Lam Research Corporation Reports Financial Results for the Quarter Ended March 28, 2021
Lam Research reported strong financial results for the quarter ending March 28, 2021, with revenue of $3.85 billion, a 46.3% gross margin, and diluted EPS of $7.41 on a GAAP basis, reflecting an 11% revenue increase from the previous quarter. Non-GAAP results showed a similar revenue figure with a diluted EPS of $7.49. Operating income rose to 31.1% of revenue. Cash and cash equivalents decreased to $6 billion due to significant share repurchases and dividends. The company expects revenue of $4 billion for the next quarter, indicating continued growth.
- Revenue increased by 11% quarter-over-quarter to $3.85 billion.
- Diluted EPS rose by 24% to $7.41 on a GAAP basis.
- Operating income as a percentage of revenue improved to 31.1%.
- Cash and cash equivalents decreased from $6.3 billion to $6 billion.
FREMONT, Calif., April 21, 2021 (GLOBE NEWSWIRE) -- Lam Research Corporation (the "Company," "Lam," "Lam Research") today announced financial results for the quarter ended March 28, 2021 (the “March 2021 quarter”).
Highlights for the March 2021 quarter were as follows:
- Revenue of
$3.85 billion . - U.S. GAAP gross margin of
46.3% , U.S. GAAP operating income as a percentage of revenue of31.1% , and U.S. GAAP diluted EPS of$7.41 . - Non-GAAP gross margin of
46.3% , non-GAAP operating income as a percentage of revenue of31.6% , and non-GAAP diluted EPS of$7.49 .
Key Financial Data for the Quarters Ended March 28, 2021 and December 27, 2020 (in thousands, except per-share data, percentages, and basis points) | |||||||||||
U.S. GAAP | |||||||||||
March 2021 | December 2020 | Change Q/Q | |||||||||
Revenue | $ | 3,847,654 | $ | 3,456,237 | + 11 | % | |||||
Gross margin as percentage of revenue | 46.3 | % | 46.4 | % | - 10 bps | ||||||
Operating income as percentage of revenue | 31.1 | % | 29.2 | % | + 190 bps | ||||||
Diluted EPS | $ | 7.41 | $ | 5.96 | + 24 | % | |||||
Non-GAAP | |||||||||||
March 2021 | December 2020 | Change Q/Q | |||||||||
Revenue | $ | 3,847,654 | $ | 3,456,237 | + 11 | % | |||||
Gross margin as percentage of revenue | 46.3 | % | 46.6 | % | - 30 bps | ||||||
Operating income as percentage of revenue | 31.6 | % | 30.3 | % | + 130 bps | ||||||
Diluted EPS | $ | 7.49 | $ | 6.03 | + 24 | % |
U.S. GAAP Financial Results
For the March 2021 quarter, revenue was
Non-GAAP Financial Results
For the March 2021 quarter, non-GAAP gross margin was
“Lam’s growth trajectory continues with record revenue and earnings per share delivered in the March quarter,” said Tim Archer, Lam Research’s President and Chief Executive Officer. “Semiconductors are reaching new heights of strategic relevance, and Lam’s differentiated ability to meet our customers’ scaling challenges positions us well amid a strong wafer fabrication spending environment.”
Balance Sheet and Cash Flow Results
Cash and cash equivalents, short-term investments, and restricted cash and investments balances decreased to
Revenue
The geographic distribution of revenue during the March 2021 quarter is shown in the following table:
Region | Revenue |
China | |
Korea | |
Taiwan | |
Japan | |
Southeast Asia | |
United States | |
Europe |
The following table presents revenue disaggregated between system and customer support-related revenue:
Three Months Ended | Nine Months Ended | ||||||||||||||||||
March 28, 2021 | December 27, 2020 | March 29, 2020 | March 28, 2021 | March 29, 2020 | |||||||||||||||
(In thousands) | |||||||||||||||||||
System revenue | $ | 2,545,306 | $ | 2,307,421 | $ | 1,647,560 | $ | 7,000,968 | $ | 4,759,881 | |||||||||
Customer support-related revenue and other | 1,302,348 | 1,148,816 | 856,065 | 3,480,003 | 2,492,991 | ||||||||||||||
$ | 3,847,654 | $ | 3,456,237 | $ | 2,503,625 | $ | 10,480,971 | $ | 7,252,872 |
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 June 27, 2021, Lam is providing the following guidance:
U.S. GAAP | Reconciling Items | Non-GAAP | ||||||||||
Revenue | +/- | — | +/- | |||||||||
Gross margin as a percentage of revenue | +/- | +/- | ||||||||||
Operating income as a percentage of revenue | +/- | +/- | ||||||||||
Net income per diluted share | +/- | +/- | ||||||||||
Diluted share count | 144 Million | — | 144 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 March 2021 and December 2020 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.
