Lam Research Corp. (NASDAQ:LRCX)

The financial leverage ratios demonstrate a generally declining trend over the observed periods, indicating a gradual reduction in the company's reliance on debt financing relative to its equity base. Specifically, the debt to equity ratio decreased from 0.96 in mid-2019 to 0.58 by mid-2024, reflecting strengthened equity or reduced debt levels. When operating lease liabilities are included, the trend remains consistent, though with slightly higher ratios, ending at 0.62 in 2024.

Similarly, the debt to capital ratio and its variant including operating lease liabilities show a decreasing pattern, dropping from 0.49 and 0.49 in 2019 to 0.37 and 0.38 respectively in 2024. This suggests an improved capital structure with a lower proportion of debt in the capital employed.

Regarding debt to assets ratios, both the standard and the version including operating leases decline steadily, beginning at 0.37 and moving down to 0.27-0.28 by 2024. This further confirms the company's reduced leverage when measured against total assets, implying less financial risk over the years.

The financial leverage ratio, which indicates the extent to which the company uses debt to finance its assets, also shows a downward trend from 2.57 to 2.2 across the period, supporting the observations of decreasing debt levels relative to equity.

In terms of coverage ratios, the interest coverage ratio exhibits some volatility but remains relatively high throughout, peaking at 29.11 in 2022 and slightly declining to 24.54 in 2024. This indicates that earnings before interest and taxes are more than adequate to cover interest expenses, reflecting strong operational earnings and manageable interest burden.

The fixed charge coverage ratio follows a similar pattern with some fluctuations, increasing from 17.83 in 2019 to a high of 21.44 in 2022 before decreasing to 17.23 in 2024. Despite the decrease, the ratio remains at a level that suggests the company comfortably meets its fixed financial obligations including interest and lease payments.

Overall, the data reveals a consistent trend of reducing leverage and robust capacity to cover interest and fixed charges, pointing toward an increasingly stable and financially prudent position over the five-year span.

Total debt

The total debt level exhibited fluctuations over the observed periods. It increased significantly from 4,489,899 thousand USD in mid-2019 to a peak of 5,810,725 thousand USD in mid-2020. Subsequently, the debt amount decreased and stabilized around 5,000,000 thousand USD in the years following, with minor variations, showing a modest decline to approximately 4,983,334 thousand USD by mid-2024.

Stockholders’ equity

Stockholders’ equity demonstrated a consistent upward trend throughout the span. Starting at 4,673,865 thousand USD in mid-2019, it progressively increased each year, reaching a substantial value of 8,539,454 thousand USD by mid-2024. This reflects a solid growth in the company’s net worth over the period.

Debt to equity ratio

The debt to equity ratio initially rose from 0.96 in mid-2019 to a peak of 1.12 in mid-2020, indicating higher leverage relative to equity during that year. After this peak, the ratio steadily declined each year, reaching a low of 0.58 by mid-2024. This trend suggests a decreasing reliance on debt financing relative to equity, enhancing the company's financial stability and potentially reducing financial risk.

The analysis reveals several notable financial trends over the six-year period ending June 30, 2024.

Total Debt (Including Operating Lease Liability)

The total debt increased substantially from 4,489,899 thousand US dollars in mid-2019 to a peak of 5,984,094 thousand US dollars in mid-2020. After this peak, the debt level decreased sharply in 2021 and then remained relatively stable from 2021 through 2024, hovering slightly above 5.2 million thousand US dollars.

Stockholders’ Equity

Stockholders’ equity showed a consistent upward trajectory throughout the period. Starting at approximately 4.67 million thousand US dollars in 2019, equity rose steadily each year, reaching 8.54 million thousand US dollars by mid-2024. The most significant year-over-year increase appears between 2022 and 2023, where equity jumped from approximately 6.28 million to over 8.21 million thousand US dollars.

Debt to Equity Ratio (Including Operating Lease Liability)

The debt-to-equity ratio peaked at 1.16 in mid-2020, reflecting the earlier noted surge in total debt combined with equity growth that was less pronounced at that time. Subsequently, the ratio declined consistently each year to 0.62 by mid-2024. This trend indicates an improving financial leverage position, where the company increasingly relied more on equity financing relative to debt over recent years.

In summary, the company managed to stabilize its debt after a peak in 2020 while simultaneously growing its equity at a robust pace. This combination resulted in a steadily improving debt-to-equity ratio, implying enhanced financial stability and potentially greater capacity to absorb debt or invest in growth without excessive leverage risk.

Total Debt

The total debt experienced an initial increase from approximately 4.49 billion USD in mid-2019 to about 5.81 billion USD in mid-2020. Subsequently, it decreased to roughly 5.00 billion USD in mid-2021 and then remained relatively stable around the 5.00 billion USD mark through mid-2024, with a slight decline to approximately 4.98 billion USD by the end of this period.

Total Capital

Total capital showed a consistent upward trend across the observed periods. It increased from approximately 9.16 billion USD in mid-2019 to 13.52 billion USD in mid-2024. Notably, the growth accelerated from mid-2021 onward, moving from around 11.03 billion USD to over 13.5 billion USD by the final period.

Debt to Capital Ratio

The debt to capital ratio exhibited a gradual decline throughout the time frame. It started at 0.49 in mid-2019, increased slightly to 0.53 in mid-2020, and then steadily decreased each year thereafter, reaching 0.37 by mid-2024. This reduction indicates an improving capital structure with a lower proportion of debt relative to total capital over time.

Overall Analysis

The financial data reveals that while total debt remained relatively stable after an initial rise, total capital consistently increased, leading to a decreasing debt to capital ratio. This trend suggests a strengthening balance sheet and an improved capital structure with potentially lower financial risk due to reduced leverage.

The financial data highlights the debt and capital structure trends over a six-year period ending in mid-2024. Total debt, including operating lease liabilities, shows a fluctuating pattern with a notable increase from approximately $4.49 billion in mid-2019 to a peak of around $5.98 billion in mid-2020. Thereafter, debt decreased to about $5.17 billion in mid-2021 and remained relatively stable through mid-2024, ending at approximately $5.27 billion.

Total capital, which also includes operating lease liabilities, consistently increased during the same period. Starting from roughly $9.16 billion in mid-2019, capital grew steadily each year to reach approximately $13.81 billion by mid-2024. This indicates expansion in the company's capital base.

The debt to capital ratio, representing the proportion of debt relative to total capital, reveals a declining trend after peaking in mid-2020. The ratio rose from 0.49 in mid-2019 to 0.54 in mid-2020, corresponding with the highest total debt figure. Subsequently, the ratio decreased progressively to 0.38 by mid-2024. This decline suggests a reduced reliance on debt financing relative to the company's overall capital.

Total Debt

Increased sharply in 2020 but declined and stabilized in subsequent years.

Total Capital

Consistently grew year-over-year, indicating strengthening capital resources.

Debt to Capital Ratio

Peaked in 2020, then steadily declined, reflecting improved capital structure with lower leverage.

Total Debt

The total debt exhibited an overall increase from 2019 to 2020, rising from approximately 4.49 billion to 5.81 billion US dollars. Following this peak in 2020, the total debt decreased to around 5.0 billion by 2021 and remained relatively stable through 2024, showing a slight decline to approximately 4.98 billion.

Total Assets

Total assets demonstrated a consistent upward trend throughout the period. Starting at about 12.0 billion in 2019, assets increased steadily each year, reaching their highest level in 2023 at nearly 18.8 billion. This was followed by a slight decrease in 2024 to around 18.7 billion US dollars, indicating a general trend of asset growth over the six-year span.

Debt to Assets Ratio

The debt to assets ratio declined notably over the period. Beginning at 0.37 in 2019, the ratio increased slightly to 0.40 in 2020, reflecting the rise in debt relative to assets that year. However, from 2021 onward, the ratio decreased steadily to 0.27 by 2023 and remained stable at 0.27 in 2024. This trend suggests an improvement in the company's leverage position, with debt becoming a smaller proportion of total assets.

Total Debt (including Operating Lease Liability)

The total debt exhibited a general upward trend over the analyzed period. Starting at approximately 4.49 billion USD in mid-2019, it increased notably to nearly 6.0 billion USD by mid-2020. Following that peak, it decreased to around 5.17 billion USD in mid-2021 and then remained relatively stable, with a slight increase to approximately 5.27 billion USD by mid-2024. This indicates some fluctuations in debt levels, with a significant rise in 2020 followed by a slight reduction and stabilization in subsequent years.

Total Assets

Total assets demonstrated consistent growth throughout the time span. From about 12.0 billion USD in mid-2019, assets increased steadily each year, reaching nearly 18.8 billion USD by mid-2023. The growth slightly moderated by mid-2024, with assets at approximately 18.7 billion USD, suggesting a plateauing effect after several years of expansion. Overall, the company’s asset base expanded significantly, indicating an increase in resource capacity and potential operational scale.

