Lam Research Corporation Reports Financial Results for the Quarter Ended June 27, 2021

·17 min read

FREMONT, Calif., July 28, 2021 (GLOBE NEWSWIRE) -- Lam Research Corporation (the "Company," "Lam," "Lam Research") today announced financial results for the quarter ended June 27, 2021 (the “June 2021 quarter”).

Highlights for the June 2021 quarter were as follows:

  • Revenue of $4.15 billion.

  • U.S. GAAP gross margin of 46.2%, U.S. GAAP operating income as a percentage of revenue of 31.7%, and U.S. GAAP diluted EPS of $7.98.

  • Non-GAAP gross margin of 46.5%, non-GAAP operating income as a percentage of revenue of 32.6%, and non-GAAP diluted EPS of $8.09.

Key Financial Data for the Quarters Ended
June 27, 2021 and March 28, 2021
(in thousands, except per-share data, percentages, and basis points)

U.S. GAAP

June 2021

March 2021

Change Q/Q

Revenue

$

4,145,179

$

3,847,654

+8%

Gross margin as percentage of revenue

46.2

%

46.3

%

- 10 bps

Operating income as percentage of revenue

31.7

%

31.1

%

+ 60 bps

Diluted EPS

$

7.98

$

7.41

+8%

Non-GAAP

June 2021

March 2021

Change Q/Q

Revenue

$

4,145,179

$

3,847,654

+8%

Gross margin as percentage of revenue

46.5

%

46.3

%

+ 20 bps

Operating income as percentage of revenue

32.6

%

31.6

%

+ 100 bps

Diluted EPS

$

8.09

$

7.49

+8%

U.S. GAAP Financial Results

For the June 2021 quarter, revenue was $4,145 million, gross margin was $1,915 million, or 46.2% of revenue, operating expenses were $599 million, operating income was 31.7% of revenue, and net income was $1,145 million, or $7.98 per diluted share on a U.S. GAAP basis. This compares to revenue of $3,848 million, gross margin of $1,780 million, or 46.3% of revenue, operating expenses of $585 million, operating income of 31.1% of revenue, and net income of $1,071 million, or $7.41 per diluted share, for the quarter ended March 28, 2021 (the “March 2021 quarter”).

Non-GAAP Financial Results

For the June 2021 quarter, non-GAAP gross margin was $1,926 million, or 46.5% of revenue, non-GAAP operating expenses were $574 million, non-GAAP operating income was 32.6% of revenue, and non-GAAP net income was $1,161 million, or $8.09 per diluted share. This compares to non-GAAP gross margin of $1,783 million, or 46.3% of revenue, non-GAAP operating expenses of $567 million, non-GAAP operating income of 31.6% of revenue, and non-GAAP net income of $1,084 million, or $7.49 per diluted share, for the March 2021 quarter.

“Lam continued its record performance in the June quarter, capping a fiscal 2021 with more than 45% revenue growth and an increase of over 70% in earnings per share,” said Tim Archer, Lam Research’s President and Chief Executive Officer. “The combination of strong semiconductor demand and rising device complexity is driving higher levels of wafer fabrication equipment investment. Our technology differentiation and deep collaboration with customers position Lam to extend our leadership across all market segments.”

Balance Sheet and Cash Flow Results

Cash and cash equivalents, short-term investments, and restricted cash and investments balances remained flat at $6.0 billion at the end of the June 2021 quarter compared to the end of the March 2021 quarter. Cash generated from operating activities totaling $1,435.9 million was offset by repayment of $822.0 million of borrowings; $431.3 million of share repurchases, including net share settlement on employee stock-based compensation; and $185.4 million of dividends paid to stockholders.

