Applied Materials, Inc. (NASDAQ: AMAT) today reported results for
its third quarter ended Aug. 1, 2021.
Third Quarter Results
Applied generated revenue of $6.20 billion. On a GAAP basis, the
company recorded gross margin of 47.9 percent, operating income of
$2.01 billion or 32.5 percent of net sales, and earnings per share
(EPS) of $1.87.
On a non-GAAP adjusted basis, the company reported gross margin
of 48.0 percent, operating income of $2.03 billion or 32.7 percent
of net sales, and EPS of $1.90.
The company generated $1.69 billion in cash from operations and
returned $1.72 billion to shareholders including $1.50 billion in
share repurchases and $219 million in dividends.
“Applied Materials delivered record performance as long-term
trends fueled by the digital transformation of the economy drive
strong, secular demand for semiconductors,” said Gary Dickerson,
President and CEO. “Applied has the broadest and most enabling
portfolio of technologies to accelerate our customers’ roadmaps,
putting us in a great position to outperform our markets again in
2021 and the years ahead.”
Quarterly Results Summary
|
Q3 FY2021 |
|
Q3 FY2020 |
|
Change |
|
(In millions, except per share amounts and percentages) |
Net sales |
$ |
6,196 |
|
|
$ |
4,395 |
|
|
41% |
Gross margin |
47.9 |
% |
|
44.5 |
% |
|
3.4 points |
Operating margin |
32.5 |
% |
|
25.2 |
% |
|
7.3 points |
Net income |
$ |
1,716 |
|
|
$ |
841 |
|
|
104% |
Diluted earnings per share |
$ |
1.87 |
|
|
$ |
0.91 |
|
|
105% |
Non-GAAP Adjusted Results |
|
|
|
|
|
Non-GAAP adjusted gross margin |
48.0 |
% |
|
45.0 |
% |
|
3.0 points |
Non-GAAP adjusted operating margin |
32.7 |
% |
|
26.4 |
% |
|
6.3 points |
Non-GAAP adjusted net income |
$ |
1,740 |
|
|
$ |
976 |
|
|
78% |
Non-GAAP adjusted diluted EPS |
$ |
1.90 |
|
|
$ |
1.06 |
|
|
79% |
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 fourth quarter of fiscal 2021, Applied expects net sales
to be approximately $6.33 billion, plus or minus $250 million.
Non-GAAP adjusted diluted EPS is expected to be in the range of
$1.87 to $2.01.
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.
Third Quarter Reportable Segment
Information
Semiconductor
Systems |
Q3 FY2021 |
|
Q3 FY2020 |
|
(In millions, except percentages) |
Net sales |
$ |
4,454 |
|
|
$ |
2,916 |
|
Foundry, logic and other |
63 |
% |
|
55 |
% |
DRAM |
20 |
% |
|
22 |
% |
Flash memory |
17 |
% |
|
23 |
% |
Operating income |
$ |
1,785 |
|
|
$ |
958 |
|
Operating margin |
40.1 |
% |
|
32.9 |
% |
Non-GAAP
Adjusted Results |
|
|
Non-GAAP
adjusted operating income |
$ |
1,794 |
|
|
$ |
982 |
|
Non-GAAP
adjusted operating margin |
40.3 |
% |
|
33.7 |
% |
Applied Global
Services |
Q3 FY2021 |
|
Q3 FY2020 |
|
(In millions, except percentages) |
Net sales |
$ |
1,286 |
|
|
$ |
1,034 |
|
Operating income |
$ |
393 |
|
|
$ |
273 |
|
Operating margin |
30.6 |
% |
|
26.4 |
% |
Non-GAAP
Adjusted Results |
|
|
Non-GAAP
adjusted operating income |
$ |
393 |
|
|
$ |
277 |
|
Non-GAAP
adjusted operating margin |
30.6 |
% |
|
26.8 |
% |
Display and Adjacent
Markets |
Q3 FY2021 |
|
Q3 FY2020 |
|
(In millions, except percentages) |
Net sales |
$ |
431 |
|
|
$ |
425 |
|
Operating income |
$ |
99 |
|
|
$ |
83 |
|
Operating margin |
23.0 |
% |
|
19.5 |
% |
Non-GAAP
Adjusted Results |
|
|
Non-GAAP
adjusted operating income |
$ |
100 |
|
|
$ |
87 |
|
Non-GAAP
adjusted operating margin |
23.2 |
% |
|
20.5 |
% |
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; gain or loss on
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
fourth quarter of fiscal 2021 and beyond, the impact of the ongoing
COVID-19 pandemic and responses thereto on our operations and
financial results, 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,
our ability to meet customer demand, and our suppliers' ability to
meet our demand requirements; 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 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-Q 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 a better future. Learn
more at www.appliedmaterials.com.
Contact:
Ricky Gradwohl (editorial/media) 408.235.4676Michael
Sullivan (financial community) 408.986.7977
APPLIED MATERIALS, INC.UNAUDITED CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
|
Three Months Ended |
|
Nine Months Ended |
(In millions, except per share
amounts) |
August 1,2021 |
|
July 26,2020 |
|
August 1,2021 |
|
July 26,2020 |
Net
sales |
$ |
6,196 |
|
|
$ |
4,395 |
|
|
$ |
16,940 |
|
|
$ |
12,514 |
|
Cost of
products sold |
3,229 |
|
|
2,440 |
|
|
8,971 |
|
|
6,952 |
|
Gross
profit |
2,967 |
|
|
1,955 |
|
|
7,969 |
|
|
5,562 |
|
Operating expenses: |
|
|
|
|
|
|
|
Research, development and engineering |
640 |
|
|
572 |
|
|
1,863 |
|
|
1,674 |
|
Marketing and selling |
159 |
|
|
130 |
|
|
454 |
|
|
395 |
|
General and administrative |
155 |
|
|
145 |
|
|
465 |
|
|
411 |
|
Severance and related charges |
— |
|
|
— |
|
|
158 |
|
|
— |
|
Deal termination fee |
— |
|
|
— |
|
|
154 |
|
|
— |
|
Total
operating expenses |
954 |
|
|
847 |
|
|
3,094 |
|
|
2,480 |
|
Income
from operations |
2,013 |
|
|
1,108 |
|
|
4,875 |
|
|
3,082 |
|
Interest
expense |
57 |
|
|
61 |
|
|
179 |
|
|
181 |
|
Interest
and other income, net |
24 |
|
|
(7 |
) |
|
69 |
|
|
22 |
|
Income
before income taxes |
1,980 |
|
|
1,040 |
|
|
4,765 |
|
|
2,923 |
|
Provision for income taxes |
264 |
|
|
199 |
|
|
589 |
|
|
435 |
|
Net
income |
$ |
1,716 |
|
|
$ |
841 |
|
|
$ |
4,176 |
|
|
$ |
2,488 |
|
Earnings
per share: |
|
|
|
|
|
|
|
Basic |
$ |
1.89 |
|
|
$ |
0.92 |
|
|
$ |
4.57 |
|
|
$ |
2.71 |
|
Diluted |
$ |
1.87 |
|
|
$ |
0.91 |
|
|
$ |
4.52 |
|
|
$ |
2.69 |
|
Weighted
average number of shares: |
|
|
|
|
|
|
|
Basic |
908 |
|
|
915 |
|
|
914 |
|
|
916 |
|
Diluted |
918 |
|
|
922 |
|
|
923 |
|
|
924 |
|
APPLIED MATERIALS, INC.UNAUDITED CONSOLIDATED
CONDENSED BALANCE SHEETS
(In millions) |
August 1,2021 |
|
October 25,2020 |
ASSETS |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
6,066 |
|
|
$ |
5,351 |
|
Short-term investments |
444 |
|
|
387 |
|
Accounts receivable, net |
3,822 |
|
|
2,963 |
|
Inventories |
4,117 |
|
|
3,904 |
|
Other current assets |
799 |
|
|
764 |
|
Total
current assets |
15,248 |
|
|
13,369 |
|
Long-term investments |
1,658 |
|
|
1,538 |
|
Property, plant and equipment, net |
1,814 |
|
|
1,604 |
|
Goodwill |
3,479 |
|
|
3,466 |
|
Purchased technology and other intangible assets, net |
116 |
|
|
153 |
|
Deferred
income taxes and other assets |
2,164 |
|
|
2,223 |
|
Total
assets |
$ |
24,479 |
|
|
$ |
22,353 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable and accrued expenses |
$ |
3,437 |
|
|
$ |
3,138 |
|
Contract liabilities |
1,688 |
|
|
1,321 |
|
Total
current liabilities |
5,125 |
|
|
4,459 |
|
Long-term debt, net of current portion |
5,451 |
|
|
5,448 |
|
Income
taxes payable |
1,144 |
|
|
1,206 |
|
Other
liabilities |
699 |
|
|
662 |
|
Total
liabilities |
12,419 |
|
|
11,775 |
|
Total
stockholders’ equity |
12,060 |
|
|
10,578 |
|
Total
liabilities and stockholders’ equity |
$ |
24,479 |
|
|
$ |
22,353 |
|
APPLIED MATERIALS, INC.UNAUDITED CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOWS
(In millions) |
Three Months Ended |
|
Nine Months Ended |
August 1,2021 |
|
July 26,2020 |
August 1,2021 |
|
July 26,2020 |
Cash
flows from operating activities: |
|
|
|
|
|
|
|
Net income |
$ |
1,716 |
|
|
$ |
841 |
|
|
$ |
4,176 |
|
|
$ |
2,488 |
|
Adjustments required to reconcile net income to cash provided by
operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
98 |
|
|
94 |
|
|
289 |
|
|
279 |
|
Severance and related charges |
— |
|
|
— |
|
|
149 |
|
|
— |
|
Share-based compensation |
81 |
|
|
70 |
|
|
272 |
|
|
234 |
|
Deferred income taxes |
20 |
|
|
79 |
|
|
44 |
|
|
98 |
|
Other |
(15 |
) |
|
33 |
|
|
(30 |
) |
|
55 |
|
Net change in operating assets and liabilities |
(214 |
) |
|
(250 |
) |
|
(606 |
) |
|
(665 |
) |
Cash
provided by operating activities |
1,686 |
|
|
867 |
|
|
4,294 |
|
|
2,489 |
|
Cash
flows from investing activities: |
|
|
|
|
|
|
|
Capital expenditures |
(137 |
) |
|
(87 |
) |
|
(462 |
) |
|
(260 |
) |
Cash paid for acquisitions, net of cash acquired |
— |
|
|
(80 |
) |
|
(12 |
) |
|
(107 |
) |
Proceeds from sales and maturities of investments |
400 |
|
|
353 |
|
|
1,024 |
|
|
1,388 |
|
Purchases of investments |
(457 |
) |
|
(178 |
) |
|
(1,179 |
) |
|
(1,010 |
) |
Cash
provided by (used in) investing activities |
(194 |
) |
|
8 |
|
|
(629 |
) |
|
11 |
|
Cash
flows from financing activities: |
|
|
|
|
|
|
|
Debt borrowings, net of issuance costs |
— |
|
|
1,481 |
|
|
— |
|
|
2,979 |
|
Debt repayments |
— |
|
|
(2,882 |
) |
|
— |
|
|
(2,882 |
) |
Proceeds from common stock issuances |
— |
|
|
— |
|
|
86 |
|
|
91 |
|
Common stock repurchases |
(1,500 |
) |
|
(200 |
) |
|
(2,250 |
) |
|
(599 |
) |
Tax withholding payments for vested equity awards |
(12 |
) |
|
(3 |
) |
|
(171 |
) |
|
(166 |
) |
Payments of dividends to stockholders |
(219 |
) |
|
(202 |
) |
|
(622 |
) |
|
(587 |
) |
