KLA Corp. (NASDAQ:KLAC)

Current Income Tax Expense

The current income tax expense shows a consistent upward trend from June 30, 2019, to June 30, 2023, increasing from $147,399 thousand to $756,992 thousand. However, in the most recent period ending June 30, 2024, there is a notable decline to $567,014 thousand. This suggests a significant reduction in current tax liabilities after a period of sustained growth.

Deferred Income Tax Expense

The deferred income tax expense is consistently negative across all periods, indicating deferred tax benefits. From June 30, 2019, to June 30, 2020, there is a considerable increase in the deferred tax benefit magnitude, moving from -$26,185 thousand to -$93,342 thousand. Subsequently, the deferred tax benefit decreases in size to -$45,622 thousand by June 30, 2021, before increasing sharply in magnitude again through June 30, 2023 (-$355,153 thousand). In June 30, 2024, the deferred tax benefit recedes to -$138,878 thousand. This pattern reflects volatility in deferred tax positions, possibly due to changes in temporary differences or tax rate adjustments.

Provision for Income Taxes

The provision for income taxes fluctuates notably over the analyzed periods. Initially, it declines from $121,214 thousand in June 2019 to $101,686 thousand in June 2020, then sharply increases to $283,101 thousand by June 2021. A decline is observed in June 2022 to $167,177 thousand, followed by a significant surge to $401,839 thousand in June 2023. The most recent figure at June 30, 2024, shows a further increase to $428,136 thousand. This variability highlights the impact of both current and deferred tax expenses combined, reflecting changes in taxable income, tax planning strategies, or alterations in tax legislation.

Overall Insights

The data illustrate rising current tax expenses interrupted by a recent decline, while deferred tax benefits exhibit fluctuations with significant gains particularly in the latter years. The combined effect results in a provision for income taxes that is generally trending upward with notable variability. This indicates dynamic tax positions and potential strategic tax management over the reported periods.

The analysis of the financial data reveals several trends and fluctuations in income tax-related items over the period from June 30, 2019, to June 30, 2024.

U.S. Federal Statutory Income Tax Rate

This rate remained stable at 21% throughout the entire period, indicating no changes in the statutory tax framework affecting the company.

Global Intangible Low-Taxed Income (GILTI)

The GILTI rate showed a general decline from 3.5% in 2019 to 2% in 2022 but increased afterwards, reaching 3.7% by 2024. This suggests some variability in the impact of foreign intangible income taxed at low rates.

Goodwill Impairment

Goodwill impairment was recorded at 4.1% in 2020 and decreased to 1.7% in 2024, with no impairments reported in the intervening years, indicating occasional valuation adjustments impacting tax rates.

Net Change in Tax Reserves

The tax reserves fluctuated, starting at 1.4% in 2019, increasing slightly to 1.5% in 2020, then showing a negative change of -1.1% in 2021, rising again to 2% in 2022, missing data for 2023, and ending at 1.1% in 2024, reflective of adjustments in tax provisions.

State Income Taxes, Net of Federal Benefit

This category remained relatively stable, ranging between 0.2% and 0.5% throughout the period, indicating consistent state tax effects after federal considerations.

Restructuring

Restructuring had a significant impact in 2020 with -2.6% and 2022 with -11.2%, but no other values were reported. These negative values suggest tax benefits related to restructuring activities during those years.

Effect of Share-Based Compensation (SBC)

The effect of SBC hovered near zero, fluctuating slightly between -0.3% and 0.4%, indicating minimal impact on the effective tax rate despite compensation-related tax considerations.

Research and Development (R&D) Tax Credit

The R&D tax credit effect maintained a negative range from -1.8% in 2019 and 2020 to -1.1% in 2021 and 2022, and slightly increased in 2023 and 2024 to -1.5% and -1.6%, respectively. This reflects consistent benefits from R&D activities reducing the tax burden.

Foreign Derived Intangible Income

This rate consistently contributed to a reduction in the effective tax rate, fluctuating between -4% and -5.9%, with the most pronounced negative impact observed in 2023 and 2024.

Effect of Foreign Operations Taxed at Various Rates

The effect declined from -10.5% in 2019 to a low of -4.2% in 2022, before increasing again to -7.1% in 2023 and -6.6% in 2024. This pattern indicates variability in the tax impact driven by foreign jurisdictions with differing tax rates.

