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KLA (KLAC) Up 20.9% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for KLA (KLAC - Free Report) . Shares have added about 20.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is KLA due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
KLA's Q1 Earnings & Revenues Beat Estimates, Fall Y/Y
KLA Corporation 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.
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.
KLA expects non-GAAP earnings of $5.86 per share, plus/minus 60 cents.
KLA expects a non-GAAP gross margin of 61.5% plus/minus 1%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 8.16% due to these changes.
VGM Scores
At this time, KLA has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise KLA has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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KLA (KLAC) Up 20.9% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for KLA (KLAC - Free Report) . Shares have added about 20.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is KLA due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
KLA's Q1 Earnings & Revenues Beat Estimates, Fall Y/Y
KLA Corporation 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.
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.
KLA expects non-GAAP earnings of $5.86 per share, plus/minus 60 cents.
KLA expects a non-GAAP gross margin of 61.5% plus/minus 1%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 8.16% due to these changes.
VGM Scores
At this time, KLA has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise KLA has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.