0000006951FALSEAPPLIED MATERIALS INC /DE00000069512024-08-152024-08-15
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________________________
FORM 8-K
____________________________________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 15, 2024
____________________________________________________________________
Applied Materials, Inc.
(Exact name of registrant as specified in its charter)
____________________________________________________________________ | | | | | | | | | | | | | | |
| | | | |
Delaware | | 000-06920 | | 94-1655526 |
(State or other jurisdiction of incorporation) | | (Commission File Number) | | (IRS Employer Identification No.) |
3050 Bowers Avenue
P.O. Box 58039
Santa Clara, CA 95052-8039
(Address of principal executive offices)
Registrant’s telephone number, including area code: (408) 727-5555
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | | | | | | | | |
☐ | | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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☐ | | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| | |
☐ | | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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☐ | | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act: | | | | | | | | |
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered |
Common Stock, par value $.01 per share | AMAT | The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act). ☐
Item 2.02 Results of Operations and Financial Condition.
On August 15, 2024, Applied Materials, Inc. (“Applied Materials”) announced its financial results for its third quarter ended July 28, 2024. A copy of Applied Materials’ press release is attached hereto as Exhibit 99.1.
The information in this Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liability under that section, and shall not be deemed to be incorporated by reference in any filing of Applied Materials under the Securities Act of 1933, as amended, or the Exchange Act, unless expressly incorporated by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. | | | | | | | | |
| | |
Exhibit No. | | Description |
99.1 | | |
104 | | Cover Page Interactive Data File (formatted as inline XBRL) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. | | | | | | | | | | | | | | |
| | | | |
| | Applied Materials, Inc. (Registrant) |
Date: | August 15, 2024 | By: | /s/ Teri A. Little |
| | | Teri A. Little |
| | | Senior Vice President, Chief Legal Officer and Corporate Secretary |
Exhibit 99.1
APPLIED MATERIALS ANNOUNCES THIRD QUARTER 2024 RESULTS
•Revenue $6.78 billion, up 5 percent year over year
•GAAP operating margin 28.7 percent and non-GAAP operating margin 28.8 percent, up 0.7 points and 0.5 points year over year, respectively
•GAAP EPS $2.05 and non-GAAP EPS $2.12, up 11 percent and 12 percent year over year, respectively
•Generated $2.39 billion in cash from operations
SANTA CLARA, Calif., Aug. 15, 2024 — Applied Materials, Inc. (NASDAQ: AMAT) today reported results for its third quarter ended Jul. 28, 2024.
Third Quarter Results
Applied generated record revenue of $6.78 billion. On a GAAP basis, the company reported gross margin of 47.3 percent, operating income of $1.94 billion or 28.7 percent of net revenue, and earnings per share (EPS) of $2.05.
On a non-GAAP basis, the company reported gross margin of 47.4 percent, operating income of $1.95 billion or 28.8 percent of net revenue, and EPS of $2.12.
The company generated $2.39 billion in cash from operations and distributed $1.19 billion to shareholders including $861 million in share repurchases and $331 million in dividends.
“Applied Materials is delivering strong results in 2024 with record revenues in our fiscal third quarter and earnings towards the high end of our guided range,” said Gary Dickerson, President and CEO. “The race for AI leadership is fueling demand for our unique and connected portfolio of products and services, positioning Applied to outperform our markets over the longer term.”
Applied Materials, Inc.
