GlobeNewswire Inc | Oct 20, 2021 04:05PM EDT

October 20, 2021

FREMONT, Calif., Oct. 20, 2021 (GLOBE NEWSWIRE) -- Lam Research Corporation (the "Company," "Lam," "Lam Research") today announced financial results for the quarter ended September26, 2021 (the September 2021 quarter).

Highlights for the September 2021 quarter were as follows:

-- Revenue of $4.30 billion. -- U.S. GAAP gross margin of 45.9%, U.S. GAAP operating income as a percentage of revenue of 31.9%, and U.S. GAAP diluted EPS of $8.27. -- Non-GAAP gross margin of 46.0%, non-GAAP operating income as a percentage of revenue of 32.4%, and non-GAAP diluted EPS of $8.36.

Key Financial Data for the Quarters Ended September26, 2021 and June27, 2021 (in thousands, except per-share data, percentages, and basis points)

U.S. GAAP September 2021 June 2021 Change Q /QRevenue $ 4,304,465 $ 4,145,179 + 4 %Gross margin as percentage of 45.9 % 46.2 % - 30 bpsrevenueOperating income as percentage of 31.9 % 31.7 % + 20 bpsrevenueDiluted EPS $ 8.27 $ 7.98 + 4 % Non-GAAP September 2021 June 2021 Change Q /QRevenue $ 4,304,465 $ 4,145,179 + 4 %Gross margin as percentage of 46.0 % 46.5 % - 50 bpsrevenueOperating income as percentage of 32.4 % 32.6 % - 20 bpsrevenueDiluted EPS $ 8.36 $ 8.09 + 3 %

U.S. GAAP Financial Results

For the September 2021 quarter, revenue was $4,304 million, gross margin was $1,977 million, or 45.9% of revenue, operating expenses were $605 million, operating income was 31.9% of revenue, and net income was $1,180 million, or $8.27 per diluted share on a U.S. GAAP basis. This compares to revenue of $4,145 million, gross margin of $1,915 million, or 46.2% of revenue, operating expenses of $599 million, operating income of 31.7% of revenue, and net income of $1,145 million, or $7.98 per diluted share, for the quarter ended June27, 2021 (the June 2021 quarter).

Non-GAAP Financial Results

For the September 2021 quarter, non-GAAP gross margin was $1,980 million, or 46.0% of revenue, non-GAAP operating expenses were $586 million, non-GAAP operating income was 32.4% of revenue, and non-GAAP net income was $1,192 million, or $8.36 per diluted share. This compares to non-GAAP gross margin of $1,926 million, or 46.5% of revenue, non-GAAP operating expenses of $574 million, non-GAAP operating income of 32.6% of revenue, and non-GAAP net income of $1,161 million, or $8.09 per diluted share, for the June 2021 quarter.

Driven by strong demand and solid execution, Lam delivered its sixth consecutive quarter of record revenue and earnings per share, said Tim Archer, Lam Researchs President and Chief Executive Officer. In a robust wafer fabrication equipment environment, Lam is delivering the innovation needed for the success of our customers' semiconductor manufacturing roadmaps.

Balance Sheet and Cash Flow Results

Cash and cash equivalents, short-term investments, and restricted cash and investments balances decreased to $4.9 billion at the end of the September 2021 quarter compared to $6.0 billion at the end of the June 2021 quarter. This decrease was primarily the result of $1.2 billion of share repurchases, including net share settlement of employee stock-based compensation; $185.4 million of dividends paid to stockholders; and $136.4 million of capital expenditures, partially offset by $457.5 million of cash generated from operating activities.

Revenue

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

Region RevenueChina 37%Korea 21%Taiwan 15%Japan 11%Southeast Asia 8%United States 6%Europe 2%

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

Three Months Ended September 26, June 27, September 27, 2021 2021 2020 (In thousands)System revenue $ 2,924,883 $ 2,763,877 $ 2,148,241 Customer support-related 1,379,582 1,381,302 1,028,839 revenue and other $ 4,304,465 $ 4,145,179 $ 3,177,080

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 December26, 2021, Lam is providing the following guidance:

U.S. GAAP Reconciling Non-GAAP Items $4.4 + $250 $4.4 + $250Revenue Billion / Million ? Billion / Million - -Gross margin as a + +percentage of revenue 46.0% / 1% $ 1 Million 46.0% / 1% - -Operating income as a + +percentage of revenue 31.7% / 1% $ 13 Million 32.0% / 1% - -Net income per diluted + +share $8.37 / $0.50 $ 12 Million $8.45 / $0.50 - -Diluted share count 142 Million ? 142 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 recognized 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 September 2021 and June 2021 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. Additionally, the June 2021 quarter non-GAAP results exclude product rationalization charges.