Cash
used in financing activities |
(1,731 |
) |
|
(1,806 |
) |
|
(2,957 |
) |
|
(1,164 |
) |
Increase
(decrease) in cash, cash equivalents and restricted cash
equivalents |
(239 |
) |
|
(931 |
) |
|
708 |
|
|
1,336 |
|
Cash,
cash equivalents and restricted cash equivalents—beginning of
period |
6,413 |
|
|
5,396 |
|
|
5,466 |
|
|
3,129 |
|
Cash,
cash equivalents and restricted cash equivalents — end of
period |
$ |
6,174 |
|
|
$ |
4,465 |
|
|
$ |
6,174 |
|
|
$ |
4,465 |
|
|
|
|
|
|
|
|
|
Reconciliation of cash, cash equivalents, and restricted cash
equivalents |
|
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
6,066 |
|
|
$ |
4,350 |
|
|
$ |
6,066 |
|
|
$ |
4,350 |
|
Restricted cash equivalents included in deferred income taxes and
other assets |
108 |
|
|
115 |
|
|
108 |
|
|
115 |
|
Total
cash, cash equivalents, and restricted cash equivalents |
$ |
6,174 |
|
|
$ |
4,465 |
|
|
$ |
6,174 |
|
|
$ |
4,465 |
|
|
|
|
|
|
|
|
|
Supplemental cash flow information: |
|
|
|
|
|
|
|
Cash payments for income taxes |
$ |
232 |
|
|
$ |
238 |
|
|
$ |
641 |
|
|
$ |
519 |
|
Cash refunds from income taxes |
$ |
3 |
|
|
$ |
— |
|
|
$ |
26 |
|
|
$ |
5 |
|
Cash payments for interest |
$ |
34 |
|
|
$ |
41 |
|
|
$ |
137 |
|
|
$ |
151 |
|
APPLIED MATERIALS, INC.UNAUDITED SUPPLEMENTAL
INFORMATION
Corporate and Other
(In millions) |
Q3 FY2021 |
|
Q3 FY2020 |
Unallocated net sales |
$ |
25 |
|
|
$ |
20 |
|
Unallocated cost of products sold and expenses |
(208 |
) |
|
(156 |
) |
Share-based compensation |
(81 |
) |
|
(70 |
) |
Total |
$ |
(264 |
) |
|
$ |
(206 |
) |
Additional Information
|
Q3 FY2021 |
|
Q3 FY2020 |
Net
Sales by Geography (In millions) |
|
United States |
$ |
533 |
|
|
$ |
399 |
|
% of Total |
9 |
% |
|
9 |
% |
Europe |
$ |
238 |
|
|
$ |
196 |
|
% of Total |
4 |
% |
|
5 |
% |
Japan |
$ |
449 |
|
|
$ |
472 |
|
% of Total |
7 |
% |
|
11 |
% |
Korea |
$ |
1,291 |
|
|
$ |
1,051 |
|
% of Total |
21 |
% |
|
24 |
% |
Taiwan |
$ |
1,261 |
|
|
$ |
687 |
|
% of Total |
20 |
% |
|
16 |
% |
Southeast Asia |
$ |
173 |
|
|
$ |
120 |
|
% of Total |
3 |
% |
|
2 |
% |
China |
$ |
2,251 |
|
|
$ |
1,470 |
|
% of Total |
36 |
% |
|
33 |
% |
|
|
|
|
Employees (In thousands) |
|
|
|
Regular
Full Time |
26.0 |
|
|
23.6 |
|
APPLIED MATERIALS, INC. UNAUDITED
RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS
|
Three Months Ended |
|
Nine Months Ended |
(In millions, except
percentages) |
August 1,2021 |
|
July 26,2020 |
|
August 1,2021 |
|