Page 2 of 13
Results Summary
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
| Q3 FY2024 | | | | Q3 FY2023 | | | | | | Change |
| | | | | | | | | | | | | | | |
| (In millions, except per share amounts and percentages) | | |
| | | | | | | | | | | | | | | |
Net revenue | $ | 6,778 | | | | | $ | 6,425 | | | | | | | 5% | | | | |
| | | | | | | | | | | | | | | |
Gross margin | 47.3 | % | | | | 46.3 | % | | | | | | 1.0 point | | | | |
| | | | | | | | | | | | | | | |
Operating margin | 28.7 | % | | | | 28.0 | % | | | | | | 0.7 points | | | | |
Net income | $ | 1,705 | | | | | $ | 1,560 | | | | | | | 9% | | | | |
Diluted earnings per share | $ | 2.05 | | | | | $ | 1.85 | | | | | | | 11% | | | | |
Non-GAAP Results | | | | | | | | | | | | | | | |
Non-GAAP gross margin | 47.4 | % | | | | 46.4 | % | | | | | | 1.0 point | | | | |
Non-GAAP operating margin | 28.8 | % | | | | 28.3 | % | | | | | | 0.5 points | | | | |
Non-GAAP net income | $ | 1,767 | | | | | $ | 1,600 | | | | | | | 10% | | | | |
Non-GAAP diluted EPS | $ | 2.12 | | | | | $ | 1.90 | | | | | | | 12% | | | | |
Non-GAAP free cash flow | $ | 2,088 | | | | | $ | 2,328 | | | | | | | (10)% | | | | |
A reconciliation of the GAAP and non-GAAP results is provided in the financial tables included in this release. See also “Use of Non-GAAP Financial Measures” section.
Applied Materials, Inc.
Page 3 of 13
Business Outlook
In the fourth quarter of fiscal 2024, Applied expects net revenue to be approximately $6.93 billion, plus or minus $400 million. Non-GAAP diluted EPS is expected to be in the range of $2.00 to $2.36.
This outlook for non-GAAP diluted EPS excludes known charges related to completed acquisitions of $0.01 per share and includes the normalized tax benefit of share-based compensation of $0.01 per share and includes 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.
Third Quarter Reportable Segment Information
Effective in the first quarter of fiscal 2024, management began including share-based compensation expense in the evaluation of reportable segments' performance. Prior-year numbers have been recast to conform to the current-year presentation.
| | | | | | | | | | | | | | | | | | | | | | | | | |
Semiconductor Systems | Q3 FY2024 | | | | Q3 FY2023 | | | | | | | | |
| (In millions, except percentages) | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Net revenue | $ | 4,924 | | | | | $ | 4,676 | | | | | | | | | | | | | |
Foundry, logic and other | 72 | % | | | | 79 | % | | | | | | | | | | | | |
DRAM | 24 | % | | | | 17 | % | | | | | | | | | | | | |
Flash memory | 4 | % | | | | 4 | % | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Operating income | $ | 1,712 | | | | | $ | 1,568 | | | | | | | | | | | | | |
Operating margin | 34.8 | % | | | | 33.5 | % | | | | | | | | | | | | |
Non-GAAP Results | | | | | | | | | | | | | | | | |
Non-GAAP operating income | $ | 1,722 | | | | | $ | 1,578 | | | | | | | | | | | | | |
Non-GAAP operating margin | 35.0 | % | | | | 33.7 | % | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Applied Global Services | Q3 FY2024 | | | | Q3 FY2023 | | | | | | | | |
| (In millions, except percentages) | | | | |
| | | | | | | | | | | | | | | | | |
Net revenue | $ | 1,580 | | | | | $ | 1,464 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Operating income | $ | 467 | | | | | $ | 399 | | | | | | | | | | | | | |
Operating margin | 29.6 | % | | | | 27.3 | % | | | | | | | | | | | | |
Non-GAAP Results | | | | | | | | | | | | | | | | |
Non-GAAP operating income | $ | 467 | | | | | $ | 399 | | | | | | | | | | | | | |
Non-GAAP operating margin | 29.6 | % | | | | 27.3 | % | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Display and Adjacent Markets | Q3 FY2024 | | | | Q3 FY2023 | | | | | | | | |
| (In millions, except percentages) | | | | |
| | | | | | | | | | | | | | | | | |
Net revenue | $ | 251 | | | | | $ | 235 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Operating income | $ | 16 | | | | | $ | 32 | | | | | | | | | | | | | |
Operating margin | 6.4 | % | | | | 13.6 | % | | | | | | | | | | | | |
Non-GAAP Results | | | | | | | | | | | | | | | | |
Non-GAAP operating income | $ | 16 | | | | | $ | 32 | | | | | | | | | | | | | |
Non-GAAP operating margin | 6.4 | % | | | | 13.6 | % | | | | | | | | | | | | |
Applied Materials, Inc.
