Kla Corporation · NASDAQ:KLAC

Kla — Investor Day (June 2022)

29 slides from Kla's investor day presentation, Jun 16, 2022

  1. Slide 1: 2022 KLA Investor Day

    2022 KLA Investor Day New York City • June 16, 2022 1

  2. Slide 2: Disclaimer

    Disclaimer Statements in this presentation other than historical facts, including but not limited to: (i) future trend of digitization, semiconductor and EPC industry growth and evolution; (ii) geographic breakdowns of future global semiconductor production; (iii) our results of operations and finan

  3. Slide 3: Long-Term Target Model & Capital Return Strategy

    Long-Term Target Model & Capital Return Strategy Bren Higgins EVP and CFO

  4. Slide 4: Key Messages | Long-Term Target Model & Capital Return Strategy

    Key Messages | Long-Term Target Model & Capital Return Strategy Delivering sustainable market outperformance guided by the KLA Operating 1 Model which supports collaboration, innovation, and execution Portfolio strategy drives differentiation and competitive advantage, leading to 2 strong operating

  5. Slide 5: Significant Progress Since 2019 Investor Day

    Significant Progress Since 2019 Investor Day Where We Were Where We Are Where We Are Going 2019 Investor Day 2022 Investor Day 2026 Target Model  Targeted 7-9% revenue growth CAGR  Achieved 300+bps of market share and  Optimizing business through technology from 2019 – 2023E intensity gains leade

  6. Slide 6: Sustainable Revenue Growth and Diversification

    Sustainable Revenue Growth and Diversification ~$14B Key Characteristics of Target Revenue Mix  Leading edge investment driving ~11% continued foundry/logic node CAGR progression & increased design starts  EUV adoption in DRAM & higher layer counts in NAND drive increasing process control requirem

  7. Slide 7: Track Record of Strong Profitability

    Track Record of Strong Profitability Gross Margin 1 Operating Margin 1 Diluted EPS 1 FCF Margin 1 64% 63% 63% 60% 61% $22.86 31% 42% 42% 30% 29% 30% 40% 36% $18.50 33% 23% $11.47 $9.14 $8.73 2 2 2 2 CY18 CY19 CY20 CY21 CY22E CY18 CY19 CY20 CY21 CY22E CY18 CY19 CY20 CY21 CY22E CY18 CY19 CY20 CY21 CY2

  8. Slide 8: History of Best-in-Class Margins Versus Leading Peers

    History of Best-in-Class Margins Versus Leading Peers Gross Margin 1 Operating Margin 1 80% 45% 40% 70% 35% 60% 30% 50% 25% 40% 20% 30% 15% 20% 10% 10% 5% 0% 0% CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21 2 2 KLAC Semi Cap Peers KLAC

  9. Slide 9: A Pattern of Excellence – 10 Year View Versus the SOX Index

    A Pattern of Excellence – 10 Year View Versus the SOX Index Gross Margin 1 : 61% Operating Margin 1 : 34% FCF Margin 1 : 27% 97th 90th 86th Percentile Percentile Percentile Ranked Ranked Ranked #2 of 30 #4 of 30 #5 of 30 Non-GAAP Gross Margin % Non-GAAP Operating Margin % Free Cash Flow Margin % Cap

  10. Slide 10: Technical Investments are Essential to Our Portfolio Strategy

    Technical Investments are Essential to Our Portfolio Strategy R&D and Applications 1 Support Investment New Products 1800 80% Timeline CY19 CY22 1600 70% Inspection: 11 BBP 1400 LS/Macro 60% Unpatterned 1200 e-Beam 50% 1000 Patterning: 9 $M 40% Reticle Overlay 800 CD/Shape 30% Monitor 600 EPC: 10 20

  11. Slide 11: The KLA Operating Model Guides Our Strategy and Differentiation

    The KLA Operating Model Guides Our Strategy and Differentiation Collaboration  Work closely with customers in early process technology development  Work closely with suppliers' early technology development  Work across KLA to reuse applicable technology Innovation  Invest heavily in core technol

