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KLA Corp. (KLAC) Beats Q1 Earnings and Revenue Estimates
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KLA Corporation (KLAC - Free Report) reported first-quarter fiscal 2021 earnings per share of $3.03, which beat the Zacks Consensus Estimate of $2.75. The figure was up 22.2% year over year and 11% sequentially.
Revenues increased 8.9% from the year-ago quarter and 5.4% sequentially to $1.54 billion, surpassing the Zacks Consensus Estimate by 3.9%. The figure was at the high end of the company’s guided range of $1.405-$1.555 million.
Foundry and logic is expected to continue performing well in 2020 and in 2021 as well. The optimistic outlook is driven by next-generation technology development, capacity additions at leading-edge nodes, increasing competitive dynamics and investment in EUV infrastructure.
In addition, management stated that total utilization is high and memory customers continue to drive down device inventories and plan for higher bit growth in 2021. The company expects the business from memory customers to remain strong for the remainder of 2020, with the momentum continuing in 2021.
Demand for advanced logic nodes is expected to remain healthy through 2020 and 2021 driven by investment in EUV, competitive dynamics, as well as capacity additions.
Management continues to expect overall process control intensity to grow in 2021, driven by expanding value of inspection and measurement in addressing critical customer problems.
Products revenues (accounting for almost 74% of total revenues) increased 8.3% year over year to $1.15 billion.
Services revenues (26% of total revenues) also increased 10.6% from the year-ago quarter to $393.1 million.
In terms of reportable segments, Semiconductor Process Control revenues increased 9% year over year to $1.27 billion, driven by persistent strength in foundry and logic. Foundry was approximately 59% of semiconductor process control systems’ revenues, logic was about 10% and memory customers were 31%.
Specialty Semiconductor Process revenues were $89 million, up 29% year over year but down 11% sequentially. The year-over-year increase was driven by strength in RF, MEMS and advance packaging.
The segment is expected to further benefit from expanding RF demand to support 5G infrastructure investment, particularly in China.
PCB, Display and component inspection revenues increased 1.5% from a year ago but declined 10% sequentially to $181.2 million. Other revenues were $0.140 million.
The newly formed Electronics, Packaging and Components or EPC group delivered strong results for the quarter, driven by its high exposure to 5G infrastructure and the smartphone market.
Operating Details
Non-GAAP gross margin was 62.1% versus 60.3% in the prior quarter. The gross margin was at the upper end of the guided range of 60.5-62.5%.
The increase was driven by higher semiconductor process control product mix and lower inventory reserve requirements due to strengthening demand.
Total operating expenses decreased 1.8% year over year to $391.7 million. As a percentage of sales, research and development as well as selling, general and administrative costs decreased from the prior-year quarter.
Balance Sheet
KLA Corp. ended the quarter with cash, cash equivalents and a marketable securities balance of $2.04 billion compared with $1.98 billion in the fiscal fourth quarter.
Cash from operations was $512.2 million for the fiscal first quarter versus $452.8 million in the prior quarter.
During the quarter, the company paid $141 million in dividends and repurchased $188 million shares.
Fiscal Second-Quarter 2021 Guidance
For second-quarter fiscal 2021, revenues are expected between $1.510 million and $1.660 million.
The company expects non-GAAP EPS within $2.82-$3.46.
Long-term earnings growth for ON Semiconductor, Silicon Laboratories, and Alibaba is currently projected at 1.3%, 15% and 19.4%, respectively.
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KLA Corp. (KLAC) Beats Q1 Earnings and Revenue Estimates
KLA Corporation (KLAC - Free Report) reported first-quarter fiscal 2021 earnings per share of $3.03, which beat the Zacks Consensus Estimate of $2.75. The figure was up 22.2% year over year and 11% sequentially.
Revenues increased 8.9% from the year-ago quarter and 5.4% sequentially to $1.54 billion, surpassing the Zacks Consensus Estimate by 3.9%. The figure was at the high end of the company’s guided range of $1.405-$1.555 million.
Foundry and logic is expected to continue performing well in 2020 and in 2021 as well. The optimistic outlook is driven by next-generation technology development, capacity additions at leading-edge nodes, increasing competitive dynamics and investment in EUV infrastructure.
In addition, management stated that total utilization is high and memory customers continue to drive down device inventories and plan for higher bit growth in 2021. The company expects the business from memory customers to remain strong for the remainder of 2020, with the momentum continuing in 2021.
Demand for advanced logic nodes is expected to remain healthy through 2020 and 2021 driven by investment in EUV, competitive dynamics, as well as capacity additions.
Management continues to expect overall process control intensity to grow in 2021, driven by expanding value of inspection and measurement in addressing critical customer problems.
KLA Corporation Price, Consensus and EPS Surprise
KLA Corporation price-consensus-eps-surprise-chart | KLA Corporation Quote
Top-Line Details
Products revenues (accounting for almost 74% of total revenues) increased 8.3% year over year to $1.15 billion.
Services revenues (26% of total revenues) also increased 10.6% from the year-ago quarter to $393.1 million.
In terms of reportable segments, Semiconductor Process Control revenues increased 9% year over year to $1.27 billion, driven by persistent strength in foundry and logic. Foundry was approximately 59% of semiconductor process control systems’ revenues, logic was about 10% and memory customers were 31%.
Specialty Semiconductor Process revenues were $89 million, up 29% year over year but down 11% sequentially. The year-over-year increase was driven by strength in RF, MEMS and advance packaging.
The segment is expected to further benefit from expanding RF demand to support 5G infrastructure investment, particularly in China.
PCB, Display and component inspection revenues increased 1.5% from a year ago but declined 10% sequentially to $181.2 million. Other revenues were $0.140 million.
The newly formed Electronics, Packaging and Components or EPC group delivered strong results for the quarter, driven by its high exposure to 5G infrastructure and the smartphone market.
Operating Details
Non-GAAP gross margin was 62.1% versus 60.3% in the prior quarter. The gross margin was at the upper end of the guided range of 60.5-62.5%.
The increase was driven by higher semiconductor process control product mix and lower inventory reserve requirements due to strengthening demand.
Total operating expenses decreased 1.8% year over year to $391.7 million. As a percentage of sales, research and development as well as selling, general and administrative costs decreased from the prior-year quarter.
Balance Sheet
KLA Corp. ended the quarter with cash, cash equivalents and a marketable securities balance of $2.04 billion compared with $1.98 billion in the fiscal fourth quarter.
Cash from operations was $512.2 million for the fiscal first quarter versus $452.8 million in the prior quarter.
During the quarter, the company paid $141 million in dividends and repurchased $188 million shares.
Fiscal Second-Quarter 2021 Guidance
For second-quarter fiscal 2021, revenues are expected between $1.510 million and $1.660 million.
The company expects non-GAAP EPS within $2.82-$3.46.
Zacks Rank & Key Picks
KLA Corp. currently has a Zacks Rank #4 (Sell). Some better-ranked stocks in the broader technology sector include ON Semiconductor Corporation (ON - Free Report) , Silicon Laboratories, Inc. (SLAB - Free Report) and Alibaba Group Holding Limited (BABA - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth for ON Semiconductor, Silicon Laboratories, and Alibaba is currently projected at 1.3%, 15% and 19.4%, respectively.
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Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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