Group 1 - KLA (KLAC) has recently reached a key level of support and has overtaken the 20-day moving average, indicating a short-term bullish trend [1] - The 20-day simple moving average (SMA) is a popular tool among traders as it smooths out price fluctuations and can signal trend reversals more effectively than longer-term averages [1] - KLAC has gained 9.5% over the past four weeks and is currently ranked Zacks Rank 3 (Hold), suggesting potential for further upward movement [3] Group 2 - There have been no earnings estimate reductions for KLAC in the past two months, while 8 estimates have been raised for the current fiscal year, leading to an increase in the consensus estimate [3] - The combination of the positive technical indicators and favorable earnings estimate revisions makes KLAC a candidate for investors' watchlists [3]

Industry and Company Overview * **Industry**: Semiconductor equipment spending environment, wafer equipment (WFE), process control, and specialty segments. * **Company**: KLA Corporation (NASDAQ: KLAC), a leading provider of process control and inspection solutions for the semiconductor industry. * **Key Participants**: Bren Higgins, Executive Vice President and CFO of KLA, and Harlan Sur, Semiconductor and Semiconductor Capital Equipment Analyst at J.P. Morgan. Key Points and Arguments * **2024 Industry Outlook**: The semiconductor industry is expected to experience a transitional year in 2024, following a strong 2023. WFE spending is projected to remain flat to slightly up, with a total of approximately $90 billion in 2023 and a similar outlook for 2024. * **KLA's Growth Outlook**: KLA expects sequential growth throughout 2024, with high single-digit growth in the second half compared to the first half. The company's service business is expected to grow between $250 million and $300 million, while the EPC business is projected to grow modestly in the mid to high single digits. * **Process Control**: KLA's process control business is expected to grow as the industry transitions to more advanced nodes and technologies. The company's strong position in optical inspection and other key areas positions it well for growth. * **Advanced Packaging**: KLA has a strong position in advanced packaging, with a $400 million annualized revenue run rate. The company expects this market to grow significantly over the next few years, driven by increasing complexity and demand for higher-value solutions. * **Services**: KLA's services business has been a key driver of resilience during downturns. The company expects this business to reaccelerate to its long-term growth target of 12% to 14% CAGR over the next few years. * **Financial Targets**: KLA remains confident in its financial targets for 2026, including $14 billion in revenues, 63% gross margins, and $38 in earnings power. Additional Important Points * **Supply Chain**: KLA has faced supply chain challenges, particularly in optical pattern inspection, but is working to improve capacity and meet demand. * **China**: KLA has faced market access restrictions in China, but remains confident in its position and ability to win business. * **Competitive Landscape**: KLA maintains a strong market share position in process control, with a significant lead over its competitors. The company expects this position to continue to strengthen as it invests in R&D and product innovation. * **Investment in R&D**: KLA continues to invest heavily in R&D, focusing on new technologies and solutions to meet the evolving needs of the semiconductor industry.

Group 1 - KLA Corporation announced participation in several upcoming investor conferences, including the J.P. Morgan 52nd Annual Global Technology, Media and Communications Conference on May 21, 2024, the BofA Securities 2024 Global Technology Conference on June 6, 2024, and the Nasdaq Investor Conference in Partnership with Jefferies on June 11, 2024 [1] - The live webcasts of these conferences will be accessible on KLA's Investor Relations page, with replays available after the events [1] - KLA Corporation develops advanced equipment and services for the electronics industry, focusing on process control and enabling solutions for manufacturing wafers, integrated circuits, packaging, and printed circuit boards [2]