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Corporate and Other | | | | | | | | | | | | | | | | | |
(In millions) | Q3 FY2024 | | | | Q3 FY2023 | | | | |
| | | | | | | | | |
| | | | | | | | | |
Unallocated net revenue | $ | 23 | | | | | $ | 50 | | | | | |
Unallocated cost of products sold and expenses | (276) | | | | | (247) | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Total | $ | (253) | | | | | $ | (197) | | | | | |
Use of Non-GAAP Financial Measures
Applied provides investors with certain non-GAAP 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; impairments of assets; gain or loss, dividends and impairments on strategic investments; 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 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.
Applied Materials, Inc.
Page 5 of 13
Forward-Looking Statement
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 2024 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; global economic, political and industry conditions, including changes in interest rates and prices for goods and services; the implementation of additional export regulations and license requirements and their interpretation, and their impact on our ability to export products and provide services to customers and on our results of operations; global trade issues and changes in trade and export license policies; our ability to obtain licenses or authorizations on a timely basis, if at all; the effects of geopolitical turmoil or conflicts; 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; our ability to meet customer demand, and our suppliers' ability to meet our demand requirements; the concentrated nature of our customer base; 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; cybersecurity incidents affecting our information systems or information contained in them, or affecting our operations, suppliers, customers or vendors; 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 effects of regional or global health epidemics; acquisitions, investments and divestitures; changes in income tax laws; 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) 408.235.4676
Michael Sullivan (financial community) 408.986.7977
Applied Materials, Inc.
Page 6 of 13
APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
(In millions, except per share amounts) | July 28, 2024 | | | | July 30, 2023 | | July 28, 2024 | | July 30, 2023 |
Net revenue | $ | 6,778 | | | | | $ | 6,425 | | | $ | 20,131 | | | $ | 19,794 | |
Cost of products sold | 3,573 | | | | | 3,449 | | | 10,569 | | | 10,579 | |
Gross profit | 3,205 | | | | | 2,976 | | | 9,562 | | | 9,215 | |
Operating expenses: | | | | | | | | | |
Research, development and engineering | 836 | | | | | 767 | | | 2,375 | | | 2,313 | |
Marketing and selling | 205 | | | | | 193 | | | 621 | | | 584 | |
General and administrative | 222 | | | | | 214 | | | 745 | | | 635 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Total operating expenses | 1,263 | | | | | 1,174 | | | 3,741 | | | 3,532 | |
Income from operations | 1,942 | | | | | 1,802 | | | 5,821 | | | 5,683 | |
| | | | | | | | | |
Interest expense | 63 | | | | | 60 | | | 181 | | | 180 | |
Interest and other income (expense), net | 81 | | | | | 64 | | | 617 | | | 41 | |
Income before income taxes | 1,960 | | | | | 1,806 | | | 6,257 | | | 5,544 | |
Provision for income taxes | 255 | | | | | 246 | | | 811 | | | 692 | |
Net income | $ | 1,705 | | | | | $ | 1,560 | | | $ | 5,446 | | | $ | 4,852 | |
Earnings per share: | | | | | | | | | |
Basic | $ | 2.06 | | | | | $ | 1.86 | | | $ | 6.57 | | | $ | 5.76 | |
Diluted | $ | 2.05 | | | | | $ | 1.85 | | | $ | 6.52 | | | $ | 5.73 | |
Weighted average number of shares: | | | | | | | | | |
Basic | 826 | | | | | 838 | | | 829 | | | 842 | |
Diluted | 833 | | | | | 843 | | | 835 | | | 846 | |
Applied Materials, Inc.
