10-QPeriod: Q1 FY2016

KLA CORP Quarterly Report for Q1 Ended Sep 30, 2015

Filed October 22, 2015For Securities:KLAC

Summary

KLA Corporation (KLAC) reported its financial results for the quarter ending September 29, 2015. Total revenues remained stable year-over-year at $642.6 million, with a slight increase in service revenue partially offsetting a decrease in product revenue. Net income saw a significant improvement, rising to $104.9 million from $72.2 million in the same period last year, driven by lower operating expenses, including reduced R&D and SG&A costs, partly due to workforce reductions. The company also benefited from a lower effective tax rate. Despite a decrease in cash and marketable securities from the previous quarter, the company maintained a strong liquidity position with approximately $2.3 billion in cash, cash equivalents, and marketable securities.

Financial Highlights

49 data points
Beta

Revenue

$642.64M

57.9% Gross Margin

Net Income

$104.90M

16.3% Net Margin

EPS (Diluted)

$0.07

Total Assets

$4.57B

Cash & Equivalents

$763.70M

Free Cash Flow

$186.44M

Financial Statements
Beta
Revenue$642.64M
Cost of Revenue$270.24M
Gross Profit$372.40M
R&D Expenses$119.94M
SG&A Expenses$91.66M
Interest Expense$30.56M
Net Income$104.90M
EPS (Basic)$0.07
EPS (Diluted)$0.07
Shares Outstanding (Basic)1.57B
Shares Outstanding (Diluted)1.58B

Key Highlights

  • 1Total revenues for the quarter were $642.6 million, virtually flat compared to $642.9 million in the prior year's quarter.
  • 2Net income increased substantially to $104.9 million ($0.66 per diluted share) from $72.2 million ($0.43 per diluted share) in the same quarter of the prior year.
  • 3Operating expenses decreased significantly, with R&D expenses down 16% and SG&A expenses down 10% year-over-year, reflecting cost-saving measures including workforce reductions.
  • 4The effective tax rate decreased to 21.9% from 27.0% in the prior year's quarter, contributing to the net income growth.
  • 5The company's cash, cash equivalents, and marketable securities totaled $2.3 billion, a slight decrease from the prior quarter but indicative of solid liquidity.
  • 6Debt increased significantly in the prior year due to a leveraged recapitalization, with total debt at $3.15 billion as of September 30, 2015.
  • 7Subsequent to the quarter, KLA announced a definitive agreement to merge with Lam Research Corporation, expected to close mid-2016.

Frequently Asked Questions

KLA's total revenues remained stable year-over-year for the quarter ending September 29, 2015, at $642.6 million, compared to $642.9 million in the same period of the prior year. Product revenue decreased slightly, while service revenue saw a modest increase.

The substantial increase in net income to $104.9 million was primarily driven by a significant reduction in operating expenses, including R&D and SG&A, due to workforce reductions and cost-saving initiatives. A lower effective tax rate also contributed to the improved net income.

As of September 30, 2015, KLA maintained a strong liquidity position with approximately $2.3 billion in cash, cash equivalents, and marketable securities. However, this represented a decrease from the prior quarter, primarily due to dividend payments and stock repurchases.

The most significant subsequent event disclosed is the announcement on October 21, 2015, of a definitive agreement to merge with Lam Research Corporation. This transaction is expected to close in mid-calendar year 2016, pending regulatory and stockholder approvals.