GlobeNewswire Inc | Jul 29, 2020 04:05PM EDT

July 29, 2020

FREMONT, Calif., July 29, 2020 (GLOBE NEWSWIRE) -- Lam Research Corporation (the "Company," "Lam," "Lam Research") today announced financial results for the quarter ended June28, 2020 (the June 2020 quarter).

Highlights for the June 2020 quarter were as follows:

-- Revenue of $2.79 billion. -- U.S. GAAP gross margin of 45.9%, U.S. GAAP operating income as a percentage of revenue of 27.1%, and U.S. GAAP diluted EPS of $4.73. -- Non-GAAP gross margin of 46.1%, non-GAAP operating income as a percentage of revenue of 28.5%, and non-GAAP diluted EPS of $4.78.

Key Financial Data for the Quarters EndedJune28, 2020 and March 29, 2020(in thousands, except per-share data, percentages, and basis points)

U.S. GAAP June 2020 March 2020 Change Q /QRevenue $ 2,791,864 $ 2,503,625 +12%Gross margin as percentage of 45.9 % 46.6 % - 70 bpsrevenueOperating income as percentage of 27.1 % 27.7 % - 60 bpsrevenueDiluted EPS $ 4.73 $ 3.88 +22% Non-GAAP June 2020 March 2020 Change Q /QRevenue $ 2,791,864 $ 2,503,625 +12%Gross margin as percentage of 46.1 % 46.3 % - 20 bpsrevenueOperating income as percentage of 28.5 % 26.9 % + 160revenue bpsDiluted EPS $ 4.78 $ 3.98 +20%

U.S. GAAP Financial Results

For the June 2020 quarter, revenue was $2,792 million, gross margin was $1,280 million, or 45.9% of revenue, operating expenses were $525 million, operating income was 27.1% of revenue, and net income was $697 million, or $4.73 per diluted share on a U.S. GAAP basis. This compares to revenue of $2,504 million, gross margin of $1,167 million, or 46.6% of revenue, operating expenses of $473 million, operating income of 27.7% of revenue, and net income of $575 million, or $3.88 per diluted share, for the quarter ended March 29, 2020 (the March 2020 quarter).

Non-GAAP Financial Results

For the June 2020 quarter, non-GAAP gross margin was $1,288 million, or 46.1% of revenue, non-GAAP operating expenses were $493 million, non-GAAP operating income was 28.5% of revenue, and non-GAAP net income was $704 million, or $4.78 per diluted share. This compares to non-GAAP gross margin of $1,160 million, or 46.3% of revenue, non-GAAP operating expenses of $486 million, non-GAAP operating income of 26.9% of revenue, and non-GAAP net income of $590 million, or $3.98 per diluted share, for the March 2020 quarter.

Lam delivered strong financial results in the June quarter despite tremendous global health, macroeconomic, and geopolitical uncertainty, said Tim Archer, Lam Researchs President and Chief Executive Officer. This is a clear demonstration of our Companys ability to adapt and execute in a period of unprecedented challenges.With an outlook for continued industry growth, we are in an excellent position to outperform as our investments in disruptive innovation and differentiated customer support gain momentum.

Balance Sheet and Cash Flow Results

Cash and cash equivalents, short-term investments, and restricted cash and investments balances increased to $7.0 billion at the end of the June 2020 quarter compared to $5.6 billion at the end of the March 2020 quarter. This increase was primarily the result of net proceeds of $1.97 billion on issuance of long-term debt and $813.0 million of cash generated from operating activities. These sources of cash were partially offset by the $1.25 billion repayment of borrowings from the Company's revolving credit facility and $167.7 million of dividends paid to stockholders.

