Applied Materials, Inc. (NASDAQ: AMAT) today reported results for
its fourth quarter and fiscal year ended Oct. 31, 2021.
Fourth Quarter Results
Applied generated revenue of $6.12 billion, which was at the low
end of the guidance range due to supply chain challenges. On a GAAP
basis, the company recorded gross margin of 48.1 percent, operating
income of $2.01 billion or 32.9 percent of net sales, and earnings
per share (EPS) of $1.89.
On a non-GAAP adjusted basis, the company reported gross margin
of 48.2 percent, operating income of $2.03 billion or 33.1 percent
of net sales, and EPS of $1.94.
The company generated $1.15 billion in cash from operations and
returned $1.72 billion to shareholders including $1.50 billion in
share repurchases and $216 million in dividends.
Full Year Results
In fiscal 2021, Applied generated revenue of $23.06 billion. On
a GAAP basis, the company recorded gross margin of 47.3 percent,
operating income of $6.89 billion or 29.9 percent of net sales, and
EPS of $6.40.
On a non-GAAP adjusted basis, the company reported gross margin
of 47.5 percent, operating income of $7.32 billion or 31.7 percent
of net sales, and EPS of $6.84.
The company generated a record $5.44 billion in cash from
operations and returned $4.59 billion to shareholders including
$3.75 billion in share repurchases and $838 million in
dividends.
“Demand for semiconductors and equipment continues to grow as
the pandemic accelerates digital transformation of the economy, and
currently, our supply chain cannot keep up,” said Gary Dickerson,
President and CEO. “We expect supply shortages of certain silicon
components to persist in the near-term, and managing these
constraints in partnership with our suppliers and chipmakers is our
top priority.”
“Applied delivered strong growth in fiscal 2021, with overall
orders up by 62 percent year over year and Semiconductor Systems
orders up 78 percent,” said Bob Halliday, Senior Vice President and
CFO. “The momentum continued as our Semiconductor Systems backlog
increased during the fourth quarter from $5.5 billion to $6.7
billion, and we see this strength sustaining into 2022.”
Results Summary
|
|
|
|
|
|
|
|
|
Change |
|
Q4 FY2021 |
|
Q4 FY2020 |
|
FY2021 |
|
FY2020 |
|
Q4 FY2021 vs. Q4
FY2020 |
|
FY2021 vs.
FY2020 |
|
(In millions, except per share amounts and percentages) |
Net sales |
$ |
6,123 |
|
|
$ |
4,688 |
|
|
$ |
23,063 |
|
|
$ |
17,202 |
|
|
31% |
|
34% |
Gross margin |
48.1 |
% |
|
45.4 |
% |
|
47.3 |
% |
|
44.7 |
% |
|
2.7 points |
|
2.6 points |
Operating margin |
32.9 |
% |
|
27.4 |
% |
|
29.9 |
% |
|
25.4 |
% |
|
5.5 points |
|
4.5 points |
Net income |
$ |
1,712 |
|
|
$ |
1,131 |
|
|
$ |
5,888 |
|
|
$ |
3,619 |
|
|
51% |
|
63% |
Diluted earnings per share |
$ |
1.89 |
|
|
$ |
1.23 |
|
|
$ |
6.40 |
|
|
$ |
3.92 |
|
|
54% |
|
63% |
Non-GAAP Adjusted Results |
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted gross margin |
48.2 |
% |
|
45.7 |
% |
|
47.5 |
% |
|
45.1 |
% |
|
2.5 points |
|
2.4 points |
Non-GAAP adjusted operating
margin |
33.1 |
% |
|
28.3 |
% |
|
31.7 |
% |
|
26.3 |
% |
|
4.8 points |
|
5.4 points |
Non-GAAP adjusted net income |
$ |
1,756 |
|
|
$ |
1,148 |
|
|
$ |
6,287 |
|
|
$ |
3,845 |
|
|
53% |
|
64% |
Non-GAAP adjusted diluted
EPS |
$ |
1.94 |
|
|
$ |
1.25 |
|
|
$ |
6.84 |
|
|
$ |
4.17 |
|
|
55% |
|
64% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 first quarter of fiscal 2022, Applied expects net sales
to be approximately $6.16 billion, plus or minus $250 million,
which includes the expected impact of ongoing supply chain
challenges. Non-GAAP adjusted diluted EPS is expected to be in the
range of $1.78 to $1.92.
