01—Abstract
Summary
Summary of the 10-Q filed October 23, 2023. Cited figures are marked; the original filing is the authoritative source.
Lam Research Corporation reported a significant year-over-year decline in revenue for the first quarter of fiscal year 2024, with revenues falling to $3.48 billiona from $5.07 billion in the prior year's quarter.
This decrease was attributed to a weakening semiconductor market, particularly in memory, and ongoing U.S. government restrictions on sales to China. Despite the revenue drop, the company demonstrated resilience by increasing its gross margin percentage to 47.5% from 45.5% in the previous quarter, driven by a favorable customer mix, and maintaining a strong focus on research and development. The company also continued its capital return program, repurchasing $843.2 millionb in treasury stock and paying $230.3 million in dividends, while generating $951.2 million in operating cash flow.
Management highlighted that while overall customer demand weakened in calendar year 2023, long-term secular demand for semiconductors and technology inflections are expected to drive sustainable growth. The company has initiated a restructuring plan to align costs with the current business outlook, expecting to incur approximately $7 millionc in additional charges in the next quarter.
02—Key points
Key Highlights
- Revenue for the quarter ended September 24, 2023, was $3.48 billion, a decrease of 31.4% compared to $5.07 billion in the same period last year.
- Gross margin improved to 47.5% from 46.1% in the prior year's quarter, indicating improved operational efficiency or product mix.
- Net income decreased to $887.4 million ($6.66 per diluted share) from $1.43 billion ($10.39 per diluted share) year-over-year.
- The company repurchased $843.2 million of treasury stock and paid $230.3 million in dividends, demonstrating a commitment to returning capital to shareholders.
- Operating cash flow remained robust at $951.2 million.
- Revenue from China represented 48% of total revenue for the quarter, a significant increase from 30% in the prior year, reflecting increased spending by Chinese customers for mature node equipment and potentially indicating a shift in geographic revenue concentration.
- Restructuring charges of $9.96 million were incurred, part of a plan to align costs with the business outlook, with an estimated $7 million expected in the next quarter.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2024, Lam Research Corp kept $0.25.
- Revenue$3.48B100.0%
- Cost of revenue−$1.83B52.5%
- Gross profit$1.65B47.5%
- Operating costs−$631.7M18.1%
- Operating income$1.02B29.4%
- Interest, other & tax−$135.6M3.9%
- Net income$887.4M25.5%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed October 23, 2023Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $3.48B$5.07B | −31.4% |
| Cost of Revenue | $1.83B$2.74B | −33.2% |
| Gross Profit | $1.65B$2.34B | −29.2% |
| R&D Expenses | $422.63M$433.38M | −2.5% |
| SG&A Expenses | $207.02M$205.62M | +0.7% |
| Operating Expenses | $631.67M$639.00M | −1.1% |
| Operating Income | $1.02B$1.70B | −39.7% |
| Interest Expense | $45.33M$46.05M | −1.6% |
| Net Income | $887.40M$1.43B | −37.8% |
| EPS (Basic) | $0.67$1.04 | −35.7% |
| EPS (Diluted) | $0.67$1.04 | −35.5% |
| Shares Outstanding (Basic) | 1.33B1.37B | −3.1% |
| Shares Outstanding (Diluted) | 1.33B1.37B | −2.9% |
05—Questions
Frequently Asked Questions
What drove the significant year-over-year revenue decline?
The revenue decline was primarily driven by a general weakening in the semiconductor market, particularly in the memory segment, and impacted by U.S. government restrictions on sales to China. These factors led to reduced wafer fabrication equipment spending by customers.
How did the company manage profitability despite lower revenues?
Lam Research improved its gross margin percentage to 47.5% compared to 45.5% in the prior quarter. This was attributed to a favorable customer mix and, in comparison to the prior year's quarter, reduced spending on material costs and logistics, partially offset by unfavorable factory utilization.
What is the outlook for the semiconductor industry and Lam Research's position?
Management believes that long-term secular demand for semiconductors, coupled with technology inflections like 3D device scaling, will drive sustainable growth. Lam Research is positioned to benefit from these trends due to its expertise in deposition, etch, and clean technologies.
What actions is the company taking to address the current market conditions?
The company initiated a restructuring plan to align its cost structure with the current economic environment and business outlook. This includes workforce reductions, and an estimated $7 million in additional restructuring charges are expected in the upcoming quarter.
06—Continue