GlobeNewswire Inc | Oct 21, 2020 04:05PM EDT

October 21, 2020

FREMONT, Calif., Oct. 21, 2020 (GLOBE NEWSWIRE) -- Lam Research Corporation (the "Company," "Lam," "Lam Research") today announced financial results for the quarter ended September27, 2020 (the September 2020 quarter).

Highlights for the September 2020 quarter were as follows:

-- Revenue of $3.18 billion. -- U.S. GAAP gross margin of 47.4%, U.S. GAAP operating income as a percentage of revenue of 30.2%, and U.S. GAAP diluted EPS of $5.59. -- Non-GAAP gross margin of 47.5%, non-GAAP operating income as a percentage of revenue of 31.1%, and non-GAAP diluted EPS of $5.67.

Key Financial Data for the Quarters Ended September27, 2020 and June28, 2020 (in thousands, except per-share data, percentages, and basis points)

U.S. GAAP September 2020 June 2020 Change Q/QRevenue $ 3,177,080 $ 2,791,864 + 14 %Gross margin as percentage of 47.4 % 45.9 % + 150 revenue bpsOperating income as percentage 30.2 % 27.1 % + 310 of revenue bpsDiluted EPS $ 5.59 $ 4.73 + 18 % Non-GAAP September 2020 June 2020 Change Q/QRevenue $ 3,177,080 $ 2,791,864 + 14 %Gross margin as percentage of 47.5 % 46.1 % + 140 revenue bpsOperating income as percentage 31.1 % 28.5 % + 260 of revenue bpsDiluted EPS $ 5.67 $ 4.78 + 19 %

U.S. GAAP Financial Results

For the September 2020 quarter, revenue was $3,177 million, gross margin was $1,506 million, or 47.4% of revenue, operating expenses were $545 million, operating income was 30.2% of revenue, and net income was $823 million, or $5.59 per diluted share on a U.S. GAAP basis. This compares to revenue of $2,792 million, gross margin of $1,280 million, or 45.9% of revenue, operating expenses of $525 million, operating income of 27.1% of revenue, and net income of $697 million, or $4.73 per diluted share, for the quarter ended June28, 2020 (the June 2020 quarter).

Non-GAAP Financial Results

For the September 2020 quarter, non-GAAP gross margin was $1,511 million, or 47.5% of revenue, non-GAAP operating expenses were $523 million, non-GAAP operating income was 31.1% of revenue, and non-GAAP net income was $835 million, or $5.67 per diluted share. This compares to non-GAAP gross margin of $1,288 million, or 46.1% of revenue, non-GAAP operating expenses of $493 million, non-GAAP operating income of 28.5% of revenue, and non-GAAP net income of $704 million, or $4.78 per diluted share, for the June 2020 quarter.

Lam generated outstanding results in the September quarter with record revenues and earnings per share, said Tim Archer, Lam Researchs President and Chief Executive Officer. Our strong operational execution is enabling the Company to meet our customers' critical needs, providing a solid foundation to deliver on our long-term growth objectives.

Balance Sheet and Cash Flow Results

Cash and cash equivalents, short-term investments, and restricted cash and investments balances decreased slightly to $6.9 billion at the end of the September 2020 quarter compared to $7.0 billion at the end of the June 2020 quarter. This decrease was primarily the result of $448.6 million of share repurchases, including net share settlement on employee stock-based compensation; $167.1 million of dividends paid to stockholders; and $62.8 million of capital expenditures, partially offset by $642.5 million of cash generated from operating activities.

Revenue

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

Region RevenueChina 37 %Korea 24 %Taiwan 14 %Japan 12 %Southeast Asia 7 %United States 4 %Europe 2 %

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

Three Months Ended September 27, June 28, September 29, 2020 2020 2019 (In thousands)System revenue $ 2,148,241 $ 1,865,249 $ 1,365,228 Customer support-related 1,028,839 926,615 800,518 revenue and other $ 3,177,080 $ 2,791,864 $ 2,165,746

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 December 27, 2020, Lam is providing the following guidance:

U.S. GAAP Reconciling Non-GAAP Items $3.3 + $200 $3.3 + $200Revenue Billion / Million ? Billion / Million - -Gross margin as a + +percentage of revenue 46.0 % / 1 % $ 1Million 46.0 % / 1 % - -Operating income as a + +percentage of revenue 29.1 % / 1 % $ 14Million 29.5 % / 1 % - -Net income per diluted + +share $ 5.51 / $ 0.40 $ 13Million $ 5.60 / $ 0.40 - -Diluted share count 146 Million ? 146 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, $14 million. -- Net income per diluted share - amortization related to intangible assets acquired though business combinations, $14 million; amortization of note discounts, $1 million; and associated tax benefit for non-GAAP items ($2 million); totaling $13 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 2020 and June 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 income tax expense (benefit) of non-GAAP items. Additionally, the June 2020 quarter non-GAAP results exclude an adjustment to the previously recognized cumulative income tax benefit reversal associated with the Ninth Circuit decision to deny a rehearing of the Altera stock-based compensation case.

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 operational execution; our ability to meet our customers critical needs; and our ability to deliver on our long term growth objectives. 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. 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 September 27, June 28, September 29, 2020 2020 2019Revenue $ 3,177,080 $ 2,791,864 $ 2,165,746 Cost of goods sold 1,670,901 1,511,532 1,184,036 Gross margin 1,506,179 1,280,332 981,710 Gross margin as a percent 47.4 % 45.9 % 45.3 %of revenueResearch and development 355,367 338,810 286,827 Selling, general and 189,748 185,800 157,428 administrativeTotal operating expenses 545,115 524,610 444,255 Operating income 961,064 755,722 537,455 Operating income as a 30.2 % 27.1 % 24.8 %percent of revenueOther expense, net (38,792 ) (7,553 ) (12,728 )Income before income 922,272 748,169 524,727 taxesIncome tax expense (98,821 ) (51,496 ) (58,938 )Net income $ 823,451 $ 696,673 $ 465,789 Net income per share: Basic $ 5.67 $ 4.79 $ 3.22 Diluted $ 5.59 $ 4.73 $ 3.09 Number of shares used in per share calculations:Basic 145,267 145,295 144,673 Diluted 147,248 147,416 150,682 Cash dividend declared $ 1.30 $ 1.15 $ 1.15 per common share

LAM RESEARCH CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS(in thousands)

September 27, June 28, September 29, 2020 2020 2019 (unaudited) (1) (unaudited)ASSETS Cash and cash equivalents $ 4,129,067 $ 4,915,172 $ 4,607,182 Investments 2,528,841 1,795,080 983,650 Accounts receivable, net 2,317,922 2,097,099 1,635,643 Inventories 2,138,050 1,900,024 1,483,385 Prepaid expenses and other 161,003 146,160 124,755 current assetsTotal current assets 11,274,883 10,853,535 8,834,615 Property and equipment, net 1,133,529 1,071,499 1,030,168 Restricted cash and 253,458 253,911 254,654 investmentsGoodwill and intangible assets 1,646,343 1,652,968 1,690,648 Other assets 748,795 727,134 533,417 Total assets $ 15,057,008 $ 14,559,047 $ 12,343,502 LIABILITIES AND STOCKHOLDERS? EQUITYCurrent portion of long-termdebt and finance lease $ 834,138 $ 839,877 $ 645,158 obligationsOther current liabilities 2,572,730 2,322,565 1,812,524 Total current liabilities 3,406,868 3,162,442 2,457,682 Long-term debt and finance 4,993,495 4,970,848 3,788,089 lease obligationsIncome taxes payable 879,870 909,709 856,895 Other long-term liabilities 351,283 332,559 261,890 Total liabilities 9,631,516 9,375,558 7,364,556 Temporary equity, convertible 6,307 10,995 42,553 notesStockholders? equity (2) 5,419,185 5,172,494 4,936,393 Total liabilities and $ 15,057,008 $ 14,559,047 $ 12,343,502 stockholders? equity

(1)Derived from audited financial statements.(2)Common shares issued and outstanding were 144,593 as of September 27,2020, 145,331 as of June 28, 2020, and 144,871 as of September 29,2019.



