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KLA(KLAC) - 2024 Q3 - Quarterly Results
KLAKLA(US:KLAC)2024-04-25 20:14

Fiscal 2024 Third Quarter Financial Highlights KLA reported strong Q3 FY2024 results with revenue of $2.36 billion and robust cash flow, exceeding guidance amid stabilizing market conditions Q3 FY2024 Performance Summary KLA reported Q3 FY2024 revenue of $2.36 billion with GAAP diluted EPS of $4.43 and non-GAAP diluted EPS of $5.26, exceeding adjusted guidance and reflecting stabilized market conditions Q3 FY2024 Key Financial Results | Metric | Q3 FY 2024 (in millions) | Q2 FY 2024 (in millions) | Q3 FY 2023 (in millions) | | :--- | :--- | :--- | :--- | | GAAP Results | | | | | Total Revenue | $2,360 | $2,487 | $2,433 | | Net Income | $602 | $583 | $698 | | Net Income per Diluted Share | $4.43 | $4.28 | $5.03 | | Non-GAAP Results | | | | | Net Income | $715 | $839 | $761 | | Net Income per Diluted Share | $5.26 | $6.16 | $5.49 | - CEO Rick Wallace stated that market conditions have stabilized and the company expects business levels to improve through the year, citing constructive discussions with customers about future leading-edge capacity investments3 - Key financial achievements for the quarter include total revenues of $2.36 billion, GAAP and Non-GAAP diluted EPS near the upper end of adjusted guidance ranges, $910.0 million in cash flow from operations, $838.2 million in free cash flow, and $569.4 million returned to shareholders through dividends and buybacks4 Fourth Quarter Fiscal 2024 Guidance KLA projects Q4 FY2024 revenues between $2.375 billion and $2.625 billion, with non-GAAP diluted EPS ranging from $5.47 to $6.67 Q4 FY2024 Outlook For the fourth quarter of fiscal 2024, KLA anticipates total revenues to be in the range of $2.50 billion ± $125 million, with non-GAAP diluted EPS between $5.47 and $6.67 Q4 FY2024 Financial Guidance | Guidance Metric | Q4 FY 2024 Range | | :--- | :--- | | Total Revenues | $2.50 billion +/- $0.125 billion | | GAAP Gross Margin | 59.5% +/- 1.0% | | Non-GAAP Gross Margin | 61.5% +/- 1.0% | | GAAP Diluted EPS | $5.66 +/- $0.60 | | Non-GAAP Diluted EPS | $6.07 +/- $0.60 | Consolidated Financial Statements (Unaudited) Unaudited financial statements detail KLA's balance sheet growth, a slight revenue decline in operations, and significant cash flow from operating activities Condensed Consolidated Balance Sheets As of March 31, 2024, KLA reported total assets of $14.96 billion, an increase from $14.07 billion at the end of fiscal year 2023, driven by marketable securities and inventories Condensed Consolidated Balance Sheets | Balance Sheet Item | March 31, 2024 (in billions) | June 30, 2023 (in billions) | | :--- | :--- | :--- | | Total current assets | $9.53 | $8.37 | | Total assets | $14.96 | $14.07 | | Total current liabilities | $4.46 | $3.74 | | Total liabilities | $11.86 | $11.15 | | Total stockholders' equity | $3.09 | $2.92 | Condensed Consolidated Statements of Operations For the third quarter of fiscal 2024, total revenues were $2.36 billion, a decrease from $2.43 billion in the prior-year quarter, impacted by a $70.5 million impairment charge Condensed Consolidated Statements of Operations | Income Statement Item | Q3 FY 2024 (in millions) | Q3 FY 2023 (in millions) | | :--- | :--- | :--- | | Product Revenue | $1,769.4 | $1,903.5 | | Service Revenue | $590.5 | $529.1 | | Total Revenues | $2,359.8 | $2,432.6 | | Gross Profit (Revenues - Costs of revenues) | $1,366.0 | $1,427.3 | | Impairment of goodwill and assets | $70.5 | $0 | | Net Income Attributable to KLA | $601.5 | $697.8 | | Diluted EPS | $4.43 | $5.03 | Condensed Consolidated Statements of Cash Flows In Q3 FY2024, KLA generated $910.0 million in net cash from operating activities, used $858.0 million in investing activities, and generated $138.9 million from financing activities Condensed Consolidated Statements of Cash Flows | Cash Flow Item | Q3 FY 2024 (in millions) | Q3 FY 2023 (in millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $910.0 | $1,010.9 | | Net cash used in investing activities | ($858.0) | ($113.2) | | Net cash provided by (used in) financing activities | $138.9 | ($902.7) | | Net