Applied Materials, Inc. · NASDAQ:AMAT
Applied Materials — Q2 FY2010 Earnings Presentation
26 slides from Applied Materials's earnings presentation, May 19, 2010
Slide 1: Second Quarter 2010 Earnings Call Highlights
Second Quarter 2010 Earnings Call Highlights May 19, 2010 Applied Materials opened its new Singapore Operations Center, Applied's first facility in Asia for manufacturing its advanced semiconductor equipment External Use
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains forward-looking statements, including those regarding Applied’s performance, opportunities, industry outlooks, and financial expectations. These statements are subject to known and unknown risks and uncertainties that could cause actual results to dif
Slide 3: Contents
Contents Q2 FY’10 Key Messages Q2 FY‘10 financial highlights (consolidated): – Income statement – Summary income statement table – New orders and net sales regional distribution – Balance sheet – Summary balance sheet table Reporting segments: – Q2 FY‘10 new orders and net sales by segment – B
Slide 4: Q2'10 Key Messages
Q2’10 Key Messages Results at upper end of company net sales and EPS targets Revenue growth across our most profitable businesses – Silicon, Display and Services Gained WFE share in 2009 and on track for further gains in 2010 Announced 17% dividend increase & reinstated share buybacks Furt
Slide 5: Q2'10 Financial Summary: Income Statement
Q2’10 Financial Summary: Income Statement (consolidated) New orders: $2.53 billion – up 29% from Q1‘10 led by Silicon and Display Backlog: $2.99 billion – up 2% from Q1‘10 – Negative adjustments totaling $184M primarily driven by EES Net sales: $2.30 billion – up 24% from Q1‘10 Gross margin:
Slide 6: Summary Income Statement (consolidated)
Summary Income Statement (consolidated) (Unaudited) ($ Millions Except EPS) Q2'10 Q1'10 Q2'09 New Orders $2,533.3 $1,964.5 $648.9 Net Sales $2,295.5 $1,848.9 $1,020.1 Gross Margin 40.4% 38.5% 15.2% RD&E 13.3% 14.5% 23.2% SG&A 9.9% 12.0% 18.2% Operating Margin 16.8% 6.3% N/A Net Income (Loss) $264.0
Slide 7: QoQ New Orders Regional Distribution
QoQ New Orders Regional Distribution (consolidated) SEAsia SEAsia 6% 6% North North China America America 11% 12% Europe 13% Europe China 6% 7% 22% Japan Japan 6% 9% Taiwan Korea 34% Korea 22% Taiwan 20% 26% Q1 FY’10 Q2 FY’10 $1.96 Billion $2.53 Billion 7 Q2FY10 Financial Highlights External Use
Slide 8: QoQ Net Sales Regional Distribution
QoQ Net Sales Regional Distribution (consolidated) SEAsia SEAsia North 7% North 5% America China China America 10% Europe 8% 10% 13% 7% Europe Japan 17% 10% Taiwan Taiwan 28% 30% Japan 9% Korea Korea 28% 18% Q1 FY’10 Q2 FY’10 $1.85 Billion $2.30 Billion 8 Q2FY10 Financial Highlights External Use
Slide 9: Q2'10 Financial Summary: Balance Sheet
Q2’10 Financial Summary: Balance Sheet (consolidated) Cash/cash equivalents and investments increased $365M to $3.57B Operating cash flow: $527M or 23% of revenue Free cash flow*: $482M or 21% of revenue Inventory: $1.69B – up $26 million from Q1‘10 DSO**: 57 days, compared to 67 days in Q
Slide 10: Summary Balance Sheet (Consolidated)
Summary Balance Sheet (Consolidated) (Unaudited) ($ Millions) Q2'10 Q1'10 Q2'09 Cash, Cash Equivalents and Investments $3,565.1 $3,200.3 $3,065.1 Accounts Receivable, Net $1,437.7 $1,267.4 $914.4 Inventories $1,690.4 $1,664.3 $1,901.0 Property, Plant & Equipment, Net $1,083.5 $1,128.7 $1,090.1 Total
Slide 11: Reporting Segments
Reporting Segments Designs, manufactures and sells equipment Silicon used to fabricate semiconductor chips Applied Broad range of products1 to maintain, Global service and optimize customers’ Services semiconductor, display and solar fabs Designs, manufactures and sells equipment Display used to mak