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APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
| | | | | | | | | | | | | |
(In millions) | July 28, 2024 | | | | October 29, 2023 |
ASSETS | | | | | |
Current assets: | | | | | |
Cash and cash equivalents | $ | 8,288 | | | | | $ | 6,132 | |
Short-term investments | 815 | | | | | 737 | |
Accounts receivable, net | 4,970 | | | | | 5,165 | |
Inventories | 5,568 | | | | | 5,725 | |
Other current assets | 1,030 | | | | | 1,388 | |
| | | | | |
Total current assets | 20,671 | | | | | 19,147 | |
Long-term investments | 2,981 | | | | | 2,281 | |
Property, plant and equipment, net | 3,100 | | | | | 2,723 | |
Goodwill | 3,732 | | | | | 3,732 | |
Purchased technology and other intangible assets, net | 262 | | | | | 294 | |
Deferred income taxes and other assets | 2,901 | | | | | 2,552 | |
Total assets | $ | 33,647 | | | | | $ | 30,729 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
Current liabilities: | | | | | |
Short-term debt | $ | 99 | | | | | $ | 100 | |
Accounts payable and accrued expenses | 4,387 | | | | | 4,297 | |
Contract liabilities | 2,742 | | | | | 2,975 | |
| | | | | |
Total current liabilities | 7,228 | | | | | 7,372 | |
Long-term debt | 6,158 | | | | | 5,461 | |
Income taxes payable | 671 | | | | | 833 | |
Other liabilities | 750 | | | | | 714 | |
| | | | | |
Total liabilities | 14,807 | | | | | 14,380 | |
Total stockholders’ equity | 18,840 | | | | | 16,349 | |
Total liabilities and stockholders’ equity | $ | 33,647 | | | | | $ | 30,729 | |
Applied Materials, Inc.
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APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
| | | | | | | | | | | | | | | | | | | | | | | | | |
(In millions) | Three Months Ended | | Nine Months Ended |
July 28, 2024 | | | | July 30, 2023 | July 28, 2024 | | July 30, 2023 |
Cash flows from operating activities: | | | | | | | | | |
Net income | $ | 1,705 | | | | | $ | 1,560 | | | $ | 5,446 | | | $ | 4,852 | |
Adjustments required to reconcile net income to cash provided by operating activities: | | | | | | | | | |
Depreciation and amortization | 95 | | | | | 136 | | | 282 | | | 385 | |
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Share-based compensation | 132 | | | | | 114 | | | 436 | | | 375 | |
| | | | | | | | | |
Deferred income taxes | (179) | | | | | (38) | | | (385) | | | (174) | |
Other | 48 | | | | | 15 | | | (199) | | | 189 | |
Net change in operating assets and liabilities | 584 | | | | | 796 | | | 522 | | | 1,518 | |
Cash provided by operating activities | 2,385 | | | | | 2,583 | | | 6,102 | | | 7,145 | |
Cash flows from investing activities: | | | | | | | | | |
Capital expenditures | (297) | | | | | (255) | | | (783) | | | (797) | |
Cash paid for acquisitions, net of cash acquired | — | | | | | (7) | | | — | | | (25) | |
| | | | | | | | | |
Proceeds from sales and maturities of investments | 382 | | | | | 302 | | | 1,495 | | | 971 | |
Purchases of investments | (745) | | | | | (465) | | | (1,968) | | | (1,195) | |
Cash used in investing activities | (660) | | | | | (425) | | | (1,256) | | | (1,046) | |
