Applied Materials Delivers Strong Year-on-Year Growth in Quarterly Revenue and Operating Profit
Wed February 14, 2018 4:01 PM|GlobeNewswire
Record quarterly revenue of $4.20 billion, up 28 percent year over year
GAAP EPS of $0.13; record non-GAAP EPS of $1.06, up 58 percent year over yearDoubles quarterly dividend and increases share repurchase authorization by $6.0 billionSANTA CLARA, Calif., Feb. 14, 2018 (GLOBE NEWSWIRE) -- Applied Materials, Inc. ( AMAT) today reported record revenue and operating profit in its first quarter ended January 28, 2018.
First Quarter Results
Compared to the first quarter of fiscal 2017, Applied grew net sales by 28 percent to $4.20 billion. On a GAAP basis, the company increased gross margin by 1.6 points to 45.7 percent, and grew operating income by 48 percent to $1.20 billion or 28.4 percent of net sales. GAAP earnings per share (EPS) declined to $0.13 due to a one-time charge related to recent U.S. tax legislation that reduced EPS by approximately $0.94.
On a non-GAAP adjusted basis, over the same period, the company increased gross margin by 1.3 points to 46.7 percent, grew operating income by 46 percent to $1.25 billion or 29.6 percent of net sales, and increased EPS by 58 percent to $1.06, which excludes the charge related to recent U.S. tax legislation. In addition, non-GAAP EPS included a benefit of $0.04 that was driven by recent changes in U.S. tax legislation that reduced the company's fiscal 2018 tax rate relative to previous expectations.
The company increased cash flow from operations by 85 percent year over year to $1.47 billion and returned $888 million to shareholders through dividends of $106 million and $782 million in share repurchases.
“We see sustainable strength in our markets as large, powerful trends drive a fundamental shift in the demand for semiconductors and displays,” said Gary Dickerson, president and CEO. “Our broad portfolio of capabilities and products puts us in a great position to outperform our markets and we’re confident that each of our three major business segments can deliver strong double-digit growth in 2018.”
Quarterly Results Summary
| | | | | | | | | | | | | | | | Q1 FY2018 | | Q1 FY2017 | | Change | | | | | | | | | | | | | | (In millions, except per share amounts and percentages)
| | Net sales | $ | 4,204 | | | $ | 3,278 | | | 28% | | Gross margin | 45.7 | % | | 44.1 | % | | 1.6 points | | Operating margin | 28.4 | % | | 24.6 | % | | 3.8 points | | Net income | $ | 135 | | | $ | 703 | | | (81%) | | Diluted earnings per share | $ | 0.13 | | | $ | 0.65 | | | (80%) | | Non-GAAP Adjusted Results | | | | | | | Non-GAAP adjusted gross margin | 46.7 | % | | 45.4 | % | | 1.3 points | | Non-GAAP adjusted operating margin | 29.6 | % | | 26.0 | % | | 3.6 points | | Non-GAAP adjusted net income | $ | 1,135 | | | $ | 732 | | | 55% | | Non-GAAP adjusted diluted EPS | $ | 1.06 | | | $ | 0.67 | | | 58% | | | | | | | | | | | |
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.
Capital Allocation
Applied’s Board of Directors has approved a doubling of the quarterly cash dividend on the company's common stock to $0.20 per share. The Board declared that a dividend of $0.20 per share will be payable on June 14, 2018 to shareholders of record as of May 24, 2018. As previously announced, a cash dividend of $0.10 per share will be paid on March 14, 2018 to shareholders of record as of February 21, 2018.
The Board also approved a new $6.0 billion share repurchase authorization. This new authorization is incremental to $2.8 billion remaining in the previously approved authorization.
“The dividend increase and additional repurchase authorization reflect Applied’s confidence in the underlying strength of our markets along with our company’s technology leadership and strategy to deliver profitable growth and increase shareholder value,” said Dan Durn, Senior Vice President and Chief Financial Officer.
Impact of Recent U.S. Tax Legislation
As a result of the Tax Cuts and Jobs Act, the company recorded a $1.0 billion tax charge, which included an estimate of a one-time transition tax that is payable over 8 years.
Business Outlook
In the second quarter of fiscal 2018, Applied expects net sales to be in the range of $4.35 billion to $4.55 billion; the midpoint of the range would be an increase of approximately 26 percent, year over year. Non-GAAP adjusted diluted EPS is expected to be in the range of $1.10 to $1.18; the midpoint of the range would be an increase of approximately 44 percent, year over year.
This outlook for non-GAAP adjusted diluted EPS excludes known charges related to completed acquisitions of $0.04 per share and includes the normalized tax benefit of share-based compensation of $0.01 per share, but does not reflect any items that are unknown at this time, such as any additional charges related to acquisitions or other non-operational or unusual items, as well as other tax related items, which we are not able to predict without unreasonable efforts due to their inherent uncertainty.
First Quarter Reportable Segment Information
| Semiconductor Systems | Q1 FY2018 | | Q1 FY2017 | | | | | | | | | | | | (In millions, except percentages) | | Net sales | $ | 2,847 | | | $ | 2,150 | | | Foundry | | 25 | % | | | 50 | % | | DRAM | | 25 | % | | | 16 | % | | Flash | | 37 | % | | | 25 | % | | Logic and other | | 13 | % | | | 9 | % | | Operating income | | 995 | | | | 690 | | | Operating margin | | 34.9 | % | | | 32.1 | % | | Non-GAAP Adjusted Results | | | | | | | | | Non-GAAP adjusted operating income | $ | 1,041 | | | $ | 736 | | | Non-GAAP adjusted operating margin | | 36.6 | % | | | 34.2 | % | | | | | | | | | | | Applied Global Services | Q1 FY2018 | | Q1 FY2017 | | | | | | | | | | | | (In millions, except percentages) | | Net sales | $ | 880 | | | $ | 676 | | | Operating income | | 254 | | | | 178 | | | Operating margin | | 28.9 | % | | | 26.3 | % | | Non-GAAP Adjusted Results | | | | | | | | | Non-GAAP adjusted operating income | $ | 255 | | | $ | 179 | | | Non-GAAP adjusted operating margin | | 29.0 | % | | | 26.5 | % | | | | | | | | | |
| Display and Adjacent Markets | Q1 FY2018 | | Q1 FY2017 | | | | | | | | | | | | (In millions, except percentages) | | Net sales | $ | 455 | | | $ | 422 | | | Operating income | | 101 | | | | 115 | | | Operating margin | | 22.2 | % | | | 27.3 | % | | Non-GAAP Adjusted Results | | | | | | | | | Non-GAAP adjusted operating income | $ | 104 | | | $ | 115 | | | Non-GAAP adjusted operating margin | | 22.9 | % | | | 27.3 | % |
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