8-KRegulation FDExhibits & Filings

KLA CORP 8-K Report, Regulation FD Disclosure (Mar 18, 2024)

Filed March 18, 2024For Securities:KLAC

Summary

KLA Corporation (KLAC) announced its strategic decision to exit the flat panel display (FPD) business, with manufacturing of FPD products expected to cease by December 31, 2024. This decision stems from the cancellation of a significant new technology project by a major customer and follows the company's prior exploration of alternatives for this segment. The FPD business represented a small portion of KLA's overall revenue, accounting for only 1.4% in calendar year 2023. While this exit is not expected to impact revenue guidance for the March 2024 quarter, the company anticipates incurring between $60-$70 million in non-cash inventory write-offs and $50-$70 million for impairment of goodwill and purchased intangible assets. Consequently, KLA has revised its financial guidance for the March quarter, expecting lower GAAP and non-GAAP gross margins and diluted EPS. The company anticipates an immaterially favorable long-term impact on profitability margins from this strategic shift.

Key Highlights

  • 1KLA Corp is exiting its Flat Panel Display (FPD) business, with manufacturing to cease by December 31, 2024.
  • 2The FPD business accounted for a minimal 1.4% of KLA's total revenue in calendar year 2023.
  • 3The exit is primarily driven by the cancellation of a significant new technology project by a major customer.
  • 4KLA reaffirms its revenue guidance for the March 2024 quarter at $2.3 billion +/- $125 million.
  • 5The company expects to incur $60-$70 million in non-cash inventory write-offs and $50-$70 million in goodwill/intangible asset impairment charges in Q1 2024.
  • 6Revised financial guidance for Q1 2024 reflects lower expected GAAP and non-GAAP gross margins and diluted EPS.
  • 7KLA anticipates an immaterially favorable long-term impact on profitability margins from exiting the FPD systems market.

Frequently Asked Questions

For the quarter ending March 31, 2024, KLA expects to incur approximately $60-$70 million in non-cash expenses for inventory write-offs and $50-$70 million for the impairment of goodwill and purchased intangible assets. These charges will lead to revised guidance for lower GAAP and non-GAAP gross margins and diluted EPS.

No, the company stated that this decision has no effect on revenue expectations for the March 2024 quarter, and it reaffirms its revenue guidance range of $2.3 billion, plus or minus $125 million.

KLA expects the exit from the FPD systems market to have an immaterially favorable impact on its long-term profitability margins.

The decision is based on multiple factors, including the cancellation of a significant new technology project by a major customer. This follows the company's prior disclosure of exploring alternatives for this business segment.