  12. Slide 12: Case Study: Strategic Supply Chain Sourcing

    Case Study: Strategic Supply Chain Sourcing Revenue Growth Versus Semi Cap Peers Indexed to CY21-Q1 Component Types Parts Category % Low volume, sole Optics CY21-Q1 CY21-Q2 CY21-Q3 CY21-Q4 CY22-Q1 CY22-Q2E sourced highly Sensors KLAC Semi Cap Peers 1 complex components Lasers Source: FactSet, Consen

  13. Slide 13: Case Study: Supply Chain Management

    Case Study: Supply Chain Management 4,000 Visibility Purchase Commitments 3,000 Long-term, strategic  Long term forecast partnership with the $M commitments drive supplier investment 2,000 supply chain & availability 1,000  Decades-long relationships with 96%+ of key suppliers under Inventory CY20

  14. Slide 14: Case Study: Measured Pace of Moore’s Law Enables Platform Extendibility and Lower R&D Intensity

    Case Study: Measured Pace of Moore’s Law Enables Platform Extendibility and Lower R&D Intensity 25% 20% ~0.8x vs 15% CY11-CY16 10% CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21 R&D % of Semi PC Revenue 8x 6x ~1.4x vs CY11-CY16 4x 2x x CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19 C

  15. Slide 15: Case Study: Gen4 Extendibility Enables Gross Margin Improvements and Platform Scalability

    Case Study: Gen4 Extendibility Enables Gross Margin Improvements and Platform Scalability GM % Improvement +180bps +620bps +630bps +980bps Patterned Optical Inspection Market 1 2019 TAM: $1.35B 2021 TAM: $2.88B CAGR: 46% $200 $1,200 $180 $1,000 $160 $140 $800 $120 $600 $100 $80 $400 $60 $40 $200 $20

  16. Slide 16: Case Study: SpectraShape Extendibility Enables Gross Margin Improvements and Platform Scalability

    Case Study: SpectraShape™ Extendibility Enables Gross Margin Improvements and Platform Scalability GM % Improvement +540bps +690bps +750bps Optical Metrology Market 1 $200 2019 TAM: $0.8B $180 $1,000 2021 TAM: $1.5B $160 CAGR: 37% $140 $120 $100 $500 $80 $60 $40 $20 $0 $0 CY11 CY12 CY13 CY14 CY15 CY

  17. Slide 17: Case Study: Semi PC Service Incremental Margin

    Case Study: Semi PC Service Incremental Margin Semi PC Service Revenue and Incremental Gross Margin 1,800 ~15% 80% 1,600 CAGR 1,400 60% 1,200 1,000 40% 800 600 20% 400 200 $M - 0% CY16 CY17 CY18 CY19 CY20 CY21 CY22E Semi PC Service Revenue Incremental Service GM% Linear ( Incremental Service GM% ) S

  18. Slide 18: FCF Generation Fuels Consistent Capital Returns to Shareholders

    FCF Generation Fuels Consistent Capital Returns to Shareholders Free Cash Flow 1 and FCF Margin 2 Investment Market Market inInvestment Growth Leadership Leadership andand 2.7 in Growth and andProducts New New Differentiated Differentiated 2.5 Products Solutions Solutions Value 1.8 Creation $B 1.3 1

  19. Slide 19: Investment Grade Balance Sheet Supports Capital Structure

    Investment Grade Balance Sheet Supports Capital Structure Balance Sheet Summary 1 ($B) Target Today’s Capital Structure Announcements Total Cash2 $2.6 $2.5B - $3B Share Repurchases Revolver1 $1.0 $1.5B  $6B Share Repurchase Authorization Working Capital $3.8  $3B Accelerated Share Repurchase (ASR)

