Applied Materials Announces Second Quarter 2022 Results

Applied Materials Announces Second Quarter 2022 Results

Applied Materials, Inc.

  • Quarterly revenue of $6.25 billion, up 12 percent year over year

  • GAAP operating margin of 30.3 percent and non-GAAP operating margin of 30.6 percent, up 2.0 points and down 1.1 points year over year, respectively

  • GAAP EPS of $1.74 and non-GAAP EPS of $1.85, up 22 percent and 13 percent year over year, respectively

SANTA CLARA, Calif., May 19, 2022 (GLOBE NEWSWIRE) — Applied Materials, Inc. (NASDAQ: AMAT) today reported results for its second quarter ended May 1, 2022.

Second Quarter Results

Applied generated revenue of $6.25 billion. On a GAAP basis, the company achieved gross margin of 46.9 percent, operating income of $1.89 billion or 30.3 percent of net sales, and earnings per share (EPS) of $1.74.

On a non-GAAP adjusted basis, the company reported gross margin of 47.0 percent, operating income of $1.91 billion or 30.6 percent of net sales, and EPS of $1.85.

The company generated $415 million in cash from operations and returned $2.01 billion to shareholders including $1.80 billion in share repurchases and $211 million in dividends.

“Demand for Applied Materials’ products and services has never been stronger, yet we remain constrained by on-going supply chain issues,” said Gary Dickerson, President and CEO. “Our priority is to work quickly and creatively across the supply chain to bring more industry capacity on-line, while accelerating the technology inflections that we believe will enable Applied to outgrow the semiconductor market in the years ahead.”

Results Summary

 

Q2 FY2022

 

Q2 FY2021

 

Change

 

(In millions, except per share amounts and percentages)

Net sales

$

6,245

 

 

$

5,582

 

 

12%

Gross margin

 

46.9

%

 

 

47.5

%

 

(0.6) points

Operating margin

 

30.3

%

 

 

28.3

%

 

2.0 points

Net income

$

1,536

 

 

$

1,330

 

 

15%

Diluted earnings per share

$

1.74

 

 

$

1.43

 

 

22%

Non-GAAP Adjusted Results

 

 

 

 

 

Non-GAAP adjusted gross margin

 

47.0

%

 

 

47.7

%

 

(0.7) points

Non-GAAP adjusted operating margin

 

30.6

%

 

 

31.7

%

 

(1.1) points

Non-GAAP adjusted net income

$

1,636

 

 

$

1,509

 

 

8%

Non-GAAP adjusted diluted EPS

$

1.85

 

 

$

1.63

 

 

13%

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

In the third quarter of fiscal 2022, Applied expects net sales to be approximately $6.25 billion, plus or minus $400 million, which includes the expected impact of ongoing supply chain challenges. Non-GAAP adjusted diluted EPS is expected to be in the range of $1.59 to $1.95.

This outlook for non-GAAP adjusted diluted EPS excludes known charges related to completed acquisitions of $0.01 per share, includes the normalized tax benefit of share-based compensation of $0.02 per share and includes a net income tax benefit related to intra-entity intangible asset transfers of $0.02 per share, but does not reflect any items that are unknown at this time, such as any additional charges related to acquisitions or other non-operational or unusual items, as well as other tax related items, which we are not able to predict without unreasonable efforts due to their inherent uncertainty.

Second Quarter Reportable Segment Information

Semiconductor Systems

Q2 FY2022

 

Q2 FY2021

 

(In millions, except percentages)

Net sales

$

4,458

 

 

$

3,972

 

Foundry, logic and other

 

65

%

 

 

56

%

DRAM

 

21

%

 

 

14

%

Flash memory

 

14

%

 

 

30

%

Operating income

$

1,648

 

 

$

1,542

 

Operating margin

 

37.0

%

 

 

38.8

%

Non-GAAP Adjusted Results

 

 

Non-GAAP adjusted operating income

$

1,656

 

 

$

1,555

 

Non-GAAP adjusted operating margin

 

37.1

%

 

 

39.1

%

Applied Global Services

Q2 FY2022 

 

Q2 FY2021

 

(In millions, except percentages)

Net sales

$

1,383

 

 

$

1,203

 

Operating income

$

422

 

 

$

358

 

Operating margin

 

30.5

%

 

 

29.8

%

Non-GAAP Adjusted Results

 

 

Non-GAAP adjusted operating income

$

422

 

 

$

359

 

Non-GAAP adjusted operating margin

 

30.5

%

 

 

