Lam Research Corporation Reports Financial Results for the Quarter Ended December 25, 2022
On January 25, 2023, Lam Research reported financial results for the December 2022 quarter, achieving a revenue of $5.28 billion, representing a 4% increase from the previous quarter. The U.S. GAAP diluted EPS was $10.77, a rise of 3.7%. Despite a decline in gross margin to 45.0% and operating income as a percentage of revenue at 31.8%, the company maintained robust cash flow, ending the quarter with $4.8 billion in cash equivalents. For the March 2023 quarter, Lam anticipates revenue to be around $3.8 billion, reflecting potential challenges ahead due to expected declines in wafer fabrication equipment spending.
- Record revenue and earnings per share for the December quarter and calendar year.
- Revenue increased by 4% quarter-over-quarter.
- U.S. GAAP diluted EPS rose by 3.7% to $10.77.
- Strong cash flow with $4.8 billion in cash and equivalents.
- Decline in gross margin to 45.0%, down 110 bps quarter-over-quarter.
- Operating income percentage decreased to 31.8%, down 170 bps from the previous quarter.
- Expected decline in wafer fabrication equipment spending in 2023.
Highlights for the
- Revenue of
$5.28 billion U.S. GAAP gross margin of45.0% ,U.S. GAAP operating income as a percentage of revenue of31.8% , andU.S. GAAP diluted EPS of$10.77 - Non-GAAP gross margin of
45.1% , non-GAAP operating income as a percentage of revenue of32.1% , and non-GAAP diluted EPS of$10.71
Key Financial Data for the Quarters Ended (in thousands, except per-share data, percentages, and basis points)
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Change Q/Q | ||||||
Revenue | $ 5,277,569 | $ 5,074,121 | + 4 % | |||
Gross margin as percentage of revenue | 45.0 % | 46.1 % | - 110 bps | |||
Operating income as percentage of revenue | 31.8 % | 33.5 % | - 170 bps | |||
Diluted EPS | $ 10.77 | $ 10.39 | + 3.7 % | |||
Non-GAAP | ||||||
Change Q/Q | ||||||
Revenue | $ 5,277,569 | $ 5,074,121 | + 4 % | |||
Gross margin as percentage of revenue | 45.1 % | 46.0 % | - 90 bps | |||
Operating income as percentage of revenue | 32.1 % | 33.3 % | - 120 bps | |||
Diluted EPS | $ 10.71 | $ 10.42 | + 2.8 % | |||
For the
Non-GAAP Financial Results
For the
"Lam closed out 2022 with record revenue and earnings per share for both the December quarter and calendar year, despite supply chain challenges and inflationary pressures," said
Balance Sheet and Cash Flow Results
Cash and cash equivalents, short-term investments, and restricted cash and investments balances increased to
Deferred revenue at the end of the
Revenue
The geographic distribution of revenue during the
Region | Revenue |
24 % | |
20 % | |
19 % | |
11 % | |
10 % | |
10 % | |
6 % |
The following table presents revenue disaggregated between system and customer support-related revenue:
Three Months Ended | |||||
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(In thousands) | |||||
System revenue | $ 3,547,518 | $ 3,181,987 | $ 2,740,173 | ||
Customer support-related revenue and other | 1,730,051 | 1,892,134 | 1,486,431 | ||
$ 5,277,569 | $ 5,074,121 | $ 4,226,604 | |||
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
Reconciling Items | Non-GAAP | |||||||||
Revenue | +/- | — | +/- | |||||||
Gross margin as a percentage of revenue | 42.8 % | +/- | 1 % | $ 45 | Million | 44.0 % | +/- | 1 % | ||
Operating income as a percentage of revenue | 25.3 % | +/- | 1 % | $ 84 | Million | 27.5 % | +/- | 1 % | ||
Net income per diluted share | +/- | $ 74 | Million | +/- | ||||||
