Santa Clara, Calif., Aug 16, 2012 – (ACN Newswire) – Applied Materials, Inc. (NASDAQ:AMAT), the global leader in manufacturing solutions for the semiconductor, display and solar industries, today reported results for its third quarter of fiscal 2012 ended July 29, 2012.
– Results in line with business outlook in a challenging environment
– Net sales of $2.34 billion with non-GAAP EPS of 24 cents and GAAP EPS of 17 cents
– Operating cash flow exceeded $650 million or 28 percent of net sales
– Share repurchases increased 150% versus the prior quarter to $500 million
Applied generated orders of $1.80 billion and net sales of $2.34 billion. Non-GAAP operating income was $431 million, and non-GAAP net income was $300 million or 24 cents per share. GAAP operating income was $322 million, and GAAP net income was $218 million or 17 cents per share.
“We delivered solid financial performance in line with our outlook despite challenging industry conditions in semiconductor, display and solar,” said Mike Splinter, chairman and CEO. ” Economic uncertainty is weighing on top of a seasonal pullback to produce weaker near-term demand.”
“Applied generated strong operating cash flow and ramped the return of cash to shareholders, buying back 3.6 percent of shares outstanding in the quarter,” said George Davis, executive vice president and CFO. “In a difficult environment, we are controlling spending while ensuring we prioritize investment in key areas to support future growth. “
Quarterly Results Summary ---------------------------------------------------------------------- GAAP Results Q3 FY2012 Q2 FY2012 Q3 FY2011 Net sales $2.34 billion $2.54 billion $2.79 billion Operating income $322 million $409 million $687 million Net income $218 million $289 million $476 million Diluted earnings per share (EPS) $0.17 $0.22 $0.36 ---------------------------------------------------------------------- Non-GAAP Results Non-GAAP operating income $431 million $490 million $683 million Non-GAAP net income $300 million $349 million $467 million Non-GAAP diluted EPS $0.24 $0.27 $0.35 ----------------------------------------------------------------------
Third quarter results included $44 million of restructuring and asset impairment charges, consisting primarily of costs associated with the EES restructuring plan announced on May 10, 2012. The plan also resulted in inventory-related charges of approximately $13 million that lowered gross margin by approximately half a percentage point and earnings per share by $0.01 on both a GAAP and non-GAAP basis.
During the quarter, Varian generated orders of $241 million and net sales of $294 million which were reported within the Silicon Systems Group (SSG) and Applied Global Services (AGS) segments. The business contributed approximately $0.04 to the company’s non-GAAP EPS, which excluded acquisition-related charges equivalent to approximately $0.03 per share.
Applied’s non-GAAP results exclude the impact of the following, where applicable: certain discrete tax items, restructuring and asset impairment charges and any associated adjustments related to restructuring actions, certain acquisition-related costs, investment impairments, and gain or loss on sale of facilities. A reconciliation of the GAAP and non-GAAP results is provided in the financial statements included in this release. See also “Use of Non-GAAP Financial Measures” below.
Third Quarter Reportable Segment Results and Comparisons to the Second Quarter
Silicon Systems Group (SSG) orders were $1.17 billion, down 41 percent, primarily due to lower demand from foundry and logic customers. Net sales were $1.55 billion, down 13 percent. Non-GAAP operating income decreased to $482 million or 31.2 percent of net sales. GAAP operating income decreased to $427 million or 27.6 percent of net sales. New order composition was: foundry 58 percent, flash 19 percent, logic and other 13 percent, and DRAM 10 percent.
Applied Global Services (AGS) orders were $531 million, down 18 percent from the prior quarter which benefited from a thin film production line order. Net sales were $579 million, up 5 percent. Non-GAAP operating income increased to $135 million or 23.3 percent of net sales. GAAP operating income increased to $122 million or 21.1 percent of net sales.
Display orders were $67 million, down 20 percent. Net sales were $142 million, up 6 percent. Non-GAAP operating income increased to $12 million or 8.5 percent of net sales. GAAP operating income increased to $10 million or 7 percent of net sales.
Energy and Environmental Solutions (EES) orders were $35 million, down 44 percent. Net sales were $77 million, down 3 percent. EES had a non-GAAP operating loss of $64 million and a GAAP operating loss of $102 million.
Additional Quarterly Financial Information and Comparisons to the Second Quarter
– Backlog decreased by $551 million to $1.82 billion.
– Gross margin was 41.6 percent on a non-GAAP basis, down from 42.1 percent, in line with the decrease in net sales. GAAP gross margin of 39.7 percent was down slightly from 39.8 percent.
– The effective income tax rate was 27.0 percent on a non-GAAP basis and 27.8 percent on a GAAP basis.
– Cash, cash equivalents and investments were essentially flat at $3.2 billion.
For the fourth quarter of fiscal 2012, Applied expects net sales to be 25 percent to 40 percent lower sequentially. The company expects non-GAAP EPS to be in the range of $0.00 to $0.06. The non-GAAP EPS outlook excludes known charges related to completed acquisitions of approximately $0.05 per share but does not exclude other non-GAAP adjustments that may arise subsequent to this release.
Use of Non-GAAP Financial Measures
Management uses non-GAAP results to evaluate the company’s operating and financial performance in light of business objectives and for planning purposes. These measures are not in accordance with GAAP and may differ from non-GAAP methods of accounting and reporting used by other companies. Applied believes these measures enhance 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. The presentation of this additional information should not be considered a substitute for results prepared in accordance with GAAP.
Applied Materials will discuss these results during an earnings call that begins at 1:30 p.m. Pacific Time today. A live webcast will be available at www.appliedmaterials.com.
This press release contains forward-looking statements, including statements regarding Applied’s performance, industry and economic outlooks, spending, investment, growth strategies, and business outlooks for the fourth quarter of fiscal 2012. Forward-looking statements may contain words such as “expect,” “believe,” “may,” “can,” “should,” “will,” “anticipate” or similar expressions, and include the assumptions that underlie such statements. These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements, including but not limited to: the level of demand for Applied’s products, which is subject to many factors, including uncertain global economic and industry conditions, business and consumer spending, demand for electronic products and semiconductors, government renewable energy policies and incentives, and customers’ utilization rates and new technology and capacity requirements; variability of operating expenses and results among the company’s segments caused by differing conditions in the served markets; the concentrated nature of Applied’s customer base; Applied’s ability to (i) develop, deliver and support a broad range of products, expand its markets and develop new markets, (ii) timely align its cost structure with business conditions and achieve targeted efficiencies from cost-reduction activities, (iii) plan and manage its resources and production capability, (iv) integrate Varian’s operations, product lines, technology and employees and realize synergies, (v) obtain and protect intellectual property rights in key technologies, (vi) attract, motivate and retain key employees, and (vii) accurately forecast future results, which depends on multiple assumptions related to, without limitation, market conditions, customer requirements and business needs; and other risks described in Applied’s SEC filings. All forward-looking statements are based on management’s estimates, projections and assumptions as of the date hereof. The company undertakes no obligation to update any forward-looking statements.
About Applied Materials
Applied Materials, Inc. (Nasdaq:AMAT) is the global leader in providing innovative equipment, services and software to enable the manufacture of advanced semiconductor, flat panel display and solar photovoltaic products. Our technologies help make innovations like smartphones, flat screen TVs and solar panels more affordable and accessible to consumers and businesses around the world. At Applied Materials, we turn today’s innovations into the industries of tomorrow. Learn more at www.appliedmaterials.com .
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