Cash flows from financing activities: | | | | | | | | | |
Debt borrowings, net of issuance costs | 694 | | | | | — | | | 694 | | | — | |
| | | | | | | | | |
Proceeds from issuance of commercial paper | 100 | | | | | 297 | | | 300 | | | 892 | |
Repayments of commercial paper | (100) | | | | | (300) | | | (300) | | | (700) | |
Proceeds from common stock issuances | — | | | | | — | | | 119 | | | 111 | |
Common stock repurchases | (861) | | | | | (439) | | | (2,381) | | | (1,489) | |
| | | | | | | | | |
Tax withholding payments for vested equity awards | (25) | | | | | (11) | | | (258) | | | (165) | |
Payments of dividends to stockholders | (331) | | | | | (268) | | | (863) | | | (707) | |
Repayments of principal on finance leases | 1 | | | | | 1 | | | (12) | | | (8) | |
Cash used in financing activities | (522) | | | | | (720) | | | (2,701) | | | (2,066) | |
| | | | | | | | | |
Increase (decrease) in cash, cash equivalents and restricted cash equivalents | 1,203 | | | | | 1,438 | | | 2,145 | | | 4,033 | |
Cash, cash equivalents and restricted cash equivalents—beginning of period | 7,175 | | | | | 4,695 | | | 6,233 | | | 2,100 | |
Cash, cash equivalents and restricted cash equivalents — end of period | $ | 8,378 | | | | | $ | 6,133 | | | $ | 8,378 | | | $ | 6,133 | |
| | | | | | | | | |
Reconciliation of cash, cash equivalents, and restricted cash equivalents | | | | | | | | | |
Cash and cash equivalents | $ | 8,288 | | | | | $ | 6,025 | | | $ | 8,288 | | | $ | 6,025 | |
Restricted cash equivalents included in deferred income taxes and other assets | 90 | | | | | 108 | | | 90 | | | 108 | |
Total cash, cash equivalents, and restricted cash equivalents | $ | 8,378 | | | | | $ | 6,133 | | | $ | 8,378 | | | $ | 6,133 | |
| | | | | | | | | |
Supplemental cash flow information: | | | | | | | | | |
Cash payments for income taxes | $ | 213 | | | | | $ | 197 | | | $ | 819 | | | $ | 418 | |
Cash refunds from income taxes | $ | 2 | | | | | $ | — | | | $ | 7 | | | $ | 51 | |
Cash payments for interest | $ | 35 | | | | | $ | 35 | | | $ | 137 | | | $ | 137 | |
Applied Materials, Inc.
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Additional Information | | | | | | | | | | | | | | | | | |
| Q3 FY2024 | | | | Q3 FY2023 | | | | |
Net Revenue by Geography (In millions) | | | | | |
| | | | | | | | | |
United States | $ | 1,053 | | | | | $ | 1,039 | | | | | |
% of Total | 16 | % | | | | 16 | % | | | | |
Europe | $ | 339 | | | | | $ | 661 | | | | | |
% of Total | 5 | % | | | | 10 | % | | | | |
Japan | $ | 555 | | | | | $ | 478 | | | | | |
% of Total | 8 | % | | | | 8 | % | | | | |
Korea | $ | 1,102 | | | | | $ | 988 | | | | | |
% of Total | 16 | % | | | | 15 | % | | | | |
Taiwan | $ | 1,148 | | | | | $ | 1,345 | | | | | |
% of Total | 17 | % | | | | 21 | % | | | | |
Southeast Asia | $ | 428 | | | | | $ | 180 | | | | | |
% of Total | 6 | % | | | | 3 | % | | | | |
China | $ | 2,153 | | | | | $ | 1,734 | | | | | |
% of Total | 32 | % | | | | 27 | % | | | | |
| | | | | | | | | |
Employees (In thousands) | | | | | | | | | |
Regular Full Time | 35.2 | | | | | 34.5 | | | | | |
Applied Materials, Inc.