Tax Rate Change on Deferred Tax Liability on Purchased Intangibles

This adjustment was only noted in 2021 at 1.7%, suggesting a one-time tax impact associated with purchased intangible assets.

Other Adjustments

Other tax-related effects fluctuated minimally around zero, moving from 0.4% to as low as -0.3%, reflecting minor miscellaneous adjustments.

Effective Income Tax Rate Before Tax Cuts and Jobs Act of 2017

This rate showed high volatility: declining from 10.9% in 2019 to 4.8% in 2022, then rising again to 13.4% in 2024. The fluctuations may reflect changes in operational tax circumstances excluding legislative impacts.

Tax Cuts and Jobs Act of 2017 (Transition Tax and Deferred Tax Effects)

This was only recorded in 2019 at -1.5%, indicating the phasing out or non-recurring nature of these transition effects in subsequent years.

Effective Income Tax Rate

Mirroring the effective rate before the Tax Cuts and Jobs Act adjustments, the overall effective income tax rate fluctuated, with a low point of 4.8% in 2022, followed by increases to 10.6% in 2023 and 13.4% in 2024. This suggests overall varying tax liabilities influenced by a combination of statutory rates and various adjustments.

In summary, the data indicate relative stability in statutory U.S. tax rates alongside significant variations in tax effects due to goodwill impairment, restructuring, foreign operations, and tax credits. Notably, restructuring and goodwill impairment cause substantial year-to-year variability. The effective income tax rate shows a U-shaped pattern, decreasing notably by 2022 before increasing sharply in the last two reported years, reflecting changing tax dynamics possibly linked to operational or legislative factors outside the base statutory rate.

The financial data reveals several notable trends over the examined periods. Capitalized research and development expenses were not reported until the last two fiscal years, showing a considerable increase from 201,228 thousand US dollars to 328,061 thousand US dollars, indicating a growing investment in development activities.

Tax credits and net operating losses have shown a steady increase across all periods, rising from 208,572 thousand US dollars in 2019 to 311,026 thousand US dollars in 2024. This suggests an accumulation of tax benefits or losses that may be utilized to offset future taxable income.

Depreciation and amortization recorded a significant jump in the recent years, from 1,760 thousand US dollars in 2022 to 151,371 thousand US dollars in 2024. Meanwhile, the corresponding depreciation and amortization figures presented as negative values decreased from -515,643 thousand US dollars in 2019 to a less negative figure in later years, though data is missing for some periods, indicating changes in asset base or accounting policies.

Inventory reserves steadily increased over the years, growing from 67,249 thousand US dollars in 2019 to 121,238 thousand US dollars in 2024, reflecting a potential buildup of inventory or adjustments for obsolescence.

Employee benefits accruals followed a similar upward trajectory, increasing from 65,065 thousand US dollars in 2019 to 95,461 thousand US dollars in 2024. Non-deductible reserves also rose but at a more moderate pace, ending at 53,668 thousand US dollars in 2024.

Unearned revenue remained relatively stable with minor fluctuations until increasing sharply to 25,532 thousand US dollars in 2024. Stock-based compensation expenses rose consistently, nearly doubling from 9,432 thousand US dollars in 2019 to 15,375 thousand US dollars in 2024, reflecting increased employee incentive costs.

Unrealized gains and losses on investments exhibit volatility. Unrealized losses jumped from 1,492 thousand US dollars in 2019 to 5,384 thousand US dollars in 2021 but are not reported thereafter. Unrealized gains only appeared from 2022 and showed negative values, indicating a loss position on investment valuation.

Other expenses demonstrated variability, with amounts fluctuating and notably decreasing in recent years to 12,785 thousand US dollars in 2024 from a peak of 66,667 thousand US dollars in 2020.

Gross deferred tax assets increased considerably, especially in the last two years, reaching over one billion US dollars (1,114,517 thousand) in 2024, suggesting enhanced recognition of future tax benefits. The valuation allowance associated with these assets also grew negatively, reaching -289,534 thousand US dollars, but at a slower pace compared to the gross assets, resulting in a significant rise in net deferred tax assets from 278,516 thousand US dollars in 2019 to 824,983 thousand US dollars in 2024.