This outlook for non-GAAP adjusted diluted EPS excludes known
charges related to completed acquisitions of $0.01 per share and a
net income tax benefit related to intra-entity intangible asset
transfers of $0.02 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.
Fourth Quarter Reportable Segment
Information
Semiconductor
Systems |
Q4 FY2021 |
|
Q4 FY2020 |
|
FY2021 |
|
FY2020 |
|
(In millions, except percentages) |
Net sales |
$ |
4,307 |
|
|
$ |
3,070 |
|
|
$ |
16,286 |
|
|
$ |
11,367 |
|
Foundry, logic and other |
63 |
% |
|
58 |
% |
|
60 |
% |
|
59 |
% |
DRAM |
23 |
% |
|
21 |
% |
|
19 |
% |
|
20 |
% |
Flash memory |
14 |
% |
|
21 |
% |
|
21 |
% |
|
21 |
% |
Operating income |
$ |
1,723 |
|
|
$ |
1,059 |
|
|
6,311 |
|
|
3,714 |
|
Operating margin |
40.0 |
% |
|
34.5 |
% |
|
38.8 |
% |
|
32.7 |
% |
Non-GAAP Adjusted
Results |
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted operating
income |
$ |
1,732 |
|
|
$ |
1,073 |
|
|
$ |
6,362 |
|
|
$ |
3,778 |
|
Non-GAAP adjusted operating
margin |
40.2 |
% |
|
35.0 |
% |
|
39.1 |
% |
|
33.2 |
% |
Applied Global
Services |
Q4 FY2021 |
|
Q4 FY2020 |
|
FY2021 |
|
FY2020 |
|
(In millions, except percentages) |
Net sales |
$ |
1,369 |
|
|
$ |
1,106 |
|
|
$ |
5,013 |
|
|
$ |
4,155 |
|
Operating income |
$ |
425 |
|
|
$ |
320 |
|
|
1,508 |
|
|
1,127 |
|
Operating margin |
31.0 |
% |
|
28.9 |
% |
|
30.1 |
% |
|
27.1 |
% |
Non-GAAP Adjusted
Results |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted operating
income |
$ |
425 |
|
|
$ |
320 |
|
|
$ |
1,517 |
|
|
$ |
1,135 |
|
Non-GAAP adjusted operating
margin |
31.0 |
% |
|
28.9 |
% |
|
30.3 |
% |
|
27.3 |
% |
Display and Adjacent
Markets |
Q4 FY2021 |
|
Q4 FY2020 |
|
FY2021 |
|
FY2020 |
|
(In millions, except percentages) |
Net sales |
$ |
417 |
|
|
$ |
485 |
|
|
$ |
1,634 |
|
|
$ |
1,607 |
|
Operating income |
$ |
85 |
|
|
$ |
95 |
|
|
314 |
|
|
291 |
|
Operating margin |
20.4 |
% |
|
19.6 |
% |
|
19.2 |
% |
|
18.1 |
% |
Non-GAAP
Adjusted Results |
|
|
|
|
|
|
Non-GAAP adjusted operating
income |
$ |
86 |
|
|
$ |
98 |
|
|
$ |
327 |
|
|
$ |
304 |
|
Non-GAAP adjusted operating
margin |
20.6 |
% |
|
20.2 |
% |
|
20.0 |
% |
|
18.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
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. 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
first quarter of fiscal 2022 and beyond, 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; transportation
interruptions and logistics constraints; Lunar New Year and other
holidays in the countries in which we operate; 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; 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; our ability to ensure compliance with applicable
