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KLA Corporation Reports Fiscal 2021 Fourth Quarter And Full Year Results, Raises Dividend Level By 17% And Announces Additional $2 Billion Share Repurchase Authorization

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- Total revenues were $1.93 billion, GAAP diluted EPS attributable to KLA was $4.10 and non-GAAP diluted EPS attributable to KLA was $4.43, each finishing above the mid-point of guidance ranges;

- Cash flow from operations for the quarter and fiscal year was $465.6 million and $2.19 billion and free cash flow was $410.2 million and $1.95 billion, respectively;

- Capital return for the quarter and fiscal year was $439.1 million and $1.50 billion, respectively;

- KLA's Board of Directors approved a 17% increase in the quarterly dividend level to $1.05 per share and approved $2 billion for additional share repurchases.

MILPITAS, Calif., July 29, 2021 /PRNewswire/ -- KLA Corporation (NASDAQ: KLAC) today announced operating results for its fourth quarter and fiscal year ended June 30, 2021. KLA reported GAAP net income attributable to KLA of $633 million and GAAP diluted EPS attributable to KLA of $4.10 on revenues of $1.93 billion for the fourth quarter of fiscal year 2021. For the fiscal year ended June 30, 2021, KLA reported GAAP net income attributable to KLA of $2.08 billion and GAAP diluted EPS attributable to KLA of $13.37 on revenues of $6.92 billion.

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"Thanks to the commitment of our global team, KLA delivered strong results in the June 2021 quarter, with revenue and GAAP and non-GAAP EPS each finishing above the mid-point of our guidance ranges. This continued performance demonstrates strong customer demand, exceptional execution, and focus driven by the KLA Operating Model," commented Rick Wallace, president and CEO of KLA Corporation. "We are also pleased to announce today that the Board of Directors approved the twelfth consecutive dividend level increase which has grown at a compound annual growth rate of 16% since inception. The Board has also authorized a new $2 billion share repurchase program. KLA's dividend and share repurchase programs are integral to KLA's disciplined approach to capital management and reflect the company's continued strength in free cash flow generation."

GAAP Results


Q4 FY 2021

Q3 FY 2021

Q4 FY 2020

Total Revenue

$1,925 million

$1,804 million

$1,460 million

Net Income Attributable to KLA

$633 million

$567 million

$411 million

Net Income per Diluted Share Attributable to KLA

$4.10

$3.66

$2.63





Non-GAAP Results


Q4 FY 2021

Q3 FY 2021

Q4 FY 2020

Net Income Attributable to KLA

$684 million

$598 million

$426 million

Net Income per Diluted Share Attributable to KLA

$4.43

$3.85

$2.73

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 fourth quarter and full year, along with its outlook, on a conference call today beginning at 2:00 p.m. Pacific Time. A webcast of the call will be available at: www.kla.com.

First Quarter Fiscal 2022 Guidance

The following details our guidance for the first quarter of fiscal 2022 ending in September:

  • Total revenue between $1,920 million to $2,120 million

  • GAAP gross margin is expected to be in a range of 59.4% to 61.5%

  • Non-GAAP gross margin is expected to be in a range of 61.5% to 63.5%

  • GAAP diluted EPS attributable to KLA is expected to be in a range of $3.76 to $4.64

  • Non-GAAP diluted EPS attributable to KLA is expected to be in a range of $4.01 to $4.89

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.

Note Regarding Forward-Looking Statements:

Statements in this press release other than historical facts, such as statements pertaining to revenues, GAAP and non-GAAP gross margin and GAAP and non-GAAP diluted EPS for the quarter ending September 30, 2021 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 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 and retain key personnel; cybersecurity threats, cyber incidents affecting our and our service providers' systems and networks and our 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, 2020, 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, 2021


June 30, 2020

ASSETS




Cash, cash equivalents and marketable securities

$

2,494,522



$

1,980,472


Accounts receivable, net

1,305,479



1,107,413


Inventories

1,575,380



1,310,985


Other current assets

320,867



324,675


Land, property and equipment, net

663,027



519,824


Goodwill

2,011,172



2,045,402


Deferred income taxes, non-current

270,461



236,797


Purchased intangibles, net

1,185,311



1,391,413


Other non-current assets

444,905



362,979


Total assets

$

10,271,124



$

9,279,960






LIABILITIES, NON-CONTROLLING INTEREST AND STOCKHOLDERS' EQUITY

Current liabilities:




Accounts payable

$

342,083



$

264,280


Deferred system revenue

295,192



336,237


Deferred service revenue

284,936



233,493


Short-term debt

20,000




Other current liabilities

1,161,016



865,776


Total current liabilities

2,103,227



1,699,786


Non-current liabilities:




