10-QPeriod: Q3 FY2021

APPLIED MATERIALS INC /DE Quarterly Report for Q3 Ended May 2, 2021

Filed May 27, 2021For Securities:AMAT

Summary

Applied Materials, Inc. (AMAT) reported a strong fiscal second quarter ended May 2, 2021, with net sales increasing significantly by 41% year-over-year to $5.58 billion. This growth was primarily driven by robust demand in the Semiconductor Systems segment, which saw sales jump 55%. The company also experienced substantial growth in its Applied Global Services segment (up 18%) and a modest increase in Display and Adjacent Markets (up 3%). Profitability also improved significantly, with net income soaring 76% to $1.33 billion, and diluted earnings per share rising to $1.43 from $0.82 in the prior year. This performance reflects strong execution and continued investment in semiconductor and display manufacturing technologies. The company also highlighted a significant increase in cash flow from operations, demonstrating solid financial health and operational efficiency.

Financial Highlights

56 data points
Beta

Revenue

$5.58B

47.5% Gross Margin

Net Income

$1.33B

23.8% Net Margin

EPS (Diluted)

$1.43

Total Assets

$24.09B

Cash & Equivalents

$6.30B

Free Cash Flow

$983.00M

Financial Statements
Beta
Revenue$5.58B
Cost of Revenue$2.93B
Gross Profit$2.65B
R&D Expenses$617.00M
Operating Expenses$1.07B
Operating Income$1.58B
Interest Expense$61.00M
Net Income$1.33B
EPS (Basic)$1.45
EPS (Diluted)$1.43
Shares Outstanding (Basic)918.00M
Shares Outstanding (Diluted)927.00M

Key Highlights

  • 1Net sales increased 41% year-over-year to $5.58 billion, driven by strong demand across segments.
  • 2Semiconductor Systems segment sales grew 55% to $3.97 billion, indicating robust industry investment.
  • 3Net income rose 76% to $1.33 billion, with diluted EPS reaching $1.43.
  • 4Gross margin improved to 47.5% from 44.2% in the prior year's quarter, reflecting operational leverage and favorable product mix.
  • 5Cash flow from operating activities was strong at $2.61 billion for the six months ended May 2, 2021, up from $1.62 billion in the prior year period.
  • 6The company repurchased $750 million of common stock during the period and has an authorized repurchase program of $8.0 billion remaining.
  • 7A deal termination fee of $154 million was recognized due to the termination of the Kokusai Electric acquisition agreement.

Frequently Asked Questions

The substantial increase in net sales was primarily driven by strong customer investments in semiconductor equipment, particularly within the Semiconductor Systems segment, which experienced a 55% year-over-year increase in sales. Growth was also supported by an 18% increase in the Applied Global Services segment.

Profitability saw a significant improvement. Net income grew by 76% to $1.33 billion, and diluted earnings per share increased to $1.43 from $0.82 in the same quarter last year. This was supported by increased net sales and a 3.3 percentage point improvement in gross margin.

The company incurred a deal termination fee of $154 million related to the termination of the Kokusai Electric acquisition agreement. Additionally, severance and related charges of $158 million were recorded in connection with workforce realignments.

Applied Materials continues to return capital to shareholders through dividends and share repurchases. The company paid $403 million in dividends and repurchased $750 million of common stock during the six-month period. They also have a substantial remaining authorization for future stock repurchases, totaling approximately $8.0 billion.