GlobeNewswire Inc | Apr 21, 2021 04:05PM EDT

April 21, 2021

FREMONT, Calif., April 21, 2021 (GLOBE NEWSWIRE) -- Lam Research Corporation (the "Company," "Lam," "Lam Research") today announced financial results for the quarter ended March28, 2021 (the March 2021 quarter).

Highlights for the March 2021 quarter were as follows:

-- Revenue of $3.85 billion. -- U.S. GAAP gross margin of 46.3%, U.S. GAAP operating income as a percentage of revenue of 31.1%, and U.S. GAAP diluted EPS of $7.41. -- Non-GAAP gross margin of 46.3%, non-GAAP operating income as a percentage of revenue of 31.6%, and non-GAAP diluted EPS of $7.49.

Key Financial Data for the Quarters EndedMarch28, 2021 and December27, 2020(in thousands, except per-share data, percentages, and basis points)

U.S. GAAP March 2021 December 2020 Change Q /QRevenue $ 3,847,654 $ 3,456,237 + 11 %Gross margin as percentage of 46.3 % 46.4 % - 10 bpsrevenueOperating income as percentage of 31.1 % 29.2 % + 190revenue bpsDiluted EPS $ 7.41 $ 5.96 + 24 % Non-GAAP March 2021 December 2020 Change Q /QRevenue $ 3,847,654 $ 3,456,237 + 11 %Gross margin as percentage of 46.3 % 46.6 % - 30 bpsrevenueOperating income as percentage of 31.6 % 30.3 % + 130revenue bpsDiluted EPS $ 7.49 $ 6.03 + 24 %

U.S. GAAP Financial Results

For the March 2021 quarter, revenue was $3,848 million, gross margin was $1,780 million, or 46.3% of revenue, operating expenses were $585 million, operating income was 31.1% of revenue, and net income was $1,071 million, or $7.41 per diluted share on a U.S. GAAP basis. This compares to revenue of $3,456 million, gross margin of $1,604 million, or 46.4% of revenue, operating expenses of $594 million, operating income of 29.2% of revenue, and net income of $869 million, or $5.96 per diluted share, for the quarter ended December27, 2020 (the December 2020 quarter).

Non-GAAP Financial Results

For the March 2021 quarter, non-GAAP gross margin was $1,783 million, or 46.3% of revenue, non-GAAP operating expenses were $567 million, non-GAAP operating income was 31.6% of revenue, and non-GAAP net income was $1,084 million, or $7.49 per diluted share. This compares to non-GAAP gross margin of $1,611 million, or 46.6% of revenue, non-GAAP operating expenses of $563 million, non-GAAP operating income of 30.3% of revenue, and non-GAAP net income of $880 million, or $6.03 per diluted share, for the December 2020 quarter.

Lams growth trajectory continues with record revenue and earnings per share delivered in the March quarter, said Tim Archer, Lam Researchs President and Chief Executive Officer. Semiconductors are reaching new heights of strategic relevance, and Lams differentiated ability to meet our customers scaling challenges positions us well amid a strong wafer fabrication spending environment.

Balance Sheet and Cash Flow Results

Cash and cash equivalents, short-term investments, and restricted cash and investments balances decreased to $6.0 billion at the end of the March 2021 quarter compared to $6.3 billion at the end of the December 2020 quarter. This decrease was primarily the result of $1.1 billion of share repurchases, including net share settlement of employee stock-based compensation; $186.6 million of dividends paid to stockholders; and $89.6 million of capital expenditures, partially offset by $1.2 billion of cash generated from operating activities.

Revenue

The geographic distribution of revenue during the March 2021 quarter is shown in the following table:

Region RevenueChina 32%Korea 31%Taiwan 14%Japan 7%Southeast Asia 7%United States 5%Europe 4%

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

Three Months Ended Nine Months Ended March 28, December 27, March 29, March 28, March 29, 2021 2020 2020 2021 2020 (In thousands)System revenue $ 2,545,306 $ 2,307,421 $ 1,647,560 $ 7,000,968 $ 4,759,881 Customersupport-related 1,302,348 1,148,816 856,065 3,480,003 2,492,991 revenue and other $ 3,847,654 $ 3,456,237 $ 2,503,625 $ 10,480,971 $ 7,252,872

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 June27, 2021, Lam is providing the following guidance:

