KLA Corp. (NASDAQ:KLAC)

Debt to Equity

The debt to equity ratio remained relatively stable around 1.29 to 1.3 between 2019 and 2020, followed by a decrease to 1.02 in 2021. In 2022, there was a sharp increase to 4.75, indicating a significant rise in debt compared to equity. This ratio decreased again in the following years to 2.02 in 2023 and slightly declined further to 1.97 in 2024. Including operating lease liability shows a similar pattern with marginally higher values.

Debt to Capital

The debt to capital ratio showed a modest decline from 0.56 in 2019 to 0.50 in 2021, suggesting a reduction in the proportion of debt in the capital structure. However, this ratio jumped to 0.83 in 2022, indicating increased leverage, before declining to 0.67 in 2023 and staying nearly constant at 0.66 in 2024. Incorporating operating lease liabilities did not materially alter this trend.

Debt to Assets

The debt to assets ratio demonstrated a slight downward trend from 0.38 in 2019 to 0.34 in 2021, indicating lower leverage relative to total assets. Nevertheless, the ratio rose notably to 0.53 in 2022, aligning with the observed increase in debt ratios. It then decreased to 0.42 in 2023 and marginally increased to 0.43 in 2024. Including operating lease liabilities resulted in marginally higher debt to asset ratios but followed the same pattern.

Financial Leverage

Financial leverage remained steady at around 3.39 to 3.48 in the early years, followed by a reduction to 3.04 in 2021. A significant surge to 8.99 was noted in 2022, reflecting increased reliance on borrowed funds relative to equity. Subsequent years showed a decline to 4.82 in 2023 and 4.58 in 2024, indicating deleveraging, albeit remaining above pre-2022 levels.

Interest Coverage

Interest coverage ratio decreased from 11.4 in 2019 to 9.22 in 2020, representing lowered ability to cover interest expenses. It then sharply increased to 16.0 in 2021 and further to 22.76 in 2022, indicating improved operational earnings relative to interest obligations. However, the ratio fell to 13.76 in 2023 and declined further to 11.25 in 2024, suggesting reduced cushion in later periods.

Fixed Charge Coverage

Fixed charge coverage showed a similar trajectory to interest coverage, declining from 10.39 in 2019 to 7.74 in 2020, then substantially increasing to 13.03 in 2021 and 18.72 in 2022. Post-2022, the ratio decreased to 12.19 in 2023 and 9.72 in 2024, indicating a diminishing capacity to meet fixed charges over time, though still above the earlier years.

The analysis of the financial data reveals significant trends in the capital structure over the six-year period ending June 30, 2024.

Total Debt

The total debt level remained relatively stable from 2019 through 2021, fluctuating slightly around 3.4 billion US dollars. However, there was a marked increase in 2022, with total debt nearly doubling to approximately 6.66 billion US dollars. In the following years, 2023 and 2024, total debt slightly decreased but remained elevated compared to the earlier years, at approximately 5.89 billion and 6.63 billion US dollars respectively.

Total KLA Stockholders’ Equity

Equity values exhibited a generally positive trend from 2019 to 2021, increasing from about 2.66 billion to 3.38 billion US dollars. A sharp decline occurred in 2022, dropping to approximately 1.4 billion US dollars. This decline was followed by a recovery in 2023 and 2024, with equity rising back to nearly 2.92 billion and 3.37 billion US dollars consecutively, approaching pre-2022 levels by the end of the period.

Debt to Equity Ratio

The debt to equity ratio aligned closely with the noted changes in debt and equity figures. The ratio fluctuated slightly between 1.29 and 1.02 from 2019 to 2021, indicating a balanced capital structure. In 2022, the ratio surged dramatically to 4.75, reflecting the disproportionate increase in debt relative to the sharp fall in equity. This ratio decreased to around 2.0 in 2023 and 2024 but remained substantially higher than in the initial years, suggesting a more leveraged financial position than in prior periods.

