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KLA CORPORATION REPORTS FISCAL 2022 FOURTH QUARTER AND FULL YEAR RESULTS

KLAC
  • For the quarter, total revenues were $2.49 billion, GAAP diluted EPS attributable to KLA was $5.40 and non-GAAP diluted EPS attributable to KLA was $5.81, each finishing above the mid-point of guidance ranges;
  • Cash flow from operations for the quarter and fiscal year was $819.2 million and $3.31 billion and free cash flow was $746.1 million and $3.01 billion, respectively; and
  • Capital returns for the quarter and fiscal year were $3.63 billion and $5.51 billion, respectively.

MILPITAS, Calif., July 28, 2022 /PRNewswire/ -- KLA Corporation (NASDAQ: KLAC) today announced operating results for its fourth quarter and fiscal year ended June 30, 2022. KLA reported GAAP net income attributable to KLA of $805.4 million and GAAP diluted earnings per share ("EPS") attributable to KLA of $5.40 on total revenues of $2.49 billion for the fourth quarter of fiscal year 2022. For the fiscal year ended June 30, 2022, KLA reported GAAP net income attributable to KLA of $3.32 billion and GAAP diluted EPS attributable to KLA of $21.92 on total revenues of $9.21 billion.

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

"KLA's June quarter results and September quarter outlook once again demonstrate sustainable outperformance, highlighting the critical nature of KLA's products and services in enabling digital transformation in how we live and work," commented Rick Wallace, president and chief executive officer of KLA Corporation. "Our consistent, strong execution against various challenges in the marketplace, both in terms of macro-economic uncertainty and in addressing persistent supply chain issues, highlights the resiliency of the KLA Operating Model, the dedication of our global teams, and our commitment to delivering long-term value to our stakeholders."

GAAP Results


Q4 FY 2022

Q3 FY 2022

Q4 FY 2021

Total Revenues

$2,487 million

$2,289 million

$1,925 million

Net Income Attributable to KLA

$805 million

$731 million

$633 million

Net Income per Diluted Share Attributable to KLA

$5.40

$4.83

$4.10





Non-GAAP Results


Q4 FY 2022

Q3 FY 2022

Q4 FY 2021

Net Income Attributable to KLA

$867 million

$776 million

$684 million

Net Income per Diluted Share Attributable to KLA

$5.81

$5.13

$4.43

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 2022 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.

First Quarter Fiscal 2023 Guidance

The following details our guidance for the first quarter of fiscal 2023 ending in September:

  • Total revenues is expected to be in a range of $2,475 million to $2,725 million
  • GAAP gross margin is expected to be in a range of 60.2% to 62.3%
  • Non-GAAP gross margin is expected to be in a range of 62.0% to 64.0%
  • GAAP diluted EPS attributable to KLA is expected to be in a range of $5.28 to $6.38
  • Non-GAAP diluted EPS attributable to KLA is expected to be in a range of $5.70 to $6.80

For additional details and assumptions underlying our guidance metrics, please see the company's published Letter to Shareholders and Earnings Slide Presentation on the KLA investor relations website. Such Letter to Shareholders and Earnings Slide Presentation 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 attributable to KLA for the quarter ending Sept. 30, 2022 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; 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; 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; and our ability to identify suitable acquisition targets and successfully integrate and manage acquired businesses. 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 Corporation's Annual Report on Form 10-K for the year ended June 30, 2021, and other subsequent filings with the Securities and Exchange Commission (including, but not limited to, the risk factors described therein). KLA Corporation 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, 2022


June 30, 2021

ASSETS




Current assets:




Cash and cash equivalents

$ 1,584,908


$ 1,434,610

Marketable securities

1,123,100


1,059,912

Accounts receivable, net

1,811,877


1,305,479

Inventories

2,146,889


1,575,380

Other current assets

502,137


320,867

Total current assets

7,168,911


5,696,248

Land, property and equipment, net

849,929


663,027

Goodwill

2,320,049


2,011,172

Deferred income taxes, non-current

579,173


270,461

Purchased intangibles, net

1,194,414


1,185,311

Other non-current assets

484,612


444,905

Total assets

$ 12,597,088


$ 10,271,124

LIABILITIES, NON-CONTROLLING INTEREST AND STOCKHOLDERS' EQUITY

Current liabilities:




Accounts payable

$ 443,338


$ 342,083

Deferred system revenue

500,969


295,192

Deferred service revenue

381,737


284,936

Short-term debt


20,000

Other current liabilities

1,545,039


1,161,016

Total current liabilities

2,871,083


2,103,227

Long-term debt

6,660,718


3,422,767

Deferred tax liabilities

658,937


650,623

Deferred service revenue

124,618


87,575

Other non-current liabilities

882,642


631,290

Total liabilities

11,197,998


6,895,482

Stockholders' equity:




