01—Abstract
Summary
Summary of the 10-Q filed October 24, 2014. Cited figures are marked; the original filing is the authoritative source.
KLA CORP (KLAC) reported revenues of $642.9 milliona 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 millionb, 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 billionc 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.
02—Key points
Key Highlights
- Total revenues for the quarter ended September 30, 2014, were $642.9 million, a 2% decrease year-over-year.
- Product revenues declined by 5% to $476.6 million, while Service revenues grew by 6% to $166.3 million.
- Net income decreased to $72.2 million ($0.43 per diluted share) from $111.2 million ($0.66 per diluted share) in the prior year.
- Operating expenses, particularly Engineering, Research & Development (R&D), increased by 9% year-over-year.
- The company maintained a strong liquidity position with $2.9 billion in cash, cash equivalents, and marketable securities as of September 30, 2014.
- A 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.
- The company repurchased $130.7 million of its common stock during the quarter.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2015, KLA Corp kept $0.11.
- Revenue$642.9M100.0%
- Cost of revenue−$288.5M44.9%
- Gross profit$354.4M55.1%
- Operating costs−$245.3M38.2%
- Operating income$109.2M17.0%
- Interest, other & tax−$36.9M5.7%
- Net income$72.2M11.2%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2015filed October 24, 2014Financial Statements
Q1 FY2015 against Q1 FY2014
| Line item | Q1 FY2015Q1 FY2014 | Change |
|---|---|---|
| Revenue | $642.90M$658.34M | −2.3% |
| Cost of Revenue | $288.47M$277.66M | +3.9% |
| Gross Profit | $354.43M$380.68M | −6.9% |
| R&D Expenses | $143.64M$132.27M | +8.6% |
| SG&A Expenses | $101.64M$98.50M | +3.2% |
| Operating Expenses | $533.75M$508.43M | +5.0% |
| Operating Income | $109.15M$149.91M | −27.2% |
| Interest Expense | $13.52M$13.66M | −1.0% |
| Net Income | $72.23M$111.20M | −35.0% |
| EPS (Basic) | $0.04$0.07 | −34.3% |
| EPS (Diluted) | $0.04$0.07 | −34.8% |
| Shares Outstanding (Basic) | 1.65B1.66B | −0.6% |
| Shares Outstanding (Diluted) | 1.67B1.69B | −1.3% |
05—Questions
Frequently Asked Questions
What was KLA Corp's revenue performance for the quarter ending September 30, 2014?
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.
How did KLA Corp's profitability change during the quarter?
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.
What is the company's cash and liquidity position?
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.
What significant events were announced after the reporting period?
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.
06—Continue