GlobeNewswire Inc | Jan 26, 2022 04:05PM EST

January 26, 2022

FREMONT, Calif., Jan. 26, 2022 (GLOBE NEWSWIRE) -- Lam Research Corporation (the "Company," "Lam," "Lam Research") today announced financial results for the quarter ended December26, 2021 (the December 2021 quarter).

Highlights for the December 2021 quarter were as follows:

-- Revenue of $4.23 billion. -- U.S. GAAP gross margin of 46.8%, U.S. GAAP operating income as a percentage of revenue of 31.7%, and U.S. GAAP diluted EPS of $8.44. -- Non-GAAP gross margin of 46.8%, non-GAAP operating income as a percentage of revenue of 32.0%, and non-GAAP diluted EPS of $8.53.

Key Financial Data for the Quarters Ended December26, 2021 and September26, 2021 (in thousands, except per-share data, percentages, and basis points)

U.S. GAAP December 2021 September 2021 Change Q /QRevenue $ 4,226,604 $ 4,304,465 - 2 %Gross margin as percentage of 46.8 % 45.9 % + 90 bpsrevenueOperating income as 31.7 % 31.9 % - 20 bpspercentage of revenueDiluted EPS $ 8.44 $ 8.27 + 2 % Non-GAAP December 2021 September 2021 Change Q /QRevenue $ 4,226,604 $ 4,304,465 - 2 %Gross margin as percentage of 46.8 % 46.0 % + 80 bpsrevenueOperating income as 32.0 % 32.4 % - 40 bpspercentage of revenueDiluted EPS $ 8.53 $ 8.36 + 2 %

U.S. GAAP Financial Results

For the December 2021 quarter, revenue was $4,227 million, gross margin was $1,978 million, or 46.8% of revenue, operating expenses were $640 million, operating income was 31.7% of revenue, and net income was $1,195 million, or $8.44 per diluted share on a U.S. GAAP basis. This compares to revenue of $4,304 million, gross margin of $1,977 million, or 45.9% of revenue, operating expenses of $605 million, operating income of 31.9% of revenue, and net income of $1,180 million, or $8.27 per diluted share, for the quarter ended September26, 2021 (the September 2021 quarter).

Non-GAAP Financial Results

For the December 2021 quarter, non-GAAP gross margin was $1,979 million, or 46.8% of revenue, non-GAAP operating expenses were $627 million, non-GAAP operating income was 32.0% of revenue, and non-GAAP net income was $1,207 million, or $8.53 per diluted share. This compares to non-GAAP gross margin of $1,980 million, or 46.0% of revenue, non-GAAP operating expenses of $586 million, non-GAAP operating income of 32.4% of revenue, and non-GAAP net income of $1,192 million, or $8.36 per diluted share, for the September 2021 quarter.

Lam delivered record calendar year 2021 financial performance within a robust wafer fabrication spending environment said Tim Archer, Lam Researchs President and Chief Executive Officer. While supply chain conditions worsened in late December and are causing near-term impacts to our results, we expect wafer fabrication equipment investments to again increase in calendar year 2022, leading to another strong growth year for Lam.

Balance Sheet and Cash Flow Results

Cash and cash equivalents, short-term investments, and restricted cash and investments balances increased to $5.6 billion at the end of the December 2021 quarter compared to $4.9 billion at the end of the September 2021 quarter. This increase was primarily the result of $1.4 billion of cash generated from operating activities, partially offset by $415 million of share repurchases, including net share settlement of employee stock-based compensation; $211 million of dividends paid to stockholders; and $138 million of capital expenditures.

Deferred revenue at the end of the December 2021 quarter increased to $1,458 million compared to $1,110 million as of the end of the September 2021 quarter. Lam's deferred revenue balance does not include shipments to customers in Japan, to whom title does not transfer until customer acceptances. Shipments to customers in Japan are classified as inventory at cost until the time of acceptance. The estimated future revenue from shipments to customers in Japan was approximately $328 million as of December26, 2021 and $331 million as of September26, 2021.

Revenue

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

Region RevenueChina 26%Korea 25%Taiwan 18%Japan 12%Southeast Asia 9%United States 6%Europe 4%

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

Three Months Ended December 26, September December 27, 2021 26, 2020 2021 (In thousands)System revenue $ 2,740,173 $ 2,924,883 $ 2,307,421Customer support-related revenue 1,486,431 1,379,582 1,148,816and other $ 4,226,604 $ 4,304,465 $ 3,456,237

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 March27, 2022, Lam is providing the following guidance:

U.S. GAAP Reconciling Non-GAAP Items $4.25 + $300 $4.25 + $300Revenue Billion / Million ? Billion / Million - -Gross margin as a + +percentage of revenue 45.0% / 1% $ 1 Million 45.0% / 1% - -Operating income as a + +percentage of revenue 29.2% / 1% $ 13 Million 29.5% / 1% - -Net income per diluted + +share $7.36 / $0.75 $ 12 Million $7.45 / $0.75 - -Diluted share count 141 Million ? 141 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 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 December 2021 and September 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.

