Slide 1: Fourth Quarter Fiscal 2023 Earnings Presentation
Fourth Quarter Fiscal 2023 Earnings Presentation November 16, 2023 Applied Materials External
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements, including those regarding anticipated growth and trends in our businesses and markets, industry outlooks and demand drivers, technology transitions, our business and financial performance and market share positions, ou
Slide 3: Gary Dickerson, President and CEO
Gary Dickerson President and Chief Executive Officer Applied Materials External
Slide 4: Fiscal Year 2023: Record Revenue, Earnings and Cash Flow
FISCAL YEAR 2023 Record Revenue, Earnings and Cash Flow REVENUE NON-GAAP EPS* FREE CASH FLOW* $26.5B $8.05 $7.6B 3% YoY 5% YoY 65% YoY * For reconciliation of GAAP to non-GAAP results, see appendix of this presentation and non-GAAP reconciliation on the investor relations page at www.appliedmater
Slide 5: Agenda
AGENDA FY2023 Performance and Key Accomplishments Longer-Term Growth Thesis FY 2024 Outlook and Priorities 5 | Applied Materials External
Slide 6: Strength in Semiconductor Systems
Strength in Semiconductor Systems ▪ Delivered growth during a down year for semiconductor and WFE spending ▪ On track to outgrow the WFE market for the fifth consecutive year ▪ Positioned for sustained outperformance over the coming years 6 | Applied Materials External
Slide 7: Enabling Customer Roadmaps
Enabling Customer Roadmaps MILESTONES INFLECTIONS ICAPS Delivered new records Secured incremental Strengthened ICAPS and major milestones production tool positions business with new products with existing systems in key inflections and application wins » Passed 10K shipments » GAA, backside power, »
Slide 8: Applied Global Services
APPLIED ▪ Record revenue in Q4 and FY2023 GLOBAL ▪ 17 consecutive quarters of YoY growth SERVICES ▪ Positive leading indicators of future growth » Increased industry’s biggest installed base by 5% » Grew long-term subscription service agreements to 63% of recurring revenue » Maintained subscription
Slide 9: Applied's Growth Thesis
Applied’s Growth Thesis Global GDP ▪ Semiconductors outgrow GDP ▪ Equipment grows as fast or faster than semiconductors Semiconductors ▪ Applied Semi Systems outgrows equipment market Wafer Fab Equipment ▪ AGS grows as fast or faster than Semi Systems Applied Semi Systems Positioned for Profitable G
Slide 10: Solving Customers' Highest-Value Problems
Solving Customers’ Highest-Value Problems portfolio TECHNOLOGIES RELATIONSHIPS SERVICES ▪ Broadest portfolio of unit ▪ Deep relationships ▪ Advanced service offerings process technologies with customers are increasingly valuable ▪ Ability to combine technologies ▪ Unique platform for during transfer
Slide 11: 2024 Outlook and Priorities
2024 Outlook 2024 Priorities Demand remains robust, Driving R&D programs with some mix changes to further differentiate our portfolio » Leading-edge F/L stronger » ICAPS lower Investing in operational and » DRAM strong supply chain improvements » NAND <10% of WFE Continuing to reduce our environment
Slide 12: CEO Summary