Core Insights - KLA (NASDAQ:KLAC) is distinct from other major equipment companies, focusing on "metrology and inspection" equipment rather than "processing" equipment [1] - KLA's equipment is essential for yield enhancement in semiconductor manufacturing, enabling defect detection and classification at various production stages [2][24] - KLA reported an EPS of $5.26 for Q3 2024, exceeding analyst estimates, with revenue of $2.36 billion, surpassing expectations by 2.16% [3] Financial Performance - KLA's guidance for Q4 fiscal 2024 anticipates total revenue between $2.50 billion +/- $125 million, compared to a consensus of $2.43 billion [4] - KLA's revenue growth was -5.5% in 2023, outperforming the overall WFE semiconductor equipment market, which declined by -9.0% to $86.6 billion [14] Market Position - KLA holds a dominant position in the metrology and inspection market, with a market share significantly larger than competitors like Applied Materials [21] - KLA's market share in the Wafer Inspection/Defect Review segment is 73%, while it holds 34% in Lithography Metrology and 58% in Thin Film Metrology [9][10][12] Growth Opportunities - KLA's revenues from China increased to 38% of overall revenues, amounting to $2.659 billion in 2023, up from 29% ($2.378 billion) in 2022 [16] - Planned fab construction in China for chip manufacturing at the 28nm node and above represents a significant growth opportunity for KLA, with total fab spending projected at $67.566 billion [18] Industry Trends - The increasing complexity of semiconductor chips is driving demand for KLA's advanced process control solutions, particularly as the industry shifts towards sophisticated architectures [22] - The average selling prices (ASPs) for wafers increase with decreasing node size, indicating that defects at smaller nodes have a greater financial impact [25]

Have you looked into how KLA (KLAC) performed internationally during the quarter ending March 2024? Considering the widespread global presence of this maker of equipment for manufacturing semiconductors, examining the trends in international revenues is essential for assessing its financial resilience and prospects for growth.In today's increasingly interconnected global economy, a company's ability to tap into international markets can be a pivotal factor in shaping its overall financial health and growth ...