Long-term debt

3,422,767



3,469,670


Deferred tax liabilities

650,623



660,885


Deferred service revenue

87,575



96,325


Other non-current liabilities

631,290



672,284


Total liabilities

6,895,482



6,598,950


Stockholders' equity:




Common stock and capital in excess of par value

2,175,988



2,090,268


Retained earnings

1,277,123



654,930


Accumulated other comprehensive income (loss)

(75,557)



(79,774)


Total KLA stockholders' equity

3,377,554



2,665,424


Non-controlling interest in consolidated subsidiaries

(1,912)



15,586


Total stockholders' equity

3,375,642



2,681,010


Total liabilities and stockholders' equity

$

10,271,124



$

9,279,960


KLA Corporation







Condensed Consolidated Unaudited Statements of Operations
















Three months ended


Twelve months ended

(In thousands, except per share amounts)

June 30, 2021


June 30, 2020


June 30, 2021


June 30, 2020

Revenues:








Product

$

1,481,478



$

1,075,104



$

5,240,316



$

4,328,725


Service

443,993



384,489



1,678,418



1,477,699


Total revenues

1,925,471



1,459,593



6,918,734



5,806,424


Costs and expenses:








Costs of revenues

772,241



621,544



2,772,165



2,449,561


Research and development

241,428



217,100



928,487



863,864


Selling, general and administrative

192,022



167,791



729,602



734,149


Goodwill impairment







256,649


Interest expense

39,970



40,221



157,328



160,274


Loss on extinguishment of debt







22,538


Other expense (income), net

(29,033)



7,868



(29,302)



2,678


Income before income taxes

708,843



405,069



2,360,454



1,316,711


Provision for income taxes

75,785



(5,246)



283,101



101,686


Net income

633,058



410,315



2,077,353



1,215,025


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

80



(938)



(939)



(1,760)


Net income attributable to KLA

$

632,978



$

411,253



$

2,078,292



$

1,216,785


Net income per share attributable to KLA:








Basic

$

4.14



$

2.65



$

13.49



$

7.76


Diluted

$

4.10



$

2.63



$

13.37



$

7.70


Weighted-average number of shares:








Basic

152,971



155,106



154,086



156,797


Diluted

154,283



156,183



155,437



158,005


KLA Corporation

Condensed Consolidated Unaudited Statements of Cash Flows



Three months ended

June 30,

(In thousands)

2021


2020

Cash flows from operating activities:




Net income

$

633,058



$

410,315


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




Depreciation and amortization

84,647



78,937


Unrealized foreign exchange (gain) loss and other

(6,102)



15,047


Other impairment charges



10,760


Stock-based compensation expense

27,690



26,378


Gain on fair value adjustment of marketable equity securities

(26,719)




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






Accounts receivable

(102,021)



10,431


Inventories

(123,725)



(56,609)


Other assets

(68,525)



(74,986)


Accounts payable

48,414



19,905


Deferred system revenue

(40,900)



3,652


Deferred service revenue

35,769



15,205


Other liabilities

4,036



(6,189)


Net cash provided by operating activities

465,622



452,846


Cash flows from investing activities:




Business acquisitions, net of cash acquired



(11,543)


Capital expenditures

(55,375)



(41,790)


Purchases of available-for-sale securities

(223,619)



(233,838)


Proceeds from sale of available-for-sale securities

19,759



44,199


Proceeds from maturity of available-for-sale securities

163,232



135,674


Purchases of trading securities

(24,001)



(41,584)


Proceeds from sale of trading securities

26,402



43,061


Net cash used in investing activities

(93,602)



(105,821)


Cash flows from financing activities:




Payment of debt issuance costs



(172)


Proceeds from revolving credit facility, net of costs



200,000


Repayment of debt



(175,000)


Issuance of common stock

59,742



50,349


Tax withholding payments related to vested and released restricted stock units

(13,543)



(5,527)


Common stock repurchases

(299,777)




Payment of dividends to stockholders

(139,267)



(132,762)


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



(1,239)


Contingent consideration payable and other, net



2,996


Net cash used in financing activities

(392,845)



(61,355)


Effect of exchange rate changes on cash and cash equivalents

3,285



2,564


Net (decrease) increase in cash and cash equivalents

(17,540)



288,234


Cash and cash equivalents at beginning of period

1,452,150



946,175


Cash and cash equivalents at end of period

$

1,434,610



$

1,234,409


Supplemental cash flow disclosures:




