• Applied Materials Announces Third Quarter 2023 Results

    ソース: Nasdaq GlobeNewswire / 17 8 2023 15:01:34   America/Chicago

    • Revenue $6.43 billion, down 1 percent year over year
    • GAAP operating margin 28.0 percent and non-GAAP operating margin 28.3 percent, down 1.5 points and 1.7 points year over year, respectively
    • GAAP EPS $1.85 and non-GAAP EPS $1.90, flat and down 2 percent year over year, respectively
    • Generated $2.58 billion in cash from operations

    SANTA CLARA, Calif., Aug. 17, 2023 (GLOBE NEWSWIRE) --  Applied Materials, Inc. (NASDAQ: AMAT) today reported results for its third quarter ended July 30, 2023.

    Third Quarter Results

    Applied generated revenue of $6.43 billion. On a GAAP basis, the company reported gross margin of 46.3 percent, operating income of $1.80 billion or 28.0 percent of net sales, and earnings per share (EPS) of $1.85.

    On a non-GAAP adjusted basis, the company reported gross margin of 46.4 percent, operating income of $1.82 billion or 28.3 percent of net sales, and EPS of $1.90.

    The company generated $2.58 billion in cash from operations and distributed $707 million to shareholders including $439 million in share repurchases and $268 million in dividends.

    “Applied Materials executed well in our fiscal third quarter, with revenue and earnings at the high end of our guidance range,” said Gary Dickerson, President and CEO. “Over the past several years, we have focused our strategy and investments on key technologies to accelerate the Internet of Things and AI era, enabling us to consistently deliver strong results in 2023 and positioning Applied Materials for sustainable outperformance.”

    Results Summary

     Q3 FY2023 Q3 FY2022 Change
     (In millions, except per share amounts and percentages)
    Net sales$6,425  $6,520  (1)%
    Gross margin 46.3%  46.1% 0.2 points
    Operating margin 28.0%  29.5% (1.5) points
    Net income$1,560  $1,606  (3)%
    Diluted earnings per share$1.85  $1.85  — 
    Non-GAAP Adjusted Results     
    Non-GAAP adjusted gross margin 46.4%  46.2% 0.2 points
    Non-GAAP adjusted operating margin 28.3%  30.0% (1.7) points
    Non-GAAP adjusted net income$1,600  $1,683  (5)%
    Non-GAAP adjusted diluted EPS$1.90  $1.94  (2)%


    A reconciliation of the GAAP and non-GAAP adjusted results is provided in the financial tables included in this release. See also “Use of Non-GAAP Adjusted Financial Measures” section.

    Business Outlook

    In the fourth quarter of fiscal 2023, Applied expects net sales to be approximately $6.51 billion, plus or minus $400 million. Non-GAAP adjusted diluted EPS is expected to be in the range of $1.82 to $2.18.

    This outlook for non-GAAP adjusted diluted EPS excludes known charges related to completed acquisitions of $0.01 per share, includes the normalized tax benefit of share-based compensation of $0.01 per share and includes a net income tax benefit related to intra-entity intangible asset transfers of $0.01 per share, but does not reflect any items that are unknown at this time, such as any additional charges related to acquisitions or other non-operational or unusual items, as well as other tax-related items, which we are not able to predict without unreasonable efforts due to their inherent uncertainty.

    Third Quarter Reportable Segment Information

    Semiconductor SystemsQ3 FY2023 Q3 FY2022
     (In millions, except percentages)
    Net sales$4,676  $4,734 
    Foundry, logic and other 79%  66%
    DRAM 17%  15%
    Flash memory 4%  19%
    Operating income$1,618  $1,701 
    Operating margin 34.6%  35.9%
    Non-GAAP Adjusted Results  
    Non-GAAP adjusted operating income$1,628  $1,708 
    Non-GAAP adjusted operating margin 34.8%  36.1%


    Applied Global ServicesQ3 FY2023 Q3 FY2022
     (In millions, except percentages)
    Net sales$1,464  $1,420 
    Operating income$429  $434 
    Operating margin 29.3%  30.6%
    Non-GAAP Adjusted Results  
    Non-GAAP adjusted operating income$429  $434 
    Non-GAAP adjusted operating margin 29.3%  30.6%