Overall, the financial data indicates a period of relative stability from 2019 to 2021, followed by significant volatility in 2022 impacting both debt and equity measures. The elevated debt levels and volatility in equity have led to a considerable increase in leverage, which partially receded in subsequent years but indicates a shift toward a higher reliance on debt financing. This could imply increased financial risk and potential changes in the company's financing strategy or external factors influencing capital structure decisions during this period.

Total debt (including operating lease liability)

The total debt exhibited a fluctuating trend over the periods analyzed. From June 2019 to June 2021, the debt level remained relatively stable, ranging between approximately $3.4 billion and $3.6 billion. A significant increase is observed in June 2022, with debt almost doubling to about $6.77 billion. This elevated level slightly decreased in June 2023 to approximately $6.06 billion, followed by another rise in June 2024 to nearly $6.82 billion.

Total KLA stockholders’ equity

Stockholders’ equity showed variability across the reviewed years. The equity remained fairly steady around $2.65 billion to $2.67 billion from June 2019 to June 2020, then rose notably to about $3.38 billion by June 2021. A pronounced decline occurred in June 2022, where equity dropped sharply to approximately $1.40 billion. Subsequently, equity recovered substantially over the next two years, reaching nearly $2.92 billion in June 2023 and further increasing to about $3.37 billion by June 2024.

Debt to equity (including operating lease liability)

The debt-to-equity ratio reflected the interplay between debt and equity changes. It was relatively stable and modest from June 2019 to June 2021, fluctuating between 1.05 and 1.34. A marked spike was recorded in June 2022, with the ratio reaching 4.83, indicative of the steep rise in debt coupled with a sharp equity decline. This ratio moderated significantly afterward, moving down to 2.08 in June 2023 and slightly declining further to 2.02 in June 2024, suggesting gradual rebalancing of capital structure.

Total Debt

The total debt initially remained relatively stable from 2019 to 2021, fluctuating slightly around the 3.4 million USD mark. However, a significant increase occurred in 2022, with total debt nearly doubling to approximately 6.66 million USD. This amount then decreased in 2023 to about 5.89 million USD, before increasing again in 2024, nearing the previous high at approximately 6.63 million USD.

Total Capital

Total capital exhibited a steady upward trend throughout the period. Starting from approximately 6.08 million USD in 2019, it increased consistently each year, reaching nearly 10.0 million USD by 2024. The growth was gradual from 2019 to 2021, followed by a more pronounced rise from 2022 onward.

Debt to Capital Ratio

The debt to capital ratio reflected the changes in total debt relative to capital structure. The ratio remained within the range of 0.50 to 0.57 between 2019 and 2021, indicating moderate leverage. In 2022, the ratio surged sharply to 0.83, corresponding to the spike in total debt relative to capital. Subsequently, the ratio declined to 0.67 in 2023 and slightly decreased further to 0.66 in 2024, suggesting a partial reduction in leverage but still elevated compared to earlier years.

Total Debt (Including Operating Lease Liability)

The total debt exhibited a generally increasing trend over the six-year period. Starting at approximately 3.42 billion USD in mid-2019, debt remained relatively stable through mid-2021, slightly fluctuating around 3.5 billion USD. A sharp increase occurred between mid-2021 and mid-2022, when debt nearly doubled to approximately 6.77 billion USD. Subsequently, total debt declined somewhat by mid-2023 to around 6.06 billion USD before rising again to approximately 6.82 billion USD by mid-2024.

Total Capital (Including Operating Lease Liability)

Total capital increased steadily throughout the entire period from about 6.08 billion USD in mid-2019 to nearly 10.19 billion USD by mid-2024. The growth was relatively consistent year-over-year, with the largest absolute increments observed in the later periods, particularly from mid-2022 onward.

Debt to Capital Ratio (Including Operating Lease Liability)

The debt to capital ratio remained close to the 0.50 to 0.57 range from mid-2019 through mid-2021, indicating moderate leverage. It experienced a pronounced spike to 0.83 by mid-2022, reflecting a significant increase in debt relative to total capital during that period. Afterward, the ratio decreased to approximately 0.67 in mid-2023 and remained stable at this level through mid-2024. This suggests a partial deleveraging after the peak but with leverage still substantially higher than the early part of the period.

