• Applied Materials Announces Fourth Quarter and Fiscal Year 2024 Results

    Source: Nasdaq GlobeNewswire / 14 Nov 2024 15:01:35   America/Chicago

    • Quarterly revenue $7.05 billion, up 5 percent year over year
    • Quarterly GAAP EPS $2.09 and non-GAAP EPS $2.32, down 12 percent and up 9 percent year over year, respectively
    • Annual revenue $27.18 billion, up 2 percent year over year
    • Annual GAAP EPS $8.61 and non-GAAP EPS $8.65, up 6 percent and 7 percent year over year, respectively

    SANTA CLARA, Calif., Nov. 14, 2024 (GLOBE NEWSWIRE) -- Applied Materials, Inc. (NASDAQ: AMAT) today reported results for its fourth quarter and fiscal year ended Oct. 27, 2024.

    Fourth Quarter Results

    Applied generated record revenue of $7.05 billion. On a GAAP basis, the company reported gross margin of 47.3 percent, record operating income of $2.05 billion or 29.0 percent of net revenue, and earnings per share (EPS) of $2.09.

    On a non-GAAP basis, the company reported gross margin of 47.5 percent, record operating income of $2.06 billion or 29.3 percent of net revenue, and record EPS of $2.32.

    The company generated $2.58 billion in cash from operations and distributed $1.77 billion to shareholders including $1.44 billion in share repurchases and $329 million in dividends.

    Full Year Results

    In fiscal 2024, Applied generated record revenue of $27.18 billion. On a GAAP basis, the company recorded gross margin of 47.5 percent, record operating income of $7.87 billion or 28.9 percent of net sales, and record EPS of $8.61.

    On a non-GAAP adjusted basis, the company reported gross margin of 47.6 percent, record operating income of $7.92 billion or 29.2 percent of net sales, and record EPS of $8.65.

    The company generated a $8.68 billion in cash from operations and distributed $5.01 billion to shareholders including $3.82 billion in share repurchases and $1.19 billion in dividends.

    “Applied Materials’ technology leadership and strong execution drove record Q4 and fiscal 2024 performance, our fifth consecutive year of growth,” said Gary Dickerson, President and CEO. “Our portfolio of products and services uniquely positions us to enable our customers in their pursuit of AI and energy-efficient computing. As these key drivers of semiconductor innovation continue to grow in importance, the industry’s roadmap is becoming increasingly dependent on materials engineering, where Applied is the clear leader.”

    Results Summary

             Change
     Q4 FY2024 Q4 FY2023 FY2024 FY2023 Q4 FY2024
    vs.
    Q4 FY2023    		 FY2024
    vs.
    FY2023
     (In millions, except per share amounts and percentages)  
    Net revenue$7,045  $6,723  $27,176  $26,517  5% 2%
    Gross margin 47.3%  47.1%  47.5%  46.7% 0.2 points 0.8 points
    Operating margin 29.0%  29.3%  28.9%  28.9% (0.3) points —
    Net income$1,731  $2,004  $7,177  $6,856  (14)% 5%
    Diluted earnings per share$2.09  $2.38  $8.61  $8.11  (12)% 6%
    Non-GAAP Results           
    Non-GAAP gross margin 47.5%  47.3%  47.6%  46.8% 0.2 points 0.8 points
    Non-GAAP operating margin 29.3%  29.5%  29.2%  29.1% (0.2) points 0.1 points
    Non-GAAP net income$1,917  $1,786  $7,210  $6,802  7% 6%
    Non-GAAP diluted EPS$2.32  $2.12  $8.65  $8.05  9% 7%
    Non-GAAP free cash flow$2,168  $1,246  $7,487  $7,594  74% (1)%
                        

    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.

    Business Outlook

    In the first quarter of fiscal 2025, Applied expects net revenue to be approximately $7.15 billion, plus or minus $400 million. Non-GAAP diluted EPS is expected to be approximately $2.29, plus or minus $0.18.

