amat-20230216
0000006951FALSEAPPLIED MATERIALS INC /DE00000069512023-02-162023-02-16


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________________________
FORM 8-K
 ____________________________________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 16, 2023
____________________________________________________________________
 Applied Materials, Inc.
(Exact name of registrant as specified in its charter)
____________________________________________________________________
Delaware000-0692094-1655526
(State or other jurisdiction of incorporation)(Commission File Number)(IRS Employer Identification No.)
3050 Bowers Avenue
P.O. Box 58039
Santa Clara, CA 95052-8039
(Address of principal executive offices)

Registrant’s telephone number, including area code: (408) 727-5555
N/A
(Former name or former address, if changed since last report.)
 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Common Stock, par value $.01 per shareAMATThe NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act).   ☐



Item 2.02 Results of Operations and Financial Condition.
On February 16, 2023, Applied Materials, Inc. (“Applied Materials”) announced its financial results for its first quarter ended January 29, 2023. A copy of Applied Materials’ press release is attached hereto as Exhibit 99.1.
The information in this Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liability under that section, and shall not be deemed to be incorporated by reference in any filing of Applied under the Securities Act of 1933, as amended, or the Exchange Act, unless expressly incorporated by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No.Description
99.1
104Cover Page Interactive Data File (formatted as inline XBRL)
 



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Applied Materials, Inc.
 (Registrant)
  
Date:February 16, 2023By:/s/ Teri A. Little
Teri A. Little
Senior Vice President, Chief Legal Officer
and Corporate Secretary
 





Exhibit 99.1
applied_prlogoxcmykblueresa.jpg

APPLIED MATERIALS ANNOUNCES FIRST QUARTER 2023 RESULTS

•Revenue $6.74 billion, up 7 percent year over year
•GAAP operating margin 29.2 percent and non-GAAP operating margin 29.5 percent, down 2.3 points and 2.2 points year over year, respectively
•GAAP EPS $2.02 and non-GAAP EPS $2.03, up 1 percent and 7 percent year over year, respectively
•Generated $2.27 billion in cash from operations

SANTA CLARA, Calif., Feb. 16, 2023 — Applied Materials, Inc. (NASDAQ: AMAT) today reported results for its first quarter ended Jan. 29, 2023.
First Quarter Results
Applied generated revenue of $6.74 billion. On a GAAP basis, the company achieved gross margin of 46.7 percent, operating income of $1.97 billion or 29.2 percent of net sales, and record earnings per share (EPS) of $2.02.
On a non-GAAP adjusted basis, the company reported gross margin of 46.8 percent, operating income of $1.99 billion or 29.5 percent of net sales, and EPS of $2.03.
The company generated $2.27 billion in cash from operations and returned $470 million to shareholders including $250 million in share repurchases and $220 million in dividends.
“While the economy and semiconductor industry are facing challenges in 2023, Applied Materials delivered strong first quarter results, and we believe Applied is well positioned to outperform our markets this year,” said Gary Dickerson, President and CEO. “Our resilience is underpinned by our strong positions with leading customers at key technology inflections, large backlog of differentiated products and growing service business.”


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Results Summary
Q1 FY2023Q1 FY2022Change
(In millions, except per share amounts and percentages)
Net sales$6,739 $6,271 7%
Gross margin46.7 %47.2 %(0.5) points
Operating margin29.2 %31.5 %(2.3) points
Net income$1,717 $1,792 (4)%
Diluted earnings per share$2.02 $2.00 1%
Non-GAAP Adjusted Results
Non-GAAP adjusted gross margin46.8 %47.3 %(0.5) points
Non-GAAP adjusted operating margin29.5 %31.7 %(2.2) points
Non-GAAP adjusted net income$1,724 $1,696 2%
Non-GAAP adjusted diluted EPS$2.03 $1.89 7%

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.



