10-QPeriod: Q2 FY2016

KLA CORP Quarterly Report for Q2 Ended Dec 31, 2015

Filed January 28, 2016For Securities:KLAC

Summary

KLA-Tencor (KLAC) reported solid results for the quarter ending December 31, 2015, with total revenues of $710.2 million, an increase of 5% compared to the same period last year. Net income saw a significant jump to $152.2 million, up from $20.3 million in the prior year's quarter. This improvement was driven by higher product revenues, particularly from foundry and memory market customers, and a favorable gross margin of 60.4%. The company also continued to manage its expenses effectively, with a reduction in R&D and SG&A expenses compared to the prior year, despite some merger-related costs. A significant event during the quarter was the ongoing merger discussions with Lam Research Corporation, announced in October 2015. While this merger is expected to provide strategic benefits, the company has suspended its share repurchase program as a result. KLA-Tencor's balance sheet remains strong, with cash, cash equivalents, and marketable securities totaling $2.24 billion, although this represents a slight decrease from the previous quarter due to dividend payments and stock repurchases. The company remains committed to shareholder returns through its quarterly dividend.

Financial Highlights

49 data points
Beta

Revenue

$710.25M

60.4% Gross Margin

Net Income

$152.21M

21.4% Net Margin

EPS (Diluted)

$0.10

Total Assets

$4.57B

Cash & Equivalents

$886.59M

Free Cash Flow

$92.39M

Financial Statements
Beta
Revenue$710.25M
Cost of Revenue$280.98M
Gross Profit$429.26M
R&D Expenses$118.27M
SG&A Expenses$96.53M
Interest Expense$30.54M
Net Income$152.21M
EPS (Basic)$0.10
EPS (Diluted)$0.10
Shares Outstanding (Basic)1.55B
Shares Outstanding (Diluted)1.56B

Key Highlights

  • 1Total revenues increased 5% year-over-year to $710.2 million.
  • 2Net income surged to $152.2 million, a substantial increase from $20.3 million in the prior year quarter.
  • 3Gross margin improved to 60.4%, reflecting strong product revenue and efficient operations.
  • 4The company announced a proposed merger with Lam Research Corporation in October 2015, pending regulatory and shareholder approvals.
  • 5Cash, cash equivalents, and marketable securities stood at $2.24 billion, indicating a healthy liquidity position.
  • 6R&D and SG&A expenses were reduced year-over-year, demonstrating effective cost management.
  • 7The company declared and paid a quarterly cash dividend of $0.52 per share.

Frequently Asked Questions

KLA-Tencor reported total revenues of $710.2 million, a 5% increase year-over-year. Net income was $152.2 million, a significant improvement from $20.3 million in the same quarter of the previous year. The gross margin stood at a healthy 60.4%.

The most significant strategic development was the announcement of an agreement to merge with Lam Research Corporation in October 2015. This merger is pending regulatory and shareholder approvals, expected to close mid-calendar year 2016. As a result of this pending merger, KLA-Tencor suspended its share repurchase program.

KLA-Tencor has demonstrated effective expense management. Engineering, Research and Development (R&D) expenses decreased by 11% year-over-year, and Selling, General and Administrative (SG&A) expenses decreased by 8% year-over-year. These reductions were partly due to workforce optimization initiatives.

The company maintained a strong liquidity position with $2.24 billion in cash, cash equivalents, and marketable securities as of December 31, 2015. This provides ample resources for operations, capital expenditures, and shareholder returns.