29.8

%

Display and Adjacent Markets

Q2 FY2022

 

Q2 FY2021

 

(In millions, except percentages)

Net sales

$

381

 

 

$

375

 

Operating income

$

81

 

 

$

65

 

Operating margin

 

21.3

%

 

 

17.3

%

Non-GAAP Adjusted Results

 

 

Non-GAAP adjusted operating income

$

82

 

 

$

66

 

Non-GAAP adjusted operating margin

 

21.5

%

 

 

17.6

%


Use of Non-GAAP Adjusted Financial Measures

Applied provides investors with certain non-GAAP adjusted financial measures, which are adjusted for the impact of certain costs, expenses, gains and losses, including certain items related to mergers and acquisitions; restructuring and severance charges and any associated adjustments; certain incremental expenses related to COVID-19; impairments of assets; gain or loss on strategic investments; certain income tax items and other discrete adjustments. On a non-GAAP basis, the tax effect related to share-based compensation is recognized ratably over the fiscal year. Reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are provided in the financial tables included in this release.

Management uses these non-GAAP adjusted financial measures to evaluate the company’s operating and financial performance and for planning purposes, and as performance measures in its executive compensation program. Applied believes these measures enhance an overall understanding of its performance and investors’ ability to review the company’s business from the same perspective as the company’s management, and facilitate comparisons of this period’s results with prior periods on a consistent basis by excluding items that management does not believe are indicative of Applied’s ongoing operating performance. There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles, may be different from non-GAAP financial measures used by other companies, and may exclude certain items that may have a material impact upon our reported financial results. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP.

Webcast Information

Applied Materials will discuss these results during an earnings call that begins at 1:30 p.m. Pacific Time today. A live webcast and related slide presentation will be available at www.appliedmaterials.com. A replay will be available on the website beginning at 5:00 p.m. Pacific Time today.

Forward-Looking Statements

This press release contains forward-looking statements, including those regarding anticipated growth and trends in our businesses and markets, industry outlooks and demand drivers, technology transitions, our business and financial performance and market share positions, our capital allocation and cash deployment strategies, our investment and growth strategies, our development of new products and technologies, our business outlook for the third quarter of fiscal 2022 and beyond, and other statements that are not historical facts. These statements and their underlying assumptions are subject to risks and uncertainties and are not guarantees of future performance. Factors that could cause actual results to differ materially from those expressed or implied by such statements include, without limitation: the level of demand for our products, our ability to meet customer demand, and our suppliers’ ability to meet our demand requirements; transportation interruptions and logistics constraints; global economic, political and industry conditions, including rising inflation and interest rates; the effects of regional or global health epidemics, including the severity and duration of the ongoing COVID-19 pandemic and government imposed lockdowns and other measures taken in response; global trade issues and changes in trade and export license policies; consumer demand for electronic products; the demand for semiconductors; customers’ technology and capacity requirements; the introduction of new and innovative technologies, and the timing of technology transitions; our ability to develop, deliver and support new products and technologies; the concentrated nature of our customer base; acquisitions, investments and divestitures; changes in income tax laws; our ability to expand our current markets, increase market share and develop new markets; market acceptance of existing and newly developed products; our ability to obtain and protect intellectual property rights in key technologies; our ability to achieve the objectives of operational and strategic initiatives, align our resources and cost structure with business conditions, and attract, motivate and retain key employees; the variability of operating expenses and results among products and segments, and our ability to accurately forecast future results, market conditions, customer requirements and business needs; our ability to ensure compliance with applicable law, rules and regulations; and other risks and uncertainties described in our SEC filings, including our recent Forms 10-Q and 8-K. All forward-looking statements are based on management’s current estimates, projections and assumptions, and we assume no obligation to update them.

About Applied Materials

Applied Materials, Inc. (Nasdaq: AMAT) is the leader in materials engineering solutions used to produce virtually every new chip and advanced display in the world. Our expertise in modifying materials at atomic levels and on an industrial scale enables customers to transform possibilities into reality. At Applied Materials, our innovations make possible a better future. Learn more at www.appliedmaterials.com.

