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26.04.2023 22:05:00

KLA Corporation Reports Fiscal 2023 Third Quarter Results

  • Total revenues were $2.43 billion, above the midpoint of the guidance range of $2.20 to $2.50 billion;
  • GAAP diluted EPS was $5.03 and non-GAAP diluted EPS was $5.49, each finishing above the midpoint of the respective guidance ranges;
  • Cash flow from operating activities and free cash flow were $1,010.9 million and $925.9 million, respectively; and
  • Capital returns were $659.0 million, split between $180.9 million in dividends paid and $478.2 million in share repurchases.

MILPITAS, Calif., April 26, 2023 /PRNewswire/ -- KLA Corporation (NASDAQ: KLAC) today announced financial and operating results for its third quarter of fiscal year 2023, which ended on March 31, 2023, and reported GAAP net income of $697.8 million and GAAP earnings per diluted share of $5.03 on revenue of $2.43 billion.

KLA Corporation

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

"The March quarter delivered revenue, GAAP and non-GAAP earnings per share above the midpoint of the guidance ranges, reflecting solid execution in a challenging industry environment," said Rick Wallace, president and CEO of KLA Corporation. "In addition, KLA's customer focus and product portfolio strategy has been validated by recently published Wafer Fab Equipment ("WFE") industry analysis for calendar year 2022 that shows increased market leadership in the process control market. This performance reinforces the strength of the KLA Operating Model and the value of KLA to our customers' fab productivity and technology roadmaps."

GAAP Results


Q3 FY 2023

Q2 FY 2023

Q3 FY 2022

Total Revenue

$2,433 million

$2,984 million

$2,289 million

Net Income Attributable to KLA

$698 million

$979 million

$731 million

Net Income per Diluted Share Attributable to KLA

$5.03

$6.89

$4.83





Non-GAAP Results


Q3 FY 2023

Q2 FY 2023

Q3 FY 2022

Net Income Attributable to KLA

$761 million

$1,048 million

$776 million

Net Income per Diluted Share Attributable to KLA

$5.49

$7.38

$5.13

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 2023 third quarter, along with its outlook, on a conference call today beginning at 2 p.m. Pacific Time. A webcast of the call will be available at: www.kla.com.

Fourth Quarter Fiscal 2023 Guidance

The following details our guidance for the fourth quarter of fiscal 2023 ending in June:

  • Total revenues is expected to be between $2,125 million to $2,375 million
  • GAAP gross margin is expected to be in a range of 57.58% to 59.85%
  • Non-GAAP gross margin is expected to be in a range of 59.75% to 61.75%
  • GAAP diluted EPS is expected to be in a range of $3.87 to $5.07
  • Non-GAAP diluted EPS is expected to be in a range of $4.23 to $5.43

For additional details and assumptions underlying our guidance metrics, please see the company's published Letter to Shareholders, Earnings Slide Presentation and Earnings Infographic on the KLA investor relations website. Such Letter to Shareholders, Earnings Slide Presentation and Earnings Infographic are not incorporated by reference into this earnings release.

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 June 30, 2023, 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 rising inflation and interest rates, Russia's invasion of Ukraine and 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, onboard and retain key personnel; cybersecurity threats, cyber incidents affecting our and our customers, suppliers and other service providers' systems and networks and our and their 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; increasing attention to environmental, social and governance matters and the resulting costs, risks and impact on our business; 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; our ability or the ability of our customers to obtain licenses for the sale of certain products or provision of certain services to customers in China, pursuant to regulations recently issued by the Bureau of Industry and Security of the U.S. Department of Commerce, which could impact our business, financial condition and results of operations; 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; our ability to identify suitable acquisition targets and successfully integrate and manage acquired businesses; and unexpected delays, difficulties and expenses in executing against our environmental, climate, inclusion and diversity or other Environmental, Social and Governance targets, goals and commitments. 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's Annual Report on Form 10-K for the year ended June 30, 2022, and other subsequent filings with the Securities and Exchange Commission (including, but not limited to, the risk factors described therein). 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)

March 31, 2023


June 30, 2022

ASSETS




Current assets:




