KLA Corporation Reports Fiscal 2021 Second Quarter Results
MILPITAS, Calif., Feb. 3, 2021 /PRNewswire/ -- KLA Corporation (NASDAQ: KLAC) today announced operating results for its second quarter of fiscal year 2021, which ended on Dec. 31, 2020, and reported GAAP net income attributable to KLA of $457 million and GAAP earnings per diluted share attributable to KLA of $2.94 on revenue of $1.65 billion.
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"Our results for the December quarter and calendar 2020 demonstrate continued strong demand from customers, exceptional execution by our global teams, and the enduring strength and resiliency of our KLA operating model in guiding our strategic objectives," commented Rick Wallace, president and chief executive officer of KLA Corporation. "In the December quarter we also generated record free cash flow while continuing our commitment to capital returns to our shareholders."
GAAP Results
---
Q2 FY 2021 Q1 FY 2021 Q2 FY 2020
---
Total revenue
$1,651 million
$1,539 million
$1,509 million
--- ---
Net Income
Attributable
to KLA
$457 million
$421 million
$381 million
--- ---
Earnings per
Diluted Share
Attributable
to KLA $2.94 $2.69 $2.40
---
Non-GAAP Results
---
Q2 FY 2021 Q1 FY 2021 Q2 FY 2020
---
Adjusted Net
Income
Attributable
to KLA
$504 million
$475 million
$422 million
--- ---
Earnings per
Diluted Share
Attributable
to KLA $3.24 $3.03 $2.66
---
A reconciliation between GAAP operating results and non-GAAP operating results is provided following the financial statements included in this release. KLA will discuss the results for its fiscal year 2021 second 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.
Third Quarter Fiscal 2021 Guidance
The following details our guidance for the third quarter of fiscal 2021 ending in March:
-- Total revenue between $1,665 million to $1,815 million
-- GAAP diluted EPS attributable to KLA is expected to be in a range of
$2.98 to $3.66
-- Non-GAAP diluted EPS attributable to KLA in a range of $3.23 to $3.91
For additional guidance metrics please see the company's published letter to shareholders and earnings slides on the KLA investor relations website.
About KLA:
KLA Corporation ("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. Investors and others should note that KLA announces material financial information including SEC filings, press releases, public earnings calls and conference webcasts using an investor relations website (ir.kla.com). Additional information may be found at: www.kla.com (KLAC-F).
Note Regarding Forward-Looking Statements:
This release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements, including statements regarding our total revenue, GAAP and non-GAAP EPS attributable to KLA for the quarter ending Dec. 31, 2020, and growth of our Services business in 2020, are subject to risks and uncertainties. Factors that may cause actual results to differ materially from those projected and anticipated in the forward-looking statements in this release, include risks related to customer cancellations or push outs, our ability to deliver services during the COVID-19 pandemic, the introduction of new laws, regulations or orders that limit our ability to sell products to customers or to service products previously sold to customers and other risk factors included in KLA's annual report on Form 10-K for the year ended June 30, 2020 and other filings with the Securities and Exchange Commission (including, without limitation, the risk factors described therein). Except as otherwise specifically indicated, the information included in this release is as of the date it is delivered. KLA assumes no obligation to, and does not currently intend to, update these forward-looking statements.
KLA Corporation
Condensed Consolidated Unaudited Balance Sheets
(In thousands) Dec. 31, 2020 June 30, 2020
--- ---
ASSETS
Cash, cash equivalents and
marketable securities $
2,296,530 $
1,980,472
Accounts receivable, net 1,219,189 1,107,413
Inventories 1,420,618 1,310,985
Other current assets 286,617 324,675
Land, property and equipment,
net 594,185 519,824
Goodwill 2,045,445 2,045,402
Deferred income taxes, non-
current 258,734 236,797
Purchased intangible assets,
net 1,289,843 1,391,413
Other non-current assets 403,483 362,979
Total assets $
9,814,644 $
9,279,960
LIABILITIES, NON-CONTROLLING INTEREST AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $
262,496 $
264,280
Deferred system revenue 274,642 336,237
Deferred service revenue 239,618 233,493
Short-term debt 20,000
Other current liabilities 1,223,356 865,776
Total current liabilities 2,020,112 1,699,786
Non-current liabilities:
Long-term debt 3,441,465 3,469,670
Deferred tax liabilities 646,028 660,885
Deferred service revenue 88,769 96,325