Unremitted earnings of foreign subsidiaries not indefinitely reinvested remained negative throughout the periods, with fluctuations but an overall increase in absolute terms to -315,231 thousand US dollars in 2024, indicating substantial earnings held abroad that may be subject to repatriation taxes.

Deferred profit, presented as a negative value, showed inconsistency but increased in absolute terms from -15,718 thousand US dollars in 2019 to -70,204 thousand US dollars in 2024.

Deferred tax liabilities decreased significantly from -774,852 thousand US dollars in 2019 to -396,384 thousand US dollars in 2024, coinciding with a reduction in net deferred tax liabilities to a positive net deferred tax asset position of 428,599 thousand US dollars in 2024, a notable shift from a negative net deferred tax asset (liability) position in earlier years.

Deferred Tax Assets

The deferred tax assets have demonstrated a consistent and substantial upward trend over the analyzed period. Beginning at 206,141 thousand USD in mid-2019, the figure increased gradually through 2020 and 2021, reaching 270,461 thousand USD. Subsequently, there was a marked acceleration, with a notable jump to 579,173 thousand USD in 2022. This growth continued in 2023 and 2024, culminating at 915,241 thousand USD. Overall, deferred tax assets more than quadrupled from 2019 to 2024, indicating an expanding recognition of temporary differences favorable for future taxable income reductions.

Deferred Tax Liabilities

In contrast, deferred tax liabilities have shown a declining trend over the same period. Starting from 702,285 thousand USD in mid-2019, the liabilities decreased steadily each year, with minor fluctuations. The figure dropped to 660,885 thousand USD in 2020 and continued downward to 650,623 thousand USD in 2021 and 658,937 thousand USD in 2022. From 2022 onwards, a more pronounced decline occurred, with liabilities reducing to 529,287 thousand USD in 2023 and further to 486,690 thousand USD in 2024. This represents a decrease of approximately 30.7% over the five years, suggesting a contraction in temporary differences that create future taxable amounts.

Overall Insights

The data indicates a strengthening net deferred tax asset position over the five-year span. The growth in deferred tax assets coupled with a reduction in deferred tax liabilities suggests improved future tax benefits relative to future tax obligations. This trend could reflect changes in the company's asset composition, tax planning strategies, or differences in tax regulations affecting temporary timing differences.

The analysis of the financial data from the periods ending June 30, 2019, through June 30, 2024, reveals several notable trends in assets, liabilities, equity, and net income, both in reported and adjusted figures.

Assets

Total assets showed a consistent upward trend over the six-year period. Reported total assets increased from approximately $9.01 billion in 2019 to about $15.43 billion in 2024, representing substantial growth. Adjusted total assets followed a similar pattern, rising from around $8.80 billion to $14.52 billion over the same timeframe. The gap between reported and adjusted assets remained relatively stable, indicating consistent adjustments for deferred and income tax considerations.

Liabilities

Reported total liabilities exhibited growth from about $6.33 billion in 2019 to $12.07 billion in 2024, with a significant jump between 2021 and 2022, where liabilities escalated sharply from approximately $6.90 billion to nearly $11.20 billion. Adjusted liabilities showed a comparable increase, rising from roughly $5.63 billion to $11.58 billion during the period. The pronounced increase in liabilities in 2022 suggests major changes, possibly linked to financing or operational shifts. The difference between reported and adjusted liabilities decreased marginally over time, indicating stable adjustments.

Stockholders' Equity

Reported stockholders’ equity generally increased from around $2.66 billion in 2019 to approximately $3.37 billion in 2024. However, there was an anomalous dip in 2022 to about $1.40 billion, which deviates significantly from the trend before and after this period. Adjusted equity reflected a similar pattern, dropping to roughly $1.48 billion in 2022 before rising again to about $2.94 billion in 2024. This temporary decline in both reported and adjusted equity suggests a restructuring, impairment, or unusual financial event impacting equity during 2022.

Net Income Attributable to KLA

The reported net income attributable to KLA fluctuated over the period. There was steady growth from about $1.18 billion in 2019 to a peak near $3.39 billion in 2023, followed by a decline to around $2.76 billion in 2024. Adjusted net income showed a similar pattern, rising from approximately $1.15 billion to $3.03 billion before declining to $2.62 billion in 2024. The rise in net income coincided with the increase in assets, but the post-2023 decline may signal operational challenges or external market factors affecting profitability.

