EX-99.1 2 exhibit991earningsrelease7.htm EX-99.1 Document

Exhibit 99.1
FOR IMMEDIATE RELEASE
Investor Relations:Media Relations:
Kevin Kessel, CFARandi Polanich
Vice President, Investor RelationsVice President and Chief Communications Officer
(408) 875-6627(408) 875-6633
kevin.kessel@kla.comrandi.polanich@kla.com
KLA CORPORATION REPORTS FISCAL 2021 FOURTH QUARTER AND FULL YEAR RESULTS, RAISES DIVIDEND LEVEL BY 17% AND ANNOUNCES ADDITIONAL $2 BILLION SHARE REPURCHASE AUTHORIZATION
Total revenues were $1.93 billion, GAAP diluted EPS attributable to KLA was $4.10 and non-GAAP diluted EPS attributable to KLA was $4.43, each finishing above the mid-point of guidance ranges;
Cash flow from operations for the quarter and fiscal year was $465.6 million and $2.19 billion and free cash flow was $410.2 million and $1.95 billion, respectively;
Capital return for the quarter and fiscal year was $439.1 million and $1.50 billion, respectively;
KLA’s Board of Directors approved a 17% increase in the quarterly dividend level to $1.05 per share and approved $2 billion for additional share repurchases.

MILPITAS, Calif., July 29, 2021 -KLA Corporation (NASDAQ: KLAC) today announced operating results for its fourth quarter and fiscal year ended June 30, 2021. KLA reported GAAP net income attributable to KLA of $633 million and GAAP diluted EPS attributable to KLA of $4.10 on revenues of $1.93 billion for the fourth quarter of fiscal year 2021. For the fiscal year ended June 30, 2021, KLA reported GAAP net income attributable to KLA of $2.08 billion and GAAP diluted EPS attributable to KLA of $13.37 on revenues of $6.92 billion.
“Thanks to the commitment of our global team, KLA delivered strong results in the June 2021 quarter, with revenue and GAAP and non-GAAP EPS each finishing above the mid-point of our guidance ranges. This continued performance demonstrates strong customer demand, exceptional execution, and focus driven by the KLA Operating Model,” commented Rick Wallace, President and CEO of KLA Corporation. “We are also pleased to announce today that the Board of Directors approved the twelfth consecutive dividend level increase which has grown at a compound annual growth rate of 16% since inception. The Board has also authorized a new $2 billion share repurchase program. KLA’s dividend and share repurchase programs are integral to KLA’s disciplined approach to capital management and reflect the company’s continued strength in free cash flow generation.”
GAAP Results
Q4 FY 2021Q3 FY 2021Q4 FY 2020
Total Revenue$1,925 million$1,804 million$1,460 million
Net Income Attributable to KLA $633 million$567 million$411 million
Net Income per Diluted Share Attributable to KLA $4.10$3.66$2.63
Non-GAAP Results
Q4 FY 2021Q3 FY 2021Q4 FY 2020
Net Income Attributable to KLA $684 million$598 million$426 million
Net Income per Diluted Share Attributable to KLA $4.43$3.85$2.73