Diluted share count | 135 million | — | 135 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, other investments, or other significant arrangements that may be completed or recognized after the date of this release, except as described below. 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,
$3 million $42 million $45 million - Operating income as a percentage of revenue - amortization related to intangible assets acquired through business combinations,
$4 million $80 million $84 million - Net income per diluted share - amortization related to intangible assets acquired though business combinations,
$4 million $80 million $1 million $11 million $74 million
Use of Non-GAAP Financial Results
In addition to
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
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 margin, operating income and net income; our expectations for wafer fabrication equipment spending; our cost structure and steps we are taking to lower it and drive efficiencies; our ability to preserve research and development; our ability to accelerate our strategic priorities; and the semiconductor industry's long-term growth prospects and our ability to capitalize on them. Some factors that may affect these forward-looking statements include: trade regulations, export controls, trade disputes, and other geopolitical tensions may inhibit our ability to sell our products; business, political and/or regulatory conditions in the consumer electronics industry, the semiconductor industry and the overall economy may deteriorate or change; the actions of our customers and competitors may be inconsistent with our expectations; supply chain cost increases and other inflationary pressures have impacted and are expected to continue to impact our profitability; supply chain disruptions have limited and are expected to continue to limit our ability to meet demand for our products; 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; 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
Consolidated Financial Tables Follow.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data and percentages) (unaudited) | |||||||||
Three Months Ended | Six Months Ended | ||||||||
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Revenue | $ 5,277,569 | $ 5,074,121 | $ 4,226,604 | $ 8,531,069 | |||||
Cost of goods sold | 2,901,220 | 2,737,286 | 2,248,688 | 5,638,506 | 4,576,399 | ||||
Gross margin | 2,376,349 | 2,336,835 | 1,977,916 | 4,713,184 | 3,954,670 | ||||
Gross margin as a percent of revenue | 45.0 % | 46.1 % | 46.8 % | 45.5 % | 46.4 % | ||||
Research and development | 462,385 | 433,375 | 403,644 | 895,760 | 785,971 | ||||
Selling, general and administrative | 233,802 | 205,620 | 236,133 | 439,422 | 458,327 | ||||
Total operating expenses | 696,187 | 638,995 | 639,777 | 1,335,182 | 1,244,298 | ||||
Operating income | 1,680,162 | 1,697,840 | 1,338,139 | 3,378,002 | 2,710,372 | ||||
Operating income as a percent of revenue | 31.8 % | 33.5 % | 31.7 % | 32.6 % | 31.8 % | ||||
Other income (expense), net | (28,234) | (43,095) | 17,999 | (71,329) | (10,858) | ||||
Income before income taxes | 1,651,928 | 1,654,745 | 1,356,138 | 3,306,673 | 2,699,514 | ||||
Income tax expense | (183,421) | (228,866) | (161,308) | (412,287) | (324,940) | ||||
Net income | $ 1,468,507 | $ 1,425,879 | $ 1,194,830 | $ 2,894,386 | $ 2,374,574 | ||||
Net income per share: | |||||||||
Basic | $ 10.80 | $ 10.42 | $ 8.50 | $ 21.21 | $ 16.82 | ||||
Diluted | $ 10.77 | $ 10.39 | $ 8.44 | $ 21.16 | $ 16.71 | ||||
Number of shares used in per share calculations: | |||||||||
Basic | 136,018 | 136,891 | 140,630 | 136,455 | 141,187 | ||||
Diluted | 136,339 | 137,208 | 141,530 | 136,774 | 142,071 | ||||
Cash dividend declared per common share | $ 1.725 | $ 1.725 | $ 1.50 | $ 3.450 | $ 3.00 | ||||
CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) | |||||
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(unaudited) | (unaudited) | (1) | |||
ASSETS | |||||
Cash and cash equivalents | $ 4,484,716 | $ 4,256,499 | $ 3,522,001 | ||
Investments | 103,130 | 120,551 | 135,731 | ||
Accounts receivable, net | 4,070,088 | 4,569,735 | 4,313,818 | ||
Inventories | 4,819,966 | 4,360,325 | 3,966,294 | ||
Prepaid expenses and other current assets | 230,888 | 305,554 | 347,391 | ||
Total current assets | 13,708,788 | 13,612,664 | 12,285,235 | ||
Property and equipment, net | 1,863,155 | 1,718,791 | 1,647,587 | ||
Restricted cash and investments | 251,344 | 250,955 | 251,534 | ||
1,805,218 | 1,624,932 | 1,616,963 | |||
Other assets | 1,577,876 | 1,513,940 | 1,394,313 | ||
Total assets | $ 19,206,381 | $ 18,721,282 | $ 17,195,632 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
Current portion of long-term debt and finance lease obligations | $ 7,226 | $ 7,110 | $ 7,381 | ||
Other current liabilities | 4,539,696 | 5,046,272 | 4,557,378 | ||
Total current liabilities | 4,546,922 | 5,053,382 | 4,564,759 | ||
Long-term debt and finance lease obligations | 4,996,057 | 4,996,363 | 4,998,449 | ||
Income taxes payable | 862,405 | 840,214 | 931,117 | ||
Other long-term liabilities | 496,362 | 418,756 | 422,941 | ||
Total liabilities | 10,901,746 | 11,308,715 | 10,917,266 | ||
Stockholders' equity (2) | 8,304,635 | 7,412,567 | 6,278,366 | ||
Total liabilities and stockholders' equity | $ 19,206,381 | $ 18,721,282 | $ 17,195,632 | ||
(1) | Derived from audited financial statements. |
(2) | Common shares issued and outstanding were 135,403 as of |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, unaudited) | |||||||||
Three Months Ended | Six Months Ended | ||||||||
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CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||
Net income | $ 1,468,507 | $ 1,425,879 | $ 1,194,830 | $ 2,894,386 | $ 2,374,574 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||
Depreciation and amortization | 85,414 | 75,751 | 81,705 | 161,165 | 161,579 | ||||
Deferred income taxes | (6,680) | (133,616) | (13,550) | (140,296) | (26,573) | ||||
Equity-based compensation expense | 73,084 | 71,110 | 62,834 | 144,194 | 120,933 | ||||
Other, net | 12,729 | (2,751) | (66,514) | 9,978 | (75,204) | ||||
Changes in operating assets and liabilities | (492,867) | (246,785) | 181,201 | (739,652) | (657,279) | ||||
Net cash provided by operating activities | 1,140,187 | 1,189,588 | 1,440,506 | 2,329,775 | 1,898,030 | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||
Capital expenditures and intangible assets | (163,378) | (140,063) | (138,493) | (303,441) | (274,920) | ||||
Business acquisitions, net of cash acquired | (119,955) | — | — | (119,955) | — | ||||
Net maturities and sales of available-for-sale securities | 17,743 | 14,695 | 325,171 | 32,438 | 1,063,214 | ||||
Other, net | (1,657) | (2,435) | (595) | (4,092) | (5,518) | ||||
Net cash (used for) provided by investing activities | (267,247) | (127,803) | 186,083 | (395,050) | 782,776 | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||
Principal payments on debt | (17,082) | (1,854) | (1,698) | (18,936) | (8,036) | ||||
(456,276) | (109,779) | (414,815) | (566,055) | (1,651,568) | |||||
Dividends paid | (235,980) | (205,615) | (211,216) | (441,595) | (396,647) | ||||
Reissuance of treasury stock related to employee stock purchase plan | 44,996 | — | 46,380 | 44,996 | 46,380 | ||||
Proceeds from issuance of common stock | 877 | 6,796 | 3,451 | 7,673 | 4,193 | ||||
Other, net | 1,253 | (489) | (205) | 764 | (17) | ||||