  20. Slide 20: Returns to Shareholders Across Share Repurchases and Dividends

    Returns to Shareholders Across Share Repurchases and Dividends Share Repurchases 1 Track Record of Dividend Increases June 2022: New $6B June 2022: Announced 13th consecutive annual dividend repurchase authorization increase to $1.30/share quarterly from $1.05 (24% increase) 5.20 4.70 ~3,000 ~3,000

  21. Slide 21: Consistent and Disciplined Capital Allocation Priorities

    Consistent and Disciplined Capital Allocation Priorities Primary Capital Priorities 2019-2021 2022E-2026E  Fund significant R&D investments for innovation 12% 7%  Invest in working capital to support 12% 7% 19% customers and enable business model 19%  Enable inorganic strategic growth 22% $14B ~$

  22. Slide 22: 2026E Target Model: Semiconductors Now Growing Faster Than GDP

    2026E Target Model: Semiconductors Now Growing Faster Than GDP Industry driven by PCs and Mobile Digitization Semi Revenues CY04 – CY16 CY16 - CY22E driving growth What Has Changed? 0.8% CAGR 4.7% 12.1%  Scaling resumed  Increased performance & 0.7% cost benefits Semiconductor Revenues as % of GDP

  23. Slide 23: 2026E Target Model: Scaling Resumed at 7nm EUV and Drove Significant Investments

    2026E Target Model: Scaling Resumed at 7nm EUV and Drove Significant Investments Design Starts Have Become More Affordable Resumption of Scaling Drove Increased Investments >50% increase in design starts and WSPM 1 at 7nm Logic/Foundry WFE 70 WSPM1 60 50 40 Design Starts $B 30 CAGR: -3.8% 20 10 0 28

  24. Slide 24: 2026E Target Model: Capex Intensity Rising as Market Opportunities, Technology Complexity and Competition Increase

    2026E Target Model: Capex Intensity Rising as Market Opportunities, Technology Complexity and Competition Increase 180 40% Drivers of Capex Intensity 160 Decline (from 2000-2013) 35%  200 mm to 300 mm 140 30% wafer transition 120 Capital Expenditures $B 25%  Industry consolidation Capex Intensity

  25. Slide 25: Making the Case for Increased Foundry/Logic WFE Intensity

    Making the Case for Increased Foundry/Logic WFE Intensity WFE/EBITDA Ratio Provides Perspective into Spend 1 40% 30% 20% 10% Highlights 0% CY02 CY03 CY04 CY05 CY06 CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21  Record revenues and profits  Strong long-term industry 40,

  26. Slide 26: Long-Term Target Revenue Growth Model Update

    Long-Term Target Revenue Growth Model Update 2023E Model 2026E Model Growth Drivers (presented 9/17/19) (from 2021) Industry Growth 10%  Diversification of end markets 10%  Modestly rising capital intensity ~1% ~9-11%  New markets and applications ~1% - 2% Intensity Improvement / Share Gain ~2% ~

  27. Slide 27: KLA 2026 Target Model | Driving Sustainable Outperformance

    KLA 2026 Target Model | Driving Sustainable Outperformance ~$1.5B ~$0.25B ~$14B ~$0.7B ~$3.6B $8.2B Double-digit revenue growth across Semi PC, EPC, and Services drive a ~9-11% CAGR from 2021 to 2026E 27

  28. Slide 28: Introducing 2026E Target Model

    Introducing 2026E Target Model Prior 2023E New 2026E Ongoing Financial Target Model Target Model Framework Macro Assumptions Revenue $7.0B - $7.5B $14B +/- $500M ~9% - 11% CAGR  CY21-CY26E semiconductor industry CAGR of ~6-7%  WFE grows faster than Semi revs Gross Margin%1 61%+ ~63%  ~55-60% foun

  29. Slide 29: Key Takeaways

    Key Takeaways 1 2 3 4 5 Delivering Portfolio strategy Collaborative supply Pace of Moore’s Law Leveraging our strong sustainable market drives differentiation chain strategy helps and trends of end investment-grade outperformance and competitive drive execution, market demand balance sheet to guided

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