A reconciliation between GAAP operating results and non-GAAP operating results is provided following the financial statements included in this release. KLA will discuss the results for its fiscal year 2021 fourth quarter and full year, along with its outlook, on a conference call today beginning at 2:00 p.m. Pacific Time. A webcast of the call will be available at: www.kla.com.
First Quarter Fiscal 2022 Guidance
The following details our guidance for the first quarter of fiscal 2022 ending in September:
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Total revenue between $1,920 million to $2,120 million
GAAP gross margin is expected to be in a range of 59.4% to 61.5%
Non-GAAP gross margin is expected to be in a range of 61.5% to 63.5%
GAAP diluted EPS attributable to KLA is expected to be in a range of $3.76 to $4.64
Non-GAAP diluted EPS attributable to KLA is expected to be in a range of $4.01 to $4.89
For additional guidance metrics please see the company’s published Letter to Shareholders and earnings slides on the KLA investor relations website.
About KLA:
KLA Corporation (“KLA”) develops industry-leading equipment and services that enable innovation throughout the electronics industry. We provide advanced process control and process-enabling solutions for manufacturing wafers and reticles, integrated circuits, packaging, printed circuit boards and flat panel displays. In close collaboration with leading customers across the globe, our expert teams of physicists, engineers, data scientists and problem-solvers design solutions that move the world forward. Investors and others should note that KLA announces material financial information including SEC filings, press releases, public earnings calls and conference webcasts using an investor relations website (ir.kla.com). Additional information may be found at: www.kla.com.
Note Regarding Forward-Looking Statements:
Statements in this press release other than historical facts, such as statements pertaining to revenues, GAAP and non-GAAP gross margin and GAAP and non-GAAP diluted EPS for the quarter ending September 30, 2021 are forward-looking statements and subject to the Safe Harbor provisions created by the Private Securities Litigation Reform Act of 1995. 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: the impact of the COVID-19 pandemic on the global economy and on our business, financial condition and results of operations, including the supply chain constraints we are experiencing as a result of the pandemic; economic, political and social conditions in the countries in which we, our customers and our suppliers operate, including global trade policies; disruption to our manufacturing facilities or other operations, or the operations of our customers, due to natural catastrophic events, health epidemics or terrorism; ongoing changes in the technology industry, and the semiconductor industry in particular, including future growth rates, pricing trends in end-markets, or changes in customer capital spending patterns; our ability to timely develop new technologies and products that successfully anticipate or address changes in the semiconductor industry; our ability to maintain our technology advantage and protect our proprietary rights; our ability to compete with new products introduced by our competitors; our ability to attract and retain key personnel; cybersecurity threats, cyber incidents affecting our and our service providers’ systems and networks and our ability to access critical information systems for daily business operations; liability to our customers under indemnification provisions if our products fail to operate properly or contain defects or our customers are sued by third parties due to our products; exposure to a highly concentrated customer base; availability and cost of the wide range of materials used in the production of our products; our ability to operate our business in accordance with our business plan; legal, regulatory and tax environments in which we perform our operations and conduct our business and our ability to comply with relevant laws and regulations; our ability to pay interest and repay the principal of our current indebtedness is dependent upon our ability to manage our business operations, our credit rating and the ongoing interest rate environment, among other factors; instability in the global credit and financial markets; our exposure to currency exchange rate fluctuations, or declining economic conditions in those countries where we conduct our business; changes in our effective tax rate resulting from changes in the tax rates imposed by jurisdictions where our profits are determined to be earned and taxed, expiration of tax holidays in certain jurisdictions, resolution of issues arising from tax audits with various authorities or changes in tax laws or the interpretation of such tax laws; and our ability to identify suitable acquisition targets and successfully integrate and manage acquired businesses. For other factors that may cause actual results to differ materially from those projected and anticipated in forward-looking statements in this press release, please refer to KLA Corporation’s Annual Report on Form 10-K for the year ended June 30, 2020, and other subsequent filings with the Securities and Exchange Commission (including, but not limited to, the risk factors described therein). KLA Corporation assumes no obligation to, and does not currently intend to, update these forward-looking statements.
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KLA Corporation
Condensed Consolidated Unaudited Balance Sheets
(In thousands)
June 30, 2021June 30, 2020
ASSETS
Cash, cash equivalents and marketable securities$2,494,522 $1,980,472 
Accounts receivable, net1,305,479 1,107,413 
Inventories1,575,380 1,310,985 
Other current assets320,867 324,675 
Land, property and equipment, net663,027 519,824 
Goodwill2,011,172 2,045,402 
