Applied Materials Announces 2Q 2013 Results

Applied Materials, Inc. reported results for its second quarter of fiscal 2013 ended April 28, 2013. Applied generated orders of $2.27 billion, up 7% from the prior quarter, with Silicon Systems Group orders up 14% from the first quarter and Display orders up 41% sequentially. Net sales were $1.97 billion, up 25% sequentially.

Applied reported non-GAAP adjusted operating income of $285 million and non-GAAP adjusted net income of $199 million, or 16 cents per diluted share. The company recorded a GAAP operating loss of $68 million and a GAAP net loss of $129 million or 11 cents per diluted share.

The GAAP net loss included $278 million in goodwill and intangible asset impairment charges associated with the Energy and Environmental Solutions (EES) segment, which were primarily the result of the further deterioration in solar equipment market conditions, along with $10 million in charges related to previously announced restructuring plans. The company continues to aggressively reduce spending in the EES segment.

“For the second quarter in a row, Applied had strong order performance of over $2 billion,” said Mike Splinter, chairman and chief executive officer. “We are seeing increasing pull from some of our largest strategic customers for our key enabling technologies. We remain committed to driving profitable growth.”

Silicon Systems Group (SSG) orders were $1.55 billion, up 14%, with growth primarily driven by memory. Applied Global Services (AGS) orders were $481 million, down 12% primarily due to the timing of service contract renewals which are typically concentrated in the first fiscal quarter. Display orders were $195 million, up 41% driven by the initial recovery in TV equipment investment. Energy and Environmental Solutions (EES) orders were $39 million, down 43%.

Backlog increased by 9% sequentially to $2.30 billion including negative adjustments of $102 million. Gross margin was 43.2% on a non-GAAP adjusted basis, up from 39.8% in the prior quarter reflecting higher net sales and lower inventory charges. GAAP gross margin was 41.0%.

For the third quarter of fiscal 2013, Applied expects net sales to be up slightly from the previous quarter. The company expects non-GAAP adjusted EPS to be in the range of $0.16 to $0.20.