KLA-Tencor Corporation KLAC reported fourth-quarter fiscal 2018 earnings of $2.22 per share, beating the Zacks Consensus Estimate by 8 cents. The figure surged 36% from the year-ago quarter and 10% sequentially.
Revenues increased 14% from the year-ago quarter to $1.07 billion, comfortably surpassing the Zacks Consensus Estimate of $1.05 billion. The figure was within management’s guided range of $1.02-$1.08 billion.
Products’ revenues (almost 79% of the total revenues) increased 14% year over year to $840.5 million.
Services revenues (21% of the total revenues) increased 14.1% from the year-ago quarter to $229.5 million.
The company stated that the integration of Orbotech Ltd. is well on track. The deal will allow KLA to be a diversified technology leader in process and yield management solutions, and services.
Management expects overall process control intensity to grow this year, driven by the expanding value of inspection and measurement in addressing critical customer problems, and semiconductor industry expansion in China.
KLA’s shares have returned 14.8% in the past 12 months, underperforming the 26.7% rally of the industry it belongs to.
Shipments Detail
Shipments in the fiscal fourth quarter were $1.07 billion, up approximately 3% sequentially and were at the high end of the company’s guided range of $1.01-$1.09 billion, driven by strength in memory.
Memory accounted for 69% (in line with guidance) of fiscal fourth-quarter shipments, 22% of foundry customers and 9% of logic.
In terms of end market, Wafer Inspection, Patterning (including shipments from reticle inspection business), Service and Non semi (including back-end component inspection business) contributed 47%, 29%, 21% and 3% of shipments, respectively.
KLA continues to experience strong growth for its Wafer Inspection solutions. Management stated that new capacity addition by Wafer manufacturers and adoption of more complex architectures by IC customers are driving demand for new bare wafer products. These are needed to support more stringent wafer flatness and process tool cleanliness specifications in advanced technologies.
The company registered strong growth in China. Management stated that China was strong in terms of both process control adoption and market share gains.
Also, orders from native Chinese customers remained solid and this momentum is expected to continue in 2018.
Operating Details
KLA’s gross margin expanded 180 basis points (bps) on a year-over-year basis to 64.8% and came in at the upper end of the guided range of 64-65%. The growth was driven by a favorable product mix.
Total operating expenses increased 11.1% year over year to $268.6 million. As a percentage of sales, both research and development, and selling, general and administrative decreased.
As a result, operating margin expanded 340 bps to 38%.
Balance Sheet
KLA ended the quarter with cash, cash equivalents and a marketable securities balance of $2.88 billion compared with $2.89 billion in the last reported quarter. Cash from operations was $373.5 million in the quarter.
Fiscal First-Quarter2019 Guidance
For first-quarter fiscal 2019, KLA expects shipments within$935 million to $1.015 billion. Revenues are expected between $1.030 billion and $1.110 billion. The Zacks Consensus Estimate for revenues is pegged at $1.04 billion.
KLA expects gross margin in the range of 64-65%. Non-GAAP diluted EPS is expected in the range of $2.04-$2.36, while GAAP diluted EPS is projected within $2-$2.32. The Zacks Consensus Estimate for earnings is pegged at $2.06 billion.
KLA-Tencor Corporation Price, Consensus and EPS Surprise
KLA-Tencor Corporation Price, Consensus and EPS Surprise | KLA-Tencor Corporation Quote
Zacks Rank & Key Picks
Currently, KLA carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry include Groupon GRPN, IAC/InterActiveCorp IAC and Integrated Device Technology, Inc. IDTI. While Groupon and IAC/InterActiveCorp sport a Zacks Rank #1 (Strong Buy), Integrated Device holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth for Groupon, IAC/InterActiveCorp and Integrated Device is currently projected to be 3%, 7.5% and 12.4%, respectively.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 – 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment