KLA(KLAC)

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Here's Why KLA (KLAC) is a Strong Momentum Stock
ZACKS· 2025-02-04 15:55
Core Insights - Zacks Premium provides various tools for investors to enhance their stock market engagement and confidence [1][2] Zacks Style Scores - Zacks Style Scores are indicators that assist investors in selecting stocks likely to outperform the market within 30 days, rated from A to F based on value, growth, and momentum characteristics [3] - The Value Score focuses on identifying undervalued stocks using financial ratios like P/E and Price/Sales [4] - The Growth Score emphasizes a company's financial health and future growth potential, analyzing projected and historical earnings and cash flow [5] - The Momentum Score helps investors capitalize on price trends, utilizing factors like weekly price changes and monthly earnings estimate shifts [6] - The VGM Score combines all three Style Scores, providing a comprehensive view of stocks with attractive value, growth forecasts, and momentum [7] Zacks Rank - The Zacks Rank is a proprietary model that uses earnings estimate revisions to simplify portfolio building, with 1 (Strong Buy) stocks achieving an average annual return of +25.41% since 1988, significantly outperforming the S&P 500 [8][9] - There are over 800 stocks rated 1 or 2, making it essential for investors to select those with high Style Scores for optimal success [10] Stock Highlight: KLA Corporation - KLA Corporation, based in San Jose, CA, specializes in process diagnostics and control equipment for semiconductor manufacturing [12] - KLA holds a 2 (Buy) rating on the Zacks Rank, with a VGM Score of B and a Momentum Style Score of A, having seen a 7.2% increase in shares over the past month [13] - Recent upward revisions in earnings estimates by seven analysts for fiscal 2025 have raised the Zacks Consensus Estimate by $0.88 to $31.59 per share, with an average earnings surprise of 6.4% [13][14]
Can KLA Corp's Growing Semiconductor Process Control Drive the Stock?
ZACKS· 2025-02-03 18:31
Core Insights - KLA Corporation's second-quarter fiscal 2025 Semiconductor Process Control revenues reached $2.76 billion, exceeding the Zacks Consensus Estimate by 5.17% and reflecting a 25.6% year-over-year increase [1][4] - The company's adjusted earnings of $8.20 per share surpassed the Zacks Consensus Estimate by 6.08%, marking an 11.9% year-over-year growth [2] - Total revenues for the quarter were reported at $3.08 billion, showing a 23.7% year-over-year growth and exceeding the Zacks Consensus Estimate by 4.88% [2] Revenue Segments - KLA operates primarily in three segments: Semiconductor Process Control (89.6% of total revenues), Specialty Semiconductor Process, and PCB and Component Inspection (both contributing 5.2% each) [3] - The Semiconductor Process Control segment generated revenues of $2.76 billion, reflecting a 26% year-over-year increase driven by demand for advanced semiconductor manufacturing solutions, particularly in AI and high-performance computing [4] Advanced Packaging Growth - Advanced packaging revenues reached approximately $500 million in calendar year 2024 and are projected to exceed $800 million in calendar year 2025, an increase from the previously estimated $750 million [5] Market Drivers - Key growth drivers include ongoing scaling, new technology, larger die sizes, and increasing capital intensity in Foundry/Logic, along with investments in AI and high bandwidth memory in DRAM [6] - Strong growth in advanced packaging is attributed to investments in AI and high-performance computing, which are increasing the demand for complex chip integration [7] Future Guidance - For the third quarter of fiscal 2025, KLA expects revenues to be around $3.0 billion, plus or minus $150 million, indicating a 27.57% year-over-year growth [8] - Non-GAAP earnings are expected to be $8.05 per share, plus or minus 60 cents, reflecting a 48.29% year-over-year growth [9] Geopolitical Challenges - KLA faces significant challenges due to geopolitical risks, particularly U.S. export controls affecting its business in China, which accounts for 36% of its revenues [11] - The company estimates a $500 million revenue impact from recent export controls in China for calendar year 2025, with 70% of this impact expected to affect its systems business [12]
Unlocking KLA (KLAC) International Revenues: Trends, Surprises, and Prospects
ZACKS· 2025-02-03 15:15