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Business Outlook
In the second quarter of fiscal 2023, Applied expects net sales to be approximately $6.40 billion, plus or minus $400 million, which includes ongoing supply chain challenges and a negative estimated impact of $250 million dollars related to a cybersecurity event recently announced by one of our suppliers. Non-GAAP adjusted diluted EPS is expected to be in the range of $1.66 to $2.02.
This outlook for non-GAAP adjusted diluted EPS excludes known charges related to completed acquisitions of $0.01 per share, includes the normalized tax benefit of share-based compensation of $0.01 per share and includes a net income tax benefit related to intra-entity intangible asset transfers of $0.02 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 SystemsQ1 FY2023Q1 FY2022
 (In millions, except percentages)
Net sales$5,162 $4,567 
Foundry, logic and other77 %60 %
DRAM13 %25 %
Flash memory10 %15 %
Operating income$1,917 $1,771 
Operating margin37.1 %38.8 %
Non-GAAP Adjusted Results
Non-GAAP adjusted operating income$1,926 $1,778 
Non-GAAP adjusted operating margin37.3 %38.9 %
Applied Global ServicesQ1 FY2023Q1 FY2022
 (In millions, except percentages)
Net sales$1,369 $1,320 
Operating income$383 $403 
Operating margin28.0 %30.5 %
Non-GAAP Adjusted Results
Non-GAAP adjusted operating income$383 $403 
Non-GAAP adjusted operating margin28.0 %30.5 %
Display and Adjacent MarketsQ1 FY2023Q1 FY2022
 (In millions, except percentages)
Net sales$167 $366 
Operating income$8 $76 
Operating margin4.8 %20.8 %
Non-GAAP Adjusted Results
Non-GAAP adjusted operating income$8 $77 
Non-GAAP adjusted operating margin4.8 %21.0 %







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Use of Non-GAAP Adjusted Financial Measures

Applied provides investors with certain non-GAAP adjusted financial measures, which are adjusted for the impact of certain costs, expenses, gains and losses, including certain items related to mergers and acquisitions; restructuring and severance charges and any associated adjustments; impairments of assets; gain or loss on strategic investments; certain income tax items and other discrete adjustments. On a non-GAAP basis, the tax effect related to share-based compensation is recognized ratably over the fiscal year. Reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are provided in the financial tables included in this release.
Management uses these non-GAAP adjusted financial measures to evaluate the company’s operating and financial performance and for planning purposes, and as performance measures in its executive compensation program. Applied believes these measures enhance an overall understanding of its performance and 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 on a consistent basis by excluding items that management does not believe are indicative of Applied's ongoing operating performance. There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles, may be different from non-GAAP financial measures used by other companies, and may exclude certain items that may have a material impact upon our reported financial results. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP.
Webcast Information
Applied Materials will discuss these results during an earnings call that begins at 1:30 p.m. Pacific Time today. A live webcast and related slide presentation will be available at www.appliedmaterials.com. A replay will be available on the website beginning at 5:00 p.m. Pacific Time today.


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Forward-Looking Statements

This press release contains forward-looking statements, including those regarding anticipated growth and trends in our businesses and markets, industry outlooks and demand drivers, technology transitions, our business and financial performance and market share positions, our capital allocation and cash deployment strategies, our investment and growth strategies, our development of new products and technologies, our estimate of the impact on our second quarter of fiscal 2023 of a recent cybersecurity incident at one of our major suppliers, our business outlook for the second quarter of fiscal 2023 and beyond, and other statements that are not historical facts. These statements and their underlying assumptions are subject to risks and uncertainties and are not guarantees of future performance. Factors that could cause actual results to differ materially from those expressed or implied by such statements include, without limitation: the level of demand for our products, our ability to meet customer demand, and our suppliers' ability to meet our demand requirements; our ability to assess and mitigate the impact on our business of the recent cybersecurity incident at one of our major suppliers, and this supplier’s ability to recover its manufacturing and operations to meet our requirements; financial, legal and reputational risks, and the risk of loss of intellectual property, resulting from this or other cybersecurity incidents affecting us or our suppliers; global economic, political and industry conditions, including rising inflation and interest rates; the interpretation and implementation of new export regulations and license requirements, and their impact on our ability to export products and provide services to customers and on our results of operations; global trade issues and changes in trade and export license policies; our ability to obtain licenses or authorizations on a timely basis, if at all; transportation interruptions and logistics constraints; the effects of regional or global health epidemics, including the severity and duration of the ongoing COVID-19 pandemic and government imposed lockdowns and other measures taken in response; consumer demand for electronic products; the demand for semiconductors; customers’ technology and capacity requirements; the introduction of new and innovative technologies, and the timing of technology transitions; our ability to develop, deliver and support new products and technologies; the concentrated nature of our customer base; acquisitions, investments and divestitures; changes in income tax laws; our ability to expand our current markets, increase market share and develop new markets; market acceptance of existing and newly developed products; our ability to obtain and protect intellectual property rights in key technologies; our ability to achieve the objectives of operational and strategic initiatives, align our resources and cost structure with business conditions, and attract, motivate and retain key employees; the variability of operating expenses and results among products and segments, and our ability to accurately forecast future results, market conditions, customer requirements and business needs; our ability to ensure compliance with applicable law, rules and regulations; and other risks and uncertainties described in our SEC filings, including our recent Forms 10-K and 8-K. All forward-looking statements are based on management’s current estimates, projections and assumptions, and we assume no obligation to update them.