CEO ▪ Record revenue, earnings and cash flow in FY2023 SUMMARY ▪ On track to outgrow WFE for the fifth year in a row ▪ Outperformance is sustainable due to: » Strong positions at all key industry inflections » Strength of our customer collaborations » Pull for our advanced services ▪ We remain posit
Slide 13: Brice Hill, SVP, Chief Financial Officer
Brice Hill SVP, Chief Financial Officer Applied Materials External
Slide 14: CFO Perspective
CFO ~$3B of annualized R&D invested in semiconductor industry PERSPECTIVE ▪ Invited to identify and solve customers’ most valuable challenges using broadest and deepest equipment portfolio and expertise ▪ Unique insights into market and technology roadmap trends ▪ Spending focused on projects with a
Slide 15: Compound Annual Growth Rates Over 10 Years
Compound Annual Growth Rates Over 10 Years 13% ~30% 33% >12% REVENUE NON-GAAP EPS FREE QUARTERLY CASH FLOW DIVIDEND / SHARE 15 | Applied Materials External
Slide 16: FY2023 Non-GAAP Financial Results
FY2023 Non-GAAP Financial Results $M, except EPS FY2022 FY2023 YoY Revenue 25,785 26,517 3% Gross Margin* 46.6% 46.8% 20bps Operating Income* 7,861 7,719 (2%) EPS* $7.70 $8.05 5% Operating Cash Flow 5,399 8,700 61% Free Cash Flow** 4,612 7,594 65% * For reconciliation of GAAP to non-GAAP results, se
Slide 17: Cash Flows and Shareholder Distributions
Cash Flows and Shareholder Distributions CASH FLOWS ($M) Q4F22 Q1F23 Q2F23 Q3F23 Q4F23 FY23 Operating Cash Flow 857 2,270 2,292 2,583 1,555 8,700 Free Cash Flow* 634 1,983 2,037 2,328 1,246 7,594 SHAREHOLDER DISTRIBUTIONS ($M) Total Shareholder Distributions (1,723) (470) (1,019) (707) (968) (3,164)
Slide 18: Q4F23 Non-GAAP Financial Results
Q4F23 Non-GAAP Financial Results $M, except EPS Q4F22 Q3F23 Q4F23 YoY QoQ Revenue 6,749 6,425 6,723 - 5% Gross Margin* 46.0% 46.4% 47.3% 130bps 90bps Operating Expenses* 1,097 1,165 1,193 9% 2% Operating Income* 2,010 1,818 1,984 (1%) 9% Operating Margin* 29.8% 28.3% 29.5% (30bps) 120bps EPS* $2.03
Slide 19: Q4F23 Segment Results
Q4F23 Segment Results SEMICONDUCTOR SYSTEMS APPLIED GLOBAL SERVICES DISPLAY & ADJACENT MARKETS Non-GAAP Operating Margin* 37% 37% 37% 36% 35% 29% 29% 28% 28% 29% 5,162 5,038 4,977 4,883 23% 4,676 14% 13% 1,471 1,464 1,428 1,420 1,369 16% 5% 298 251 235 Revenue ($M) 168 167 Q4F22 Q1F23 Q2F23 Q3F23 Q4
Slide 20: AGS Highlights
AGS Highlights ▪ AGS growth is a function of increasing 1. Installed base 2. Service intensity 3. Subscription agreements ▪ FY23 milestones » Grew installed base to 48.3K tools » Increased tools under service agreement to 16.6K » Added new sensor and AI-based service capabilities » Delivered eco-eff
Slide 21: First Quarter Fiscal 2024 Business Outlook
Business Outlook Total Revenue ~$6.47B ± $400M First OUTLOOK Non-GAAP EPS ~$1.90 ± $0.18 QUARTER FISCAL 2024 Semiconductor Systems ~$4.70B SEGMENT Applied Global Services ~$1.46B REVENUE Display and Adjacent Markets ~$235M Non-GAAP Gross Margin ~47.0% OTHER Non-GAAP Operating Expenses ~$1.23B Non-GA
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Slide 23: Strong History of Shareholder Distributions
