Lam Research Corp. (NASDAQ:LRCX)

Inventory Turnover

The inventory turnover ratio displays a general declining trend from 3.44 in late 2018 to approximately 2.00 by late 2024, indicating a slower rate at which inventory is sold and replenished over time. This decrease suggests potential challenges in inventory management or slowing sales velocity, as the company holds inventory for longer durations.

Receivables Turnover

Receivables turnover experienced fluctuations throughout the periods, starting near 6.63 and dipping to lows around 3.94 in late 2022, then recovering to levels near 5.31 towards late 2024. This pattern reflects variations in the efficiency of collections from customers. Periods of lower turnover imply longer collection times, impacting cash flow.

Payables Turnover

The payables turnover ratio shows a decreasing trend from approximately 14.06 in 2018, dropping to about 8.52 in late 2022, then experiencing a sharp increase to levels exceeding 20 in early 2023, before gradually declining back to around 10.44 by late 2024. This indicates significant changes in the company's payment behavior—with intervals of faster payment cycles particularly around 2023—likely affecting working capital.

Working Capital Turnover

Working capital turnover shows moderate variability, ranging from a low near 1.31 to peaks above 2.15. After a dip around 2019, it generally trends upwards, suggesting enhanced efficiency in utilizing working capital to generate sales, though recent periods indicate some fluctuation without a consistent growth trend.

Average Inventory Processing Period

The average inventory processing period steadily lengthened from about 106 days in late 2018 to a peak nearing 208 days in early 2024, then slightly declined to 183 days towards late 2024. This extension aligns with the decrease in inventory turnover and implies inventory remains in stock longer, possibly due to demand shifts or supply chain factors.

Average Receivable Collection Period

Receivable collection periods ranged notably, increasing from approximately 55 days to peaks around 93 days in 2021, before falling back to around 69 days by late 2024. These fluctuations mark varying collection efficiency, with longer collection intervals impacting liquidity during peak periods.

Operating Cycle

The operating cycle lengthened overall, from about 161 days in 2018 to a maximum exceeding 275 days around mid-2023, then slightly contracted to near 252 days later. This increase indicates the business is requiring more time to convert inventory and receivables into cash, which may strain operational liquidity.

Average Payables Payment Period

The average payables payment period grew from approximately 26 days to a peak of around 43 days in 2021, then declined sharply to as low as 18 days in early 2023 before gradually climbing back up to about 35 days in late 2024. This variation suggests shifting payment strategies, likely balancing vendor relations with cash preservation efforts.

Cash Conversion Cycle

The cash conversion cycle extended from 135 days in 2018 to a high of 252 days in early 2023, followed by a modest decrease to approximately 217 days by late 2024. The prolonged cash conversion cycle reflects increasing time spans between cash outflows and inflows, indicating rising working capital requirements and potential liquidity management concerns.

Cost of Goods Sold (COGS)

The cost of goods sold exhibits considerable fluctuations over the analyzed periods, initially decreasing slightly from approximately 1.27 billion US dollars in September 2018 to around 1.18 billion in September 2019. Subsequently, it rises steadily, peaking near 2.9 billion by December 2022. After this peak, a marked decline occurs through June 2023, dropping to about 1.75 billion, followed by a gradual increase reaching nearly 2.4 billion towards the end of the observed timeline.

Inventories

Inventories present a generally upward trend over the periods reported. Starting at roughly 1.87 billion in September 2018, inventories progressively increase, with occasional moderate accelerations, reaching a high of about 4.87 billion in March 2023. After a slight decline in the subsequent quarters, inventories stabilize near 4.4 billion towards the latter dates, indicating a buildup of stock over time.

Inventory Turnover Ratio

The inventory turnover ratio displays a declining tendency overall. The earliest available values indicate turnover rates above 3.4 times per period, which progressively decrease to a low near 1.75 by early 2024. A modest rebound is noted afterwards, with the ratio rising back to around 2 by the latest date reported. This pattern suggests a slowing in the rate at which inventories are converted into sales over the time frame examined.

Overall Analysis

The combination of these trends reveals a dynamic shift in operational efficiency and inventory management. The increasing inventory levels alongside declining inventory turnover suggest that inventory accumulation has outpaced sales or production needs in recent periods. The fluctuations in COGS, particularly the sharp increase up to late 2022 followed by a reduction, may reflect changes in production volumes, cost structures, or demand variability. The slight recovery in inventory turnover towards the end could indicate attempts to optimize inventory levels or improve sales velocity. Close attention to inventory management and cost control appears warranted to maintain profitability and operational efficiency going forward.

The quarterly financial data reveals several discernible trends in revenue, accounts receivable, and receivables turnover ratios over the observed periods.

Revenue Trends

Revenue initially exhibited moderate fluctuations, ranging between approximately 2.16 billion and 2.58 billion US dollars up to late 2019. Thereafter, a marked upward trajectory is observed, with revenue reaching levels above 5 billion US dollars by late 2022. Notably, there is a significant dip observed in early 2023, where revenue decreased sharply to approximately 3.87 billion and further to about 3.21 billion US dollars in the subsequent quarter. Post this contraction, a recovery phase is evident, with revenue gradually increasing to over 4.7 billion US dollars by the first quarter of 2025.

Accounts Receivable Behavior

Accounts receivable values generally follow an increasing trend paralleling revenue growth, rising from approximately 1.85 billion US dollars in late 2018 to a peak exceeding 4.56 billion in late 2021. Subsequently, a decline occurs through 2022 and into early 2023, mirroring the revenue contraction, with receivables decreasing to around 2.2 billion US dollars by late 2023. There is a modest rebound towards the end of the data series, reaching approximately 3.23 billion US dollars in early 2025. This pattern suggests correlation with revenue fluctuations and reflects management of credit policies or collection efficiency during periods of changing sales volumes.

Receivables Turnover Analysis

The receivables turnover ratio, available only from the first quarter of 2019 onward, shows variability between roughly 3.9 and 6.6 times. This ratio declined from a high of 6.63 in early 2019 to a low near 3.94 by the end of 2021, indicating slower collection of receivables during this period when accounts receivable were increasing. Following this, the ratio demonstrates a recovery with intermittent fluctuations, reaching values above 6.0 in certain quarters of 2023, coinciding with the revenue and receivables decreases, suggesting improved collection efficiency. The ratio then stabilizes around the 5.0 to 5.9 range in the most recent periods.

Overall, the data indicates that revenue growth from 2019 through 2022 corresponded with rising accounts receivable balances and a reduction in receivables turnover ratio, implying extended credit terms or slower collections. The downturn in revenue during early 2023 initiated a downward adjustment in receivables and a concomitant improvement in turnover ratios, reflecting tighter credit management or enhanced collection efforts. Subsequently, recovery in revenue appears to be met with controlled receivable levels and stable turnover ratios, suggesting an effective balance between sales expansion and working capital management in the latest quarters.

The quarterly financial data reveals notable trends in the cost of goods sold (COGS), trade accounts payable, and the payables turnover ratio over the observed periods.

Cost of Goods Sold (COGS)

The COGS exhibit a generally increasing trend from September 2018 through December 2022, rising from approximately 1.27 billion USD to nearly 2.9 billion USD. This growth suggests an expansion in production or sales volume during this period. However, from March 2023 onwards, there is a marked decline in COGS down to around 1.75 billion USD by June 2023, before showing a moderate upward adjustment to approximately 2.4 billion USD by March 2025. This fluctuation may indicate supply chain adjustments, changes in production efficiency, or shifts in demand.

Trade Accounts Payable

Trade accounts payable have generally increased from 384 million USD in September 2018 to a peak exceeding 1.14 billion USD in September 2022, indicating a growing reliance on supplier credit or increased purchasing activity. Post this peak, payables decreased sharply to approximately 470 million USD by December 2022 but then gradually rose again to over 850 million USD by March 2025. The fluctuations suggest variability in payment terms management or procurement cycles.

Payables Turnover Ratio

This ratio, indicative of how quickly the company settles its payables, shows a declining trend from 14.06 in March 2019 to a low near 8.52 in December 2022, reflecting slower payments to suppliers over time. In 2023, the ratio spikes notably to 17.34 and further to 20.5 in September 2023, signaling a period of accelerated payment processes or reduced leverage with suppliers. Following this peak, the ratio gradually decreases to around 10.44 by March 2025, suggesting a return to more moderate payment timing.

Overall, the data reflects a period of growth in both cost structure and supplier obligations until late 2022, followed by significant adjustments in supplier payment practices and cost management during 2023 and early 2024. The fluctuations in payables turnover indicate periods of both extended credit terms and expedited payments, likely tied to strategic cash flow management or operational responses to market conditions.

Working Capital

The working capital values show an overall fluctuating trend over the observed periods. Starting at approximately 4.69 billion USD in late 2018, working capital generally increased, reaching a peak of around 9.28 billion USD in early 2023. After this peak, there was a gradual decline with some variability, ending near 7.97 billion USD by the first quarter of 2025. This indicates a growth phase until early 2023 followed by a period of reduction, suggesting changes in current assets and liabilities management or operational shifts impacting liquidity.

