MILPITAS, Calif., Feb. 3, 2021 /PRNewswire/ — KLA Corporation (NASDAQ: KLAC) today announced operating results for its second quarter of fiscal year 2021, which ended on Dec. 31, 2020, and reported GAAP net income attributable to KLA of $457 million and GAAP earnings per diluted share attributable to KLA of $2.94 on revenue of $1.65 billion.

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“Our results for the December quarter and calendar 2020 demonstrate continued strong demand from customers, exceptional execution by our global teams, and the enduring strength and resiliency of our KLA operating model in guiding our strategic objectives,” commented Rick Wallace, president and chief executive officer of KLA Corporation. “In the December quarter we also generated record free cash flow while continuing our commitment to capital returns to our shareholders.”

GAAP Results

Q2 FY 2021

Q1 FY 2021

Q2 FY 2020

Total revenue

$1,651 million

$1,539 million

$1,509 million

Net Income Attributable to KLA

$457 million

$421 million

$381 million

Earnings per Diluted Share Attributable to KLA

$2.94

$2.69

$2.40

Non-GAAP Results

Q2 FY 2021

Q1 FY 2021

Q2 FY 2020

Adjusted Net Income Attributable to KLA

$504 million

$475 million

$422 million

Earnings per Diluted Share Attributable to KLA

$3.24

$3.03

$2.66

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 2021 second quarter, 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.

Third Quarter Fiscal 2021 Guidance

The following details our guidance for the third quarter of fiscal 2021 ending in March:

  • Total revenue between $1,665 million to $1,815 million
  • GAAP diluted EPS attributable to KLA is expected to be in a range of $2.98 to $3.66
  • Non-GAAP diluted EPS attributable to KLA in a range of $3.23 to $3.91

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. 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 (KLAC-F).

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 total revenue, GAAP and non-GAAP EPS attributable to KLA for the quarter ending Dec. 31, 2020, and growth of our Services business in 2020, are subject to risks and uncertainties. Factors that may cause actual results to differ materially from those projected and anticipated in the forward-looking statements in this release, include risks related to customer cancellations or push outs, our ability to deliver services during the COVID-19 pandemic, the introduction of new laws, regulations or orders that limit our ability to sell products to customers or to service products previously sold to customers and other risk factors included in KLA’s annual report on Form 10-K for the year ended June 30, 2020 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)

Dec. 31, 2020

June 30, 2020

ASSETS

Cash, cash equivalents and marketable securities

$

2,296,530

$

1,980,472

Accounts receivable, net

1,219,189

1,107,413

Inventories

1,420,618

1,310,985

Other current assets

286,617

324,675

Land, property and equipment, net

594,185

519,824

Goodwill

2,045,445

2,045,402

Deferred income taxes, non-current

258,734

236,797

Purchased intangible assets, net

1,289,843

1,391,413

Other non-current assets

403,483

362,979

Total assets

$

9,814,644

$

9,279,960

LIABILITIES, NON-CONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

262,496

$

264,280

Deferred system revenue

274,642

336,237

Deferred service revenue

239,618

233,493

Short-term debt

20,000

Other current liabilities

1,223,356

865,776

Total current liabilities

2,020,112

1,699,786

Non-current liabilities:

Long-term debt

3,441,465

3,469,670

Deferred tax liabilities

646,028

660,885

Deferred service revenue

88,769

96,325

Other non-current liabilities

667,964

672,284

Total liabilities

6,864,338

6,598,950

Stockholders’ equity:

Common stock and capital in excess of par value

2,104,190

2,090,268

Retained earnings

903,696

654,930

Accumulated other comprehensive income (loss)

(72,704)

(79,774)

Total KLA stockholders’ equity

2,935,182

2,665,424

Non-controlling interest in consolidated subsidiary

15,124

15,586

Total stockholders’ equity

2,950,306

2,681,010

Total liabilities and stockholders’ equity

$

9,814,644

$

9,279,960

 

 

KLA Corporation

Condensed Consolidated Unaudited Statements of Operations

Three Months Ended Dec. 31,

Six Months Ended Dec. 31,

(In thousands, except per share amounts)

2020

2019

2020

2019

Revenues:

