Stock Analysis on Net

Lam Research Corp. (NASDAQ:LRCX)

$24.99

Analysis of Goodwill and Intangible Assets

Microsoft Excel

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Goodwill and Intangible Asset Disclosure

Lam Research Corp., balance sheet: goodwill and intangible assets

US$ in thousands

Microsoft Excel
Jun 30, 2024 Jun 25, 2023 Jun 26, 2022 Jun 27, 2021 Jun 28, 2020 Jun 30, 2019
Goodwill
Customer relationships
Existing technology
Patents and other intangible assets
Intangible assets subject to amortization, gross
Accumulated amortization
Intangible assets subject to amortization, net
In process research and development
Intangible assets
Goodwill and intangible assets

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30).


Goodwill
The goodwill value has shown a consistent gradual increase over the six-year period, rising from approximately 1.48 billion USD in mid-2019 to around 1.63 billion USD by mid-2024. This indicates stable acquisitions or revaluations contributing to the goodwill balance.
Customer Relationships
Customer relationship intangibles have remained relatively stable, with a slight upward trend. The value increased modestly from about 630 million USD in 2019 to approximately 644 million USD in 2024, suggesting steady maintenance or modest growth in this asset category.
Existing Technology
Existing technology assets have experienced a noticeable upward trend. Starting near 669 million USD in 2019, the value rose consistently each year to reach roughly 747 million USD in 2024, reflecting ongoing investments or capitalization in technological assets.
Patents and Other Intangible Assets
There is a significant increase in patents and other intangible assets, more than doubling from about 126 million USD in 2019 to over 208 million USD in 2024. This growth indicates active development or acquisition of intellectual property over the period.
Intangible Assets Subject to Amortization, Gross
Gross intangible assets subject to amortization have steadily increased from approximately 1.43 billion USD in 2019 to around 1.60 billion USD in 2024, consistent with the growth seen in patents and technology assets.
Accumulated Amortization
Accumulated amortization has increased in absolute value (more negative) over the period, from about -1.21 billion USD in 2019 to approximately -1.46 billion USD in 2024. This reflects ongoing amortization expense reducing the net carrying value of intangible assets subject to amortization.
Intangible Assets Subject to Amortization, Net
The net value of intangible assets subject to amortization depicts a declining trend from 217 million USD in 2019 down to 102 million USD in 2022, followed by a partial recovery to about 139 million USD in 2024. The recovery is influenced by the inclusion of an in-process research and development asset valued at roughly 30 million USD in 2023, indicating new capitalizations or reclassification.
Intangible Assets (Total)
Total intangible assets decreased from approximately 217 million USD in 2019 to 102 million USD in 2022, then rose to 168 million USD in 2023 before falling slightly to 139 million USD in 2024. This pattern reflects the fluctuation in net amortizable intangibles and the temporary impact of in-process research and development capitalization.
Goodwill and Intangible Assets (Combined)
Combined goodwill and intangible assets show a mild decrease from about 1.70 billion USD in 2019 to 1.62 billion USD in 2022, followed by an increase peaking near 1.79 billion USD in 2023 and a slight decline to approximately 1.77 billion USD in 2024. This trend suggests modest overall growth in long-term intangibles with some volatility due to asset additions and amortization effects.

Adjustments to Financial Statements: Removal of Goodwill

Lam Research Corp., adjustments to financial statements

US$ in thousands

Microsoft Excel
Jun 30, 2024 Jun 25, 2023 Jun 26, 2022 Jun 27, 2021 Jun 28, 2020 Jun 30, 2019
Adjustment to Total Assets
Total assets (as reported)
Less: Goodwill
Total assets (adjusted)
Adjustment to Stockholders’ Equity
Stockholders’ equity (as reported)
Less: Goodwill
Stockholders’ equity (adjusted)

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30).


The analysis of the financial data reveals a consistent upward trend in both total assets and stockholders' equity over the examined six-year period. Both reported and goodwill-adjusted figures reflect growth, although the magnitude and pace differ between the reported and adjusted values.

Total Assets
Reported total assets increased steadily from approximately $12.0 billion in 2019 to about $18.7 billion in 2023, with a slight decrease to around $18.7 billion in 2024. This demonstrates significant asset growth over the period, nearly a 56% increase from 2019 to 2023, followed by stabilization in 2024.
Goodwill-adjusted total assets show a similar upward pattern, rising from about $10.5 billion in 2019 to approximately $17.2 billion in 2023. There is a marginal decline to $17.1 billion in 2024, mirroring the reported asset trend but at a consistently lower level due to the adjustment excluding goodwill. This indicates that goodwill represents a substantial but stable portion of total assets throughout the years.
Stockholders' Equity
Reported stockholders’ equity grew from $4.7 billion in 2019 to $8.2 billion in 2023, with further increase to about $8.5 billion in 2024. This reflects an approximate 75% increase over five years, signaling strong capitalization and retention of earnings.
Adjusted stockholders’ equity similarly increased from around $3.2 billion in 2019 to nearly $6.6 billion in 2023, continuing upward to $6.9 billion in 2024. The gap between reported and adjusted equity remains significant but stable, suggesting consistent goodwill or intangible assets included in the reported figures.