Overall Analysis

Over the six years, the company showed a pattern of maintaining moderate leverage initially, followed by a marked rise in indebtedness around mid-2022, which likely reflects strategic financing or capital structure decisions coinciding with significant investments or acquisitions. Despite growing total capital steadily, the relatively high debt to capital ratios post-2021 indicate elevated financial leverage. The partial stabilization of the ratio post-2022 suggests efforts toward managing leverage, albeit at levels higher than earlier years. Continuous increases in total capital alongside volatile debt levels denote an expansion phase with an increased reliance on debt financing.

Total Debt

The total debt displayed a relatively stable behavior between fiscal years ending in 2019 to 2021, ranging narrowly around 3.4 million US dollars. A significant increase occurred in the fiscal year 2022, with debt nearly doubling to approximately 6.7 million US dollars. In the following years, 2023 and 2024, total debt showed some fluctuations but remained at elevated levels above 5.8 million US dollars, with a rise again in 2024 reaching over 6.6 million US dollars.

Total Assets

The total assets experienced a steady upward trend during the entire period. Starting at around 9.0 million US dollars in mid-2019, assets consistently grew each year, reaching approximately 15.4 million US dollars by mid-2024. This growth trajectory indicates sustained expansion in the company's asset base over these years.

Debt to Assets Ratio

The debt to assets ratio remained relatively stable and moderate from 2019 through 2021, fluctuating between 0.34 and 0.38 range, indicative of moderate leverage. A sharp increase is observed for the year ending in 2022, with the ratio rising to 0.53, reflecting a substantial increase in leverage. The subsequent years, 2023 and 2024, show a decline in the ratio to 0.42 and 0.43 respectively, suggesting some reduction in leverage relative to assets but still higher than the initial years examined.

Total debt (including operating lease liability)

The total debt of the company exhibited a general upward trend over the analyzed period. Starting at approximately 3.42 billion USD in mid-2019, the debt level slightly increased to about 3.57 billion USD in 2020 and remained relatively stable in 2021 at around 3.55 billion USD. However, a significant rise occurred in 2022, with the total debt nearly doubling to 6.77 billion USD. This elevated level slightly decreased to 6.06 billion USD in 2023 before rising again to 6.82 billion USD in 2024. This pattern indicates a notable increase in leverage beginning in 2022, followed by minor fluctuations.

Total assets

Total assets consistently increased throughout the period. From approximately 9.01 billion USD in 2019, the asset base grew steadily each year, reaching 9.28 billion USD in 2020, 10.27 billion USD in 2021, 12.60 billion USD in 2022, 14.07 billion USD in 2023, and finally 15.43 billion USD in 2024. This steady asset growth suggests ongoing expansion or investment activities by the company over these years.

Debt to assets ratio (including operating lease liability)

The debt to assets ratio remained fairly stable around 0.38 from 2019 to 2020, then decreased to 0.35 in 2021, indicating a modest reduction in leverage relative to assets. In 2022, there was a sharp increase to 0.54, reflecting a significant rise in liabilities compared to assets. This ratio then declined to 0.43 in 2023 and showed a slight increase to 0.44 in 2024. Overall, the debt to assets ratio highlights a period of heightened leverage beginning in 2022, followed by partial deleveraging, but still above pre-2022 levels.

The financial data reveals several notable trends across the observed periods ending June 30 from 2019 to 2024.

Total assets

There is a consistent upward trajectory in total assets over the six-year span, increasing from approximately 9 billion USD in 2019 to over 15.4 billion USD in 2024. This indicates sustained growth in the company's asset base, reflecting expansion or accumulation of resources.

Total KLA stockholders’ equity

The stockholders' equity demonstrates variability. It grew moderately from around 2.66 billion USD in 2019 and 2020 to approximately 3.38 billion USD in 2021. However, a significant decrease is observed in 2022, dropping sharply to about 1.40 billion USD. Following this decline, equity rebounds in 2023 to nearly 2.92 billion USD and further increases in 2024 to approximately 3.37 billion USD, nearing the 2021 level. This pattern signifies a major equity restructuring or loss event in 2022, followed by recovery in subsequent years.