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; our growth trajectory; the strategic relevance of semiconductors; our ability to meet our customers’ scaling challenges and the extent to which that ability is differentiated; and the wafer fabrication spending environment and our positioning within that environment. 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 and December 27, 2020. 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) (unaudited) | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
March 28, 2021 | December 27, 2020 | March 29, 2020 | March 28, 2021 | March 29, 2020 | |||||||||||||||
Revenue | $ | 3,847,654 | $ | 3,456,237 | $ | 2,503,625 | $ | 10,480,971 | $ | 7,252,872 | |||||||||
Cost of goods sold | 2,067,523 | 1,852,442 | 1,336,618 | 5,590,866 | 3,924,511 | ||||||||||||||
Gross margin | 1,780,131 | 1,603,795 | 1,167,007 | 4,890,105 | 3,328,361 | ||||||||||||||
Gross margin as a percent of revenue | 46.3 | % | 46.4 | % | 46.6 | % | 46.7 | % | 45.9 | % | |||||||||
Research and development | 381,120 | 375,172 | 307,914 | 1,111,659 | 913,602 | ||||||||||||||
Selling, general and administrative | 203,703 | 218,899 | 164,979 | 612,350 | 496,679 | ||||||||||||||
Total operating expenses | 584,823 | 594,071 | 472,893 | 1,724,009 | 1,410,281 | ||||||||||||||
Operating income | 1,195,308 | 1,009,724 | 694,114 | 3,166,096 | 1,918,080 | ||||||||||||||
Operating income as a percent of revenue | 31.1 | % | 29.2 | % | 27.7 | % | 30.2 | % | 26.4 | % | |||||||||
Other expense, net | (35,320 | ) | (29,941 | ) | (64,619 | ) | (104,053 | ) | (91,271 | ) | |||||||||
Income before income taxes | 1,159,988 | 979,783 | 629,495 | 3,062,043 | 1,826,809 | ||||||||||||||
Income tax expense | (88,867 | ) | (110,554 | ) | (54,714 | ) | (298,242 | ) | (271,729 | ) | |||||||||
Net income | $ | 1,071,121 | $ | 869,229 | $ | 574,781 | $ | 2,763,801 | $ | 1,555,080 | |||||||||
Net income per share: | |||||||||||||||||||
Basic | $ | 7.51 | $ | 6.04 | $ | 3.96 | $ | 19.20 | $ | 10.75 | |||||||||
Diluted | $ | 7.41 | $ | 5.96 | $ | 3.88 | $ | 18.94 | $ | 10.39 | |||||||||
Number of shares used in per share calculations: | |||||||||||||||||||
Basic | 142,676 | 143,830 | 145,301 | 143,925 | 144,654 | ||||||||||||||
Diluted | 144,609 | 145,910 | 148,165 | 145,923 | 149,648 | ||||||||||||||
Cash dividend declared per common share | $ | 1.30 | $ | 1.30 | $ | 1.15 | $ | 3.90 | $ | 3.45 |
LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) | ||||||||||||
March 28, 2021 | December 27, 2020 | June 28, 2020 | ||||||||||
(unaudited) | (unaudited) | (1) | ||||||||||
ASSETS | ||||||||||||
Cash and cash equivalents | $ | 3,673,366 | $ | 3,687,165 | $ | 4,915,172 | ||||||
Investments | 2,116,101 | 2,355,067 | 1,795,080 | |||||||||
Accounts receivable, net | 2,809,068 | 2,900,362 | 2,097,099 | |||||||||
Inventories | 2,552,032 | 2,348,955 | 1,900,024 | |||||||||
Prepaid expenses and other current assets | 171,703 | 176,403 | 146,160 | |||||||||
Total current assets | 11,322,270 | 11,467,952 | 10,853,535 | |||||||||
Property and equipment, net | 1,279,836 | 1,208,285 | 1,071,499 | |||||||||
Restricted cash and investments | 253,460 | 252,807 | 253,911 | |||||||||
Goodwill and intangible assets | 1,633,254 | 1,641,168 | 1,652,968 | |||||||||
Other assets | 796,093 | 800,162 | 727,134 | |||||||||
Total assets | $ | 15,284,913 | $ | 15,370,374 | $ | 14,559,047 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
Current portion of long-term debt and finance lease obligations | $ | 825,434 | $ | 832,847 | $ | 839,877 | ||||||
Other current liabilities | 2,786,899 | 2,758,206 | 2,322,565 | |||||||||
