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Lam Research (LRCX) Q1 Earnings & Revenues Beat, Decline Y/Y
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Lam Research Corporation (LRCX - Free Report) delivered first-quarter fiscal 2024 non-GAAP earnings of $6.85 per share, which surpassed the Zacks Consensus Estimate by 12.8%. The figure decreased 34.3% from the year-ago quarter.
Revenues of $3.48 billion surpassed the Zacks Consensus Estimate of $3.41 billion. The figure declined 31.4% year over year. This was primarily attributed to weakness in the systems business due to sluggish memory spending.
Lam Research’s system revenues were $2.06 billion (59.1% of the total revenues), down 35.4% from the year-ago fiscal quarter’s figure. The reported figure surpassed the Zacks Consensus Estimate of $1.87 billion.
In the Customer Support Business Group, revenues for the reported quarter were $1.43 billion (40.9%), down 24.7% from the year-ago fiscal quarter’s number. The figure lagged the consensus mark of $1.53 billion.
Although sluggish wafer fabrication equipment (“WFE”) spending remains a concern, improvement in the outlook for the same is a positive. For 2023, WFE spending is expected to be in the $80 billion range, which was previously anticipated in the mid-$70 billion range.
NAND and foundry/logic spending remain weak, while DRAM spending has shown signs of improvement on the back of HBM-related demand and China upside.
Nevertheless, Lam Research’s proper execution and expanding and diversifying global footprints remain positives. The company’s technological advancements, especially with AI, are noteworthy. Also, its strength in 3D DRAM and advanced packaging is a tailwind.
Coming to the price performance, Lam Research has gained 54.3% year to date, outperforming the industry’s growth of 27.2%.
Lam Research Corporation Price, Consensus and EPS Surprise
China, Korea and Taiwan accounted for 48%, 16% and 7% of Lam Research’s total revenues for the fiscal first quarter, respectively. Japan, Southeast Asia, the United States and Europe accounted for 9%, 5%, 8% and 7%, respectively.
Operating Details
The non-GAAP gross margin was 47.9%, which expanded 190 basis points (bps) from the year-ago fiscal quarter’s level.
Non-GAAP operating expenses were $622.2 million, down 3.9% from the prior-year fiscal quarter’s reading. As a percentage of revenues, the figure expanded 510 bps from the year-earlier fiscal quarter’s level to 17.9%.
The non-GAAP operating margin was 30.1%, contracting 320 bps from the year-ago fiscal quarter’s level.
Balance Sheet & Cash Flow
As of Jun 25, 2023, cash and cash equivalents and short-term investments were $5.16 billion compared with $5.38 billion as of Jun 25, 2023.
Cash flow from operating activities was $951.2 million for the reported quarter, down from $1.12 billion in the previous fiscal quarter. Capital expenditure was $77 million in first-quarter fiscal 2024 compared with $78.7 million in fourth-quarter fiscal 2023.
In the reported quarter, Lam Research paid out dividends of $230 million and repurchased shares worth $830 million.
Guidance
For second-quarter fiscal 2024, LRCX expects revenues of $3.7 billion (+/- $300 million). The Zacks Consensus Estimate for the same is pegged at $3.6 billion.
The non-GAAP gross margin is projected at 47% (+/-1%), while the non-GAAP operating margin is expected to be 29.5% (+/-1%).
Non-GAAP earnings are projected to be $7 (+/- 75 cents) per share on a diluted share count of 132 million. The Zacks Consensus Estimate for the same is pinned at $6.63 per share.
Zacks Rank and Stocks to Consider
Currently, Lam Research carries a Zacks Rank #3 (Hold).
Image: Bigstock
Lam Research (LRCX) Q1 Earnings & Revenues Beat, Decline Y/Y
Lam Research Corporation (LRCX - Free Report) delivered first-quarter fiscal 2024 non-GAAP earnings of $6.85 per share, which surpassed the Zacks Consensus Estimate by 12.8%. The figure decreased 34.3% from the year-ago quarter.