Financial leverage

Financial leverage ratios mostly fluctuated within the 3.0 to 3.5 range from 2019 through 2021, consistent with moderate leverage use. In 2022, leverage sharply rose to nearly 9.0, reflecting a substantial increase in obligations relative to equity, likely caused by the steep equity decline in that year. Subsequently, leverage ratios decreased to 4.82 in 2023 and slightly further to 4.58 in 2024, indicating partial deleveraging but maintaining leverage above pre-2022 levels.

In summary, the company exhibits significant growth in assets alongside pronounced volatility in equity and financial leverage, particularly highlighted by the 2022 fiscal year, when equity declined and leverage escalated dramatically. Subsequent periods show efforts at financial stabilization and gradual restoration of equity levels with moderated leverage, though leverage remains moderately elevated compared to the earlier years in the dataset.

Earnings before interest and tax (EBIT)

The EBIT shows a positive upward trend from 2019 to 2023, increasing significantly from approximately 1.42 billion US dollars in 2019 to a peak of around 4.09 billion US dollars in 2023. This reflects strong growth in operating profitability over this period. However, in 2024, there is a noticeable decline in EBIT to about 3.50 billion US dollars, representing a decrease of approximately 14% from the prior year.

Interest expense

Interest expense has generally increased over the period analyzed, starting at 124.6 million US dollars in 2019 and rising to 311.3 million US dollars in 2024. The increase is especially pronounced between 2021 and 2024, suggesting higher levels of debt or increased borrowing costs.

Interest coverage ratio

The interest coverage ratio, which measures the ability to meet interest obligations from operating earnings, shows fluctuation over time. After declining from 11.4 in 2019 to 9.22 in 2020, the ratio improved sharply to a peak of 22.76 in 2022, indicating a strong capacity to cover interest expenses during this year. Subsequently, the ratio declines to 13.76 in 2023 and further to 11.25 in 2024, reflecting a reduced buffer for interest payments relative to EBIT.

Overall analysis

The data indicate a period of growth in operating profitability with expanding EBIT through 2023, accompanied by increasing interest expenses. The strong improvement in interest coverage through 2022 suggests robust operational performance relative to debt costs during this time. However, the declines in EBIT and the interest coverage ratio in the most recent year analyzed point to emerging pressures on earnings and potentially tighter financial conditions. Monitoring the trends in operating income relative to rising interest expenses will be important for assessing future financial stability.

Earnings before fixed charges and tax

The earnings before fixed charges and tax demonstrated a general upward trend from June 2019 through June 2023, increasing from approximately 1.43 million to over 4.12 million USD. This indicates a substantial growth in operational profitability over this period. However, there is a noticeable decline in the year ending June 2024, with earnings dropping to around 3.56 million USD, suggesting a potential slowdown or one-time factors affecting earnings.

Fixed charges

Fixed charges increased steadily from about 138,000 USD in June 2019 to nearly 366,000 USD in June 2024. The most significant increase occurred between June 2022 and June 2023, where fixed charges rose sharply from approximately 197,000 to 339,000 USD, and continued to rise into June 2024. This upward movement in fixed costs could reflect higher interest expenses or other fixed obligations impacting financial flexibility.

Fixed charge coverage ratio

The fixed charge coverage ratio, which measures the ability to cover fixed charges from earnings before fixed charges and tax, showed considerable fluctuation. It started at a strong 10.39 in June 2019 but declined to 7.74 by June 2020. This was followed by a significant increase to 18.72 in June 2022, indicating enhanced coverage capability during that period. Subsequently, the ratio declined again to 9.72 by June 2024, reflecting reduced cushion against fixed charges, likely influenced by the decline in earnings and the rise in fixed charges observed in the recent years.

Summary

Overall, the data reveals a company experiencing growth in earnings before fixed charges and tax over the majority of the analyzed period, coupled with increasing fixed charges. The fixed charge coverage ratio has varied significantly, peaking in the middle of the period and declining thereafter. The recent decrease in both earnings and the coverage ratio highlights a potential risk to financial stability and suggests a need for monitoring fixed cost management and operational profitability closely.