Debt to Assets Ratio (Including Operating Lease Liability)

The debt to assets ratio showed a declining trend over the period reviewed. Beginning at 0.37 in mid-2019, this ratio increased to 0.41 in mid-2020, reflecting a relatively higher leverage during that year. Subsequently, the ratio decreased consistently to 0.33 in mid-2021, then further to 0.30 in mid-2022, and reached a stable level of 0.28 by mid-2023 and mid-2024. This downward trend indicates that the company reduced its leverage relative to its asset base over time, potentially implying improved financial stability or asset growth outpacing debt accumulation.

The financial data over the analyzed periods reveals several notable trends in the company's asset base, equity position, and financial leverage.

Total Assets

Total assets have demonstrated consistent growth throughout the years. Beginning at approximately $12.0 billion in mid-2019, assets increased steadily each year, reaching just below $18.8 billion by mid-2023. The pace of growth remained strong through mid-2024 though the asset base slightly decreased to approximately $18.7 billion, indicating a stabilization in total asset accumulation in the latest period.

Stockholders’ Equity

Equity showed a robust upward trend during the entire timeframe. Starting from about $4.7 billion in mid-2019, equity increased annually, with particularly notable acceleration after mid-2022. By mid-2024, equity exceeded $8.5 billion, reflecting strengthened ownership interest and retained earnings over the years. The more rapid growth in equity relative to assets in later periods suggests improved capitalization.

Financial Leverage

Financial leverage ratios fluctuated within a narrow range but exhibited an overall declining trend. Initial leverage stood at 2.57 times in mid-2019, peaked around 2.81 in mid-2020, and then generally decreased to 2.20 times by mid-2024. This reduction suggests the company has been gradually lowering its reliance on debt financing relative to equity, resulting in a more conservative capital structure.

In summary, the company has consistently expanded its asset and equity base while simultaneously reducing its financial leverage over the examined periods. This indicates strengthening financial stability and increasing shareholder value, accompanied by a cautious approach to debt management in recent years.

Earnings before interest and tax (EBIT)

The EBIT shows a general upward trend from June 30, 2019, through June 26, 2022, increasing from approximately 2.56 billion to about 5.38 billion US dollars. This represents a significant growth phase over four years. However, in the subsequent periods, there is a slight decline with EBIT reducing to approximately 5.30 billion in June 25, 2023, and further to around 4.55 billion by June 30, 2024. This decline suggests some challenges or decreased operating profitability in the more recent years following the peak.

Interest expense

Interest expense exhibits an increasing trend from around 117 million US dollars in 2019 to a peak of about 208.6 million in 2021. After this peak, the interest expense stabilizes, remaining relatively constant near 185 million US dollars for the last three periods. This stabilization could reflect consistent borrowing costs or effective debt management during these years.

Interest coverage ratio

The interest coverage ratio starts at a high level of 21.86 in 2019, decreases notably to 15.51 in 2020, and then recovers strongly to reach 29.11 in 2022. In the last two years, the ratio slightly declines but remains robust at 28.4 in 2023 and 24.54 in 2024. This pattern indicates that despite fluctuations in operating earnings and interest expenses, the company's ability to cover interest obligations with operating earnings remains strong, although some weakening is apparent in the latest period.

Earnings before fixed charges and tax

The earnings before fixed charges and tax show an overall upward trend from 2019 to 2022, increasing from approximately 2.59 billion to about 5.45 billion US dollars. However, this upward momentum reverses in the subsequent years, with earnings declining to around 5.37 billion in 2023 and further down to approximately 4.63 billion in 2024.

Fixed charges

Fixed charges steadily increased over the period analyzed, rising from about 145 million US dollars in 2019 to around 269 million US dollars in 2024. This consistent increase indicates growing financial obligations related to fixed expenses.

Fixed charge coverage

The fixed charge coverage ratio experienced fluctuations during the period. It started at a strong level of 17.83 in 2019 but dropped significantly to 12.52 in 2020. It recovered substantially in 2021 to 17.80 and continued to improve, peaking at 21.44 in 2022. Subsequently, the ratio declined to 20.49 in 2023 and further to 17.23 in 2024. Despite these fluctuations, the coverage ratio remained at relatively high levels, indicating that earnings were generally sufficient to cover fixed charges throughout the period, though the decline towards 2024 suggests increased pressure on the company's ability to cover these charges adequately.