    This outlook for non-GAAP diluted EPS excludes known charges related to completed acquisitions of $0.01 per share and includes a net income tax benefit related to intra-entity intangible asset transfers of $0.09 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 and Fiscal Year 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 SystemsQ4 FY2024 Q4 FY2023 FY2024 FY2023
     (In millions, except percentages)
    Net revenue$5,177  $4,883  $19,911  $19,698 
    Foundry, logic and other 73%  69%  68%  77%
    DRAM 23%  27%  28%  17%
    Flash memory 4%  4%  4%  6%
    Operating income$1,824  $1,741  $6,981  $6,879 
    Operating margin 35.2%  35.7%  35.1%  34.9%
    Non-GAAP Results      
    Non-GAAP operating income$1,834  $1,751  $7,021  $6,918 
    Non-GAAP operating margin 35.4%  35.9%  35.3%  35.1%
                    


    Applied Global ServicesQ4 FY2024 Q4 FY2023 FY2024 FY2023
     (In millions, except percentages)
    Net revenue$1,639  $1,471  $6,225  $5,732 
    Operating income$492  $401  $1,812  $1,529 
    Operating margin 30.0%  27.3%  29.1%  26.7%
    Non-GAAP Results      
    Non-GAAP operating income$492  $401  $1,812  $1,529 
    Non-GAAP operating margin 30.0%  27.3%  29.1%  26.7%
                    


    DisplayQ4 FY2024 Q4 FY2023 FY2024 FY2023
     (In millions, except percentages)
    Net revenue$211  $298  $885  $868 
    Operating income$5  $63  $51  $114 
    Operating margin 2.4%  21.1%  5.8%  13.1%
    Non-GAAP Results      
    Non-GAAP operating income$5  $63  $51  $114 
    Non-GAAP operating margin 2.4%  21.1%  5.8%  13.1%
                    

    Corporate and Other

    (In millions)Q4 FY2024 Q4 FY2023 FY2024 FY2023
    Unallocated net revenue$18  $71  $155  $219 
    Unallocated cost of products sold and expenses (293)  (305)  (1,132)  (1,087)
    Total$(275) $(234) $(977) $(868)
                    

    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 https://ir.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 2025 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 and our ability to obtain licenses or authorizations on a timely basis, if at all; the effects of geopolitical turmoil or conflicts; demand for semiconductor chips and electronic devices; 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
    Liz Morali (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 27,
    2024    		 October 29,
    2023    		 October 27,
    2024    		 October 29,
    2023
    Net revenue$7,045  $6,723 $27,176 $26,517
    Cost of products sold 3,710   3,554  14,279  14,133
    Gross profit 3,335   3,169  12,897  12,384
    Operating expenses:       
    Research, development and engineering 858   789  3,233  3,102
    Marketing and selling 215   192  836  776
    General and administrative 216   217  961  852
    Total operating expenses 1,289   1,198  5,030  4,730
    Income from operations 2,046   1,971  7,867  7,654
    Interest expense 66   58  247  238
    Interest and other income (expense), net (85)  259  532  300
    Income before income taxes 1,895   2,172  8,152  7,716
    Provision for income taxes 164   168  975  860
    Net income$1,731  $2,004 $7,177 $6,856
    Earnings per share:       
    Basic$2.11  $2.40 $8.68 $8.16
    Diluted$2.09  $2.38 $8.61 $8.11
    Weighted average number of shares:       
    Basic 822   836  827  840
    Diluted 828   842  834  845
                 

    APPLIED MATERIALS, INC.
    UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS

    (In millions)October 27,
    2024    		 October 29,
    2023
    ASSETS   
    Current assets:   
    Cash and cash equivalents$8,022 $6,132
    Short-term investments 1,449  737
    Accounts receivable, net 5,234  5,165
    Inventories 5,421  5,725
    Other current assets 1,094  1,388
    Total current assets 21,220  19,147
    Long-term investments 2,787  2,281
    Property, plant and equipment, net 3,339  2,723
    Goodwill 3,732  3,732
    Purchased technology and other intangible assets, net 249  294
    Deferred income taxes and other assets 3,082  2,552
    Total assets$34,409 $30,729
    LIABILITIES AND STOCKHOLDERS’ EQUITY   
    Current liabilities:   
    Short-term debt$799 $100
    Accounts payable and accrued expenses 4,820  4,297
    Contract liabilities 2,849  2,975
    Total current liabilities 8,468  7,372
    Long-term debt 5,460  5,461
    Income taxes payable 670  833
    Other liabilities 810  714
    Total liabilities 15,408  14,380
    Total stockholders’ equity 19,001  16,349
    Total liabilities and stockholders’ equity$34,409 $30,729
          

    APPLIED MATERIALS, INC.
    UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

    (In millions)