Deferred income taxes, non-current270,461 236,797 
Purchased intangibles, net1,185,311 1,391,413 
Other non-current assets444,905 362,979 
Total assets$10,271,124 $9,279,960 
LIABILITIES, NON-CONTROLLING INTEREST AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable$342,083 $264,280 
Deferred system revenue295,192 336,237 
Deferred service revenue284,936 233,493 
Short-term debt20,000 — 
Other current liabilities1,161,016 865,776 
Total current liabilities2,103,227 1,699,786 
Non-current liabilities:
Long-term debt3,422,767 3,469,670 
Deferred tax liabilities650,623 660,885 
Deferred service revenue87,575 96,325 
Other non-current liabilities631,290 672,284 
Total liabilities6,895,482 6,598,950 
Stockholders’ equity:
Common stock and capital in excess of par value2,175,988 2,090,268 
Retained earnings 1,277,123 654,930 
Accumulated other comprehensive income (loss)(75,557)(79,774)
Total KLA stockholders’ equity3,377,554 2,665,424 
Non-controlling interest in consolidated subsidiaries(1,912)15,586 
Total stockholders’ equity3,375,642 2,681,010 
Total liabilities and stockholders’ equity$10,271,124 $9,279,960 
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KLA Corporation
Condensed Consolidated Unaudited Statements of Operations
Three months endedTwelve months ended
(In thousands, except per share amounts)
June 30, 2021June 30, 2020June 30, 2021June 30, 2020
Revenues:
Product$1,481,478 $1,075,104 $5,240,316 $4,328,725 
Service443,993 384,489 1,678,418 1,477,699 
Total revenues1,925,471 1,459,593 6,918,734 5,806,424 
Costs and expenses:
Costs of revenues772,241 621,544 2,772,165 2,449,561 
Research and development241,428 217,100 928,487 863,864 
Selling, general and administrative192,022 167,791 729,602 734,149 
Goodwill impairment— — — 256,649 
Interest expense39,970 40,221 157,328 160,274 
Loss on extinguishment of debt— — — 22,538 
Other expense (income), net(29,033)7,868 (29,302)2,678 
Income before income taxes708,843 405,069 2,360,454 1,316,711 
Provision for income taxes75,785 (5,246)283,101 101,686 
Net income633,058 410,315 2,077,353 1,215,025 
Less: Net income (loss) attributable to non-controlling interest80 (938)(939)(1,760)
Net income attributable to KLA$632,978 $411,253 $2,078,292 $1,216,785 
Net income per share attributable to KLA:
Basic$4.14 $2.65 $13.49 $7.76 
Diluted$4.10 $2.63 $13.37 $7.70 
Weighted-average number of shares:
Basic152,971 155,106 154,086 156,797 
Diluted154,283 156,183 155,437 158,005 
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KLA Corporation
Condensed Consolidated Unaudited Statements of Cash Flows
Three months ended
June 30,
(In thousands)20212020
Cash flows from operating activities:
Net income$633,058 $410,315 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization84,647 78,937 
Unrealized foreign exchange (gain) loss and other(6,102)15,047 
Other impairment charges— 10,760 
Stock-based compensation expense27,690 26,378 
Gain on fair value adjustment of marketable equity securities(26,719)— 
Changes in assets and liabilities, net of assets acquired and liabilities assumed in business acquisitions:
Accounts receivable(102,021)10,431 
Inventories(123,725)(56,609)
Other assets(68,525)(74,986)
Accounts payable48,414 19,905 
Deferred system revenue(40,900)3,652 
Deferred service revenue35,769 15,205 
Other liabilities4,036 (6,189)
Net cash provided by operating activities465,622 452,846 
Cash flows from investing activities:
Business acquisitions, net of cash acquired— (11,543)
Capital expenditures(55,375)(41,790)
Purchases of available-for-sale securities(223,619)(233,838)
Proceeds from sale of available-for-sale securities19,759 44,199 
Proceeds from maturity of available-for-sale securities163,232 135,674 
Purchases of trading securities(24,001)(41,584)
Proceeds from sale of trading securities26,402 43,061 
Net cash used in investing activities(93,602)(105,821)
Cash flows from financing activities:
Payment of debt issuance costs— (172)
Proceeds from revolving credit facility, net of costs— 200,000 
Repayment of debt— (175,000)
Issuance of common stock59,742 50,349 
Tax withholding payments related to vested and released restricted stock units(13,543)(5,527)
Common stock repurchases(299,777)— 
Payment of dividends to stockholders(139,267)(132,762)
Payment of dividends to subsidiary's non-controlling interest holders— (1,239)
Contingent consideration payable and other, net— 2,996 
Net cash used in financing activities(392,845)(61,355)
Effect of exchange rate changes on cash and cash equivalents3,285 2,564 
Net (decrease) increase in cash and cash equivalents(17,540)288,234 
Cash and cash equivalents at beginning of period1,452,150 946,175 
Cash and cash equivalents at end of period$1,434,610 $1,234,409 
Supplemental cash flow disclosures:
Income taxes paid$111,396 $31,865 
Interest paid$37,219 $37,988 
Non-cash activities:
Contingent consideration payable - financing activities$1,120 $(803)
Dividends payable - financing activities$1,428 $1,400 
Unsettled common stock repurchase - financing activities$6,000 $— 
Accrued purchase of land, property and equipment - investing activities$30,615 $15,843 
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KLA Corporation
Segment Information (Unaudited)
The following is a summary of results for each of our four reportable segments and reconciliation to total revenues for the indicated periods:
 Three months endedTwelve months ended
(In thousands)
June 30, 2021June 30, 2020June 30, 2021June 30, 2020
Revenues:
Semiconductor Process Control$1,580,547 $1,156,607 $5,734,825 $4,745,446 
Specialty Semiconductor Process97,952 100,372 369,216 329,700 
PCB, Display and Component Inspection246,974 202,209 812,620 727,451 
Other— 397 739 3,614 
Total revenues for reportable segments1,925,473 1,459,585 6,917,400 5,806,211 
Corporate allocation and effects of foreign exchange rates(2)1,334 213 
Total revenues$1,925,471 $1,459,593 $6,918,734 $5,806,424 


