Applied Materials, Inc. Q1 FY2023 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Q1 net sales were $6.74B, nearly identical to the prior quarter’s record levels, reflecting strong operational execution.
  • Non-GAAP EPS was $2.03, at the upper end of guidance.
  • Non-GAAP gross margin improved sequentially by 80bps to 46.8%, driven by better manufacturing/logistics efficiencies and pricing adjustments.
  • Backlog increased for the ninth consecutive quarter, though management expects it to start declining through 2023 as supply catches up.
  • A late-quarter disruption at a major supplier will negatively affect Q2 shipments.

Business Segment Performance (YoY comparisons unless noted)

  • Semi Systems revenue: $5.16B, up 13%. Strength in ICAPS (IoT, Communications, Auto, Power, Sensors) offset weakness in memory and advanced foundry-logic.
  • AGS (Applied Global Services): $1.37B revenue, up nearly 4% despite full-quarter impact from U.S. export controls.
  • Display: $167M revenue, down year-over-year; margin at 4.8%.

Cash Flow & Shareholder Returns

  • $2.27B in operating cash flow (34% of revenue).
  • $470M returned to shareholders: $220M in dividends and $250M in buybacks.
  • Over the last decade, the company has returned 106% of free cash flow and repurchased 40% of shares outstanding.

Q2 FY2023 Guidance

  • Revenue: ~$6.4B ± $400M (up 2% YoY).
  • Non-GAAP EPS: $1.84 ± $0.18.

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Operator: Welcome to the Applied Materials Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, you will be invited to participate in a question-and-answer session. I would now like to turn the conference over to Michael Sullivan, Corporate Vice President. Please go ahead, sir. Michael Sullivan: Good afternoon everyone and thank you for joining Applied’s first quarter of fiscal 2023 earnings call. Joining me are Gary Dickerson, our President and CEO, and Brice Hill, our Chief Financial Officer. Before we begin, I’d like to remind you that today’s call contains forward-looking statements which are subject to risks and uncertainties that could cause our actual results to differ. Information concerning the risks and uncertainties is contained in Applied’s most recent Form 10-K filing with the SEC. Today’s call also includes non-GAAP financial measures. Reconciliations to GAAP measures are found in today’s earnings press release and in our quarterly earnings materials, which are available on the IR page of our website at appliedmaterials.com. Before we begin, I have a calendar announcement. Later this month, Applied Materials is participating in the SPIE Advanced Lithography and Patterning Conference. For those who aren’t traveling to San Jose for the conference, we plan to hold a new product launch event on our IR Website on Tuesday, February 28th at 9 am Pacific Time. We hope you’ll join us. And with that introduction, I

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