Applied Materials, Inc. Q3 FY2021 Earnings Call

· Earnings call transcript and AI-powered summary

Overview

  • Applied Materials delivered another record quarter, achieving the highest revenue, gross margin, operating profit, and EPS in company history.
  • Strong demand across Foundry/Logic, Memory, and ICAPS (IoT, communications, automotive, power, sensors).
  • Company continues to navigate supply chain disruptions but reports strong execution and backlog near $10 billion.
  • Secular tailwinds driven by digital transformation, AI, edge computing, and regionalization of semiconductor supply chains.

Financial Highlights (Q3 FY2021)

  • Record revenue across all segments; exact revenue not stated in transcript but described as company record.
  • Gross margin: 48% (highest in 14 years), up significantly year-over-year.
  • Record free cash flow: $1.5 billion; $5 billion generated over the past 4 quarters.
  • Shareholder returns: $1.5 billion in buybacks; 111% of free cash flow returned including dividends.
  • Credit rating upgrades: Moody to A2; S&P to A.

Business & Market Performance

Semiconductor Systems

  • Highest-ever revenue in the segment.
  • Operating margin exceeded 40% for the first time.
  • Strong demand across all device types (Foundry/Logic, DRAM, NAND).
  • Foundry/Logic: >55% of total WFE spending in 2021; evenly split between leading-edge and ICAPS nodes.

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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. Afterward, 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 Third Quarter Fiscal 2021 Earnings Call. Joining me are Gary Dickerson (ph), our President and CEO, and Dan Durn (ph), 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-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 materials, which are available on the IR page of our website at appliedmaterials.com. Before we begin, I have some calendar announcements. On the 8th of September at 9:00 A.M. Pacific Time, we plan to host the third event in our Master Class series, this time focusing on the ICAPS markets and also on heterogeneous design and advanced packaging. Then, on the 18th of October, also at 9:00 AM Pacific Time, we plan to hold our fourth Master Class. We'll foc

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