Net Profit Margin

The reported net profit margin exhibited a fluctuating trend over the periods, starting at 25.73% in mid-2019, declining to 20.96% in 2020, then rising significantly to peak at 36.06% in 2022 before gradually declining to 28.15% by mid-2024. The adjusted net profit margin followed a similar trajectory, starting at 25.16%, dipping to 19.35%, rising to 32.22% in 2022, and subsequently decreasing to 26.73% in 2024. This reflects variability in profitability with notable improvement during 2021-2022, followed by a moderation in the most recent years.

Total Asset Turnover

Both reported and adjusted total asset turnover ratios showed a consistent upward trend from 2019 through 2023, improving from approximately 0.51-0.52 to around 0.75-0.79, indicating enhanced efficiency in asset utilization over these years. However, in 2024, a decline is observed with the turnover dropping to 0.64 (reported) and 0.68 (adjusted), suggesting a reduction in asset productivity during the latest period.

Financial Leverage

Financial leverage ratios reveal significant volatility. From moderate levels near 3.4 for reported and 2.8 for adjusted in 2019, there is a marked increase in 2022 (reported 8.99, adjusted 8.11), indicating a substantial rise in leverage and potentially increased risk or reliance on debt financing during this period. Following this peak, leverage decreases but remains elevated compared to earlier years, settling around 4.5 reported and 4.9 adjusted by 2024.

Return on Equity (ROE)

ROE demonstrates dramatic fluctuations aligned with changes in leverage and profitability. The reported ROE increased from 44.21% in 2019 to a striking peak of 237.04% in 2022, before declining to 82.00% in 2024. The adjusted ROE mirrors this pattern with slightly lower values but similarly extreme variability, indicating leveraged gains during 2022 followed by normalization. These variations suggest significant impacts of financial leverage and operational performance on shareholder returns.

Return on Assets (ROA)

ROA trends show a more stable, gradual increase from near 13% in 2019 to above 24% in 2022, accompanied by a decrease thereafter to around 18% by 2024. Adjusted ROA follows a parallel pattern but with slightly lower values post-2020. This indicates improved asset profitability through 2022, coupled with a decline in the subsequent periods, consistent with observed patterns in asset turnover and net margin.

Overall Insights

The data reflects periods of enhanced profitability and efficiency culminating around 2022, characterized by peak margins, asset productivity, and returns, albeit accompanied by sharply increased leverage. The subsequent reduction in leverage and profitability metrics toward 2024 points to a possible deleveraging strategy or market adjustments affecting operational results. The difference between reported and adjusted figures is generally consistent, with adjustments slightly tempering some ratios, implying the impact of income tax treatment on financial indicators.

Reported Net Income Attributable to KLA

The reported net income shows a generally increasing trend from 2019 to 2023, with values rising from approximately 1.18 billion USD in 2019 to a peak of about 3.39 billion USD in 2023. However, there is a noticeable decline in 2024, with reported net income falling to approximately 2.76 billion USD.

Adjusted Net Income Attributable to KLA

Adjusted net income follows a similar trajectory to reported net income. Starting from around 1.15 billion USD in 2019, it remains relatively flat in 2020, then substantially increases to just over 3.03 billion USD in 2023 before declining to approximately 2.62 billion USD in 2024. The adjustment appears to have a moderating effect, with adjusted figures consistently lower than reported values but maintaining comparable trends.

Reported Net Profit Margin

The reported net profit margin reveals a fluctuating but overall rising pattern from 2019 through 2022, increasing from 25.73% up to a peak of 36.06%. This peak is followed by a decrease in both 2023 and 2024, falling to 32.27% and then to 28.15%, respectively. This indicates improving profitability margins until 2022, with some erosion in recent years.

Adjusted Net Profit Margin

The adjusted net profit margin parallels the reported margin trend, starting lower at 25.16% in 2019, dipping further in 2020 to 19.35%, before rising steadily and reaching 32.22% in 2022. This is followed by a decline to 28.89% in 2023 and 26.73% in 2024. The adjusted margins are consistently less than the reported margins, reflecting the impact of tax adjustments on perceived profitability.