law, rules and regulations; 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 |
|
Twelve Months Ended |
(In millions, except per share
amounts) |
October 31,2021 |
|
October 25,2020 |
|
October 31,2021 |
|
October 25,2020 |
Net sales |
$ |
6,123 |
|
|
$ |
4,688 |
|
|
$ |
23,063 |
|
|
$ |
17,202 |
|
Cost of products sold |
3,178 |
|
|
2,558 |
|
|
12,149 |
|
|
9,510 |
|
Gross profit |
2,945 |
|
|
2,130 |
|
|
10,914 |
|
|
7,692 |
|
Operating expenses: |
|
|
|
|
|
|
|
Research, development and engineering |
622 |
|
|
560 |
|
|
2,485 |
|
|
2,234 |
|
Marketing and selling |
155 |
|
|
131 |
|
|
609 |
|
|
526 |
|
General and administrative |
155 |
|
|
156 |
|
|
620 |
|
|
567 |
|
Severance and related charges |
(1 |
) |
|
— |
|
|
157 |
|
|
— |
|
Deal termination fee |
— |
|
|
— |
|
|
154 |
|
|
— |
|
Total operating expenses |
931 |
|
|
847 |
|
|
4,025 |
|
|
3,327 |
|
Income from operations |
2,014 |
|
|
1,283 |
|
|
6,889 |
|
|
4,365 |
|
Interest expense |
57 |
|
|
59 |
|
|
236 |
|
|
240 |
|
Interest and other income,
net |
49 |
|
|
19 |
|
|
118 |
|
|
41 |
|
Income before income taxes |
2,006 |
|
|
1,243 |
|
|
6,771 |
|
|
4,166 |
|
Provision for income taxes |
294 |
|
|
112 |
|
|
883 |
|
|
547 |
|
Net income |
$ |
1,712 |
|
|
$ |
1,131 |
|
|
$ |
5,888 |
|
|
$ |
3,619 |
|
Earnings per share: |
|
|
|
|
|
|
|
Basic |
$ |
1.91 |
|
|
$ |
1.24 |
|
|
$ |
6.47 |
|
|
$ |
3.95 |
|
Diluted |
$ |
1.89 |
|
|
$ |
1.23 |
|
|
$ |
6.40 |
|
|
$ |
3.92 |
|
Weighted average number of
shares: |
|
|
|
|
|
|
|
Basic |
898 |
|
|
914 |
|
|
910 |
|
|
916 |
|
Diluted |
907 |
|
|
921 |
|
|
919 |
|
|
923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
APPLIED MATERIALS, INC.UNAUDITED CONSOLIDATED
CONDENSED BALANCE SHEETS
(In millions) |
October 31,2021 |
|
October 25,2020 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
4,995 |
|
|
$ |
5,351 |
|
Short-term investments |
464 |
|
|
387 |
|
Accounts receivable, net |
4,953 |
|
|
2,963 |
|
Inventories |
4,309 |
|
|
3,904 |
|
Other current assets |
1,386 |
|
|
764 |
|
Total current assets |
16,107 |
|
|
13,369 |
|
Long-term investments |
2,055 |
|
|
1,538 |
|
Property, plant and equipment,
net |
1,934 |
|
|
1,604 |
|
Goodwill |
3,479 |
|
|
3,466 |
|
Purchased technology and other
intangible assets, net |
104 |
|
|
153 |
|
Deferred income taxes and other
assets |
2,146 |
|
|
2,223 |
|
Total assets |
$ |
25,825 |
|
|
$ |
22,353 |
|
LIABILITIES AND STOCKHOLDERS’
EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable and accrued expenses |
$ |
4,268 |