Contact:

Ricky Gradwohl (editorial/media) 408.235.4676
Michael Sullivan (financial community) 408.986.7977

APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

 

Three Months Ended

 

Six Months Ended

(In millions, except per share amounts)

May 1,
2022

 

May 2,
2021

 

May 1,
2022

 

May 2,
2021

Net sales

$

6,245

 

$

5,582

 

$

12,516

 

 

$

10,744

Cost of products sold

 

3,318

 

 

2,929

 

 

6,630

 

 

 

5,742

Gross profit

 

2,927

 

 

2,653

 

 

5,886

 

 

 

5,002

Operating expenses:

 

 

 

 

 

 

 

Research, development and engineering

 

686

 

 

617

 

 

1,340

 

 

 

1,223

Marketing and selling

 

173

 

 

148

 

 

340

 

 

 

295

General and administrative

 

174

 

 

149

 

 

340

 

 

 

310

Severance and related charges

 

 

 

6

 

 

(4

)

 

 

158

Deal termination fee

 

 

 

154

 

 

 

 

 

154

Total operating expenses

 

1,033

 

 

1,074

 

 

2,016

 

 

 

2,140

Income from operations

 

1,894

 

 

1,579

 

 

3,870

 

 

 

2,862

Interest expense

 

58

 

 

61

 

 

115

 

 

 

122

Interest and other income, net

 

28

 

 

27

 

 

34

 

 

 

45

Income before income taxes

 

1,864

 

 

1,545

 

 

3,789

 

 

 

2,785

Provision for income taxes

 

328

 

 

215

 

 

461

 

 

 

325

Net income

$

1,536

 

$

1,330

 

$

3,328

 

 

$

2,460

Earnings per share:

 

 

 

 

 

 

 

Basic

$

1.75

 

$

1.45

 

$

3.77

 

 

$

2.68

Diluted

$

1.74

 

$

1.43

 

$

3.74

 

 

$

2.66

Weighted average number of shares:

 

 

 

 

 

 

 

Basic

 

878

 

 

918

 

 

883

 

 

 

917

Diluted

 

883

 

 

927

 

 

890

 

 

 

926

APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS

(In millions)

May 1,
2022

 

October 31,
2021

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

3,331

 

$

4,995

Short-term investments

 

591

 

 

464

Accounts receivable, net

 

4,883

 

 

4,953

Inventories

 

5,009

 

 

4,309

Other current assets

 

1,430

 

 

1,386

Total current assets

 

15,244

 

 

16,107

Long-term investments

 

2,102

 

 

2,055

Property, plant and equipment, net

 

2,071

 

 

1,934

Goodwill

 

3,479

 

 

3,479

Purchased technology and other intangible assets, net

 

85

 

 

104

Deferred income taxes and other assets

 

2,478

 

 

2,146

Total assets

$

25,459

 

$

25,825

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued expenses

$

4,060

 

$

4,268

Contract liabilities

 

2,590

 

 

2,076

Total current liabilities

 

6,650

 

 

6,344

Long-term debt

 

5,455

 

 

5,452

Income taxes payable

 

962

 

 

1,090

Other liabilities

 

813

 

 

692

Total liabilities

 

13,880

 

 

13,578

Total stockholders’ equity

 

11,579

 

 

12,247

Total liabilities and stockholders’ equity

$

25,459

 

$

25,825

APPLIED MATERIALS, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In millions)

Three Months Ended

 

Six Months Ended

May 1,
2022

 

May 2,
2021

May 1,
2022

 

May 2,
2021

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

$

1,536

 

 

$

1,330

 

 

$

3,328

 

 

$

2,460

 

Adjustments required to reconcile net income to cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

111

 

 

 

97

 

 

 

213

 

 

 

191

 

Severance and related charges

 

 

 

 

1

 

 

 

(4

)

 

 

149

 

Share-based compensation

 

101

 

 

 

84

 

 

 

219

 

 

 

191

 

Deferred income taxes

 

(257

)

 

 

(4

)

 

 

(256

)

 

 

24

 

Other

 

(24

)

 

 

(15

)

 

 

(8

)

 

 

(15

)

Net change in operating assets and liabilities

 

(1,052

)

 

 

(306

)

 

 

(419

)

 

 

(392

)

Cash provided by operating activities

 

415

 

 

 

1,187

 

 

 

3,073

 

 

 

2,608

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Capital expenditures

 

(210

)

 

 

(204

)

 

 

(354

)

 

 

(325

)

Cash paid for acquisitions, net of cash acquired

 

 

 

 

 

 

 

 

 

 

(12

)

Proceeds from sales and maturities of investments

 

321

 

 

 

266

 

 

 

639

 

 

 

624

 

Purchases of investments

 

(524

)

 

 

(281

)

 

 

(836

)

 

 

(722

)

Cash used in investing activities

 

(413

)

 

 

(219

)

 

 

(551

)

 

 

(435

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from common stock issuances

 

