KLA Corporation Reports Fiscal 2022 First Quarter Results

- Total revenues were $2.08 billion, finishing towards the upper end of the range of guidance;
Published: Oct. 27, 2021 at 4:05 PM EDT

MILPITAS, Calif., Oct. 27, 2021 /PRNewswire/ -- KLA Corporation (NASDAQ: KLAC) today announced operating results for its first quarter of fiscal year 2022, which ended on September 30, 2021, and reported GAAP net income attributable to KLA of $1.07 billion and GAAP earnings per diluted share attributable to KLA of $6.96 on revenue of $2.08 billion.

Logo - https://mma.prnewswire.com/media/806571/KLA_Corporation_Logo.jpg

"KLA's track record of consistent execution and sustainable outperformance was evident during the September 2021 quarter, demonstrating the strong momentum in our core markets and the attractive operating leverage inherent in the KLA financial model," commented Rick Wallace, president and chief executive officer of KLA Corporation. "KLA continues to outperform expectations despite significant supply chain challenges by operating with purpose and precision and focusing on creating value for our customers, partners, and shareholders alike. KLA's execution is powered by our global teams continuing to go above and beyond, to meet the challenges and opportunities of the marketplace."

GAAP Results


Q1 FY 2022

Q4 FY 2021

Q1 FY 2021

Total Revenue

$2,084 million

$1,925 million

$1,539 million

Net Income Attributable to KLA

$1,068 million

$633 million

$421 million

Net Income per Diluted Share Attributable to KLA

$6.96

$4.10

$2.69





Non-GAAP Results


Q1 FY 2022

Q4 FY 2021

Q1 FY 2021

Net Income Attributable to KLA

$712 million

$684 million

$475 million

Net Income per Diluted Share Attributable to KLA

$4.64

$4.43

$3.03

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 2022 first 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.

Second Quarter Fiscal 2022 Guidance

The following details our guidance for the second quarter of fiscal 2022 ending in December:

  • Total revenue between $2,225 million to $2,425 million
  • GAAP gross margin is expected to be in a range of 60.2% to 62.3%
  • Non-GAAP gross margin is expected to be in a range of 62.0% to 64.0%
  • GAAP diluted EPS attributable to KLA is expected to be in a range of $4.69 to $5.59
  • Non-GAAP diluted EPS attributable to KLA in a range of $4.95 to $5.85

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.

Note Regarding Forward-Looking Statements:

Statements in this press release other than historical facts, such as statements pertaining to total revenues, GAAP and non-GAAP gross margin and GAAP and non-GAAP diluted EPS for the quarter ending December 31, 2021 are forward-looking statements and subject to the Safe Harbor provisions created by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current information and expectations and involve a number of risks and uncertainties. Actual results may differ materially from those projected in such statements due to various factors, including but not limited to: the impact of the COVID-19 pandemic on the global economy and on our business, financial condition and results of operations, including the supply chain constraints we are experiencing as a result of the pandemic; economic, political and social conditions in the countries in which we, our customers and our suppliers operate, including global trade policies; disruption to our manufacturing facilities or other operations, or the operations of our customers, due to natural catastrophic events, health epidemics or terrorism; ongoing changes in the technology industry, and the semiconductor industry in particular, including future growth rates, pricing trends in end-markets, or changes in customer capital spending patterns; our ability to timely develop new technologies and products that successfully anticipate or address changes in the semiconductor industry; our ability to maintain our technology advantage and protect our proprietary rights; our ability to compete with new products introduced by our competitors; our ability to attract and retain key personnel; cybersecurity threats, cyber incidents affecting our and our service providers' systems and networks and our ability to access critical information systems for daily business operations; liability to our customers under indemnification provisions if our products fail to operate properly or contain defects or our customers are sued by third parties due to our products; exposure to a highly concentrated customer base; availability and cost of the wide range of materials used in the production of our products; our ability to operate our business in accordance with our business plan; legal, regulatory and tax environments in which we perform our operations and conduct our business and our ability to comply with relevant laws and regulations; our ability to pay interest and repay the principal of our current indebtedness is dependent upon our ability to manage our business operations, our credit rating and the ongoing interest rate environment, among other factors; instability in the global credit and financial markets; our exposure to currency exchange rate fluctuations, or declining economic conditions in those countries where we conduct our business; changes in our effective tax rate resulting from changes in the tax rates imposed by jurisdictions where our profits are determined to be earned and taxed, expiration of tax holidays in certain jurisdictions, resolution of issues arising from tax audits with various authorities or changes in tax laws or the interpretation of such tax laws; and our ability to identify suitable acquisition targets and successfully integrate and manage acquired businesses. For other factors that may cause actual results to differ materially from those projected and anticipated in forward-looking statements in this press release, please refer to KLA Corporation's Annual Report on Form 10-K for the year ended June 30, 2021, and other subsequent filings with the Securities and Exchange Commission (including, but not limited to, the risk factors described therein). KLA Corporation assumes no obligation to, and does not currently intend to, update these forward-looking statements.