|
|
$ |
3,138 |
|
Contract liabilities |
2,076 |
|
|
1,321 |
|
Total current liabilities |
6,344 |
|
|
4,459 |
|
Long-term debt |
5,452 |
|
|
5,448 |
|
Income taxes payable |
1,090 |
|
|
1,206 |
|
Other liabilities |
692 |
|
|
662 |
|
Total liabilities |
13,578 |
|
|
11,775 |
|
Total stockholders’ equity |
12,247 |
|
|
10,578 |
|
Total liabilities and
stockholders’ equity |
$ |
25,825 |
|
|
$ |
22,353 |
|
|
APPLIED MATERIALS, INC.UNAUDITED CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOWS
(In millions) |
Three Months Ended |
|
Twelve Months Ended |
October 31,2021 |
|
October 25,2020 |
October 31,2021 |
|
October 25,2020 |
Cash flows from operating
activities: |
|
|
|
|
|
|
|
Net income |
$ |
1,712 |
|
|
$ |
1,131 |
|
|
$ |
5,888 |
|
|
$ |
3,619 |
|
Adjustments required to reconcile net income to cash provided by
operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
105 |
|
|
97 |
|
|
394 |
|
|
376 |
|
Severance and related charges |
(1 |
) |
|
— |
|
|
148 |
|
|
— |
|
Share-based compensation |
74 |
|
|
73 |
|
|
346 |
|
|
307 |
|
Deferred income taxes |
36 |
|
|
(18 |
) |
|
80 |
|
|
80 |
|
Other |
(40 |
) |
|
5 |
|
|
(70 |
) |
|
60 |
|
Net change in operating assets and
liabilities |
(738 |
) |
|
27 |
|
|
(1,344 |
) |
|
(638 |
) |
Cash provided by operating
activities |
1,148 |
|
|
1,315 |
|
|
5,442 |
|
|
3,804 |
|
Cash flows from investing
activities: |
|
|
|
|
|
|
|
Capital expenditures |
(206 |
) |
|
(162 |
) |
|
(668 |
) |
|
(422 |
) |
Cash paid for acquisitions, net of cash acquired |
— |
|
|
— |
|
|
(12 |
) |
|
(107 |
) |
Proceeds from sales and maturities of investments |
447 |
|
|
366 |
|
|
1,471 |
|
|
1,754 |
|
Purchases of investments |
(828 |
) |
|
(345 |
) |
|
(2,007 |
) |
|
(1,355 |
) |
Cash used in investing
activities |
(587 |
) |
|
(141 |
) |
|
(1,216 |
) |
|
(130 |
) |
Cash flows from financing
activities: |
|
|
|
|
|
|
|
Debt borrowings, net of issuance costs |
— |
|
|
— |
|
|
— |
|
|
2,979 |
|
Debt repayments |
— |
|
|
— |
|
|
— |
|
|
(2,882 |
) |
Proceeds from common stock issuances |
89 |
|
|
83 |
|
|
175 |
|
|
174 |
|
Common stock repurchases |
(1,500 |
) |
|
(50 |
) |
|
(3,750 |
) |
|
(649 |
) |
Tax withholding payments for vested equity awards |
(7 |
) |
|
(6 |
) |
|
(178 |
) |
|
(172 |
) |
Payments of dividends to stockholders |
(216 |
) |
|
(200 |
) |
|
(838 |
) |
|
(787 |
) |
Cash used in financing
activities |
(1,634 |
) |
|
(173 |
) |
|
(4,591 |
) |
|
(1,337 |
) |
Increase (decrease) in cash,
cash equivalents and restricted cash equivalents |
(1,073 |
) |
|
1,001 |
|
|
(365 |
) |
|
2,337 |
|
Cash, cash equivalents and