96

 

 

 

86

 

 

 

96

 

 

 

86

 

Common stock repurchases

 

(1,800

)

 

 

(750

)

 

 

(3,603

)

 

 

(750

)

Tax withholding payments for vested equity awards

 

(21

)

 

 

(17

)

 

 

(256

)

 

 

(159

)

Payments of dividends to stockholders

 

(211

)

 

 

(202

)

 

 

(425

)

 

 

(403

)

Cash used in financing activities

 

(1,936

)

 

 

(883

)

 

 

(4,188

)

 

 

(1,226

)

Increase (decrease) in cash, cash equivalents and restricted cash equivalents

 

(1,934

)

 

 

85

 

 

 

(1,666

)

 

 

947

 

Cash, cash equivalents and restricted cash equivalents—beginning of period

 

5,369

 

 

 

6,328

 

 

 

5,101

 

 

 

5,466

 

Cash, cash equivalents and restricted cash equivalents — end of period

$

3,435

 

 

$

6,413

 

 

$

3,435

 

 

$

6,413

 

 

 

 

 

 

 

 

 

Reconciliation of cash, cash equivalents, and restricted cash equivalents

 

 

 

 

 

 

 

Cash and cash equivalents

$

3,331

 

 

$

6,305

 

 

$

3,331

 

 

$

6,305

 

Restricted cash equivalents included in deferred income taxes and other assets

 

104

 

 

 

108

 

 

 

104

 

 

 

108

 

Total cash, cash equivalents, and restricted cash equivalents

$

3,435

 

 

$

6,413

 

 

$

3,435

 

 

$

6,413

 

 

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

 

 

Cash payments for income taxes

$

951

 

 

$

299

 

 

$

1,031

 

 

$

409

 

Cash refunds from income taxes

$

5

 

 

$

4

 

 

$

128

 

 

$

23

 

Cash payments for interest

$

68

 

 

$

68

 

 

$

102

 

 

$

103

 

APPLIED MATERIALS, INC.
UNAUDITED SUPPLEMENTAL INFORMATION

Corporate and Other

(In millions)

Q2 FY2022

 

Q2 FY2021

Unallocated net sales

$

23

 

 

$

32

 

Unallocated cost of products sold and expenses

 

(179

)

 

 

(174

)

Share-based compensation

 

(101

)

 

 

(84

)

Severance and related charges

 

 

 

 

(6

)

Deal termination fee

 

 

 

 

(154

)

Total

$

(257

)

 

$

(386

)

Additional Information

 

Q2 FY2022

 

Q2 FY2021

Net Sales by Geography (In millions)

 

United States

$

702

 

 

$

489

 

% of Total

 

11

%

 

 

9

%

Europe

$

489

 

 

$

229

 

% of Total

 

8

%

 

 

4

%

Japan

$

407

 

 

$

442

 

% of Total

 

6

%

 

 

8

%

Korea

$

968

 

 

$

1,428

 

% of Total

 

16

%

 

 

25

%

Taiwan

$

1,408

 

 

$

1,041

 

% of Total

 

23

%

 

 

19

%

Southeast Asia

$

138

 

 

$

109

 

% of Total

 

2

%

 

 

2

%

China

$

2,133

 

 

$

1,844

 

% of Total

 

34

%

 

 

33

%

 

 

 

 

Employees (In thousands)

 

 

 

Regular Full Time

 

30.1

 

 

 

24.8

 

APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS

 

Three Months Ended

 

Six Months Ended

(In millions, except percentages)

May 1,
2022

 

May 2,
2021

 

May 1,
2022

 

May 2,
2021

Non-GAAP Adjusted Gross Profit

 

 

 

 

 

 

 

Reported gross profit – GAAP basis

$

2,927

 

 

$

2,653

 

 

$

5,886

 

 

$

5,002

 

Certain items associated with acquisitions1

 

7

 

 

 

7

 

 

 

13

 

 

 

15

 

Certain incremental expenses related to COVID-192

 

 

 

 

 

 

 

 

 

 

12

 

Other charges

 

 

 

 

2

 

 

 

 

 

 

2

 

Non-GAAP adjusted gross profit

$

2,934

 

 

$

2,662

 

 

$

5,899

 

 

$

5,031

 

Non-GAAP adjusted gross margin

 

47.0

%

 

 

47.7

%

 

 

47.1

%

 

 

46.8

%

Non-GAAP Adjusted Operating Income

 

 

 

 

 

 

 

Reported operating income – GAAP basis

$

1,894

 