Overall Insights

Both reported and adjusted net incomes and profit margins exhibit a substantial growth phase between 2019 and 2022, reaching peak profitability during that period. The subsequent declines in 2023 and 2024 suggest emerging challenges or changes in financial conditions affecting profitability. The consistent difference between reported and adjusted figures highlights the influence of deferred income tax considerations on the financial results, with adjustments leading to slightly more conservative measures of income and margin. The trends indicate the company experienced strong profitability growth before a modest downturn in the most recent reporting periods.

The analysis of the adjusted and reported financial data related to total assets and asset turnover over the period from June 30, 2019, to June 30, 2024, reveals several notable trends and patterns.

Total Assets

The reported total assets demonstrate a consistent upward trajectory across the examined periods. Starting at approximately 9.01 billion US dollars in mid-2019, the figure rises steadily each year, reaching about 15.43 billion US dollars by mid-2024. This indicates sustained growth in the asset base.

Similarly, adjusted total assets also show a comparable increasing trend, beginning at around 8.80 billion US dollars and ascending to approximately 14.52 billion US dollars over the same timeframe. The adjusted values consistently present slightly lower figures than the reported totals but follow a parallel path of growth, suggesting that deferred income tax adjustments have a consistent impact on asset valuation without altering the overall growth trend.

Total Asset Turnover

Examining the reported total asset turnover ratio, there is a clear improvement from 0.51 in 2019 to a peak of 0.75 in 2023, indicating enhanced efficiency in generating revenue from assets over these years. However, in 2024, there is a noticeable decrease to 0.64, suggesting a potential decline in turnover efficiency or changes in revenue or asset base affecting this metric.

The adjusted total asset turnover ratio similarly increases from 0.52 in 2019 to a high of 0.79 in 2023 before declining to 0.68 in 2024. The adjusted turnover ratio tends to be slightly higher than the reported ratio across all years, signaling that adjustments related to deferred income taxes may influence the turnover metrics positively.

Patterns and Insights

The overall growth in both reported and adjusted total assets highlights an expanding asset base for the entity, reflective of possible investments or asset acquisitions aligned with business growth strategies.

The increasing asset turnover ratios up to 2023 suggest improving operational efficiency in utilizing assets to generate revenue. The subsequent decline in 2024 might warrant further investigation to determine underlying causes, such as changes in asset utilization, revenue fluctuations, or adjustments affecting asset valuation.

The close alignment between reported and adjusted figures, both for assets and turnover, implies that deferred income tax considerations moderately affect reported values but do not fundamentally alter the trends observed in asset growth and usage efficiency.

Total Assets

There is a consistent upward trend in both reported and adjusted total assets over the six-year period. Reported total assets increased from approximately 9.01 billion USD in mid-2019 to around 15.43 billion USD by mid-2024. Adjusted total assets followed a similar trajectory, rising from about 8.80 billion USD to 14.52 billion USD during the same timeframe. The steady growth implies ongoing asset accumulation or appreciation.

Stockholders’ Equity

The reported stockholders’ equity values display variability, with a notable decline in mid-2022 to approximately 1.40 billion USD from over 3.37 billion USD in the previous year, before recovering to roughly 3.37 billion USD by mid-2024. Adjusted equity exhibits a similar pattern, declining sharply in mid-2022 to about 1.48 billion USD from 3.76 billion USD, then partially recovering but remaining below pre-2022 levels by mid-2024 at approximately 2.94 billion USD. This indicates a significant equity event or adjustment impacting 2022 figures, followed by gradual recovery.

Financial Leverage

Both reported and adjusted financial leverage ratios generally decreased from mid-2019 through mid-2021, suggesting a reduction in leverage. However, there is a pronounced spike in mid-2022, with reported leverage reaching nearly 9.0 and adjusted leverage around 8.11, indicating a substantial increase in debt relative to equity. Post-2022, these ratios decline again but remain elevated compared to earlier years, stabilizing at approximately 4.58 (reported) and 4.94 (adjusted) by mid-2024. The spike corresponds with the sharp equity drop in 2022, highlighting increased financial risk during that period.