KLA Corporation
Condensed Consolidated Unaudited Supplemental Information
Reconciliation of GAAP Net Income to Non-GAAP Net Income
Three months endedTwelve months ended
(In thousands, except per share amounts)
June 30, 2021March 31, 2021June 30, 2020June 30, 2021June 30, 2020
GAAP net income attributable to KLA $632,978 $567,496 $411,253 $2,078,292 $1,216,785 
Adjustments to reconcile GAAP net income to non-GAAP net income:
Acquisition-related chargesa53,008 52,973 55,937 209,555 244,715 
Restructuring, severance and other chargesb1,358 (1,534)4,240 7,037 12,458 
Goodwill impairmentc— — — — 256,649 
Loss on extinguishment of debtd— — — — 22,538 
Income tax effect of non-GAAP adjustmentse(16,910)(17,866)(16,027)(69,341)(83,402)
Discrete tax itemsf13,620 (2,967)(29,364)35,521 (34,915)
Non-GAAP net income attributable to KLA $684,054 $598,102 $426,039 $2,261,064 $1,634,828 
GAAP net income per diluted share attributable to KLA$4.10 $3.66 $2.63 $13.37 $7.70 
Non-GAAP net income per diluted share attributable to KLA$4.43 $3.85 $2.73 $14.55 $10.35 
Shares used in diluted shares calculation154,283 155,159 156,183 155,437 158,005 
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Pre-tax impact of GAAP to non-GAAP adjustments included in Condensed Consolidated Unaudited Statements of Operations
(In thousands)
Acquisition-Related ChargesRestructuring, Severance and Other ChargesTotal pre-tax GAAP to non-GAAP adjustments
Three months ended June 30, 2021
Costs of revenues$40,499 $(471)$40,028 
Research and development— 203 203 
Selling, general and administrative12,509 1,626 14,135 
Total in three months ended June 30, 2021$53,008 $1,358 $54,366 
Three Months Ended March 31, 2021
Costs of revenues$40,309 $701 $41,010 
Research and development— 147 147 
Selling, general and administrative12,664 2,075 14,739 
Other expense (income), net— (4,457)(4,457)
Total in three months ended March 31, 2021$52,973 $(1,534)$51,439 
Three Months Ended June 30, 2020
Costs of revenues$41,446 $534 $41,980 
Research and development— 585 585 
Selling, general and administrative14,491 1,179 15,670 
Other expense (income), net— 1,942 1,942 
Total in three months ended June 30, 2020$55,937 $4,240 $60,177 