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APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP RESULTS
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
(In millions, except percentages) | July 28, 2024 | | | | July 30, 2023 | | July 28, 2024 | | July 30, 2023 |
Non-GAAP Gross Profit | | | | | | | | | |
GAAP reported gross profit | $ | 3,205 | | | | | $ | 2,976 | | | $ | 9,562 | | | $ | 9,215 | |
Certain items associated with acquisitions1 | 6 | | | | | 7 | | | 20 | | | 21 | |
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Non-GAAP gross profit | $ | 3,211 | | | | | $ | 2,983 | | | $ | 9,582 | | | $ | 9,236 | |
Non-GAAP gross margin | 47.4 | % | | | | 46.4 | % | | 47.6 | % | | 46.7 | % |
Non-GAAP Operating Income | | | | | | | | | |
GAAP reported operating income | $ | 1,942 | | | | | $ | 1,802 | | | $ | 5,821 | | | $ | 5,683 | |
Certain items associated with acquisitions1 | 10 | | | | | 10 | | | 31 | | | 32 | |
Acquisition integration and deal costs | 1 | | | | | 6 | | | 9 | | | 20 | |
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Non-GAAP operating income | $ | 1,953 | | | | | $ | 1,818 | | | $ | 5,861 | | | $ | 5,735 | |
Non-GAAP operating margin | 28.8 | % | | | | 28.3 | % | | 29.1 | % | | 29.0 | % |
Non-GAAP Net Income | | | | | | | | | |
GAAP reported net income | $ | 1,705 | | | | | $ | 1,560 | | | $ | 5,446 | | | $ | 4,852 | |
Certain items associated with acquisitions1 | 10 | | | | | 10 | | | 31 | | | 32 | |
Acquisition integration and deal costs | 1 | | | | | 6 | | | 9 | | | 20 | |
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Realized loss (gain), dividends and impairments on strategic investments, net | 16 | | | | | (4) | | | 12 | | | 109 | |
Unrealized loss (gain) on strategic investments, net | 25 | | | | | 6 | | | (275) | | | 13 | |
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Income tax effect of share-based compensation2 | 8 | | | | | 5 | | | (7) | | | (6) | |
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Income tax effects related to intra-entity intangible asset transfers | 17 | | | | | 9 | | | 57 | | | 25 | |
Resolution of prior years’ income tax filings and other tax items | (11) | | | | | 10 | | | 22 | | | (22) | |
Income tax effect of non-GAAP adjustments3 | (4) | | | | | (2) | | | (2) | | | (7) | |
Non-GAAP net income | $ | 1,767 | | | | | $ | 1,600 | | | $ | 5,293 | | | $ | 5,016 | |
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1 | These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets. |
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2 | GAAP basis tax benefit related to share-based compensation is recognized ratably over the fiscal year on a non-GAAP basis. |
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3 | Adjustment to provision for income taxes related to non-GAAP adjustments reflected in income before income taxes. |
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Applied Materials, Inc.
Page 11 of 13
APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP RESULTS
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
(In millions, except per share amounts) | July 28, 2024 | | | | July 30, 2023 | | July 28, 2024 | | July 30, 2023 |
Non-GAAP Earnings Per Diluted Share | | | | | | | | | |
GAAP reported earnings per diluted share | $ | 2.05 | | | | | $ | 1.85 | | | $ | 6.52 | | | $ | 5.73 | |
Certain items associated with acquisitions | 0.01 | | | | | 0.01 | | | 0.04 | | | 0.04 | |
Acquisition integration and deal costs | — | | | | | 0.01 | | | 0.01 | | | 0.02 | |
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Realized loss (gain), dividends and impairments on strategic investments, net | 0.01 | | | | | — | | | 0.01 | | | 0.13 | |
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Unrealized loss (gain) on strategic investments, net | 0.03 | | | | | — | | | (0.33) | | | 0.01 | |
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Income tax effect of share-based compensation | 0.01 | | | | | 0.01 | | | (0.01) | | | (0.01) | |
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Income tax effects related to intra-entity intangible asset transfers | 0.02 | | | | | 0.01 | | | 0.07 | | | 0.03 | |
Resolution of prior years’ income tax filings and other tax items | (0.01) | | | | | 0.01 | | | 0.03 | | | (0.02) | |
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Non-GAAP earnings per diluted share | $ | 2.12 | | | | | $ | 1.90 | | | $ | 6.34 | | | $ | 5.93 | |
Weighted average number of diluted shares | 833 | | | | | 843 | | | 835 | | | 846 | |
Applied Materials, Inc.
