Applied Materials, Inc. Q2 FY2020 Earnings Call

· Earnings call transcript and AI-powered summary

Overview

  • Q2 results were below original guidance due to COVID‑19 supply chain disruptions, particularly impacting system shipments. However, demand remained strong across semiconductor and services.
  • Revenue grew 12% year-over-year, non‑GAAP operating profit grew 23%, and non‑GAAP EPS rose 27% to $0.89.
  • Record backlog for semiconductor systems + AGS combined. Strong orders entering the second half of fiscal 2020.
  • Company repaid its revolver post‑quarter and ended with $5.9B in cash and investments (up ~$200M from Q1).

Operational & COVID‑19 Response

  • Major supply disruptions in Bay Area and Malaysia resulted in ~$650M of semi systems revenue being deferred from Q2.
  • All suppliers have resumed operations; supply chain expected to return to near‑normal throughput exiting fiscal Q3.
  • Logistics costs remain elevated due to reduced commercial air traffic; expected to remain a margin headwind.
  • Extensive safety protocols implemented across operations; full employee pay maintained.
  • Created a global charitable COVID fund and donated PPE to hospitals.

Business Segment Highlights

Semiconductor Systems
  • Q2 systems revenue fell short due to supply constraints, not demand.
  • Orders were significantly up and backlog at record levels.
  • Management expects:
    • Q3 revenue up high single digits sequentially.

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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, and thank you for joining Applied’s second quarter of fiscal 2020 earnings call, which is being recorded. Joining me are Gary Dickerson, our President and CEO; and Dan Durn, 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 Form 10-Q and 8-K filings 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 presentation, which are available on the IR page of our website at appliedmaterials.com. And now, I’d like to turn the call over to Gary Dickerson. Gary Dickerson: Thanks, Mike. I'd like to start today's call by addressing the topic at the forefront of everyone's mind, the COVID-19 pandemic, which has created unprecedented challenges around the world. My thoughts and best wishes go out to all of you and especially those whose families have been directly a

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