Total current liabilities | 3,612,333 | 3,591,053 | 3,162,442 | |||||||||
Long-term debt and finance lease obligations | 4,991,613 | 4,992,496 | 4,970,848 | |||||||||
Income taxes payable | 924,629 | 902,047 | 909,709 | |||||||||
Other long-term liabilities | 381,505 | 376,230 | 332,559 | |||||||||
Total liabilities | 9,910,080 | 9,861,826 | 9,375,558 | |||||||||
Temporary equity, convertible notes | 3,217 | 5,515 | 10,995 | |||||||||
Stockholders’ equity (2) | 5,371,616 | 5,503,033 | 5,172,494 | |||||||||
Total liabilities and stockholders’ equity | $ | 15,284,913 | $ | 15,370,374 | $ | 14,559,047 |
(1) | Derived from audited financial statements. | |
(2) | Common shares issued and outstanding were 142,607 as of March 28, 2021, 143,205 as of December 27, 2020, and 145,331 as of June 28, 2020. |
LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, unaudited) | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
March 28, 2021 | December 27, 2020 | March 29, 2020 | March 28, 2021 | March 29, 2020 | |||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||||
Net income | $ | 1,071,121 | $ | 869,229 | $ | 574,781 | $ | 2,763,801 | $ | 1,555,080 | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||
Depreciation and amortization | 79,453 | 76,389 | 67,248 | 228,754 | 197,442 | ||||||||||||||
Deferred income taxes | (1,136 | ) | (2,462 | ) | — | (5,448 | ) | 74,516 | |||||||||||
Equity-based compensation expense | 55,746 | 52,109 | 47,414 | 163,843 | 136,044 | ||||||||||||||
Amortization of note discounts and issuance costs | 1,412 | 1,417 | 1,361 | 4,251 | 4,611 | ||||||||||||||
Other, net | (2,047 | ) | 5,273 | 7,811 | 6,143 | 11,510 | |||||||||||||
Changes in operating assets and liabilities | (39,469 | ) | (657,318 | ) | (157,187 | ) | (1,009,116 | ) | (665,800 | ) | |||||||||
Net cash provided by operating activities | 1,165,080 | 344,637 | 541,428 | 2,152,228 | 1,313,403 | ||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||||
Capital expenditures and intangible assets | (89,596 | ) | (92,072 | ) | (51,375 | ) | (244,474 | ) | (152,685 | ) | |||||||||
Net sale (purchase) of available-for-sale securities | 233,529 | 168,102 | 211,159 | (335,443 | ) | 339,350 | |||||||||||||
Other, net | (27,997 | ) | (6,090 | ) | 9,988 | (35,873 | ) | (540 | ) | ||||||||||
Net cash provided by (used for) investing activities | 115,936 | 69,940 | 169,772 | (615,790 | ) | 186,125 | |||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||||
Principal payments on debt | (16,245 | ) | (4,596 | ) | (617,637 | ) | (40,014 | ) | (664,589 | ) | |||||||||
Proceeds from borrowings on revolving credit facility | — | — | 1,250,000 | — | 1,250,000 | ||||||||||||||
Treasury stock purchases | (1,094,571 | ) | (723,297 | ) | (245,433 | ) | (2,266,449 | ) | (1,328,632 | ) | |||||||||
Dividends paid | (186,551 | ) | (187,927 | ) | (163,510 | ) | (541,607 | ) | (489,099 | ) | |||||||||
Reissuance of treasury stock related to employee stock purchase plan | — | 41,434 | — | 41,434 | 38,447 | ||||||||||||||
Proceeds from issuance of common stock | 9,626 | 8,108 | 1,714 | 23,272 | 6,215 | ||||||||||||||
Other, net | (665 | ) | 961 | 328 | (1,844 | ) | 328 | ||||||||||||
Net cash (used for) provided by financing activities | (1,288,406 | ) | (865,317 | ) | 225,462 | (2,785,208 | ) | (1,187,330 | ) | ||||||||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (5,756 | ) | 8,187 | (10,715 | ) | 6,513 | (9,853 | ) | |||||||||||
