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Applied Materials (AMAT) Q4 Earnings Beat, Sales Down Y/Y
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Applied Materials Inc. (AMAT - Free Report) reported fourth-quarter fiscal 2023 non-GAAP earnings of $2.12 per share, surpassing the Zacks Consensus Estimate by 7.1%. Moreover, the figure improved 4% from the year-ago fiscal quarter’s reported figure.
Net sales of $6.72 billion were down 0.4% from the year-ago fiscal quarter’s level. The figure surpassed the Zacks Consensus Estimate of $6.52 billion.
Softness in the Semiconductor Systems segment mainly led to a decline in top-line growth.
Weakening momentum across Korea, Taiwan, Southeast Asia and the United States was a major negative.
Nevertheless, the company’s strength in the Applied Global Services segment was a positive. Further, improving the Display segment contributed well. AMAT also experienced solid momentum across China, Europe and Japan during the reported quarter.
Applied Materials, Inc. Price, Consensus and EPS Surprise
Semiconductor Systems generated sales worth $4.88 billion, which contributed 72.6% to its net sales, reflecting a decline of 3.1% from the year-ago fiscal quarter’s reading. The figure surpassed the Zacks Consensus Estimate of $4.75 billion.
Applied Global Services reported sales of $1.47 billion (21.9% of net sales), up 3.6% from the prior-year fiscal quarter’s reported number. The figure surpassed the Zacks Consensus Estimate of $1.42 billion.
Sales from Display and Adjacent Markets were $298 million (4.4% of net sales), up 18.7% from the year-ago fiscal quarter’s reported level. The figure came ahead of the Zacks Consensus Estimate of $290 million.
Revenues by Geography
The United States, Europe, Japan, Korea, Taiwan, Southeast Asia and China generated sales of $803 million, $441 million, $681 million, $745 million, $922 million, $168 million and $2.96 billion, contributing 12%, 7%, 10%, 11%, 14%, 2% and 44% to net sales, respectively.
Sales in Europe, Japan and China increased 17.6%, 12.4% and 121.6%, respectively, from the year-ago fiscal quarter’s readings. Sales in the United States, Korea, Taiwan and Southeast Asia fell 3.2%, 31.1%, 55.4% and 62.7%, respectively, from the year-ago quarter’s corresponding levels.
Operating Results
The non-GAAP gross margin was 47.3%, which expanded 130 basis points (bps) from the year-ago fiscal quarter’s figure.
Operating expenses were $1.2 billion, up 8.2% from the year-ago fiscal quarter. As a percentage of sales, the figure expanded 140 bps from the year-earlier fiscal quarter’s level to 17.8%.
The non-GAAP operating margin of 29.5% for the reported quarter contracted 30 bps from the prior-year fiscal period’s actuals.
Balance Sheet & Cash FlowAs of Oct 29, 2023, cash and cash equivalent balances and short-term investments were $6.9 billion, up from $6.5 billion as of Jul 30, 2023.
Inventories were $5.7 billion in fourth-quarter fiscal 2023 compared with $5.8 billion in third-quarter fiscal 2023. Accounts receivables increased to $5.17 billion in the reported quarter from $5.23 billion in the previous fiscal quarter.
Long-term debt was $5.461 billion at the end of the reported quarter compared with $5.460 billion at the end of the previous fiscal quarter.
Applied Materials generated a cash flow of $1.5 billion compared with $2.6 billion in the prior fiscal quarter.
AMAT returned $968 million to its shareholders, of which share repurchases were worth $700 million and dividend payments amounted to $268 million.
Guidance
For first-quarter fiscal 2024, Applied Materials expects net sales of $6.47 billion (+/-$400 million). The Zacks Consensus Estimate for the same is pegged at $6.39 billion.
AMAT anticipates Semiconductor Systems, AGS and Display revenues to be $4.70 billion, $1.46 billion and $235 million, respectively.
Management expects non-GAAP earnings per share in the band of $1.72-$2.08. The Zacks Consensus Estimate for the same is pegged at $1.85.
Applied Materials expects a non-GAAP gross margin of 47% and non-GAAP operating expenses of $1.23 billion. It projects a non-GAAP tax rate of 13%.
Zacks Rank & Stocks to Consider
Currently, Applied Materials carries a Zacks Rank #3 (Hold).
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Applied Materials (AMAT) Q4 Earnings Beat, Sales Down Y/Y
Applied Materials Inc. (AMAT - Free Report) reported fourth-quarter fiscal 2023 non-GAAP earnings of $2.12 per share, surpassing the Zacks Consensus Estimate by 7.1%. Moreover, the figure improved 4% from the year-ago fiscal quarter’s reported figure.
