Stock Analysis on Net

KLA Corp. (NASDAQ:KLAC)

Analysis of Income Taxes

Microsoft Excel

Income Tax Expense (Benefit)

KLA Corp., income tax expense (benefit), continuing operations

US$ in thousands

Microsoft Excel
12 months ended: Jun 30, 2023 Jun 30, 2022 Jun 30, 2021 Jun 30, 2020 Jun 30, 2019 Jun 30, 2018
Federal 553,197 341,614 201,413 108,136 82,460 504,758
State 14,804 14,149 6,164 518 5,665 6,422
Foreign 188,991 165,194 121,146 86,374 59,274 41,414
Current 756,992 520,957 328,723 195,028 147,399 552,594
Federal (228,414) 11,564 (31,989) (26,743) 1,636 98,702
State (4,295) (311) (1,155) (1,174) 2,118 1,526
Foreign (122,444) (365,033) (12,478) (65,425) (29,939) 844
Deferred (355,153) (353,780) (45,622) (93,342) (26,185) 101,072
Provision for income taxes 401,839 167,177 283,101 101,686 121,214 653,666

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30).

Item Description The company
Current Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations. KLA Corp. current increased from 2021 to 2022 and from 2022 to 2023.
Deferred Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. KLA Corp. deferred decreased from 2021 to 2022 and from 2022 to 2023.
Provision for income taxes Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. KLA Corp. provision for income taxes decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

Effective Income Tax Rate (EITR)

KLA Corp., effective income tax rate (EITR) reconciliation

Microsoft Excel
Jun 30, 2023 Jun 30, 2022 Jun 30, 2021 Jun 30, 2020 Jun 30, 2019 Jun 30, 2018
U.S. federal statutory income tax rate 21.00% 21.00% 21.00% 21.00% 21.00% 28.10%
Global intangible low-taxed income (GILTI) 3.40% 2.00% 2.60% 3.00% 3.50% 0.00%
State income taxes, net of federal benefit 0.20% 0.30% 0.20% 0.20% 0.50% 0.50%
Effect of SBC 0.10% -0.20% -0.30% -0.30% 0.40% -0.10%
Net change in tax reserves 0.00% 2.00% -1.10% 1.50% 1.40% -0.40%
Tax rate change on deferred tax liability on purchased intangibles 0.00% 0.00% 1.70% 0.00% 0.00% 0.00%
Restructuring 0.00% -11.20% 0.00% -2.60% 0.00% 0.00%
R&D tax credit -1.50% -1.10% -1.10% -1.80% -1.80% -1.40%
Foreign derived intangible income -5.70% -4.00% -4.30% -5.00% -4.00% 0.00%
Effect of foreign operations taxed at various rates -7.10% -4.20% -6.60% -12.10% -10.50% -11.00%
Non-deductible impairment of goodwill 0.00% 0.00% 0.00% 4.10% 0.00% 0.00%
Domestic manufacturing benefit 0.00% 0.00% 0.00% 0.00% 0.00% -1.10%
Other 0.20% 0.20% -0.10% -0.30% 0.40% 0.00%
Effective income tax rate, before Tax Cuts and Jobs Act of 2017 10.60% 4.80% 12.00% 7.70% 10.90% 14.60%
Tax Cuts and Jobs Act of 2017 (Transition tax and deferred tax effects) 0.00% 0.00% 0.00% 0.00% -1.50% 30.30%
Effective income tax rate 10.60% 4.80% 12.00% 7.70% 9.40% 44.90%

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30).

Item Description The company
Effective income tax rate, before Tax Cuts and Jobs Act of 2017 Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. KLA Corp. effective income tax rate, before Tax Cuts and Jobs Act of 2017 decreased from 2021 to 2022 but then increased from 2022 to 2023 not reaching 2021 level.