U.S. GAAP Reconciling Non-GAAP ItemsRevenue $4.0 +/ $250 ? $4.0 +/ $250 Billion - Million Billion - MillionGross margin as a 46.5% +/ 1% $1 Million 46.5% +/ 1%percentage of revenue - -Operating income as a 31.7% +/ 1% $13 Million 32.0% +/ 1%percentage of revenue - -Net income per diluted $7.42 +/ $0.50 $12 Million $7.50 +/ $0.50share - -Diluted share count 144 Million ? 144 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, gains or losses on equity investments, other investments, or other significant arrangements that may be completed or realized 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 March 2021 and December 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; our growth trajectory; the strategic relevance of semiconductors; our ability to meet our customers scaling challenges and the extent to which that ability is differentiated; and the wafer fabrication spending environment and our positioning within that environment. 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; supply chain disruptions or manufacturing capacity constraints may limit our ability to manufacture and sell our products; the actions of our customers and competitors may be inconsistent with our expectations; trade regulations, export controls, trade disputes, and other geopolitical tensions 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 reports on Form 10-Q for the fiscal quarters ended September 27, 2020 and December 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 Nine Months Ended March 28, December 27, March 29, March 28, March 29, 2021 2020 2020 2021 2020Revenue $ 3,847,654 $ 3,456,237 $ 2,503,625 $ 10,480,971 $ 7,252,872 Cost of goods 2,067,523 1,852,442 1,336,618 5,590,866 3,924,511 soldGross margin 1,780,131 1,603,795 1,167,007 4,890,105 3,328,361 Gross marginas a percent 46.3 % 46.4 % 46.6 % 46.7 % 45.9 %of revenueResearch and 381,120 375,172 307,914 1,111,659 913,602 developmentSelling,general and 203,703 218,899 164,979 612,350 496,679 administrativeTotaloperating 584,823 594,071 472,893 1,724,009 1,410,281 expensesOperating 1,195,308 1,009,724 694,114 3,166,096 1,918,080 incomeOperatingincome as a 31.1 % 29.2 % 27.7 % 30.2 % 26.4 %percent ofrevenueOther expense, (35,320 ) (29,941 ) (64,619 ) (104,053 ) (91,271 )netIncome before 1,159,988 979,783 629,495 3,062,043 1,826,809 income taxesIncome tax (88,867 ) (110,554 ) (54,714 ) (298,242 ) (271,729 )expenseNet income $ 1,071,121 $ 869,229 $ 574,781 $ 2,763,801 $ 1,555,080 Net income per share:Basic $ 7.51 $ 6.04 $ 3.96 $ 19.20 $ 10.75 Diluted $ 7.41 $ 5.96 $ 3.88 $ 18.94 $ 10.39 Number ofshares used in per sharecalculations:Basic 142,676 143,830 145,301 143,925 144,654 Diluted 144,609 145,910 148,165 145,923 149,648 Cash dividenddeclared per $ 1.30 $ 1.30 $ 1.15 $ 3.90 $ 3.45 common share

LAM RESEARCH CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS(in thousands)

March 28, December 27, June 28, 2021 2020 2020 (unaudited) (unaudited) (1) ASSETS Cash and cash equivalents $ 3,673,366 $ 3,687,165 $ 4,915,172 Investments 2,116,101 2,355,067 1,795,080 Accounts receivable, net 2,809,068 2,900,362 2,097,099 Inventories 2,552,032 2,348,955 1,900,024 Prepaid expenses and other 171,703 176,403 146,160 current assetsTotal current assets 11,322,270 11,467,952 10,853,535 Property and equipment, net 1,279,836 1,208,285 1,071,499 Restricted cash and 253,460 252,807 253,911 investmentsGoodwill and intangible 1,633,254 1,641,168 1,652,968 assetsOther assets 796,093 800,162 727,134 Total assets $ 15,284,913 $ 15,370,374 $ 14,559,047 LIABILITIES AND STOCKHOLDERS? EQUITYCurrent portion of long-termdebt and finance lease $ 825,434 $ 832,847 $ 839,877 obligationsOther current liabilities 2,786,899 2,758,206 2,322,565 Total current liabilities 3,612,333 3,591,053 3,162,442 Long-term debt and finance 4,991,613 4,992,496 4,970,848 lease obligationsIncome taxes payable 924,629 902,047 909,709 Other long-term liabilities 381,505 376,230 332,559 Total liabilities 9,910,080 9,861,826 9,375,558 Temporary equity, convertible 3,217 5,515 10,995 notesStockholders? equity (2) 5,371,616 5,503,033 5,172,494 Total liabilities and $ 15,284,913 $ 15,370,374 $ 14,559,047 stockholders? equity

(1) Derived from audited financial statements.(2) Common shares issued and outstanding were 142,607 as of March 28, 2021, 143,205 as of December 27, 2020, and 145,331 as of June 28, 2020.