Cash and cash equivalents

$               1,568,513


$     1,584,908

Marketable securities

1,321,696


1,123,100

Accounts receivable, net

1,940,067


1,811,877

Inventories

2,749,743


2,146,889

Other current assets

438,731


502,137

Total current assets

8,018,750


7,168,911

Land, property and equipment, net

984,271


849,929

Goodwill

2,278,817


2,320,049

Deferred income taxes

783,843


579,173

Purchased intangible assets, net

999,958


1,194,414

Other non-current assets

617,910


484,612

Total assets

$             13,683,549


$   12,597,088

LIABILITIES, NON-CONTROLLING INTEREST AND STOCKHOLDERS' EQUITY



Current liabilities:




Accounts payable

$                  410,885


$         443,338

Deferred system revenue

533,791


500,969

Deferred service revenue

364,394


381,737

Other current liabilities

2,109,451


1,545,039

Total current liabilities

3,418,521


2,871,083

Long-term debt

5,889,740


6,660,718

Deferred tax liabilities

514,269


658,937

Deferred service revenue

176,260


124,618

Other non-current liabilities

1,001,978


882,642

Total liabilities

11,000,768


11,197,998

Stockholders' equity:




Common stock and capital in excess of par value

1,996,773


1,061,940

Retained earnings

721,299


366,882

Accumulated other comprehensive loss

(35,291)


(27,471)

Total KLA stockholders' equity

2,682,781


1,401,351

Non-controlling interest in consolidated subsidiaries


(2,261)

Total stockholders' equity

2,682,781


1,399,090

Total liabilities and stockholders' equity

$             13,683,549


$   12,597,088

 

KLA Corporation








Condensed Consolidated Unaudited Statements of Operations















Three Months Ended March 31,


Nine Months Ended March 31,

(In thousands, except per share amounts)

2023


2022


2023


2022

Revenues:








Product

$     1,903,484


$     1,800,659


$     6,562,501


$     5,326,316

Service

529,124


488,017


1,578,418


1,398,828

Total revenues

2,432,608


2,288,676


8,140,919


6,725,144

Costs and expenses:








Costs of revenues

1,005,346


892,091


3,255,358


2,613,877

Research and development

328,276


285,189


979,617


808,373

Selling, general and administrative

238,393


216,489


735,469


623,229

Interest expense

74,774


39,978


223,449


116,142

Loss on extinguishment of debt



13,286


Other expense (income), net

(14,864)


8,644


(79,944)


23,985

Income before income taxes

800,683


846,285


3,013,684


2,539,538

Provision for income taxes

102,846


115,625


310,987


22,876

Net income

697,837


730,660


2,702,697


2,516,662

Less: Net income attributable to non-controlling interest


88


74


229

Net income attributable to KLA

$         697,837


$         730,572


$     2,702,623


$     2,516,433

Net income per share attributable to KLA








Basic

$               5.06


$               4.87


$             19.26


$             16.64

Diluted

$               5.03


$               4.83


$             19.16


$             16.52

Weighted-average number of shares:








Basic

137,865


150,145


140,349


151,250

Diluted

138,645


151,186


141,073


152,346

 

KLA Corporation

Condensed Consolidated Unaudited Statements of Cash Flows



Three Months Ended March 31,

(In thousands)

2023


2022

Cash flows from operating activities:




Net income

$

697,837


$

730,660

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




Depreciation and amortization

104,854


92,127

Unrealized foreign exchange (gain) loss and other

(16,531)


(7,059)

Stock-based compensation expense

48,130


37,087

Deferred income taxes

(66,596)


(11,747)

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




Accounts receivable

342,090


126,414

Inventories

(211,216)


(156,513)

Other assets

(60,973)


(25,972)

Accounts payable

(119,606)


41,797

Deferred system revenue

(1,765)


(4,734)

Deferred service revenue

5,332


47,748

Other liabilities

289,299


(50,930)

Net cash provided by operating activities

1,010,855


818,878

Cash flows from investing activities:




Business acquisitions, net of cash acquired


(432,901)

Capital expenditures

(84,914)


(100,304)

Purchases of available-for-sale securities

(402,672)


(207,546)