Components of Deferred Tax Assets and Liabilities

KLA Corp., components of deferred tax assets and liabilities

US$ in thousands

Microsoft Excel
Jun 30, 2023 Jun 30, 2022 Jun 30, 2021 Jun 30, 2020 Jun 30, 2019 Jun 30, 2018
Tax credits and net operating losses 271,500 268,416 237,480 214,305 208,572 171,701
Capitalized R&D expenses 201,228
Inventory reserves 103,646 86,059 81,224 73,939 67,249 62,232
Employee benefits accrual 92,696 78,021 82,055 67,729 65,065 64,707
Depreciation and amortization 73,691 1,760 701
Non-deductible reserves 52,147 53,426 36,267 20,526 21,633 29,841
Unearned revenue 16,668 11,843 15,712 15,786 16,126 11,104
Stock-based compensation (SBC) 12,710 9,864 7,284 8,871 9,432 8,902
Unrealized loss on investments 5,384 5,345 1,492 956
Other 35,360 56,911 54,615 66,667 55,518 25,602
Gross deferred tax assets 859,646 566,300 520,021 473,168 445,087 375,746
Valuation allowance (259,172) (244,429) (204,433) (181,846) (166,571) (163,570)
Net deferred tax assets 600,474 321,871 315,588 291,322 278,516 212,176
Unremitted earnings of foreign subsidiaries not indefinitely reinvested (279,677) (358,374) (278,014) (257,757) (243,491) (7,146)
Deferred profit (23,149) (30,268) (10,044) (18,111) (15,718) (13,027)
Unrealized gain on investments (9,994) (12,993)
Depreciation and amortization (407,692) (439,685) (515,643)
Deferred tax liabilities (312,820) (401,635) (695,750) (715,553) (774,852) (20,173)
Net deferred tax assets (liabilities) 287,654 (79,764) (380,162) (424,231) (496,336) 192,003

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30).

Item Description The company
Gross deferred tax assets Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. KLA Corp. gross deferred tax assets increased from 2021 to 2022 and from 2022 to 2023.
Net deferred tax assets Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. KLA Corp. net deferred tax assets increased from 2021 to 2022 and from 2022 to 2023.
Net deferred tax assets (liabilities) Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting. KLA Corp. net deferred tax assets (liabilities) increased from 2021 to 2022 and from 2022 to 2023.

Deferred Tax Assets and Liabilities, Classification

KLA Corp., deferred tax assets and liabilities, classification

US$ in thousands

Microsoft Excel
Jun 30, 2023 Jun 30, 2022 Jun 30, 2021 Jun 30, 2020 Jun 30, 2019 Jun 30, 2018
Deferred tax assets 816,899 579,173 270,461 236,797 206,141 193,200
Deferred tax liabilities 529,287 658,937 650,623 660,885 702,285 1,197

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30).

Item Description The company
Deferred tax assets Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent. KLA Corp. deferred tax assets increased from 2021 to 2022 and from 2022 to 2023.
Deferred tax liabilities Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent. KLA Corp. deferred tax liabilities increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.

Adjustments to Financial Statements: Removal of Deferred Taxes

KLA Corp., adjustments to financial statements

US$ in thousands

Microsoft Excel
Jun 30, 2023 Jun 30, 2022 Jun 30, 2021 Jun 30, 2020 Jun 30, 2019 Jun 30, 2018
Adjustment to Total Assets
Total assets (as reported) 14,072,357 12,597,088 10,271,124 9,279,960 9,008,516 5,619,356
Less: Noncurrent deferred tax assets, net 816,899 579,173 270,461 236,797 206,141 193,200
Total assets (adjusted) 13,255,458 12,017,915 10,000,663 9,043,163 8,802,375 5,426,156
Adjustment to Total Liabilities
Total liabilities (as reported) 11,152,604 11,197,998 6,895,482 6,598,950 6,330,823 3,998,845
Less: Noncurrent deferred tax liabilities, net 529,287 658,937 650,623 660,885 702,285 1,197
Total liabilities (adjusted) 10,623,317 10,539,061 6,244,859 5,938,065 5,628,538 3,997,648
Adjustment to Total KLA Stockholders’ Equity
Total KLA stockholders’ equity (as reported) 2,919,753 1,401,351 3,377,554 2,665,424 2,659,108 1,620,511
Less: Net deferred tax assets (liabilities) 287,654 (79,764) (380,162) (424,231) (496,336) 192,003
Total KLA stockholders’ equity (adjusted) 2,632,099 1,481,115 3,757,716 3,089,655 3,155,444 1,428,508
Adjustment to Net Income Attributable To KLA
Net income attributable to KLA (as reported) 3,387,277 3,321,807 2,078,292 1,216,785 1,175,617 802,265
Add: Deferred income tax expense (benefit) (355,153) (353,780) (45,622) (93,342) (26,185) 101,072
Net income attributable to KLA (adjusted) 3,032,124 2,968,027 2,032,670 1,123,443 1,149,432 903,337

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30).


