01—Abstract
Summary
Summary of the 10-K filed December 15, 2016. Cited figures are marked; the original filing is the authoritative source.
Applied Materials Inc. (AMAT) reported a strong fiscal year 2016, with net sales reaching $10.83 billiona, a significant increase from the previous year, driven primarily by robust demand in the Semiconductor Systems segment.
The company demonstrated solid financial performance, with operating income growing to $2.15 billionb and a healthy gross margin of 41.7%. Significant investments in research, development, and engineering (RD&E) continue, with $1.54 billion allocated to innovation, reflecting the company's commitment to staying at the forefront of materials engineering for the semiconductor, display, and related industries. The company's backlog also saw a substantial increase to $4.58 billion, signaling strong future demand.
Applied Materials continued its commitment to shareholder returns through dividends and share repurchases, repurchasing $1.89 billionc of its common stock during the fiscal year. The company's diversified business across Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets positions it well to capitalize on industry trends, particularly the ongoing demand for advanced mobile devices and evolving display technologies.
02—Key points
Key Highlights
- Net sales increased by 12% year-over-year to $10.83 billion in fiscal year 2016.
- Semiconductor Systems segment remains the largest contributor, with net sales of $6.87 billion.
- Backlog significantly increased by 46% to $4.58 billion at the end of fiscal year 2016.
- Research, Development, and Engineering (RD&E) expenses were $1.54 billion, representing 14% of net sales.
- The company returned capital to shareholders through $444 million in cash dividends and $1.89 billion in share repurchases.
- Gross margin was 41.7%, and operating margin was 19.9% for fiscal year 2016.
- Key customers like TSMC, Samsung Electronics, Intel, and Micron Technology accounted for a significant portion of net sales.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, Applied Materials kept $0.16.
- Revenue$10.82B100.0%
- Cost of revenue−$6.31B58.3%
- Gross profit$4.51B41.7%
- Operating costs−$2.36B21.8%
- Operating income$2.15B19.9%
- Interest, other & tax−$431.0M4.0%
- Net income$1.72B15.9%
Where FY2016 revenue went
$10.82B- Cost of revenue: $6.31B, 58% of revenue
- Net income: $1.72B, 16% of revenue
- R&D: $1.54B, 14% of revenue
- Other operating costs: $819.0M, 7.6% of revenue
- Interest, other & tax: $431.0M, 4.0% of revenue
Kept 16% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed December 15, 2016Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $10.82B$9.66B | +12.1% |
| Cost of Revenue | $6.31B$5.71B | +10.6% |
| Gross Profit | $4.51B$3.95B | +14.1% |
| R&D Expenses | $1.54B$1.45B | +6.1% |
| Operating Expenses | $2.36B$2.26B | +4.4% |
| Operating Income | $2.15B$1.69B | +27.1% |
| Interest Expense | $155.00M$103.00M | +50.5% |
| Net Income | $1.72B$1.38B | +25.0% |
| EPS (Basic) | $1.56$1.13 | +38.1% |
| EPS (Diluted) | $1.54$1.12 | +37.5% |
| Shares Outstanding (Basic) | 1.11B1.21B | −8.8% |
| Shares Outstanding (Diluted) | 1.12B1.23B | −9.0% |
05—Questions
Frequently Asked Questions
What was Applied Materials' revenue performance in fiscal year 2016?
Applied Materials reported net sales of $10.83 billion in fiscal year 2016, an increase of 12% compared to fiscal year 2015. This growth was primarily driven by increased customer investments in semiconductor and display equipment.
How did the different business segments perform?
The Semiconductor Systems segment was the largest contributor to net sales, accounting for $6.87 billion. The Applied Global Services segment generated $2.59 billion in net sales, and the Display and Adjacent Markets segment had net sales of $1.21 billion. The company also experienced a significant increase in new orders for the Display and Adjacent Markets segment.
What is the company's outlook for future demand based on the backlog?
The company's backlog increased substantially to $4.58 billion at the end of fiscal year 2016, up 46% from the previous year. This strong backlog indicates robust future demand, particularly for display and semiconductor equipment, with approximately 64% of the backlog expected to be shipped within the next two quarters.
How is Applied Materials investing in innovation?
Applied Materials significantly invested $1.54 billion in Research, Development, and Engineering (RD&E) in fiscal year 2016, which represents 14% of net sales. These investments are focused on new product growth in Semiconductor Systems and Display and Adjacent Markets, including advancements in etch technology, e-beam inspection, materials engineering, and OLED displays.
06—Continue