Core Insights - KLA's international operations are crucial for understanding its financial resilience and growth potential, especially given its extensive global presence in the semiconductor manufacturing equipment sector [1][2][3] Revenue Performance - KLA's total revenue for the quarter reached $3.08 billion, marking a 23.7% year-over-year increase [4] - Korea contributed $357.43 million, representing 11.62% of total revenue, which was a -19.21% surprise compared to the consensus estimate of $442.44 million [5] - Taiwan generated $881.21 million, accounting for 28.64% of total revenue, with a +99.17% surprise against the projected $442.44 million [6] - Japan's revenue was $228.61 million, or 7.43% of total revenue, with a -22.49% surprise compared to the expected $294.96 million [7] - China contributed $1.09 billion, making up 35.51% of total revenue, with a +5.83% surprise against the forecast of $1.03 billion [8] - Europe & Israel generated $134.27 million, constituting 4.36% of total revenue, which was an -8.96% surprise compared to the expected $147.48 million [9] Future Projections - Analysts project KLA's total revenue for the current fiscal quarter to be $3.01 billion, reflecting a 27.6% increase from the same quarter last year, with specific contributions from various regions [10] - For the entire year, total revenue is forecasted at $11.89 billion, an improvement of 21.2% from the previous year, with detailed regional contributions outlined [11] Market Context - The interconnected global economy makes international market engagement vital for financial success, influencing consistent earnings and growth prospects [2][3] - KLA's reliance on international markets presents both opportunities and challenges, necessitating close monitoring of revenue trends to forecast future performance [12][13]
KLA(KLAC) - 2025 Q2 - Quarterly Report
2025-01-31 21:05
Demand and Market Environment - The company reported a significant increase in demand for semiconductors driven by advancements in AI, 5G technology, and the electrification of the automotive industry[160] - The semiconductor industry environment has improved, with foundry/logic customers increasing capital intensity and technology development investments supporting AI and high bandwidth memory[161] - The company continues to invest in technological innovation despite potential delays from customers in adopting new chips and technology methods[161] Financial Performance - Total revenues for the three months ended December 31, 2024, reached $3,076.9 million, a 24% increase from $2,486.7 million in the same period of 2023[180] - Product revenues increased from $1,921.8 million to $2,409.5 million, representing a 25% growth year-over-year for the quarter[180] - Service revenues rose from $564.9 million to $667.4 million, an 18% increase for the same quarter[182] - Net income for the three months ended December 31, 2024, was $824.5 million, compared to $582.5 million in the same period of 2023[169] - Diluted net income per share for the quarter was $6.16, up from $4.28 in the same quarter of the previous year[171] - Total revenues for the six months ended December 31, 2024, were $5,918.4 million, a 21% increase from $4,883.7 million in the same period of 2023[181] - Total revenues for reportable segments increased by $590.1 million, or 24%, to $3,077.2 million for the three months ended December 31, 2024, compared to $2,487.2 million for the same period in 2023[184] Segment Performance - Semiconductor Process Control segment revenues increased by $561.7 million, or 26%, for the three months ended December 31, 2024, and accounted for approximately 90% of total company revenue[186] - Wafer Inspection revenues grew by $396.1 million, or 34%, to $1,562.6 million for the three months ended December 31, 2024, compared to $1,166.5 million in 2023[185] - Specialty Semiconductor Process revenues remained relatively flat, accounting for approximately 5% of total revenues for both the three and six months ended December 31, 2024[186] - PCB and Component Inspection segment revenues increased due to a settlement related to a technology project cancellation, contributing to the decision to exit the Display business[187] Expenses and Margins - Gross margin for the quarter was 60.3%, slightly down from 60.7% in the previous year[180] - Gross margin decreased to 60.3% for the three months ended December 31, 2024, down from 60.7% in the same period of 2023, primarily due to a less profitable mix of products and