On November 16, 2023, Applied Materials Inc (AMAT, Financial) released its 8-K filing, announcing its fourth quarter and fiscal year 2023 results. The company reported a steady annual revenue of $26.52 billion, a 3% increase year over year. Despite a flat quarterly revenue of $6.72 billion compared to the same quarter last year, AMAT saw a rise in both GAAP and non-GAAP earnings per share (EPS).
Financial Highlights and Performance Analysis
For the fourth quarter, AMAT's GAAP EPS climbed to $2.38, a 29% increase, while non-GAAP EPS reached $2.12, up by 4%. The annual figures were also positive, with GAAP EPS at $8.11 and non-GAAP EPS at $8.05, showing 9% and 5% increases respectively. The company's gross margin improved slightly, with a 1.2 percentage point increase for GAAP and a 1.3 point increase for non-GAAP adjusted gross margin compared to the previous year.
AMAT's operating margin saw a slight decline, with a 0.2 percentage point decrease in GAAP and a 0.3 point decrease in non-GAAP adjusted operating margin for the quarter. Annually, the operating margin decreased by 1.3 points for GAAP and 1.4 points for non-GAAP adjusted figures. However, the company's net income showed a robust increase of 26% for the quarter and 5% for the year.
Applied Materials Inc (AMAT, Financial) generated a record $8.70 billion in cash from operations during the fiscal year and returned $3.16 billion to shareholders through share repurchases and dividends. Notably, the non-GAAP free cash flow surged to $7.59 billion, a remarkable 97% increase for the quarter and 65% for the year.
Segment Performance and Future Outlook
The Semiconductor Systems segment, which is AMAT's largest, reported a slight decrease in net sales from $5.04 billion to $4.88 billion for the quarter. However, the segment's operating margin remained stable at 36.7%. The Applied Global Services segment saw an increase in net sales from $1.42 billion to $1.47 billion, with a consistent operating margin of 29.3%. The Display and Adjacent Markets segment experienced growth in net sales and operating margin, indicating a strong performance in a smaller segment of the company's portfolio.
Looking ahead to the first quarter of fiscal 2024, Applied Materials Inc (AMAT, Financial) anticipates net sales to be approximately $6.47 billion, with non-GAAP adjusted diluted EPS expected to range from $1.72 to $2.08. These projections reflect the company's confidence in its product portfolio, customer relationships, and leadership in technology inflections.
President and CEO Gary Dickerson stated,
Applied Materials delivered record revenue, earnings and cash flow in fiscal 2023 and is outgrowing the wafer fabrication equipment market for the fifth year in a row."He emphasized the company's strong position to profitably grow as the semiconductor industry expands.
Investor Considerations
Value investors may find AMAT's consistent revenue growth, increased EPS, and strong free cash flow generation appealing. The company's strategic position in the semiconductor equipment market and its ability to return significant capital to shareholders through buybacks and dividends are also noteworthy. However, investors should consider the slight decrease in operating margins and the potential impact of global economic conditions on future performance.
For detailed financial tables and a complete reconciliation of GAAP to non-GAAP adjusted results, investors can refer to the financial tables included in the 8-K filing.
Applied Materials Inc (AMAT, Financial) continues to demonstrate its resilience and strategic growth in a challenging market, positioning itself as a potentially attractive investment for those looking for stability and growth in the tech sector.
Explore the complete 8-K earnings release (here) from Applied Materials Inc for further details.
