All in, KLA returned a total of $659 million to shareholders in the three months ending March 31.
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Notwithstanding, a sure sign of management confidence – or hubris – is KLA's use of cash, the largest expenditure of which were for the company's stock buybacks and payments of dividends to shareholders, at 71% of free cash flow.
Though Taiwan Semiconductor ( TSM) and Advanced Micro Devices ( AMD) are still growing, for example, Nvidia's ( NVDA) sales were flat in the most recent quarter. So, when one or all of these customers face troubles, it can spell trouble for KLA too. Semiconductor supply companies face a big concentration as there are a limited number of customers big enough to service the foundries and related companies. This is not an entirely logical constellation, however. Shares are up 21% in the past 12 months (more if you include the 1.4% dividend), versus the iShares Semiconductor ETF ( SOXX), which is up just 2.8%. Sales growth, steady EPS improvement and a decent balance sheet are probably what insulated KLAC shares from the overall downdraft in semiconductor stocks.
Its free cash flow (cash from operations less capital expenditures) arrived at $925.9 million. The company sports a decent balance sheet with good liquidity, and operating cash flow exceeded $1.01 billion in the fiscal third quarter. The reported revenue of $2.43 billion came in above the midpoint of KLA's guidance range of $2.20 billion-$2.50 billion. Revenue and GAAP earnings were up 6.6% and 4.1% year-over-year, respectively. And it's one that remains intact following the company's fiscal third-quarter earnings report. The investment thesis for KLA ( KLA, $386.54) which offers semiconductor manufacturing solutions, is simple: fundamentals and industry outlook.
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