About Applied Materials

Applied Materials, Inc. (Nasdaq: AMAT) is the leader in materials engineering solutions used to produce virtually every new chip and advanced display in the world. Our expertise in modifying materials at atomic levels and on an industrial scale enables customers to transform possibilities into reality. At Applied Materials, our innovations make possible a better future. Learn more at www.appliedmaterials.com.

Contact:
Ricky Gradwohl (editorial/media) 408.235.4676
Michael Sullivan (financial community) 408.986.7977


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APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
 
 Three Months Ended
(In millions, except per share amounts)January 29,
2023		January 30,
2022
Net sales$6,739 $6,271 
Cost of products sold3,594 3,312 
Gross profit3,145 2,959 
Operating expenses:
Research, development and engineering771 654 
Marketing and selling197 167 
General and administrative207 166 
Severance and related charges— (4)
Total operating expenses1,175 983 
Income from operations1,970 1,976 
Interest expense59 57 
Interest and other income, net50 6 
Income before income taxes1,961 1,925 
Provision for income taxes244 133 
Net income$1,717 $1,792 
Earnings per share:
Basic $2.03 $2.02 
Diluted$2.02 $2.00 
Weighted average number of shares:
Basic845 889 
Diluted849 897 



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APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
 
(In millions)January 29,
2023		October 30,
2022
ASSETS
Current assets:
Cash and cash equivalents$3,547 $1,995 
Short-term investments500 586 
Accounts receivable, net5,385 6,068 
Inventories6,054 5,932 
Other current assets1,229 1,344 
Total current assets16,715 15,925 
Long-term investments2,088 1,980 
Property, plant and equipment, net2,494 2,307 
Goodwill3,718 3,700 
Purchased technology and other intangible assets, net332 339 
Deferred income taxes and other assets2,612 2,475 
Total assets$27,959 $26,726 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt$199 $— 
Accounts payable and accrued expenses3,969 4,237 
Contract liabilities3,082 3,142 
Total current liabilities7,250 7,379 
Long-term debt5,458 5,457 
Income taxes payable 975 964 
Other liabilities856 732 
Total liabilities14,539 14,532 
Total stockholders’ equity13,420 12,194 
Total liabilities and stockholders’ equity$27,959 $26,726 




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APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
 
(In millions)Three Months Ended
January 29,
2023		January 30,
2022
Cash flows from operating activities:
Net income $1,717 $1,792 
Adjustments required to reconcile net income to cash provided by operating activities:
Depreciation and amortization120 102 
Severance and related charges— (4)
Share-based compensation148 118 
Deferred income taxes(21)1 
Other7 16 
Net change in operating assets and liabilities299 633 
Cash provided by operating activities2,270 2,658 
Cash flows from investing activities:
Capital expenditures (287)(144)
Cash paid for acquisitions, net of cash acquired(20)— 
Proceeds from sales and maturities of investments414 318 
Purchases of investments(406)(312)
Cash used in investing activities(299)(138)
Cash flows from financing activities:
Proceeds from commercial paper298 — 
Repayments of commercial paper(100)— 
Common stock repurchases(250)(1,803)
Tax withholding payments for vested equity awards(136)(235)
Payments of dividends to stockholders(220)(214)
Repayments of principal on finance leases(10)— 
Cash used in financing activities(418)(2,252)
Increase in cash, cash equivalents and restricted cash equivalents1,553 268 
Cash, cash equivalents and restricted cash equivalents—beginning of period2,100 5,101 
Cash, cash equivalents and restricted cash equivalents — end of period$3,653 $5,369 
Reconciliation of cash, cash equivalents, and restricted cash equivalents
       Cash and cash equivalents$3,547 $5,264 
Restricted cash equivalents included in deferred income taxes and other assets106 105 
Total cash, cash equivalents, and restricted cash equivalents$3,653 $5,369 
Supplemental cash flow information:
Cash payments for income taxes$69 $80 
Cash refunds from income taxes$4 $123 
Cash payments for interest$34 $34 


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APPLIED MATERIALS, INC.
UNAUDITED SUPPLEMENTAL INFORMATION

Corporate and Other
(In millions)Q1 FY2023Q1 FY2022
Unallocated net sales$41 $18 
Unallocated cost of products sold and expenses(231)(178)
Share-based compensation(148)(118)
Severance and related charges— 4 
Total $(338)$(274)