Slide 12: Q2'10 New Orders and Net Sales by Segment
Q2’10 New Orders and Net Sales by Segment Display Display $256M $270M 10% EES 12% EES $166M $378M 7% 15% Silicon Silicon $1,416M AGS $1,404M 56% $456M 61% AGS $483M 20% 19% New Orders Net Sales $2.53 Billion $2.30 Billion 12 Q2FY10 Financial Highlights External Use
Slide 13: QoQ Backlog by Segment
QoQ Backlog by Segment Q1 FY’10 Q2 FY’10 $2.93 Billion $2.99 Billion 13 Q2FY10 Financial Highlights External Use
Slide 14: Silicon Segment Summary
Silicon Segment Summary New Orders Orders up 25% QoQ $1,416M – Led by memory and logic $1,135M customers Net sales up 45% QoQ – Over 65% of net sales resulted $259M from orders received within the quarter Q2’09 Q1’10 Q2’10 Net Sales & Operating Income (Loss) Operating income of $498M $1,404M o
Slide 15: Applied Global Services Segment Summary
Applied Global Services Segment Summary New Orders Orders up 2% QoQ $474M $483M – 200mm equipment and higher spares offset lower service $236M Net sales up 7% QoQ – Spares availability and customer delivery performance Q2’09 Q1’10 Q2’10 improved significantly Net Sales & Operating Income (Loss)
Slide 16: Display Segment Summary
Display Segment Summary New Orders Orders more than $256M doubled QoQ Net sales more than $126M doubled QoQ – Driven by customer $13M investments in China Q2’09 Q1’10 Q2’10 Net Sales & Operating Income (Loss) Operating income of $90M $270M or 33% of revenue – Strong flow through and $132M favo
Slide 17: Energy & Environmental Solutions Segment
Energy & Environmental Solutions Segment New Orders Orders up 64% QoQ $378M – Strong demand for c-Si solar equipment $230M $141M Net sales down 48% QoQ – Lower than expected thin film partially offset by Q2’09 Q1’10 Q2’10 increased c-Si Net Sales & Operating Income (Loss) Operating loss of $14
Slide 18: Industry Outlook
Industry Outlook Semiconductor: Strong CQ1’10 end market, driven by computing and consumer electronic products CQ1’10 Semiconductor sales up 2.8% QoQ in seasonally down quarter 2010 outlook: expect Wafer Fab Equipment spending to be $26-28B, up ~$5B from prior estimates Display: Global LCD T
Slide 19: Q3'10 Expectations
Q3’10 Expectations (As of May 19, 2010) Down 2% to Up 5% Net Sales from Q2’10 Non-GAAP EPS* $0.22 to $0.26 * Excludes known charges related to completed acquisitions of approximately $0.01 per share; outlook does not take into account other non-GAAP adjustments that may arise subsequent to Q2’10 ear
Slide 20: Reconciliation of GAAP to Non-GAAP Results
Reconciliation of GAAP to NON-GAAP Results 20 Q2FY10 Financial Highlights External Use
Slide 21: Reconciliation of GAAP to Non-GAAP Measures – Free Cash Flow
Reconciliation of GAAP to Non-GAAP Measures – Free Cash Flow (Dollars in Thousands) Three months ended Three months ended Free Cash Flow May 02, 2010 January 31, 2010 Cash from Operations $526,963 $371,873 Capital Expenditures $(44,707) $(53,167) Free cash flow $482,256 $318,706 Revenue $2,295,540 $
Slide 22: Operating Margin Reclassification by Segment
Operating Margin Reclassification by Segment 22 Q2FY10 Financial Highlights External Use
Slide 23: Operating Margin Reclassification Trend by Segment
Operating Margin Reclassification Trend by Segment 23 Q2FY10 Financial Highlights External Use
Slide 24: Detail of Certain Items Associated with Acquisitions
Detail of Certain Items Associated with Acquisitions* * Details to amounts shown on slide 20 for certain items associated with acquisitions 24 Q2FY10 Financial Highlights External Use
Slide 25: Reconciliation of GAAP to Non-GAAP Operating Expenses
Reconciliation of GAAP to Non-GAAP Operating Expenses 25 Q2FY10 Financial Highlights External Use
Slide 26: Thank You.
Thank You. Applied Materials External Use Confidential