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KLA's (KLAC) Q1 Earnings & Revenues Beat Estimates, Fall Y/Y
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KLA Corporation (KLAC - Free Report) reported first-quarter fiscal 2024 non-GAAP earnings of $5.74 per share, beating the Zacks Consensus Estimate by 6.49%. The figure declined 18.7% year over year. The figure was within management’s guidance range of $4.75-$5.95 per share.
Revenues decreased 12% year over year to $2.397 billion, surpassing the Zacks Consensus Estimate by 1.53%. The reported figure was within management’s guidance of $2.225-$2.475 billion.
The decline in the top line was attributed to softness in the Semiconductor Process Control, Specialty Semiconductor Process, and PCB, Display and Component Inspection segments.
In terms of reportable segments, Semiconductor Process Control revenues (89.1% of total revenues) decreased 10.9% year over year to $2.14 billion. Our model estimate was pegged at $2.04 billion.
Foundry & Logic accounted for about 67%, while Memory constituted about 33% of semiconductor process control systems’ revenues. Within memory, approximately 91% was from DRAM and 9% was from NAND.
Specialty Semiconductor Process revenues (5.3% of total revenues) were $126.7 million, down 0.9% year over year. Our model estimate was pegged at $113.9 million.
PCB, Display and Component Inspection revenues (5.7% of total revenues) plunged 32.2% year over year to $136 million. Our model estimate was pegged at $201.4 million.
KLA shares were up 0.28% in after-hours trading. The company’s shares have underperformed the Zacks Computer & Technology sector year to date. While KLAC shares have gained 20.6%, the Computer & Technology sector has increased 34.5%.
Top Line Details
Products revenues (accounted for 76.6% of total revenues) decreased 16.3% year over year to $1.84 billion. Our model estimate was pegged at $1.87 billion.
Services revenues (23.4% of total revenues) increased 6% year over year to $560.3 million. Our model estimate was pegged at $481.4 million.
In terms of major products, Wafer Inspection, Patterning Systems (including metrology and reticle inspection) and Specialty Semiconductor Process accounted for 42%, 23% and 5%, respectively, of KLA’s total revenues for the fiscal first quarter.
Wafer Inspection revenues declined 8% year over year to $1.01 billion. Patterning revenues declined 26% year over year to $543 million. Specialty Semiconductor Process fell 2% year over year to $112 million.
In terms of regional breakdown of revenues, China, Taiwan, Japan and Korea accounted for 43%, 17%, 10% and 9% of the total revenues for the fiscal first quarter, respectively. Further, North America, Europe and the Rest of Asia accounted for 10%, 7%, and 4%, respectively.
Operating Details
In first-quarter fiscal 2024, the non-GAAP gross margin was 62.4%, 40 basis points (bps) above the guidance range. Non-GAAP gross margin benefited from a richer product mix and better service cost performance.
Research and development (R&D) expenses decreased 2.3% year over year to $311.2 million. As a percentage of sales, R&D expenses expanded 130 bps year over year to 13%.
Selling, general and administrative (SG&A) expenses decreased 5.6% year over year to $239.6 million. As a percentage of sales, SG&A expenses expanded 70 bps year over year to 10%.
The fiscal first-quarter non-GAAP operating margin was 40.2%.
Balance Sheet
As of Sep 30, 2023, cash, cash equivalents and marketable securities totaled $3.24 billion compared with $3.35 billion as of Jun 30, 2023.
Long-term debt at the end of the fiscal first quarter was $5.89 billion, unchanged sequentially.
Cash flow from operating activities was $883.7 million for the reported quarter, down from $959.1 billion in the prior quarter. Free cash flow was $815.7 million for the fiscal first quarter.
During the fiscal first quarter, KLAC paid out $182 million in dividends and repurchased $455 million worth of shares.
Second-Quarter Fiscal 2024 Guidance
For second-quarter fiscal 2024, revenues are expected to be in the range of $2.45 billion, plus/minus $125 million. The Zacks Consensus Estimate for revenues is pegged at $2.36 billion, indicating a 13.35% decline year over year.
KLA expects non-GAAP earnings of $5.86 per share, plus/minus 60 cents. The Zacks Consensus Estimate for non-GAAP earnings is pegged at $5.39 per share, suggesting a year-over-year decline of 23.65%.
KLA expects a non-GAAP gross margin of 61.5% plus/minus 1%.
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KLA's (KLAC) Q1 Earnings & Revenues Beat Estimates, Fall Y/Y
KLA Corporation (KLAC - Free Report) reported first-quarter fiscal 2024 non-GAAP earnings of $5.74 per share, beating the Zacks Consensus Estimate by 6.49%. The figure declined 18.7% year over year. The figure was within management’s guidance range of $4.75-$5.95 per share.