Overall, the data indicates robust growth in the company’s asset base and equity, with the goodwill adjustment consistently reducing the absolute values but preserving the growth trends. The slight decreases in both reported and adjusted total assets in the last year analyzed may warrant a further look but do not significantly alter the long-term upward trajectory. Equity growth outpaces asset growth proportionately, which could reflect effective capital management or profitability improvements over the period.


Lam Research Corp., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios: Removal of Goodwill (Summary)

Lam Research Corp., adjusted financial ratios

Microsoft Excel
Jun 30, 2024 Jun 25, 2023 Jun 26, 2022 Jun 27, 2021 Jun 28, 2020 Jun 30, 2019
Total Asset Turnover
Reported total asset turnover
Adjusted total asset turnover
Financial Leverage
Reported financial leverage
Adjusted financial leverage
Return on Equity (ROE)
Reported ROE
Adjusted ROE
Return on Assets (ROA)
Reported ROA
Adjusted ROA

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30).


The financial data reveals several notable trends over the period analyzed. Both reported and goodwill adjusted total asset turnover ratios exhibit fluctuations but generally indicate an initial improvement followed by a decline in the most recent year. Specifically, the reported total asset turnover increased from 0.69 in 2020 to a peak of 1.00 in 2022 before decreasing to 0.80 in 2024. The adjusted total asset turnover follows a similar pattern, rising from 0.77 in 2020 to 1.10 in 2022 and then declining to 0.87 in 2024, suggesting changes in asset utilization efficiency over time with a recent downward shift.

Financial leverage ratios, both reported and adjusted, demonstrate a downward trend in the latter years. Reported financial leverage peaked at 2.81 in 2020 and then steadily declined to 2.20 by 2024. The adjusted financial leverage shows a similar pattern with a peak of 3.55 in 2020 followed by a decrease to 2.48 in 2024. This reduction indicates a decreasing reliance on debt or other leverage sources, potentially reflecting a more conservative capital structure over time.

Return on equity (ROE) values, whether reported or adjusted, reflect significant volatility with a general increase reaching a high around 2022, after which a decline is observed. Reported ROE moved from 43.53% in 2020 to a high of 73.35% in 2022, and then decreased to 44.82% in 2024. Adjusted ROE follows the same pattern, rising sharply from 61.06% in 2020 to 96.68% in 2022, then decreasing to 55.37% in 2024. These patterns suggest that profitability relative to shareholder equity improved significantly up to 2022 before tapering off.

Return on assets (ROA) trends align closely with those of ROE and total asset turnover. Reported ROA increased from 15.47% in 2020 to 26.78% in 2022, then diminished to 20.42% in 2024. Adjusted ROA mirrors this trajectory, progressing from 17.22% in 2020 to 29.37% in 2022 and declining to 22.36% in 2024. This indicates enhanced efficiency in using assets to generate earnings until 2022, followed by a retreat in performance.

Total Asset Turnover
Initial recovery and peak in 2022 with a subsequent moderate decline by 2024; adjusted figures consistently higher than reported, reflecting goodwill adjustment effects.
Financial Leverage
Peaked in 2020, followed by a gradual reduction through 2024, suggesting a strategy toward deleveraging or reduced reliance on borrowed capital.
Return on Equity (ROE)
Showed strong growth until 2022 with a pronounced maximum, then declined significantly by 2024; adjusted ROE figures are substantially higher reflecting the impact of goodwill adjustments.
Return on Assets (ROA)
Improved steadily until 2022 with returns nearing 30% (adjusted), before a notable decrease; adjusted ROA consistently exceeds reported values.

Overall, the data indicates an environment of increasing asset efficiency and profitability up to mid-2022, followed by a period of normalization or potential challenges affecting turnover and returns. Financial leverage reduction suggests a shift toward more conservative financial management. The consistent difference between reported and adjusted figures emphasizes the material impact of goodwill on performance metrics throughout the period.