Product

$

1,238,023

$

1,144,550

$

2,383,518

$

2,202,525

Service

412,847

364,903

805,972

720,342

Total revenues

1,650,870

1,509,453

3,189,490

2,922,867

Costs and expenses:

Costs of revenues

669,733

633,618

1,290,295

1,237,859

Research and development

229,064

220,751

448,102

431,331

Selling, general and administrative

181,909

192,253

354,540

380,598

Interest expense

38,880

40,472

78,266

80,822

Other expense (income), net

3,882

(2,568)

7,079

(4,186)

Income before income taxes

527,402

424,927

1,011,208

796,443

Provision for income taxes

70,419

44,622

134,083

69,742

Net income

456,983

380,305

877,125

726,701

Less: Net loss attributable to non-controlling interest

(268)

(250)

(693)

(379)

Net income attributable to KLA

$

457,251

$

380,555

$

877,818

$

727,080

Net income per share attributable to KLA:

Basic

$

2.96

$

2.42

$

5.67

$

4.60

Diluted

$

2.94

$

2.40

$

5.62

$

4.56

Weighted-average number of shares:

Basic

154,273

157,290

154,777

157,994

Diluted

155,560

158,620

156,057

159,314

 

 

KLA Corporation
Condensed Consolidated Unaudited Statements of Cash Flows

Three Months Ended

Dec. 31,

(In thousands)

2020

2019

Cash flows from operating activities:

Net income

$

456,983

$

380,305

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

Depreciation and amortization

84,257

88,534

(Gain) loss on unrealized foreign exchange and other

(5,663)

(5,550)

Asset impairment charges

100

Stock-based compensation expense

26,827

26,789

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

Accounts receivable

(190,189)

(126,682)

Inventories

(26,215)

(1,477)

Other assets

(56,390)

3,558

Accounts payable

8,039

35,258

Deferred system revenue

21,038

(30,412)

Deferred service revenue

2,215

1,220

Other liabilities

240,179

16,088

Net cash provided by operating activities

561,081

387,731

Cash flows from investing activities:

Proceeds from sale of assets

741

Capital expenditures

(59,144)

(34,874)

Purchases of available-for-sale securities

(260,227)

(144,715)

Proceeds from sale of available-for-sale securities

57,563

10,287

Proceeds from maturity of available-for-sale securities

163,492

158,699

Purchases of trading securities

(16,741)

(12,852)

Proceeds from sale of trading securities

18,424

15,307

Net cash used in investing activities

(95,892)

(8,148)

Cash flows from financing activities:

Proceeds from issuance of debt, net of issuance costs

40,343

Proceeds from revolving credit facility

250,000

Repayment of debt

(275,000)

Common stock repurchases

(177,492)

(284,593)

Payment of dividends to stockholders

(139,584)

(134,696)

Issuance of common stock

26,356

24,499

Tax withholding payments related to equity awards

(11,000)

(12,237)

Payment of contingent consideration payable

(3)

Net cash used in financing activities

(261,377)

(432,030)

Effect of exchange rate changes on cash and cash equivalents

11,834

3,963

Net increase (decrease) in cash and cash equivalents

215,646

(48,484)

Cash and cash equivalents at beginning of period

1,215,820

988,348

Cash and cash equivalents at end of period

$

1,431,466

$

939,864

Supplemental cash flow disclosures:

Income taxes paid

$

59,764

$

50,884

Interest paid

$

36,925

$

53,140

Non-cash activities:

Accrued purchase of land, property and equipment – investing activities

$

25,987

$

13,755

Contingent consideration payable – financing activities

$

(5,761)

$

(3,540)

Dividends payable – financing activities

$

812

$

1,638

Unsettled common stock repurchase – financing activities

$

6,000

$

4,000

 

 

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 Dec. 31,

Six Months Ended Dec. 31,

(In thousands)

2020

2019

2020

2019

Revenues:

Semiconductor Process Control

$

1,380,184

$

1,247,430

$

2,648,138

$

2,411,062

Specialty Semiconductor Process

90,587

75,106

179,540

144,245

PCB, Display and Component Inspection

179,267

186,279

360,444

364,831

Other

449

517

590

2,748

Total revenues for reportable segments

1,650,487

1,509,332

3,188,712

2,922,886

Corporate allocation and effects of foreign exchange rates

383

121

778

(19)

