Lam Research Corporation (NASDAQ:LRCX) Q3 2019 Earnings Conference Call Transcript

Apr 24, 2019 • 05:00 pm ET

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Lam Research Corporation (NASDAQ:LRCX) Q3 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, and welcome to the Lam Research Corporation's March Quarter Financial Conference Call.

At this time, I would like to turn the conference over to Tina Correia, CVP of Investor Relations. Please go ahead, ma'am.

Executive
Tina Correia

Thank you and good afternoon, everyone. Welcome to the Lam Research quarterly earnings conference call. With me today are Tim Archer, President and Chief Executive Officer; and Doug Bettinger, Executive Vice President and Chief Financial Officer. During today's call, we will share our overview on the business environment and review our financial results for the March 2019 quarter, and our outlook for the June 2019 quarter. The press release detailing our financial results was distributed a little after 1 o'clock P.M. Pacific Time this afternoon. The release can also be found on the Investor Relations section of the Company's website along with the presentation slides that accompany today's call.

Today's presentation and Q&A includes forward-looking statements that are subject to risks and uncertainties reflected in the Risk Factors disclosures of our SEC public filings. Please see accompanying slides in the presentation for additional information. Today's discussion of our financial results will be presented on a non-GAAP financial basis unless otherwise specified. A detailed reconciliation between GAAP and non-GAAP results can be found in today's earnings press release. This call is scheduled to last until 3 o'clock P.M. Pacific Time. A replay of this call will be available later this afternoon on our website.

With that, let me hand the call over to Tim.

Executive
Tim Archer

Thanks, Tina and hello, everyone. After Doug and I go through our prepared comments, we look forward to your questions. Lam delivered a solid March quarter and continued to demonstrate strong execution in a challenging near-term industry environment. Key metrics including revenue, gross margin and operating income margin, all came in above the midpoint of guidance that we gave on our last earnings call. EPS of $3.70 exceeded the high-end of our range, helped by a favorable tax rate and the benefit of ongoing share repurchases. This performance and continued execution in the business is attributable to the support of our customers and partners, and as always, the exceptional efforts of Lam employees around the world.

Turning now to our perspective on the current industry environment and outlook. Industry conditions are directionally unchanged from our January call. We continue to expect customer WFE spending for calendar year 2019 to be in the low $40 billion. Though since our last call, we now see a marginal downtick in memory spending offset by slightly better expectations in Foundry and Logic. Also consistent with our prior commentary, we expect memory supply growth as we exit 2019 to be below the long-term demand trend line for both, NAND and DRAM.

In DRAM, we continue to believe the spending correction will extend through this calendar year, as customers continue to rationalize long-term profitability with near-term focus on reducing channel inventories and bringing supply and demand dynamics into balance for our business. In NAND, recent industry data indicates