10-QPeriod: Q1 FY2014

LAM RESEARCH CORP Quarterly Report for Q1 Ended Sep 29, 2013

Filed November 7, 2013For Securities:LRCX

Summary

Lam Research Corporation (LRCX) reported a solid financial performance for the quarter ended September 29, 2013. Revenue saw a 3% increase sequentially and a significant 12% jump year-over-year, reaching $1.015 billion. This growth was driven by increased customer investments in semiconductor equipment, particularly in the memory and foundry segments. The company also demonstrated improved profitability, with gross margin increasing to 42.5% of revenue, up from 36.8% in the prior year's quarter, attributed to a favorable business mix and cost synergies from the Novellus acquisition. Net income for the quarter was $85.5 million, or $0.50 per diluted share, a substantial improvement from the $2.8 million net income ($0.02 per diluted share) reported in the same period last year. The company maintained a strong liquidity position with approximately $2.6 billion in cash, cash equivalents, and short-term investments. Lam Research also continued its share repurchase program, demonstrating a commitment to returning capital to shareholders.

Financial Highlights

52 data points
Beta

Revenue

$1.02B

42.5% Gross Margin

Net Income

$85.51M

8.4% Net Margin

EPS (Diluted)

$0.05

Total Assets

$7.29B

Cash & Equivalents

$1.16B

Free Cash Flow

$51.92M

Financial Statements
Beta
Revenue$1.02B
Cost of Revenue$583.20M
Gross Profit$431.86M
R&D Expenses$170.57M
SG&A Expenses$155.88M
Operating Expenses$326.45M
Operating Income$105.41M
Interest Expense$15.30M
Net Income$85.51M
EPS (Basic)$0.05
EPS (Diluted)$0.05
Shares Outstanding (Basic)1.63B
Shares Outstanding (Diluted)1.71B

Key Highlights

  • 1Revenue increased by 3% sequentially to $1.015 billion, and by 12% year-over-year, indicating a recovery in customer spending on semiconductor equipment.
  • 2Gross margin improved significantly to 42.5% of revenue, up from 36.8% in the prior year, driven by favorable product mix and operational efficiencies.
  • 3Net income surged to $85.5 million, or $0.50 per diluted share, a substantial increase from $2.8 million ($0.02 per diluted share) in the same quarter last year.
  • 4Operating expenses remained stable quarter-over-quarter, demonstrating good cost control amidst revenue growth.
  • 5The company maintained a strong balance sheet with $2.6 billion in cash and short-term investments, indicating solid financial health and liquidity.
  • 6Lam Research continued its share repurchase program, spending $104 million on treasury stock purchases, reflecting confidence and a commitment to shareholder returns.

Frequently Asked Questions

The increase in revenue was driven by higher customer investments in semiconductor equipment, reflecting an improved industry environment. The substantial jump in net income was due to this revenue growth coupled with improved gross margins, resulting from a more favorable business mix and cost synergies from the Novellus acquisition, and well-managed operating expenses.

The company is focusing on operational efficiencies, including factory and manufacturing savings and integration cost synergies from the Novellus acquisition, which contributed to the improved gross margin. Operating expenses were kept relatively flat quarter-over-quarter, indicating effective cost management.

Lam Research maintains a strong liquidity position with approximately $2.6 billion in cash and short-term investments as of September 29, 2013. The company generated $52 million in cash from operations during the quarter and used cash for share repurchases and capital expenditures, demonstrating active capital management.

The acquisition of Novellus has contributed to cost synergies and operational efficiencies, which have positively impacted gross margins. The integration of Novellus' business is ongoing and management is working to realize the anticipated benefits of the acquisition.