Proceeds from sale of available-for-sale securities

37,786


26,713

Proceeds from maturity of available-for-sale securities

345,972


151,724

Purchases of trading securities

(40,176)


(43,000)

Proceeds from sale of trading securities

30,797


35,820

Net cash used in investing activities

(113,207)


(569,494)

Cash flows from financing activities:




Proceeds from revolving credit facility


300,000

Repayment of debt

(225,000)


(45,000)

Common stock repurchases

(478,186)


(564,666)

Payment of dividends to stockholders

(180,854)


(158,976)

Tax withholding payments related to vested and released restricted stock units

(16,154)


(16,661)

Contingent consideration payable and other, net

(2,527)


(1,100)

Net cash used in financing activities

(902,721)


(486,403)

Effect of exchange rate changes on cash and cash equivalents

2,109


(4,866)

Net decrease in cash and cash equivalents

(2,964)


(241,885)

Cash and cash equivalents at beginning of period

1,571,477


1,657,057

Cash and cash equivalents at end of period

$

1,568,513


$

1,415,172

Supplemental cash flow disclosures:




Income taxes paid, net

$

56,779


$

128,233

Interest paid

$

125,055


$

40,020

Non-cash activities:




Contingent consideration payable - financing activities

$

(75)


$

423

Dividends payable - financing activities

$

1,915


$

1,638

Unsettled common stock repurchase - financing activities

$

15,943


$

6,000

Accrued purchase of land, property and equipment - investing activities

$

14,390


$

22,305

 

KLA Corporation

Segment Information (Unaudited)

 

The following is a summary of results for each of our three reportable segments and reconciliations to total revenues for the indicated periods:



Three Months Ended March 31,


Nine Months Ended March 31,

(In thousands)

2023


2022


2023


2022

Revenues:








Semiconductor Process Control

$     2,171,557


$     1,979,295


$     7,226,711


$     5,810,580

Specialty Semiconductor Process

128,438


117,253


414,390


332,020

PCB, Display and Component Inspection

131,923


192,533


502,627


583,318

Total revenues for reportable segments

2,431,918


2,289,081


8,143,728


6,725,918

Corporate allocations and effects of changes in foreign currency exchange rates

690


(405)


(2,809)


(774)

Total revenues

$     2,432,608


$     2,288,676


$     8,140,919


$     6,725,144

 

KLA Corporation

Condensed Consolidated Unaudited Supplemental Information

 

Reconciliation of GAAP Net Income to Non-GAAP Net Income





 

Three Months Ended


 

Nine Months Ended


(In thousands, except per share amounts)


March 31,
2023


Dec. 31,
2022


March 31,
2022


March 31,
2023


March 31,
2022

GAAP net income attributable to KLA


$

697,837


$

978,795


$

730,572


$

2,702,623


$

2,516,433

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

















Acquisition-related charges

a


65,050



66,689



59,898



206,999



174,405


Restructuring, severance and other charges

b


19,089





2,513



13,900



2,638


Loss on extinguishment of debt

c








13,286




Income tax effect of non-GAAP adjustments

d


(22,942)



(19,293)



(18,803)



(69,517)



(55,245)


Discrete tax items

e


1,688



21,511



1,457



(52,277)



(299,527)

Non-GAAP net income attributable to KLA


$

760,722


$

1,047,702


$

775,637


$

2,815,014


$

2,338,704

GAAP net income per diluted share attributable to KLA


$

5.03


$

6.89


$

4.83


$

19.16


$

16.52

Non-GAAP net income per diluted share attributable to KLA


$

5.49


$

7.38


$

5.13


$

19.95


$

15.35

Shares used in diluted net income per share calculation



138,645



141,966



151,186



141,073



152,346

 

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 March 31, 2023






Costs of revenues

$                   45,437


$                     6,039


$                   51,476

Research and development


6,664


6,664

Selling, general and administrative

19,613


6,386


25,999

Total in three months ended March 31, 2023

$                   65,050


$                   19,089


$                   84,139

Three Months Ended Dec. 31, 2022






Costs of revenues

$                   45,437


$                           —


$                   45,437

Research and development

748



748

Selling, general and administrative

20,504



20,504

Total in three months ended Dec. 31, 2022

$                   66,689


$                           —


$                   66,689

Three Months Ended March 31, 2022






Costs of revenues

$                   42,576


$                           —


$                   42,576

Selling, general and administrative

17,322



17,322

Other expense (income), net


2,513


2,513

Total in three months ended March 31, 2022

$                   59,898


$                     2,513


$                   62,411

 