July 26,2020 |
Non-GAAP
Adjusted Gross Profit |
|
|
|
|
|
|
|
Reported gross profit - GAAP basis |
$ |
2,967 |
|
|
|
$ |
1,955 |
|
|
|
$ |
7,969 |
|
|
|
$ |
5,562 |
|
|
Certain
items associated with acquisitions1 |
6 |
|
|
|
8 |
|
|
|
21 |
|
|
|
25 |
|
|
Certain
incremental expenses related to COVID-192 |
— |
|
|
|
15 |
|
|
|
12 |
|
|
|
23 |
|
|
Other
charges |
— |
|
|
|
— |
|
|
|
2 |
|
|
|
— |
|
|
Non-GAAP
adjusted gross profit |
$ |
2,973 |
|
|
|
$ |
1,978 |
|
|
|
$ |
8,004 |
|
|
|
$ |
5,610 |
|
|
Non-GAAP
adjusted gross margin |
48.0 |
|
% |
|
45.0 |
|
% |
|
47.2 |
|
% |
|
44.8 |
|
% |
Non-GAAP
Adjusted Operating Income |
|
|
|
|
|
|
|
Reported
operating income - GAAP basis |
$ |
2,013 |
|
|
|
$ |
1,108 |
|
|
|
$ |
4,875 |
|
|
|
$ |
3,082 |
|
|
Certain
items associated with acquisitions1 |
11 |
|
|
|
12 |
|
|
|
36 |
|
|
|
38 |
|
|
Acquisition integration and deal costs |
5 |
|
|
|
20 |
|
|
|
40 |
|
|
|
54 |
|
|
Certain
incremental expenses related to COVID-192 |
— |
|
|
|
20 |
|
|
|
24 |
|
|
|
30 |
|
|
Severance and related charges3 |
— |
|
|
|
— |
|
|
|
158 |
|
|
|
— |
|
|
Deal
termination fee |
— |
|
|
|
— |
|
|
|
154 |
|
|
|
— |
|
|
Other
charges |
— |
|
|
|
— |
|
|
|
6 |
|
|
|
— |
|
|
Non-GAAP
adjusted operating income |
$ |
2,029 |
|
|
|
$ |
1,160 |
|
|
|
$ |
5,293 |
|
|
|
$ |
3,204 |
|
|
Non-GAAP
adjusted operating margin |
32.7 |
|
% |
|
26.4 |
|
% |
|
31.2 |
|
% |
|
25.6 |
|
% |
Non-GAAP
Adjusted Net Income |
|
|
|
|
|
|
|
Reported
net income - GAAP basis |
$ |
1,716 |
|
|
|
$ |
841 |
|
|
|
$ |
4,176 |
|
|
|
$ |
2,488 |
|
|
Certain
items associated with acquisitions1 |
11 |
|
|
|
12 |
|
|
|
36 |
|
|
|
38 |
|
|
Acquisition integration and deal costs |
5 |
|
|
|
20 |
|
|
|
41 |
|
|
|
54 |
|
|
Certain
incremental expenses related to COVID-192 |
— |
|
|
|
20 |
|
|
|
24 |
|
|
|
30 |
|
|
Severance and related charges3 |
— |
|
|
|
— |
|
|
|
158 |
|
|
|
— |
|
|
Deal
termination fee |
— |
|
|
|
— |
|
|
|
154 |
|
|
|
— |
|
|
Realized
loss (gain) on strategic investments, net |
(6 |
) |
|
|
(8 |
) |
|
|
(2 |
) |
|
|
(1 |
) |
|
Unrealized loss (gain) on strategic investments, net |
(13 |
) |
|
|
(5 |
) |
|
|
(45 |
) |
|
|
(1 |
) |
|
Loss on
early extinguishment of debt |
— |
|
|
|
33 |
|
|
|
— |
|
|
|
33 |
|
|
Other
charges |
— |
|
|
|
— |
|
|
|
6 |
|
|
|
— |
|
|
Income tax effect of share-based compensation4 |
11 |
|
|
|
12 |
|
|
|
(12 |
) |
|
|
(13 |
) |
|
Income tax effects related to
intra-entity intangible asset transfers |