Free Cash Flow Reconciliation
Three Months Ended June 30,
(In thousands)20212020
Net cash provided by operating activities$465,622 $452,846 
Capital expenditures(55,375)(41,790)
Free Cash Flow$410,247 $411,056 

Twelve Months Ended June 30,
(In thousands)20212020
Net cash provided by operating activities$2,185,026 $1,778,850 
Capital expenditures(231,628)(152,675)
Free Cash Flow$1,953,398 $1,626,175 

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First Quarter Fiscal 2022 Guidance
Reconciliation of GAAP Diluted EPS to Non-GAAP Diluted EPS
Three months ending September 30, 2021
(In millions, except per share amounts)
LowHigh
GAAP net income per diluted share attributable to KLA$3.76$4.64
Acquisition-related chargesa0.350.35
Restructuring, severance and other chargesb0.010.01
Income tax effect of non-GAAP adjustmentse(0.11)(0.11)
Non-GAAP net income per diluted share attributable to KLA$4.01$4.89
Shares used in net income per diluted share calculation153.5153.5

Reconciliation of GAAP Gross Margin to Non-GAAP Gross Margin
Three Months Ending September 30, 2021
LowHigh
GAAP gross margin59.4%61.5%
Acquisition-related chargesa2.1%2.0%
Non-GAAP gross margin61.5%63.5%
The Non-GAAP and supplemental information provided in this press release is a supplement to, and not a substitute for, KLA’s financial results presented in accordance with United States GAAP.

To supplement our Condensed Consolidated Financial Statements presented in accordance with GAAP, we provide certain non-GAAP financial information, which is adjusted from results based on GAAP to exclude certain costs and expenses, as well as other supplemental information. The non-GAAP and supplemental information is provided to enhance the user’s overall understanding of our operating performance and our prospects in the future. Specifically, we believe that the non-GAAP information, including non-GAAP net income attributable to KLA, non-GAAP net income per diluted share attributable to KLA, non-GAAP gross margin and Free Cash Flow, provides useful measures to both management and investors regarding financial and business trends relating to our financial performance by excluding certain costs and expenses that we believe are not indicative of our core operating results to help investors compare our operating performances with our results in prior periods as well as with the performance of other companies. The non-GAAP information is among the budgeting and planning tools that management uses for future forecasting. However, because there are no standardized or generally accepted definitions for most non-GAAP financial metrics, definitions of non-GAAP financial metrics are inherently subject to significant discretion (for example, determining which costs and expenses to exclude when calculating such a metric). As a result, non-GAAP financial metrics may be defined very differently from company to company, or even from period to period within the same company, which can potentially limit the usefulness of such information to an investor. The presentation of non-GAAP and supplemental information is not meant to be considered in isolation or as a substitute for results prepared and presented in accordance with United States GAAP. The following are descriptions of the adjustments made to reconcile GAAP net income attributable to KLA to non-GAAP net income attributable to KLA:
a.Acquisition-related charges primarily include amortization of intangible assets and other acquisition-related adjustments including adjustments for the fair valuation of inventory and backlog, and transaction costs associated with our acquisitions, primarily Orbotech.
b.Restructuring, severance and other charges primarily include costs associated with employee severance, acceleration of certain stock-based compensation arrangements, and other exit costs.
c.Goodwill impairment included non-cash expense recognized as a result of KLA’s annual testing for goodwill impairment performed in the third quarter of the prior fiscal year. The impairment charge resulted from the downward revision of financial outlook for the acquired Orbotech business as well as the impact of elevated risk and macroeconomic slowdown driven by the COVID-19 pandemic.
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d.Loss on extinguishment of debt included a pre-tax loss on early extinguishment of the $500 million 4.125% Senior Notes due in November 2021.
e.Income tax effect of non-GAAP adjustments includes the income tax effects of the excluded items noted above.
f.Discrete tax items in the three and twelve months ended June 30, 2021 include tax expense from an increase in deferred tax liability on purchased intangibles relating to an increase in the United Kingdom statutory income tax rate, partially offset by a net tax benefit from an internal restructuring and a reduction in unrecognized tax benefits. Discrete tax items in the three months ended March 31, 2021 primarily relate to a tax benefit due to a decrease in deferred tax liability on purchased intangibles relating to a decrease in the effective income tax rate in Israel. Discrete tax items in the three months and twelve months ended June 30, 2020 include a tax benefit from an internal restructuring and a decrease in deferred tax liability for an unrealized gain on investments held for sale by subsidiaries of the acquired Orbotech business.

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