10-QPeriod: Q1 FY2013

APPLIED MATERIALS INC /DE Quarterly Report for Q1 Ended Jan 27, 2013

Filed February 21, 2013For Securities:AMAT

Summary

Applied Materials Inc. (AMAT) reported its fiscal first quarter 2013 results, ending January 26, 2013, showing a significant year-over-year decline in net sales and net income. Net sales decreased by 28% to $1.57 billion from $2.19 billion in the prior year's comparable quarter, while net income fell to $34 million ($0.03 per diluted share) from $117 million ($0.09 per diluted share). This downturn reflects challenging industry conditions across its key segments, particularly in the Energy and Environmental Solutions segment, which experienced a substantial operating loss. Despite the revenue decline, the company saw an increase in new orders, driven primarily by the semiconductor equipment segment, indicating potential future demand. Management is focused on cost management and strategic investments in R&D.

Financial Highlights

56 data points
Beta

Revenue

$1.57B

37.0% Gross Margin

Net Income

$34.00M

2.2% Net Margin

EPS (Diluted)

$0.03

Total Assets

$11.71B

Cash & Equivalents

$1.52B

Free Cash Flow

-$33.00M

Financial Statements
Beta
Revenue$1.57B
Cost of Revenue$991.00M
Gross Profit$582.00M
R&D Expenses$304.00M
SG&A Expenses$230.00M
Operating Expenses$543.00M
Operating Income$39.00M
Interest Expense$24.00M
Net Income$34.00M
EPS (Basic)$0.03
EPS (Diluted)$0.03
Shares Outstanding (Basic)1.20B
Shares Outstanding (Diluted)1.21B

Key Highlights

  • 1Net sales for the quarter were $1.57 billion, a decrease of 28% compared to $2.19 billion in the prior year's first quarter.
  • 2Net income significantly declined to $34 million ($0.03 EPS) from $117 million ($0.09 EPS) year-over-year.
  • 3The Silicon Systems Group remains the largest segment, but saw a 28% decrease in net sales year-over-year, though new orders increased significantly quarter-over-quarter.
  • 4The Energy and Environmental Solutions segment reported a substantial operating loss of $54 million, reflecting ongoing challenges in the solar industry.
  • 5The company announced and is executing restructuring plans, including workforce reductions, impacting its cost structure.
  • 6New orders increased by 5% year-over-year to $2.11 billion, driven by demand in semiconductor equipment, suggesting a potential turnaround.
  • 7The company maintained a strong cash position, with cash, cash equivalents, and investments totaling $2.8 billion, and continued to return capital to shareholders through dividends and stock repurchases.

Frequently Asked Questions

The primary driver for the year-over-year decline in net sales and income was a broad-based slowdown in demand across all segments, most notably in the Energy and Environmental Solutions segment due to persistent challenges in the solar industry. Lower investments in semiconductor equipment, spares, services, and LCD TV equipment also contributed significantly to the revenue decrease.

The increase in new orders, particularly for the Silicon Systems Group, is a positive sign for the semiconductor equipment business. This increase, driven by foundry customers and overall mobility trends, suggests potential future growth. However, industry conditions remain cyclical, and customer investment plans can be sensitive to macroeconomic factors.

Applied Materials is actively managing costs through restructuring plans, including workforce reductions. These initiatives aim to align the company's cost structure with prevailing market conditions and enhance its ability to invest in future growth. The company incurred restructuring charges during the quarter and expects to achieve annual savings from these actions.

Applied Materials maintains a strong liquidity position with approximately $2.8 billion in cash, cash equivalents, and investments. The company continues to prioritize returning capital to shareholders through dividend payments and stock repurchases, while also investing in research and development to maintain its competitive edge.