23 |
|
|
|
67 |
|
|
|
60 |
|
|
|
104 |
|
|
Resolution of prior years’ income tax filings and other tax
items |
(9 |
) |
|
|
(1 |
) |
|
|
(22 |
) |
|
|
(5 |
) |
|
Income
tax effect of non-GAAP adjustments5 |
2 |
|
|
|
(15 |
) |
|
|
(43 |
) |
|
|
(30 |
) |
|
Non-GAAP
adjusted net income |
$ |
1,740 |
|
|
|
$ |
976 |
|
|
|
$ |
4,531 |
|
|
|
$ |
2,697 |
|
|
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 RESULTS
|
Three Months Ended |
|
Nine Months Ended |
(In millions, except per share
amounts) |
August 1,2021 |
|
July 26,2020 |
|
August 1,2021 |
|
July 26,2020 |
Non-GAAP
Adjusted Earnings Per Diluted Share |
|
|
|
|
|
|
|
Reported earnings per diluted share - GAAP basis |
$ |
1.87 |
|
|
$ |
0.91 |
|
|
$ |
4.52 |
|
|
$ |
2.69 |
|
Certain
items associated with acquisitions |
0.01 |
|
|
0.01 |
|
|
0.03 |
|
|
0.04 |
|
Acquisition integration and deal costs |
0.01 |
|
|
0.02 |
|
|
0.04 |
|
|
0.05 |
|
Certain
incremental expenses related to COVID-19 |
— |
|
|
0.02 |
|
|
0.02 |
|
|
0.03 |
|
Loss on
early extinguishment of debt |
— |
|
|
0.03 |
|
|
— |
|
|
0.03 |
|
Severance and related charges |
— |
|
|
— |
|
|
0.13 |
|
|
— |
|
Deal
termination fee |
— |
|
|
— |
|
|
0.17 |
|
|
— |
|
Realized
loss (gain) on strategic investments, net |
(0.01 |
) |
|
(0.01 |
) |
|
0.01 |
|
|
— |
|
Unrealized loss (gain) on strategic investments, net |
(0.01 |
) |
|
— |
|
|
(0.05 |
) |
|
— |
|
Other
charges |
— |
|
|
— |
|
|
0.01 |
|
|
— |
|
Income tax effect of share-based compensation |
0.01 |
|
|
0.01 |
|
|
(0.01 |
) |
|
(0.02 |
) |
Income tax effects related to intra-entity intangible asset
transfers |
0.03 |
|
|
0.07 |
|
|
0.06 |
|
|
0.11 |
|
Resolution of prior years’ income tax filings and other tax
items |
(0.01 |
) |
|
— |
|
|
(0.02 |
) |
|
(0.01 |
) |
Non-GAAP
adjusted earnings per diluted share |
$ |
1.90 |
|
|
$ |
1.06 |
|
|
$ |
4.91 |
|
|
$ |
2.92 |
|
Weighted
average number of diluted shares |
918 |
|
|
922 |
|
|
923 |
|
|
924 |
|
APPLIED MATERIALS, INC.UNAUDITED RECONCILIATION
OF GAAP TO NON-GAAP ADJUSTED RESULTS
|
Three Months Ended |
|
Nine Months Ended |
(In millions, except
percentages) |
August 1,2021 |
|
July 26,2020 |
|
August 1,2021 |
|
July 26,2020 |
Semiconductor Systems Non-GAAP Adjusted Operating Income |
|
|
|
|
|
|
|
Reported operating income - GAAP basis |
$ |
1,785 |
|
|
$ |
958 |
|
|
$ |
4,588 |
|
|
|
$ |
2,655 |
|
Certain
items associated with acquisitions1 |
9 |
|
|
9 |
|
|
29 |
|
|
|
29 |
|
