Applied Materials Inc. ( AMAT Quick Quote 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. 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).
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