Strong History of Shareholder Distributions Over past 10 fiscal years (through FY23) March 2023, Board of Directors approved » Grew dividend per share at >12% CAGR » 23% dividend per share increase » Reduced shares outstanding by more than 30% » $10B supplemental share repurchase authorization » Dis
Slide 24: FY2019 – FY2023 Segment Results
FY2019 – FY2023 Segment Results SEMICONDUCTOR SYSTEMS APPLIED GLOBAL SERVICES DISPLAY & ADJACENT MARKETS Non-GAAP Operating Margin* 39% 37% 36% 33% 30% 30% 29% 29% 19,698 28% 27% 18,797 16,286 5,732 5,543 20% 20% 19% 19% 5,013 11,367 4,155 3,854 15% 9,027 Revenue ($M) 1,651 1,634 1,607 1,331 868 FY1
Slide 25: Applied Materials At-A-Glance
APPLIED MATERIALS AT-A-GLANCE REPORTING SEGMENTS FOUNDED Semiconductor Systems CURRENT FISCAL 1967 YEAR ENDS FIRST PUBLIC Applied Global Services 29 October 2023 OFFERING Display and Adjacent Markets 1972 $3.1 billion ~34,000* $26.5 billion ~17,300** TTM R&D employees TTM REVENUE INVESTMENTS active
Slide 26: Strong and Flexible Balance Sheet
Strong and Flexible Balance Sheet CASH AND INVESTMENTS ($M) Q4F22 Q1F23 Q2F23 Q3F23 Q4F23 Cash and cash equivalents 1,995 3,547 4,588 6,025 6,132 Short-term investments 586 500 510 510 737 Long-term investments 1,980 2,088 2,024 2,177 2,281 Total cash and investments 4,561 6,135 7,122 8,712 9,150 Co
Slide 27: ESG Roadmap: 2030 Goals & Net Zero 2040 Playbook
ESG Roadmap | 2030 Goals & Net Zero 2040 Playbook APPLIED’S SEMI INDUSTRY’S GLOBAL OPERATIONS OPERATIONS ELECTRONICS 1x 100x 10,000x Achieved 100% Strong collaboration with PPACt engagements with customers’ renewable energy in leading customers on customers focus on energy-efficient US in 2022 and o
Slide 28: Additional Resources
Additional Resources Investor Relations Home Page LINK Latest News LINK Blog: Ideas, Actions & Technologies LINK 2021 Memory Master Class LINK 2021 Logic Master Class LINK 2021 ICAPS and Packaging Master Class LINK 2021 Process Control and AppliedPRO Master Class LINK 2022 New Ways to Shrink Master
Slide 29: Appendix: GAAP to Non-GAAP Reconciliations
Appendix GAAP to Non-GAAP Reconciliations 29 | Applied Materials External
Slide 30: Use of Non-GAAP Adjusted Financial Measures
Use of Non-GAAP Adjusted Financial Measures Applied provides investors with certain non-GAAP adjusted financial measures, which are adjusted for the impact of certain costs, expenses, gains and losses, including certain items related to mergers and acquisitions; restructuring and severance charges a
Slide 31: Quarterly Reconciliation of GAAP to Non-GAAP Adjusted Results
UNAUDITED QUARTERLY RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS IN MILLIONS, EXCEPT PER SHARE AMOUNTS AND PERCENTAGES Q4F22 Q1F23 Q2F23 Q3F23 Q4F23 Non-GAAP Adjusted Gross Profit Reported gross profit - GAAP basis $ 3,101 $ 3,145 $ 3,094 $ 2,976 $ 3,169 Certain items associated with acquisit
Slide 32: Quarterly Reconciliation of GAAP to Non-GAAP Operating Expenses
UNAUDITED QUARTERLY RECONCILIATION OF GAAP TO NON-GAAP OPERATING EXPENSES IN MILLIONS Q4F22 Q1F23 Q2F23 Q3F23 Q4F23 Operating Expenses – GAAP Basis $ 1,107 $ 1,175 $ 1,183 $ 1,174 $ 1,198 Certain items associated with acquisitions (4) (4) (4) (3) (3) Acquisition integration and deal costs (6) (6) (8