Revenues decreased 12% year over year to $2.397 billion, surpassing the Zacks Consensus Estimate by 1.53%. The reported figure was within management’s guidance of $2.225-$2.475 billion.
The decline in the top line was attributed to softness in the Semiconductor Process Control, Specialty Semiconductor Process, and PCB, Display and Component Inspection segments.
In terms of reportable segments, Semiconductor Process Control revenues (89.1% of total revenues) decreased 10.9% year over year to $2.14 billion. Our model estimate was pegged at $2.04 billion.
Foundry & Logic accounted for about 67%, while Memory constituted about 33% of semiconductor process control systems’ revenues. Within memory, approximately 91% was from DRAM and 9% was from NAND.
KLA Corporation Price, Consensus and EPS Surprise
KLA Corporation price-consensus-eps-surprise-chart | KLA Corporation Quote
Specialty Semiconductor Process revenues (5.3% of total revenues) were $126.7 million, down 0.9% year over year. Our model estimate was pegged at $113.9 million.
PCB, Display and Component Inspection revenues (5.7% of total revenues) plunged 32.2% year over year to $136 million. Our model estimate was pegged at $201.4 million.
KLA shares were up 0.28% in after-hours trading. The company’s shares have underperformed the Zacks Computer & Technology sector year to date. While KLAC shares have gained 20.6%, the Computer & Technology sector has increased 34.5%.
Top Line Details
Products revenues (accounted for 76.6% of total revenues) decreased 16.3% year over year to $1.84 billion. Our model estimate was pegged at $1.87 billion.
Services revenues (23.4% of total revenues) increased 6% year over year to $560.3 million. Our model estimate was pegged at $481.4 million.
In terms of major products, Wafer Inspection, Patterning Systems (including metrology and reticle inspection) and Specialty Semiconductor Process accounted for 42%, 23% and 5%, respectively, of KLA’s total revenues for the fiscal first quarter.
Wafer Inspection revenues declined 8% year over year to $1.01 billion. Patterning revenues declined 26% year over year to $543 million. Specialty Semiconductor Process fell 2% year over year to $112 million.
In terms of regional breakdown of revenues, China, Taiwan, Japan and Korea accounted for 43%, 17%, 10% and 9% of the total revenues for the fiscal first quarter, respectively. Further, North America, Europe and the Rest of Asia accounted for 10%, 7%, and 4%, respectively.
Operating Details
In first-quarter fiscal 2024, the non-GAAP gross margin was 62.4%, 40 basis points (bps) above the guidance range. Non-GAAP gross margin benefited from a richer product mix and better service cost performance.
Research and development (R&D) expenses decreased 2.3% year over year to $311.2 million. As a percentage of sales, R&D expenses expanded 130 bps year over year to 13%.
Selling, general and administrative (SG&A) expenses decreased 5.6% year over year to $239.6 million. As a percentage of sales, SG&A expenses expanded 70 bps year over year to 10%.
The fiscal first-quarter non-GAAP operating margin was 40.2%.
Balance Sheet
As of Sep 30, 2023, cash, cash equivalents and marketable securities totaled $3.24 billion compared with $3.35 billion as of Jun 30, 2023.
Long-term debt at the end of the fiscal first quarter was $5.89 billion, unchanged sequentially.
Cash flow from operating activities was $883.7 million for the reported quarter, down from $959.1 billion in the prior quarter. Free cash flow was $815.7 million for the fiscal first quarter.
During the fiscal first quarter, KLAC paid out $182 million in dividends and repurchased $455 million worth of shares.
Second-Quarter Fiscal 2024 Guidance
For second-quarter fiscal 2024, revenues are expected to be in the range of $2.45 billion, plus/minus $125 million. The Zacks Consensus Estimate for revenues is pegged at $2.36 billion, indicating a 13.35% decline year over year.
KLA expects non-GAAP earnings of $5.86 per share, plus/minus 60 cents. The Zacks Consensus Estimate for non-GAAP earnings is pegged at $5.39 per share, suggesting a year-over-year decline of 23.65%.
KLA expects a non-GAAP gross margin of 61.5% plus/minus 1%.
Zacks Rank & Stocks to Consider
Currently, KLA carries a Zacks Rank #4 (Sell).
eGain (EGAN - Free Report) , GoDaddy (GDDY - Free Report) and Itron (ITRI - Free Report) are some better-ranked stocks that investors can consider in the broader sector, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
eGain shares have declined 34.3% year to date. EGAN is set to report its first-quarter fiscal 2024 results on Nov 2.
GoDaddy shares have declined 2.6% year to date. GDDY is set to report its third-quarter 2023 results on Nov 2.
Itron shares have returned 13.9% year to date. ITRI is set to report its third-quarter 2023 results on Nov 2.