Applied Materials Releases Third Quarter Fiscal 2019 Financial Results

•   Third quarter revenue of $3.56 billion

•  GAAP EPS was $0.61 and non-GAAP EPS was $0.74

• Returned $724 million to shareholders

SANTA CLARA, Calif., August 15, 2019 – Applied Materials, Inc. (NASDAQ: AMAT) today announced financial results for the third quarter ended July 28, 2019.

Third quarter results

Applied Materials achieved revenue of $3.56 billion. Based on GAAP (Generally Accepted Accounting Principles), the company's gross margin was 43.7%, operating profit was $802 million, accounting for 22.5% of net sales, and earnings per share (EPS) was $0.61.

On an adjusted non-GAAP basis, the Company had gross margin of 44.0%, operating income of $820 million, or 23.0% of net sales, and earnings per share of $0.74.

The company returned $724 million to shareholders through $528 million in share repurchases and $196 million in dividends.

“Applied Materials delivered solid financial results in today’s challenging market environment,” said Gary Dickerson, president and CEO of Applied Materials. “We are excited about the opportunities ahead and are fully committed to funding our R&D programs to develop new products and capabilities that will help our customers accelerate their roadmaps while positioning us for growth in the years ahead.”

Third quarter results at a glance

Applied Materials implemented Accounting Standards Update 2014-09: Revenue from Contracts with Customers (ASC 606) retrospectively as of the first day of fiscal year 2019. Applied Materials also implemented Accounting Standards Update 2017-07: Compensation – Pensions, retrospectively as of the first day of fiscal year 2019. The unaudited consolidated balance sheets for all prior periods ended October 28, 2018 and the unaudited consolidated statements of cash flows from operations for the three and nine months ended July 29, 2018 have been restated in accordance with the new standard.

Reconciliations between GAAP and non-GAAP financial measures are included in the financial statements included in this press release. See “Use of Non-GAAP Financial Measures” below.

Business Outlook

Looking ahead to the fourth quarter of fiscal 2019, Applied Materials expects net sales of approximately $3.685 billion, with a fluctuation range of $150 million. Adjusted non-GAAP diluted earnings per share are expected to be between $0.72 and $0.80.

Applied Materials' third quarter fiscal 2019 non-GAAP diluted earnings per share estimate excludes known charges related to the completion of acquisitions of $0.01 per share and includes a $0.03 per share net income tax benefit related to the transfer of intra-company intangible assets, but does not reflect other currently unknown items, such as additional charges related to acquisitions or other non-operating and non-recurring items, and other tax-related items, which are inherently uncertain and cannot be reasonably predicted by the Company at this time.

Financial performance of each business unit in the third quarter

Use of Non-GAAP Financial Measures

Applied Materials provides investors with non-GAAP adjusted financial statements that are adjusted for certain costs, expenses, gains and losses, including the impact of certain items related to acquisitions; restructuring charges and any related adjustments; impairment adjustments for assets or investments; gains or losses on strategic investments; and certain tax and other adjustments. In addition, non-GAAP results exclude estimated income tax expense related to recent changes in U.S. tax legislation. Reconciliations between GAAP and non-GAAP results are included in the financial statements included in this press release.

The Company’s management uses non-GAAP financial statements to evaluate the Company’s operating and financial performance for business planning purposes and as a performance measure in its executive compensation programs. Applied Materials believes that these measures improve the understanding of the Company’s overall performance by excluding items not relevant to current operations and allow investors to view the Company’s operating capabilities on the same level as management and to compare quarterly results. Non-GAAP financial statements have certain limitations because they are not based on generally accepted GAAP accounting principles, may differ from non-GAAP accounting and reporting methods used by other companies, and may exclude items that have a significant impact on the reported financial results. This additional information is not a substitute for, nor should it be used in addition to, financial statements prepared in accordance with GAAP.