restricted cash equivalents—beginning of period |
6,174 |
|
|
4,465 |
|
|
5,466 |
|
|
3,129 |
|
Cash, cash equivalents and
restricted cash equivalents — end of period |
$ |
5,101 |
|
|
$ |
5,466 |
|
|
$ |
5,101 |
|
|
$ |
5,466 |
|
|
|
|
|
|
|
|
|
Reconciliation of cash, cash
equivalents, and restricted cash equivalents |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
4,995 |
|
|
$ |
5,351 |
|
|
$ |
4,995 |
|
|
$ |
5,351 |
|
Restricted cash equivalents included in deferred income taxes and
other assets |
106 |
|
|
115 |
|
|
106 |
|
|
115 |
|
Total cash, cash equivalents,
and restricted cash equivalents |
$ |
5,101 |
|
|
$ |
5,466 |
|
|
$ |
5,101 |
|
|
$ |
5,466 |
|
|
|
|
|
|
|
|
|
Supplemental cash flow
information: |
|
|
|
|
|
|
|
Cash payments for income taxes |
$ |
210 |
|
|
$ |
23 |
|
|
$ |
851 |
|
|
$ |
542 |
|
Cash refunds from income taxes |
$ |
1 |
|
|
$ |
63 |
|
|
$ |
27 |
|
|
$ |
68 |
|
Cash payments for interest |
$ |
68 |
|
|
$ |
68 |
|
|
$ |
205 |
|
|
$ |
219 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APPLIED MATERIALS, INC.UNAUDITED SUPPLEMENTAL
INFORMATION
Corporate and Other
(In millions) |
Q4 FY2021 |
|
Q4 FY2020 |
|
FY2021 |
|
FY2020 |
Unallocated net sales |
$ |
30 |
|
|
$ |
27 |
|
|
$ |
130 |
|
|
$ |
73 |
|
Unallocated cost of products sold
and expenses |
(176 |
) |
|
(145 |
) |
|
(725 |
) |
|
(533 |
) |
Share-based compensation |
(74 |
) |
|
(73 |
) |
|
(346 |
) |
|
(307 |
) |
Severance and related
charges |
1 |
|
|
— |
|
|
(149 |
) |
|
— |
|
Deal termination fee |
— |
|
|
— |
|
|
(154 |
) |
|
— |
|
Total |
$ |
(219 |
) |
|
$ |
(191 |
) |
|
$ |
(1,244 |
) |
|
$ |
(767 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Information
|
Q4 FY2021 |
|
Q4 FY2020 |
|
FY2021 |
|
FY2020 |
Net Sales by Geography (In
millions) |
|
|
|
|
|
United States |
$ |
673 |
|
|
$ |
448 |
|
|
$ |
2,038 |
|
|
$ |
1,619 |
|
% of Total |
11 |
% |
|
10 |
% |
|
9 |
% |
|
10 |
% |
Europe |
$ |
331 |
|
|
$ |
206 |
|
|
$ |
1,097 |
|
|
$ |
736 |
|
% of Total |
5 |
% |
|
4 |
% |
|
5 |
% |
|
4 |
% |
Japan |
$ |
613 |
|
|
$ |
706 |
|
|
$ |
1,962 |
|
|
$ |
1,996 |
|
% of Total |
10 |
% |
|
15 |
% |
|
8 |
% |
|
11 |
% |
Korea |
$ |
1,004 |
|
|
$ |
719 |
|
|
$ |
5,012 |
|
|
$ |
3,031 |
|
% of Total |
17 |
% |
|
15 |
% |
|
22 |
% |
|
18 |
% |
Taiwan |
$ |
1,240 |
|
|
$ |
872 |
|
|
$ |
4,742 |
|
|
$ |
3,953 |
|
% of Total |
20 |
% |
|
19 |
% |
|
20 |
% |
|
23 |
% |
Southeast Asia |
$ |
205 |
|
|
$ |
161 |
|
|
$ |
677 |
|
|
$ |
411 |
|
% of Total |
3 |
% |
|
3 |
% |
|
3 |
% |
|
2 |
% |
China |
$ |
2,057 |
|
|
$ |
1,576 |
|
|
$ |
7,535 |
|
|
$ |
5,456 |
|
% of Total |
34 |
% |
|
