Company Announcements

KLA Corporation Reports Fiscal 2020 Fourth Quarter Results And Raises Dividend Level

MILPITAS, Calif., Aug. 3, 2020 /PRNewswire/ -- KLA Corporation (NASDAQ: KLAC) today announced operating results for its fourth quarter and fiscal year ended June 30, 2020. KLA reported GAAP net income attributable to KLA of $411 million and GAAP earnings per diluted share attributable to KLA of $2.63 on revenues of $1,460 million for the fourth quarter of fiscal year 2020. For the fiscal year ended June 30, 2020, KLA reported GAAP net income attributable to KLA of $1,217 million and GAAP earnings per diluted share attributable to KLA of $7.70 on revenues of $5,806 million.

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"Thanks to the dedication, engagement and perseverance of our global workforce, KLA delivered strong results in the June 2020 quarter, with revenue and GAAP and non-GAAP EPS each finishing above the mid-point of our guidance ranges, demonstrating strong demand from customers, exceptional execution by our teams, and the enduring strength and resiliency of our company under today's extraordinary circumstances," commented Rick Wallace, president and CEO of KLA Corporation. "KLA's performance in the June quarter once again highlights how the KLA operating model and our long-term strategic objectives provide a dependable framework to guide our execution and consistently deliver on our commitments."

GAAP Results


Q4 FY 2020

Q3 FY 2020

Q4 FY 2019

Revenues

$1,460 million

$1,424 million

$1,258 million

Net Income Attributable to KLA

$411 million

$78 million

$218 million

Earnings per Diluted Share Attributable to KLA

$2.63

$0.50

$1.35





Non-GAAP Results


Q4 FY 2020

Q3 FY 2020

Q4 FY 2019

Net Income Attributable to KLA

$426 million

$389 million

$289 million

Earnings per Diluted Share Attributable to KLA

$2.73

$2.47

$1.78

A reconciliation between GAAP operating results and non-GAAP operating results is provided following the financial statements included in this release. Non-GAAP results include the impact of recurring stock-based compensation, but exclude the impact of acquisitions or pending acquisitions, goodwill impairment, restructuring, severance and other charges, loss on extinguishment of debt, and certain discrete tax items. KLA will discuss the results for its fiscal year 2020 fourth quarter and full year, along with its outlook, on a conference call today beginning at 2 p.m. PT. A webcast of the call will be available at: www.kla.com.

Eleventh Consecutive Annual Increase in Dividend Payment

KLA's board of directors has approved a $0.20 annual dividend increase to $3.60 per year or $0.05 quarterly dividend increase to $0.90 per quarter. KLA's dividend payout has grown at a CAGR of approximately 15% since inception.

First Quarter Fiscal 2021 Guidance

The following details our guidance for the first quarter of fiscal 2021 ending in September:

  • Revenue between $1,405 million to $1,555 million
  • GAAP diluted EPS is expected to be in a range of $2.18 to $2.82
  • Non-GAAP diluted EPS in a range of $2.42 to $3.06

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. Additional information may be found at: www.kla.com (KLAC-F).

Use of Non-GAAP Financial Information:

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 KLA's condensed consolidated financial statements presented in accordance with GAAP, KLA provides certain non-GAAP financial information, which is adjusted from results based on GAAP to exclude certain costs and expenses (benefits), as well as other supplemental information. The non-GAAP and supplemental information is provided to enhance the user's overall understanding of KLA's operating performance and its prospects in the future. Specifically, KLA believes that the non-GAAP information provides useful measures to both management and investors regarding financial and business trends relating to KLA's financial performance by excluding certain costs and expenses (benefits) that we believe are not indicative of our core operating results. 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 (for example, determining which costs and expenses (benefits) to exclude when calculating such a metric) are inherently subject to significant discretion. 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.

