01—Abstract
Summary
Summary of the 10-Q filed October 31, 2019. Cited figures are marked; the original filing is the authoritative source.
KLA Corporation (KLAC) reported solid financial results for the quarter ended September 30, 2019, with total revenues of $1.41 billiona, a significant increase of 29% year-over-year.
This growth was primarily driven by strong demand in the patterning business and the inclusion of revenues from the recently acquired Orbotech business. While product revenues saw a substantial 28%b increase, service revenues also grew by a strong 35%, demonstrating the company's diversified revenue streams. The company maintained a robust gross margin of 57%, despite a slight decrease compared to the prior year, impacted by the lower gross margins of the acquired Orbotech business and an unfavorable product mix.
Net income attributable to KLA for the quarter was $346.5 millionc, leading to diluted earnings per share of $2.16. The company's balance sheet remains strong, with total assets of $9.23 billion and a healthy liquidity position of $1.75 billion in cash, cash equivalents, and marketable securities. KLA continued to return capital to shareholders through dividends and share repurchases, indicating confidence in its financial health and future prospects.
02—Key points
Key Highlights
- Total revenues increased by 29% to $1.41 billion for the three months ended September 30, 2019, compared to $1.09 billion in the prior year period.
- Product revenues grew by 28% to $1.06 billion, driven by strong demand in the patterning business and the inclusion of Orbotech's revenue.
- Service revenues increased by 35% to $355.4 million, benefiting from the acquired Orbotech business and an increase in installed systems.
- Net income attributable to KLA was $346.5 million, resulting in diluted EPS of $2.16.
- The company maintained a gross margin of 57%, although it decreased from 65% in the prior year, primarily due to the impact of the Orbotech acquisition.
- KLA Corporation ended the quarter with a strong liquidity position, holding $1.75 billion in cash, cash equivalents, and marketable securities.
- Significant investments were made in R&D ($210.6 million) and SG&A ($188.3 million), reflecting ongoing product development and integration efforts.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2020filed October 31, 2019Financial Statements
Q1 FY2020 against Q1 FY2019
| Line item | Q1 FY2020Q1 FY2019 | Change |
|---|---|---|
| Revenue | $1.41B$1.09B | +29.3% |
| Cost of Revenue | $604.24M$381.39M | +58.4% |
| Gross Profit | $809.17M$711.87M | +13.7% |
| R&D Expenses | $210.58M$153.53M | +37.2% |
| SG&A Expenses | $188.34M$114.44M | +64.6% |
| Interest Expense | $40.35M$26.36M | +53.1% |
| Net Income | $346.52M$395.94M | −12.5% |
| EPS (Basic) | $0.22$0.26 | −14.5% |
| EPS (Diluted) | $0.22$0.25 | −15.0% |
| Shares Outstanding (Basic) | 1.59B1.55B | +2.2% |
| Shares Outstanding (Diluted) | 1.60B1.56B | +2.6% |
05—Questions
Frequently Asked Questions
What drove the significant revenue growth in the reported quarter?
The revenue growth was primarily driven by strong demand from customers in the patterning business and the inclusion of revenue from the Orbotech business, which was acquired in February 2019. Both product and service revenues saw substantial year-over-year increases.
What is the impact of the Orbotech acquisition on KLA's financial performance?
The Orbotech acquisition, completed in February 2019, contributed significantly to revenue growth, particularly in the Specialty Semiconductor Process and PCB, Display and Component Inspection segments. However, it also impacted the gross margin percentage due to Orbotech's lower product gross margins compared to KLA's historical margins.
How has KLA's liquidity position changed, and is it sufficient?
KLA maintained a strong liquidity position, with $1.75 billion in cash, cash equivalents, and marketable securities as of September 30, 2019. This was a slight increase from the prior quarter. The company believes its operating cash flow, existing cash balances, and revolving credit facility are sufficient to meet its liquidity needs for at least the next 12 months.
What is KLA's strategy regarding capital allocation (dividends and share repurchases)?
KLA continued to return capital to shareholders by declaring a regular quarterly cash dividend of $0.75 per share and actively repurchasing shares of its common stock. The stock repurchase program is intended to offset dilution and return excess cash to stockholders, with $1.63 billion still available under the program as of September 30, 2019.
06—Continue