GlobeNewswire Inc | Jan 27, 2021 04:05PM EST

January 27, 2021

FREMONT, Calif., Jan. 27, 2021 (GLOBE NEWSWIRE) -- Lam Research Corporation (the "Company," "Lam," "Lam Research") today announced financial results for the quarter ended December27, 2020 (the December 2020 quarter).

Highlights for the December 2020 quarter were as follows:

-- Revenue of $3.46 billion. -- U.S. GAAP gross margin of 46.4%, U.S. GAAP operating income as a percentage of revenue of 29.2%, and U.S. GAAP diluted EPS of $5.96. -- Non-GAAP gross margin of 46.6%, non-GAAP operating income as a percentage of revenue of 30.3%, and non-GAAP diluted EPS of $6.03.

Key Financial Data for the Quarters Ended December27, 2020 and September27, 2020 (in thousands, except per-share data, percentages, and basis points)

U.S. GAAP December 2020 September 2020 Change Q/ QRevenue $ 3,456,237 $ 3,177,080 + 9 %Gross margin as percentage 46.4 % 47.4 % - 100 of revenue bpsOperating income as 29.2 % 30.2 % - 100 percentage of revenue bpsDiluted EPS $ 5.96 $ 5.59 + 7 % Non-GAAP December 2020 September 2020 Change Q/ QRevenue $ 3,456,237 $ 3,177,080 + 9 %Gross margin as percentage 46.6 % 47.5 % - 90 of revenue bpsOperating income as 30.3 % 31.1 % - 80 percentage of revenue bpsDiluted EPS $ 6.03 $ 5.67 + 6 %

U.S. GAAP Financial Results

For the December 2020 quarter, revenue was $3,456 million, gross margin was $1,604 million, or 46.4% of revenue, operating expenses were $594 million, operating income was 29.2% of revenue, and net income was $869 million, or $5.96 per diluted share on a U.S. GAAP basis. This compares to revenue of $3,177 million, gross margin of $1,506 million, or 47.4% of revenue, operating expenses of $545 million, operating income of 30.2% of revenue, and net income of $823 million, or $5.59 per diluted share, for the quarter ended September27, 2020 (the September 2020 quarter).

Non-GAAP Financial Results

For the December 2020 quarter, non-GAAP gross margin was $1,611 million, or 46.6% of revenue, non-GAAP operating expenses were $563 million, non-GAAP operating income was 30.3% of revenue, and non-GAAP net income was $880 million, or $6.03 per diluted share. This compares to non-GAAP gross margin of $1,511 million, or 47.5% of revenue, non-GAAP operating expenses of $523 million, non-GAAP operating income of 31.1% of revenue, and non-GAAP net income of $835 million, or $5.67 per diluted share, for the September 2020 quarter.

Lams December quarter closed out the most successful year in our 40-year history, said Tim Archer, Lam Researchs President and Chief Executive Officer. In calendar 2020, our global teams displayed resiliency amid the pandemic, leading the company to set new financial records and deliver ground-breaking new products that enable key technology advances. With strong secular demand for semiconductors driving increased wafer fabrication equipment spending, Lam enters 2021 with solid momentum for continued growth and expanded leadership across our markets.

Balance Sheet and Cash Flow Results

Cash and cash equivalents, short-term investments, and restricted cash and investments balances decreased to $6.3 billion at the end of the December 2020 quarter compared to $6.9 billion at the end of the September 2020 quarter. This decrease was primarily the result of $723.3 million of share repurchases, including net share settlement of employee stock-based compensation; $187.9 million of dividends paid to stockholders; and $92.1 million of capital expenditures, partially offset by $344.6 million of cash generated from operating activities.

