Applied Materials Announces First Quarter Results

Applied Materials, Inc. reported results for its first quarter of fiscal 2013, ended Jan. 27, 2013. Applied generated orders of $2.11 billion and net sales of $1.57 billion. The company reported operating income of $39 million and net income of $34 million or 3 cents per diluted share. Non-GAAP operating income was $112 million, and non-GAAP net income was $69 million or 6 cents per share, at the high end of the business outlook.

“We executed well through the bottom of this industry investment cycle and, with our semiconductor orders up over 80% from the previous quarter, we are optimistic about the potential of our markets this year,” said Mike Splinter, chairman and CEO. “2013 looks to be another strong year for mobile products like smartphones and tablets, and customers are increasingly turning to Applied to help solve the technology challenges they face in this growing market.”

Silicon Systems Group (SSG) orders were $1.36 billion, up 84%, primarily due to increased demand in foundry and memory, partially offset by lower orders in logic. Net sales were $969 million, up 11%. Non-GAAP operating income increased to $180 million or 18.6% of net sales. GAAP operating income increased to $134 million or 13.8% of net sales. New order composition was: foundry 73%, logic and other 12%, flash 8%, and DRAM 7%.

Applied Global Services (AGS) orders were $544 million, down 6% primarily due to lower orders of 200mm equipment. Net sales were $471 million, down 24% from the prior quarter which benefited from the sale of a thin film production line. Non-GAAP operating income decreased to $91 million or 19.3% of net sales. GAAP operating income decreased to $89 million or 18.9% of net sales.

Display orders were $138 million, up 66% from low levels. Net sales were $87 million, down 6%. Non-GAAP operating income increased to $5 million or 5.7% of net sales. GAAP operating income remained at $3 million or 3.4% of net sales.

Energy and Environmental Solutions (EES) orders were $68 million, up 5% from low levels, with the majority of orders for web coating equipment. Net sales were $46 million, down 26%. EES had a non-GAAP operating loss of $44 million and a GAAP operating loss of $54 million.

Backlog increased by 31% sequentially to $2.11 billion, including negative adjustments of $40 million.

Gross margin was 39.8% on a non-GAAP basis, up from 38.4% in the prior quarter due to a more favorable product mix. GAAP gross margin was 37.0%.

For the second quarter of fiscal 2013, Applied expects net sales to be up 15% to 25% sequentially. The company expects non-GAAP EPS to be in the range of $0.09 to $0.15.