10-QPeriod: Q1 FY2015

KLA CORP Quarterly Report for Q1 Ended Sep 30, 2014

Filed October 24, 2014For Securities:KLAC

Summary

KLA CORP (KLAC) reported revenues of $642.9 million for the three months ended September 30, 2014, a slight decrease of 2% compared to the same period in the prior year. Product revenue saw a decline of 5% year-over-year, while service revenue demonstrated growth, increasing by 6%. This indicates a shift in revenue composition, with services becoming a more significant contributor. Net income for the quarter was $72.2 million, or $0.43 per diluted share, down from $111.2 million, or $0.66 per diluted share, in the prior year's quarter. This decline in profitability is attributed to increased R&D expenses and a higher effective tax rate. Despite the revenue and profit dip, the company maintained a strong liquidity position with $2.9 billion in cash, cash equivalents, and marketable securities. Notably, a significant subsequent event was the announcement of a leveraged recapitalization plan, including a special cash dividend of $16.50 per share, to be funded by existing cash and new debt.

Financial Highlights

49 data points
Beta

Revenue

$642.90M

55.1% Gross Margin

Net Income

$72.23M

11.2% Net Margin

EPS (Diluted)

$0.04

Total Assets

$5.30B

Cash & Equivalents

$669.68M

Free Cash Flow

$21.48M

Financial Statements
Beta
Revenue$642.90M
Cost of Revenue$288.47M
Gross Profit$354.43M
R&D Expenses$143.64M
SG&A Expenses$101.64M
Operating Expenses$533.75M
Operating Income$109.15M
Interest Expense$13.52M
Net Income$72.23M
EPS (Basic)$0.04
EPS (Diluted)$0.04
Shares Outstanding (Basic)1.65B
Shares Outstanding (Diluted)1.67B

Key Highlights

  • 1Total revenues for the quarter ended September 30, 2014, were $642.9 million, a 2% decrease year-over-year.
  • 2Product revenues declined by 5% to $476.6 million, while Service revenues grew by 6% to $166.3 million.
  • 3Net income decreased to $72.2 million ($0.43 per diluted share) from $111.2 million ($0.66 per diluted share) in the prior year.
  • 4Operating expenses, particularly Engineering, Research & Development (R&D), increased by 9% year-over-year.
  • 5The company maintained a strong liquidity position with $2.9 billion in cash, cash equivalents, and marketable securities as of September 30, 2014.
  • 6A significant subsequent event announced on October 23, 2014, is the authorization of a leveraged recapitalization, including a $16.50 per share special cash dividend, to be funded by cash and up to $2.5 billion in new debt.
  • 7The company repurchased $130.7 million of its common stock during the quarter.

Frequently Asked Questions

For the three months ended September 30, 2014, KLA Corp reported total revenues of $642.9 million, a slight decrease of 2% compared to $658.3 million in the same period of the previous year. Product revenue decreased by 5% to $476.6 million, while service revenue increased by 6% to $166.3 million.

Profitability decreased year-over-year. Net income for the quarter was $72.2 million ($0.43 per diluted share), down from $111.2 million ($0.66 per diluted share) in the prior year's quarter. This was influenced by an increase in R&D expenses and a higher effective tax rate.

KLA Corp maintained a strong liquidity position, with cash, cash equivalents, and marketable securities totaling $2.9 billion as of September 30, 2014. This represented 56% of total assets.

Subsequent to the quarter, on October 23, 2014, KLA Corp announced its Board of Directors had authorized the financing of a leveraged recapitalization. This plan includes a special cash dividend of $16.50 per share, estimated to be approximately $2.75 billion, to be funded by existing cash and up to $2.5 billion in new debt. Additionally, the stock repurchase program was authorized to be increased.