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Applied Materials Inc. (AMAT - Free Report) reported first-quarter fiscal 2024 non-GAAP earnings of $2.13 per share, surpassing the Zacks Consensus Estimate by 12.1%. Moreover, the figure improved 5% from the year-ago quarter’s reported number.
Net sales of $6.71 billion were down 0.5% from the year-ago quarter’s reported level. The figure surpassed the Zacks Consensus Estimate of $6.47 billion.
Softness in the Semiconductor Systems segment remained a headwind.
Weakening momentum across Taiwan, Southeast Asia, the United States and Europe was a major negative.
Nevertheless, the company’s strength in the Applied Global Services (“AGS”) segment was a positive. Further, improving the Display segment contributed well. AMAT also experienced solid momentum across China and Japan in the reported quarter.
Shares of Applied Materials have gained 79.8% over a year, outperforming the industry’s rally of 53.6%.
Applied Materials, Inc. Price, Consensus and EPS Surprise
Semiconductor Systems generated sales worth $4.91 billion, which contributed 73.2% to its net sales, reflecting a decline of 4.9% from the year-ago quarter. The figure surpassed the Zacks Consensus Estimate of $4.705 billion.
AGS reported sales of $1.48 billion (22% of net sales), up 7.8% from the prior-year quarter. The figure surpassed the Zacks Consensus Estimate of $1.46 billion.
Sales from Display and Adjacent Markets were $244 million (3.6% of net sales), up 46.1% from the year-ago quarter. The figure beat the Zacks Consensus Estimate of $235 million.
Revenues by Geography
The United States, Europe, Japan, Korea, Taiwan, Southeast Asia and China generated sales of $759 million, $410 million, $565 million, $1.23 billion, $559 million, $186 million and $2.99 billion, contributing 11%, 6%, 9%, 18%, 8%, 3% and 45% to net sales, respectively.
Sales in Japan and China increased 23.9% and 161.7%, respectively, from the year-ago quarter. Sales in the United States, Europe, Korea, Taiwan and Southeast Asia fell 27.8%, 28.4%, 4.8%, 71.6% and 26.5%, respectively, from the year-ago quarter.
Operating Results
The non-GAAP gross margin was 47.9%, which expanded 110 basis points (bps) from the year-ago quarter.
Operating expenses were $1.23 billion, up 5.3% from the year-ago quarter. As a percentage of sales, the figure expanded 100 bps from the year-earlier quarter to 18.4%.
The non-GAAP operating margin of 29.5% for the reported quarter remained flat year over year.
Balance Sheet & Cash Flow
As of Jan 28, 2024, cash, cash equivalent balances and short-term investments were $7.5 billion, up from $6.9 billion as of Oct 29, 2023.
Inventories were $5.6 billion in first-quarter fiscal 2024 compared with $5.7 billion in fourth-quarter fiscal 2023. Accounts receivables increased to $4.7 billion in the reported quarter from $5.2 billion in the previous quarter.
Long-term debt was $5.462 billion at the end of the reported quarter compared with $5.461 billion at the end of the previous quarter.
Applied Materials generated a cash flow of $2.3 billion, up from $1.5 billion in the prior quarter.
AMAT returned $966 million to its shareholders, of which share repurchases were worth $700 million and dividend payments amounted to $266 million.
Guidance
For second-quarter fiscal 2024, Applied Materials expects net sales of $6.50 billion (+/-$400 million). The Zacks Consensus Estimate for the same is pegged at $6.28 billion.
AMAT anticipates Semiconductor Systems, AGS and Display sales to be $4.80 billion, $1.50 billion and $150 million, respectively.
Management expects non-GAAP earnings per share of $1.79-$2.15. The Zacks Consensus Estimate for the same is pegged at $1.79.
Applied Materials expects a non-GAAP gross margin of 47.3% and non-GAAP operating expenses of $1.235 billion. It projects a non-GAAP tax rate of 12.5%.
Zacks Rank & Stocks to Consider
Currently, Applied Materials carries a Zacks Rank #2 (Buy).
Image: Bigstock
Applied Materials (AMAT) Q1 Earnings Beat, Sales Dip Y/Y
Applied Materials Inc. (AMAT - Free Report) reported first-quarter fiscal 2024 non-GAAP earnings of $2.13 per share, surpassing the Zacks Consensus Estimate by 12.1%. Moreover, the figure improved 5% from the year-ago quarter’s reported number.