Common stock and capital in excess of par value

1,061,940


2,175,988

Retained earnings

366,882


1,277,123

Accumulated other comprehensive loss

(27,471)


(75,557)

Total KLA stockholders' equity

1,401,351


3,377,554

Non-controlling interest in consolidated subsidiaries

(2,261)


(1,912)

Total stockholders' equity

1,399,090


3,375,642

Total liabilities and stockholders' equity

$ 12,597,088


$ 10,271,124

KLA Corporation







Condensed Consolidated Unaudited Statements of Operations
















Three months ended June 30,


Twelve months ended June 30,

(In thousands, except per share amounts)

2022


2021


2022


2021

Revenues:








Product

$ 1,975,112


$ 1,481,478


$ 7,301,428


$ 5,240,316

Service

511,627


443,993


1,910,455


1,678,418

Total revenues

2,486,739


1,925,471


9,211,883


6,918,734

Costs and expenses:








Costs of revenues

978,564


772,241


3,592,441


2,772,165

Research and development

296,881


241,428


1,105,254


928,487

Selling, general and administrative

236,778


192,022


860,007


729,602

Interest expense

44,197


39,970


160,339


157,328

Other expense (income), net

(19,380)


(29,033)


4,605


(29,302)

Income before income taxes

949,699


708,843


3,489,237


2,360,454

Provision for income taxes

144,301


75,785


167,177


283,101

Net income

805,398


633,058


3,322,060


2,077,353

Less: Net income (loss) attributable to non-controlling interest

24


80


253


(939)

Net income attributable to KLA

$ 805,374


$ 632,978


$ 3,321,807


$ 2,078,292

Net income per share attributable to KLA:








Basic

$ 5.43


$ 4.14


$ 22.07


$ 13.49

Diluted

$ 5.40


$ 4.10


$ 21.92


$ 13.37

Weighted-average number of shares:








Basic

148,219


152,971


150,494


154,086

Diluted

149,117


154,283


151,555


155,437

KLA Corporation

Condensed Consolidated Unaudited Statements of Cash Flows



Three months ended June 30,

(In thousands)

2022


2021

Cash flows from operating activities:




Net income

$ 805,398


$ 633,058

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




Depreciation and amortization

100,848


84,647

Unrealized foreign exchange (gain) loss and other

31,862


(6,102)

Stock-based compensation expense

36,849


27,690

Deferred income taxes

53,474


(4,787)

Gain on fair value adjustment of marketable equity securities


(26,719)

Settlement of treasury lock agreement

82,799


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

Accounts receivable

(192,055)


(102,021)

Inventories

(170,600)


(123,725)

Other assets

(193,341)


(63,738)

Accounts payable

19,256


48,414

Deferred system revenue

72,246


(40,900)

Deferred service revenue

48,502


35,769

Other liabilities

123,991


4,036

Net cash provided by operating activities

819,229


465,622

Cash flows from investing activities:




Business acquisitions, net of cash acquired

(8,226)


Capital expenditures

(73,160)


(55,375)

Proceeds from sale of assets

27,658


Purchases of available-for-sale securities

(254,274)


(223,619)

Proceeds from sale of available-for-sale securities

46,033


19,759

Proceeds from maturity of available-for-sale securities

235,871


163,232

Purchases of trading securities

(19,912)


(24,001)

Proceeds from sale of trading securities

20,616


26,402

Net cash used in investing activities

(25,394)


(93,602)

Cash flows from financing activities:




Proceeds from issuance of debt, net of issuance costs

2,967,409


Proceeds from revolving credit facility, net of costs

275,000


Repayment of debt

(275,000)


Issuance of common stock

76,102


59,742

Common stock repurchases

(2,573,589)


(299,777)

Forward contract for accelerated share repurchases

(900,000)


Payment of dividends to stockholders

(157,602)


(139,267)

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

(602)


Tax withholding payments related to vested and released restricted stock units

(15,423)


(13,543)

Contingent consideration payable and other, net

(21)


Net cash used in financing activities

(603,726)


(392,845)

Effect of exchange rate changes on cash and cash equivalents

(20,373)


3,285

Net (decrease) increase in cash and cash equivalents

169,736


(17,540)

Cash and cash equivalents at beginning of period

1,415,172


1,452,150

Cash and cash equivalents at end of period

$ 1,584,908


$ 1,434,610

Supplemental cash flow disclosures:




Income taxes paid, net

$ 109,350


$ 111,396

Interest paid

$ 37,882


$ 37,219

Non-cash activities:




Contingent consideration payable - financing activities

$ 1,195


$ 1,120

Dividends payable - financing activities

$ 1,653


$ 1,428

Unsettled common stock repurchase - financing activities

$ —


$ 6,000

Accrued purchase of land, property and equipment - investing activities

$ 19,595


$ 30,615

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 June 30,


Twelve months ended June 30,

(In thousands)

2022


2021


2022


2021

Revenues:








Semiconductor Process Control

$ 2,114,242


$ 1,580,547


$ 7,924,822


$ 5,734,825

Specialty Semiconductor Process

124,559


97,952


456,579


369,216

PCB, Display and Component Inspection

248,858


246,974


832,176


812,620

Other




739

Total revenues for reportable segments

2,487,659


1,925,473


9,213,577


6,917,400

Corporate allocation and effects of foreign exchange rates

(920)


(2)


(1,694)


1,334

Total revenues

$ 2,486,739


$ 1,925,471


$ 9,211,883


$ 6,918,734

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, 2022


March 31, 2022


June 30, 2021


June 30, 2022


June 30, 2021

GAAP net income attributable to KLA


$ 805,374


$ 730,572


$ 632,978


$ 3,321,807


$ 2,078,292

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











Acquisition-related charges

a

64,450


59,898


53,008


238,855


209,555

Restructuring, severance and other charges

b

2,837


2,513


1,358


5,475


7,037

Income tax effect of non-GAAP adjustments

c

(19,465)


(18,803)


(16,910)


(74,710)


(69,341)

Discrete tax items

d

13,496


1,457


13,620


(286,031)


35,521

Non-GAAP net income attributable to KLA


$ 866,692


$ 775,637


$ 684,054


$ 3,205,396


$ 2,261,064

GAAP net income per diluted share attributable to KLA


$ 5.40


$ 4.83


$ 4.10


$ 21.92


$ 13.37

Non-GAAP net income per diluted share attributable to KLA


$ 5.81


$ 5.13


$ 4.43


$ 21.15


$ 14.55

Shares used in diluted shares calculation


149,117


151,186


154,283


151,555


155,437

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 June 30, 2022






Costs of revenues

$ 44,331


$ —


$ 44,331

Selling, general and administrative

20,119



20,119

Other expense (income), net


2,837


2,837

Total in three months ended June 30, 2022

$ 64,450


$ 2,837


$ 67,287

Three Months Ended Mar. 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 Mar. 31, 2022

$ 59,898


$ 2,513


$ 62,411

Three Months Ended June 30, 2021






Costs of revenues

$ 40,499


$ (471)


$ 40,028

Research and development


203


203

Selling, general and administrative

12,509


1,626


14,135

Total in three months ended June 30, 2021

$ 53,008


$ 1,358


$ 54,366

Free Cash Flow Reconciliation




Three months ended June 30,


Twelve months ended June 30,

(In thousands)


2022


2021


2022


2021

Net cash provided by operating activities


$ 819,229


$ 465,622


$ 3,312,702


$ 2,185,026

Capital expenditures


(73,160)


(55,375)


(307,320)


(231,628)

Free Cash Flow


$ 746,069


$ 410,247


$ 3,005,382


$ 1,953,398

First Quarter Fiscal 2023 Guidance

Reconciliation of GAAP Diluted EPS to Non-GAAP Diluted EPS




Three months ending Sept. 30, 2022

(In millions, except per share amounts)


Low


High

GAAP net income per diluted share attributable to KLA


$5.28


$6.38

Acquisition-related charges

a

0.48


0.48

Restructuring, severance and other charges

b

0.10


0.10

Income tax effect of non-GAAP adjustments

c

(0.16)


(0.16)

Non-GAAP net income per diluted share attributable to KLA


$5.70


$6.80

Shares used in net income per diluted share calculation


142.8


142.8

Reconciliation of GAAP Gross Margin to Non-GAAP Gross Margin




Three months ending Sept. 30, 2022



Low


High

GAAP gross margin


60.2 %


62.3 %

Acquisition-related charges

a

1.8 %


1.7 %

Non-GAAP gross margin


62.0 %


64.0 %

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, 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 and other acquisition-related adjustments including adjustments for the fair valuation of inventory and backlog, and transaction costs associated with our acquisitions.

b. Restructuring, severance and other charges primarily include costs associated with employee severance, acceleration of certain stock-based compensation arrangements, interest expense on unrecognized tax benefits, charges related to liquidation of legal entities 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 June 30, 2022 include an increase in unrecognized tax benefits related to the transition tax on accumulated foreign earnings from the Tax Cuts and Jobs Act. Discrete tax items in the three months ended Mar. 31, 2022 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 twelve months ended June 30, 2022 primarily include the aforementioned items 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 and a net benefit of $69.2 million from an internal restructuring, partially offset by 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. Discrete tax items in the three and twelve months ended June 30, 2021 include tax expense from an increase in deferred tax liability on purchased intangibles relating to an increase in the United Kingdom statutory income tax rate, partially offset by a net tax benefit from an internal restructuring and a reduction in unrecognized tax benefits.

Cision View original content:https://www.prnewswire.com/news-releases/kla-corporation-reports-fiscal-2022-fourth-quarter-and-full-year-results-301595642.html

SOURCE KLA Corporation