Applied Materials(US:AMAT)2025-02-20 21:02Financial Performance - Net revenue for the three months ended January 26, 2025, was $7,166 million, an increase of 6.9% compared to $6,707 million for the same period in 2024[12]. - Gross profit for the same period was $3,496 million, up from $3,204 million, reflecting a gross margin increase from 47.8% to 48.8%[12]. - Net income decreased to $1,185 million, down 41.2% from $2,019 million year-over-year, resulting in diluted earnings per share of $1.45 compared to $2.41[12][22]. - Comprehensive income for the three months ended January 26, 2025, was $1,210 million, down from $2,070 million in the same period last year[16]. - Basic earnings per share for the three months ended January 26, 2025, was $1.46, down 40% from $2.43 in the prior year[32]. - Operating income for the first quarter was $2,175 million, a 10.6% increase from $1,967 million in the same period last year[140]. - Total operating income rose by $208 million to $2,175 million, up from $1,967 million year-over-year[157]. Expenses and Investments - Research, development, and engineering expenses increased to $859 million, a rise of 13.9% from $754 million in the prior year[12]. - Capital expenditures for the quarter were $381 million, compared to $229 million in the same period last year, reflecting increased investment in infrastructure[26]. - Total cash, cash equivalents, and investments as of January 26, 2025, amounted to $10,899 million, with total cash and cash equivalents at $6,264 million[34]. - Total long-term debt as of January 26, 2025, was $5.461 billion, with various senior notes maturing between 2025 and 2050[83]. - Total share-based compensation for the three months ended January 26, 2025, was $195 million, an increase from $170 million in the same period in 2024[93]. Cash Flow and Liquidity - Cash provided by operating activities was $925 million, down from $2,325 million in the previous year, indicating a significant decrease in cash flow[26]. - Cash used in investing activities was $897 million, with capital expenditures totaling $381 million and net cash paid for acquisitions amounting to $28 million[171]. - Cash used in financing activities totaled $1.8 billion, primarily for stock repurchases of $1.3 billion and cash dividends of $326 million[172]. - The company anticipates that cash generated from operations will be sufficient to meet liquidity requirements for the next 12 months[183]. Revenue Segmentation - Semiconductor Systems segment generated $5,356 million in net revenue, with an operating income of $1,986 million, compared to $4,909 million and $1,744 million, respectively, in the prior year[118]. - Applied Global Services segment reported net revenue of $1,594 million and operating income of $447 million, up from $1,476 million and $417 million in the same quarter of 2024[118]. - Display segment's net revenue decreased to $183 million with an operating income of $14 million, down from $244 million and $25 million, respectively, in the previous year[118]. Market and Economic Conditions - Net revenue from China was $2,243 million, accounting for 31% of total revenue, a decrease of 25% from $2,997 million in the prior year[122]. - Revenue from Korea increased by 35% to $1,667 million, while Taiwan's revenue surged by 112% to $1,183 million[122]. - The semiconductor and display industries served by the company are subject to volatility in customer demand, influenced by technology advances and economic conditions[203]. - Uncertain economic conditions could lead to decreased business and consumer spending, negatively impacting demand for the company's products and services[205]. Shareholder Returns - The company declared dividends of $0.40 per common share, totaling $325 million, compared to $0.32 per share totaling $265 million in the prior year[22]. - Dividends paid during the three months ended January 26, 2025, totaled $326 million, compared to $266 million for the same period in 2024[91]. - The company has approximately $7.6 billion remaining for future stock repurchases under its $10 billion repurchase program approved in March 2023[86]. Tax and Regulatory Matters - The effective tax rate for the first quarter of fiscal 2025 was 44.1%, significantly higher than 12.3% in the same period of fiscal 2024, primarily due to remeasurement of deferred tax assets[103]. - The company adopted a new accounting standard regarding fair value measurement of equity securities in Q1 of fiscal 2025, which did not significantly impact the financial statements[30]. Risk Factors - Shortages of parts and materials needed for manufacturing may adversely impact the company's ability to meet customer demand[206]. - The company maintains an investment portfolio subject to credit, liquidity, market, and interest rate risks, which could be negatively impacted by deteriorating financial market conditions[210].