Free Cash Flow Reconciliation



Three Months Ended March 31,


Nine Months Ended March 31,

(In thousands)

2023


2022


2023


2022

Net cash provided by operating activities

$        1,010,855


$        818,878


$      2,710,690


$      2,493,473

Capital expenditures

(84,914)


(100,304)


(262,908)


(234,160)

Free cash flow

$           925,941


$        718,574


$      2,447,782


$      2,259,313



Capital Returns Calculation



Three Months Ended March 31,


Nine Months Ended March 31,

(In thousands)

2023


2022


2023


2022

Payments of dividends to stockholders

$         180,854


$         158,976


$         553,046


$          480,926

Common stock repurchases

478,186


564,666


923,039


1,394,217

Capital returns

$         659,040


$         723,642


$     1,476,085


$       1,875,143

 

Fourth Quarter Fiscal 2023 Guidance

 

Reconciliation of GAAP Diluted EPS to Non-GAAP Diluted EPS








Three Months Ending June 30, 2023

(In millions, except per share amounts)


Low


High

GAAP net income per diluted share


$3.87


$5.07

Acquisition-related charges

a

0.49


0.49

Restructuring, severance and other charges

b

0.01


0.01

Income tax effect of non-GAAP adjustments

d

(0.14)


(0.14)

Non-GAAP net income per diluted share


$4.23


$5.43

Shares used in net income per diluted share calculation


137.5


137.5



Reconciliation of GAAP Gross Margin to Non-GAAP Gross Margin








Three Months Ending June 30, 2023



Low


High

GAAP gross margin


57.58 %


59.85 %

Acquisition-related charges

a

2.14 %


1.87 %

Restructuring, severance and other charges

b

0.03 %


0.03 %

Non-GAAP gross margin


59.75 %


61.75 %

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 gains, 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, transaction costs associated with our acquisitions and dispositions, as well as intangible asset impairment charges.

b.

Restructuring, severance and other charges primarily include costs associated with employee severance including associated acceleration of recognition of certain stock-based and other compensation expenses, gains and losses from exiting non-core businesses, charges related to liquidation of legal entities and adjustments related to non-controlling interest. Restructuring, severance and other charges in the nine months ended March 31, 2023 include a gain on the sale of Orbograph, Ltd. ("Orbograph"), which was sold in the first quarter of fiscal 2023, partially offset by certain transaction bonuses triggered by the sale of Orbograph.

c.

Loss on extinguishment of debt includes a pre-tax loss on early extinguishment of the $500 million 4.650% Senior Notes due in November 2024.

d.

Income tax effect of non-GAAP adjustments includes the income tax effects of the excluded items noted above.

e.

Discrete tax items in all periods presented include a tax impact relating to the amortization of certain intellectual property as a result of an internal restructuring of ownership rights to align with how our business operates. Discrete tax items in the three months ended Dec. 31, 2022, also consist of a tax expense of $19.8 million from an internal restructuring. Discrete items in the nine months ended March 31, 2023 include the aggregate of the aforementioned discrete tax items as well as an adjustment of the net benefit of the Orbotech Ltd. 2012 to 2018 Israel tax audit settlement, for which the net benefit includes the liability on the audit settlement less reductions in unrecognized tax positions and deferred tax assets and liabilities. Discrete tax items in the nine months ended March 31, 2023 also include a tax impact from the sale of Orbograph.  Discrete tax items in the nine months ended March 31, 2022 primarily include a tax expense of $163.7 million from an increase in deferred tax liabilities on unremitted foreign earnings due to a change in tax law, partially offset by a net benefit of $69.2 million from an internal restructuring as well as 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.

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/kla-corporation-reports-fiscal-2023-third-quarter-results-301808520.html

SOURCE KLA Corporation

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