increase (decrease) in cash | $183.1 | ($3.0) | Segment and Supplemental Information (Unaudited) Supplemental information highlights Semiconductor Process Control as the main revenue driver, reconciles GAAP to non-GAAP results, and details free cash flow and capital returns Segment Revenue The Semiconductor Process Control segment remains the primary revenue driver, contributing $2.10 billion in Q3 FY2024, with other segments showing stable revenues Segment Revenue Breakdown | Segment Revenue | Q3 FY 2024 (in millions) | Q3 FY 2023 (in millions) | | :--- | :--- | :--- | | Semiconductor Process Control | $2,096.0 | $2,171.6 | | Specialty Semiconductor Process | $130.6 | $128.4 | | PCB, Display and Component Inspection | $133.4 | $131.9 | | Total Revenues | $2,360.1 | $2,431.9 | GAAP to Non-GAAP Reconciliation For Q3 FY2024, KLA's non-GAAP net income was $715.1 million, adjusted from GAAP net income of $601.5 million primarily due to impairment and acquisition-related charges GAAP to Non-GAAP Net Income Reconciliation | Reconciliation Item | Q3 FY 2024 (in millions) | | :--- | :--- | | GAAP net income attributable to KLA | $601.5 | | Acquisition-related charges | $58.6 | | Restructuring, severance and other charges | $2.0 | | Impairment of goodwill and purchased intangible assets | $70.5 | | Income tax effect of non-GAAP adjustments | ($19.9) | | Non-GAAP net income attributable to KLA | $715.1 | - The pre-tax impact of non-GAAP adjustments in Q3 FY2024 included $45.6 million to Costs of revenues, $1.8 million to R&D, $13.2 million to SG&A, and a $70.5 million impairment charge16 Free Cash Flow and Capital Returns The company generated $838.2 million in free cash flow during Q3 FY2024 and returned $569.4 million to shareholders through dividends and stock repurchases Free Cash Flow | Metric | Q3 FY 2024 (in millions) | Q3 FY 2023 (in millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $910.0 | $1,010.9 | | Capital expenditures | ($71.8) | ($84.9) | | Free cash flow | $838.2 | $925.9 | Capital Returns to Shareholders | Metric | Q3 FY 2024 (in millions) | Q3 FY 2023 (in millions) | | :--- | :--- | :--- | | Payments of dividends to stockholders | $197.2 | $180.9 | | Common stock repurchases | $372.3 | $478.2 | | Capital returns | $569.4 | $659.0 | Guidance Reconciliation and Non-GAAP Disclosures This section reconciles Q4 FY2024 guidance to non-GAAP measures and explains the rationale for non-GAAP adjustments, including a Q3 impairment charge Q4 FY2024 Guidance Reconciliation KLA provides a reconciliation for its Q4 FY2024 guidance, projecting non-GAAP diluted EPS between $5.47 and $6.67 and non-GAAP gross margin between 60.5% and 62.5% Q4 FY2024 Diluted EPS Guidance Reconciliation | EPS Reconciliation ($) | Low | High | | :--- | :--- | :--- | | GAAP net income per diluted share | $5.06 | $6.26 | | Acquisition-related charges | $0.44 | $0.44 | | Restructuring, severance and other charges | $0.14 | $0.14 | | Income tax effect of non-GAAP adjustments | ($0.17) | ($0.17) | | Non-GAAP net income per diluted share | $5.47 | $6.67 | Q4 FY2024 Gross Margin Guidance Reconciliation | Gross Margin Reconciliation (%) | Low | High | | :--- | :--- | :--- | | GAAP gross margin | 58.5% | 60.5% | | Acquisition-related charges | 1.9% | 1.9% | | Restructuring, severance and other charges | 0.1% | 0.1% | | Non-GAAP gross margin | 60.5% | 62.5% | Explanation of Non-GAAP Measures The company explains that non-GAAP measures enhance understanding of core operating performance by excluding specific non-recurring or non-cash items, such as the Q3 FY2024 impairment charge - Non-GAAP financial information is used to provide a better understanding of operating performance by excluding certain costs and expenses not indicative of core operating results, such as acquisition-related charges, restructuring, and severance2122 - A non-cash impairment charge for goodwill and purchased intangible assets was recognized in Q3 FY2024, triggered by a downward revision of the financial outlook for the PCB and Display reporting units and the decision to exit the Display business, influenced by a major customer canceling a significant new technology project23