Income taxes paid

$

111,396



$

31,865


Interest paid

$

37,219



$

37,988


Non-cash activities:




Contingent consideration payable - financing activities

$

1,120



$

(803)


Dividends payable - financing activities

$

1,428



$

1,400


Unsettled common stock repurchase - financing activities

$

6,000



$


Accrued purchase of land, property and equipment - investing activities

$

30,615



$

15,843



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, 2021


June 30, 2020


June 30, 2021


June 30, 2020

Revenues:








Semiconductor Process Control

$

1,580,547



$

1,156,607



$

5,734,825



$

4,745,446


Specialty Semiconductor Process

97,952



100,372



369,216



329,700


PCB, Display and Component Inspection

246,974



202,209



812,620



727,451


Other



397



739



3,614


Total revenues for reportable segments

1,925,473



1,459,585



6,917,400



5,806,211


Corporate allocation and effects of foreign exchange rates

(2)



8



1,334



213


Total revenues

$

1,925,471



$

1,459,593



$

6,918,734



$

5,806,424


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, 2021


March 31, 2021


June 30, 2020


June 30, 2021


June 30, 2020

GAAP net income attributable to KLA


$

632,978



$

567,496



$

411,253



$

2,078,292



$

1,216,785


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











Acquisition-related charges

a

53,008



52,973



55,937



209,555



244,715


Restructuring, severance and other charges

b

1,358



(1,534)



4,240



7,037



12,458


Goodwill impairment

c









256,649


Loss on extinguishment of debt

d









22,538


Income tax effect of non-GAAP adjustments

e

(16,910)



(17,866)



(16,027)



(69,341)



(83,402)


Discrete tax items

f

13,620



(2,967)



(29,364)



35,521



(34,915)


Non-GAAP net income attributable to KLA


$

684,054



$

598,102



$

426,039



$

2,261,064



$

1,634,828


GAAP net income per diluted share attributable to
KLA


$

4.10



$

3.66



$

2.63



$

13.37



$

7.70


Non-GAAP net income per diluted share attributable
to KLA


$

4.43



$

3.85



$

2.73



$

14.55



$

10.35


Shares used in diluted shares calculation


154,283



155,159



156,183



155,437



158,005


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, 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


Three Months Ended March 31, 2021






Costs of revenues

$

40,309



$

701



$

41,010


Research and development



147



147


Selling, general and administrative

12,664



2,075



14,739


Other expense (income), net



(4,457)



(4,457)


Total in three months ended March 31, 2021

$

52,973



$

(1,534)



$

51,439


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


Free Cash Flow Reconciliation




Three Months Ended June 30,

(In thousands)


2021


2020

Net cash provided by operating activities


$

465,622



$

452,846


Capital expenditures


(55,375)



(41,790)


Free Cash Flow


$

410,247



$

411,056





Twelve Months Ended June 30,

(In thousands)


2021


2020

Net cash provided by operating activities


$

2,185,026



$

1,778,850


Capital expenditures


(231,628)



(152,675)


Free Cash Flow


$

1,953,398



$

1,626,175


First Quarter Fiscal 2022 Guidance


Reconciliation of GAAP Diluted EPS to Non-GAAP Diluted EPS




Three months ending September 30, 2021

(In millions, except per share amounts)


Low


High

GAAP net income per diluted share attributable to KLA


$3.76


$4.64

Acquisition-related charges

a

0.35


0.35

Restructuring, severance and other charges

b

0.01


0.01

Income tax effect of non-GAAP adjustments

e

(0.11)


(0.11)

Non-GAAP net income per diluted share attributable to KLA


$4.01


$4.89

Shares used in net income per diluted share calculation


153.5


153.5

Reconciliation of GAAP Gross Margin to Non-GAAP Gross Margin




Three Months Ending September 30, 2021



Low


High

GAAP gross margin


59.4%


61.5%

Acquisition-related charges

a

2.1%


2.0%

Non-GAAP gross margin


61.5%


63.5%

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, primarily Orbotech.



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.

Goodwill impairment included non-cash expense recognized as a result of KLA's annual testing for goodwill impairment performed in the third quarter of the prior 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.



d.

Loss on extinguishment of debt included a pre-tax loss on early extinguishment of the $500 million 4.125% Senior Notes due in November 2021.



e.

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



f.

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. Discrete tax items in the three months ended March 31, 2021 primarily relate to a tax benefit due to a decrease in deferred tax liability on purchased intangibles relating to a decrease in the effective income tax rate in Israel. Discrete tax items in the three months 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 for sale by subsidiaries of the acquired Orbotech business.

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SOURCE KLA Corporation