Revenue

The geographic distribution of revenue during the December 2020 quarter is shown in the following table:

Region RevenueChina 35 %Korea 21 %Taiwan 17 %Japan 10 %Southeast Asia 10 %United States 4 %Europe 3 %

The following table presents revenue disaggregated between system and customer support-related revenue:

Three Months Ended Six Months Ended December 27, September 27, December 29, December 27, December 29, 2020 2020 2019 2020 2019 (In thousands)System revenue $ 2,307,421 $ 2,148,241 $ 1,747,093 $ 4,455,662 $ 3,112,321 Customersupport-related 1,148,816 1,028,839 836,408 2,177,655 1,636,926 revenue andother $ 3,456,237 $ 3,177,080 $ 2,583,501 $ 6,633,317 $ 4,749,247

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 March28, 2021, Lam is providing the following guidance:

U.S. GAAP Reconciling Non-GAAP ItemsRevenue $3.7 +/ $200 ? $3.7 +/ $200 Billion - Million Billion - MillionGross margin as a 46.0% +/ 1% $1 Million 46.0% +/ 1%percentage of revenue - -Operating income as a 30.1% +/ 1% $13 Million 30.5% +/ 1%percentage of revenue - -Net income per diluted $6.47 +/ $0.40 $12 Million $6.55 +/ $0.40share - -Diluted share count 145 Million ? 145 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 after the date of this release. 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, $1 million. -- Operating income as a percentage of revenue - amortization related to intangible assets acquired through business combinations, $13 million. -- Net income per diluted share - amortization related to intangible assets acquired though business combinations, $13 million; amortization of note discounts, $1 million; and associated tax benefit for non-GAAP items ($2 million); totaling $12 million.

Use of Non-GAAP Financial Results

In addition to U.S. GAAP results, this press release also contains non-GAAP financial results. The Companys non-GAAP results for both the December 2020 and September 2020 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 income tax benefit of non-GAAP items.

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 Companys 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 Companys results from managements 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 Companys website at http://investor.lamresearch.com.

Caution Regarding Forward-Looking StatementsStatements 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 margins, operating income and net income; the ability of our products to enable technology advances; the strength of secular demand for semiconductors and its impact on wafer fabrication equipment spending; and our momentum for continued growth and expanded leadership across our markets. Some factors that may affect these forward-looking statements include: the severity, magnitude and duration of the COVID19 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; 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; trade regulations, export controls, and trade disputes may inhibit our ability to sell our products; 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 10K for the fiscal year ended June 28, 2020 and our quarterly report on Form 10-Q for the fiscal quarter ended September 27, 2020. 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. As a trusted, collaborative partner to the worlds leading semiconductor companies, we combine superior systems engineering capability, technology leadership, and unwavering commitment to customer success to accelerate innovation through enhanced device performance. In fact, today, nearly every advanced chip is built with Lam technology. 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 CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share data and percentages)(unaudited)

Three Months Ended Six Months Ended December 27, September 27, December 29, December 27, December 29, 2020 2020 2019 2020 2019Revenue $ 3,456,237 $ 3,177,080 $ 2,583,501 $ 6,633,317 $ 4,749,247 Cost of goods 1,852,442 1,670,901 1,403,857 3,523,343 2,587,893 soldGross margin 1,603,795 1,506,179 1,179,644 3,109,974 2,161,354 Gross marginas a percent 46.4 % 47.4 % 45.7 % 46.9 % 45.5 %of revenueResearch and 375,172 355,367 318,861 730,539 605,688 developmentSelling,general and 218,899 189,748 174,272 408,647 331,700 administrativeTotaloperating 594,071 545,115 493,133 1,139,186 937,388 expensesOperating 1,009,724 961,064 686,511 1,970,788 1,223,966 incomeOperatingincome as a 29.2 % 30.2 % 26.6 % 29.7 % 25.8 %percent ofrevenueOther expense, (29,941 ) (38,792 ) (13,924 ) (68,733 ) (26,652 )netIncome before 979,783 922,272 672,587 1,902,055 1,197,314 income taxesIncome tax (110,554 ) (98,821 ) (158,077 ) (209,375 ) (217,015 )expenseNet income $ 869,229 $ 823,451 $ 514,510 $ 1,692,680 $ 980,299 Net income per share:Basic $ 6.04 $ 5.67 $ 3.57 $ 11.71 $ 6.79 Diluted $ 5.96 $ 5.59 $ 3.43 $ 11.55 $ 6.52 Number ofshares used in per sharecalculations:Basic 143,830 145,267 143,987 144,549 144,330 Diluted 145,910 147,248 150,097 146,579 150,389 Cash dividenddeclared per $ 1.30 $ 1.30 $ 1.15 $ 2.60 $ 2.30 common share

