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Applied Materials Announces First Quarter 2021 Results
المصدر: Nasdaq GlobeNewswire / 18 فبراير 2021 15:01:00 America/Chicago
- Record quarterly revenue of $5.16 billion, up 24 percent year over year
- Quarterly GAAP EPS of $1.22 and record non-GAAP EPS of $1.39, up 27 percent and 42 percent year over year, respectively
- Generated $1.42 billion in cash from operations
SANTA CLARA, Calif., Feb. 18, 2021 (GLOBE NEWSWIRE) -- Applied Materials, Inc. (NASDAQ: AMAT) today reported results for its first quarter ended Jan. 31, 2021.
First Quarter Results
Applied generated revenue of $5.16 billion. On a GAAP basis, the company recorded gross margin of 45.5 percent, operating income of $1.28 billion or 24.9 percent of net sales, and earnings per share (EPS) of $1.22.
On a non-GAAP adjusted basis, the company reported gross margin of 45.9 percent, operating income of $1.50 billion or 29.0 percent of net sales, and EPS of $1.39.
The company generated $1.42 billion in cash from operations and paid dividends of $201 million to shareholders.
“In our first fiscal quarter, we’ve seen a continued acceleration of demand in our semiconductor business as major macro and industry trends fuel increasing consumption of silicon across a wide range of markets and applications,” said Gary Dickerson, president and CEO. “We have strong momentum across the company, as our broad portfolio and exposure to technology inflections, combined with the traction of our new products, put us in a great position to substantially outgrow our markets again in 2021 and beyond.”
Quarterly Results Summary
Q1 FY2021 Q1 FY2020 Change (In millions, except per share amounts and percentages) Net sales $ 5,162 $ 4,162 24% Gross margin 45.5 % 44.6 % 0.9 points Operating margin 24.9 % 25.0 % (0.1) points Net income $ 1,130 $ 892 27% Diluted earnings per share $ 1.22 $ 0.96 27% Non-GAAP Adjusted Results Non-GAAP adjusted gross margin 45.9 % 44.9 % 1.0 points Non-GAAP adjusted operating margin 29.0 % 25.7 % 3.3 points Non-GAAP adjusted net income $ 1,282 $ 904 42% Non-GAAP adjusted diluted EPS $ 1.39 $ 0.98 42% First quarter GAAP results included $152 million of severance and related charges primarily related to a one-time voluntary retirement program offered to certain eligible employees, which reduced earnings per share by $0.13.
A reconciliation of the GAAP and non-GAAP adjusted results is provided in the financial tables included in this release. See also “Use of Non-GAAP Adjusted Financial Measures” section.
Business Outlook
In the second quarter of fiscal 2021, Applied expects net sales to be approximately $5.39 billion, plus or minus $200 million. Non-GAAP adjusted diluted EPS is expected to be in the range of $1.44 to $1.56.
This outlook for non-GAAP adjusted diluted EPS excludes known charges related to completed acquisitions of $0.01 per share, includes the normalized tax benefit of share-based compensation of $0.01 per share and a net income tax benefit related to intra-entity intangible asset transfers of $0.03 per share, but does not reflect any items that are unknown at this time, such as any additional charges related to acquisitions or other non-operational or unusual items, as well as other tax related items, which we are not able to predict without unreasonable efforts due to their inherent uncertainty.
First Quarter Reportable Segment Information
Semiconductor Systems Q1 FY2021 Q1 FY2020 (In millions, except percentages) Net sales $ 3,553 $ 2,814 Foundry, logic and other 58 % 68 % DRAM 17 % 15 % Flash memory 25 % 17 % Operating income 1,261 915 Operating margin 35.5 % 32.5 % Non-GAAP Adjusted Results Non-GAAP adjusted operating income $ 1,281 $ 925 Non-GAAP adjusted operating margin 36.1 % 32.9 % Applied Global Services Q1 FY2021 Q1 FY2020 (In millions, except percentages) Net sales $ 1,155 $ 997 Operating income 332 278 Operating margin 28.7 % 27.9 % Non-GAAP Adjusted Results Non-GAAP adjusted operating income $ 340 $ 278 Non-GAAP adjusted operating margin 29.4 % 27.9 % Display and Adjacent Markets Q1 FY2021 Q1 FY2020 (In millions, except percentages) Net sales $ 411 $ 332 Operating income 65 38 Operating margin 15.8 % 11.4 % Non-GAAP Adjusted Results Non-GAAP adjusted operating income $ 75 $ 41 Non-GAAP adjusted operating margin 18.2 % 12.3 % Use of Non-GAAP Adjusted Financial Measures
Applied provides investors with certain non-GAAP adjusted financial measures, which are adjusted for the impact of certain costs, expenses, gains and losses, including certain items related to mergers and acquisitions; restructuring and severance charges and any associated adjustments; certain incremental expenses related to COVID-19; impairments of assets, or investments; gain or loss on sale of strategic investments; loss on early extinguishment of debt; certain income tax items and other discrete adjustments. On a non-GAAP basis, the tax effect related to share-based compensation is recognized ratably over the fiscal year. Additionally, non-GAAP results exclude estimated discrete income tax expense items associated with U.S. tax legislation. Reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are provided in the financial tables included in this release.