    Display and Adjacent MarketsQ3 FY2023 Q3 FY2022
     (In millions, except percentages)
    Net sales$235  $333 
    Operating income$37  $69 
    Operating margin 15.7%  20.7%
    Non-GAAP Adjusted Results  
    Non-GAAP adjusted operating income$37  $70 
    Non-GAAP adjusted operating margin 15.7%  21.0%


    Use of Non-GAAP Adjusted Financial Measures

    Applied provides investors with certain non-GAAP adjusted financial measures, which are adjusted for the impact of certain costs, expenses, gains and losses, including certain items related to mergers and acquisitions; restructuring and severance charges and any associated adjustments; impairments of assets; gain or loss, dividends and impairments on strategic investments; certain income tax items and other discrete adjustments. On a non-GAAP basis, the tax effect related to share-based compensation is recognized ratably over the fiscal year. Reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are provided in the financial tables included in this release.

    Management uses these non-GAAP adjusted financial measures to evaluate the company’s operating and financial performance and for planning purposes, and as performance measures in its executive compensation program. Applied believes these measures enhance an overall understanding of its performance and investors’ ability to review the company’s business from the same perspective as the company’s management, and facilitate comparisons of this period’s results with prior periods on a consistent basis by excluding items that management does not believe are indicative of Applied's ongoing operating performance. There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles, may be different from non-GAAP financial measures used by other companies, and may exclude certain items that may have a material impact upon our reported financial results. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP.

    Webcast Information

    Applied Materials will discuss these results during an earnings call that begins at 1:30 p.m. Pacific Time today. A live webcast and related slide presentation will be available at www.appliedmaterials.com. A replay will be available on the website beginning at 5:00 p.m. Pacific Time today.

    Forward-Looking Statement

    This press release contains forward-looking statements, including those regarding anticipated growth and trends in our businesses and markets, industry outlooks and demand drivers, technology transitions, our business and financial performance and market share positions, our capital allocation and cash deployment strategies, our investment and growth strategies, our development of new products and technologies, our business outlook for the fourth quarter of fiscal 2023 and beyond, and other statements that are not historical facts. These statements and their underlying assumptions are subject to risks and uncertainties and are not guarantees of future performance. Factors that could cause actual results to differ materially from those expressed or implied by such statements include, without limitation: the level of demand for our products, our ability to meet customer demand, and our suppliers' ability to meet our demand requirements; global economic, political and industry conditions, including rising inflation and interest rates; the implementation and interpretation of new export regulations and license requirements, and their impact on our ability to export products and provide services to customers and on our results of operations; global trade issues and changes in trade and export license policies; our ability to obtain licenses or authorizations on a timely basis, if at all; consumer demand for electronic products; the demand for semiconductors; customers’ technology and capacity requirements; the introduction of new and innovative technologies, and the timing of technology transitions; our ability to develop, deliver and support new products and technologies; the concentrated nature of our customer base; our ability to expand our current markets, increase market share and develop new markets; market acceptance of existing and newly developed products; our ability to obtain and protect intellectual property rights in key technologies; our ability to achieve the objectives of operational and strategic initiatives, align our resources and cost structure with business conditions, and attract, motivate and retain key employees; the effects of regional or global health epidemics, including COVID-19; acquisitions, investments and divestitures; changes in income tax laws; the variability of operating expenses and results among products and segments, and our ability to accurately forecast future results, market conditions, customer requirements and business needs; our ability to ensure compliance with applicable law, rules and regulations; and other risks and uncertainties described in our SEC filings, including our recent Forms 10-Q and 8-K. All forward-looking statements are based on management’s current estimates, projections and assumptions, and we assume no obligation to update them.

    About Applied Materials

    Applied Materials, Inc. (Nasdaq: AMAT) is the leader in materials engineering solutions used to produce virtually every new chip and advanced display in the world. Our expertise in modifying materials at atomic levels and on an industrial scale enables customers to transform possibilities into reality. At Applied Materials, our innovations make possible a better future. Learn more at www.appliedmaterials.com.

