Applied Materials Announces 2Q 2015 Results

Applied Materials, Inc. reported results for its second quarter ended April 26, 2015. Second quarter orders were $2.52 billion, up 11% sequentially and down 4% year over year. Net sales were $2.44 billion, up 4% sequentially and up 4% year over year.

On a non-GAAP adjusted basis, the company reported gross margin of 43.2%, operating income of $476 million, and net income of $362 million or $0.29 per diluted share. The company recorded GAAP gross margin of 41.6%, operating income of $416 million, and net income of $364 million or $0.29 per diluted share.

“Applied posted our highest quarterly revenue in the past three years and earnings near the top of our guidance range,” said Gary Dickerson, president and CEO. “These results demonstrate that Applied is delivering the enabling products and services our customers need as they transition complex new devices into volume production.”

Silicon Systems Group (SSG) orders were $1.70 billion, up 19%, with increases in foundry, flash and DRAM more than offsetting a decline in logic/other. Net sales increased by 8% to $1.56 billion. Non-GAAP adjusted operating income increased by 19% to $418 million or 26.8% of net sales. GAAP operating income increased by 22% to $374 million or 24.0% of net sales.

Applied Global Services orders of $641 million declined 7% primarily due to a seasonal decline in service contract renewals. Net sales of $646 million increased by 11%. Operating income increased to $170 million or 26.3% of net sales on both a GAAP and non-GAAP basis.

Display orders of $120 million were up 12% reflecting an increase in TV equipment orders. Net sales declined 41% to $163 million, which was in line with expectations. Operating income decreased to $40 million or 24.5% of net sales on both a GAAP and non-GAAP basis.

Energy and Environmental Solutions orders remained flat at $50 million, and net sales increased by 33% to $73 million. EES reported a non-GAAP adjusted operating loss of $4 million and a GAAP operating loss of $5 million.

Applied’s backlog remained essentially flat at $2.78 billion and included negative adjustments of $69 million, primarily consisting of order cancellations and other adjustments. Backlog composition by segment was: SSG 53%; AGS 29%; Display 13%; and EES 5%.

For the third quarter of fiscal 2015, Applied expects net sales to be in the range of up 2% to up 6% from the previous quarter, the midpoint of which would be up 12% year over year. Non-GAAP adjusted diluted EPS is expected to be in the range of $0.31 to $0.35, the midpoint of which would be up 18% year over year.