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KLA Corporation Reports Fiscal 2019 Fourth Quarter And Full Year Results

MILPITAS, Calif., Aug. 5, 2019 /PRNewswire/ -- KLA Corporation (KLAC) today announced operating results for its fourth quarter and fiscal year ended June 30, 2019. KLA reported GAAP net income attributable to KLA of $218 million and GAAP earnings per diluted share attributable to KLA of $1.35 on revenues of $1,258 million for the fourth quarter of fiscal year 2019. For the fiscal year ended June 30, 2019, the company reported GAAP net income attributable to KLA of $1,176 million and GAAP earnings per diluted share attributable to KLA of $7.49 on revenues of $4.6 billion.

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"In the fourth fiscal quarter KLA delivered results above the midpoint of our range of guidance, reflecting solid execution in a challenging business environment," commented Rick Wallace, president and chief executive officer. "These results demonstrate KLA is benefitting from our strategies for growth and market leadership, which in combination with the recent acquisition of Orbotech, is translating to good relative performance for the company in calendar year 2019."

GAAP Results


Q4 FY 2019

Q3 FY 2019

Q4 FY 2018

Revenues

$1,258 million

$1,097 million

$1,070 million

Net Income Attributable to KLA Corporation

$218 million

$193 million

$349 million

Earnings per Diluted Share Attributable to KLA Corporation

$1.35

$1.23

$2.22





Non-GAAP Results


Q4 FY 2019

Q3 FY 2019

Q4 FY 2018

Net Income Attributable to KLA Corporation

$289 million

$283 million

$348 million

Earnings per Diluted Share Attributable to KLA Corporation

$1.78

$1.80

$2.22

Effective on the first day of fiscal 2019, the company adopted Accounting Standards Update 2014-09, Revenue from Contracts with Customers ("ASC 606"). Prior periods were not retrospectively restated, and accordingly, the condensed consolidated unaudited balance sheet as of June 30, 2018, and the condensed consolidated unaudited statements of operations for the three and twelve months ended June 30, 2018 and cash flows for the three months ended June 30, 2018 were prepared using accounting standards that were different from those in effect for the three and twelve months ended June 30, 2019.

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 stock-based compensation, but exclude the impact of acquisitions or pending acquisitions, restructuring, severance, merger and other related charges and certain discrete tax items. KLA will discuss the results for its fiscal year 2019 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

About KLA:

KLA Corporation, formerly known as KLA-Tencor Corporation, (aka "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 http://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, the company 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 the company believes are not indicative of its 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.

KLA Corporation (formerly known as KLA-Tencor Corporation)




Condensed Consolidated Unaudited Balance Sheets








(In thousands)

June 30, 2019


June 30, 2018

ASSETS




Cash, cash equivalents and marketable securities

$

1,739,385



$

2,880,318


Accounts receivable, net

990,113



651,678


Inventories

1,262,500



931,845


Other current assets

323,077



85,159


Land, property and equipment, net

448,799



286,306


Goodwill

2,211,858



354,698


Deferred income taxes, non-current

206,141



193,200


Purchased intangibles, net

1,560,670



19,333


Other non-current assets

265,973



236,082


Total assets

$

9,008,516



$

5,638,619


LIABILITIES, NON-CONTROLLING INTEREST AND STOCKHOLDERS' EQUITY



Current liabilities:




Accounts payable

$

202,416



$

169,354


Deferred system revenue

282,348




Deferred service revenue

206,669



69,255


Deferred system profit



279,581


Current portion of long-term debt

249,999




Other current liabilities

827,054



696,080


Total current liabilities

1,768,486



1,214,270


Non-current liabilities:




Long-term debt

3,173,383



2,237,402


Deferred tax liabilities

702,285



1,197


Deferred service revenue

98,772



71,997


Other non-current liabilities

587,897



493,242


Total liabilities

6,330,823



4,018,108


Stockholders' equity:




Common stock and capital in excess of par value

2,017,312



617,999


Retained earnings

714,825



1,056,445


Accumulated other comprehensive income (loss)

(73,029)



(53,933)


Total KLA stockholders' equity

2,659,108



1,620,511


Non-controlling interest in consolidated subsidiary

18,585




Total stockholders' equity

2,677,693



1,620,511


Total liabilities and stockholders' equity

$

9,008,516



$

5,638,619


 

KLA Corporation (formerly known as KLA-Tencor Corporation)







Condensed Consolidated Unaudited Statements of Operations
















Three months ended


Twelve months ended

(In thousands, except per share amounts)

June 30, 2019


June 30, 2018


June 30, 2019


June 30, 2018

Revenues:








Product

$

917,591



$

840,500



$

3,392,243



$

3,160,671


Service

340,844



229,504



1,176,661



876,030


Total revenues

1,258,435



1,070,004



4,568,904



4,036,701


Costs and expenses:








Costs of revenues

592,785



377,566



1,869,377



1,446,041


Research and development

206,710



151,905



711,030



608,531


Selling, general and administrative

190,040



116,370



599,124



442,304


Interest expense and other, net

37,590



17,674



93,142



83,894


Income before income taxes

231,310



406,489



1,296,231



1,455,931


Provision for income taxes

13,982



57,722



121,214



653,666


Net income

217,328



348,767



1,175,017



802,265


Less: Net loss attributable to non-controlling interest

(517)





(600)