    Contact:

    Ricky Gradwohl (editorial/media) 408.235.4676
    Michael Sullivan (financial community) 408.986.7977


    APPLIED MATERIALS, INC.
    UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

     Three Months Ended Nine Months Ended
    (In millions, except per share amounts)July 30,
    2023    		 July 31,
    2022    		 July 30,
    2023    		 July 31,
    2022
    Net sales$6,425 $6,520  $19,794 $19,036 
    Cost of products sold 3,449  3,514   10,579  10,144 
    Gross profit 2,976  3,006   9,215  8,892 
    Operating expenses:       
    Research, development and engineering 767  705   2,313  2,045 
    Marketing and selling 193  180   584  520 
    General and administrative 214  197   635  537 
    Severance and related charges —  —   —  (4)
    Total operating expenses 1,174  1,082   3,532  3,098 
    Income from operations 1,802  1,924   5,683  5,794 
    Interest expense 60  56   180  171 
    Interest and other income (expense), net 64  (7)  41  27 
    Income before income taxes 1,806  1,861   5,544  5,650 
    Provision for income taxes 246  255   692  716 
    Net income$1,560 $1,606  $4,852 $4,934 
    Earnings per share:       
    Basic$1.86 $1.86  $5.76 $5.63 
    Diluted$1.85 $1.85  $5.73 $5.59 
    Weighted average number of shares:       
    Basic 838  864   842  877 
    Diluted 843  869   846  883 


    APPLIED MATERIALS, INC.
    UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS

    (In millions)July 30,
    2023    		 October 30,
    2022
    ASSETS   
    Current assets:   
    Cash and cash equivalents$6,025 $1,995
    Short-term investments 510  586
    Accounts receivable, net 5,230  6,068
    Inventories 5,809  5,932
    Other current assets 1,305  1,344
    Total current assets 18,879  15,925
    Long-term investments 2,177  1,980
    Property, plant and equipment, net 2,604  2,307
    Goodwill 3,732  3,700
    Purchased technology and other intangible assets, net 305  339
    Deferred income taxes and other assets 2,713  2,475
    Total assets$30,410 $26,726
    LIABILITIES AND STOCKHOLDERS’ EQUITY   
    Current liabilities:   
    Short-term debt$199 $—
    Accounts payable and accrued expenses 4,528  4,237
    Contract liabilities 3,497  3,142
    Total current liabilities 8,224  7,379
    Long-term debt 5,460  5,457
    Income taxes payable 818  964
    Other liabilities 815  732
    Total liabilities 15,317  14,532
    Total stockholders’ equity 15,093  12,194
    Total liabilities and stockholders’ equity$30,410 $26,726


    APPLIED MATERIALS, INC.
    UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

    (In millions)

    		Three Months Ended Nine Months Ended
    July 30,
    2023    		 July 31,
    2022    		July 30,
    2023    		 July 31,
    2022
    Cash flows from operating activities:       
    Net income$1,560  $1,606  $4,852  $4,934 
    Adjustments required to reconcile net income to cash provided by operating activities:       
    Depreciation and amortization 136   108   385   321 
    Severance and related charges —   —   —   (4)
    Share-based compensation 114   95   375   314 
    Deferred income taxes (38)  47   (174)  (209)
    Other 15   22   189   14 
    Net change in operating assets and liabilities 796   (409)  1,518   (828)
    Cash provided by operating activities 2,583   1,469   7,145   4,542 
    Cash flows from investing activities:       
    Capital expenditures (255)  (210)  (797)  (564)
    Cash paid for acquisitions, net of cash acquired (7)  (441)  (25)  (441)
    Proceeds from sales and maturities of investments 302   374   971   1,013 
    Purchases of investments (465)  (339)  (1,195)  (1,175)
    Cash used in investing activities (425)  (616)  (1,046)  (1,167)
    Cash flows from financing activities:       
    Proceeds from commercial paper 297   —   892   — 
    Repayments of commercial paper (300)  —   (700)  — 
    Proceeds from common stock issuances —   —   111   96 
    Common stock repurchases (439)  (1,000)  (1,489)  (4,603)
    Tax withholding payments for vested equity awards (11)  (3)  (165)  (259)
    Payments of dividends to stockholders (268)  (225)  (707)  (650)
    Repayments of principal on finance leases 1   —   (8)  — 
    Cash used in financing activities (720)  (1,228)  (2,066)  (5,416)
    Increase (decrease) in cash, cash equivalents and restricted cash equivalents 1,438   (375)  4,033   (2,041)
    Cash, cash equivalents and restricted cash equivalents—beginning of period 4,695   3,435   2,100   5,101 
    Cash, cash equivalents and restricted cash equivalents — end of period$6,133  $3,060  $6,133  $3,060 
            