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 margin, operating income and net income; demand and spending for wafer fabrication equipment; supply chain conditions and their impacts on our results; and our prospects for growth. Some factors that may affect these forward-looking statements include: supply chain disruptions and/or manufacturing capacity constraints have limited and are expected to continue to 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 and our quarterly report on Form 10-Q for the fiscal quarter ended September 26, 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 Six Months Ended December 26, September 26, December 27, December 26, December 27, 2021 2021 2020 2021 2020Revenue $ 4,226,604 $ 4,304,465 $ 3,456,237 $ 8,531,069 $ 6,633,317 Cost of goods 2,248,688 2,327,711 1,852,442 4,576,399 3,523,343 soldGross margin 1,977,916 1,976,754 1,603,795 3,954,670 3,109,974 Gross marginas a percent 46.8 % 45.9 % 46.4 % 46.4 % 46.9 %of revenueResearch and 403,644 382,327 375,172 785,971 730,539 developmentSelling,general and 236,133 222,194 218,899 458,327 408,647 administrativeTotaloperating 639,777 604,521 594,071 1,244,298 1,139,186 expensesOperating 1,338,139 1,372,233 1,009,724 2,710,372 1,970,788 incomeOperatingincome as a 31.7 % 31.9 % 29.2 % 31.8 % 29.7 %percent ofrevenueOther income 17,999 (28,857 ) (29,941 ) (10,858 ) (68,733 )(expense), netIncome before 1,356,138 1,343,376 979,783 2,699,514 1,902,055 income taxesIncome tax (161,308 ) (163,632 ) (110,554 ) (324,940 ) (209,375 )expenseNet income $ 1,194,830 $ 1,179,744 $ 869,229 $ 2,374,574 $ 1,692,680 Net income per share:Basic $ 8.50 $ 8.32 $ 6.04 $ 16.82 $ 11.71 Diluted $ 8.44 $ 8.27 $ 5.96 $ 16.71 $ 11.55 Number ofshares used in per sharecalculations:Basic 140,630 141,743 143,830 141,187 144,549 Diluted 141,530 142,612 145,910 142,071 146,579 Cash dividenddeclared per $ 1.50 $ 1.50 $ 1.30 $ 3.00 $ 2.60 common share

LAM RESEARCH CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS(in thousands)

December 26, September June 27, 2021 26, 2021 2021 (unaudited) (unaudited) (1) ASSETS Cash and cash equivalents $ 5,086,544 $ 4,042,151 $ 4,418,263 Investments 242,590 569,472 1,310,872 Accounts receivable, net 3,402,840 3,397,180 3,026,430 Inventories 3,074,177 2,872,141 2,689,294 Prepaid expenses and other current 296,711 263,738 207,528 assetsTotal current assets 12,102,862 11,144,682 11,652,387 Property and equipment, net 1,503,385 1,372,533 1,303,479 Restricted cash and investments 250,863 251,448 252,487 Goodwill and intangible assets 1,601,755 1,614,959 1,622,499 Other assets 1,226,563 1,181,930 1,061,300 Total assets $ 16,685,428 $ 15,565,552 $ 15,892,152 LIABILITIES AND STOCKHOLDERS? EQUITYCurrent portion of long-term debt $ 6,201 $ 6,368 $ 11,349 and finance lease obligationsOther current liabilities 3,856,950 3,402,852 3,516,518 Total current liabilities 3,863,151 3,409,220 3,527,867 Long-term debt and finance lease 4,988,121 4,988,964 4,990,333 obligationsIncome taxes payable 891,545 881,325 948,037 Other long-term liabilities 466,830 466,000 398,727 Total liabilities 10,209,647 9,745,509 9,864,964 Stockholders? equity (2) 6,475,781 5,820,043 6,027,188 Total liabilities and $ 16,685,428 $ 15,565,552 $ 15,892,152 stockholders? equity

(1) Derived from audited financial statements.(2) Common shares issued and outstanding were 140,275 as of December 26, 2021, 140,811 as of September 26, 2021, and 142,501 as of June 27, 2021.

