10-QPeriod: Q2 FY2023

APPLIED MATERIALS INC /DE Quarterly Report for Q2 Ended Apr 30, 2023

Filed May 26, 2023For Securities:AMAT

Summary

Applied Materials, Inc. (AMAT) reported solid financial results for the fiscal second quarter ending April 30, 2023. Net sales increased by 6% year-over-year to $6.63 billion, demonstrating resilience in its core semiconductor equipment business. Diluted earnings per share also saw a healthy increase to $1.86, up from $1.74 in the prior year's quarter. The company continues to benefit from strong demand in the Semiconductor Systems segment, driven by customer investments in new capacity and technology transitions, particularly in foundry and logic. While the Applied Global Services segment showed modest growth, the Display and Adjacent Markets segment experienced a significant decline in net sales, attributed to reduced customer investment amid weak consumer electronics demand. Despite some headwinds, the company's robust performance and strategic positioning in the essential semiconductor industry highlight its continued strength.

Financial Highlights

57 data points
Beta

Revenue

$6.63B

46.7% Gross Margin

Net Income

$1.57B

23.8% Net Margin

EPS (Diluted)

$1.86

Total Assets

$29.09B

Cash & Equivalents

$4.59B

Free Cash Flow

$2.04B

Financial Statements
Beta
Revenue$6.63B
Cost of Revenue$3.54B
Gross Profit$3.09B
R&D Expenses$775.00M
Operating Expenses$1.18B
Operating Income$1.91B
Interest Expense$61.00M
Net Income$1.57B
EPS (Basic)$1.87
EPS (Diluted)$1.86
Shares Outstanding (Basic)843.00M
Shares Outstanding (Diluted)847.00M

Key Highlights

  • 1Net sales increased 6% year-over-year to $6.63 billion for the quarter ended April 30, 2023.
  • 2Diluted earnings per share (EPS) rose to $1.86 from $1.74 in the prior year's quarter.
  • 3The Semiconductor Systems segment, the largest contributor, saw a 12% increase in net sales, driven by foundry and logic investments.
  • 4Applied Global Services segment net sales increased by 3% year-over-year.
  • 5Display and Adjacent Markets segment net sales decreased significantly by 56% year-over-year due to reduced customer investment.
  • 6The company ended the quarter with a strong cash position of $4.6 billion.
  • 7Applied Materials repurchased $804 million of its common stock during the quarter.

Frequently Asked Questions

The increase in net sales was primarily driven by continued customer investments in semiconductor equipment, particularly in the Foundry, logic, and other end-use applications within the Semiconductor Systems segment. Improvements in supply chain performance also enabled the company to better fulfill demand compared to the prior year.

The sharp decrease in net sales for the Display and Adjacent Markets segment is attributed to lower customer investments in display manufacturing equipment. This is largely due to a reported weakness in demand for consumer electronic products, impacting the segment's performance.

Applied Materials ended the quarter with a strong cash and cash equivalents balance of $4.6 billion. The company is actively returning capital to shareholders through dividends and share repurchases. During the quarter, they repurchased $804 million of common stock and paid $268 million in dividends. A significant stock repurchase program remains available, authorizing $10.0 billion in repurchases.

The company highlighted several risks, including volatility in the semiconductor and display industries, uncertainties in the global economy, supply chain disruptions, geopolitical tensions and trade policies (particularly regarding China), a concentrated customer base, and the ongoing need to invest heavily in research and development to maintain its competitive edge.