 

$

1,579

 

 

$

3,870

 

 

$

2,862

 

Certain items associated with acquisitions1

 

10

 

 

 

12

 

 

 

19

 

 

 

25

 

Acquisition integration and deal costs

 

9

 

 

 

11

 

 

 

13

 

 

 

35

 

Certain incremental expenses related to COVID-192

 

 

 

 

 

 

 

 

 

 

24

 

Severance and related charges3

 

 

 

 

6

 

 

 

(4

)

 

 

158

 

Deal termination fee

 

 

 

 

154

 

 

 

 

 

 

154

 

Other charges

 

 

 

 

6

 

 

 

 

 

 

6

 

Non-GAAP adjusted operating income

$

1,913

 

 

$

1,768

 

 

$

3,898

 

 

$

3,264

 

Non-GAAP adjusted operating margin

 

30.6

%

 

 

31.7

%

 

 

31.1

%

 

 

30.4

%

Non-GAAP Adjusted Net Income

 

 

 

 

 

 

 

Reported net income – GAAP basis

$

1,536

 

 

$

1,330

 

 

$

3,328

 

 

$

2,460

 

Certain items associated with acquisitions1

 

10

 

 

 

12

 

 

 

19

 

 

 

25

 

Acquisition integration and deal costs

 

12

 

 

 

12

 

 

 

16

 

 

 

36

 

Certain incremental expenses related to COVID-192

 

 

 

 

 

 

 

 

 

 

24

 

Severance and related charges3

 

 

 

 

6

 

 

 

(4

)

 

 

158

 

Deal termination fee

 

 

 

 

154

 

 

 

 

 

 

154

 

Realized loss (gain) on strategic investments, net

 

(2

)

 

 

6

 

 

 

 

 

 

4

 

Unrealized loss (gain) on strategic investments, net

 

(28

)

 

 

(26

)

 

 

(33

)

 

 

(32

)

Other charges

 

 

 

 

6

 

 

 

 

 

 

6

 

Income tax effect of share-based compensation4

 

14

 

 

 

6

 

 

 

(44

)

 

 

(23

)

Income tax effects related to intra-entity intangible asset transfers

 

81

 

 

 

17

 

 

 

99

 

 

 

37

 

Resolution of prior years’ income tax filings and other tax items

 

7

 

 

 

(10

)

 

 

(55

)

 

 

(13

)

Income tax effect of non-GAAP adjustments5

 

6

 

 

 

(4

)

 

 

6

 

 

 

(45

)

Non-GAAP adjusted net income

$

1,636

 

 

$

1,509

 

 

$

3,332

 

 

$

2,791

 

1

These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets.

 

 

2

Temporary incremental employee compensation during the COVID-19 pandemic.

 

 

3

The severance and related charges primarily related to a one-time voluntary retirement program offered to certain eligible employees.

 

 

4

GAAP basis tax benefit related to share-based compensation is recognized ratably over the fiscal year on a non-GAAP basis.

 

 

5

Adjustment to provision for income taxes related to non-GAAP adjustments reflected in income before income taxes.

APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS

 

Three Months Ended

 

Six Months Ended

(In millions, except per share amounts)

May 1,
2022

 

May 2,
2021

 

May 1,
2022

 

May 2,
2021

Non-GAAP Adjusted Earnings Per Diluted Share

 

 

 

 

 

 

 

Reported earnings per diluted share – GAAP basis

$

1.74

 

 

$

1.43

 

 

$

3.74

 

 

$

2.66

 

Certain items associated with acquisitions

 

0.01

 

 

 

0.01

 

 

 

0.02

 

 

 

0.02

 

Acquisition integration and deal costs

 

0.01

 

 

 

0.01

 

 

 

0.02

 

 

 

0.03

 

Certain incremental expenses related to COVID-19

 

 

 

 

 

 

 

 

 

 

0.02

 

Severance and related charges

 

 

 

 

0.01

 

 

 

 

 

 

0.13

 

Deal termination fee

 

 

 

 

0.17

 

 

 

 

 

 

0.17

 

Realized loss (gain) on strategic investments, net

 

 

 

 

0.01

 

 

 

 

 

 

 

Unrealized loss (gain) on strategic investments, net

 

(0.03

)

 

 

(0.03

)

 

 

(0.04

)

 

 

(0.02

)

Income tax effect of share-based compensation

 

0.02

 

 

 

0.01

 

 

 

(0.05

)

 

 

(0.02

)

Income tax effects related to intra-entity intangible asset transfers

 

