10-QPeriod: Q3 FY2017

LAM RESEARCH CORP Quarterly Report for Q3 Ended Mar 26, 2017

Filed April 24, 2017For Securities:LRCX

Summary

Lam Research Corporation (LRCX) reported strong financial results for the quarter ended March 26, 2017, demonstrating significant growth compared to the prior year. Revenue surged by 64% year-over-year to $2.15 billion, driven by increased investments from memory customers and broader industry demand. This top-line growth translated into substantial profitability improvements, with net income reaching $574.7 million, a significant increase from $143.5 million in the same period last year. Diluted earnings per share also saw a substantial rise to $3.10 from $0.82. The company's operational efficiency improved, reflected in a gross margin of 45.1%, up from 43.5% in the prior year's comparable quarter. While research and development expenses increased to support innovation, selling, general, and administrative expenses were managed effectively. Lam Research ended the quarter with a solid liquidity position, holding approximately $6.1 billion in cash, cash equivalents, and investments, though this was a decrease from the prior year-end due to debt redemptions.

Financial Highlights

55 data points
Beta

Revenue

$2.15B

45.1% Gross Margin

Net Income

$574.71M

26.7% Net Margin

EPS (Diluted)

$0.31

Total Assets

$11.88B

Cash & Equivalents

$2.13B

Free Cash Flow

$422.69M

Financial Statements
Beta
Revenue$2.15B
Cost of Revenue$1.18B
Gross Profit$971.40M
R&D Expenses$265.99M
SG&A Expenses$167.00M
Operating Expenses$432.99M
Operating Income$538.42M
Interest Expense$24.75M
Net Income$574.71M
EPS (Basic)$0.35
EPS (Diluted)$0.31
Shares Outstanding (Basic)1.63B
Shares Outstanding (Diluted)1.85B

Key Highlights

  • 1Revenue increased significantly by 64% year-over-year to $2.15 billion for the quarter ended March 26, 2017.
  • 2Net income more than quadrupled year-over-year, reaching $574.7 million.
  • 3Diluted EPS increased substantially to $3.10, up from $0.82 in the prior year's quarter.
  • 4Gross margin improved to 45.1% from 43.5% year-over-year, indicating better operational efficiency and favorable product mix.
  • 5The company experienced increased demand from memory customers, contributing to higher shipments and revenue.
  • 6Cash and cash equivalents, investments, and restricted cash stood at $6.1 billion as of March 26, 2017, providing ample liquidity.
  • 7The company repurchased a significant amount of its common stock, with $795 million available under its repurchase program at quarter-end.

Frequently Asked Questions

The primary driver of Lam Research's revenue growth was increased investments from memory customers, alongside a general strengthening of demand for semiconductor equipment across the industry.

Profitability saw a substantial improvement. Net income grew from $143.5 million in the quarter ended March 27, 2016, to $574.7 million in the quarter ended March 26, 2017. Diluted earnings per share also increased significantly to $3.10 from $0.82 over the same period.

As of March 26, 2017, Lam Research maintained a strong liquidity position with approximately $6.1 billion in cash, cash equivalents, and investments. This provides sufficient resources to support operations, investments, debt service, and capital expenditures.

Management believes that demand for their products will continue to strengthen over the next quarter, driven by ongoing technology inflections in the semiconductor industry such as FinFET transistors, 3D NAND, and advanced packaging, which increase the company's served addressable market.