KLA Corp., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

KLA Corp., adjusted financial ratios

Microsoft Excel
Jun 30, 2023 Jun 30, 2022 Jun 30, 2021 Jun 30, 2020 Jun 30, 2019 Jun 30, 2018
Net Profit Margin
Reported net profit margin 32.27% 36.06% 30.04% 20.96% 25.73% 19.87%
Adjusted net profit margin 28.89% 32.22% 29.38% 19.35% 25.16% 22.38%
Total Asset Turnover
Reported total asset turnover 0.75 0.73 0.67 0.63 0.51 0.72
Adjusted total asset turnover 0.79 0.77 0.69 0.64 0.52 0.74
Financial Leverage
Reported financial leverage 4.82 8.99 3.04 3.48 3.39 3.47
Adjusted financial leverage 5.04 8.11 2.66 2.93 2.79 3.80
Return on Equity (ROE)
Reported ROE 116.01% 237.04% 61.53% 45.65% 44.21% 49.51%
Adjusted ROE 115.20% 200.39% 54.09% 36.36% 36.43% 63.24%
Return on Assets (ROA)
Reported ROA 24.07% 26.37% 20.23% 13.11% 13.05% 14.28%
Adjusted ROA 22.87% 24.70% 20.33% 12.42% 13.06% 16.65%

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30).

Financial ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. KLA Corp. adjusted net profit margin ratio improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. KLA Corp. adjusted total asset turnover ratio improved from 2021 to 2022 and from 2022 to 2023.
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
KLA Corp. adjusted financial leverage ratio increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. KLA Corp. adjusted ROE improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023 not reaching 2021 level.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. KLA Corp. adjusted ROA improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023.

KLA Corp., Financial Ratios: Reported vs. Adjusted


Adjusted Net Profit Margin

Microsoft Excel
Jun 30, 2023 Jun 30, 2022 Jun 30, 2021 Jun 30, 2020 Jun 30, 2019 Jun 30, 2018
As Reported
Selected Financial Data (US$ in thousands)
Net income attributable to KLA 3,387,277 3,321,807 2,078,292 1,216,785 1,175,617 802,265
Revenues 10,496,056 9,211,883 6,918,734 5,806,424 4,568,904 4,036,701
Profitability Ratio
Net profit margin1 32.27% 36.06% 30.04% 20.96% 25.73% 19.87%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income attributable to KLA 3,032,124 2,968,027 2,032,670 1,123,443 1,149,432 903,337
Revenues 10,496,056 9,211,883 6,918,734 5,806,424 4,568,904 4,036,701
Profitability Ratio
Adjusted net profit margin2 28.89% 32.22% 29.38% 19.35% 25.16% 22.38%

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30).

2023 Calculations

1 Net profit margin = 100 × Net income attributable to KLA ÷ Revenues
= 100 × 3,387,277 ÷ 10,496,056 = 32.27%

2 Adjusted net profit margin = 100 × Adjusted net income attributable to KLA ÷ Revenues
= 100 × 3,032,124 ÷ 10,496,056 = 28.89%

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. KLA Corp. adjusted net profit margin ratio improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Adjusted Total Asset Turnover

Microsoft Excel
Jun 30, 2023 Jun 30, 2022 Jun 30, 2021 Jun 30, 2020 Jun 30, 2019 Jun 30, 2018
As Reported
Selected Financial Data (US$ in thousands)
Revenues 10,496,056 9,211,883 6,918,734 5,806,424 4,568,904 4,036,701
Total assets 14,072,357 12,597,088 10,271,124 9,279,960 9,008,516 5,619,356
Activity Ratio
Total asset turnover1 0.75 0.73 0.67 0.63 0.51 0.72
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Revenues 10,496,056 9,211,883 6,918,734 5,806,424 4,568,904 4,036,701
Adjusted total assets 13,255,458 12,017,915 10,000,663 9,043,163 8,802,375 5,426,156
Activity Ratio
Adjusted total asset turnover2 0.79 0.77 0.69 0.64 0.52 0.74

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30).

2023 Calculations

1 Total asset turnover = Revenues ÷ Total assets
= 10,496,056 ÷ 14,072,357 = 0.75

2 Adjusted total asset turnover = Revenues ÷ Adjusted total assets
= 10,496,056 ÷ 13,255,458 = 0.79

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. KLA Corp. adjusted total asset turnover ratio improved from 2021 to 2022 and from 2022 to 2023.