KLA Corporation




Condensed Consolidated Unaudited Balance Sheets








(In thousands)

Sept. 30, 2021


June 30, 2021

ASSETS




Cash, cash equivalents and marketable securities

$

2,624,813



$

2,494,522


Accounts receivable, net

1,463,974



1,305,479


Inventories

1,715,339



1,575,380


Other current assets

340,546



320,867


Land, property and equipment, net

698,547



663,027


Goodwill

2,041,338



2,011,172


Deferred income taxes, non-current

665,672



270,461


Purchased intangible assets, net

1,157,535



1,185,311


Other non-current assets

438,713



444,905


Total assets

$

11,146,477



$

10,271,124





LIABILITIES, NON-CONTROLLING INTEREST AND STOCKHOLDERS' EQUITY



Current liabilities:




Accounts payable

$

380,827



$

342,083


Deferred system revenue

319,846



295,192


Deferred service revenue

286,741



284,936


Short-term debt

20,000



20,000


Other current liabilities

1,515,596



1,161,016


Total current liabilities

2,523,010



2,103,227


Non-current liabilities:




Long-term debt

3,423,436



3,422,767


Deferred tax liabilities

625,540



650,623


Deferred service revenue

94,824



87,575


Other non-current liabilities

620,581



631,290


Total liabilities

7,287,391



6,895,482


Stockholders' equity:




Common stock and capital in excess of par value

2,137,706



2,175,988


Retained earnings

1,801,268



1,277,123


Accumulated other comprehensive loss

(78,044)



(75,557)


Total KLA stockholders' equity

3,860,930



3,377,554


Non-controlling interest in consolidated subsidiaries

(1,844)



(1,912)


Total stockholders' equity

3,859,086



3,375,642


Total liabilities and stockholders' equity

$

11,146,477



$

10,271,124


KLA Corporation




Condensed Consolidated Unaudited Statements of Operations







Three Months Ended Sept. 30,

(In thousands, except per share amounts)

2021


2020

Revenues:




Product

$

1,629,888



$

1,145,495


Service

453,950



393,125


Total revenues

2,083,838



1,538,620


Costs and expenses:




Costs of revenues

813,624



620,562


Research and development

258,153



219,038


Selling, general and administrative

193,261



172,631


Interest expense

38,312



39,386


Other expense (income), net

14,140



3,197


Income before income taxes

766,348



483,806


Provision (benefit) for income taxes

(302,137)



63,664


Net income

1,068,485



420,142


Less: Net income (loss) attributable to non-controlling interest

68



(425)


Net income attributable to KLA

$

1,068,417



$

420,567


Net income per share attributable to KLA:




Basic

$

7.01



$

2.71


Diluted

$

6.96



$

2.69


Weighted-average number of shares:




Basic

152,330



155,281


Diluted

153,410



156,442


KLA Corporation

Condensed Consolidated Unaudited Statements of Cash Flows



Three Months Ended Sept. 30,

(In thousands)

2021


2020

Cash flows from operating activities:




Net income

$

1,068,485



$

420,142


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




Depreciation and amortization

84,824



80,066


Unrealized foreign exchange (gain) loss and other

15,639



(12,907)


Asset impairment charges

5,962



865


Stock-based compensation expense

25,216



26,992


Deferred income taxes

(427,970)



(14,967)


Changes in assets and liabilities, net of assets acquired and liabilities assumed in business acquisitions:




Accounts receivable

(180,354)



73,000


Inventories

(138,189)



(85,991)


Other assets

4,673



20,070


Accounts payable

41,868



(9,822)


Deferred system revenue

33,469



(82,633)


Deferred service revenue

4,912



(3,646)


Other liabilities

325,262



101,002


Net cash provided by operating activities

863,797



512,171


Cash flows from investing activities:




Proceeds from sale of assets



1,114


Business acquisitions, net of cash acquired

(37,986)




Capital expenditures

(68,955)



(55,925)


Purchases of available-for-sale securities

(264,000)



(231,821)


Proceeds from sale of available-for-sale securities

14,954



53,249


Proceeds from maturity of available-for-sale securities

178,414



95,835


Purchases of trading securities

(22,896)



(18,630)


Proceeds from sale of trading securities

25,163



21,244


Proceeds from other investments



614


Net cash used in investing activities

(175,306)



(134,320)


Cash flows from financing activities:




Proceeds from revolving credit facility

300,000




Repayment of debt

(300,000)



(50,000)


Common stock repurchases

(399,677)



(187,897)


Payment of dividends to stockholders

(162,821)



(141,164)


Tax withholding payments related to equity awards

(46,532)



(25,145)


Net cash used in financing activities

(609,030)



(404,206)


Effect of exchange rate changes on cash and cash equivalents

(4,507)



7,766


Net increase (decrease) in cash and cash equivalents

74,954



(18,589)