34 |
% |
|
33 |
% |
|
32 |
% |
|
|
|
|
|
|
|
|
Employees (In thousands) |
|
|
|
|
|
|
|
Regular Full Time |
27.2 |
|
|
24.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APPLIED MATERIALS, INC.UNAUDITED
RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS
|
Three Months Ended |
|
Twelve Months Ended |
(In millions, except
percentages) |
October 31,2021 |
|
October 25,2020 |
|
October 31,2021 |
|
October 25,2020 |
Non-GAAP Adjusted Gross
Profit |
|
|
|
|
|
|
|
Reported gross profit - GAAP basis |
$ |
2,945 |
|
|
|
$ |
2,130 |
|
|
|
$ |
10,914 |
|
|
|
$ |
7,692 |
|
|
Certain items associated with
acquisitions1 |
6 |
|
|
|
12 |
|
|
|
27 |
|
|
|
37 |
|
|
Certain incremental expenses
related to COVID-192 |
— |
|
|
|
— |
|
|
|
12 |
|
|
|
23 |
|
|
Other charges |
— |
|
|
|
— |
|
|
|
2 |
|
|
|
— |
|
|
Non-GAAP adjusted gross
profit |
$ |
2,951 |
|
|
|
$ |
2,142 |
|
|
|
$ |
10,955 |
|
|
|
$ |
7,752 |
|
|
Non-GAAP adjusted gross
margin |
48.2 |
|
% |
|
45.7 |
|
% |
|
47.5 |
|
% |
|
45.1 |
|
% |
Non-GAAP Adjusted Operating
Income |
|
|
|
|
|
|
|
Reported operating income - GAAP
basis |
$ |
2,014 |
|
|
|
$ |
1,283 |
|
|
|
$ |
6,889 |
|
|
|
$ |
4,365 |
|
|
Certain items associated with
acquisitions1 |
11 |
|
|
|
16 |
|
|
|
47 |
|
|
|
54 |
|
|
Acquisition integration and deal
costs |
5 |
|
|
|
26 |
|
|
|
45 |
|
|
|
80 |
|
|
Certain incremental expenses
related to COVID-192 |
— |
|
|
|
— |
|
|
|
24 |
|
|
|
30 |
|
|
Severance and related
charges3 |
(1 |
) |
|
|
— |
|
|
|
157 |
|
|
|
— |
|
|
Deal termination fee |
— |
|
|
|
— |
|
|
|
154 |
|
|
|
— |
|
|
Other charges |
— |
|
|
|
— |
|
|
|
6 |
|
|
|
— |
|
|
Non-GAAP adjusted operating
income |
$ |
2,029 |
|
|
|
$ |
1,325 |
|
|
|
$ |
7,322 |
|
|
|
$ |
4,529 |
|
|
Non-GAAP adjusted operating
margin |
33.1 |
|
% |
|
28.3 |
|
% |
|
31.7 |
|
% |
|
26.3 |
|
% |
Non-GAAP Adjusted Net Income |
|
|
|
|
|
|
|
Reported net income - GAAP
basis |
$ |
1,712 |
|
|
|
$ |
1,131 |
|
|
|
$ |
5,888 |
|
|
|
$ |
3,619 |
|
|
Certain items associated with
acquisitions1 |
11 |
|
|
|
16 |
|
|
|
47 |
|
|
|
54 |
|
|
Acquisition integration and deal
costs |
5 |
|
|
|
26 |
|
|
|
46 |
|
|
|
80 |
|
|
Certain incremental expenses
related to COVID-192 |
— |
|
|
|
— |
|
|
|
24 |
|
|
|
30 |
|
|
Severance and related
charges3 |
(1 |
) |
|
|
— |
|
|
|
157 |
|
|
|
— |
|
|
Deal termination fee |
— |
|
|
|
— |
|
|
|
154 |
|
|
|
— |
|
|
Realized loss (gain) on strategic
investments, net |
(41 |
) |
|
|
— |
|
|
|
(43 |
) |
|
|
(1 |
) |
|
Unrealized loss (gain) on
strategic investments, net |
(11 |
) |
|
|
(7 |
) |
|
|
(56 |
) |
|
|
(8 |
) |
|
Loss on early extinguishment of