0.09

 

 

 

0.02

 

 

 

0.11

 

 

 

0.04

 

Resolution of prior years’ income tax filings and other tax items

 

0.01

 

 

 

(0.01

)

 

 

(0.06

)

 

 

(0.01

)

Non-GAAP adjusted earnings per diluted share

$

1.85

 

 

$

1.63

 

 

$

3.74

 

 

$

3.02

 

Weighted average number of diluted shares

 

883

 

 

 

927

 

 

 

890

 

 

 

926

 

APPLIED MATERIALS, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS

 

Three Months Ended

 

Six Months Ended

(In millions, except percentages)

May 1,
2022

 

May 2,
2021

 

May 1,
2022

 

May 2,
2021

Semiconductor Systems Non-GAAP Adjusted Operating Income

 

 

 

 

 

 

 

Reported operating income – GAAP basis

$

1,648

 

 

$

1,542

 

 

$

3,419

 

 

$

2,803

 

Certain items associated with acquisitions1

 

8

 

 

 

10

 

 

 

15

 

 

 

20

 

Acquisition integration costs

 

 

 

 

 

 

 

 

 

 

(2

)

Certain incremental expenses related to COVID-192

 

 

 

 

 

 

 

 

 

 

12

 

Other charges

 

 

 

 

3

 

 

 

 

 

 

3

 

Non-GAAP adjusted operating income

$

1,656

 

 

$

1,555

 

 

$

3,434

 

 

$

2,836

 

Non-GAAP adjusted operating margin

 

37.1

%

 

 

39.1

%

 

 

38.0

%

 

 

37.7

%

AGS Non-GAAP Adjusted Operating Income

 

 

 

 

 

 

 

Reported operating income – GAAP basis

$

422

 

 

$

358

 

 

$

825

 

 

$

690

 

Certain incremental expenses related to COVID-192

 

 

 

 

 

 

 

 

 

 

8

 

Other charges

 

 

 

 

1

 

 

 

 

 

 

1

 

Non-GAAP adjusted operating income

$

422

 

 

$

359

 

 

$

825

 

 

$

699

 

Non-GAAP adjusted operating margin

 

30.5

%

 

 

29.8

%

 

 

30.5

%

 

 

29.6

%

Display and Adjacent Markets Non-GAAP Adjusted Operating Income

 

 

 

 

 

 

 

Reported operating income – GAAP basis

$

81

 

 

$

65

 

 

$

157

 

 

$

130

 

Certain items associated with acquisitions1

 

1

 

 

 

1

 

 

 

2

 

 

 

2

 

Certain incremental expenses related to COVID-192

 

 

 

 

 

 

 

 

 

 

1

 

Severance and related charges3

 

 

 

 

 

 

 

 

 

 

8

 

Non-GAAP adjusted operating income

$

82

 

 

$

66

 

 

$

159

 

 

$

141

 

Non-GAAP adjusted operating margin

 

21.5

%

 

 

17.6

%

 

 

21.3

%

 

 

17.9

%

1

These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets.

2

Temporary incremental employee compensation during the COVID-19 pandemic.

3

The severance and related charges related to workforce reduction actions globally across the Display and Adjacent Markets business.

Note: The reconciliation of GAAP and non-GAAP adjusted segment results above does not include certain revenues, costs of products sold and operating expenses that are reported within corporate and other and included in consolidated operating income.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED EFFECTIVE INCOME TAX RATE

 

Three Months Ended

(In millions, except percentages)

May 1, 2022

 

 

Provision for income taxes – GAAP basis (a)

$

328

 

Income tax effect of share-based compensation

 

(14

)

Income tax effects related to intra-entity intangible asset transfers

 

(81

)

Resolutions of prior years’ income tax filings and other tax items

 

(7

)

Income tax effect of non-GAAP adjustments

 

(6

)

Non-GAAP adjusted provision for income taxes (b)

$

220

 

 

 

Income before income taxes – GAAP basis (c)

$

1,864

 

Certain items associated with acquisitions

 

10

 

Acquisition integration and deal costs

 

12

 

Realized loss (gain) on strategic investments, net

 

(2

)

Unrealized loss (gain) on strategic investments, net

 

(28

)

Non-GAAP adjusted income before income taxes (d)

$

1,856

 

 

 

Effective income tax rate – GAAP basis (a/c)

 

17.6

%

 

 

Non-GAAP adjusted effective income tax rate (b/d)

 

11.9

%

#Applied #Materials #Announces #Quarter #Results

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