10-QPeriod: Q2 FY2015

LAM RESEARCH CORP Quarterly Report for Q2 Ended Dec 28, 2014

Filed February 3, 2015For Securities:LRCX

Summary

Lam Research Corporation (LRCX) reported strong financial results for the quarter ending December 28, 2014, demonstrating significant revenue growth and improved profitability compared to both the previous quarter and the same period last year. Revenue increased to $1.23 billion, up 7% sequentially and 10% year-over-year, driven by robust demand in the memory segment. Net income also saw a healthy increase to $176.9 million, or $1.00 per diluted share. The company's balance sheet remains solid, with total assets growing to $8.11 billion and a healthy cash position of $981 million, although cash and equivalents decreased from the prior quarter due to share repurchases and capital expenditures. Management highlighted increased investments in Research and Development (R&D) to support industry technology inflections, which is a positive sign for future innovation and market position. Despite a slight dip in gross margin percentage due to product mix, overall financial health appears strong, supported by continued strategic investments and effective cost management. The company also made significant progress on its share repurchase program and initiated dividend payments, signaling confidence in its financial outlook and commitment to returning value to shareholders.

Financial Highlights

55 data points
Beta

Revenue

$1.23B

43.6% Gross Margin

Net Income

$176.94M

14.4% Net Margin

EPS (Diluted)

$0.10

Total Assets

$8.11B

Cash & Equivalents

$981.27M

Free Cash Flow

$161.24M

Financial Statements
Beta
Revenue$1.23B
Cost of Revenue$695.58M
Gross Profit$536.66M
R&D Expenses$196.77M
SG&A Expenses$151.15M
Operating Expenses$347.92M
Operating Income$188.74M
Interest Expense$15.80M
Net Income$176.94M
EPS (Basic)$0.11
EPS (Diluted)$0.10
Shares Outstanding (Basic)1.59B
Shares Outstanding (Diluted)1.77B

Key Highlights

  • 1Revenue for the quarter grew to $1.23 billion, a 10% increase year-over-year, driven by strong demand in the memory segment.
  • 2Net income increased to $176.9 million, resulting in diluted EPS of $1.00, up from $0.87 in the prior year's quarter.
  • 3Gross margin as a percentage of revenue remained strong at 43.6%, demonstrating pricing power and operational efficiency.
  • 4Research and Development (R&D) expenses increased to $196.8 million (16.0% of revenue), indicating continued investment in innovation and future growth.
  • 5The company repurchased $66 million of its shares during the quarter and paid its first dividend of $0.18 per share, signaling a commitment to shareholder returns.
  • 6Total assets grew to $8.11 billion, with a significant portion held in cash and short-term investments totaling $2.88 billion.

Frequently Asked Questions

Revenue growth was primarily driven by strong customer demand, particularly in the memory segment, which saw significant capacity and technology investments from semiconductor manufacturers. This demand was also supported by industry technology inflections such as FinFET transistors, 3D NAND, and multiple patterning, which increased the market size for deposition, etch, and clean equipment.

R&D expenses increased to $196.8 million, representing 16.0% of revenue. This increase reflects continued investment in developing technologies for industry inflection points and product development efforts. This sustained investment in R&D signals the company's focus on innovation and maintaining its competitive edge in a rapidly evolving technological landscape.

Lam Research demonstrated a commitment to shareholder returns by repurchasing $66 million of its shares during the quarter and initiating its first quarterly dividend payment of $0.18 per share. This suggests management's confidence in the company's financial health and future prospects.

The company maintains a substantial liquidity reserve with $3.0 billion in gross cash, cash equivalents, and short-term investments as of December 28, 2014. While cash and cash equivalents decreased from the prior quarter due to share repurchases and capital expenditures, the overall liquidity position remains strong, providing resources for R&D, capital infrastructure, debt service, and shareholder returns.