Revenue

The geographic distribution of revenue during the June 2021 quarter is shown in the following table:

Region

Revenue

China

37%

Korea

30%

Taiwan

13%

Japan

9%

United States

5%

Southeast Asia

3%

Europe

3%

The following table presents revenue disaggregated between system and customer support-related revenue:

Three Months Ended

Twelve Months Ended

June 27,
2021

March 28,
2021

June 28,
2020

June 27,
2021

June 28,
2020

(In thousands)

Systems revenue

$

2,763,877

$

2,545,306

$

1,865,249

$

9,764,845

$

6,625,130

Customer support-related revenue and other

1,381,302

1,302,348

926,615

4,861,305

3,419,606

$

4,145,179

$

3,847,654

$

2,791,864

$

14,626,150

$

10,044,736

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 September 26, 2021, Lam is providing the following guidance:

U.S. GAAP

Reconciling Items

Non-GAAP

Revenue

$4.3 Billion

+/-

$250 Million

$4.3 Billion

+/-

$250 Million

Gross margin as a percentage of revenue

46.0%

+/-

1%

$

1

Million

46.0%

+/-

1%

Operating income as a percentage of revenue

31.7%

+/-

1%

$

13

Million

32.0%

+/-

1%

Net income per diluted share

$8.02

+/-

$0.50

$

12

Million

$8.10

+/-

$0.50

Diluted share count

143 Million

143 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, gains or losses on equity investments, other investments, or other significant arrangements that may be completed or realized 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, $13 million.

  • Net income per diluted share - amortization related to intangible assets acquired though business combinations, $13 million; amortization of note discounts, $1 million; and associated tax benefit for non-GAAP items ($2 million); totaling $12 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 June 2021 and March 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 income tax benefit of non-GAAP items. Additionally, the June 2021 quarter non-GAAP results exclude product rationalization charges.

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 margins, operating income and net income; the factors affecting wafer fabrication equipment investment or the future levels of such investment; the extent to which our technology is differentiated and the extent to which we will collaborate with customers; and our ability to maintain or extend our leadership across any or all market segments. Some factors that may affect these forward-looking statements include: 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; business, political and/or regulatory conditions in the consumer electronics industry, the semiconductor industry and the overall economy may deteriorate or change; supply chain disruptions or manufacturing capacity constraints may limit our ability to manufacture and sell our products; the actions of our customers and competitors may be inconsistent with our expectations; trade regulations, export controls, trade disputes, and other geopolitical tensions may inhibit our ability to sell our products; 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 28, 2020, and our quarterly reports on Form 10–Q for the fiscal quarters ended September 27, 2020, December 27, 2020 and March 28, 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. As a trusted, collaborative partner to the world’s leading semiconductor companies, we combine superior systems engineering capability, technology leadership, and unwavering commitment to customer success to accelerate innovation through enhanced device performance. In fact, today, nearly every advanced chip is built with Lam technology. 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.


LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data and percentages)

Three Months Ended

Twelve Months Ended

June 27,
2021

March 28,
2021

June 28,
2020

June 27,
2021

June 28,
2020

(unaudited)

(unaudited)

(unaudited)

(unaudited)

(1)

Revenue

$

4,145,179

$

3,847,654

$

2,791,864

$

14,626,150

$

10,044,736

Cost of goods sold

2,229,978

2,067,523

1,511,532

7,820,844

5,436,043

Gross margin

1,915,201

1,780,131

1,280,332

6,805,306

4,608,693

Gross margin as a percent of revenue

46.2

%

46.3

%

45.9

%

46.5

%

45.9

%

Research and development

381,749

381,120

338,810

1,493,408

1,252,412

Selling, general and administrative

217,525

203,703

185,800

829,875

682,479

Total operating expenses

599,274

584,823

524,610

2,323,283

1,934,891

Operating income

1,315,927

1,195,308

755,722

4,482,023

2,673,802

Operating income as a percent of revenue

31.7

%

31.1

%

27.1

%

30.6

%

26.6

%

Other expense, net

(7,166

)

(35,320

)

(7,553

)

(111,219

)

(98,824

)

Income before income taxes

1,308,761

1,159,988

748,169

4,370,804

2,574,978

Income tax expense

(164,104

)

(88,867

)

(51,496

)

(462,346

)

(323,225

)

Net income

$

1,144,657

$

1,071,121

$

696,673

$

3,908,458

$

2,251,753

Net income per share:

Basic

$

8.02

$

7.51

$

4.79

$

27.22

$

15.55

Diluted

$

7.98

$

7.41

$

4.73

$

26.90

$

15.10

Number of shares used in per share calculations:

Basic

142,662

142,676

145,295

143,609

144,814

Diluted

143,514

144,609

147,416

145,320

149,090

Cash dividend declared per common share

$

1.30

$

1.30

$

1.15

$

5.20

$

4.60

(1) Derived from audited financial statements.


LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

June 27,
2021

March 28,
2021

June 28,
2020

(unaudited)

(unaudited)

(1)

ASSETS

Cash and cash equivalents

$

4,418,263

$

3,673,366

$

4,915,172

Investments

1,310,872

2,116,101

1,795,080

Accounts receivable, net

3,026,430

2,809,068

2,097,099

Inventories

2,689,294

2,552,032

1,900,024

Prepaid expenses and other current assets

207,528

171,703

146,160

Total current assets

11,652,387

11,322,270

10,853,535

Property and equipment, net

1,303,479

1,279,836

1,071,499

Restricted cash and investments

252,487

253,460

253,911

Goodwill and intangible assets

1,622,499

1,633,254

1,652,968

Other assets

1,061,300

796,093

727,134

Total assets

$

15,892,152

$

15,284,913

$

14,559,047

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current portion of long-term debt and finance lease obligations

$

11,349

$

825,434

$

839,877

Other current liabilities

3,516,518

2,786,899

2,322,565

Total current liabilities

3,527,867

3,612,333

3,162,442

Long-term debt and finance lease obligations

4,990,333

4,991,613

4,970,848

Income taxes payable

948,037

924,629

909,709

Other long-term liabilities

398,727

381,505

332,559

Total liabilities

9,864,964

9,910,080

9,375,558

Temporary equity, convertible notes

3,217

10,995

Stockholders’ equity (2)

6,027,188

5,371,616

5,172,494

Total liabilities and stockholders’ equity

$

15,892,152

$

15,284,913

$

14,559,047

(1) Derived from audited financial statements.

(2) Common shares issued and outstanding were 142,501 as of June 27, 2021, 142,607 as of March 28, 2021, and 145,331 as of June 28, 2020



LAM RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Three Months Ended

Twelve Months Ended

June 27,
2021

March 28,
2021

June 28,
2020

June 27,
2021

June 28,
2020

(unaudited)

(unaudited)

(unaudited)

(unaudited)

(1)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

1,144,657

1,071,121

696,673

3,908,458

2,251,753

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

78,397

79,453

71,083

307,151

268,525

Deferred income taxes

(146,029

)

(1,136

)

(92,293

)

(151,477

)

(17,777

)

Equity-based compensation expense

56,321

55,746

53,153

220,164

189,197

Other, net

(27,786

)

(635

)

(9,493

)

(17,392

)

6,628

Changes in operating assets and liabilities

330,375

(39,469

)

93,925

(678,741

)

(571,875

)

Net cash provided by operating activities

1,435,935

1,165,080

813,048

3,588,163

2,126,451

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures and intangible assets

(104,622

)

(89,596

)

(50,554

)

(349,096

)

(203,239

)

Net sale (purchase) of available-for-sale securities

799,965

233,529

(354,350

)

464,522

(15,000

)

Other, net

(6,282

)

(27,997

)

(25,305

)

(42,155

)

(25,845

)

Net cash provided by (used for) investing activities

689,061

115,936

(430,209

)

73,271

(244,084

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of long-term debt, net of issuance costs

1,974,651

1,974,651

Principal payments on debt

(822,046

)

(16,245

)

(2,948

)

(862,060

)

(667,537

)

Proceeds from borrowings on revolving credit facility

1,250,000

Repayments of borrowings on revolving credit facility

(1,250,000

)

(1,250,000

)

Treasury stock purchases

(431,255

)

(1,094,571

)

(41,017

)

(2,697,704

)

(1,369,649

)

Dividends paid

(185,385

)

(186,551

)

(167,739

)

(726,992

)

(656,838

)

Reissuance of treasury stock related to employee stock purchase plan

56,330

46,992

97,764

85,439

Proceeds from issuance of common stock

851

9,626

1,869

24,123

8,084

Other, net

(269

)