services sold[188] - R&D expenses increased by $25.7 million, or 8%, to $346.2 million for the three months ended December 31, 2024, primarily due to higher employee-related expenses[193] - SG&A expenses rose by $29.8 million, or 13%, to $267.1 million for the three months ended December 31, 2024, driven by increases in employee-related and facility-related expenses[196] - SG&A expenses for the six months ended December 31, 2024 increased by $13.2 million in employee-related expenses, $8.1 million in facility-related expenses, $5.2 million in travel expenses, $4.8 million in promotional expenses, and $4.2 million in consulting costs compared to the same period in 2023[198] Goodwill and Impairments - The company recorded a goodwill impairment charge of $239.1 million for the three months ended December 31, 2024[170] - A goodwill and purchased intangible assets impairment charge of $239.1 million was recorded in the PCB and Component Inspection segment during Q2 FY25, compared to a $219.0 million charge in Q2 FY24[199] Cash Flow and Capital Structure - Net cash provided by operating activities was $1.84 billion for the six months ended December 31, 2024, an increase of $338.8 million from $1.51 billion in the same period of 2023[215] - Cash, cash equivalents, and marketable securities totaled $3.78 billion as of December 31, 2024, a decrease of $723.6 million from $4.50 billion as of June 30, 2024, primarily due to stock repurchases and debt repayment[211] - The total amount of regular quarterly cash dividends paid during the three months ended December 31, 2024 was $226.8 million, compared to $196.9 million in the same period of 2023[213] - As of December 31, 2024, the company had $5.95 billion in Senior Notes, with $750.0 million repaid in November 2024[217] - The company had no outstanding borrowings under its $1.50 billion Revolving Credit Facility as of December 31, 2024, maintaining compliance with all covenants[218] Regulatory and Compliance - The U.S. government has tightened export controls, impacting the company's ability to sell products to certain customers in China, which is a major region for semiconductor manufacturing[162] - The 2023 BIS Rules impose new export licensing requirements that could affect the company's ability to provide products and services to customers in China[165] - The company is continuously assessing the impact of government regulations on its financial results and operations, particularly concerning export licenses[167] Internal Controls and Governance - The CEO and CFO concluded that the Disclosure Controls were effective at a reasonable assurance level as of the end of the reporting period[233] - No changes in internal control over financial reporting were identified that materially affected or are likely to materially affect the internal control over financial reporting during the most recent fiscal quarter[237] - Disclosure Controls are designed to ensure timely recording, processing, summarizing, and reporting of required information under the Exchange Act[235] - The effectiveness of Disclosure Controls is limited by inherent constraints, including the possibility of errors or fraud not being detected[236] - The evaluation of Disclosure Controls was conducted under the supervision of management, including the CEO and CFO[234]
KLA Shares Rise on Q2 Earnings & Revenues Beat, Optimistic Q3 Outlook
ZACKS· 2025-01-31 17:06
Core Insights - KLA Corporation reported strong second-quarter fiscal 2025 results, with non-GAAP earnings of $8.20 per share, exceeding estimates by 6.08% and reflecting an 11.9% year-over-year increase [1][2] - Revenues rose 23.7% year over year to $3.08 billion, surpassing the Zacks Consensus Estimate by 4.88%, leading to a 3.71% increase in share price during pre-market trading [2] Segment Performance - Semiconductor Process Control revenues, which account for 89.6% of total revenues, increased 25.6% year over year to $2.76 billion, with a sequential growth of 7% [3] - Specialty Semiconductor Process revenues were $160.4 million, up 6.9% year over year and 25% sequentially, while PCB and Component Inspection revenues increased 12.6% year over year to $161.1 million [4] Revenue Breakdown - Product revenues, making up 78.3% of total revenues, increased 25.4% year over year to $2.41 billion, while service revenues rose 18.1% year over year to $667.4 million [5] - Wafer Inspection revenues increased 34% year over year to $1.56 billion, while Patterning revenues rose 