    		Three Months Ended Twelve Months Ended
    October 27,
    2024    		 October 29,
    2023    		October 27,
    2024    		 October 29,
    2023
    Cash flows from operating activities:       
    Net income$1,731  $2,004  $7,177  $6,856 
    Adjustments required to reconcile net income to cash provided by operating activities:       
    Depreciation and amortization 110   130   392   515 
    Share-based compensation 141   115   577   490 
    Deferred income taxes (248)  198   (633)  24 
    Other 246   (149)  47   40 
    Net change in operating assets and liabilities 595   (743)  1,117   775 
    Cash provided by operating activities 2,575   1,555   8,677   8,700 
    Cash flows from investing activities:       
    Capital expenditures (407)  (309)  (1,190)  (1,106)
    Cash paid for acquisitions, net of cash acquired —   —   —   (25)
    Proceeds from sales and maturities of investments 956   297   2,451   1,268 
    Purchases of investments (1,620)  (477)  (3,588)  (1,672)
    Cash used in investing activities (1,071)  (489)  (2,327)  (1,535)
    Cash flows from financing activities:       
    Debt borrowings, net of issuance costs —   —   694   — 
    Proceeds from issuance of commercial paper 101   99   401   991 
    Repayments of commercial paper (100)  (200)  (400)  (900)
    Proceeds from common stock issuances 124   116   243   227 
    Common stock repurchases (1,442)  (700)  (3,823)  (2,189)
    Tax withholding payments for vested equity awards (33)  (14)  (291)  (179)
    Payments of dividends to stockholders (329)  (268)  (1,192)  (975)
    Repayments of principal on finance leases (90)  1   (102)  (7)
    Cash used in financing activities (1,769)  (966)  (4,470)  (3,032)
    Increase (decrease) in cash, cash equivalents and restricted cash equivalents (265)  100   1,880   4,133 
    Cash, cash equivalents and restricted cash equivalents — beginning of period 8,378   6,133   6,233   2,100 
    Cash, cash equivalents and restricted cash equivalents — end of period$8,113  $6,233  $8,113  $6,233 
            
    Reconciliation of cash, cash equivalents, and restricted cash equivalents       
    Cash and cash equivalents$8,022  $6,132  $8,022  $6,132 
    Restricted cash equivalents included in deferred income taxes and other assets 91   101   91   101 
    Total cash, cash equivalents, and restricted cash equivalents$8,113  $6,233  $8,113  $6,233 
            
    Supplemental cash flow information:       
    Cash payments for income taxes$138  $588  $957  $1,006 
    Cash refunds from income taxes$8  $2  $15  $53 
    Cash payments for interest$68  $68  $205  $205 
                    

    Additional Information

     Q4 FY2024 Q4 FY2023 FY2024 FY2023
    Net Revenue by Geography (In millions)     
    United States$1,153  $803  $3,818  $4,006 
    % of Total 16%  12%  14%  15%
    Europe$405  $441  $1,443  $2,152 
    % of Total 6%  7%  5%  8%
    Japan$581  $681  $2,154  $2,075 
    % of Total 8%  10%  8%  8%
    Korea$1,172  $745  $4,493  $4,609 
    % of Total 17%  11%  17%  18%
    Taiwan$1,284  $922  $4,010  $5,670 
    % of Total 18%  14%  15%  21%
    Southeast Asia$314  $168  $1,141  $758 
    % of Total 5%  2%  4%  3%
    China$2,136  $2,963  $10,117  $7,247 
    % of Total 30%  44%  37%  27%
            
    Employees (In thousands)       
    Regular Full Time 35.7   34.3     
                

    APPLIED MATERIALS, INC.
    UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP RESULTS

     Three Months Ended Twelve Months Ended
    (In millions, except percentages)October 27,
    2024    		 October 29,
    2023    		 October 27,
    2024    		 October 29,
    2023
    Non-GAAP Gross Profit       
    GAAP reported gross profit$3,335  $3,169  $12,897  $12,384 
    Certain items associated with acquisitions1 6   8   26   29 
    Impairment of long-lived assets 3   —   3   — 
    Non-GAAP gross profit$3,344  $3,177  $12,926  $12,413 
    Non-GAAP gross margin 47.5%  47.3%  47.6%  46.8%
    Non-GAAP Operating Income       
    GAAP reported operating income$2,046  $1,971  $7,867  $7,654 
    Certain items associated with acquisitions1 11   11   42   43 
    Acquisition integration and deal costs 3   2   12   22 
    Impairment of long-lived assets 3   —   3   — 
    Non-GAAP operating income$2,063  $1,984  $7,924  $7,719 
    Non-GAAP operating margin 29.3%  29.5%  29.2%  29.1%
    Non-GAAP Net Income       
    GAAP reported net income$1,731  $2,004  $7,177  $6,856 
    Certain items associated with acquisitions1 11   11   42   43 
    Acquisition integration and deal costs 3   2   12   22 
    Impairment of long-lived assets 3   —   3   — 
    Realized loss (gain), dividends and impairments on strategic investments, net (1)  (2)  11   107 
    Unrealized loss (gain) on strategic investments, net 244   (147)  (31)  (134)
    Earn-out —   (15)  —   (15)
    Income tax effect of share-based compensation2 7   6   —   — 
    Income tax effects related to intra-entity intangible asset transfers (33)  (65)  24   (40)
    Resolution of prior years’ income tax filings and other tax items (47)  (9)  (25)  (31)
    Income tax effect of non-GAAP adjustments3 (1)  1   (3)  (6)
    Non-GAAP net income$1,917  $1,786  $7,210  $6,802 