Page 12 of 13
APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP RESULTS
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
(In millions, except percentages) | July 28, 2024 | | | | July 30, 2023 | | July 28, 2024 | | July 30, 2023 |
Semiconductor Systems Non-GAAP Operating Income | | | | | | | | | |
GAAP reported operating income | $ | 1,712 | | | | | $ | 1,568 | | | $ | 5,157 | | | $ | 5,138 | |
Certain items associated with acquisitions1 | 10 | | | | | 10 | | | 30 | | | 29 | |
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Non-GAAP operating income | $ | 1,722 | | | | | $ | 1,578 | | | $ | 5,187 | | | $ | 5,167 | |
Non-GAAP operating margin | 35.0 | % | | | | 33.7 | % | | 35.2 | % | | 34.9 | % |
Applied Global Services Non-GAAP Operating Income | | | | | | | | | |
GAAP reported operating income | $ | 467 | | | | | $ | 399 | | | $ | 1,320 | | | $ | 1,128 | |
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Non-GAAP operating income | $ | 467 | | | | | $ | 399 | | | $ | 1,320 | | | $ | 1,128 | |
Non-GAAP operating margin | 29.6 | % | | | | 27.3 | % | | 28.8 | % | | 26.5 | % |
Display and Adjacent Markets Non-GAAP Operating Income | | | | | | | | | |
GAAP reported operating income | $ | 16 | | | | | $ | 32 | | | $ | 46 | | | $ | 51 | |
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Non-GAAP operating income | $ | 16 | | | | | $ | 32 | | | $ | 46 | | | $ | 51 | |
Non-GAAP operating margin | 6.4 | % | | | | 13.6 | % | | 6.8 | % | | 8.9 | % |
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1 | These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets. |
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Note: The reconciliation of GAAP and non-GAAP 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.
Applied Materials, Inc.
Page 13 of 13
APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP EFFECTIVE INCOME TAX RATE
| | | | | |
| Three Months Ended |
(In millions, except percentages) | July 28, 2024 |
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GAAP provision for income taxes (a) | $ | 255 | |
Income tax effect of share-based compensation | (8) | |
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Income tax effects related to intra-entity intangible asset transfers | (17) | |
Resolutions of prior years’ income tax filings and other tax items | 11 | |
Income tax effect of non-GAAP adjustments | 4 | |
Non-GAAP provision for income taxes (b) | $ | 245 | |
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GAAP income before income taxes (c) | $ | 1,960 | |
Certain items associated with acquisitions | 10 | |
Acquisition integration and deal costs | 1 | |
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Realized loss (gain), dividends and impairments on strategic investments, net | 16 | |
Unrealized loss (gain) on strategic investments, net | 25 | |
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Non-GAAP income before income taxes (d) | $ | 2,012 | |
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GAAP effective income tax rate (a/c) | 13.0 | % |
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Non-GAAP effective income tax rate (b/d) | 12.2 | % |
UNAUDITED RECONCILIATION OF NON-GAAP FREE CASH FLOW
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| Three Months Ended | | Nine Months Ended |
(In millions) | July 28, 2024 | | | | July 30, 2023 | | July 28, 2024 | | July 30, 2023 |
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Cash provided by operating activities | $ | 2,385 | | | | | $ | 2,583 | | | $ | 6,102 | | | $ | 7,145 | |
Capital expenditures | (297) | | | | | (255) | | | (783) | | | (797) | |
Non-GAAP free cash flow | $ | 2,088 | | | | | $ | 2,328 | | | $ | 5,319 | | | $ | 6,348 | |
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