PR Newswire | Jul 29, 2021 04:06PM EDT

Raises Dividend Level By 17% And Announces Additional $2 Billion Share Repurchase Authorization

07/29 15:05 CDT

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

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 $1,804 $1,460 million million million

Net Income Attributable to KLA $633 million$567 million$411 million

Net Income per Diluted Share $4.10 $3.66 $2.63 Attributable to KLA



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 $4.43 $3.85 $2.73 Attributable to KLA

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, 2021June 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, 2021June 30, 2020June 30, 2021June 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-controlling80 (938) (939) (1,760) interest

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(26,719) - securities

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 19,759 44,199 securities

Proceeds from maturity of available-for-sale 163,232 135,674 securities

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 - 200,000 costs

Repayment of debt - (175,000)

Issuance of common stock 59,742 50,349

Tax withholding payments related to vested and (13,543) (5,527) released restricted stock units

Common stock repurchases (299,777) -

Payment of dividends to stockholders (139,267) (132,762)

Payment of dividends to subsidiary's - (1,239) non-controlling interest holders

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 3,285 2,564 equivalents

Net (decrease) increase in cash and cash (17,540) 288,234 equivalents

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 $1,120 $(803) activities

Dividends payable - financing activities $1,428 $1,400

Unsettled common stock repurchase - financing $6,000 $- activities

Accrued purchase of land, property and equipment -$30,615 $15,843 investing activities

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, 2021March 31, 2021June 30, 2020June 30, 2021June 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 a53,008 52,973 55,937 209,555 244,715

Restructuring, severance and other charges b1,358 (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 f13,620 (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 $ 4.10 $ 3.66 $ 2.63 $ 13.37 $ 7.70 KLA

Non-GAAP net income per diluted share attributable $ 4.43 $ 3.85 $ 2.73 $ 14.55 $ 10.35 to KLA

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



Acquisition- Restructuring, Total pre-tax(In thousands) Related Severance and GAAP to non- Charges Other Charges 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 $3.76 $4.64 attributable to KLA

Acquisition-related charges a0.35 0.35

Restructuring, severance and other charges b0.01 0.01

Income tax effect of non-GAAP adjustments e(0.11) (0.11)

Non-GAAP net income per diluted share $4.01 $4.89 attributable to KLA

Shares used in net income per diluted share 153.5 153.5 calculation

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 a2.1% 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:

Acquisition-related charges primarily include amortization of intangiblea. 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.

Restructuring, severance and other charges primarily include costsb. associated with employee severance, acceleration of certain stock-based compensation arrangements, and other exit costs.

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

Loss on extinguishment of debt included a pre-tax loss on earlyd. 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.

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 taxf. 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