PART I [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) KLA Corporation's unaudited financial statements reveal decreased revenue and net income, influenced by market slowdowns and goodwill impairment [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheets show increased total assets from marketable securities and inventories, and higher total liabilities due to deferred revenue and short-term debt Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | June 30, 2023 | | :--- | :--- | :--- | | **Total current assets** | $9,528,082 | $8,372,032 | | **Total assets** | **$14,957,289** | **$14,072,357** | | **Total current liabilities** | $4,458,538 | $3,742,842 | | **Total liabilities** | **$11,862,404** | **$11,152,604** | | **Total stockholders' equity** | **$3,094,885** | **$2,919,753** | - Total assets increased by approximately **$0.885 billion**, primarily driven by a rise in marketable securities and inventories, while total liabilities increased by about **$0.71 billion**, largely due to deferred system revenue and short-term debt[10](index=10&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The statements of operations show a year-over-year decline in total revenues and net income, significantly impacted by goodwill and intangible asset impairment charges Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Mar 31, 2024 | Three Months Ended Mar 31, 2023 | Nine Months Ended Mar 31, 2024 | Nine Months Ended Mar 31, 2023 | | :--- | :--- | :--- | :--- | :--- | | **Total revenues** | $2,359,830 | $2,432,608 | $7,243,512 | $8,140,919 | | **Net income attributable to KLA** | $601,541 | $697,837 | $1,925,450 | $2,702,623 | | **Diluted EPS** | $4.43 | $5.03 | $14.11 | $19.16 | - The company recorded a goodwill and purchased intangible assets impairment charge of **$70.5 million** for the three months ended March 31, 2024, and a total of **$289.5 million** for the nine-month period, with no such charges in prior year periods[12](index=12&type=chunk) - Revenues for the three and nine months ended March 31, 2024, decreased by **3%** and **11%** year-over-year respectively, with net income also declining due to lower revenues and impairment charges[12](index=12&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash from operations decreased due to lower net income, while cash used in investing increased significantly, and cash used in financing decreased due to debt activities Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months Ended Mar 31, 2024 | Nine Months Ended Mar 31, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,415,960 | $2,710,690 | | Net cash used in investing activities | ($1,338,193) | ($408,087) | | Net cash used in financing activities | ($1,157,156) | ($2,318,968) | | **Net decrease in cash and cash equivalents** | **($79,698)** | **($16,395)** | - Cash from operations decreased primarily due to lower net income, partially offset by working capital changes, while cash used in investing increased significantly from higher marketable securities purchases, and cash used in financing decreased due to lower debt repayments and higher new debt issuance proceeds[22](index=22&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail remaining performance obligations, significant goodwill impairment charges, debt issuance, share repurchases, effective tax rate changes, and geographical revenue distribution - As of March 31, 2024, the company had **$9.90 billion** in remaining performance obligations (RPO), with an estimated **40% to 45%** expected to be recognized beyond the next 12 months[38](index=38&type=chunk) - The company recorded total goodwill impairment charges of **$263.1 million** during the nine months ended March 31, 2024, related to its PCB and Display businesses, following a significant deterioration in their long-term forecast and a decision to exit most of the Display business[69](index=69&type=chunk)[72](index=72&type=chunk)[74](index=74&type=chunk) - In February 2024, KLA issued **$750.0 million** in senior notes, bringing total debt as of March 31, 2024, to **$6.63 billion**[79](index=79&type=chunk)[80](index=80&type=chunk) - The company repurchased **2.4 million** shares of common stock for **$1.28 billion** during the nine months ended March 31, 2024, with **$2.64 billion** remaining available for repurchase as of March 31, 2024[114](index=114&type=chunk)[115](index=115&type=chunk) - The effective tax rate for the nine months ended March 31, 2024, was **14.2%**, up from **10.3%** in the prior year, primarily due to non-deductible goodwill impairment charges[118](index=118&type=chunk)[217](index=217&type=chunk) Revenues by Geography (Nine Months Ended March 31) | Region | 2024 Revenue (in thousands) | 2024 % of Total | 2023 Revenue (in thousands) | 2023 % of Total | | :--- | :--- | :--- | :--- | :--- | | China | $3,050,609 | 42% | $2,156,380 | 26% | | Taiwan | $1,214,518 | 17% | $1,996,188 | 24% | | Korea | $731,783 | 10% | $1,466,624 | 18% | | North America | $761,319 | 11% | $941,771 | 12% | | Japan | $792,179 | 11% | $702,986 | 9% | | Europe and Israel | $421,148 | 6% | $542,823 | 7% | | Rest of Asia | $271,956 | 3% | $334,147 | 4% | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial results, noting revenue declines due to semiconductor slowdowns and U.S. export regulations, alongside significant goodwill impairment charges, while maintaining strong liquidity and capital return programs [Executive Summary](index=38&type=section&id=Executive%20Summary) The executive summary highlights long-term demand drivers like AI and 5G, tempered by a recent macro-driven slowdown in semiconductor demand and the impact of U.S. export control rules on China sales - The company's business is driven by long-term demand for AI, 5G, automotive electrification, and IoT, though a recent macro-driven slowdown has impacted semiconductor demand, leading customers to reduce capital expenditures[172](index=172&type=chunk)[173](index=173&type=chunk) - U.S. government (BIS) export control rules, updated in October 2022 and October 2023, impose significant licensing requirements for products and services supplied to certain advanced IC fabs in China, creating uncertainty and potential disruption for a key growth region[175](index=175&type=chunk)[176](index=176&type=chunk) [Results of Operations](index=41&type=section&id=Results%20of%20Operations) Results of operations show declines in total and product revenues due to market slowdowns, while service revenue grew, and significant goodwill impairment charges impacted gross profit Revenue and Gross Margin Analysis | Metric | Three Months Ended Mar 31, 2024 | Three Months Ended Mar 31, 2023 | Nine Months Ended Mar 31, 2024 | Nine Months Ended Mar 31, 2023 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | $2,359.8M (-3% YoY) | $2,432.6M | $7,243.5M (-11% YoY) | $8,140.9M | | Product Revenue | $1,769.4M (-7% YoY) | $1,903.5M | $5,527.8M (-16% YoY) | $6,562.5M | | Service Revenue | $590.5M (+12% YoY) | $529.1M | $1,715.7M (+9% YoY) | $1,578.4M | | **Gross Margin** | 57.9% | 58.7% | 59.7% | 60.0% | - Product revenue decline is attributed to a broad, macro-driven slowdown impacting semiconductor demand and customer capital expenditure, while service revenue increased due to a larger installed base of equipment[191](index=191&type=chunk)[192](index=192&type=chunk) - The PCB, Display and Component Inspection segment gross profit decreased by **102%** in Q3 2024 versus Q3 2023, primarily due to non-cash expenses to write off excess and obsolete inventory related to discontinued Display product lines[199](index=199&type=chunk)[200](index=200&type=chunk) - Goodwill and purchased intangible asset impairment charges of **$219.0 million** were recorded in Q2 2024, with an additional **$70.5 million** goodwill impairment in Q3 2024, both related to the PCB and Display businesses[208](index=208&type=chunk) [Liquidity and Capital Resources](index=47&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity improved with increased cash and marketable securities, despite a decrease in operating cash flow, while continuing capital returns through dividends and share repurchases - As of March 31, 2024, total cash, cash equivalents, and marketable securities amounted to **$4.29 billion**, an increase of **$1.05 billion** from June 30, 2023[220](index=220&type=chunk)[221](index=221&type=chunk) - Net cash from operating activities for the nine months ended March 31, 2024, was **$2.42 billion**, a decrease from **$2.71 billion** in the prior year, mainly due to lower customer collections and higher income tax payments[226](index=226&type=chunk) - The company paid **$575.5 million** in dividends and repurchased **$1.27 billion** of its common stock during the nine months ended March 31, 2024[221](index=221&type=chunk)[224](index=224&type=chunk)[225](index=225&type=chunk) - In December 2023, Fitch upgraded KLA's senior unsecured credit rating from **A-** to **A**[232](index=232&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from changes in interest rates, foreign currency exchange rates, and equity prices, with hedging strategies in place to mitigate potential impacts - The company's fixed income securities portfolio of **$1.69 billion** is subject to interest rate risk, where a **100 basis point** increase in market interest rates would cause a **$16.0 million** decline in its fair value[235](index=235&type=chunk) - The fair value of the company's **$6.70 billion** in fixed-rate Senior Notes is subject to interest rate risk, with its fair value decreasing as market rates rise, and was **$6.39 billion** as of March 31, 2024[236](index=236&type=chunk) - Foreign currency risk is managed through forward and option contracts, where a **10%** adverse move in exchange rates would decrease contract fair value by **$125.9 million**, offset by an increase in underlying hedged exposures[240](index=240&type=chunk) [Controls and Procedures](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of March 31, 2024, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that as of March 31, 2024, the company's disclosure controls and procedures were effective at a reasonable assurance level[242](index=242&type=chunk) - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[246](index=246&type=chunk) PART II OTHER INFORMATION [Legal Proceedings](index=52&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings and claims in the normal course of business, including commercial, intellectual property, and employment matters - The company is party to various lawsuits and legal proceedings related to commercial, intellectual property (IP), customer, and labor claims, considered normal in the course of business[127](index=127&type=chunk)[248](index=248&type=chunk) [Risk Factors](index=52&type=section&id=Item%201A.%20Risk%20Factors) This section details significant risks to the business, including vulnerability to industry cycles, U.S. export controls on China sales, intellectual property disputes, cybersecurity threats, customer concentration, supply chain disruptions, and a leveraged capital structure - A primary risk is the impact of U.S. (BIS) and other government trade restrictions, particularly those targeting China, which could significantly disrupt global operations, product shipments, and revenue, with China revenue at **27%** of total in fiscal 2023[262](index=262&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk) - The business is exposed to the cyclicality of the semiconductor industry and a highly concentrated customer base, where orders from a few manufacturers account for a substantial portion of sales, increasing volatility and pricing pressure[312](index=312&type=chunk)[314](index=314&type=chunk) - Cybersecurity incidents affecting KLA or its suppliers pose a significant risk, potentially causing operational disruptions, data theft, and financial loss, as evidenced by a supplier ransomware event in February 2023 that caused shipment delays[279](index=279&type=chunk)[280](index=280&type=chunk) - The company has a leveraged capital structure with **$6.70 billion** in debt as of March 31, 2024, requiring significant cash flow for service payments and adherence to financial covenants, potentially constraining operational flexibility[331](index=331&type=chunk)[335](index=335&type=chunk) - The company may incur significant restructuring, inventory write-off, or asset impairment charges, having recorded material goodwill and intangible asset impairment charges in the second and third quarters of fiscal 2024[344](index=344&type=chunk)[346](index=346&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=72&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's stock repurchase activity, including shares repurchased during the quarter and the remaining availability under the authorized program Stock Repurchases for the Three Months Ended March 31, 2024 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2024 | 243,342 | $577.50 | | Feb 2024 | 160,251 | $641.27 | | Mar 2024 | 184,625 | $697.51 | | **Total** | **588,218** | **-** | - As of March 31, 2024, approximately **$2.64 billion** remained available for future repurchases under the company's publicly announced stock repurchase program, which has no expiration date[350](index=350&type=chunk) [Other Information](index=72&type=section&id=Item%205.%20Other%20Information) During the third quarter of fiscal 2024, several executive officers adopted Rule 10b5-1 trading plans to sell shares of company common stock - Four executive officers, including Ahmad Khan (President, Semiconductor Process Control) and Mary Beth Wilkinson (EVP, Chief Legal Officer), adopted Rule 10b5-1 trading plans during the quarter to sell company stock[353](index=353&type=chunk)