Revenue

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

Region RevenueChina 34%Korea 32%Taiwan 11%Japan 8%United States 7%Southeast Asia 5%Europe 3%

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

Three Months Ended Twelve Months Ended June28, March 29, June30, June28, June30, 2020 2020 2019 2020 2019 (In thousands)Systems revenue $ 1,865,249 $ 1,647,560 $ 1,570,373 $ 6,625,130 $ 6,451,104Customersupport-related 926,615 856,065 790,774 3,419,606 3,202,455revenue andother $ 2,791,864 $ 2,503,625 $ 2,361,147 $ 10,044,736 $ 9,653,559

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

U.S. GAAP Reconciling Non-GAAP ItemsRevenue $3.1 +/ $200 ? $3.1 +/ $200 Billion - Million Billion - MillionGross margin as a 46.4% +/ 1% $2Million 46.5% +/ 1%percentage of revenue - -Operating income as a 29.0% +/ 1% $14 Million 29.5% +/ 1%percentage of revenue - -Net income per diluted $5.06 +/ $0.40 $13 Million $5.15 +/ $0.40share - -Diluted share count 147 Million ? 147 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, $2 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 June 2020 and March 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 and the March 2020 quarter non-GAAP results exclude the income tax benefit on conclusion of certain tax matters related to a prior business combination.

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 Statements

Statements 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 ability to adapt and execute, including during a period of challenges; our outlook for continued industry growth; our ability to gain momentum from our investments in disruptive innovation and differentiated customer support as well as whether our innovation will indeed be disruptive and our support differentiated in the future; the impact of the COVID-19 outbreak on our operations and financial results; macroeconomic conditions; the status of the industry supply chain; customer demand for our equipment; industry conditions; the longterm resiliency of the semiconductor industry; the relevance of our technology to our customers; our positioning within the industry; and our ability to outperform. Some factors that may affect these forward-looking statements include: the severity, magnitude and duration of the COVID-19 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; 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 10-K for the fiscal year ended June 30, 2019, our quarterly reports on Form 10-Q for the fiscal quarters ended September 29, 2019, December 29, 2019 and March 29, 2020 and our Current Report on Form 8-K dated April 30, 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.

About Lam Research

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)

Three Months Ended Twelve Months Ended June28, March29, June30, June28, June30, 2020 2020 2019 2020 2019 (unaudited) (unaudited) (unaudited) (unaudited) (1)Revenue $ 2,791,864 $ 2,503,625 $ 2,361,147 $ 10,044,736 $ 9,653,559 Cost of goods 1,511,532 1,336,618 1,280,256 5,436,043 5,295,100 soldGross margin 1,280,332 1,167,007 1,080,891 4,608,693 4,358,459 Gross marginas a percent 45.9 % 46.6 % 45.8 % 45.9 % 45.1 %of revenueResearch and 338,810 307,914 295,578 1,252,412 1,191,320 developmentSelling,general and 185,800 164,979 168,228 682,479 702,407 administrativeTotaloperating 524,610 472,893 463,806 1,934,891 1,893,727 expensesOperating 755,722 694,114 617,085 2,673,802 2,464,732 incomeOperatingincome as a 27.1 % 27.7 % 26.1 % 26.6 % 25.5 %percent ofrevenueOther expense, (7,553 ) (64,619 ) (7,667 ) (98,824 ) (18,161 )netIncome before 748,169 629,495 609,418 2,574,978 2,446,571 income taxesIncome tax (51,496 ) (54,714 ) (67,593 ) (323,225 ) (255,141 )expenseNet income $ 696,673 $ 574,781 $ 541,825 $ 2,251,753 $ 2,191,430 Net income per share:Basic $ 4.79 $ 3.96 $ 3.66 $ 15.55 $ 14.37 Diluted $ 4.73 $ 3.88 $ 3.51 $ 15.10 $ 13.70 Number ofshares used in per sharecalculations:Basic 145,295 145,301 148,131 144,814 152,478 Diluted 147,416 148,165 154,474 149,090 159,915 Cash dividenddeclared per $ 1.15 $ 1.15 $ 1.10 $ 4.60 $ 4.40 common share

(1) Derived from audited financial statements.