LAM RESEARCH CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS(in thousands)

December 27, September 27, June 28, 2020 2020 2020 (unaudited) (unaudited) (1)ASSETS Cash and cash equivalents $ 3,687,165 $ 4,129,067 $ 4,915,172 Investments 2,355,067 2,528,841 1,795,080 Accounts receivable, net 2,900,362 2,317,922 2,097,099 Inventories 2,348,955 2,138,050 1,900,024 Prepaid expenses and other 176,403 161,003 146,160 current assetsTotal current assets 11,467,952 11,274,883 10,853,535 Property and equipment, net 1,208,285 1,133,529 1,071,499 Restricted cash and 252,807 253,458 253,911 investmentsGoodwill and intangible assets 1,641,168 1,646,343 1,652,968 Other assets 800,162 748,795 727,134 Total assets $ 15,370,374 $ 15,057,008 $ 14,559,047 LIABILITIES AND STOCKHOLDERS? EQUITYCurrent portion of long-termdebt and finance lease $ 832,847 $ 834,138 $ 839,877 obligationsOther current liabilities 2,758,206 2,572,730 2,322,565 Total current liabilities 3,591,053 3,406,868 3,162,442 Long-term debt and finance 4,992,496 4,993,495 4,970,848 lease obligationsIncome taxes payable 902,047 879,870 909,709 Other long-term liabilities 376,230 351,283 332,559 Total liabilities 9,861,826 9,631,516 9,375,558 Temporary equity, convertible 5,515 6,307 10,995 notesStockholders? equity (2) 5,503,033 5,419,185 5,172,494 Total liabilities and $ 15,370,374 $ 15,057,008 $ 14,559,047 stockholders? equity

(1) Derived from audited financial statements.(2) Common shares issued and outstanding were 143,205 as of December 27, 2020, 144,593 as of September 27, 2020, and 145,331 as of June 28, 2020.

LAM RESEARCH CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands, unaudited)

Three Months Ended Six Months Ended December 27, September 27, December 29, December 27, December 29, 2020 2020 2019 2020 2019CASH FLOWS FROMOPERATING ACTIVITIES:Net income $ 869,229 $ 823,451 $ 514,510 $ 1,692,680 $ 980,299 Adjustments toreconcile netincome to net cash provided byoperatingactivities:Depreciation and 76,389 72,912 65,530 149,301 130,194 amortizationDeferred income (2,462 ) (1,850 ) 77,508 (4,312 ) 74,516 taxesEquity-basedcompensation 52,109 55,988 45,725 108,097 88,630 expenseAmortization ofnote discounts and 1,417 1,422 1,575 2,839 3,250 issuance costsOther, net 5,273 2,917 (327 ) 8,190 3,699 Changes inoperating assets (657,318 ) (312,329 ) (396,593 ) (969,647 ) (508,613 )and liabilitiesNet cash providedby operating 344,637 642,511 307,928 987,148 771,975 activitiesCASH FLOWS FROMINVESTING ACTIVITIES:Capitalexpenditures and (92,072 ) (62,806 ) (62,054 ) (154,878 ) (101,310 )intangible assetsNet sale(purchase) of 168,102 (737,074 ) (662,287 ) (568,972 ) 128,191 available-for-salesecuritiesOther, net (6,090 ) (1,786 ) (9,988 ) (7,876 ) (10,528 )Net cash providedby (used for) 69,940 (801,666 ) (734,329 ) (731,726 ) 16,353 investingactivitiesCASH FLOWS FROMFINANCING ACTIVITIES:Principal payments (4,596 ) (19,173 ) (17,987 ) (23,769 ) (46,952 )on debtTreasury stock (723,297 ) (448,581 ) (1,005,067 ) (1,171,878 ) (1,083,199 )purchasesDividends paid (187,927 ) (167,129 ) (166,721 ) (355,056 ) (325,589 )Reissuance oftreasury stockrelated to 41,434 ? 38,447 41,434 38,447 employee stockpurchase planProceeds fromissuance of common 8,108 5,538 632 13,646 4,501 stockOther, net 961 (2,140 ) ? (1,179 ) ? Net cash used forfinancing (865,317 ) (631,485 ) (1,150,696 ) (1,496,802 ) (1,412,792 )activitiesEffect of exchangerate changes oncash, cash 8,187 4,082 5,055 12,269 862 equivalents, andrestricted cashNet decrease incash, cash (442,553 ) (786,558 ) (1,572,042 ) (1,229,111 ) (623,602 )equivalents, andrestricted cashCash, cashequivalents, andrestricted cash at 4,382,525 5,169,083 4,861,836 5,169,083 3,913,396 beginning ofperiodCash, cashequivalents, and $ 3,939,972 $ 4,382,525 $ 3,289,794 $ 3,939,972 $ 3,289,794 restricted cash atend of period