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; demand for wafer fabrication equipment; our operational execution; and our ability to deliver innovative products and services to our customers. Some factors that may affect these forward-looking statements include: supply chain disruptions or manufacturing capacity constraints may limit our ability to manufacture and sell our products; trade regulations, export controls, trade disputes, and other geopolitical tensions may inhibit our ability to sell our products; 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; 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; 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 27, 2021. 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. Lam's equipment and services allow customers to build smaller and better performing devices. In fact, today, nearly every advanced chip is built with Lam technology. We combine superior systems engineering, technology leadership, and a strong values-based culture, with an unwavering commitment to our customers. 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 September 26, June 27, September 27, 2021 2021 2020Revenue $ 4,304,465 $ 4,145,179 $ 3,177,080 Cost of goods 2,327,711 2,229,978 1,670,901 soldGross margin 1,976,754 1,915,201 1,506,179 Gross margin asa percent of 45.9 % 46.2 % 47.4 %revenueResearch and 382,327 381,749 355,367 developmentSelling, generaland 222,194 217,525 189,748 administrativeTotal operating 604,521 599,274 545,115 expensesOperating income 1,372,233 1,315,927 961,064 Operating incomeas a percent of 31.9 % 31.7 % 30.2 %revenueOther expense, (28,857 ) (7,166 ) (38,792 ) netIncome before 1,343,376 1,308,761 922,272 income taxesIncome tax (163,632 ) (164,104 ) (98,821 ) expenseNet income $ 1,179,744 $ 1,144,657 $ 823,451 Net income per share:Basic $ 8.32 $ 8.02 $ 5.67 Diluted $ 8.27 $ 7.98 $ 5.59 Number of sharesused in per sharecalculations:Basic 141,743 142,662 145,267 Diluted 142,612 143,514 147,248 Cash dividenddeclared per $ 1.50 $ 1.30 $ 1.30 common share

LAM RESEARCH CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS(in thousands)

September 26, June 27, September 27, 2021 2021 2020 (unaudited) (1) (unaudited)ASSETS Cash and cash equivalents $ 4,042,151 $ 4,418,263 $ 4,129,067 Investments 569,472 1,310,872 2,528,841 Accounts receivable, net 3,397,180 3,026,430 2,317,922 Inventories 2,872,141 2,689,294 2,138,050 Prepaid expenses and other 263,738 207,528 161,003 current assetsTotal current assets 11,144,682 11,652,387 11,274,883 Property and equipment, net 1,372,533 1,303,479 1,133,529 Restricted cash and 251,448 252,487 253,458 investmentsGoodwill and intangible 1,614,959 1,622,499 1,646,343 assetsOther assets 1,181,930 1,061,300 748,795 Total assets $ 15,565,552 $ 15,892,152 $ 15,057,008 LIABILITIES AND STOCKHOLDERS? EQUITYCurrent portion of long-termdebt and finance lease $ 6,368 $ 11,349 $ 834,138 obligationsOther current liabilities 3,402,852 3,516,518 2,572,730 Total current liabilities 3,409,220 3,527,867 3,406,868 Long-term debt and finance 4,988,964 4,990,333 4,993,495 lease obligationsIncome taxes payable 881,325 948,037 879,870 Other long-term liabilities 466,000 398,727 351,283 Total liabilities 9,745,509 9,864,964 9,631,516 Temporary equity, convertible ? ? 6,307 notesStockholders? equity (2) 5,820,043 6,027,188 5,419,185 Total liabilities and $ 15,565,552 $ 15,892,152 $ 15,057,008 stockholders? equity

(1) Derived from audited financial statements.(2) Common shares issued and outstanding were 140,811 as of September 26, 2021, 142,501 as of June 27, 2021, and 144,593 as of September 27, 2020.