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

Three Months Ended Nine Months Ended March 28, December 27, March 29, March 28, March 29, 2021 2020 2020 2021 2020CASH FLOWS FROMOPERATING ACTIVITIES:Net income $ 1,071,121 $ 869,229 $ 574,781 $ 2,763,801 $ 1,555,080 Adjustments toreconcile netincome to net cash provided byoperatingactivities:Depreciation and 79,453 76,389 67,248 228,754 197,442 amortizationDeferred income (1,136 ) (2,462 ) ? (5,448 ) 74,516 taxesEquity-basedcompensation 55,746 52,109 47,414 163,843 136,044 expenseAmortization ofnote discounts and 1,412 1,417 1,361 4,251 4,611 issuance costsOther, net (2,047 ) 5,273 7,811 6,143 11,510 Changes inoperating assets (39,469 ) (657,318 ) (157,187 ) (1,009,116 ) (665,800 )and liabilitiesNet cash providedby operating 1,165,080 344,637 541,428 2,152,228 1,313,403 activitiesCASH FLOWS FROMINVESTING ACTIVITIES:Capitalexpenditures and (89,596 ) (92,072 ) (51,375 ) (244,474 ) (152,685 )intangible assetsNet sale(purchase) of 233,529 168,102 211,159 (335,443 ) 339,350 available-for-salesecuritiesOther, net (27,997 ) (6,090 ) 9,988 (35,873 ) (540 )Net cash providedby (used for) 115,936 69,940 169,772 (615,790 ) 186,125 investingactivitiesCASH FLOWS FROMFINANCING ACTIVITIES:Principal payments (16,245 ) (4,596 ) (617,637 ) (40,014 ) (664,589 )on debtProceeds fromborrowings on ? ? 1,250,000 ? 1,250,000 revolving creditfacilityTreasury stock (1,094,571 ) (723,297 ) (245,433 ) (2,266,449 ) (1,328,632 )purchasesDividends paid (186,551 ) (187,927 ) (163,510 ) (541,607 ) (489,099 )Reissuance oftreasury stockrelated to ? 41,434 ? 41,434 38,447 employee stockpurchase planProceeds fromissuance of common 9,626 8,108 1,714 23,272 6,215 stockOther, net (665 ) 961 328 (1,844 ) 328 Net cash (usedfor) provided by (1,288,406 ) (865,317 ) 225,462 (2,785,208 ) (1,187,330 )financingactivitiesEffect of exchangerate changes oncash, cash (5,756 ) 8,187 (10,715 ) 6,513 (9,853 )equivalents, andrestricted cashNet (decrease)increase in cash,cash equivalents, (13,146 ) (442,553 ) 925,947 (1,242,257 ) 302,345 and restrictedcashCash, cashequivalents, andrestricted cash at 3,939,972 4,382,525 3,289,794 5,169,083 3,913,396 beginning ofperiodCash, cashequivalents, and $ 3,926,826 $ 3,939,972 $ 4,215,741 $ 3,926,826 $ 4,215,741 restricted cash atend of period

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

Three Months Ended March 28, December 27, 2021 2020Revenue $ 3,847,654 $ 3,456,237 Gross margin $ 1,783,209 $ 1,611,154 Gross margin as percentage of revenue 46.3 % 46.6 %Operating expenses $ 566,507 $ 563,446 Operating income $ 1,216,702 $ 1,047,708 Operating income as a percentage of revenue 31.6 % 30.3 %Net income $ 1,083,532 $ 880,211 Net income per diluted share $ 7.49 $ 6.03 Shares used in per share calculation - diluted 144,609 145,910

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

Three Months Ended March 28, December 27, 2021 2020U.S. GAAP net income $ 1,071,121 $ 869,229 Pre-tax non-GAAP items: Amortization related to intangible assetsacquired through certain business combinations - 1,092 1,270 cost of goods soldElective deferred compensation ("EDC") relatedliability valuation increase - cost of goods 1,986 6,089 soldEDC related liability valuation increase - 3,575 10,961 research and developmentAmortization related to intangible assetsacquired through certain business combinations - 12,357 12,357 selling, general and administrativeEDC related liability valuation increase - 2,384 7,307 selling, general and administrativeAmortization of note discounts - other expense, 998 1,001 netGain on EDC related asset - other expense, net (7,520 ) (24,207 )Net income tax benefit on non-GAAP items (2,461 ) (3,796 )Non-GAAP net income $ 1,083,532 $ 880,211 Non-GAAP net income per diluted share $ 7.49 $ 6.03 U.S. GAAP net income per diluted share $ 7.41 $ 5.96 U.S. GAAP and non-GAAP number of shares used for 144,609 145,910 per diluted share calculation

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

Three Months Ended March 28, December 27, 2021 2020U.S. GAAP gross margin $ 1,780,131 $ 1,603,795 Pre-tax non-GAAP items: Amortization related to intangible assets 1,092 1,270 acquired through certain business combinationsEDC related liability valuation increase 1,986 6,089 Non-GAAP gross margin $ 1,783,209 $ 1,611,154 U.S. GAAP gross margin as a percentage of 46.3 % 46.4 %revenueNon-GAAP gross margin as a percentage of 46.3 % 46.6 %revenueU.S. GAAP operating expenses $ 584,823 $ 594,071 Pre-tax non-GAAP items: Amortization related to intangible assets (12,357 ) (12,357 )acquired through certain business combinationsEDC related liability valuation increase (5,959 ) (18,268 )Non-GAAP operating expenses $ 566,507 $ 563,446 U.S. GAAP operating income $ 1,195,308 $ 1,009,724 Non-GAAP operating income $ 1,216,702 $ 1,047,708 U.S. GAAP operating income as percent of 31.1 % 29.2 %revenueNon-GAAP operating income as a percent of 31.6 % 30.3 %revenue

Lam Research Corporation Contacts:

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