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

Three Months Ended September 27, June 28, September 29, 2020 2020 2019CASH FLOWS FROM OPERATING ACTIVITIES:Net income $ 823,451 $ 696,673 $ 465,789 Adjustments to reconcile netincome to net cash provided by operating activities:Depreciation and amortization 72,912 71,083 64,664 Deferred income taxes (1,850 ) (92,293 ) (2,992 )Equity-based compensation expense 55,988 53,153 42,905 Amortization of note discounts 1,422 1,329 1,675 and issuance costsOther, net 2,917 (10,822 ) 4,026 Changes in operating assets and (312,329 ) 93,925 (112,020 )liabilitiesNet cash provided by operating 642,511 813,048 464,047 activitiesCASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures and (62,806 ) (50,554 ) (39,256 )intangible assetsNet (purchase) sale of (737,074 ) (354,350 ) 790,478 available-for-sale securitiesOther, net (1,786 ) (25,305 ) (540 )Net cash (used for) provided by (801,666 ) (430,209 ) 750,682 investing activitiesCASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from issuance oflong-term debt, net of issuance ? 1,974,651 ? costsPrincipal payments on debt (19,173 ) (2,948 ) (28,965 )Repayments of borrowings on ? (1,250,000 ) ? revolving credit facilityTreasury stock purchases (448,581 ) (41,017 ) (78,132 )Dividends paid (167,129 ) (167,739 ) (158,868 )Reissuance of treasury stockrelated to employee stock ? 46,992 ? purchase planProceeds from issuance of common 5,538 1,869 3,869 stockOther, net (2,140 ) 1,592 ? Net cash (used for) provided by (631,485 ) 563,400 (262,096 )financing activitiesEffect of exchange rate changeson cash, cash equivalents, and 4,082 7,103 (4,193 )restricted cashNet (decrease) increase in cash,cash equivalents, and restricted (786,558 ) 953,342 948,440 cashCash, cash equivalents, andrestricted cash at beginning of 5,169,083 4,215,741 3,913,396 periodCash, cash equivalents, and $ 4,382,525 $ 5,169,083 $ 4,861,836 restricted cash at end of period

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

Three Months Ended September 27, June 28, 2020 2020Revenue $ 3,177,080 $ 2,791,864 Gross margin $ 1,510,673 $ 1,288,339 Gross margin as percentage of revenue 47.5 % 46.1 %Operating expenses $ 523,086 $ 493,115 Operating income $ 987,587 $ 795,224 Operating income as a percentage of revenue 31.1 % 28.5 %Net income $ 835,066 $ 704,456 Net income per diluted share $ 5.67 $ 4.78 Shares used in per share calculation - diluted 147,248 147,416

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

Three Months Ended September June 28, 27, 2020 2020U.S. GAAP net income $ 823,451 $ 696,673 Pre-tax non-GAAP items: Amortization related to intangible assets acquiredthrough certain business combinations - cost of goods 1,270 1,627 soldLoss on elective deferred compensation ("EDC") 3,224 6,380 related liability - cost of goods soldLoss on EDC related liability - research and 5,803 11,483 developmentAmortization related to intangible assets acquiredthrough certain business combinations - selling, 12,357 12,357 general and administrativeLoss on EDC related liability - selling, general and 3,869 7,655 administrativeAmortization of note discounts - other expense, net 1,011 935 Gain on EDC related asset - other expense, net (12,927 ) (26,135 )Net income tax benefit on non-GAAP items (2,992 ) (5,698 )Adjustment to cumulative income tax benefit reversal ? (821 )due to a court rulingNon-GAAP net income $ 835,066 $ 704,456 Non-GAAP net income per diluted share $ 5.67 $ 4.78 U.S. GAAP net income per diluted share $ 5.59 $ 4.73 U.S. GAAP and non-GAAP number of shares used for per 147,248 147,416 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 27, June 28, 2020 2020U.S. GAAP gross margin $ 1,506,179 $ 1,280,332 Pre-tax non-GAAP items: Amortization related to intangible assets 1,270 1,627 acquired through certain business combinationsLoss on EDC related liability 3,224 6,380 Non-GAAP gross margin $ 1,510,673 $ 1,288,339 U.S. GAAP gross margin as a percentage of 47.4 % 45.9 %revenueNon-GAAP gross margin as a percentage of 47.5 % 46.1 %revenueU.S. GAAP operating expenses $ 545,115 $ 524,610 Pre-tax non-GAAP items: Amortization related to intangible assets (12,357 ) (12,357 )acquired through certain business combinationsLoss on EDC related liability (9,672 ) (19,138 )Non-GAAP operating expenses $ 523,086 $ 493,115 U.S. GAAP operating income $ 961,064 $ 755,722 Non-GAAP operating income $ 987,587 $ 795,224 U.S. GAAP operating income as percent of 30.2 % 27.1 %revenueNon-GAAP operating income as a percent of 31.1 % 28.5 %revenue

Lam Research Corporation Contacts:

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