Lam Research Corp., Financial Ratios: Reported vs. Adjusted


Adjusted Total Asset Turnover

Microsoft Excel
Jun 30, 2024 Jun 25, 2023 Jun 26, 2022 Jun 27, 2021 Jun 28, 2020 Jun 30, 2019
As Reported
Selected Financial Data (US$ in thousands)
Revenue
Total assets
Activity Ratio
Total asset turnover1
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Revenue
Adjusted total assets
Activity Ratio
Adjusted total asset turnover2

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30).

2024 Calculations

1 Total asset turnover = Revenue ÷ Total assets
= ÷ =

2 Adjusted total asset turnover = Revenue ÷ Adjusted total assets
= ÷ =


Over the observed period, total assets have exhibited a consistent upward trend. Reported total assets increased from approximately $12 billion to nearly $18.7 billion by the latest date, indicating a substantial growth in the asset base. When adjusting for goodwill, total assets also grew in a similar pattern but remained consistently lower than the reported figures, reflecting the impact of goodwill adjustments on the asset base valuation.

Total asset turnover ratios reveal a fluctuating performance in asset utilization efficiency. The reported total asset turnover started at 0.8 and declined to 0.69, then peaked notably at 1.0 before gradually decreasing to 0.8 again. This pattern indicates some volatility in how effectively the company generated revenue from its assets over time, with a peak performance around 2022 followed by a decline.

Adjusted total asset turnover figures, accounting for goodwill adjustment, showed a generally higher ratio compared to reported figures throughout the period. Starting at 0.92, this metric declined to 0.77 but then increased steadily to a peak of 1.1 in 2022 before tapering off to 0.87 in the latest period. The higher adjusted turnover rates suggest that removing goodwill from the asset base provides a perspective of more efficient asset use than the reported metrics indicate, although the downward trend in the last two years may imply some deterioration in asset utilization efficiency when considering only tangible or adjusted assets.

Overall, while the company’s asset base has expanded significantly, its ability to turn those assets into revenue has experienced variability, with peak efficiency around 2022. The differences between reported and adjusted figures highlight the importance of considering goodwill in evaluating asset utilization, as excluding it presents consistently higher turnover ratios but also reveals recent declines in operational efficiency.


Adjusted Financial Leverage

Microsoft Excel
Jun 30, 2024 Jun 25, 2023 Jun 26, 2022 Jun 27, 2021 Jun 28, 2020 Jun 30, 2019
As Reported
Selected Financial Data (US$ in thousands)
Total assets
Stockholders’ equity
Solvency Ratio
Financial leverage1
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Adjusted total assets
Adjusted stockholders’ equity
Solvency Ratio
Adjusted financial leverage2

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30).

2024 Calculations

1 Financial leverage = Total assets ÷ Stockholders’ equity
= ÷ =

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity
= ÷ =


The financial data over the analyzed periods reveals several notable trends in asset base, equity, and leverage ratios, both on reported and goodwill-adjusted bases.

Total Assets
Reported total assets steadily increased from approximately $12.0 billion in mid-2019 to a peak near $18.8 billion by mid-2023, before slightly declining to about $18.7 billion in mid-2024. Adjusted total assets follow a similar growth pattern, rising from about $10.5 billion in mid-2019 to approximately $17.2 billion in mid-2023, then experiencing a marginal decrease to roughly $17.1 billion in mid-2024. The consistent increase over the initial years indicates steady asset growth, with a slight plateau or minor contraction observed in the latest period.
Stockholders’ Equity
Reported stockholders’ equity shows a clear upward trajectory, growing from about $4.7 billion in mid-2019 to approximately $8.5 billion by mid-2024, with the most significant jump occurring between mid-2022 and mid-2023. Adjusted equity also increases consistently from roughly $3.2 billion in mid-2019 to about $6.9 billion in mid-2024, mirroring the reported figures but at a lower absolute level due to goodwill adjustments. The significant equity growth, especially in the later years, suggests improved retained earnings or additional equity infusions.
Financial Leverage
Reported financial leverage ratios demonstrate some fluctuation over the period studied. Initially rising from 2.57 in mid-2019 to 2.81 in mid-2020, they subsequently decrease to 2.64 and then slightly increase to 2.74 in mid-2022, before dropping more notably to 2.29 in mid-2023 and further to 2.20 in mid-2024. This pattern indicates a moderate initial increase in leverage followed by a consistent de-leveraging trend in recent years. Adjusted financial leverage ratios present a similar pattern but at higher levels, starting at 3.30 in mid-2019 and peaking at 3.55 in mid-2020, before falling gradually to 2.60 in mid-2023 and 2.48 in mid-2024. The decline in leverage ratios on both bases suggests a strengthening equity position relative to debt or asset base expansion managed with more equity financing in recent periods.