debt |
— |
|
|
|
— |
|
|
|
— |
|
|
|
33 |
|
|
Other charges |
— |
|
|
|
— |
|
|
|
6 |
|
|
|
— |
|
|
Income tax effect of
share-based compensation4 |
12 |
|
|
|
13 |
|
|
|
— |
|
|
|
— |
|
|
Income tax effects related to
intra-entity intangible asset transfers |
4 |
|
|
|
10 |
|
|
|
64 |
|
|
|
114 |
|
|
Resolution of prior years’ income
tax filings and other tax items |
55 |
|
|
|
(36 |
) |
|
|
33 |
|
|
|
(41 |
) |
|
Income tax effect of non-GAAP
adjustments5 |
10 |
|
|
|
(5 |
) |
|
|
(33 |
) |
|
|
(35 |
) |
|
Non-GAAP adjusted net income |
$ |
1,756 |
|
|
|
$ |
1,148 |
|
|
|
$ |
6,287 |
|
|
|
$ |
3,845 |
|
|
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 |
|
Twelve Months Ended |
(In millions, except per share
amounts) |
October 31,2021 |
|
October 25,2020 |
|
October 31,2021 |
|
October 25,2020 |
Non-GAAP Adjusted Earnings Per
Diluted Share |
|
|
|
|
|
|
|
Reported earnings per diluted share - GAAP basis |
$ |
1.89 |
|
|
$ |
1.23 |
|
|
$ |
6.40 |
|
|
$ |
3.92 |
|
Certain items associated with
acquisitions |
0.01 |
|
|
0.02 |
|
|
0.04 |
|
|
0.05 |
|
Acquisition integration and deal
costs |
0.01 |
|
|
0.02 |
|
|
0.04 |
|
|
0.07 |
|
Certain incremental expenses
related to COVID-19 |
— |
|
|
— |
|
|
0.02 |
|
|
0.03 |
|
Loss on early extinguishment of
debt |
— |
|
|
— |
|
|
— |
|
|
0.03 |
|
Severance and related
charges |
— |
|
|
— |
|
|
0.13 |
|
|
— |
|
Deal termination fee |
— |
|
|
— |
|
|
0.17 |
|
|
— |
|
Realized loss (gain) on strategic
investments, net |
(0.03 |
) |
|
— |
|
|
(0.03 |
) |
|
— |
|
Unrealized loss (gain) on
strategic investments, net |
(0.01 |
) |
|
(0.01 |
) |
|
(0.05 |
) |
|
(0.01 |
) |
Other charges |
— |
|
|
— |
|
|
0.01 |
|
|
— |
|
Income tax effect of
share-based compensation |
0.01 |
|
|
0.02 |
|
|
— |
|
|
— |
|
Income tax effects related to
intra-entity intangible asset transfers |
— |
|
|
0.01 |
|
|
0.07 |
|
|
0.12 |
|
Resolution of prior years’ income
tax filings and other tax items |
0.06 |
|
|
(0.04 |
) |
|
0.04 |
|
|
(0.04 |
) |
Non-GAAP adjusted earnings per
diluted share |
$ |
1.94 |
|
|
$ |
1.25 |
|
|
$ |
6.84 |
|
|
$ |
4.17 |
|
Weighted average number of
diluted shares |
907 |
|
|
921 |
|
|
919 |
|
|
923 |
|
|
APPLIED MATERIALS, INC.UNAUDITED RECONCILIATION
OF GAAP TO NON-GAAP ADJUSTED RESULTS
|
Three Months Ended |
|
Twelve Months Ended |
(In millions, except
percentages) |
October 31,2021 |
|
October 25,2020 |
|
October 31,2021 |
|
October 25,2020 |
Semiconductor Systems Non-GAAP
Adjusted Operating Income |
|
|
|
|
|
|
|
Reported operating income - GAAP basis |
$ |
1,723 |
|
|
$ |
1,059 |
|
|
$ |
6,311 |
|
|
|
$ |
3,714 |