Adjusted Financial Leverage

Microsoft Excel
Jun 30, 2023 Jun 30, 2022 Jun 30, 2021 Jun 30, 2020 Jun 30, 2019 Jun 30, 2018
As Reported
Selected Financial Data (US$ in thousands)
Total assets 14,072,357 12,597,088 10,271,124 9,279,960 9,008,516 5,619,356
Total KLA stockholders’ equity 2,919,753 1,401,351 3,377,554 2,665,424 2,659,108 1,620,511
Solvency Ratio
Financial leverage1 4.82 8.99 3.04 3.48 3.39 3.47
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted total assets 13,255,458 12,017,915 10,000,663 9,043,163 8,802,375 5,426,156
Adjusted total KLA stockholders’ equity 2,632,099 1,481,115 3,757,716 3,089,655 3,155,444 1,428,508
Solvency Ratio
Adjusted financial leverage2 5.04 8.11 2.66 2.93 2.79 3.80

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30).

2023 Calculations

1 Financial leverage = Total assets ÷ Total KLA stockholders’ equity
= 14,072,357 ÷ 2,919,753 = 4.82

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted total KLA stockholders’ equity
= 13,255,458 ÷ 2,632,099 = 5.04

Solvency ratio Description The company
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
KLA Corp. adjusted financial leverage ratio increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

Adjusted Return on Equity (ROE)

Microsoft Excel
Jun 30, 2023 Jun 30, 2022 Jun 30, 2021 Jun 30, 2020 Jun 30, 2019 Jun 30, 2018
As Reported
Selected Financial Data (US$ in thousands)
Net income attributable to KLA 3,387,277 3,321,807 2,078,292 1,216,785 1,175,617 802,265
Total KLA stockholders’ equity 2,919,753 1,401,351 3,377,554 2,665,424 2,659,108 1,620,511
Profitability Ratio
ROE1 116.01% 237.04% 61.53% 45.65% 44.21% 49.51%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income attributable to KLA 3,032,124 2,968,027 2,032,670 1,123,443 1,149,432 903,337
Adjusted total KLA stockholders’ equity 2,632,099 1,481,115 3,757,716 3,089,655 3,155,444 1,428,508
Profitability Ratio
Adjusted ROE2 115.20% 200.39% 54.09% 36.36% 36.43% 63.24%

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30).

2023 Calculations

1 ROE = 100 × Net income attributable to KLA ÷ Total KLA stockholders’ equity
= 100 × 3,387,277 ÷ 2,919,753 = 116.01%

2 Adjusted ROE = 100 × Adjusted net income attributable to KLA ÷ Adjusted total KLA stockholders’ equity
= 100 × 3,032,124 ÷ 2,632,099 = 115.20%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. KLA Corp. adjusted ROE improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023 not reaching 2021 level.

Adjusted Return on Assets (ROA)

Microsoft Excel
Jun 30, 2023 Jun 30, 2022 Jun 30, 2021 Jun 30, 2020 Jun 30, 2019 Jun 30, 2018
As Reported
Selected Financial Data (US$ in thousands)
Net income attributable to KLA 3,387,277 3,321,807 2,078,292 1,216,785 1,175,617 802,265
Total assets 14,072,357 12,597,088 10,271,124 9,279,960 9,008,516 5,619,356
Profitability Ratio
ROA1 24.07% 26.37% 20.23% 13.11% 13.05% 14.28%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income attributable to KLA 3,032,124 2,968,027 2,032,670 1,123,443 1,149,432 903,337
Adjusted total assets 13,255,458 12,017,915 10,000,663 9,043,163 8,802,375 5,426,156
Profitability Ratio
Adjusted ROA2 22.87% 24.70% 20.33% 12.42% 13.06% 16.65%

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30).

2023 Calculations

1 ROA = 100 × Net income attributable to KLA ÷ Total assets
= 100 × 3,387,277 ÷ 14,072,357 = 24.07%

2 Adjusted ROA = 100 × Adjusted net income attributable to KLA ÷ Adjusted total assets
= 100 × 3,032,124 ÷ 13,255,458 = 22.87%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. KLA Corp. adjusted ROA improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023.