LAM RESEARCH CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS(in thousands)

June28, March29, June30, 2020 2020 2019 (unaudited) (unaudited) (1)ASSETS Cash and cash equivalents $ 4,915,172 $ 3,961,586 $ 3,658,219 Investments 1,795,080 1,431,550 1,772,984 Accounts receivable, net 2,097,099 2,191,070 1,455,522 Inventories 1,900,024 1,674,740 1,540,140 Prepaid expenses and other 146,160 149,839 133,544 current assetsTotal current assets 10,853,535 9,408,785 8,560,409 Property and equipment, net 1,071,499 1,048,619 1,059,077 Restricted cash and 253,911 254,155 255,177 investmentsGoodwill and intangible assets 1,652,968 1,666,732 1,701,547 Other assets 727,134 560,344 425,123 Total assets $ 14,559,047 $ 12,938,635 $ 12,001,333 LIABILITIES AND STOCKHOLDERS? EQUITYCurrent portion of long-termdebt and finance lease $ 839,877 $ 42,407 $ 667,131 obligationsOther current liabilities 2,322,565 2,063,254 1,704,519 Total current liabilities 3,162,442 2,105,661 2,371,650 Long-term debt and finance 4,970,848 5,043,931 3,822,768 lease obligationsIncome taxes payable 909,709 889,287 892,790 Other long-term liabilities 332,559 350,603 190,821 Total liabilities 9,375,558 8,389,482 7,278,029 Temporary equity, convertible 10,995 11,546 49,439 notesStockholders? equity (2) 5,172,494 4,537,607 4,673,865 Total liabilities and $ 14,559,047 $ 12,938,635 $ 12,001,333 stockholders? equity

(1) Derived from audited financial statements.(2) Common shares issued and outstanding were 145,331 as of June 28, 2020, 145,156 as of March 29, 2020, and 144,433 as of June 30, 2019.

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

Three Months Ended Twelve Months Ended June28, March29, June30, June28, June30, 2020 2020 2019 2020 2019 (unaudited) (unaudited) (unaudited) (unaudited) (1)CASH FLOWS FROMOPERATING ACTIVITIES:Net income 696,673 574,781 541,825 2,251,753 2,191,430 Adjustments toreconcile netincome to net cash provided byoperatingactivities:Depreciation and 71,083 67,248 65,408 268,525 309,281 amortizationDeferred income (92,293 ) ? 70,125 (17,777 ) (4,980 )taxesEquity-basedcompensation 53,153 47,414 44,845 189,197 187,234 expenseAmortization ofnote discounts and 1,329 1,361 2,206 5,940 7,343 issuance costsOther, net (10,822 ) 7,811 (5,173 ) 688 (5,819 )Changes inoperating assets 93,925 (157,187 ) 161,251 (571,875 ) 491,524 and liabilitiesNet cash providedby operating 813,048 541,428 880,487 2,126,451 3,176,013 activitiesCASH FLOWS FROMINVESTING ACTIVITIES:Capitalexpenditures and (50,554 ) (51,375 ) (65,948 ) (203,239 ) (303,491 )intangible assetsNet (purchase)sale of (354,350 ) 211,159 (555,468 ) (15,000 ) (1,326,208 )available-for-salesecuritiesOther, net (25,305 ) 9,988 (2,067 ) (25,845 ) (7,355 )Net cash (usedfor) provided by (430,209 ) 169,772 (623,483 ) (244,084 ) (1,637,054 )investingactivitiesCASH FLOWS FROMFINANCING ACTIVITIES:Proceeds fromissuance oflong-term debt, 1,974,651 ? ? 1,974,651 2,476,720 net of issuancecostsPrincipal payments (2,948 ) (617,637 ) (1,157 ) (667,537 ) (117,653 )on debtNet repaymentsfrom issuance of ? ? (300,000 ) ? (361,754 )commercial paperProceeds fromborrowings on ? 1,250,000 ? 1,250,000 ? revolving creditfacilityRepayments ofborrowings on (1,250,000 ) ? ? (1,250,000 ) ? revolving creditfacilityTreasury stock (41,017 ) (245,433 ) (1,108,560 ) (1,369,649 ) (3,780,611 )purchasesDividends paid (167,739 ) (163,510 ) (164,874 ) (656,838 ) (678,348 )Reissuance oftreasury stockrelated to 46,992 ? 45,041 85,439 77,961 employee stockpurchase planProceeds fromissuance of common 1,869 1,714 1,694 8,084 6,813 stockOther, net 1,592 328 ? 1,920 (13,208 )Net cash providedby (used for) 563,400 225,462 (1,527,856 ) (623,930 ) (2,390,080 )financingactivitiesEffect of exchangerate changes oncash, cash 7,103 (10,715 ) (3,137 ) (2,750 ) (4,041 )equivalents, andrestricted cashNet increase(decrease) incash, cash 953,342 925,947 (1,273,989 ) 1,255,687 (855,162 )equivalents, andrestricted cashCash, cashequivalents, andrestricted cash at 4,215,741 3,289,794 5,187,385 3,913,396 4,768,558 beginning ofperiodCash, cashequivalents, and $ 5,169,083 $ 4,215,741 $ 3,913,396 $ 5,169,083 $ 3,913,396 restricted cash atend of period

