our prospects in the future. Specifically, we believe that the non-GAAP information provides useful measures to both management and investors regarding financial and business trends relating to our financial performance by excluding certain costs and expenses that we believe are not indicative of our 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 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.
a. Acquisition-related charges
primarily include amortization of
intangible assets and other
acquisition-related adjustments
including adjustments for the
fair valuation of inventory and
backlog, and transaction costs
associated with our acquisitions,
primarily Orbotech. Management
believes that the expense
associated with the amortization
of acquisition-related
intangible assets is appropriate
to be excluded because a
significant portion of the
purchase price for acquisitions
may be allocated to intangible
assets, and exclusion of these
expenses allows comparisons of
operating results that are
consistent over time for both
KLA's newly acquired and long-
held businesses. Management
believes that the other
acquisition-related expenses are
appropriate to be excluded
because such costs would not have
otherwise been incurred in the
periods presented. Management
believes excluding these items
helps investors compare our
operating performances with our
results in prior periods as well
as with the performance of other
companies.
b. Income tax effect of non-GAAP
adjustments includes the income
tax effects of the excluded items
noted above. Management believes
that it is appropriate to exclude
the tax effects of the items
noted above in order to present a
more meaningful measure of non-
GAAP net income.
c. Discrete tax items include charges
associated with the acquisition
of Orbotech as well as the
income tax effects of an income
tax expense from the enacted tax
reform legislation through the
Tax Cuts and Jobs-Act (the
"Act"), which was signed into law
on Dec. 22, 2017, of which the
impact is primarily related to
the provisional tax amounts
recorded for the transition tax
on accumulated foreign earnings
and the re-measurement of
certain deferred tax assets and
liabilities as a result of the
enactment of the Act. Management
believes excluding these items
helps investors compare our
operating performance with our
results in prior periods as well
as with the performance of other
companies.
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SOURCE KLA Corporation
