Lam Research Corporation Reports Financial Results for the Quarter Ended December 25, 2022
FREMONT, Calif., Jan. 25, 2023 /PRNewswire/ -- Lam Research Corporation (the "Company," "Lam," "Lam Research") today announced financial results for the quarter ended December 25, 2022 (the "December 2022 quarter").
Highlights for the December 2022 quarter were as follows:
- Revenue of $5.28 billion.
- U.S. GAAP gross margin of 45.0%, U.S. GAAP operating income as a percentage of revenue of 31.8%, and U.S. GAAP diluted EPS of $10.77.
- Non-GAAP gross margin of 45.1%, non-GAAP operating income as a percentage of revenue of 32.1%, and non-GAAP diluted EPS of $10.71.
Key Financial Data for the Quarters Ended December 25, 2022 and September 25, 2022 (in thousands, except per-share data, percentages, and basis points)
| ||||||
U.S. GAAP | ||||||
December 2022 | September 2022 | 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 | ||||||
December 2022 | September 2022 | 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 % | |||
U.S. GAAP Financial Results
For the December 2022 quarter, revenue was $5,278 million, gross margin was $2,376 million, or 45.0% of revenue, operating expenses were $696 million, operating income was 31.8% of revenue, and net income was $1,469 million, or $10.77 per diluted share on a U.S. GAAP basis. This compares to revenue of $5,074 million, gross margin of $2,337 million, or 46.1% of revenue, operating expenses of $639 million, operating income of 33.5% of revenue, and net income of $1,426 million, or $10.39 per diluted share, for the quarter ended September 25, 2022 (the "September 2022 quarter").
Non-GAAP Financial Results
For the December 2022 quarter, non-GAAP gross margin was $2,382 million, or 45.1% of revenue, non-GAAP operating expenses were $686 million, non-GAAP operating income was 32.1% of revenue, and non-GAAP net income was $1,461 million, or $10.71 per diluted share. This compares to non-GAAP gross margin of $2,335 million, or 46.0% of revenue, non-GAAP operating expenses of $647 million, non-GAAP operating income of 33.3% of revenue, and non-GAAP net income of $1,429 million, or $10.42 per diluted share, for the September 2022 quarter.
"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 Tim Archer, Lam Research's President and Chief Executive Officer. "Given the decline in wafer fabrication equipment spending expected in calendar year 2023, we are taking proactive steps to lower our cost structure and drive efficiencies across our global footprint, while preserving critical R&D. With these actions, Lam is focused on accelerating our strategic priorities to capitalize on the semiconductor industry's long-term growth prospects."
Balance Sheet and Cash Flow Results
Cash and cash equivalents, short-term investments, and restricted cash and investments balances increased to $4.8 billion at the end of the December 2022 quarter compared to $4.6 billion at the end of the September 2022 quarter. This increase was primarily the result of $1,140 million of cash generated from operating activities, partially offset by $456 million of share repurchases, including net share settlement of employee stock-based compensation; $236 million of dividends paid to stockholders; and $163 million of capital expenditures.
Deferred revenue at the end of the December 2022 quarter decreased to $1,984 million compared to $2,755 million as of the end of the September 2022 quarter. Lam's deferred revenue balance does not include shipments to customers in Japan, to whom title does not transfer until customer acceptance. Shipments to customers in Japan are classified as inventory at cost until the time of acceptance. The estimated future revenue from shipments to customers in Japan was approximately $379 million as of December 25, 2022 and $401 million as of September 25, 2022.
Revenue
The geographic distribution of revenue during the December 2022 quarter is shown in the following table:
Region | Revenue |
China | 24 % |
Korea | 20 % |
Taiwan | 19 % |
Japan | 11 % |
Southeast Asia | 10 % |
United States | 10 % |
Europe | 6 % |
The following table presents revenue disaggregated between system and customer support-related revenue:
Three Months Ended | |||||
December 25, | September 25, | December 26, | |||
(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 March 26, 2023, Lam is providing the following guidance:
U.S. GAAP | Reconciling Items | Non-GAAP | ||||||||
Revenue | $3.8 Billion | +/- | $300 Million | — | $3.8 Billion | +/- | $300 Million | |||
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 | $5.95 | +/- | $0.75 | $ 74 | Million | $6.50 | +/- | $0.75 | ||
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; and restructuring charges, $42 million; totaling $45 million.
- Operating income as a percentage of revenue - amortization related to intangible assets acquired through business combinations, $4 million; and restructuring charges, $80 million; totaling $84 million.
- Net income per diluted share - amortization related to intangible assets acquired though business combinations, $4 million; restructuring charges; $80 million; amortization of note discounts, $1 million; and associated tax benefit for non-GAAP items ($11 million); totaling $74 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 December 2022 and September 2022 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 net income tax effect of non-GAAP items. Additionally, the non-GAAP results for the December 2022 quarter excludes a net income tax benefit associated with legal entity restructuring.
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 https://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 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 Securities and Exchange Commission, including specifically the Risk Factors described in our annual report on Form 10–K for the fiscal year ended June 26, 2022 and our quarterly report on Form 10-Q for the fiscal quarter ended September 25, 2022. 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. Lam's equipment and services allow customers to build smaller and better performing devices. In fact, today, nearly every advanced chip is built with Lam technology. We combine superior systems engineering, technology leadership, and a strong values-based culture, with an unwavering commitment to our customers. 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 | Six Months Ended | ||||||||
December 25, | September 25, | December 26, | December 25, | December 26, | |||||
Revenue | $ 5,277,569 | $ 5,074,121 | $ 4,226,604 | $ 10,351,690 | $ 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 | ||||
LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) | |||||
December 25, | September 25, | June 26, | |||
(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 | ||
Goodwill and intangible assets | 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 December 25, 2022, 136,374 as of September 25, 2022, and 136,975 as of June 26, 2022. |
LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, unaudited) | |||||||||
Three Months Ended | Six Months Ended | ||||||||
December 25, | September 25, | December 26, | December 25, | December 26, | |||||
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) | ||||
Treasury stock purchases | (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 | |||
December 25, | September 25, | ||
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 U.S. GAAP Net Income to Non-GAAP Net Income (in thousands, except per share data) (unaudited) | |||
Three Months Ended | |||
December 25, | September 25, | ||
U.S. GAAP net income | $ 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 | |
U.S. GAAP net income per diluted share | $ 10.77 | $ 10.39 | |
U.S. GAAP and non-GAAP number of shares used for per diluted share calculation | 136,339 | 137,208 | |
Reconciliation of U.S. GAAP Gross Margin, Operating Expenses and Operating Income to Non-GAAP Gross Margin, (in thousands, except percentages) (unaudited) | |||
Three Months Ended | |||
December 25, | September 25, | ||
U.S. GAAP gross margin | $ 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 | |
U.S. GAAP gross margin as a percentage of revenue | 45.0 % | 46.1 % | |
Non-GAAP gross margin as a percentage of revenue | 45.1 % | 46.0 % | |
U.S. GAAP operating expenses | $ 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 | |
U.S. GAAP operating income | $ 1,680,162 | $ 1,697,840 | |
Non-GAAP operating income | $ 1,695,375 | $ 1,687,929 | |
U.S. GAAP operating income as percent of revenue | 31.8 % | 33.5 % | |
Non-GAAP operating income as a percent of revenue | 32.1 % | 33.3 % | |
Lam Research Corporation Contacts:
Tina Correia, Investor Relations, phone: 510-572-1615, e-mail: [email protected]
SOURCE Lam Research Corporation
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