10-QPeriod: Q2 FY2017

KLA CORP Quarterly Report for Q2 Ended Dec 31, 2016

Filed January 27, 2017For Securities:KLAC

Summary

KLA-Tencor Corporation (now KLA Corporation) reported solid financial results for the quarter ending December 30, 2016. Total revenues saw a significant year-over-year increase, driven by strong demand in the foundry and logic semiconductor markets, particularly for next-generation inspection products. The company demonstrated robust profitability, with net income and diluted earnings per share showing substantial growth compared to the prior year period. This performance was supported by improved gross margins, reflecting higher revenue volumes and manufacturing efficiencies. The company's balance sheet remains strong, with a healthy cash and marketable securities position. KLA-Tencor also continued its commitment to returning capital to shareholders through regular quarterly cash dividends. The company's business is characterized by cyclicality inherent in the semiconductor industry, but the report indicates a favorable demand environment, especially for process control and yield management solutions. Despite the cyclical nature, KLA-Tencor's strategic investments in R&D and focus on advanced technologies position it to capitalize on industry transitions.

Financial Highlights

50 data points
Beta

Revenue

$876.88M

63.7% Gross Margin

Net Income

$238.25M

27.2% Net Margin

EPS (Diluted)

$0.15

Total Assets

$5.09B

Cash & Equivalents

$937.03M

Free Cash Flow

$213.78M

Financial Statements
Beta
Revenue$876.88M
Cost of Revenue$318.51M
Gross Profit$558.38M
R&D Expenses$130.91M
SG&A Expenses$93.53M
Interest Expense$30.62M
Net Income$238.25M
EPS (Basic)$0.15
EPS (Diluted)$0.15
Shares Outstanding (Basic)1.56B
Shares Outstanding (Diluted)1.57B

Key Highlights

  • 1Total revenues increased by 23% year-over-year to $876.9 million for the three months ended December 31, 2016.
  • 2Net income increased significantly by 57% year-over-year to $238.3 million for the three months ended December 31, 2016.
  • 3Diluted earnings per share grew to $1.52 from $0.98 in the same period last year.
  • 4Gross margin improved to 63.7% from 60.4% in the prior year quarter, indicating better profitability on sales.
  • 5The company maintained a strong liquidity position with $2.59 billion in cash, cash equivalents, and marketable securities as of December 31, 2016.
  • 6KLA-Tencor continues to invest in Research & Development, with R&D expenses increasing by 11% year-over-year to $130.9 million.
  • 7The terminated merger agreement with Lam Research is no longer a factor affecting the company's operations or financial reporting.

Frequently Asked Questions

KLA-Tencor reported total revenues of $876.9 million for the three months ended December 31, 2016, a 23% increase compared to $710.2 million in the same period last year. This growth was driven by strong demand from foundry and logic semiconductor customers for next-generation inspection products.

Profitability significantly improved. Net income rose by 57% to $238.3 million, and diluted earnings per share increased to $1.52 from $0.98 in the prior year's quarter. The gross margin also expanded to 63.7% from 60.4%, reflecting improved operational efficiencies and product mix.

KLA-Tencor maintained a strong financial position, with $2.59 billion in cash, cash equivalents, and marketable securities as of December 31, 2016. This indicates substantial liquidity to fund operations, investments, and capital returns to shareholders.

The merger agreement with Lam Research was mutually terminated on October 5, 2016, with no termination fees payable. The company's financial reporting and operations are no longer impacted by this agreement.