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

Three Months Ended Six Months Ended December 26, September 26, December 27, December 26, December 27, 2021 2021 2020 2021 2020CASH FLOWS FROMOPERATING ACTIVITIES:Net income $ 1,194,830 $ 1,179,744 $ 869,229 $ 2,374,574 $ 1,692,680 Adjustments toreconcile netincome to net cash provided byoperatingactivities:Depreciation and 81,705 79,874 76,389 161,579 149,301 amortizationDeferred income (13,550 ) (13,023 ) (2,462 ) (26,573 ) (4,312 )taxesEquity-basedcompensation 62,834 58,099 52,109 120,933 108,097 expenseOther, net (66,514 ) (8,690 ) 6,690 (75,204 ) 11,029 Changes inoperating assets 181,201 (838,480 ) (657,318 ) (657,279 ) (969,647 )and liabilitiesNet cash providedby operating 1,440,506 457,524 344,637 1,898,030 987,148 activitiesCASH FLOWS FROMINVESTING ACTIVITIES:Capitalexpenditures and (138,493 ) (136,427 ) (92,072 ) (274,920 ) (154,878 )intangible assetsNet sale(purchase) of 325,171 738,043 168,102 1,063,214 (568,972 )available-for-salesecuritiesOther, net (595 ) (4,923 ) (6,090 ) (5,518 ) (7,876 )Net cash providedby (used for) 186,083 596,693 69,940 782,776 (731,726 )investingactivitiesCASH FLOWS FROMFINANCING ACTIVITIES:Principal payments (1,698 ) (6,338 ) (4,596 ) (8,036 ) (23,769 )on debtTreasury stock (414,815 ) (1,236,753 ) (723,297 ) (1,651,568 ) (1,171,878 )purchasesDividends paid (211,216 ) (185,431 ) (187,927 ) (396,647 ) (355,056 )Reissuance oftreasury stockrelated to 46,380 ? 41,434 46,380 41,434 employee stockpurchase planProceeds fromissuance of common 3,451 742 8,108 4,193 13,646 stockOther, net (205 ) 188 961 (17 ) (1,179 )Net cash used forfinancing (578,103 ) (1,427,592 ) (865,317 ) (2,005,695 ) (1,496,802 )activitiesEffect of exchangerate changes oncash, cash (4,678 ) (3,776 ) 8,187 (8,454 ) 12,269 equivalents, andrestricted cashNet increase(decrease) incash, cash 1,043,808 (377,151 ) (442,553 ) 666,657 (1,229,111 )equivalents, andrestricted cashCash, cashequivalents, andrestricted cash at 4,293,599 4,670,750 4,382,525 4,670,750 5,169,083 beginning ofperiodCash, cashequivalents, and $ 5,337,407 $ 4,293,599 $ 3,939,972 $ 5,337,407 $ 3,939,972 restricted cash atend of period



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

Three Months Ended December 26, September 26, 2021 2021Revenue $ 4,226,604 $ 4,304,465 Gross margin $ 1,979,000 $ 1,979,742 Gross margin as percentage of revenue 46.8 % 46.0 %Operating expenses $ 627,445 $ 586,477 Operating income $ 1,351,555 $ 1,393,265 Operating income as a percentage of revenue 32.0 % 32.4 %Net income $ 1,207,340 $ 1,191,561 Net income per diluted share $ 8.53 $ 8.36 Shares used in per share calculation - 141,530 142,612 diluted

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

Three Months Ended December 26, September 26, 2021 2021U.S. GAAP net income $ 1,194,830 $ 1,179,744 Pre-tax non-GAAP items: Amortization related to intangible assetsacquired through certain business 1,092 1,092 combinations - cost of goods soldElective deferred compensation ("EDC")related liability valuation (decrease) (8 ) 1,896 increase - cost of goods soldEDC related liability valuation (decrease) (15 ) 3,412 increase - research and developmentAmortization related to intangible assetsacquired through certain business 12,357 12,357 combinations - selling, general andadministrativeEDC related liability valuation (decrease)increase - selling, general and (10 ) 2,275 administrativeAmortization of note discounts - other 689 683 income (expense), netLoss (Gain) on EDC related asset - other 56 (7,437 )income (expense), netNet income tax benefit on non-GAAP items (1,651 ) (2,461 )Non-GAAP net income $ 1,207,340 $ 1,191,561 Non-GAAP net income per diluted share $ 8.53 $ 8.36 U.S. GAAP net income per diluted share $ 8.44 $ 8.27 U.S. GAAP and non-GAAP number of shares used 141,530 142,612 for 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 26, September 26, 2021 2021U.S. GAAP gross margin $ 1,977,916 $ 1,976,754 Pre-tax non-GAAP items: Amortization related to intangible assetsacquired through certain business 1,092 1,092 combinationsEDC related liability valuation (decrease) (8 ) 1,896 increaseNon-GAAP gross margin $ 1,979,000 $ 1,979,742 U.S. GAAP gross margin as a percentage of 46.8 % 45.9 %revenueNon-GAAP gross margin as a percentage of 46.8 % 46.0 %revenueU.S. GAAP operating expenses $ 639,777 $ 604,521 Pre-tax non-GAAP items: Amortization related to intangible assetsacquired through certain business (12,357 ) (12,357 )combinationsEDC related liability valuation decrease 25 (5,687 )(increase)Non-GAAP operating expenses $ 627,445 $ 586,477 U.S. GAAP operating income $ 1,338,139 $ 1,372,233 Non-GAAP operating income $ 1,351,555 $ 1,393,265 U.S. GAAP operating income as percent of 31.7 % 31.9 %revenueNon-GAAP operating income as a percent of 32.0 % 32.4 %revenue

Lam Research Corporation Contacts:

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