(1) Derived from audited financial statements.

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

Three Months Ended June28, March29, 2020 2020Revenue $ 2,791,864 $ 2,503,625 Gross margin $ 1,288,339 $ 1,159,981 Gross margin as percentage of revenue 46.1 % 46.3 %Operating expenses $ 493,115 $ 486,494 Operating income $ 795,224 $ 673,487 Operating income as a percentage of revenue 28.5 % 26.9 %Net income $ 704,456 $ 590,359 Net income per diluted share $ 4.78 $ 3.98 Shares used in per share calculation - diluted 147,416 148,165

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

Three Months Ended June28, March29, 2020 2020U.S. GAAP net income $ 696,673 $ 574,781 Pre-tax non-GAAP items: Amortization related to intangible assets acquiredthrough certain business combinations - cost of goods 1,627 1,627 soldLoss (gain) on elective deferred compensation ("EDC") 6,380 (8,653 )- related liability - cost of goods soldLoss (gain) on EDC - related liability - research and 11,483 (15,575 )developmentAmortization related to intangible assets acquiredthrough certain business combinations -selling, 12,357 12,357 general and administrativeLoss (gain) on EDC - related liability - selling, 7,655 (10,383 )general and administrativeAmortization of note discounts - other expense, net 935 953 (Gain) loss on EDC - related asset - other expense, (26,135 ) 33,828 netNet income tax (benefit) expense on non-GAAP items (5,698 ) 1,700 Adjustment to cumulative income tax benefit reversal (821 ) ? due to a court rulingIncome tax benefit on the conclusion of certain tax ? (276 )mattersNon-GAAP net income $ 704,456 $ 590,359 Non-GAAP net income per diluted share $ 4.78 $ 3.98 U.S. GAAP net income per diluted share $ 4.73 $ 3.88 U.S. GAAP and non-GAAP number of shares used for per 147,416 148,165 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 June28, March29, 2020 2020U.S. GAAP gross margin $ 1,280,332 $ 1,167,007 Pre-tax non-GAAP items: Amortization related to intangible assets 1,627 1,627 acquired through certain business combinationsLoss (gain) on EDC-related liability 6,380 (8,653 )Non-GAAP gross margin $ 1,288,339 $ 1,159,981 U.S. GAAP gross margin as a percentage of 45.9 % 46.6 %revenueNon-GAAP gross margin as a percentage of 46.1 % 46.3 %revenueU.S. GAAP operating expenses $ 524,610 $ 472,893 Pre-tax non-GAAP items: Amortization related to intangible assets (12,357 ) (12,357 )acquired through certain business combinations(Loss) gain on EDC-related liability (19,138 ) 25,958 Non-GAAP operating expenses $ 493,115 $ 486,494 U.S. GAAP operating income $ 755,722 $ 694,114 Non-GAAP operating income $ 795,224 $ 673,487 U.S. GAAP operating income as percent of 27.1 % 27.7 %revenueNon-GAAP operating income as a percent of 28.5 % 26.9 %revenue

Lam Research Corporation Contact:

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