01—Abstract
Summary
Summary of the 10-K filed December 17, 2021. Cited figures are marked; the original filing is the authoritative source.
Applied Materials, Inc. (AMAT) demonstrated robust performance in fiscal year 2021, driven by strong demand in the semiconductor industry.
The company's Semiconductor Systems segment, its largest, saw significant growth, reflecting increased customer investments in both advanced and mature nodes. The Applied Global Services segment also experienced substantial growth, indicating the value customers place on ongoing support and optimization of their equipment. The Display and Adjacent Markets segment showed stable performance, with growth in TV display equipment offsetting a decline in mobile display equipment investment.
The company navigated supply chain constraints, which impacted its ability to fully meet demand, particularly in the fourth quarter. Despite these challenges, AMAT maintained a strong financial position, with increased net sales and operating income. Strategic investments in research, development, and engineering (RD&E) continue to be a priority to drive future innovation and market expansion.
02—Key points
Key Highlights
- Strong revenue growth of 34% in fiscal year 2021, reaching $23.06 billion, driven by increased customer investments in semiconductor manufacturing equipment.
- The Semiconductor Systems segment accounted for 71% of net sales, demonstrating its dominance and the industry's demand for AMAT's offerings.
- Applied Global Services segment grew by 21%, highlighting the increasing importance of service and support for customer operations.
- Operating income saw a significant increase of 58% to $6.89 billion, with an operating margin of 29.9%, up from 25.4% in the prior year.
- The company repurchased $3.8 billion of its common stock in fiscal year 2021 and declared dividends totaling $838 million, returning capital to shareholders.
- Backlog reached $11.76 billion by the end of fiscal year 2021, indicating strong future demand, although the Display and Adjacent Markets segment backlog decreased.
- The company continues to invest heavily in RD&E, with expenses rising to $2.49 billion, underscoring its commitment to innovation and future product development.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Applied Materials kept $0.26.
- Revenue$23.06B100.0%
- Cost of revenue−$12.15B52.7%
- Gross profit$10.91B47.3%
- Operating costs−$4.03B17.5%
- Operating income$6.89B29.9%
- Interest, other & tax−$1.00B4.3%
- Net income$5.89B25.5%
Where FY2021 revenue went
$23.06B- Cost of revenue: $12.15B, 53% of revenue
- Net income: $5.89B, 26% of revenue
- R&D: $2.48B, 11% of revenue
- Other operating costs: $1.54B, 6.7% of revenue
- Interest, other & tax: $1.00B, 4.3% of revenue
Kept 26% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed December 17, 2021Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $23.06B$17.20B | +34.1% |
| Cost of Revenue | $12.15B$9.51B | +27.7% |
| Gross Profit | $10.91B$7.69B | +41.9% |
| R&D Expenses | $2.48B$2.23B | +11.2% |
| Operating Expenses | $4.03B$3.33B | +21.0% |
| Operating Income | $6.89B$4.37B | +57.8% |
| Interest Expense | $236.00M$240.00M | −1.7% |
| Net Income | $5.89B$3.62B | +62.7% |
| EPS (Basic) | $6.47$3.95 | +63.8% |
| EPS (Diluted) | $6.40$3.92 | +63.3% |
| Shares Outstanding (Basic) | 910.00M916.00M | −0.7% |
| Shares Outstanding (Diluted) | 919.00M923.00M | −0.4% |
05—Questions
Frequently Asked Questions
What were the main drivers of Applied Materials' revenue growth in fiscal year 2021?
Applied Materials' revenue growth in fiscal year 2021 was primarily driven by strong customer demand and strategic investments in new technology transitions within the semiconductor industry. Both foundry/logic and memory customers increased their capital expenditures, boosting sales in the Semiconductor Systems segment. The Applied Global Services segment also contributed significantly due to an increased installed base and demand for service agreements.
How did Applied Materials manage supply chain challenges during the fiscal year?
Applied Materials acknowledged that supply chain constraints impacted its ability to fulfill demand, particularly in the fourth quarter of fiscal 2021, and expected these shortages to persist into fiscal year 2022. Managing these near-term constraints was identified as a top priority. The company's distributed manufacturing model and supplier relationships are key to navigating these challenges.
What is the outlook for the Semiconductor Systems and Display and Adjacent Markets segments?
The outlook for the Semiconductor Systems segment remains strong, driven by ongoing digital transformation and demand for advanced electronic products. The company expects continued customer investment in new technology transitions. For the Display and Adjacent Markets segment, growth is dependent on consumer demand for larger and more advanced TVs and high-resolution mobile displays, with investment shifts between product categories influencing segment performance.
How is Applied Materials returning capital to shareholders?
Applied Materials is actively returning capital to shareholders through a combination of share repurchases and dividend payments. In fiscal year 2021, the company repurchased $3.8 billion of its common stock under its authorized repurchase program and paid dividends totaling $838 million. The company has significant availability remaining under its stock repurchase authorization.
06—Continue