Net income attributable to KLA

$

217,845



$

348,767



$

1,175,617



$

802,265


Net income per share attributable to KLA:








Basic

$

1.36



$

2.24



$

7.53



$

5.13


Diluted

$

1.35



$

2.22



$

7.49



$

5.10


Weighted-average number of shares:








Basic

160,546



155,740



156,053



156,346


Diluted

161,937



156,822



156,949



157,378


 

KLA Corporation (formerly known as KLA-Tencor Corporation)

Condensed Consolidated Unaudited Statements of Cash Flows


Three months ended

June 30,

(In thousands)

2019


2018

Cash flows from operating activities:




Net income

$

217,328


$

348,767

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




Depreciation and amortization

127,886


14,989

(Gain) loss on unrealized foreign exchange and other

(812)


11,107

Stock-based compensation expense

28,168


18,804

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




Accounts receivable

(53,565)


2,095

Inventories

13,179


(74,684)

Other assets

(89,691)


40,737

Accounts payable

(3,832)


403

Deferred system revenue

51,754


Deferred service revenue

31,549


Deferred system profit


20,309

Other liabilities

3,497


(9,014)

Net cash provided by operating activities

325,461


373,513

Cash flows from investing activities:



Business acquisitions, net of cash acquired


(11,913)

Capital expenditures

(55,846)


(22,828)

Purchases of available-for-sale securities

(78,847)


(27,657)

Proceeds from sale of available-for-sale securities

16,867


68,229

Proceeds from maturity of available-for-sale securities

146,217


118,877

Purchases of trading securities

(18,594)


(12,762)

Proceeds from sale of trading securities

20,642


14,829

Net cash provided by investing activities

30,439


126,775

Cash flows from financing activities:




Payments of debt issuance costs

(2,478)


Repayment of debt


(225,000)

Issuance of common stock

44,272


40,873

Tax withholding payments related equity awards

(6,942)


(2,133)

Common stock repurchases

(344,986)


(38,091)

Payment of dividends to stockholders

(121,363)


(117,035)

Payment of contingent consideration payable

(649)


Net cash used in financing activities

(432,146)


(341,386)

Effect of exchange rate changes on cash and cash equivalents

77


(10,202)

Net (decrease) increase in cash and cash equivalents

(76,169)


148,700

Cash and cash equivalents at beginning of period

1,092,163


1,255,682

Cash and cash equivalents at end of period

$

1,015,994


$

1,404,382

Supplemental cash flow disclosures:




Income taxes paid

$

15,769


$

31,331

Interest paid

$

51,544


$

53,210

Non-cash activities:




Contingent consideration payable - financing activities

$

6,905


$

Dividends payable - financing activities

$

7,340


$

9,571

Unsettled common stock repurchase - financing activities

$

8,000


$

Accrued purchase of land, property and equipment - investing activities

$

6,353


$

7,418

 

KLA Corporation (formerly known as KLA-Tencor 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, 2019


June 30, 2018


June 30, 2019


June 30, 2018

Revenues:








Semiconductor Process Control

$

1,002,544



$

1,043,714



$

4,080,822



$

3,944,015


Specialty Semiconductor Process

66,775





151,164




PCB, Display and Component Inspection(1)

184,625



26,160



332,810



92,516


Other

4,525





4,676




Total revenues for reportable segments

$

1,258,469



$

1,069,874



$

4,569,472



$

4,036,531


Corporate allocation and effects of foreign exchange rates

(34)



130



(568)



170


Total revenues

$

1,258,435



$

1,070,004



$

4,568,904



$

4,036,701


__________
















(1) Revenues in the three and twelve months ended June 30, 2019 include the contribution from the Orbotech business from the Feb. 20, 2019 acquisition date. Revenues in the 2018 periods include the component inspection business only.


 

KLA Corporation (formerly known as KLA-Tencor 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,
2019


March 31,
2019


June 30,
2018


June 30,
2019


June 30,
2018

GAAP net income attributable to KLA


$

217,845



$

192,728



$

348,767



$

1,175,617



$

802,265


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













Acquisition-related charges

a

102,807



103,755



3,973



216,394



14,581


Merger-related charges

b









3,015


Income tax effect of non-GAAP adjustments

c

(32,930)



(21,127)



(300)



(54,643)



(2,707)


Discrete tax items

d

983



7,482



(4,402)



(9,406)



441,676


Non-GAAP net income attributable to KLA


$

288,705



$

282,838



$

348,038



$

1,327,962



$

1,258,830


GAAP net income per diluted share attributable to KLA


$

1.35



$

1.23



$

2.22



$

7.49



$

5.10


Non-GAAP net income per diluted share attributable to
KLA


$

1.78



$

1.80



$

2.22



$

8.46



$

8.00


Shares used in diluted shares calculation


161,937



157,182



156,822



156,949



157,378


 

Pre-tax impact of items included in Condensed Consolidated Unaudited Statements of Operations



(In thousands)

Acquisition-related
charges

Three months ended June 30, 2019


Costs of revenues

$

75,805

Selling, general and administrative

27,002

Total in three months ended June 30, 2019

$

102,807

Three months ended March 31, 2019


Costs of revenues

$

47,659

Research and development

3,328

Selling, general and administrative

52,768

Total in three months ended March 31, 2019

$

103,755

Three months ended June 30, 2018


Costs of revenues

$

729

Selling, general and administrative

3,244

Total in three months ended June 30, 2018

$

3,973

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.

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