Net cash used for financing activities | (662,212) | (310,941) | (578,103) | (973,153) | (2,005,695) | ||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 17,878 | (16,925) | (4,678) | 953 | (8,454) | ||||
Net increase in cash, cash equivalents, and restricted cash | 228,606 | 733,919 | 1,043,808 | 962,525 | 666,657 | ||||
Cash, cash equivalents, and restricted cash at beginning of period | 4,507,454 | 3,773,535 | 4,293,599 | 3,773,535 | 4,670,750 | ||||
Cash, cash equivalents, and restricted cash at end of period | $ 4,736,060 | $ 4,507,454 | $ 5,337,407 | $ 4,736,060 | $ 5,337,407 | ||||
Non-GAAP Financial Summary (in thousands, except percentages and per share data) (unaudited) | |||
Three Months Ended | |||
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Revenue | $ 5,277,569 | $ 5,074,121 | |
Gross margin | $ 2,381,723 | $ 2,335,168 | |
Gross margin as percentage of revenue | 45.1 % | 46.0 % | |
Operating expenses | $ 686,348 | $ 647,239 | |
Operating income | $ 1,695,375 | $ 1,687,929 | |
Operating income as a percentage of revenue | 32.1 % | 33.3 % | |
Net income | $ 1,460,575 | $ 1,429,495 | |
Net income per diluted share | $ 10.71 | $ 10.42 | |
Shares used in per share calculation - diluted | 136,339 | 137,208 | |
Reconciliation of (in thousands, except per share data) (unaudited) | |||
Three Months Ended | |||
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$ 1,468,507 | $ 1,425,879 | ||
Pre-tax non-GAAP items: | |||
Amortization related to intangible assets acquired through certain business combinations - cost of goods sold | 2,521 | 1,451 | |
Elective deferred compensation ("EDC") related liability valuation increase (decrease) - cost of goods sold | 2,853 | (3,118) | |
EDC related liability valuation increase (decrease) - research and development | 5,136 | (5,612) | |
Amortization related to intangible assets acquired through certain business combinations - selling, general and administrative | 1,279 | 1,110 | |
EDC related liability valuation increase (decrease) - selling, general and administrative | 3,424 | (3,742) | |
Amortization of note discounts - other income (expense), net | 712 | 707 | |
(Gain) loss on EDC related asset - other income (expense), net | (10,871) | 12,726 | |
Net income tax (benefit) expense on non-GAAP items | (1,213) | 94 | |
Net income tax benefit associated with legal entity restructuring | (11,773) | — | |
Non-GAAP net income | $ 1,460,575 | $ 1,429,495 | |
Non-GAAP net income per diluted share | $ 10.71 | $ 10.42 | |
$ 10.77 | $ 10.39 | ||
136,339 | 137,208 | ||
Reconciliation of (in thousands, except percentages) (unaudited) | |||
Three Months Ended | |||
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$ 2,376,349 | $ 2,336,835 | ||
Pre-tax non-GAAP items: | |||
Amortization related to intangible assets acquired through certain business combinations | 2,521 | 1,451 | |
EDC related liability valuation increase (decrease) | 2,853 | (3,118) | |
Non-GAAP gross margin | $ 2,381,723 | $ 2,335,168 | |
45.0 % | 46.1 % | ||
Non-GAAP gross margin as a percentage of revenue | 45.1 % | 46.0 % | |
$ 696,187 | $ 638,995 | ||
Pre-tax non-GAAP items: | |||
Amortization related to intangible assets acquired through certain business combinations | (1,279) | (1,110) | |
EDC related liability valuation (increase) decrease | (8,560) | 9,354 | |
Non-GAAP operating expenses | $ 686,348 | $ 647,239 | |
$ 1,680,162 | $ 1,697,840 | ||
Non-GAAP operating income | $ 1,695,375 | $ 1,687,929 | |
31.8 % | 33.5 % | ||
Non-GAAP operating income as a percent of revenue | 32.1 % | 33.3 % | |
Lam Research Corporation Contacts:
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