Company Update (NASDAQ:AMAT): Applied Materials, Inc. Announces First Quarter 2016 Results


AMAT

Applied Materials, Inc. (NASDAQ:AMAT), the global leader in materials engineering solutions for the semiconductor, display and solar industries, today reported results for its first quarter ended January 31, 2016.

First quarter orders were $2.28 billion, down 6 percent sequentially and flat year over year. Net sales were $2.26 billion, down 5 percent sequentially and down 4 percent year over year.

On a non-GAAP adjusted basis, the company reported first quarter gross margin of 42.4 percent, operating margin of 17.8 percent, and net income of $302 million or $0.26 per diluted share. The company recorded GAAP gross margin of 40.6 percent, operating margin of 15.7 percent, and net income of $286 million or $0.25 per diluted share.

The company generated $207 million in cash from operations during the first quarter, paid dividends of $115 million and used $625 million to repurchase 35 million shares of common stock.

“As the market moves into the sweet spot for Applied’s materials engineering technology, we see strong demand for our semiconductor, display and service businesses,” said Gary Dickerson, president and CEO. “We are maintaining a positive outlook for 2016 as our customers make strategic, inflection-driven investments that play to our strengths.”

Quarterly Results Summary

Change
    Q1 FY2016   Q4 FY2015   Q1 FY2015   Q1 FY2016

vs.

Q4 FY2015

  Q1 FY2016

vs.

Q1 FY2015

    (In millions, except per share amounts and percentages)
New orders   $2,275   $2,424   $2,273   (6)%   -%
Net sales   $2,257   $2,368   $2,359   (5)%   (4)%
Gross margin   40.6%   40.5%   40.7%   0.1 points   (0.1) points
Operating margin   15.7%   17.9%   19.4%   (2.2) points   (3.7) points
Net income   $286   $336   $348   (15)%   (18)%
Diluted earnings per share (EPS)   $0.25   $0.28   $0.28   (11)%   (11)%
                Change
Non-GAAP Adjusted Results   Q1 FY2016   Q4 FY2015   Q1 FY2015   Q1 FY2016

vs.

Q4 FY2015

  Q1 FY2016

vs.

Q1 FY2015

    (In millions, except per share amounts and percentages)
Non-GAAP adjusted gross margin   42.4%   42.2%   42.3%   0.2 points   0.1 points
Non-GAAP adjusted operating margin   17.8%   19.3%   18.9%   (1.5) points   (1.1) points
Non-GAAP adjusted net income   $302   $347   $338   (13)%   (11)%
Non-GAAP adjusted diluted EPS   $0.26   $0.29   $0.27   (10)%   (4)%

Applied’s non-GAAP adjusted results exclude the impact of the following, where applicable: certain items related to mergers and acquisitions; restructuring charges and any associated adjustments; impairments of assets, or investments; gain or loss on sale of strategic investments; and certain discrete adjustments and tax items. 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.

Business Outlook

For the second quarter of fiscal 2016, Applied expects net sales to be up 5 percent to 10 percent sequentially. Non-GAAP adjusted diluted EPS is expected to be in the range of $0.30 to $0.34.

This outlook excludes known charges related to completed acquisitions of $0.04 per share and does not exclude other non-GAAP adjustments that may arise subsequent to this release. (Original Source)

Shares of Applied Materials are up nearly 7% in after-hours trading. AMAT has a 1-year high of $25.64 and a 1-year low of $14.25. The stock’s 50-day moving average is $17.01 and its 200-day moving average is $16.75.

On the ratings front, AMAT has been the subject of a number of recent research reports. In a report issued on February 3, Goldman Sachs analyst James Covello upgraded AMAT to Buy. Separately, on January 19, CLSA’s Mark Heller upgraded the stock to Buy .

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, James Covello and Mark Heller have a total average return of 3.5% and -4.1% respectively. Covello has a success rate of 50.0% and is ranked #765 out of 3640 analysts, while Heller has a success rate of 59.1% and is ranked #2641.

Applied Materials Inc provides manufacturing equipment, services and software to the semiconductor, flat panel display, solar photovoltaic and related industries.