Adjusted Return on Equity (ROE)

Microsoft Excel
Jun 30, 2024 Jun 25, 2023 Jun 26, 2022 Jun 27, 2021 Jun 28, 2020 Jun 30, 2019
As Reported
Selected Financial Data (US$ in thousands)
Net income
Stockholders’ equity
Profitability Ratio
ROE1
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Net income
Adjusted stockholders’ equity
Profitability Ratio
Adjusted ROE2

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30).

2024 Calculations

1 ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × ÷ =

2 Adjusted ROE = 100 × Net income ÷ Adjusted stockholders’ equity
= 100 × ÷ =


The data reveals notable trends in both reported and goodwill adjusted financial metrics over the examined six-year period. There is a general upward trajectory in stockholders’ equity under both reported and adjusted measures, indicating growth in the company’s net assets.

Stockholders’ Equity
Reported stockholders’ equity increased consistently from approximately 4.67 billion US dollars in mid-2019 to about 8.54 billion US dollars by mid-2024. This represents an overall growth of around 83%. Notably, the growth rate appears to accelerate between mid-2022 and mid-2023, with an increase of nearly 1.93 billion US dollars in that single year. Adjusted stockholders’ equity, which excludes goodwill, also shows a steady increase from roughly 3.19 billion US dollars to nearly 6.91 billion US dollars over the same period, reflecting a similar increasing pattern but at a slightly lower absolute level.
Return on Equity (ROE)
The reported ROE demonstrates considerable fluctuations but remains strong throughout the period. Starting at 46.89% in 2019, it slightly declined in 2020 but then surged substantially to reach a peak of 73.35% in 2022. Following this peak, the reported ROE decreased steadily to 44.82% by 2024. This rise and fall pattern suggests variations in profitability relative to shareholder equity, potentially due to operational factors or market conditions.
Adjusted ROE, which likely reflects profitability excluding goodwill’s impact, exhibits even higher values than the reported ROE. It climbed from 68.71% in 2019 to an exceptional 96.68% in 2022, before declining to 55.37% in 2024. Despite the decline towards the end of the period, the adjusted ROE consistently remained above the reported ROE, indicating that excluding goodwill amplifies the efficiency of equity utilization.

Overall, the data indicate that the company experienced significant growth in equity and exhibited strong profitability over the period, with peaks in return measures around 2021–2022. The subsequent decline in ROE metrics suggests a moderation in profitability levels or an increase in equity not matched by proportional earnings growth. The difference between reported and adjusted figures reflects the impact of goodwill on financial performance analysis, with adjusted figures suggesting higher returns when such intangible assets are excluded.


Adjusted Return on Assets (ROA)

Microsoft Excel
Jun 30, 2024 Jun 25, 2023 Jun 26, 2022 Jun 27, 2021 Jun 28, 2020 Jun 30, 2019
As Reported
Selected Financial Data (US$ in thousands)
Net income
Total assets
Profitability Ratio
ROA1
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Net income
Adjusted total assets
Profitability Ratio
Adjusted ROA2

Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27), 10-K (reporting date: 2020-06-28), 10-K (reporting date: 2019-06-30).

2024 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =

2 Adjusted ROA = 100 × Net income ÷ Adjusted total assets
= 100 × ÷ =


The reported total assets show a consistent upward trend from June 30, 2019, to June 25, 2023, increasing from approximately $12 billion to nearly $18.8 billion. However, the reported total assets slightly declined by June 30, 2024, reaching around $18.7 billion. When adjusted for goodwill, total assets follow a similar growth pattern but remain consistently lower than the reported figures due to the exclusion of goodwill. The adjusted total assets experienced growth from about $10.5 billion in 2019 to roughly $17.2 billion in 2023, then marginally decreased to $17.1 billion in 2024.

Regarding profitability, the reported Return on Assets (ROA) experienced some fluctuation over the periods. Initial reported ROA started at 18.26% in 2019, declined to 15.47% in 2020, then increased significantly to peak at 26.78% in 2022 before decreasing again to 20.42% in 2024. The adjusted ROA, which excludes goodwill effects for a clearer profitability measure relative to tangible assets, mirrors this trend but with consistently higher percentages. Adjusted ROA started at 20.84% in 2019, dipped to 17.22% in 2020, peaked at 29.37% in 2022, and subsequently declined to 22.36% by 2024.

Overall, the data reflects a pattern of steady asset growth, both reported and adjusted, with a slight plateau or marginal decline in the most recent year. Profitability measured by ROA shows a dip in 2020, followed by strong improvement peaking in 2022, and a moderate decline thereafter. The adjusted figures indicate that excluding goodwill improves the perception of asset efficiency and profitability, consistently portraying a higher return relative to tangible assets. The recent declines in both asset base and ROA suggest the company may be facing challenges in maintaining its previous growth and profitability momentum.