    Reconciliation of cash, cash equivalents, and restricted cash equivalents       
    Cash and cash equivalents$6,025  $2,956  $6,025  $2,956 
    Restricted cash equivalents included in deferred income taxes and other assets 108   104   108   104 
    Total cash, cash equivalents, and restricted cash equivalents$6,133  $3,060  $6,133  $3,060 
            
    Supplemental cash flow information:       
    Cash payments for income taxes$197  $592  $418  $1,623 
    Cash refunds from income taxes$—  $5  $51  $133 
    Cash payments for interest$35  $35  $137  $137 


    APPLIED MATERIALS, INC.
    UNAUDITED SUPPLEMENTAL INFORMATION

    Corporate and Other

    (In millions)Q3 FY2023 Q3 FY2022
    Unallocated net sales$50  $33 
    Unallocated cost of products sold and expenses (218)  (218)
    Share-based compensation (114)  (95)
    Total$(282) $(280)


    Additional Information

     Q3 FY2023 Q3 FY2022
    Net Sales by Geography (In millions) 
    United States$1,039  $725 
    % of Total 16%  11%
    Europe$661  $529 
    % of Total 10%  8%
    Japan$478  $438 
    % of Total 8%  7%
    Korea$988  $1,224 
    % of Total 15%  19%
    Taiwan$1,345  $1,537 
    % of Total 21%  24%
    Southeast Asia$180  $270 
    % of Total 3%  4%
    China$1,734  $1,797 
    % of Total 27%  27%
        
    Employees(In thousands)   
    Regular Full Time 34.5   31.9 


    APPLIED MATERIALS, INC.
    UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS

     Three Months Ended Nine Months Ended
    (In millions, except percentages)July 30,
    2023    		 July 31,
    2022    		 July 30,
    2023    		 July 31,
    2022
    Non-GAAP Adjusted Gross Profit       
    Reported gross profit - GAAP basis$2,976  $3,006  $9,215  $8,892 
    Certain items associated with acquisitions1 7   7   21   20 
    Non-GAAP adjusted gross profit$2,983  $3,013  $9,236  $8,912 
    Non-GAAP adjusted gross margin 46.4%  46.2%  46.7%  46.8%
    Non-GAAP Adjusted Operating Income       
    Reported operating income - GAAP basis$1,802  $1,924  $5,683  $5,794 
    Certain items associated with acquisitions1 10   10   32   29 
    Acquisition integration and deal costs 6   19   20   32 
    Severance and related charges2 —   —   —   (4)
    Non-GAAP adjusted operating income$1,818  $1,953  $5,735  $5,851 
    Non-GAAP adjusted operating margin 28.3%  30.0%  29.0%  30.7%
    Non-GAAP Adjusted Net Income       
    Reported net income - GAAP basis$1,560  $1,606  $4,852  $4,934 
    Certain items associated with acquisitions1 10   10   32   29 
    Acquisition integration and deal costs 6   12   20   28 
    Severance and related charges2 —   —   —   (4)
    Realized loss (gain), dividends and impairments on strategic investments, net (4)  (1)  109   (1)
    Unrealized loss (gain) on strategic investments, net 6   18   13   (15)
    Income tax effect of share-based compensation3 5   22   (6)  (22)
    Income tax effects related to intra-entity intangible asset transfers 9   21   25   120 
    Resolution of prior years’ income tax filings and other tax items 10   1   (22)  (54)
    Income tax effect of non-GAAP adjustments4 (2)  (6)  (7)  — 
    Non-GAAP adjusted net income$1,600  $1,683  $5,016  $5,015 


    1 These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets.
      
    2The severance and related charges primarily related to a one-time voluntary retirement program offered to certain eligible employees.
      
