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KLA Corp. (KLAC) Beats Q4 Earnings and Revenue Estimates

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KLA Corporation (KLAC - Free Report) reported fourth-quarter fiscal 2021 earnings per share of $4.43, which beat the Zacks Consensus Estimate by 12.4%. The figure was up 62.3% year over year and 15.1% sequentially.

Revenues increased 32% from the year-ago quarter and 7% sequentially to $1.93 billion, surpassing the Zacks Consensus Estimate by 3.2%. The reported figure was at the higher end of the company’s guided range of $1.76-$1.96 billion.

Increased customer demand across each of the major product group drove the quarterly revenues.

Growing investments across multiple nodes in Foundry and logic contributed well to its quarterly performance.

Moreover, KLA introduced four new products targeting the automotive semiconductor market, including patterned and unpartnered wafer inspection and in-line test solutions, which drove the quarterly results.

Management has favorable outlook toward wafer fab equipment industry. It expects positive industry dynamics to continue in calendar 2022 due to strong semiconductor demand.

Further, the Services business is expected to grow, driven by expanding installed base, higher utilization rates, and increasing expansion of service opportunities in the trailing edge and the EPC group.

KLA Corporation Price, Consensus and EPS Surprise

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 77% of total revenues) increased 37% year over year to $1.48 billion.

Services revenues (23% of total revenues) also increased 15.8% from the year-ago quarter to $443.9 million.

In terms of reportable segments, Semiconductor Process Control revenues increased 37% year over year to $1.58 billion, driven by strength in foundry and logic. Foundry & Logic accounted for 68% and Memory constituted about 32% of semiconductor process control systems’ revenues.

The segment was further driven by growth in the automotive power semiconductor applications.

The Electronics, Packaging and Components or EPC group reported strong results for the quarter, driven by its high exposure to 5G mobile and infrastructure as well as growing demand in automotive.

Specialty Semiconductor Process revenues were $98 million, down 2% year over year.

PCB, Display and Component Inspection revenues grew 22% from the year-ago quarter to $247 million, driven by strength in data center, which contributed to advanced PCB and packaging inspection.

Operating Details

Gross margin was 62% compared with 60.3% in the prior-year quarter. The gross margin was at the midpoint of the guided range of 61-63%.

Non-GAAP operating expenses increased 13.7% year over year to $419.1 million. However, as a percentage of sales, research and development contracted 234 (basis points) bps year over year. Also, as a percentage of sales, selling, general and administrative costs contracted 152 bps year over year.

Balance Sheet

As of Jun 30, 2021, cash, cash equivalents and marketable securities totaled $2.5 billion compared with $2.4 billion as of Mar 31, 2021.

Cash from operations was $465.6 million in the fiscal fourth quarter versus $646.2 million in the prior quarter.

During the quarter, the company paid $139.3 million in dividends and repurchased $299.8 million shares.

First-Quarter Fiscal 2022 Guidance

For first-quarter fiscal 2022, revenues are expected between $1.92 billion and $2.12billion. The Zacks Consensus Estimate for revenues is pegged at $1.96 billion.

The company expects non-GAAP EPS within $4.01-$4.89. The Zacks Consensus Estimate for non-GAAP EPS is pegged at $4.20.

Zacks Rank & Other Stocks to Consider

Currently, KLA Corp. has a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader technology sector are NXP Semiconductors (NXPI - Free Report) , Semtech Corporation (SMTC - Free Report) and Agilent Technologies (A - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rates for NXP, Semtech and Agilent are currently projected at 10%, 12.5% and 13%, respectively.