Cash and cash equivalents at beginning of period

1,434,610



1,234,409


Cash and cash equivalents at end of period

$

1,509,564



$

1,215,820


Supplemental cash flow disclosures:




Income taxes paid

$

57,532



$

54,185


Interest paid

$

39,717



$

40,071


Non-cash activities:




Accrued purchase of land, property and equipment - investing activities

$

22,962



$

23,388


Contingent consideration payable - financing activities

$

12,810



$

(2,987)


Dividends payable - financing activities

$

1,783



$

1,660


Unsettled common stock repurchase - financing activities

$

5,999



$

6,000


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 Sept. 30,

(In thousands)

2021


2020

Revenues:




Semiconductor Process Control

$

1,779,083



$

1,267,954


Specialty Semiconductor Process

102,029



88,954


PCB, Display and Component Inspection

202,808



181,177


Other



140


Total revenues for reportable segments

2,083,920



1,538,225


Corporate allocation and effects of foreign exchange rates

(82)



395


Total revenues

$

2,083,838



$

1,538,620


KLA Corporation

Condensed Consolidated Unaudited Supplemental Information


Reconciliation of GAAP Net Income to Non-GAAP Net Income





Three Months Ended


(In thousands, except per share amounts)


Sept. 30,

2021


June 30,

2021


Sept. 30,

2020

GAAP net income attributable to KLA


$

1,068,417



$

632,978



$

420,567


Adjustments to reconcile GAAP net income to non-GAAP net income:








Acquisition-related charges

a

60,168



53,008



50,475



Restructuring, severance and other charges

b

125



1,358



3,253



Income tax effect of non-GAAP adjustments

c

(19,684)



(16,910)



(17,013)



Discrete tax items

d

(397,000)



13,620



17,487


Non-GAAP net income attributable to KLA


$

712,026



$

684,054



$

474,769


GAAP net income per diluted share attributable to KLA


$

6.96



$

4.10



$

2.69


Non-GAAP net income per diluted share attributable to KLA


$

4.64



$

4.43



$

3.03


Shares used in diluted shares calculation


153,410



154,283



156,442


Pre-tax Impact of GAAP to Non-GAAP Adjustments Included in Condensed Consolidated Unaudited Statements of Operations


(In thousands)

Acquisition -
Related
Charges


Restructuring,
Severance and
Other Charges


Total Pre-tax
GAAP to Non-GAAP
Adjustments

Three Months Ended Sept. 30, 2021






Costs of revenues

$

41,115



$



$

41,115


Research and development

5,962





5,962


Selling, general and administrative

13,091





13,091


Other expense (income), net



125



125


Total in three months ended Sept. 30, 2021

$

60,168



$

125



$

60,293


Three Months Ended June 30, 2021






Costs of revenues

$

40,499



$

(471)



$

40,028


Research and development



203



203


Selling, general and administrative

12,509



1,626



14,135


Total in three months ended June 30, 2021

$

53,008



$

1,358



$

54,366


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


Free Cash Flow Reconciliation




Three Months Ended Sept. 30,

(In thousands)


2021


2020

Net cash provided by operating activities


$

863,797



$

512,171


Capital expenditures


(68,955)



(55,925)


Free Cash Flow


$

794,842



$

456,246


Second Quarter Fiscal 2021 Guidance


Reconciliation of GAAP Diluted EPS to Non-GAAP Diluted EPS




Three Months Ending Dec. 31, 2021

(In millions, except per share amounts)


Low


High

GAAP net income per diluted share attributable to KLA


$4.69


$5.59

Acquisition-related charges

a

0.36


0.36

Restructuring, severance and other charges

b

0.01


0.01

Income tax effect of non-GAAP adjustments

c

(0.11)


(0.11)

Non-GAAP net income per diluted share attributable to KLA


$4.95


$5.85

Shares used in net income per diluted share calculation


152.2


152.2

Reconciliation of GAAP Gross Margin to Non-GAAP Gross Margin




Three Months Ending Dec. 31, 2021



Low


High

GAAP gross margin


60.2%


62.3%

Acquisition-related charges

a

1.8%


1.7%

Non-GAAP gross margin


62.0%


64.0%



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, non-GAAP gross margin 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.



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 September 30, 2021 primarily relate to a one-time tax benefit of $394.5 million resulting from changes made to our international structure to better align ownership of certain intellectual property rights with how our business operates. Discrete tax items in the three months ended June 30, 2021 include tax expense from an increase in deferred tax liability on purchased intangibles relating to an increase in the United Kingdom statutory income tax rate, partially offset by a net tax benefit from an internal restructuring and a reduction in unrecognized tax benefits. Discrete tax items in the three months ended September 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.

View original content:

SOURCE KLA Corporation

The above press release was provided courtesy of PRNewswire. The views, opinions and statements in the press release are not endorsed by Gray Media Group nor do they necessarily state or reflect those of Gray Media Group, Inc.