Management uses these non-GAAP adjusted financial measures to evaluate the company’s operating and financial performance and for planning purposes, and as performance measures in its executive compensation program. Applied believes these measures enhance an overall understanding of its performance and investors’ ability to review the company’s business from the same perspective as the company’s management, and facilitate comparisons of this period’s results with prior periods on a consistent basis by excluding items that management does not believe are indicative of Applied's ongoing operating performance. There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles, may be different from non-GAAP financial measures used by other companies, and may exclude certain items that may have a material impact upon our reported financial results. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP.
Webcast Information
Applied Materials will discuss these results during an earnings call that begins at 1:30 p.m. Pacific Time today. A live webcast and related slide presentation will be available at www.appliedmaterials.com. A replay will be available on the website beginning at 5:00 p.m. Pacific Time today.
Forward-Looking Statements
This press release contains forward-looking statements, including those regarding anticipated growth and trends in our businesses and markets, industry outlooks and demand drivers, technology transitions, our business and financial performance and market share positions, our capital allocation and cash deployment strategies, our investment and growth strategies, our development of new products and technologies, our business outlook for the second quarter of fiscal 2021 and beyond, the impact of the ongoing COVID-19 pandemic and responses thereto on our operations and financial results, strategic acquisitions and investments, including the proposed acquisition of Kokusai Electric Corporation, and other statements that are not historical facts. These statements and their underlying assumptions are subject to risks and uncertainties and are not guarantees of future performance. Factors that could cause actual results to differ materially from those expressed or implied by such statements include, without limitation: the level of demand for our products; global economic and industry conditions; the effects of regional or global health epidemics, including the severity and duration of the ongoing COVID-19 pandemic; global trade issues and changes in trade and export license policies, including the recent rules and interpretations promulgated by U.S. Department of Commerce expanding export license requirements for certain products sold to certain entities in China; consumer demand for electronic products; the demand for semiconductors; customers’ technology and capacity requirements; the introduction of new and innovative technologies, and the timing of technology transitions; our ability to develop, deliver and support new products and technologies; the concentrated nature of our customer base; acquisitions, investments and divestitures; changes in income tax laws; our ability to expand our current markets, increase market share and develop new markets; market acceptance of existing and newly developed products; our ability to obtain and protect intellectual property rights in key technologies; our ability to achieve the objectives of operational and strategic initiatives, align our resources and cost structure with business conditions, and attract, motivate and retain key employees; the variability of operating expenses and results among products and segments, and our ability to accurately forecast future results, market conditions, customer requirements and business needs; and other risks and uncertainties described in our SEC filings, including our recent Forms 10-K and 8-K. All forward-looking statements are based on management’s current estimates, projections and assumptions, and we assume no obligation to update them.
About Applied Materials
Applied Materials, Inc. (Nasdaq: AMAT) is the leader in materials engineering solutions used to produce virtually every new chip and advanced display in the world. Our expertise in modifying materials at atomic levels and on an industrial scale enables customers to transform possibilities into reality. At Applied Materials, our innovations make possible the technology shaping the future. Learn more at www.appliedmaterials.com.