Net (decrease) increase in cash, cash equivalents, and restricted cash | (13,146 | ) | (442,553 | ) | 925,947 | (1,242,257 | ) | 302,345 | |||||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 3,939,972 | 4,382,525 | 3,289,794 | 5,169,083 | 3,913,396 | ||||||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 3,926,826 | $ | 3,939,972 | $ | 4,215,741 | $ | 3,926,826 | $ | 4,215,741 |
Non-GAAP Financial Summary (in thousands, except percentages and per share data) (unaudited) | |||||||
Three Months Ended | |||||||
March 28, 2021 | December 27, 2020 | ||||||
Revenue | $ | 3,847,654 | $ | 3,456,237 | |||
Gross margin | $ | 1,783,209 | $ | 1,611,154 | |||
Gross margin as percentage of revenue | 46.3 | % | 46.6 | % | |||
Operating expenses | $ | 566,507 | $ | 563,446 | |||
Operating income | $ | 1,216,702 | $ | 1,047,708 | |||
Operating income as a percentage of revenue | 31.6 | % | 30.3 | % | |||
Net income | $ | 1,083,532 | $ | 880,211 | |||
Net income per diluted share | $ | 7.49 | $ | 6.03 | |||
Shares used in per share calculation - diluted | 144,609 | 145,910 |
Reconciliation of U.S. GAAP Net Income to Non-GAAP Net Income (in thousands, except per share data) (unaudited) | |||||||
Three Months Ended | |||||||
March 28, 2021 | December 27, 2020 | ||||||
U.S. GAAP net income | $ | 1,071,121 | $ | 869,229 | |||
Pre-tax non-GAAP items: | |||||||
Amortization related to intangible assets acquired through certain business combinations - cost of goods sold | 1,092 | 1,270 | |||||
Elective deferred compensation ("EDC") related liability valuation increase - cost of goods sold | 1,986 | 6,089 | |||||
EDC related liability valuation increase - research and development | 3,575 | 10,961 | |||||
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 | 2,384 | 7,307 | |||||
Amortization of note discounts - other expense, net | 998 | 1,001 | |||||
Gain on EDC related asset - other expense, net | (7,520 | ) | (24,207 | ) | |||
Net income tax benefit on non-GAAP items | (2,461 | ) | (3,796 | ) | |||
Non-GAAP net income | $ | 1,083,532 | $ | 880,211 | |||
Non-GAAP net income per diluted share | $ | 7.49 | $ | 6.03 | |||
U.S. GAAP net income per diluted share | $ | 7.41 | $ | 5.96 | |||
U.S. GAAP and non-GAAP number of shares used for per diluted share calculation | 144,609 | 145,910 |
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 | |||||||
March 28, 2021 | December 27, 2020 | ||||||
U.S. GAAP gross margin | $ | 1,780,131 | $ | 1,603,795 | |||
Pre-tax non-GAAP items: | |||||||
Amortization related to intangible assets acquired through certain business combinations | 1,092 | 1,270 | |||||
EDC related liability valuation increase | 1,986 | 6,089 | |||||
Non-GAAP gross margin | $ | 1,783,209 | $ | 1,611,154 | |||
U.S. GAAP gross margin as a percentage of revenue | 46.3 | % | 46.4 | % | |||
Non-GAAP gross margin as a percentage of revenue | 46.3 | % | 46.6 | % | |||
U.S. GAAP operating expenses | $ | 584,823 | $ | 594,071 | |||
Pre-tax non-GAAP items: | |||||||
Amortization related to intangible assets acquired through certain business combinations | (12,357 | ) | (12,357 | ) | |||
EDC related liability valuation increase | (5,959 | ) | (18,268 | ) | |||
Non-GAAP operating expenses | $ | 566,507 | $ | 563,446 | |||
U.S. GAAP operating income | $ | 1,195,308 | $ | 1,009,724 | |||
Non-GAAP operating income | $ | 1,216,702 | $ | 1,047,708 | |||
U.S. GAAP operating income as percent of revenue | 31.1 | % | 29.2 | % | |||
Non-GAAP operating income as a percent of revenue | 31.6 | % | 30.3 | % | |||
Lam Research Corporation Contacts:
Tina Correia, Investor Relations, phone: 510-572-1615, e-mail: investor.relations@lamresearch.com
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