Additional Information
 Q1 FY2023Q1 FY2022
Net Sales by Geography (In millions)
United States$1,051 $847 
% of Total16 %14 %
Europe$573 $281 
% of Total8 %4 %
Japan$456 $561 
% of Total7 %9 %
Korea$1,293 $1,121 
% of Total19 %18 %
Taiwan$1,968 $1,249 
% of Total29 %20 %
Southeast Asia$253 $225 
% of Total4 %3 %
China$1,145 $1,987 
% of Total17 %32 %
Employees (In thousands)
  
Regular Full Time33.9 28.5 



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 APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS
 Three Months Ended
(In millions, except percentages)January 29,
2023		January 30,
2022
Non-GAAP Adjusted Gross Profit
Reported gross profit - GAAP basis$3,145 $2,959 
Certain items associated with acquisitions1
7 6 
Non-GAAP adjusted gross profit$3,152 $2,965 
Non-GAAP adjusted gross margin46.8 %47.3 %
Non-GAAP Adjusted Operating Income
Reported operating income - GAAP basis$1,970 $1,976 
Certain items associated with acquisitions1
11 9 
Acquisition integration and deal costs6 4 
Severance and related charges2
— (4)
Non-GAAP adjusted operating income$1,987 $1,985 
Non-GAAP adjusted operating margin29.5 %31.7 %
Non-GAAP Adjusted Net Income
Reported net income - GAAP basis$1,717 $1,792 
Certain items associated with acquisitions1
11 9 
Acquisition integration and deal costs6 4 
Severance and related charges2
— (4)
Realized loss (gain) on strategic investments, net(4)2 
Unrealized loss (gain) on strategic investments, net(4)(5)
Income tax effect of share-based compensation3
(14)(58)
Income tax effects related to intra-entity intangible asset transfers17 18 
Resolution of prior years’ income tax filings and other tax items(5)(62)
Non-GAAP adjusted net income$1,724 $1,696 

1 These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets.
2The severance and related charges primarily related to a one-time voluntary retirement program offered to certain eligible employees.
3GAAP basis tax benefit related to share-based compensation is recognized ratably over the fiscal year on a non-GAAP basis.


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APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS

 Three Months Ended
(In millions, except per share amounts)January 29,
2023		January 30,
2022
Non-GAAP Adjusted Earnings Per Diluted Share
Reported earnings per diluted share - GAAP basis$2.02 $2.00 
Certain items associated with acquisitions 0.01 0.01 
Acquisition integration and deal costs0.01 — 
Unrealized loss (gain) on strategic investments, net— (0.01)
Income tax effect of share-based compensation(0.02)(0.06)
Income tax effects related to intra-entity intangible asset transfers0.02 0.02 
Resolution of prior years’ income tax filings and other tax items(0.01)(0.07)
Non-GAAP adjusted earnings per diluted share$2.03 $1.89 
Weighted average number of diluted shares849 897 



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APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS
 
 Three Months Ended
(In millions, except percentages)January 29,
2023		January 30,
2022
Semiconductor Systems Non-GAAP Adjusted Operating Income
Reported operating income - GAAP basis$1,917 $1,771 
Certain items associated with acquisitions1
9 7 
Non-GAAP adjusted operating income$1,926 $1,778 
Non-GAAP adjusted operating margin37.3 %38.9 %
AGS Non-GAAP Adjusted Operating Income
Reported operating income - GAAP basis$383 $403 
Non-GAAP adjusted operating income$383 $403 
Non-GAAP adjusted operating margin28.0 %30.5 %
Display and Adjacent Markets Non-GAAP Adjusted Operating Income
Reported operating income - GAAP basis$8 $76 
Certain items associated with acquisitions1
— 1 
Non-GAAP adjusted operating income$8 $77 
Non-GAAP adjusted operating margin4.8 %21.0 %
 
1 These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets.

Note: The reconciliation of GAAP and non-GAAP adjusted segment results above does not include certain revenues, costs of products sold and operating expenses that are reported within corporate and other and included in consolidated operating income.


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UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED EFFECTIVE INCOME TAX RATE
 
Three Months Ended
(In millions, except percentages)January 29, 2023
Provision for income taxes - GAAP basis (a)
$244 
Income tax effect of share-based compensation14 
Income tax effects related to intra-entity intangible asset transfers(17)
Resolutions of prior years’ income tax filings and other tax items5 
Non-GAAP adjusted provision for income taxes (b)
$246 
Income before income taxes - GAAP basis (c)
$1,961 
Certain items associated with acquisitions11 
Acquisition integration and deal costs6 
Realized loss (gain) on strategic investments, net(4)
Unrealized loss (gain) on strategic investments, net(4)
Non-GAAP adjusted income before income taxes (d)
$1,970 
Effective income tax rate - GAAP basis (a/c)
12.4 %
Non-GAAP adjusted effective income tax rate (b/d)
12.5 %