Slide 33: Quarterly Reconciliation of GAAP to Non-GAAP Segment Operating Results
UNAUDITED QUARTERLY RECONCILIATION OF GAAP TO NON-GAAP SEGMENT OPERATING RESULTS IN MILLIONS, EXCEPT PERCENTAGES Q4F22 Q1F23 Q2F23 Q3F23 Q4F23 Semiconductor Systems Non-GAAP Adjusted Operating Income Reported operating income - GAAP basis $ 1,849 $ 1,917 $ 1,764 $ 1,618 $ 1,791 Certain items associa
Slide 34: Quarterly Reconciliation of Non-GAAP Free Cash Flow
UNAUDITED QUARTERLY RECONCILIATION OF NON-GAAP FREE CASH FLOW IN MILLIONS Q4F22 Q1F23 Q2F23 Q3F23 Q4F23 Non-GAAP Free Cash Flows1 Cash provided by operating activities $ 857 $ 2,270 $ 2,292 $ 2,583 $ 1,555 Capital expenditures (223) (287) (255) (255) (309) Non-GAAP free cash flow $ 634 $ 1,983 $ 2,0
Slide 35: Full Year Reconciliation of GAAP to Non-GAAP Adjusted Results
UNAUDITED FULL YEAR RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS IN MILLIONS, EXCEPT PERCENTAGES FY2013 FY2022 FY2023 Non-GAAP Adjusted Gross Profit Reported gross profit - GAAP basis $ 2,991 $ 11,993 $ 12,384 Certain items associated with acquisitions 1 166 26 29 Acquisition integration and
Slide 36: Full Year Reconciliation of GAAP to Non-GAAP Adjusted Results (EPS)
UNAUDITED FULL YEAR RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS FY2013 FY2022 FY2023 Non-GAAP Adjusted Earnings Per Diluted Share Reported earnings per diluted share - GAAP basis $ 0.21 $ 7.44 $ 8.11 Certain items associated with acquisitions 1 0.14 0.04 0.05 Acquisition integration and deal
Slide 37: Full Year Reconciliation of Non-GAAP Free Cash Flow
UNAUDITED FULL YEAR RECONCILAITON OF NON-GAAP FREE CASH FLOW IN MILLIONS FY2013 FY2022 FY2023 Non-GAAP Free Cash Flows1 Cash provided by operating activities $ 623 $ 5,399 $ 8,700 Capital expenditures (197) (787) (1,106) Non-GAAP free cash flow $ 426 $ 4,612 $ 7,594 FOOTNOTE: 1. Free cash flow is a
Slide 38: Full Year Reconciliation of GAAP to Non-GAAP Segment Operating Results
UNAUDITED FULL YEAR RECONCILIATION OF GAAP TO NON-GAAP SEGMENT OPERATING RESULTS IN MILLIONS, EXCEPT PERCENTAGES FY19 FY20 FY21 FY22 FY23 Semiconductor Systems Non-GAAP Adjusted Operating Income Reported operating income - GAAP basis $ 2,464 $ 3,714 $ 6,311 $ 6,969 $ 7,090 Certain items associated w
Slide 39: Full Year Reconciliation of Non-GAAP Free Cash Flow
UNAUDITED FULL YEAR RECONCILAITON OF NON-GAAP FREE CASH FLOW IN MILLIONS FY2022 FY2023 Non-GAAP Free Cash Flows1 Cash provided by operating activities $ 5,399 $ 8,700 Capital expenditures (787) (1,106) Non-GAAP free cash flow $ 4,612 $ 7,594 FOOTNOTE: 1. Free cash flow is a non-GAAP measure and is d
Slide 40: Reconciliation Information for Business Outlook
RECONCILIATION INFORMATION FOR BUSINESS OUTLOOK Non-GAAP outlook for the first quarter of fiscal 2024 (including non-GAAP gross margin, operating margin, operating expenses and EPS) excludes known charges related to completed acquisitions of approximately $10 million, or $0.01 per share and includes
Slide 41: Make Possible
Cll arenas. make possible