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

Three Months Ended September 26, June 27, September 27, 2021 2021 2020CASH FLOWS FROM OPERATING ACTIVITIES:Net income $ 1,179,744 $ 1,144,657 $ 823,451 Adjustments to reconcile netincome to net cash provided by operating activities:Depreciation and amortization 79,874 78,397 72,912 Deferred income taxes (13,023 ) (146,029 ) (1,850 )Equity-based compensation expense 58,099 56,321 55,988 Other, net (8,690 ) (27,786 ) 4,339 Changes in operating assets and (838,480 ) 330,375 (312,329 )liabilitiesNet cash provided by operating 457,524 1,435,935 642,511 activitiesCASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures and (136,427 ) (104,622 ) (62,806 )intangible assetsNet sale (purchase) of 738,043 799,965 (737,074 )available-for-sale securitiesOther, net (4,923 ) (6,282 ) (1,786 )Net cash provided by (used for) 596,693 689,061 (801,666 )investing activitiesCASH FLOWS FROM FINANCING ACTIVITIES:Principal payments on debt (6,338 ) (822,046 ) (19,173 )Treasury stock purchases (1,236,753 ) (431,255 ) (448,581 )Dividends paid (185,431 ) (185,385 ) (167,129 )Reissuance of treasury stockrelated to employee stock ? 56,330 ? purchase planProceeds from issuance of common 742 851 5,538 stockOther, net 188 (269 ) (2,140 )Net cash used for financing (1,427,592 ) (1,381,774 ) (631,485 )activitiesEffect of exchange rate changeson cash, cash equivalents, and (3,776 ) 702 4,082 restricted cashNet (decrease) increase in cash,cash equivalents, and restricted (377,151 ) 743,924 (786,558 )cashCash, cash equivalents, andrestricted cash at beginning of 4,670,750 3,926,826 5,169,083 periodCash, cash equivalents, and $ 4,293,599 $ 4,670,750 $ 4,382,525 restricted cash at end of period

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

Three Months Ended September 26, June 27, 2021 2021Revenue $ 4,304,465 $ 4,145,179 Gross margin $ 1,979,742 $ 1,926,323 Gross margin as percentage of revenue 46.0 % 46.5 %Operating expenses $ 586,477 $ 573,707 Operating income $ 1,393,265 $ 1,352,616 Operating income as a percentage of revenue 32.4 % 32.6 %Net income $ 1,191,561 $ 1,161,211 Net income per diluted share $ 8.36 $ 8.09 Shares used in per share calculation - diluted 142,612 143,514

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

Three Months Ended September 26, June 27, 2021 2021U.S. GAAP net income $ 1,179,744 $ 1,144,657 Pre-tax non-GAAP items: Amortization related to intangible assetsacquired through certain business combinations - 1,092 1,092 cost of goods soldElective deferred compensation ("EDC") related 1,896 4,256 liability valuation increase - cost of goods soldProduct rationalization - cost of goods sold ? 5,774 EDC related liability valuation increase - 3,412 7,661 research and developmentProduct rationalization - research and ? 426 developmentAmortization related to intangible assetsacquired through certain business combinations - 12,357 12,357 selling, general and administrativeEDC related liability valuation increase - 2,275 5,123 selling, general and administrativeAmortization of note discounts - other expense, 683 923 netGain on EDC related asset - other expense, net (7,437 ) (17,184 )Net income tax benefit on non-GAAP items (2,461 ) (3,874 )Non-GAAP net income $ 1,191,561 $ 1,161,211 Non-GAAP net income per diluted share $ 8.36 $ 8.09 U.S. GAAP net income per diluted share $ 8.27 $ 7.98 U.S. GAAP and non-GAAP number of shares used for 142,612 143,514 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 September 26, June 27, 2021 2021U.S. GAAP gross margin $ 1,976,754 $ 1,915,201 Pre-tax non-GAAP items: Amortization related to intangible assetsacquired through certain business 1,092 1,092 combinationsEDC related liability valuation increase 1,896 4,256 Product rationalization ? 5,774 Non-GAAP gross margin $ 1,979,742 $ 1,926,323 U.S. GAAP gross margin as a percentage of 45.9 % 46.2 %revenueNon-GAAP gross margin as a percentage of 46.0 % 46.5 %revenueU.S. GAAP operating expenses $ 604,521 $ 599,274 Pre-tax non-GAAP items: Amortization related to intangible assetsacquired through certain business (12,357 ) (12,357 ) combinationsEDC related liability valuation increase (5,687 ) (12,784 ) Product rationalization ? (426 ) Non-GAAP operating expenses $ 586,477 $ 573,707 U.S. GAAP operating income $ 1,372,233 $ 1,315,927 Non-GAAP operating income $ 1,393,265 $ 1,352,616 U.S. GAAP operating income as percent of 31.9 % 31.7 %revenueNon-GAAP operating income as a percent of 32.4 % 32.6 %revenue

Lam Research Corporation Contacts:

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