General Insights

The data suggest steady growth in asset base over the years, notwithstanding disturbances in stockholders’ equity and leverage in 2022. The significant equity reduction and leverage spike imply possible extraordinary events such as asset impairments, restructuring, or substantial financing activities impacting the company's capital structure during that year. Subsequent partial recovery indicates corrective measures or normalization. The adjusted figures consistently present lower leverage and equity values compared to reported ones, reflecting the impact of deferred income tax adjustments on financial positioning.

The financial data reveals noteworthy trends in KLA Corp.'s profitability and equity over the six-year period ending June 30, 2024.

Net Income (Reported and Adjusted)

Reported net income attributable to KLA shows a general upward trajectory from 1,175,617 thousand USD in 2019 to a peak of 3,387,277 thousand USD in 2023 before declining to 2,761,896 thousand USD in 2024. Adjusted net income follows a similar pattern with increases from 1,149,432 thousand USD in 2019 to 3,032,124 thousand USD in 2023, then decreasing to 2,623,018 thousand USD in 2024. This indicates sustained growth in profit until 2023, followed by a notable decline in the last year observed, with adjusted net income consistently slightly below reported income, reflecting the impact of deferred income tax adjustments.

Total Stockholders' Equity (Reported and Adjusted)

Stockholders’ equity exhibits volatility across the period. Reported total equity increases moderately from 2,659,108 thousand USD in 2019 to 3,377,554 thousand USD in 2021, sharply declines to 1,401,351 thousand USD in 2022, then recovers to 3,368,328 thousand USD by 2024. Adjusted equity corresponds closely but shows lower values overall, descending slightly from 3,155,444 thousand USD in 2019 to a low of 1,481,115 thousand USD in 2022, before rising again to 2,939,729 thousand USD in 2024. The sharp decline in 2022 followed by recovery suggests significant equity adjustments or transactions impacting the capital structure during that fiscal year.

Return on Equity (ROE) (Reported and Adjusted)

ROE metrics demonstrate substantial fluctuations. Reported ROE starts at 44.21% in 2019, gradually rising to a peak of 237.04% in 2022, then decreasing sharply to 82% in 2024. Adjusted ROE mirrors this pattern, ranging from 36.43% in 2019 up to 200.39% in 2022 and declining moderately to 89.23% in 2024. The pronounced spike in ROE during 2022 corresponds with the equity contraction that year, suggesting that reduced equity base led to amplified profitability ratios. The subsequent decline in ROE is consistent with the recovery in equity and net income stabilization.

Overall, the data points to a period of strong profit growth for KLA Corp., interrupted by significant equity fluctuations in 2022 that greatly influenced profitability ratios. Adjusted figures generally track reported amounts closely, indicating that deferred income tax impacts are moderate but consistent. The trends suggest that 2022 was a pivotal year with structural equity changes, followed by a period of recovery and normalization through 2024.

The data indicate a general upward trend in both reported and adjusted financial measures over the analyzed period, with certain fluctuations in the most recent year.

Net Income

Reported net income attributable to the entity showed consistent growth from 2019 through 2023, rising from approximately 1.18 billion USD to 3.39 billion USD. However, in 2024 there was a noticeable decline to around 2.76 billion USD. Adjusted net income follows a similar pattern, growing from roughly 1.15 billion USD in 2019 to just over 3.03 billion USD in 2023 before decreasing to approximately 2.62 billion USD in 2024.

Total Assets

Both reported and adjusted total assets exhibited steady expansion throughout the entire period. Reported total assets increased from approximately 9.01 billion USD in 2019 to 15.43 billion USD in 2024. Adjusted total assets moved in parallel, growing from about 8.80 billion USD to 14.52 billion USD over the same timeframe.

Return on Assets (ROA)

Reported ROA improved significantly from 13.05% in 2019 to a peak of 26.37% in 2022, followed by a decline to 24.07% in 2023 and a further reduction to 17.9% in 2024. Adjusted ROA mirrored this trend with an increase from 13.06% in 2019 to 24.7% in 2022, then a fall to 22.87% in 2023 and 18.07% in 2024.

Overall, the data reveal substantial growth in profitability and asset base over the long term, with peak performance around 2022. The subsequent downward movement in both net income and ROA in 2024 warrants attention, suggesting possible challenges affecting profitability despite the continued asset expansion. The adjustment for deferred income tax appears to have a moderate impact, with adjusted values closely tracking reported figures, indicating that tax effects do not drastically alter the underlying financial trends.