Acquisition integration costs |
— |
|
|
1 |
|
|
(2 |
) |
|
|
1 |
|
Certain
incremental expenses related to COVID-192 |
— |
|
|
14 |
|
|
12 |
|
|
|
20 |
|
Other
charges |
— |
|
|
— |
|
|
3 |
|
|
|
— |
|
Non-GAAP
adjusted operating income |
$ |
1,794 |
|
|
$ |
982 |
|
|
$ |
4,630 |
|
|
|
$ |
2,705 |
|
Non-GAAP
adjusted operating margin |
40.3 |
% |
|
33.7 |
% |
|
38.7 |
|
% |
|
32.6 |
% |
AGS
Non-GAAP Adjusted Operating Income |
|
|
|
|
|
|
|
Reported
operating income - GAAP basis |
$ |
393 |
|
|
$ |
273 |
|
|
$ |
1,083 |
|
|
|
$ |
807 |
|
Certain
incremental expenses related to COVID-192 |
— |
|
|
4 |
|
|
8 |
|
|
|
8 |
|
Other
charges |
— |
|
|
— |
|
|
1 |
|
|
|
— |
|
Non-GAAP
adjusted operating income |
$ |
393 |
|
|
$ |
277 |
|
|
$ |
1,092 |
|
|
|
$ |
815 |
|
Non-GAAP
adjusted operating margin |
30.6 |
% |
|
26.8 |
% |
|
30.0 |
|
% |
|
26.7 |
% |
Display
and Adjacent Markets Non-GAAP Adjusted Operating Income |
|
|
|
|
|
|
|
Reported
operating income - GAAP basis |
$ |
99 |
|
|
$ |
83 |
|
|
$ |
229 |
|
|
|
$ |
196 |
|
Certain items associated with
acquisitions1 |
1 |
|
|
3 |
|
|
3 |
|
|
|
9 |
|
Certain
incremental expenses related to COVID-192 |
— |
|
|
1 |
|
|
1 |
|
|
|
1 |
|
Severance and related charges3 |
— |
|
|
— |
|
|
8 |
|
|
|
— |
|
Non-GAAP
adjusted operating income |
$ |
100 |
|
|
$ |
87 |
|
|
$ |
241 |
|
|
|
$ |
206 |
|
Non-GAAP
adjusted operating margin |
23.2 |
% |
|
20.5 |
% |
|
19.8 |
|
% |
|
18.4 |
% |
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) |
August 1, 2021 |
|
|
Provision for income taxes - GAAP basis (a) |
$ |
264 |
|
|
Income
tax effect of share-based compensation |
(11 |
) |
|
Income tax effects related to
intra-entity intangible asset transfers |
(23 |
) |
|
Resolutions of prior years’ income tax filings and other tax
items |
9 |
|
|
Income
tax effect of non-GAAP adjustments |
(2 |
) |
|
Non-GAAP
adjusted provision for income taxes (b) |
$ |
237 |
|
|
|
|
Income
before income taxes - GAAP basis (c) |
$ |
1,980 |
|
|
Certain
items associated with acquisitions |
11 |
|
|
Acquisition integration and deal costs |
5 |
|
|
Realized
loss (gain) on strategic investments, net |
(6 |
) |
|
Unrealized loss (gain) on strategic investments, net |
(13 |
) |
|
Non-GAAP
adjusted income before income taxes (d) |
$ |
1,977 |
|
|
|
|
Effective income tax rate - GAAP basis (a/c) |
13.3 |
|
% |
|
|
Non-GAAP
adjusted effective income tax rate (b/d) |
12.0 |
|
% |
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