Net sales of $6.71 billion were down 0.5% from the year-ago quarter’s reported level. The figure surpassed the Zacks Consensus Estimate of $6.47 billion.
Softness in the Semiconductor Systems segment remained a headwind.
Weakening momentum across Taiwan, Southeast Asia, the United States and Europe was a major negative.
Nevertheless, the company’s strength in the Applied Global Services (“AGS”) segment was a positive. Further, improving the Display segment contributed well. AMAT also experienced solid momentum across China and Japan in the reported quarter.
Shares of Applied Materials have gained 79.8% over a year, outperforming the industry’s rally of 53.6%.
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 $4.91 billion, which contributed 73.2% to its net sales, reflecting a decline of 4.9% from the year-ago quarter. The figure surpassed the Zacks Consensus Estimate of $4.705 billion.
AGS reported sales of $1.48 billion (22% of net sales), up 7.8% from the prior-year quarter. The figure surpassed the Zacks Consensus Estimate of $1.46 billion.
Sales from Display and Adjacent Markets were $244 million (3.6% of net sales), up 46.1% from the year-ago quarter. The figure beat the Zacks Consensus Estimate of $235 million.
Revenues by Geography
The United States, Europe, Japan, Korea, Taiwan, Southeast Asia and China generated sales of $759 million, $410 million, $565 million, $1.23 billion, $559 million, $186 million and $2.99 billion, contributing 11%, 6%, 9%, 18%, 8%, 3% and 45% to net sales, respectively.
Sales in Japan and China increased 23.9% and 161.7%, respectively, from the year-ago quarter. Sales in the United States, Europe, Korea, Taiwan and Southeast Asia fell 27.8%, 28.4%, 4.8%, 71.6% and 26.5%, respectively, from the year-ago quarter.
Operating Results
The non-GAAP gross margin was 47.9%, which expanded 110 basis points (bps) from the year-ago quarter.
Operating expenses were $1.23 billion, up 5.3% from the year-ago quarter. As a percentage of sales, the figure expanded 100 bps from the year-earlier quarter to 18.4%.
The non-GAAP operating margin of 29.5% for the reported quarter remained flat year over year.
Balance Sheet & Cash Flow
As of Jan 28, 2024, cash, cash equivalent balances and short-term investments were $7.5 billion, up from $6.9 billion as of Oct 29, 2023.
Inventories were $5.6 billion in first-quarter fiscal 2024 compared with $5.7 billion in fourth-quarter fiscal 2023. Accounts receivables increased to $4.7 billion in the reported quarter from $5.2 billion in the previous quarter.
Long-term debt was $5.462 billion at the end of the reported quarter compared with $5.461 billion at the end of the previous quarter.
Applied Materials generated a cash flow of $2.3 billion, up from $1.5 billion in the prior quarter.
AMAT returned $966 million to its shareholders, of which share repurchases were worth $700 million and dividend payments amounted to $266 million.
Guidance
For second-quarter fiscal 2024, Applied Materials expects net sales of $6.50 billion (+/-$400 million). The Zacks Consensus Estimate for the same is pegged at $6.28 billion.
AMAT anticipates Semiconductor Systems, AGS and Display sales to be $4.80 billion, $1.50 billion and $150 million, respectively.
Management expects non-GAAP earnings per share of $1.79-$2.15. The Zacks Consensus Estimate for the same is pegged at $1.79.
Applied Materials expects a non-GAAP gross margin of 47.3% and non-GAAP operating expenses of $1.235 billion. It projects a non-GAAP tax rate of 12.5%.
Zacks Rank & Stocks to Consider
Currently, Applied Materials carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader technology sector are CrowdStrike (CRWD - Free Report) , Badger Meter (BMI - Free Report) and AMETEK (AME - Free Report) . CrowdStrike currently sports a Zacks Rank #1 (Strong Buy), and Badger Meter and AMETEK carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of CrowdStrike have gained 31% in the year-to-date period. The long-term earnings growth rate for CRWD is 36.07%
Shares of Badger Meter have lost 0.6% in the year-to-date period. The long-term earnings growth rate for BMI is 12.27%.
Shares of AMETEK have gained 5.2% in the year-to-date period. The long-term earnings growth rate for AME is 9.19%.