Note Regarding Forward-Looking Statements:

This release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements, including statements regarding our revenues, GAAP and non-GAAP earnings diluted for the quarter ending Sept. 30, 2020, are subject to risks and uncertainties. For the factors that may cause actual results to differ materially from those projected and anticipated in the forward-looking statements in this release, please refer to KLA's annual report on Form 10-K for the year ended June 30, 2019, subsequently filed quarterly reports on Form 10-Q and other filings with the Securities and Exchange Commission (including, without limitation, the risk factors described therein). Except as otherwise specifically indicated, the information included in this release is as of the date it is delivered. 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)

June 30, 2020


June 30, 2019

ASSETS




Cash, cash equivalents and marketable securities

$

1,980,472



$

1,739,385


Accounts receivable, net

1,107,413



990,113


Inventories

1,310,985



1,262,500


Other current assets

324,675



323,077


Land, property and equipment, net

519,824



448,799


Goodwill

2,045,402



2,211,858


Deferred income taxes, non-current

236,797



206,141


Purchased intangibles, net

1,391,413



1,560,670


Other non-current assets

362,979



265,973


Total assets

$

9,279,960



$

9,008,516






LIABILITIES, NON-CONTROLLING INTEREST AND STOCKHOLDERS' EQUITY

Current liabilities:




Accounts payable

$

264,280



$

202,416


Deferred system revenue

336,237



282,348


Deferred service revenue

233,493



206,669


Current portion of long-term debt



249,999


Other current liabilities

865,776



827,054


Total current liabilities

1,699,786



1,768,486


Non-current liabilities:




Long-term debt

3,469,670



3,173,383


Deferred tax liabilities

660,885



702,285


Deferred service revenue

96,325



98,772


Other non-current liabilities

672,284



587,897


Total liabilities

6,598,950



6,330,823


Stockholders' equity:




Common stock and capital in excess of par value

2,090,268



2,017,312


Retained earnings

654,930



714,825


Accumulated other comprehensive income (loss)

(79,774)



(73,029)


Total KLA stockholders' equity

2,665,424



2,659,108


Non-controlling interest in consolidated subsidiary

15,586



18,585


Total stockholders' equity

2,681,010



2,677,693


Total liabilities and stockholders' equity

$

9,279,960



$

9,008,516



 

KLA Corporation








Condensed Consolidated Unaudited Statements of Operations










Three months ended


Twelve months ended

(In thousands, except per share amounts)

June 30, 2020


June 30, 2019


June 30, 2020


June 30, 2019

Revenues:








Product

$

1,075,104



$

917,591



$

4,328,725



$

3,392,243


Service

384,489



340,844



1,477,699



1,176,661


Total revenues

1,459,593



1,258,435



5,806,424



4,568,904


Costs and expenses:








Costs of revenues

621,544



592,785



2,449,561



1,869,377


Research and development

217,100



206,710



863,864



711,030


Selling, general and administrative

167,791



190,040



734,149



599,124


Goodwill impairment





256,649




Interest expense

40,221



40,517



160,274



124,604


Loss on extinguishment of debt





22,538




Other expense (income), net

7,868



(2,927)



2,678



(31,462)


Income before income taxes

405,069



231,310



1,316,711



1,296,231


Provision for income taxes

(5,246)



13,982



101,686



121,214


Net income

410,315



217,328



1,215,025



1,175,017


Less: Net loss attributable to non-controlling interest

(938)



(517)



(1,760)



(600)


Net income attributable to KLA

$

411,253



217,845



$

1,216,785



1,175,617


Net income per share attributable to KLA:








Basic

$

2.65



$

1.36



$

7.76



$

7.53


Diluted

$

2.63



$

1.35



$

7.70



$

7.49


Weighted-average number of shares:








Basic

155,106



160,546



156,797



156,053


Diluted

156,183



161,937



158,005



156,949


 

 

KLA Corporation

Condensed Consolidated Unaudited Statements of Cash Flows



Three months ended

June 30,

(In thousands)

2020


2019

Cash flows from operating activities:




Net income

$

410,315



$

217,328


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




Depreciation and amortization

78,937



127,886


(Gain) loss on unrealized foreign exchange and other

15,047



(812)


Other impairment charges

10,760




Stock-based compensation expense

26,378



28,168


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




Accounts receivable

10,431



(53,565)


Inventories

(56,609)



13,179


Other assets

(74,986)



(89,691)


Accounts payable

19,905



(3,832)


Deferred system revenue

3,652



51,754


Deferred service revenue

15,205



31,549


Other liabilities

(6,189)



3,497


Net cash provided by operating activities

452,846



325,461


Cash flows from investing activities:




Business acquisitions, net of cash acquired

(11,543)