Other non-current liabilities 667,964 672,284
Total liabilities 6,864,338 6,598,950
Stockholders' equity:
Common stock and capital in
excess of par value 2,104,190 2,090,268
Retained earnings 903,696 654,930
Accumulated other comprehensive
income (loss) (72,704) (79,774)
Total KLA stockholders' equity 2,935,182 2,665,424
Non-controlling interest in
consolidated subsidiary 15,124 15,586
Total stockholders' equity 2,950,306 2,681,010
Total liabilities and
stockholders' equity $
9,814,644 $
9,279,960
KLA Corporation
Condensed Consolidated Unaudited Statements of Operations
Three Months Ended Dec. 31, Six Months Ended Dec. 31,
---
(In thousands, except per share amounts) 2020 2019 2020 2019
--- ---
Revenues:
Product $
1,238,023 $
1,144,550 $
2,383,518 $
2,202,525
Service 412,847 364,903 805,972 720,342
Total revenues 1,650,870 1,509,453 3,189,490 2,922,867
Costs and expenses:
Costs of revenues 669,733 633,618 1,290,295 1,237,859
Research and development 229,064 220,751 448,102 431,331
Selling, general and administrative 181,909 192,253 354,540 380,598
Interest expense 38,880 40,472 78,266 80,822
Other expense (income), net 3,882 (2,568) 7,079 (4,186)
Income before income taxes 527,402 424,927 1,011,208 796,443
Provision for income taxes 70,419 44,622 134,083 69,742
Net income 456,983 380,305 877,125 726,701
Less: Net loss attributable to non-controlling interest (268) (250) (693) (379)
Net income attributable to KLA $
457,251 $
380,555 $
877,818 $
727,080
Net income per share attributable to KLA:
Basic $
2.96 $
2.42 $
5.67 $
4.60
Diluted $
2.94 $
2.40 $
5.62 $
4.56
Weighted-average number of shares:
Basic 154,273 157,290 154,777 157,994
Diluted 155,560 158,620 156,057 159,314
KLA Corporation
Condensed Consolidated Unaudited Statements of Cash Flows
Three Months Ended
Dec. 31,
---
(In thousands) 2020 2019
--- ---
Cash flows from operating activities:
Net income $
456,983 $
380,305
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 84,257 88,534
(Gain) loss on unrealized foreign exchange and other (5,663) (5,550)
Asset impairment charges - 100
Stock-based compensation expense 26,827 26,789
Changes in assets and liabilities, net of assets acquired and liabilities assumed in business acquisitions:
Accounts receivable (190,189) (126,682)
Inventories (26,215) (1,477)
Other assets (56,390) 3,558
Accounts payable 8,039 35,258
Deferred system revenue 21,038 (30,412)
Deferred service revenue 2,215 1,220
Other liabilities 240,179 16,088
Net cash provided by operating activities 561,081 387,731
Cash flows from investing activities:
Proceeds from sale of assets 741
Capital expenditures (59,144) (34,874)
Purchases of available-for-sale securities (260,227) (144,715)
Proceeds from sale of available-for-sale securities 57,563 10,287
Proceeds from maturity of available-for-sale securities 163,492 158,699
Purchases of trading securities (16,741) (12,852)
Proceeds from sale of trading securities 18,424 15,307
Net cash used in investing activities (95,892) (8,148)
Cash flows from financing activities:
Proceeds from issuance of debt, net of issuance costs 40,343
Proceeds from revolving credit facility - 250,000
Repayment of debt - (275,000)
Common stock repurchases (177,492) (284,593)
Payment of dividends to stockholders (139,584) (134,696)
Issuance of common stock 26,356 24,499
Tax withholding payments related to equity awards (11,000) (12,237)
Payment of contingent consideration payable - (3)
Net cash used in financing activities (261,377) (432,030)
Effect of exchange rate changes on cash and cash equivalents 11,834 3,963
Net increase (decrease) in cash and cash equivalents 215,646 (48,484)
Cash and cash equivalents at beginning of period 1,215,820 988,348
Cash and cash equivalents at end of period $
1,431,466 $
939,864
Supplemental cash flow disclosures:
Income taxes paid $
59,764 $
50,884
Interest paid $
36,925 $
53,140
Non-cash activities:
Accrued purchase of land, property and equipment - investing activities $
25,987 $
13,755
Contingent consideration payable - financing activities $
(5,761) $
(3,540)
Dividends payable - financing activities $
812 $
1,638
Unsettled common stock repurchase - financing activities $
6,000 $
4,000
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 Dec. 31, Six Months Ended Dec. 31,
---
(In thousands) 2020 2019 2020 2019
--- ---
Revenues:
Semiconductor Process Control $
1,380,184 $
1,247,430 $
2,648,138 $
2,411,062
Specialty Semiconductor Process 90,587 75,106 179,540 144,245
PCB, Display and Component Inspection 179,267 186,279 360,444 364,831
Other 449 517 590 2,748
Total revenues for reportable segments 1,650,487 1,509,332 3,188,712 2,922,886
Corporate allocation and effects of foreign exchange rates 383 121 778 (19)
Total revenues $
1,650,870 $
1,509,453 $
3,189,490 $
2,922,867