Total revenues

$

1,650,870

$

1,509,453

$

3,189,490

$

2,922,867

 

 

 

KLA Corporation
Condensed Consolidated Unaudited Supplemental Information

Reconciliation of GAAP Net Income and GAAP Earnings Per Diluted Share to Non-GAAP Net Income and Non-GAAP Earnings Per Diluted Share

Three Months Ended

Six Months Ended

(In thousands, except per share amounts)

Dec. 31,
2020

Sept. 30,
2020

Dec. 31,
2019

Dec. 31,
2020

Dec. 31,
2019

GAAP net income attributable to KLA

$

457,251

$

420,567

$

380,555

$

877,818

$

727,080

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

Acquisition-related charges

a

53,099

50,475

60,393

103,574

133,756

Restructuring, severance and other charges

b

3,960

3,253

2,786

7,213

2,786

Income tax effect of non-GAAP adjustments

c

(17,552)

(17,013)

(21,505)

(34,565)

(43,771)

Discrete tax items

d

7,381

17,487

24,868

Non-GAAP net income attributable to KLA

$

504,139

$

474,769

$

422,229

$

978,908

$

819,851

GAAP net income per diluted share attributable to KLA

$

2.94

$

2.69

$

2.40

$

5.62

$

4.56

Non-GAAP net income per diluted share attributable to KLA

$

3.24

$

3.03

$

2.66

$

6.27

$

5.15

Shares used in diluted shares calculation

155,560

156,442

158,620

156,057

159,314

 

 

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 Dec. 31, 2020

Costs of revenues

$

38,738

$

765

$

39,503

Research and development

1,432

1,432

Selling, general and administrative

14,361

2,450

16,811

Other expense (income), net

(687)

(687)

Total in three months ended Dec. 31, 2020

$

53,099

$

3,960

$

57,059

Three months ended Sept. 30, 2020

Costs of revenues

$

37,040

$

636

$

37,676

Research and development

923

923

Selling, general and administrative

13,435

1,933

15,368

Other expense (income), net

(239)

(239)

Total in three months ended Sept. 30, 2020

$

50,475

$

3,253

$

53,728

Three months ended Dec. 31, 2019

Costs of revenues

$

40,590

$

831

$

41,421

Research and development

802

802

Selling, general and administrative

19,803

1,153

20,956

Total in three months ended Dec. 31, 2019

$

60,393

$

2,786

$

63,179

 

 

Free Cash Flow Reconciliation

Three Months Ended Dec. 31,

(In thousands)

2020

2019

Net cash provided by operating activities

$

561,081

$

387,731

Capital expenditures

(59,144)

(34,874)

Free Cash Flow

$

501,937

$

352,857

 

 

Third Quarter Fiscal 2021 Guidance

Reconciliation of GAAP Diluted EPS to Non-GAAP Diluted EPS

Three Months Ending March 31, 2021

(In millions, except per share amounts)

Low

High

GAAP net income per diluted share attributable to KLA

$2.98

$3.66

Acquisition-related charges

a

0.34

0.34

Restructuring, severance and other charges

b

0.02

0.02

Income tax effect of non-GAAP adjustments

c

(0.11)

(0.11)

Non-GAAP net income per diluted share attributable to KLA

$3.23

$3.91

Shares used in net income per diluted share calculation

155.2

155.2

 

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 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 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 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.

b. 

Restructuring, severance and other charges primarily include costs associated with employee severance, acceleration of certain stock-based compensation arrangements, and other exit costs.

c. 

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

d. 

Discrete tax items in the three months ended Dec. 31, 2020 consist primarily of a tax expense of $4.0 million from an internal restructuring. Discrete tax items in the three months ended Sept. 30, 2020 include a tax expense of $14.0 million due to an increase in deferred tax liability on purchased intangibles relating to an increase in the United Kingdom statutory income tax rate as well as tax expense from a restructuring. Discrete tax items in the six months ended Dec. 31, 2020 are the aggregate of the aforementioned discrete tax items.

 

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