Capital expenditures

(41,790)



(55,846)


Purchases of available-for-sale securities

(233,838)



(78,847)


Proceeds from sale of available-for-sale securities

44,199



16,867


Proceeds from maturity of available-for-sale securities

135,674



146,217


Purchases of trading securities

(41,584)



(18,594)


Proceeds from sale of trading securities

43,061



20,642


Net cash provided by investing activities

(105,821)



30,439


Cash flows from financing activities:




Payments of debt issuance costs

(172)



(2,478)


Proceeds from revolving credit facility, net of costs

200,000




Repayment of debt

(175,000)




Issuance of common stock

50,349



44,272


Tax withholding payments related equity awards

(5,527)



(6,942)


Common stock repurchases



(344,986)


Payment of dividends to stockholders

(132,762)



(121,363)


Payment of dividends to subsidiary's non-controlling interest holders

(1,239)




Contingent consideration payable and other, net

2,996



(649)


Net cash used in financing activities

(61,355)



(432,146)


Effect of exchange rate changes on cash and cash equivalents

2,564



77


Net (decrease) increase in cash and cash equivalents

288,234



(76,169)


Cash and cash equivalents at beginning of period

946,175



1,092,163


Cash and cash equivalents at end of period

$

1,234,409



$

1,015,994


Supplemental cash flow disclosures:




Income taxes paid

$

31,865



$

15,769


Interest paid

$

37,988



$

51,544


Non-cash activities:




Contingent consideration payable - financing activities

$

(803)



$

6,905


Dividends payable - financing activities

$

1,400



$

7,340


Unsettled common stock repurchase - financing activities

$



$

8,000


Accrued purchase of land, property and equipment - investing activities

$

15,843



$

6,353


 

 

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


Twelve months ended

(In thousands)

June 30, 2020


June 30, 2019


June 30, 2020


June 30, 2019

Revenues:








Semiconductor Process Control

$

1,156,607



$

1,002,544



$

4,745,446



$

4,080,822


Specialty Semiconductor Process(1)

100,372



66,775



329,700



151,164


PCB, Display and Component Inspection(1)

202,209



184,625



727,451



332,810


Other(1)

397



4,525



3,614



4,676


Total revenues for reportable segments

1,459,585



1,258,469



5,806,211



4,569,472


Corporate allocation and effects of foreign exchange rates

8



(34)



213



(568)


Total revenues

$

1,459,593



$

1,258,435



$

5,806,424



$

4,568,904


__________

(1)

Revenues in the twelve months ended June 30, 2019 include the contribution from the Orbotech business from the Feb. 20, 2019 acquisition date.

 

 

 

KLA Corporation

Condensed Consolidated Unaudited Supplemental Information


Reconciliation of GAAP Net Income to Non-GAAP Net Income




Three months ended


Twelve months ended

(In thousands, except per share amounts)


June 30, 2020


March 31, 2020


June 30, 2019


June 30, 2020


June 30, 2019

GAAP net income attributable to KLA


$

411,253



$

78,452



$

217,845



$

1,216,785



$

1,175,617


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











Acquisition-related charges

a

55,937



55,022



102,807



244,715



216,394


Restructuring, severance and other charges

b

4,240



5,432





12,458




Goodwill impairment

c



256,649





256,649




Loss on extinguishment of debt

d



22,538





22,538




Income tax effect of non-GAAP adjustments

e

(16,027)



(23,604)



(32,930)



(83,402)



(54,643)


Discrete tax items

f

(29,364)



(5,551)



983



(34,915)



(9,406)


Non-GAAP net income attributable to KLA


$

426,039



$

388,938



$

288,705



$

1,634,828



$

1,327,962


GAAP net income per diluted share attributable to KLA


$

2.63



$

0.50



$

1.35



$

7.70



$

7.49


Non-GAAP net income per diluted share attributable to
KLA


$

2.73



$

2.47



$

1.78



$

10.35



$

8.46


Shares used in diluted shares calculation


156,183



157,172



161,937



158,005



156,949


 


 