KLA Corporation (KLAC) reported third-quarter fiscal 2024 non-GAAP earnings of $5.26 per share, beating the Zacks Consensus Estimate by 6.48%. The figure declined 4.2% year over year.Revenues decreased 3% year over year to $2.36 billion, surpassing the Zacks Consensus Estimate by 2.53%. Sequentially, revenues increased 4%.The year-over-year decline in the top line was attributed to softness in the Semiconductor Process Control, Specialty Semiconductor Process and PCB, Display and Component Inspection segmen ...

Financial Performance - Q3 Fiscal 2024 - Revenue reached $2.36 billion, a decrease of 3% year-over-year and 5% quarter-over-quarter[22, 26] - GAAP diluted EPS was $4.43[8] - Non-GAAP diluted EPS was $5.26[78] - The company generated $838 million in free cash flow, representing a 36% free cash flow margin[38, 108] - Free Cash Flow conversion was 117%[38] Capital Allocation - The company paid $197 million in dividends and repurchased $372 million in shares during the March quarter[49] - LTM (Last Twelve Months) dividends paid totaled $755 million, and share buybacks amounted to $1.654 billion[38] - The company announced a 12% increase in the annual dividend to $1.45 per share, marking the 14th consecutive annual increase[107] Market Position - The company maintained a market share exceeding 56% in the process control market in 2023, leading the nearest competitor by over 4x[76] - In 2023, the company maintained over 85% market share in critical markets of Optical Inspection and Unpatterned Inspection and over 66% market share in Overlay Metrology[20] - The company gained market share in the Advanced Wafer Level Packaging (AWLP) Process Control market for the 5th consecutive year and nearly doubled market share from 2022 to 2023[94] Q4 FY2024 Guidance - Revenue is projected to be $2.5 billion, with a variance of plus or minus $125 million[50] - GAAP diluted EPS is expected to be $5.66, plus or minus $0.60[73] - Non-GAAP diluted EPS is projected to be $6.07, with a variance of plus or minus $0.60[62] - Non-GAAP Gross Margin is expected to be 61.5%, with a variance of plus or minus 1%[50]

For the quarter ended March 2024, KLA (KLAC) reported revenue of $2.36 billion, down 3% over the same period last year. EPS came in at $5.26, compared to $5.49 in the year-ago quarter.The reported revenue represents a surprise of +2.53% over the Zacks Consensus Estimate of $2.3 billion. With the consensus EPS estimate being $4.94, the EPS surprise was +6.48%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to ...

KLA (KLAC) came out with quarterly earnings of $5.26 per share, beating the Zacks Consensus Estimate of $4.94 per share. This compares to earnings of $5.49 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 6.48%. A quarter ago, it was expected that this maker of equipment for manufacturing semiconductors would post earnings of $5.88 per share when it actually produced earnings of $6.16, delivering a surprise of 4.76%.Over the la ...