Contact:
Ricky Gradwohl (editorial/media) 408.235.4676
Michael Sullivan (financial community) 408.986.7977APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONSThree Months Ended (In millions, except per share amounts) January 31,
2021January 26,
2020Net sales $ 5,162 $ 4,162 Cost of products sold 2,813 2,304 Gross profit 2,349 1,858 Operating expenses: Research, development and engineering 606 552 Marketing and selling 147 135 General and administrative 161 129 Severance and related charges 152 — Total operating expenses 1,066 816 Income from operations 1,283 1,042 Interest expense 61 59 Interest and other income, net 18 22 Income before income taxes 1,240 1,005 Provision for income taxes 110 113 Net income $ 1,130 $ 892 Earnings per share: Basic $ 1.23 $ 0.97 Diluted $ 1.22 $ 0.96 Weighted average number of shares: Basic 915 916 Diluted 925 927 APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS(In millions) January 31,
2021October 25,
2020ASSETS Current assets: Cash and cash equivalents $ 6,213 $ 5,351 Short-term investments 410 387 Accounts receivable, net 3,045 2,963 Inventories 3,925 3,904 Other current assets 676 764 Total current assets 14,269 13,369 Long-term investments 1,601 1,538 Property, plant and equipment, net 1,638 1,604 Goodwill 3,479 3,466 Purchased technology and other intangible assets, net 140 153 Deferred income taxes and other assets 2,178 2,223 Total assets $ 23,305 $ 22,353 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued expenses $ 2,932 $ 3,138 Contract liabilities 1,572 1,321 Total current liabilities 4,504 4,459 Long-term debt, net of current portion 5,449 5,448 Income taxes payable 1,210 1,206 Other liabilities 669 662 Total liabilities 11,832 11,775 Total stockholders’ equity 11,473 10,578 Total liabilities and stockholders’ equity $ 23,305 $ 22,353 APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS(In millions) Three Months Ended January 31,
2021January 26,
2020Cash flows from operating activities: Net income $ 1,130 $ 892 Adjustments required to reconcile net income to cash provided by operating activities: Depreciation and amortization 94 94 Severance and related charges 148 — Share-based compensation 107 93 Deferred income taxes 28 30 Other — 15 Net change in operating assets and liabilities (86 ) (137 ) Cash provided by operating activities 1,421 987 Cash flows from investing activities: Capital expenditures (121 ) (102 ) Cash paid for acquisitions, net of cash acquired (12 ) — Proceeds from sales and maturities of investments 358 368 Purchases of investments (441 ) (428 ) Cash used in investing activities (216 ) (162 ) Cash flows from financing activities: Proceeds from common stock issuances — 15 Common stock repurchases — (200 ) Tax withholding payments for vested equity awards (142 ) (153 ) Payments of dividends to stockholders (201 ) (192 ) Cash used in financing activities (343 ) (530 ) Increase in cash, cash equivalents and restricted cash equivalents 862 295 Cash, cash equivalents and restricted cash equivalents—beginning of period 5,466 3,129 Cash, cash equivalents and restricted cash equivalents—end of period $ 6,328 $ 3,424 Reconciliation of cash, cash equivalents, and restricted cash equivalents Cash and cash equivalents $ 6,213 $ 3,424 Restricted cash equivalents included in deferred income taxes and other assets 115 — Total cash, cash equivalents, and restricted cash equivalents $ 6,328 $ 3,424 Supplemental cash flow information: Cash payments for income taxes $ 110 $ 82 Cash refunds from income taxes $ 19 $ 1 Cash payments for interest $ 35 $ 34 APPLIED MATERIALS, INC.
UNAUDITED SUPPLEMENTAL INFORMATIONCorporate and Other
(In millions) Q1 FY2021 Q1 FY2020 Unallocated net sales $ 43 $ 19 Unallocated cost of products sold and expenses (167 ) (115 ) Share-based compensation (107 ) (93 ) Severance and related charges (144 ) — Total $ (375 ) $ (189 ) Additional Information
Q1 FY2021 Q1 FY2020 Net Sales by Geography (In millions) United States 343 441 % of Total 6 % 10 % Europe 299 153 % of Total 6 % 4 % Japan 458 351 % of Total 9 % 8 % Korea 1,289 508 % of Total 25 % 12 % Taiwan 1,200 1,365 % of Total 23 % 33 % Southeast Asia 190 72 % of Total 4 % 2 % China 1,383 1,272 % of Total 27 % 31 % Employees (In thousands) Regular Full Time 24.2 22.3 APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTSThree Months Ended (In millions, except percentages) January 31,
2021January 26,