Revenues of $3.48 billion surpassed the Zacks Consensus Estimate of $3.41 billion. The figure declined 31.4% year over year. This was primarily attributed to weakness in the systems business due to sluggish memory spending.
Lam Research’s system revenues were $2.06 billion (59.1% of the total revenues), down 35.4% from the year-ago fiscal quarter’s figure. The reported figure surpassed the Zacks Consensus Estimate of $1.87 billion.
In the Customer Support Business Group, revenues for the reported quarter were $1.43 billion (40.9%), down 24.7% from the year-ago fiscal quarter’s number. The figure lagged the consensus mark of $1.53 billion.
Although sluggish wafer fabrication equipment (“WFE”) spending remains a concern, improvement in the outlook for the same is a positive. For 2023, WFE spending is expected to be in the $80 billion range, which was previously anticipated in the mid-$70 billion range.
NAND and foundry/logic spending remain weak, while DRAM spending has shown signs of improvement on the back of HBM-related demand and China upside.
Nevertheless, Lam Research’s proper execution and expanding and diversifying global footprints remain positives. The company’s technological advancements, especially with AI, are noteworthy. Also, its strength in 3D DRAM and advanced packaging is a tailwind.
Coming to the price performance, Lam Research has gained 54.3% year to date, outperforming the industry’s growth of 27.2%.
Lam Research Corporation Price, Consensus and EPS Surprise
Lam Research Corporation price-consensus-eps-surprise-chart | Lam Research Corporation Quote
Regions in Detail
China, Korea and Taiwan accounted for 48%, 16% and 7% of Lam Research’s total revenues for the fiscal first quarter, respectively. Japan, Southeast Asia, the United States and Europe accounted for 9%, 5%, 8% and 7%, respectively.
Operating Details
The non-GAAP gross margin was 47.9%, which expanded 190 basis points (bps) from the year-ago fiscal quarter’s level.
Non-GAAP operating expenses were $622.2 million, down 3.9% from the prior-year fiscal quarter’s reading. As a percentage of revenues, the figure expanded 510 bps from the year-earlier fiscal quarter’s level to 17.9%.
The non-GAAP operating margin was 30.1%, contracting 320 bps from the year-ago fiscal quarter’s level.
Balance Sheet & Cash Flow
As of Jun 25, 2023, cash and cash equivalents and short-term investments were $5.16 billion compared with $5.38 billion as of Jun 25, 2023.
Cash flow from operating activities was $951.2 million for the reported quarter, down from $1.12 billion in the previous fiscal quarter. Capital expenditure was $77 million in first-quarter fiscal 2024 compared with $78.7 million in fourth-quarter fiscal 2023.
In the reported quarter, Lam Research paid out dividends of $230 million and repurchased shares worth $830 million.
Guidance
For second-quarter fiscal 2024, LRCX expects revenues of $3.7 billion (+/- $300 million). The Zacks Consensus Estimate for the same is pegged at $3.6 billion.
The non-GAAP gross margin is projected at 47% (+/-1%), while the non-GAAP operating margin is expected to be 29.5% (+/-1%).
Non-GAAP earnings are projected to be $7 (+/- 75 cents) per share on a diluted share count of 132 million. The Zacks Consensus Estimate for the same is pinned at $6.63 per share.
Zacks Rank and Stocks to Consider
Currently, Lam Research carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Dell Technologies (DELL - Free Report) , Applied Materials (AMAT - Free Report) and Arista Networks (ANET - Free Report) . Dell Technologies sports a Zacks Rank #1 (Strong Buy), and Applied Materials and Arista Networks carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Dell Technologies shares have gained 68.8% in the year-to-date period. DELL’s long-term earnings growth rate is projected at 12%
Shares of Applied Materials have gained 58.1% in the year-to-date period. AMAT’s long-term earnings growth rate is projected at 6.10%.
Arista Networks shares have gained 44.2% in the year-to-date period. The long-term earnings growth rate for ANET is projected at 18.75%.