Revenue

Revenue figures demonstrate notable volatility throughout the timeline. Initially, revenue rose from about 2.33 billion USD in September 2018 to a high exceeding 5 billion USD by late 2022. After peaking early in 2023, revenue dropped sharply to approximately 3.21 billion USD mid-2023 but then showed a recovery trend, increasing steadily towards 4.72 billion USD by the first quarter of 2025. The fluctuations reflect potential market demand variability, seasonality, or business cycle effects impacting sales volume and pricing.

Working Capital Turnover

Working capital turnover ratios, available from March 2019 onward, reveal consistency in operating efficiency relating to working capital utilization. Starting around 1.56, the ratio expanded steadily, reaching a high of approximately 2.23 in late 2021. This suggests improved efficiency in generating revenue from working capital resources during that period. Subsequently, the ratio softened to a low near 1.63 in late 2023 before rebounding to about 2.15 by early 2025. This pattern indicates fluctuations in how effectively the company converted its working capital into sales over time, with a recent positive trend.

Summary of Trends and Insights

The data reflect an overall growth phase in revenue and working capital through 2022, with working capital turnover efficiency improving correspondingly. Starting in early 2023, both revenue and working capital faced reductions, pointing toward potential challenges such as changing market conditions or operational adjustments. However, a recovery in revenue and turnover ratio signals a rebound in operational performance and financial management effectiveness. The working capital level's decline alongside revenue recovery might indicate more prudent capital management or shifts in current asset and liability structure. These patterns suggest dynamic operational conditions requiring continued monitoring of liquidity management and revenue generation efficiency.

Inventory Turnover

The inventory turnover ratio demonstrates a generally declining trend from the earliest available value of 3.44 to a low near 1.75 before a slight recovery towards 2.00 in the most recent periods. Initially stable around 3.4 to 3.5, the ratio slowly decreases through the years, indicating that the company is turning over its inventory less frequently. This suggests a slowdown in inventory movement or possibly increased inventory levels relative to sales or usage.

Average Inventory Processing Period

The average inventory processing period shows an increasing trend, moving from an initial value of 106 days to a peak above 208 days, before slightly declining to around 183 days in the latest quarters. This upward trend indicates that inventory is being held for longer periods over time. The increase in days corresponds inversely with the decline in inventory turnover ratio and reinforces the observation that inventory turnover is slowing.

Summary and Insights

Over the observed periods, the data reveal a consistent pattern of inventory moving more slowly through the business. The lengthening inventory processing period combined with the decreasing inventory turnover ratio suggests potential challenges in managing inventory efficiently. This could result from changes in demand, production cycles, or supply chain dynamics. The slight improvement in inventory turnover towards the end of the timeline may indicate efforts to optimize inventory management, but the overall trend warrants attention to mitigate possible impacts on liquidity and operational efficiency.

The receivables turnover ratio and the average receivable collection period exhibit notable fluctuations over the analyzed quarters. Starting from "Sep 29, 2019," the receivables turnover ratio initially declined from 6.63 to a low point of 3.94 by "Dec 25, 2022," indicating a reduction in the frequency of receivables being collected during that period. Concurrently, the average receivable collection period increased from 55 days to a peak of 93 days, reflecting a longer duration for collecting receivables.

Following this period, there is a reversal in the trend: the receivables turnover ratio improves from 3.94 to a high of 6.46 by "Mar 31, 2024," signaling more efficient collection processes. Correspondingly, the average collection period decreases from 93 days to 59 days, demonstrating a faster turnaround in receivables collection.

Subsequent quarters show some volatility. The turnover ratio decreases slightly from 6.46 to 4.9 by "Sep 29, 2024," before partially recovering to 5.31 by "Dec 29, 2024" and "Mar 30, 2025." The average collection period lengthens again during this interval, moving from 56 days to 74 days, suggesting some deterioration in collection efficiency towards the latest periods.

Receivables Turnover Ratio

Exhibited a declining trend from 6.63 in late 2019 to below 4.0 by late 2022, followed by a substantial recovery reaching above 6.4 in early 2024, with some subsequent moderate fluctuations.

Average Receivable Collection Period

Increased significantly from around 55 days in late 2019 to over 90 days by late 2022, before improving markedly to close to 56 days in early 2024, and then lengthening again towards mid-2025.