    3GAAP basis tax benefit related to share-based compensation is recognized ratably over the fiscal year on a non-GAAP basis.
      
    4Adjustment to provision for income taxes related to non-GAAP adjustments reflected in income before income taxes.
      
      

    APPLIED MATERIALS, INC.
    UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS

     Three Months Ended Nine Months Ended
    (In millions, except per share amounts)July 30,
    2023    		 July 31,
    2022    		 July 30,
    2023    		 July 31,
    2022
    Non-GAAP Adjusted Earnings Per Diluted Share       
    Reported earnings per diluted share - GAAP basis$1.85 $1.85 $5.73  $5.59 
    Certain items associated with acquisitions 0.01  0.01  0.04   0.03 
    Acquisition integration and deal costs 0.01  0.01  0.02   0.03 
    Realized loss (gain), dividends and impairments on strategic investments, net —  —  0.13   — 
    Unrealized loss (gain) on strategic investments, net —  0.02  0.01   (0.02)
    Income tax effect of share-based compensation 0.01  0.03  (0.01)  (0.03)
    Income tax effects related to intra-entity intangible asset transfers 0.01  0.02  0.03   0.14 
    Resolution of prior years’ income tax filings and other tax items 0.01  —  (0.02)  (0.06)
    Non-GAAP adjusted earnings per diluted share$1.90 $1.94 $5.93  $5.68 
    Weighted average number of diluted shares 843  869  846   883 


     

    APPLIED MATERIALS, INC.
    UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS

     Three Months Ended Nine Months Ended
    (In millions, except percentages)July 30,
    2023    		 July 31,
    2022    		 July 30,
    2023    		 July 31,
    2022
    Semiconductor Systems Non-GAAP Adjusted Operating Income       
    Reported operating income - GAAP basis$1,618  $1,701  $5,299  $5,120 
    Certain items associated with acquisitions1 10   7   29   22 
    Non-GAAP adjusted operating income$1,628  $1,708  $5,328  $5,142 
    Non-GAAP adjusted operating margin 34.8%  36.1%  36.0%  37.4%
    AGS Non-GAAP Adjusted Operating Income       
    Reported operating income - GAAP basis$429  $434  $1,226  $1,259 
    Non-GAAP adjusted operating income$429  $434  $1,226  $1,259 
    Non-GAAP adjusted operating margin 29.3%  30.6%  28.8%  30.5%
    Display and Adjacent Markets Non-GAAP Adjusted Operating Income       
    Reported operating income - GAAP basis$37  $69  $66  $226 
    Certain items associated with acquisitions1 —   1   —   3 
    Non-GAAP adjusted operating income$37  $70  $66  $229 
    Non-GAAP adjusted operating margin 15.7%  21.0%  11.6%  21.2%


    1 These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets.


    Note: The reconciliation of GAAP and non-GAAP adjusted segment results above does not include certain revenues, costs of products sold and operating expenses that are reported within corporate and other and included in consolidated operating income.


    APPLIED MATERIALS, INC.
    UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED EFFECTIVE INCOME TAX RATE

     Three Months
    Ended
    (In millions, except percentages)July 30, 2023
      
    Provision for income taxes - GAAP basis(a)$246 
    Income tax effect of share-based compensation (5)
    Income tax effects related to intra-entity intangible asset transfers (9)
    Resolutions of prior years’ income tax filings and other tax items (10)
    Income tax effect of non-GAAP adjustments 2 
    Non-GAAP adjusted provision for income taxes(b)$224 
      
    Income before income taxes - GAAP basis(c)$1,806 
    Certain items associated with acquisitions 10 
    Acquisition integration and deal costs 6 
    Realized loss (gain), dividends and impairments on strategic investments, net (4)
    Unrealized loss (gain) on strategic investments, net 6 
    Non-GAAP adjusted income before income taxes(d)$1,824 
      
    Effective income tax rate - GAAP basis(a/c) 13.6%
      
    Non-GAAP adjusted effective income tax rate(b/d) 12.3%

     


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