23% year over year to $531 million [6] Geographic Revenue Distribution - Revenue contributions came primarily from China (36%) and Taiwan (29%), followed by Korea (12%), North America (9%), Japan (7%), Europe (4%), and the rest of Asia (3%) [6] Operating Metrics - Non-GAAP gross margin was reported at 61.7%, exceeding guidance by 20 basis points [7] - R&D expenses increased 8% year over year to $346.2 million, while SG&A expenses rose 12.6% year over year to $267.1 million [8] Financial Position - As of December 31, 2024, cash and cash equivalents totaled $3.78 billion, down from $4.63 billion as of September 30, 2024, with long-term debt remaining at $5.88 billion [9] - Cash flow from operating activities was $849.5 million, down from $995.2 million in the prior quarter, with free cash flow at $757.2 million [9] Future Guidance - For the third quarter of fiscal 2025, KLA expects revenues of $3.0 billion, with non-GAAP earnings projected at $8.05 per share, indicating a year-over-year growth of 45.06% [11][12]
KLA Analysts Boost Their Forecasts After Upbeat Earnings
Benzinga· 2025-01-31 13:36
Core Insights - KLA Corp reported better-than-expected second-quarter financial results, with earnings of $8.20 per share, surpassing the analyst consensus estimate of $7.75 per share, and quarterly sales of $3.08 billion, exceeding the estimate of $2.94 billion [1][2] Financial Performance - The December quarter results were above the midpoint of guidance ranges, indicating strong performance despite challenges from new U.S. government export controls [2] - KLA anticipates third-quarter total revenues of $3.0 billion +/- $150 million and adjusted EPS of $8.05 +/- $0.60 [2] Market Reaction - KLA shares increased by 4.1%, closing at $742.43 following the earnings announcement [3] - Analysts adjusted their price targets for KLA, with Deutsche Bank raising it from $725 to $850 and Needham increasing it from $800 to $830, both maintaining a Buy rating [5]
KLA(KLAC) - 2025 Q2 - Earnings Call Transcript
2025-01-31 03:32
Financial Data and Key Metrics Changes - KLA Corporation reported a revenue growth of 12% for calendar 2024, reaching a record $10.85 billion, with process control revenue also growing over 12% and services business growing 15% to $2.5 billion [9][10] - The company maintained industry-leading gross and operating margins at 61% and 41% respectively [9] - Free cash flow increased to $3.4 billion, with $2.9 billion returned to shareholders through dividends and share buybacks [10][18] - For the December quarter, revenue exceeded $3 billion for the first time, with non-GAAP diluted EPS at $8.20 and GAAP diluted EPS at $6.16 [11][20] Business Line Data and Key Metrics Changes - Advanced packaging revenue grew to approximately $500 million in calendar 2024, with expectations to exceed $800 million in calendar 2025, up from a previous estimate of $750 million [17] - The services business achieved $667 million in the December quarter, marking a 4% sequential and 18% year-over-year growth, resulting in 50 consecutive quarters of year-over-year growth [17][18] Market Data and Key Metrics Changes - KLA expects the wafer fab equipment (WFE) market to grow by a mid-single-digit percentage in 2025, driven by investments in leading-edge logic and high bandwidth memory [24] - The company anticipates a decline in its China sales by approximately 20% year-over-year due to export controls and market digestion [99] Company Strategy and Development Direction - KLA is focused on leveraging its differentiated portfolio to support customers in navigating increasing complexity and growing design starts in semiconductor devices [12][33] - The company aims to maintain its leadership position in process control, particularly in advanced packaging and AI-related technologies [15][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand for advanced semiconductors, stating that AI is a crucial driver for KLA's growth, with expectations for continued market share gains [15][33] - The company is cautious about the impact of recent export controls, estimating a revenue impact of approximately $500 million in 2025, primarily affecting the systems business [25][26] Other Important Information - KLA's balance sheet remains strong, with $3.8 billion in cash and cash equivalents and a debt of $5.9 billion, allowing for funding of growth strategies and capital returns [22] - The company plans to maintain its operating expense trajectory to support product