KLA Corporation
Condensed Consolidated Unaudited Supplemental Information
Reconciliation of GAAP Net Income and GAAP Earnings Per Diluted Share to Non-GAAP Net Income and Non-GAAP Earnings Per Diluted Share
---
Three Months Ended Six Months Ended
(In thousands, except per share amounts) Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2020 2020 2019 2020 2019
GAAP net income attributable to KLA $
457,251 $
420,567 $
380,555 $
877,818 $
727,080
Adjustments to reconcile GAAP net income to non-GAAP net income:
---
Acquisition-related charges a 53,099 50,475 60,393 103,574 133,756
Restructuring, severance and other charges b 3,960 3,253 2,786 7,213 2,786
Income tax effect of non-GAAP adjustments c (17,552) (17,013) (21,505) (34,565) (43,771)
Discrete tax items d 7,381 17,487 24,868
Non-GAAP net income attributable to KLA $
504,139 $
474,769 $
422,229 $
978,908 $
819,851
GAAP net income per diluted share attributable to KLA $
2.94 $
2.69 $
2.40 $
5.62 $
4.56
Non-GAAP net income per diluted share attributable to KLA $
3.24 $
3.03 $
2.66 $
6.27 $
5.15
Shares used in diluted shares calculation 155,560 156,442 158,620 156,057 159,314
Pre-tax impact of GAAP to non-GAAP adjustments included in Condensed Consolidated Unaudited Statements of Operations
---
In thousands Acquisition -
Related Restructuring, Total pre-tax
Charges Severance and GAAP to non-
Other Charges GAAP Adjustments
--- ---
Three months ended Dec. 31, 2020
---
Costs of revenues $
38,738 $
765 $
39,503
Research and development - 1,432 1,432
Selling, general and administrative 14,361 2,450 16,811
Other expense (income), net - (687) (687)
Total in three months ended Dec. 31, 2020 $
53,099 $
3,960 $
57,059
Three months ended Sept. 30, 2020
---
Costs of revenues $
37,040 $
636 $
37,676
Research and development - 923 923
Selling, general and administrative 13,435 1,933 15,368
Other expense (income), net - (239) (239)
Total in three months ended Sept. 30, 2020 $
50,475 $
3,253 $
53,728
Three months ended Dec. 31, 2019
---
Costs of revenues $
40,590 $
831 $
41,421
Research and development - 802 802
Selling, general and administrative 19,803 1,153 20,956
Total in three months ended Dec. 31, 2019 $
60,393 $
2,786 $
63,179
Free Cash Flow Reconciliation
---
Three Months Ended Dec. 31,
(In thousands) 2020 2019
Net cash provided by operating
activities $
561,081 $
387,731
Capital expenditures (59,144) (34,874)
Free Cash Flow $
501,937 $
352,857
Third Quarter Fiscal 2021 Guidance
Reconciliation of GAAP Diluted EPS to Non-GAAP Diluted EPS
---
Three Months Ending
March 31, 2021
(In millions, except per share amounts) Low High
---
GAAP net income per diluted share
attributable to KLA $2.98 $3.66
Acquisition-related charges a 0.34 0.34
Restructuring, severance and
other charges b 0.02 0.02
Income tax effect of non-GAAP
adjustments c (0.11) (0.11)
Non-GAAP net income per diluted share
attributable to KLA $3.23 $3.91
Shares used in net income per diluted
share calculation 155.2 155.2
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 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, including non-GAAP net income attributable to KLA, non-GAAP net income per diluted share attributable to KLA and Free Cash Flow, 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 to help investors compare our operating performances with our results in prior periods as well as with the performance of other companies. 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 are inherently subject to significant discretion (for example, determining which costs and expenses to exclude when calculating such a metric). 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. The following are descriptions of the adjustments made to reconcile GAAP net income attributable to KLA to non-GAAP net income attributable to KLA:
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.
b. Restructuring, severance and other
charges primarily include costs
associated with employee severance,
acceleration of certain stock-based
compensation arrangements, and other
exit costs.
c. Income tax effect of non-GAAP
adjustments includes the income tax
effects of the excluded items noted
above.
d. Discrete tax items in the three months
ended Dec. 31, 2020 consist primarily
of a tax expense of $4.0 million from
an internal restructuring. Discrete
tax items in the three months ended
Sept. 30, 2020 include a tax expense
of $14.0 million due to an increase
in deferred tax liability on
purchased intangibles relating to an
increase in the United Kingdom
statutory income tax rate as well as
tax expense from a restructuring.
Discrete tax items in the six months
ended Dec. 31, 2020 are the aggregate
of the aforementioned discrete tax
items.
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SOURCE KLA Corporation
