AMAT Revenues Plunge 24 Percent YoY
Applied Materials, Inc. a manufacturer of solutions for the semiconductor, display and solar industries, has reported results for its fourth quarter and fiscal year ended October 28th, 2012.
In the fourth quarter, Applied generated orders of $1.47 billion and net sales of $1.65 billion. The company recorded a goodwill impairment and restructuring charges totalling $545 million and reported an operating loss of $499 million, with a net loss of $515 million or 42 cents per diluted share.
In FY2012, the company reported orders of $8.04 billion, net sales of $8.72 billion, operating income of $411 million, and net income of $109 million or 9 cents per diluted share.
"In our fourth quarter, Applied delivered profit at the high end of our outlook despite challenging industry conditions in semiconductor, solar and display," said Mike Splinter, Chairman and CEO. "Our strong cash flow performance allowed us to increase our quarterly dividend and share buybacks, returning $1.85 billion to stockholders in the year."
"We see improving business conditions entering 2013, with orders projected to increase after bottoming in the fourth quarter," Splinter added. "Accelerated changes in device technology and the adoption of new materials in all of the industries we serve provide opportunities for Applied to build on our leadership and grow our market share."
Quarterly Results Summary
Fourth quarter results included a $421 million goodwill impairment charge associated with the Energy and Environmental Solutions (EES) segment. The goodwill impairment reflects the deterioration in solar equipment market conditions, our customers' financial condition and reduced market valuations, causing Applied to reassess the recoverability of the segment's goodwill. Applied also reported $124 million in charges related to previously announced restructuring plans and the integration of Varian.
Fourth quarter orders for Varian products of $152 million and net sales of $195 million were reported within the Silicon Systems Group (SSG) and Applied Global Services (AGS) segments.
Fourth Quarter Reportable Segment Results and Comparisons to the Third Quarter
Silicon Systems Group (SSG) orders were $741 million, down 36 percent, primarily due to lower orders in foundry and memory, partially offset by increased orders in logic. Net sales were $870 million, down 44 percent. GAAP operating income decreased to $41 million or 4.7 percent of net sales. New order composition was: foundry 47 percent, flash 8 percent, logic and other 40 percent, and DRAM 5 percent.
Applied Global Services (AGS) orders were $576 million, up 8 percent driven by service contract renewals. Net sales were $621 million, up 7 percent, which included $85 million in sales of a thin film production line. GAAP operating income increased to $164 million or 26.4 percent of net sales.
Display orders were $83 million, up 24 percent from low levels. Net sales were $93 million, down 35 percent. GAAP operating income decreased to $3 million or 3.2 percent of net sales.
Energy and Environmental Solutions (EES) orders were $65 million, up 86 percent from low levels driven by demand for roll-to-roll deposition equipment. Net sales were $62 million, down 19 percent. EES had a GAAP operating loss of $480 million.
Additional Quarterly Financial Information and Comparisons to the Third Quarter
Backlog decreased by $215 million to $1.6 billion and included negative adjustments of $42 million.
Gross margin was 38.4 percent on a non-GAAP basis, down from 41.6 percent, reflecting the decrease in net sales. GAAP gross margin was 35.6 percent.
GAAP operating expenses were $1.09 billion and the GAAP effective tax rate was 3.2 percent.
Cash, cash equivalents and investments ended the quarter at $3.0 billion.
Full-Year Reportable Segment Results and Comparisons to the Prior Year
SSG orders decreased by 4 percent to $5.29 billion, net sales increased by 2 percent to $5.54 billion, and GAAP operating income decreased to $1.24 billion or 22.5 percent of net sales.
AGS orders decreased by 3 percent to $2.27 billion, net sales decreased by 5 percent to $2.29 billion, and GAAP operating income increased to $502 million or 22 percent of net sales.
Display orders decreased by 57 percent to $274 million, net sales decreased by 32 percent to $473 million and GAAP operating income decreased to $25 million or 5.3 percent of net sales.
EES orders decreased by 88 percent to $195 million and net sales decreased by 79 percent to $425 million. The business generated a GAAP operating loss of $668 million.
Business Outlook
For the first quarter of fiscal 2013, Applied expects net sales to be flat to down 15 percent sequentially.
