SANTA CLARA, Calif., May 20, 2021–Applied Materials, Inc. (NASDAQ: AMAT) announced its financial results for the second quarter of fiscal 2021, which ended on May 2, 2021.
Fiscal 2021 Second Quarter Results
Applied Materials reported revenue of $5.58 billion. On a GAAP basis, the company’s gross margin was 47.5%, operating profit was $1.58 billion, or 28.3% of net sales, and earnings per share (EPS) were $1.43.
On an adjusted non-GAAP basis, the company had gross margin of 47.7%, operating profit of $1.77 billion, or 31.7% of net sales, and EPS of $1.63.
The company delivered cash flow from operating activities of $1.19 billion and returned $952 million to shareholders through dividends of $202 million and share repurchases of $750 million.
“Applied’s record performance was driven by our deep-rooted, broad-based semiconductor business,” said Gary Dixon, President and CEO of Applied Materials. “Broad and long-term trends are driving interest in semiconductors. Continued demand, while our leadership in materials engineering becomes increasingly important for developing new chip technologies, Applied Materials is confident in its ability to outperform the market.”
Performance at a glance
Second-quarter GAAP results included a $154 million termination fee, payable under the terms of the purchase agreement with KKR HKE Investment LP and shares in International Electric, which reduced earnings by $0.17 per share.
Reconciling information between GAAP and non-GAAP financial statements is included in the financial statements in this press release. See “Use of Non-GAAP Financial Measures” below.
Looking ahead to the third quarter of fiscal 2021, Applied Materials expects net sales of approximately $5.92 billion, plus or minus $200 million. Adjusted non-GAAP diluted EPS is expected to be between $1.70 and $1.82.
Non-GAAP diluted EPS estimates in Applied’s fiscal 2021 third-quarter outlook exclude known charges related to closing the acquisition of $0.01 per share, including the standard tax benefit of $0.01 per share related to stock-based incentives and the company Income tax benefit of $0.03 per share related to transfers of internal intangible assets, but does not reflect other currently unknown items, such as additional charges related to acquisitions or other non-operating and non-recurring items, and other tax-related items , considering its inherent uncertainty, the company cannot make reasonable predictions for it at present.
Second quarter financial performance by division
Use of Non-GAAP Financial Measures
Applied Materials provides investors with non-GAAP adjusted financial statements adjusted for the impact of certain costs, expenses, gains and losses, including certain items related to mergers and acquisitions; restructuring and severance expense and any related adjustments ; increased expenses related to COVID-19; impairment adjustments on assets; gains or losses from strategic investments; losses from early settlement of debt; certain income tax items and other adjustments. On a non-GAAP basis, taxes related to equity incentives have been recognized on a pro-rata basis for the current fiscal year. In addition, non-GAAP results exclude estimated income tax expense items related to changes in U.S. tax legislation. Reconciling information between GAAP and non-GAAP financial statements is included in the financial statements in this press release.
The company’s managers use non-GAAP financial reports to evaluate the company’s operational and financial performance for business planning purposes and as a performance indicator in their executive compensation programs. Applied Materials believes that by eliminating items that are not relevant to current operations, these measures will help improve understanding of the company’s overall performance, and allow investors to view the company’s operating capabilities from the same standpoint as managers, making it easier to invest The authors compare the financial results of the two quarters before and after. The use of non-GAAP financial reporting has certain limitations, because its measurement caliber is inconsistent with generally accepted GAAP accounting standards, it may also be different from the non-GAAP methods used in the accounting and reporting of other companies, and may exclude some of the reporting Items in which financial data has a significant impact. This additional information does not replace, nor should it supplement, the financial statements prepared in accordance with GAAP principles.