(665

)

1,592

(2,113

)

1,920

Net cash (used for) provided by financing activities

(1,381,774

)

(1,288,406

)

563,400

(4,166,982

)

(623,930

)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

702

(5,756

)

7,103

7,215

(2,750

)

Net increase (decrease) in cash, cash equivalents, and restricted cash

743,924

(13,146

)

953,342

(498,333

)

1,255,687

Cash, cash equivalents, and restricted cash at beginning of period

3,926,826

3,939,972

4,215,741

5,169,083

3,913,396

Cash, cash equivalents, and restricted cash at end of period

$

4,670,750

$

3,926,826

$

5,169,083

$

4,670,750

$

5,169,083

(1) Derived from audited financial statements.


Non-GAAP Financial Summary
(in thousands, except percentages and per share data)
(unaudited)

Three Months Ended

June 27,
2021

March 28,
2021

Revenue

$

4,145,179

$

3,847,654

Gross margin

$

1,926,323

$

1,783,209

Gross margin as percentage of revenue

46.5

%

46.3

%

Operating expenses

$

573,707

$

566,507

Operating income

$

1,352,616

$

1,216,702

Operating income as a percentage of revenue

32.6

%

31.6

%

Net income

$

1,161,211

$

1,083,532

Net income per diluted share

$

8.09

$

7.49

Shares used in per share calculation - diluted

143,514

144,609


Reconciliation of U.S. GAAP Net Income to Non-GAAP Net Income
(in thousands, except per share data)
(unaudited)

Three Months Ended

June 27,
2021

March 28,
2021

U.S. GAAP net income

$

1,144,657

$

1,071,121

Pre-tax non-GAAP items:

Amortization related to intangible assets acquired through certain business combinations - cost of goods sold

1,092

1,092

Elective deferred compensation ("EDC") related liability valuation increase - cost of goods sold

4,256

1,986

Product rationalization - cost of goods sold

5,774

EDC related liability valuation increase - research and development

7,661

3,575

Product rationalization - research and development

426

Amortization related to intangible assets acquired through certain business combinations -selling, general and administrative

12,357

12,357

EDC related liability valuation increase - selling, general and administrative

5,123

2,384

Amortization of note discounts - other expense, net

923

998

Gain on EDC related asset - other expense, net

(17,184

)

(7,520

)

Net income tax benefit on non-GAAP items

(3,874

)

(2,461

)

Non-GAAP net income

$

1,161,211

$

1,083,532

Non-GAAP net income per diluted share

$

8.09

$

7.49

U.S. GAAP net income per diluted share

$

7.98

$

7.41

U.S. GAAP and non-GAAP number of shares used for per diluted share calculation

143,514

144,609


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

June 27,
2021

March 28,
2021

U.S. GAAP gross margin

$

1,915,201

$

1,780,131

Pre-tax non-GAAP items:

Amortization related to intangible assets acquired through certain business combinations

1,092

1,092

EDC related liability valuation increase

4,256

1,986

Product rationalization

5,774

Non-GAAP gross margin

$

1,926,323

$

1,783,209

U.S. GAAP gross margin as a percentage of revenue

46.2

%

46.3

%

Non-GAAP gross margin as a percentage of revenue

46.5

%

46.3

%

U.S. GAAP operating expenses

$

599,274

$

584,823

Pre-tax non-GAAP items:

Amortization related to intangible assets acquired through certain business combinations

(12,357

)

(12,357

)

EDC related liability valuation increase

(12,784

)

(5,959

)

Product rationalization

(426

)

Non-GAAP operating expenses

$

573,707

$

566,507

U.S. GAAP operating income

$

1,315,927

$

1,195,308

Non-GAAP operating income

$

1,352,616

$

1,216,702

U.S. GAAP operating income as percent of revenue

31.7

%

31.1

%

Non-GAAP operating income as a percent of revenue

32.6

%

31.6

%

Lam Research Corporation Contact:

Tina Correia, Investor Relations, phone: 510-572-1615, e-mail: investor.relations@lamresearch.com


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