Net sales of $6.72 billion were down 0.4% from the year-ago fiscal quarter’s level. The figure surpassed the Zacks Consensus Estimate of $6.52 billion.
Softness in the Semiconductor Systems segment mainly led to a decline in top-line growth.
Weakening momentum across Korea, Taiwan, Southeast Asia and the United States was a major negative.
Nevertheless, the company’s strength in the Applied Global Services segment was a positive. Further, improving the Display segment contributed well. AMAT also experienced solid momentum across China, Europe and Japan during the reported quarter.
Applied Materials, Inc. Price, Consensus and EPS Surprise
Applied Materials, Inc. price-consensus-eps-surprise-chart | Applied Materials, Inc. Quote
Segments in Detail
Semiconductor Systems generated sales worth $4.88 billion, which contributed 72.6% to its net sales, reflecting a decline of 3.1% from the year-ago fiscal quarter’s reading. The figure surpassed the Zacks Consensus Estimate of $4.75 billion.
Applied Global Services reported sales of $1.47 billion (21.9% of net sales), up 3.6% from the prior-year fiscal quarter’s reported number. The figure surpassed the Zacks Consensus Estimate of $1.42 billion.
Sales from Display and Adjacent Markets were $298 million (4.4% of net sales), up 18.7% from the year-ago fiscal quarter’s reported level. The figure came ahead of the Zacks Consensus Estimate of $290 million.
Revenues by Geography
The United States, Europe, Japan, Korea, Taiwan, Southeast Asia and China generated sales of $803 million, $441 million, $681 million, $745 million, $922 million, $168 million and $2.96 billion, contributing 12%, 7%, 10%, 11%, 14%, 2% and 44% to net sales, respectively.
Sales in Europe, Japan and China increased 17.6%, 12.4% and 121.6%, respectively, from the year-ago fiscal quarter’s readings. Sales in the United States, Korea, Taiwan and Southeast Asia fell 3.2%, 31.1%, 55.4% and 62.7%, respectively, from the year-ago quarter’s corresponding levels.
Operating Results
The non-GAAP gross margin was 47.3%, which expanded 130 basis points (bps) from the year-ago fiscal quarter’s figure.
Operating expenses were $1.2 billion, up 8.2% from the year-ago fiscal quarter. As a percentage of sales, the figure expanded 140 bps from the year-earlier fiscal quarter’s level to 17.8%.
The non-GAAP operating margin of 29.5% for the reported quarter contracted 30 bps from the prior-year fiscal period’s actuals.
Balance Sheet & Cash FlowAs of Oct 29, 2023, cash and cash equivalent balances and short-term investments were $6.9 billion, up from $6.5 billion as of Jul 30, 2023.
Inventories were $5.7 billion in fourth-quarter fiscal 2023 compared with $5.8 billion in third-quarter fiscal 2023. Accounts receivables increased to $5.17 billion in the reported quarter from $5.23 billion in the previous fiscal quarter.
Long-term debt was $5.461 billion at the end of the reported quarter compared with $5.460 billion at the end of the previous fiscal quarter.
Applied Materials generated a cash flow of $1.5 billion compared with $2.6 billion in the prior fiscal quarter.
AMAT returned $968 million to its shareholders, of which share repurchases were worth $700 million and dividend payments amounted to $268 million.
Guidance
For first-quarter fiscal 2024, Applied Materials expects net sales of $6.47 billion (+/-$400 million). The Zacks Consensus Estimate for the same is pegged at $6.39 billion.
AMAT anticipates Semiconductor Systems, AGS and Display revenues to be $4.70 billion, $1.46 billion and $235 million, respectively.
Management expects non-GAAP earnings per share in the band of $1.72-$2.08. The Zacks Consensus Estimate for the same is pegged at $1.85.
Applied Materials expects a non-GAAP gross margin of 47% and non-GAAP operating expenses of $1.23 billion. It projects a non-GAAP tax rate of 13%.
Zacks Rank & Stocks to Consider
Currently, Applied Materials carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Badger Meter (BMI - Free Report) , Arista Networks (ANET - Free Report) and Salesforce (CRM - Free Report) . While Badger Meter sports a Zacks Rank #1 (Strong Buy), Arista Networks and Salesforce carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Badger Meter have gained 24.8% in the year-to-date period. BMI’s long-term earnings growth rate is currently projected at 20.39%.
Shares of Arista Networks have gained 56.4% in the year-to-date period. The long-term earnings growth rate for ANET is currently projected at 20.4%
Shares of Salesforce have rallied 57.4% in the year-to-date period. CRM’s long-term earnings growth rate is currently projected at 22.54%.