What were the primary drivers of the year-over-year revenue decline?

The primary driver of the revenue decline was decreased customer spending on semiconductor and display manufacturing equipment. This was particularly evident in the Semiconductor Systems and Display and Adjacent Markets segments.

How did the company's profitability change?

Despite the revenue decline, net income increased by 46% to $666 million, and diluted earnings per share rose to $0.70. This improvement was partly due to a lower provision for income taxes compared to the prior year, which included significant tax expenses related to new U.S. tax legislation.

What is the outlook for the different business segments?

Applied anticipates continued softening in demand for memory-related semiconductor equipment through 2019, though foundry and logic spending are expected to increase year-on-year. The display equipment market is also expected to see lower spending in fiscal 2019. The global services business is expected to continue to grow.

What is the company's approach to capital allocation?

Applied Materials is actively returning capital to shareholders through share repurchases and dividends. During the quarter, the company repurchased $625 million of its stock and paid $196 million in dividends. A significant amount ($3.0 billion) remains available under its share repurchase authorization.

AMAT 10-Q Quarterly Report Q2 FY2019 — Revenue, Net Income, EPS

Summary

Applied Materials, Inc. reported a decrease in net sales for the third quarter of fiscal year 2019 compared to the same period last year, primarily driven by reduced customer spending on semiconductor and display manufacturing equipment. While the Semiconductor Systems segment remained the largest contributor to revenue, it experienced a significant decline. Despite the top-line decrease, the company saw an increase in net income and diluted earnings per share year-over-year. The Applied Global Services segment demonstrated resilience with modest revenue and operating income growth. The company continues to invest in research and development, essential for maintaining its competitive edge in the highly dynamic technology sector, with management anticipating long-term growth drivers to remain in place despite near-term market softening.

Financial Highlights

56 data points

Beta

Revenue

$3.54B

0.4% Gross Margin

Net Income

$666.00M

0.2% Net Margin

EPS (Diluted)

$0.70

Total Assets

$18.77B

Cash & Equivalents

$3.12B

Free Cash Flow

$682.00M

Financial Statements

Beta

Revenue	$3.54B
Cost of Revenue	$2.01B
Gross Profit	$1.53B
R&D Expenses	$508.00M
Operating Expenses	$754.00M
Operating Income	$776.00M
Interest Expense	$60.00M
Net Income	$666.00M
EPS (Basic)	$0.71
EPS (Diluted)	$0.70
Shares Outstanding (Basic)	942.00M
Shares Outstanding (Diluted)	948.00M

Key Highlights

1Net sales decreased by 23% to $3.54 billion for the quarter ended April 28, 2019, compared to $4.58 billion in the prior year quarter.
2Gross margin declined by 1.7 percentage points to 43.2% due to lower sales and unfavorable product mix.
3Operating income fell by 40% to $776 million, reflecting the decrease in net sales and gross margin.
4Net income increased by 46% to $666 million, or $0.70 per diluted share, compared to $1.10 billion, or $1.06 per diluted share in the prior year quarter.
5The Semiconductor Systems segment, the largest revenue contributor, saw a 25% decrease in net sales.
6The Applied Global Services segment showed growth, with net sales increasing by 4% to $984 million and operating income rising by 1% to $283 million.
7The company repurchased $625 million of its common stock during the quarter, with approximately $3.0 billion remaining under its authorized repurchase program.

APPLIED MATERIALS INC /DE Quarterly Report for Q2 Ended Apr 28, 2019

Summary

Financial Highlights

Key Highlights

Frequently Asked Questions