|
Certain items associated with
acquisitions1 |
9 |
|
|
12 |
|
|
38 |
|
|
|
41 |
|
Acquisition integration
costs |
— |
|
|
2 |
|
|
(2 |
) |
|
|
3 |
|
Certain incremental expenses
related to COVID-192 |
— |
|
|
— |
|
|
12 |
|
|
|
20 |
|
Other charges |
— |
|
|
— |
|
|
3 |
|
|
|
— |
|
Non-GAAP adjusted operating
income |
$ |
1,732 |
|
|
$ |
1,073 |
|
|
$ |
6,362 |
|
|
|
$ |
3,778 |
|
Non-GAAP adjusted operating
margin |
40.2 |
% |
|
35.0 |
% |
|
39.1 |
% |
|
|
33.2 |
% |
AGS Non-GAAP Adjusted Operating
Income |
|
|
|
|
|
|
|
Reported operating income - GAAP
basis |
$ |
425 |
|
|
$ |
320 |
|
|
$ |
1,508 |
|
|
|
$ |
1,127 |
|
Certain incremental expenses
related to COVID-192 |
— |
|
|
— |
|
|
8 |
|
|
|
8 |
|
Other charges |
— |
|
|
— |
|
|
1 |
|
|
|
— |
|
Non-GAAP adjusted operating
income |
$ |
425 |
|
|
$ |
320 |
|
|
$ |
1,517 |
|
|
|
$ |
1,135 |
|
Non-GAAP adjusted operating
margin |
31.0 |
% |
|
28.9 |
% |
|
30.3 |
% |
|
|
27.3 |
% |
Display and Adjacent Markets
Non-GAAP Adjusted Operating Income |
|
|
|
|
|
|
|
Reported operating income - GAAP
basis |
$ |
85 |
|
|
$ |
95 |
|
|
$ |
314 |
|
|
|
$ |
291 |
|
Certain items associated with
acquisitions1 |
1 |
|
|
3 |
|
|
4 |
|
|
|
12 |
|
Certain incremental expenses
related to COVID-192 |
— |
|
|
— |
|
|
1 |
|
|
|
1 |
|
Severance and related
charges3 |
— |
|
|
— |
|
|
8 |
|
|
|
— |
|
Non-GAAP adjusted operating
income |
$ |
86 |
|
|
$ |
98 |
|
|
$ |
327 |
|
|
|
$ |
304 |
|
Non-GAAP adjusted operating
margin |
20.6 |
% |
|
20.2 |
% |
|
20.0 |
% |
|
|
18.9 |
% |
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) |
October 31, 2021 |
|
|
Provision for income taxes - GAAP basis (a) |
$ |
294 |
|
|
Income tax effect of share-based
compensation |
(12 |
) |
|
Income tax effects related to
intra-entity intangible asset transfers |
(4 |
) |
|
Resolutions of prior years’
income tax filings and other tax items |
(55 |
) |
|
Income tax effect of non-GAAP
adjustments |
(10 |
) |
|
Non-GAAP adjusted provision for
income taxes (b) |
$ |
213 |
|
|
|
|
Income before income taxes - GAAP
basis (c) |
$ |
2,006 |
|
|
Certain items associated with
acquisitions |
11 |
|
|
Acquisition integration and deal
costs |
5 |
|
|
Severance and related
charges |
(1 |
) |
|
Realized loss (gain) on strategic
investments, net |
(41 |
) |
|
Unrealized loss (gain) on
strategic investments, net |
(11 |
) |
|
Non-GAAP adjusted income before
income taxes (d) |
$ |
1,969 |
|
|
|
|
Effective income tax rate - GAAP
basis (a/c) |
14.7 |
|
% |
|
|
Non-GAAP adjusted effective
income tax rate (b/d) |
10.8 |
|
% |
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