01—Abstract
Summary
Summary of the 10-Q filed January 28, 2011. Cited figures are marked; the original filing is the authoritative source.
KLA Corporation (KLAC) reported a strong financial performance for the quarter ending December 30, 2010, with significant year-over-year revenue growth.
Total revenues reached $766.3 milliona, a 74% increase compared to the same period in the prior year, driven primarily by a substantial rebound in product revenue, up 99%. This surge in revenue translated into a robust net income of $185.5 million, or $1.09 per diluted share, a dramatic improvement from a net income of $21.8 million, or $0.13 per diluted share, in the prior year's quarter. The company's balance sheet remains solid, with total assets increasing to $4.17 billion from $3.91 billion.
Cash and cash equivalents also saw a healthy increase, reaching $596.1 millionb. The company's strong operational performance and healthy cash generation allowed for increased capital expenditures, significant stock repurchases, and a dividend payout, indicating confidence in future performance and a commitment to returning value to shareholders.
02—Key points
Key Highlights
- Revenue surged by 74% year-over-year to $766.3 million, driven by a 99% increase in product revenue.
- Net income more than eightfold, reaching $185.5 million ($1.09 per diluted share) compared to $21.8 million ($0.13 per diluted share) in the prior year's quarter.
- Gross margin improved significantly to 59% from 53% in the prior year's quarter, reflecting better manufacturing efficiencies and product mix.
- Engineering, Research & Development (R&D) expenses increased by 14% year-over-year to $94.9 million, underscoring continued investment in innovation.
- Selling, General & Administrative (SG&A) expenses decreased by 11% year-over-year to $91.2 million, partly due to the absence of prior year impairment charges.
- The company generated strong operating cash flow of $289.5 million for the six months ended December 31, 2010.
- KLA Corp. repurchased $117.3 million of its common stock in the first six months of the fiscal year, a significant increase from no repurchases in the prior year period.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2011, KLA Corp kept $0.24.
- Revenue$766.3M100.0%
- Cost of revenue−$311.4M40.6%
- Gross profit$454.9M59.4%
- Operating costs−$186.1M24.3%
- Operating income$268.9M35.1%
- Interest, other & tax−$83.4M10.9%
- Net income$185.5M24.2%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2011filed January 28, 2011Financial Statements
Q2 FY2011 against Q2 FY2010
| Line item | Q2 FY2011Q2 FY2010 | Change |
|---|---|---|
| Revenue | $766.33M$440.36M | +74.0% |
| Cost of Revenue | $311.40M$207.29M | +50.2% |
| Gross Profit | $454.93M$233.07M | +95.2% |
| R&D Expenses | $94.90M$83.30M | +13.9% |
| SG&A Expenses | $91.17M$102.67M | −11.2% |
| Operating Expenses | $497.46M$393.26M | +26.5% |
| Operating Income | $268.87M$47.09M | +470.9% |
| Interest Expense | $13.49M$13.54M | −0.4% |
| Net Income | $185.49M$21.79M | +751.1% |
| EPS (Basic) | $0.11$0.01 | +753.8% |
| EPS (Diluted) | $0.11$0.01 | +738.5% |
| Shares Outstanding (Basic) | 1.67B1.71B | −2.6% |
| Shares Outstanding (Diluted) | 1.70B1.74B | −2.5% |
05—Questions
Frequently Asked Questions
How did KLA Corp.'s revenue and profitability perform compared to the previous year?
KLA Corp. demonstrated a significant improvement in performance. Total revenues for the quarter ending December 30, 2010, increased by 74% year-over-year to $766.3 million, largely driven by a 99% surge in product revenue. This revenue growth translated into a substantial increase in net income, which rose to $185.5 million, or $1.09 per diluted share, from $21.8 million, or $0.13 per diluted share, in the same period last year.
What is the company's current financial position and liquidity?
The company maintains a strong financial position. Total assets grew to $4.17 billion as of December 31, 2010. KLA Corp. reported cash and cash equivalents of $596.1 million and marketable securities of $1.04 billion, totaling over $1.6 billion in liquid assets. The company generated robust operating cash flow, providing ample liquidity to fund operations, investments, and shareholder returns.
What were the key drivers behind the significant revenue increase?
The substantial revenue increase was primarily driven by a strong recovery and growth in customer capital spending for both technology and capacity investments in the semiconductor industry. This was particularly evident in defect inspection equipment, which saw higher revenues in the current quarter compared to both the prior sequential quarter and the prior year's quarter. Higher factory utilization by customers also contributed to increased service revenues.
How is KLA Corp. returning value to its shareholders?
KLA Corp. is actively returning value to shareholders through both stock repurchases and dividend payments. The company repurchased $117.3 million of its common stock in the first six months of the fiscal year, a significant increase from the prior year. Additionally, the company declared and paid a cash dividend of $0.25 per share for the quarter, totaling $41.8 million in dividend payments for the period.
06—Continue