2020Non-GAAP Adjusted Gross Profit Reported gross profit - GAAP basis $ 2,349 $ 1,858 Certain items associated with acquisitions1 8 9 Certain incremental expenses related to COVID-192 12 — Non-GAAP adjusted gross profit $ 2,369 $ 1,867 Non-GAAP adjusted gross margin 45.9 % 44.9 % Non-GAAP Adjusted Operating Income Reported operating income - GAAP basis $ 1,283 $ 1,042 Certain items associated with acquisitions1 13 13 Acquisition integration and deal costs 24 13 Certain incremental expenses related to COVID-192 24 — Severance and related charges3 152 — Non-GAAP adjusted operating income $ 1,496 $ 1,068 Non-GAAP adjusted operating margin 29.0 % 25.7 % Non-GAAP Adjusted Net Income Reported net income - GAAP basis $ 1,130 $ 892 Certain items associated with acquisitions1 13 13 Acquisition integration and deal costs 24 13 Certain incremental expenses related to COVID-192 24 — Severance and related charges3 152 — Realized loss (gain) on strategic investments, net (2 ) 2 Unrealized loss (gain) on strategic investments, net (6 ) 2 Income tax effect of share-based compensation4 (29 ) (33 ) Income tax effects related to intra-entity intangible asset transfers 20 21 Resolution of prior years’ income tax filings and other tax items (3 ) (1 ) Income tax effect of non-GAAP adjustments5 (41 ) (5 ) Non-GAAP adjusted net income $ 1,282 $ 904 1 These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets. 2 Temporary incremental employee compensation during the COVID-19 pandemic. 3 The severance and related charges primarily related to a one-time voluntary retirement program offered to certain eligible employees. 4 GAAP basis tax benefit related to share-based compensation is recognized ratably over the fiscal year on a non-GAAP basis. 5 Adjustment to provision for income taxes related to non-GAAP adjustments reflected in income before income taxes. APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTSThree Months Ended (In millions, except per share amounts) January 31,
2021January 26,
2020Non-GAAP Adjusted Earnings Per Diluted Share Reported earnings per diluted share - GAAP basis $ 1.22 $ 0.96 Certain items associated with acquisitions 0.01 0.01 Acquisition integration and deal costs 0.02 0.01 Certain incremental expenses related to COVID-19 0.02 — Severance and related charges 0.13 — Income tax effect of share-based compensation (0.03 ) (0.03 ) Income tax effects related to intra-entity intangible asset transfers 0.02 0.03 Non-GAAP adjusted earnings per diluted share $ 1.39 $ 0.98 Weighted average number of diluted shares 925 927 APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTSThree Months Ended (In millions, except percentages) January 31,
2021January 26,
2020Semiconductor Systems Non-GAAP Adjusted Operating Income Reported operating income - GAAP basis $ 1,261 $ 915 Certain items associated with acquisitions1 10 10 Acquisition integration costs (2 ) — Certain incremental expenses related to COVID-192 12 — Non-GAAP adjusted operating income $ 1,281 $ 925 Non-GAAP adjusted operating margin 36.1 % 32.9 % AGS Non-GAAP Adjusted Operating Income Reported operating income - GAAP basis $ 332 $ 278 Certain incremental expenses related to COVID-192 8 — Non-GAAP adjusted operating income $ 340 $ 278 Non-GAAP adjusted operating margin 29.4 % 27.9 % Display and Adjacent Markets Non-GAAP Adjusted Operating Income Reported operating income - GAAP basis $ 65 $ 38 Certain items associated with acquisitions1 1 3 Certain incremental expenses related to COVID-192 1 — Severance and related charges3 8 — Non-GAAP adjusted operating income $ 75 $ 41 Non-GAAP adjusted operating margin 18.2 % 12.3 % 1 These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets. 2 Temporary incremental employee compensation during the COVID-19 pandemic. 3 The severance and related charges related to workforce reduction actions globally across the Display and Adjacent Markets business. Note: The reconciliation of GAAP and non-GAAP adjusted segment results above does not include certain revenues, costs of products sold and operating expenses that are reported within corporate and other and included in consolidated operating income.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED EFFECTIVE INCOME TAX RATE
Three Months
Ended(In millions, except percentages) January 31, 2021 Provision for income taxes - GAAP basis (a) $ 110 Income tax effect of share-based compensation 29 Income tax effects related to intra-entity intangible asset transfers (20 ) Resolutions of prior years’ income tax filings and other tax items 3 Income tax effect of non-GAAP adjustments 41 Non-GAAP adjusted provision for income taxes (b) $ 163 Income before income taxes - GAAP basis (c) $ 1,240 Certain items associated with acquisitions 13 Acquisition integration and deal costs 24 Certain incremental expenses related to COVID-19 24 Severance and related charges 152 Realized loss (gain) on strategic investments, net (2 ) Unrealized loss (gain) on strategic investments, net (6 ) Non-GAAP adjusted income before income taxes (d) $ 1,445 Effective income tax rate - GAAP basis (a/c) 8.9 % Non-GAAP adjusted effective income tax rate (b/d) 11.3 % 