    1 These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets.
      
    2GAAP basis tax benefit related to share-based compensation is recognized ratably over the fiscal year on a non-GAAP basis.
      
    3Adjustment 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 RESULTS

     Three Months Ended Twelve Months Ended
    (In millions, except per share amounts)October 27,
    2024    		 October 29,
    2023    		 October 27,
    2024    		 October 29,
    2023
    Non-GAAP Earnings Per Diluted Share       
    GAAP reported earnings per diluted share$2.09  $2.38  $8.61  $8.11 
    Certain items associated with acquisitions 0.01   0.01   0.05   0.05 
    Acquisition integration and deal costs —   —   0.01   0.02 
    Realized loss (gain), dividends and impairments on strategic investments, net —   —   0.01   0.13 
    Unrealized loss (gain) on strategic investments, net 0.30   (0.18)  (0.03)  (0.16)
    Earn-out —   (0.01)  —   (0.01)
    Income tax effect of share-based compensation 0.01   0.01   —   — 
    Income tax effects related to intra-entity intangible asset transfers (0.04)  (0.08)  0.03   (0.05)
    Resolution of prior years’ income tax filings and other tax items (0.05)  (0.01)  (0.03)  (0.04)
    Non-GAAP earnings per diluted share$2.32  $2.12  $8.65  $8.05 
    Weighted average number of diluted shares 828   842   834   845 
                    

    APPLIED MATERIALS, INC.
    UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP RESULTS

     Three Months Ended Twelve Months Ended
    (In millions, except percentages)October 27,
    2024    		 October 29,
    2023    		 October 27,
    2024    		 October 29,
    2023
    Semiconductor Systems Non-GAAP Operating Income       
    GAAP reported operating income$1,824  $1,741  $6,981  $6,879 
    Certain items associated with acquisitions1 10   10   40   39 
    Non-GAAP operating income$1,834  $1,751  $7,021  $6,918 
    Non-GAAP operating margin 35.4%  35.9%  35.3%  35.1%
    Applied Global Services Non-GAAP Operating Income       
    GAAP reported operating income$492  $401  $1,812  $1,529 
    Non-GAAP operating income$492  $401  $1,812  $1,529 
    Non-GAAP operating margin 30.0%  27.3%  29.1%  26.7%
    Display Non-GAAP Operating Income       
    GAAP reported operating income$5  $63  $51  $114 
    Non-GAAP operating income$5  $63  $51  $114 
    Non-GAAP operating margin 2.4%  21.1%  5.8%  13.1%


    1 These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets.
      

    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.
    UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP EFFECTIVE INCOME TAX RATE

     Three Months Ended
    (In millions, except percentages)October 27, 2024
      
    GAAP provision for income taxes(a)$164 
    Income tax effect of share-based compensation (7)
    Income tax effects related to intra-entity intangible asset transfers 33 
    Resolutions of prior years’ income tax filings and other tax items 47 
    Income tax effect of non-GAAP adjustments 1 
    Non-GAAP provision for income taxes(b)$238 
      
    GAAP income before income taxes(c)$1,895 
    Certain items associated with acquisitions 11 
    Acquisition integration and deal costs 3 
    Impairment of long-lived assets 3 
    Realized loss (gain), dividends and impairments on strategic investments, net (1)
    Unrealized loss (gain) on strategic investments, net 244 
    Non-GAAP income before income taxes(d)$2,155 
      
    GAAP effective income tax rate(a/c) 8.7%
      
    Non-GAAP effective income tax rate(b/d) 11.0%
        

    UNAUDITED RECONCILIATION OF NON-GAAP FREE CASH FLOW

     Three Months Ended Twelve Months Ended
    (In millions)October 27,
    2024    		 October 29,
    2023    		 October 27,
    2024    		 October 29,
    2023
    Cash provided by operating activities$2,575  $1,555  $8,677  $8,700 
    Capital expenditures (407)  (309)  (1,190)  (1,106)
    Non-GAAP free cash flow$2,168  $1,246  $7,487  $7,594 

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