development and scaling investments [29] Q&A Session Summary Question: What is happening to the process control part of the market this year? - Management indicated that KLA's share of overall WFE opportunity is expected to grow, driven by increased investment in leading-edge technology and strong demand in advanced packaging [43] Question: Can you help us with the linearity for revenue this year? - Management stated that they expect stability around the $3 billion level for the first half of the year, with potential fluctuations as the year progresses [47] Question: What is the growth outlook for your advanced packaging businesses? - Management confirmed a 60% growth outlook for advanced packaging, driven by increased complexity and demand for inspection and metrology solutions [56] Question: How do you expect your service business to perform in calendar '25? - Management anticipates high single-digit growth for the service business in the short term, with long-term growth expectations remaining positive despite current headwinds [73] Question: Can you provide details on the impact of export controls on revenue? - Management clarified that the estimated impact from export controls is primarily related to logic projects, with minimal contribution from memory [165]
KLA(KLAC) - 2025 Q2 - Earnings Call Presentation
2025-01-31 01:27
Q2 Fiscal 2025 Earnings These forward-looking statements are based on current information and expectations and involve a number of risks and uncertainties. Actual results may differ materially from those projected in such statements due to various factors, including but not limited to: our vulnerability to a weakening in the condition of the financial markets and the global economy; risks related to our international operations; evolving Bureau of Industry and Security of the U.S. Department of Commerce rul ...
KLA (KLAC) Reports Q2 Earnings: What Key Metrics Have to Say
ZACKS· 2025-01-31 00:01
Core Insights - KLA reported a revenue of $3.08 billion for the quarter ended December 2024, marking a year-over-year increase of 23.7% and exceeding the Zacks Consensus Estimate of $2.93 billion by 4.88% [1] - The company's EPS for the same period was $8.20, up from $6.16 a year ago, representing a surprise of 6.08% compared to the consensus estimate of $7.73 [1] Revenue Breakdown - Semiconductor Process Control revenues reached $2.76 billion, surpassing the estimated $2.62 billion, with a year-over-year increase of 25.6% [4] - Specialty Semiconductor Process revenues were reported at $160.41 million, exceeding the average estimate of $141.12 million, reflecting a 6.9% year-over-year change [4] - Service revenues totaled $667.39 million, slightly below the estimated $671.85 million, but still showing an 18.1% increase compared to the previous year [4] - Product revenues amounted to $2.41 billion, exceeding the average estimate of $2.24 billion, with a year-over-year growth of 25.4% [4] - PCB, Display and Component Inspection revenues were reported at $161.08 million, above the estimated $147.47 million, representing a 12.6% year-over-year increase [4] Stock Performance - KLA shares have returned +13.2% over the past month, significantly outperforming the Zacks S&P 500 composite's +1.2% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]
KLA (KLAC) Tops Q2 Earnings and Revenue Estimates
ZACKS· 2025-01-30 23:21
Group 1 - KLA reported quarterly earnings of $8.20 per share, exceeding the Zacks Consensus Estimate of $7.73 per share, and up from $6.16 per share a year ago, representing an earnings surprise of 6.08% [1] - The company achieved revenues of $3.08 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 4.88%, compared to $2.49 billion in the same quarter last year [2] - KLA has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] Group 2 - KLA shares have increased approximately 13.2% since the beginning of the year, significantly outperforming the S&P 500's gain of 2.7% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the next quarter is $7.63 on revenues of $2.9 billion, and for the current fiscal year, it is $30.35 on revenues of $11.6 billion [7] Group 3 - The Zacks Industry Rank places Electronics - Miscellaneous Products in the top 36% of over 250 Zacks industries, indicating a favorable outlook for the sector [8] - Bel Fuse, another company in the same industry, is expected to report a quarterly earnings decline of 43.8% year-over-year, with revenues projected to decrease by 4.8% [9]