Non-GAAP Financial Summary(in thousands, except percentages and per share data)(unaudited)

Three Months Ended December 27, September 27, 2020 2020Revenue $ 3,456,237 $ 3,177,080 Gross margin $ 1,611,154 $ 1,510,673 Gross margin as percentage of revenue 46.6 % 47.5 %Operating expenses $ 563,446 $ 523,086 Operating income $ 1,047,708 $ 987,587 Operating income as a percentage of revenue 30.3 % 31.1 %Net income $ 880,211 $ 835,066 Net income per diluted share $ 6.03 $ 5.67 Shares used in per share calculation - diluted 145,910 147,248

Reconciliation of U.S. GAAP Net Income to Non-GAAP Net Income(in thousands, except per share data) (unaudited)

Three Months Ended December 27, September 2020 27, 2020U.S. GAAP net income $ 869,229 $ 823,451 Pre-tax non-GAAP items: Amortization related to intangible assets acquiredthrough certain business combinations - cost of 1,270 1,270 goods soldElective deferred compensation ("EDC") related 6,089 3,224 liability valuation increase - cost of goods soldEDC related liability valuation increase - 10,961 5,803 research and developmentAmortization related to intangible assets acquiredthrough certain business combinations - selling, 12,357 12,357 general and administrativeEDC related liability valuation increase - 7,307 3,869 selling, general and administrativeAmortization of note discounts - other expense, 1,001 1,011 netGain on EDC related asset - other expense, net (24,207 ) (12,927 )Net income tax benefit on non-GAAP items (3,796 ) (2,992 )Non-GAAP net income $ 880,211 $ 835,066 Non-GAAP net income per diluted share $ 6.03 $ 5.67 U.S. GAAP net income per diluted share $ 5.96 $ 5.59 U.S. GAAP and non-GAAP number of shares used for 145,910 147,248 per diluted share calculation

Reconciliation of U.S. GAAP Gross Margin, Operating Expenses and Operating Income to Non-GAAP Gross Margin, Operating Expenses and Operating Income(in thousands, except percentages)(unaudited)

Three Months Ended December 27, September 27, 2020 2020U.S. GAAP gross margin $ 1,603,795 $ 1,506,179 Pre-tax non-GAAP items: Amortization related to intangible assets 1,270 1,270 acquired through certain business combinationsEDC related liability valuation increase 6,089 3,224 Non-GAAP gross margin $ 1,611,154 $ 1,510,673 U.S. GAAP gross margin as a percentage of 46.4 % 47.4 %revenueNon-GAAP gross margin as a percentage of 46.6 % 47.5 %revenueU.S. GAAP operating expenses $ 594,071 $ 545,115 Pre-tax non-GAAP items: Amortization related to intangible assets (12,357 ) (12,357 )acquired through certain business combinationsEDC related liability valuation increase (18,268 ) (9,672 )Non-GAAP operating expenses $ 563,446 $ 523,086 U.S. GAAP operating income $ 1,009,724 $ 961,064 Non-GAAP operating income $ 1,047,708 $ 987,587 U.S. GAAP operating income as percent of 29.2 % 30.2 %revenueNon-GAAP operating income as a percent of 30.3 % 31.1 %revenue

Lam Research Corporation Contacts:

Tina Correia, Investor Relations, phone: 510-572-1615, e-mail: investor.relations@lamresearch.com