Applied Materials(US:AMAT)2023-05-25 16:00Financial Performance - Net sales for the three months ended April 30, 2023, were $6,630 million, a 6.2% increase from $6,245 million for the same period in 2022[6] - Gross profit for the three months ended April 30, 2023, was $3,094 million, representing a gross margin of 46.7%, compared to $2,927 million and a margin of 46.9% in the prior year[6] - Net income for the three months ended April 30, 2023, was $1,575 million, up 2.5% from $1,536 million in the same period last year[8] - Earnings per share (EPS) for the three months ended April 30, 2023, were $1.87 (basic) and $1.86 (diluted), compared to $1.75 and $1.74, respectively, in the prior year[6] - The company reported a comprehensive income of $1,575 million for the three months ended April 30, 2023, compared to $1,539 million in the prior year[8] - Net income for the six months ended April 30, 2023, was $3,292 million, compared to $3,328 million for the same period in 2022, reflecting a decrease of 1.1%[22] - Cash provided by operating activities for the six months ended April 30, 2023, was $4,562 million, an increase of 48.5% from $3,073 million in the same period of 2022[22] - Total cash, cash equivalents, and restricted cash equivalents at the end of the period was $4,695 million, up from $3,435 million a year earlier, representing a 36.7% increase[22] - Total net sales for the three months ended April 30, 2023, were $6,630 million, a 6% increase from $6,245 million in the same period last year[139] - Net sales for the six months ended April 30, 2023, were $13,369 million, a 7% increase from $12,516 million for the same period in 2022[61] Assets and Liabilities - Total current assets as of April 30, 2023, increased to $17,773 million from $15,925 million as of October 30, 2022, reflecting a growth of 11.6%[11] - Total assets as of April 30, 2023, were $29,092 million, up from $26,726 million as of October 30, 2022, indicating an increase of 8.5%[11] - Total liabilities as of April 30, 2023, were $14,963 million, compared to $14,532 million as of October 30, 2022, representing a rise of 3.0%[11] - The balance of retained earnings as of April 30, 2023, was $40,696 million, up from $37,892 million as of October 30, 2022, reflecting an increase of 7.4%[22] - Total inventories as of April 30, 2023, were $5,940 million, slightly up from $5,932 million as of October 30, 2022[71] - Accounts receivable net of allowance for credit losses was $29 million as of April 30, 2023, consistent with the previous year[66] - Accounts payable decreased to $1,468 million as of April 30, 2023, down from $1,755 million on October 30, 2022, a reduction of 16.4%[74] Expenses - Research, development, and engineering expenses for the three months ended April 30, 2023, were $775 million, an increase from $686 million in the same period last year[6] - Research, development, and engineering expenses increased to $1,546 million for the six months ended April 30, 2023, compared to $1,340 million, marking a 15% rise[61] - Marketing and selling expenses increased by $21 million to $194 million for the three months ended April 30, 2023, driven by additional headcount and higher travel expenses[150] - General and Administrative (G&A) expenses rose by $40 million to $214 million, attributed to increased headcount and higher professional fees[152] - Interest expense for the six months ended April 30, 2023, was $120 million, compared to $115 million for the same period in 2022[61] - Interest expense for the three months ended April 30, 2023, was $61 million, a slight increase from $58 million in the prior year[154] Dividends and Stock Repurchases - The company declared dividends of $0.32 per common share during the quarter, totaling $268 million[14] - Dividends declared were $488 million, with a dividend of $0.58 per common share, compared to $226 million and $0.26 per share in the same period last year[22] - Common stock repurchases amounted to $1,054 million for the six months ended April 30, 2023, compared to $3,603 million in the same period of 2022, indicating a reduction of 70.7%[22] - The company has $13.9 billion remaining available for stock repurchases under its program as of April 30, 2023, following a $10 billion authorization in March 2023[105] - The average price paid per share for stock repurchases in the three months ended April 30, 2023, was $115.53, compared to $124.84 in the same period of 2022[106] Segment Performance - The Semiconductor Systems segment generated $4.98 billion in net sales and $1.76 billion in operating income for the three months ended April 30, 2023, compared to $4.46 billion and $1.65 billion in the same period last year, indicating a 11.7% increase in net sales[126] - The Applied Global Services segment reported net sales of $1.43 billion and operating income of $414 million for the three months ended April 30, 2023, compared to $1.38 billion and $422 million in the same period last year[126] - The Display and Adjacent Markets segment generated $168 million in net sales with an operating income of $21 million for the three months ended April 30, 2023, compared to $381 million and $81 million in the same period last year[126] - Net sales for the Applied Global Services segment were $1.428 billion for the three months ended April 30, 2023, a 3% increase from $1.383 billion in the same period last year[164] - Operating margin for the Applied Global Services segment decreased to 29.0% for the three months ended April 30, 2023, down from 30.5% in the prior year[164] Market Conditions and Risks - The company faces risks from uncertain global economic conditions, which could materially adversely impact operating results and customer demand[193] - Supply chain disruptions and increased costs due to rising inflation and interest rates may lead to reduced profitability and operational challenges[195] - The company is exposed to risks associated with a highly concentrated customer base, particularly in China, Taiwan, Japan, and Korea, which could lead to greater volatility in business performance[200] - Recent U.S. export regulations have limited the market for certain products, adversely impacting revenues and increasing exposure to foreign competition[198] - Difficulties in obtaining timely supply of parts and materials have resulted in manufacturing interruptions, potentially affecting the ability to meet customer demand[202] - The company must continue to invest in research and development despite economic uncertainties, which may negatively impact operating margins[195] - Economic and industry uncertainty may lead to customer bankruptcies or mergers, further affecting sales and inventory levels[193] - The company maintains an investment portfolio subject to market risks, which could be negatively impacted by deteriorating financial market conditions[195] - Ongoing supply chain constraints may increase logistics and parts costs, potentially leading to reduced demand for products[202] - The company faced supply chain disruptions due to a cybersecurity incident affecting a major supplier, leading to delays in parts and supplies[203] Accounting and Financial Management - The company is currently evaluating the impact of new accounting standards on its consolidated financial statements, effective in fiscal 2024 and 2025[26] - The company has early adoption permitted for certain accounting standards, indicating proactive financial management[26] - The effective tax rate for the second quarter of fiscal 2023 was 11.4%, down from 17.6% in the same period of fiscal 2022, primarily due to a reduction of deferred tax assets related to a new tax incentive in Singapore[117] - The company anticipates an increase in effective tax rates due to the capitalization of research and development expenditures starting in fiscal 2023[178]