01—Abstract
Summary
Summary of the 10-K filed August 6, 2018. Cited figures are marked; the original filing is the authoritative source.
KLA-Tencor Corporation, a leading supplier of process control and yield management solutions for the semiconductor industry, reported strong revenue growth in the fiscal year ended June 30, 2018, up 16% to $4.04 billiona.
This growth was primarily driven by increased investments from customers in Korea, China, and Japan, particularly in memory and wafer technology, as well as capacity expansions. The company's services revenue also saw a healthy increase, reflecting the growing installed base of its products. The company announced a significant strategic move with an agreement to acquire Orbotech, Ltd. for $3.2 billionb, signaling an intent to expand its market reach.
KLA-Tencor also announced a $2 billionc share repurchase program, demonstrating its commitment to returning value to shareholders. Despite strong revenue performance and strategic initiatives, investors should remain aware of the inherent cyclicality of the semiconductor industry and KLA-Tencor's customer concentration, with a few key customers accounting for a substantial portion of revenue.
02—Key points
Key Highlights
- KLA-Tencor reported a 16% increase in total revenues for the fiscal year ended June 30, 2018, reaching $4.04 billion, driven by strong demand in key Asian markets.
- The company is pursuing a significant strategic acquisition of Orbotech, Ltd. for $3.2 billion, pending regulatory approvals.
- A new $2 billion share repurchase authorization was announced, indicating a focus on returning capital to shareholders.
- Service revenues increased by 13% year-over-year, reflecting the growth of KLA-Tencor's installed base and customer service contracts.
- Gross margin improved to 64.1% in FY2018 from 63.0% in FY2017, attributed to a favorable mix of products and services and higher revenue volume.
- The company maintained a strong liquidity position with $2.88 billion in cash, cash equivalents, and marketable securities as of June 30, 2018.
- Significant revenue concentration exists, with a few major customers accounting for a substantial portion of total revenues, creating potential volatility.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2018filed August 6, 2018Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $4.04B$3.48B | +16.0% |
| Cost of Revenue | $1.45B$1.29B | +12.4% |
| Gross Profit | $2.59B$2.19B | +18.1% |
| R&D Expenses | $608.53M$526.69M | +15.5% |
| SG&A Expenses | $442.30M$388.21M | +13.9% |
| Interest Expense | $114.38M$122.48M | −6.6% |
| Net Income | $802.26M$926.08M | −13.4% |
| EPS (Basic) | $0.51$0.59 | −13.3% |
| EPS (Diluted) | $0.51$0.59 | −13.3% |
| Shares Outstanding (Basic) | 1.56B1.56B | −0.1% |
| Shares Outstanding (Diluted) | 1.57B1.57B | −0.1% |
05—Questions
Frequently Asked Questions
What was KLA-Tencor's revenue performance in the fiscal year ending June 30, 2018?
KLA-Tencor reported total revenues of $4.04 billion for the fiscal year ended June 30, 2018, representing a 16% increase compared to the prior fiscal year. This growth was primarily driven by increased customer investments in Korea, China, and Japan, particularly in memory and wafer technology, as well as capacity-related investments.
What is the significance of the proposed acquisition of Orbotech?
KLA-Tencor announced an agreement to acquire Orbotech, Ltd. for $3.2 billion. This acquisition is a major strategic initiative aimed at expanding the company's market reach and product portfolio, subject to regulatory approvals and customary closing conditions.
How is KLA-Tencor returning value to its shareholders?
The company announced a $2 billion share repurchase authorization, indicating a commitment to buy back its own stock. Additionally, KLA-Tencor consistently pays quarterly cash dividends, with the dividend per share increasing over the fiscal year.
What are the main risks investors should consider based on this filing?
Key risks include the cyclical nature of the semiconductor industry, which impacts customer capital spending. Additionally, KLA-Tencor faces significant customer concentration, with a few major customers accounting for a large portion of its revenue, making it vulnerable to changes in those customers' spending patterns. The company also faces risks related to ongoing technological advancements and competition.
06—Continue