The inverse relationship between the turnover ratio and collection period is consistent, as expected, indicating that periods of lower turnover correspond with extended collection times. The marked deterioration in collection efficiency around 2021–2022 could be indicative of external factors affecting customer payments or internal credit policy changes. The recovery phase suggests an improvement in receivables management or stabilization of external conditions, although recent softening may warrant continued monitoring for potential collection delays.

Average Inventory Processing Period

The average inventory processing period demonstrates a clear increasing trend over the observed timeframe. Starting from 106 days in early 2019, the period steadily rises to a peak of 208 days by early 2024. Thereafter, a slight reduction is noted, with the period decreasing to 183 days by the end of the dataset in early 2025. This gradual elongation suggests that inventory remains in processing or storage for longer durations as time progresses, potentially reflecting changes in inventory management, production cycles, or market demand effects.

Average Receivable Collection Period

The average receivable collection period exhibits more variability but follows an overall fluctuating pattern within a moderate range. Initially, it increases from 55 days to a high of 93 days around late 2021 and early 2022, indicating a lengthening in the time taken to collect receivables during that interval. Subsequently, a decrease occurs, dipping to 59 days in mid-2023, followed by moderate oscillations with values ranging from the mid-60s to low 70s towards the end of 2024 and early 2025. These fluctuations may reflect changes in credit policies, customer payment behaviors, or external economic conditions impacting collection efficiency.

Operating Cycle

The operating cycle, which combines the average inventory and receivable periods, reveals a consistent upward trajectory over the period analyzed. From an initial value of 161 days, it ascends steadily to reach a peak of 275 days by late 2023. Following this apex, the operating cycle shows a minor decline but remains elevated around the mid-250-day range through early 2025. This rise indicates that the company’s working capital is increasingly tied up in the production and collection processes, suggesting lengthier operational turnaround times or shifts in the overall business cycle duration.

Payables Turnover Trend

The payables turnover ratio shows a general declining trend from a high of 14.06 in September 2019 to a low of 8.52 in December 2022, indicating a lengthening of the payables payment cycle during this period. Starting from December 2022, the ratio sharply increases, peaking at 20.5 in March 2023, suggesting a significant acceleration in payment speed. Following this peak, the ratio decreases gradually to 10.44 by September 2025, signaling a moderation and stabilization in the payment pattern.

Average Payables Payment Period Trend

The average payables payment period lengthened steadily from 26 days in September 2019 to a peak of 43 days in December 2022, which aligns inversely with the declining payables turnover ratio. This suggests suppliers were paid more slowly over this timeframe. Post December 2022, the payment period greatly shortens to 18 days by March 2023, correlating with the spike in payables turnover, and then gradually increases again to 35 days by September 2025, indicating a return towards a more moderate payment timeframe.

Overall Insights

The data reveals a notable shift in the company's payables management over the period analyzed. Initially, the company extended its payables cycle, possibly to optimize cash flow or due to changing vendor terms. This was followed by an abrupt reversal, paying vendors faster in early 2023, before settling back to a more balanced payment schedule. The fluctuations suggest strategic adjustments in working capital management that might be responsive to operational needs or external economic conditions.

Average Inventory Processing Period

The average inventory processing period demonstrates a gradual increase over the observed timeframe. Starting at 106 days, it generally rises with some fluctuations, reaching a peak of 208 days around the March 2024 quarter before slightly decreasing to 183 days by March 2025. This upward trend indicates a lengthening duration for inventory turnover, suggesting slower inventory movement or accumulation over time.

Average Receivable Collection Period

This period exhibits variability but shows an overall moderate fluctuation throughout the quarters. It begins at 55 days and increases to a high of 93 days around December 2022, before declining sharply to 59 days by September 2023. Afterward, it fluctuates between the high 60s and low 70s days. This pattern reflects changing efficiency in collecting receivables, with periods of slower collections followed by improvement.

Average Payables Payment Period

The payables payment period also follows a variable trend. Initially at 26 days, it increases and peaks at 43 days in September 2022, indicating extended payment terms or delayed payments. Subsequently, it declines to as low as 18 days in June 2023, then rises again to 35 days by March 2025. This oscillation suggests a dynamic approach to managing payables, alternating between quicker and more extended payment cycles.

Cash Conversion Cycle

The cash conversion cycle shows a clear upward trajectory, moving from 135 days to a peak of 252 days in December 2023, before slightly decreasing to 217 days by March 2025. This denotes an overall lengthening in the time taken to convert investments in inventory and other resources into cash flows from sales. The increased duration aligns with the rising inventory processing period and fluctuating receivables and payables, indicating a potential strain on working capital efficiency over time.