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


Goodwill
Impairment


Debt
Extinguishment
Loss


Total pre-tax
GAAP to non-
GAAP
Adjustments

Three months ended June 30, 2020










Costs of revenues

$

41,446



$

534



$



$



$

41,980


Research and development



585







585


Selling, general and administrative

14,491



1,179







15,670


Other expense (income), net



1,942







1,942


Total in three months ended June 30, 2020

$

55,937



$

4,240



$



$



$

60,177


Three Months Ended March 31, 2020










Costs of revenues

$

36,850



$

483



$



$



$

37,333


Research and development



685







685


Selling, general and administrative

18,172



4,264







22,436


Goodwill impairment





256,649





256,649


Loss on extinguishment of debt







22,538



22,538


Total in three months ended March 31, 2020

$

55,022



$

5,432



$

256,649



$

22,538



$

339,641


Three Months Ended June 30, 2019










Costs of revenues

$

75,805



$



$



$



$

75,805


Selling, general and administrative

27,002









27,002


Total in three months ended June 30, 2019

$

102,807



$



$



$



$

102,807


 

First Quarter Fiscal 2021 Guidance

Reconciliation of GAAP Diluted EPS to Non-GAAP Diluted EPS




Three months ending Sept. 30, 2020

(In thousands, except per share amounts)


Low


High

GAAP net income per diluted share attributable to KLA


$2.18


$2.82

Acquisition-related charges

a

0.33


0.33

Restructuring, severance and other charges

b

0.02


0.02

Income tax effect of non-GAAP adjustments

e

(0.11)


(0.11)

Non-GAAP net income per diluted share attributable to KLA


$2.42


$3.06

Shares used in net income per diluted share calculation


156.6


156.6

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 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. 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 (for example, determining which costs and expenses to exclude when calculating such a metric) are inherently subject to significant discretion. 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.

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, primarily Orbotech. Management believes that the expense associated with the amortization of acquisition-related intangible assets is appropriate to be excluded because a significant portion of the purchase price for acquisitions may be allocated to intangible assets and exclusion of these expenses allows comparisons of operating results that are consistent over time for both KLA's newly-acquired and long-held businesses. Management believes that the other acquisition-related expenses are appropriate to be excluded because such costs would not have otherwise been incurred in the periods presented. Management believes excluding these items helps investors compare our operating performances with our results in prior periods as well as with the performance of other companies.

b. 

Restructuring, severance and other charges primarily include costs associated with employee severance, acceleration of certain stock-based compensation arrangements, and other exit costs. Management believes excluding these items helps investors compare our operating performance with our results in prior periods.

c. 

Goodwill impairment includes non-cash expense recognized as a result of KLA's annual testing for goodwill impairment performed in the third quarter of the fiscal year. The impairment charge resulted from the downward revision of financial outlook for the acquired Orbotech business as well as the impact of elevated risk and macroeconomic slowdown driven by the COVID-19 pandemic. Management believes that it is appropriate to exclude the impairment charge as it is not indicative of ongoing operating results and therefore limits comparability. Management also believes excluding this item helps investors compare our operating performance with our results in prior periods as well as with the performance of other companies.

d. 

Loss on extinguishment of debt includes a pre-tax loss on early extinguishment of the $500 million 4.125% Senior Notes due in November 2021. Management believes it is appropriate to exclude this loss as it is not indicative of ongoing operating results and therefore limits comparability and excluding this loss helps investors compare our operating results with our results in prior periods as well as with performance of other companies.

e. 

Income tax effect of non-GAAP adjustments includes the income tax effects of the excluded items noted above. Management believes that it is appropriate to exclude the tax effects of the items noted above in order to present a more meaningful measure of non-GAAP net income.

f. 

Discrete tax items in the three and twelve months ended June 30, 2020 include a tax benefit from an internal restructuring and a decrease in deferred tax liability for an unrealized gain on investments held by subsidiaries of the acquired Orbotech business. Discrete tax items in the three and twelve months ended June 30, 2019 include tax impact of and the income tax effects of an income tax expense from the enacted tax reform legislation through the Tax Cuts and Jobs-Act (the "Act"), which was signed into law on Dec. 22, 2017, of which the impact is primarily related to the provisional tax amounts recorded for the transition tax on accumulated foreign earnings and the re-measurement of certain deferred tax assets and liabilities as a result of the enactment of the Act. Management believes excluding these items helps investors compare our operating performance with our results in prior periods as well as with the performance of other companies.

 

 

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SOURCE KLA Corporation