Applied Materials increases FQ3 revenue by 23 percent from last year

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Applied Materials buys Kokusai Electric
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Applied Materials, Inc. revealed it grew its business by 23 percent in the fiscal third quarter on Thursday. Bloomberg notes the semiconductor manufacturing equipment maker outpaced Wall Street’s consensus sales estimate by 7.31 percent.

While the company reported losing $650 million to coronavirus related disruption in the fiscal second quarter, its sales slump looks to be over.

Applied Materials’ Strong Showing in FQ3

The Santa Clara, California-based manufacturer made $4.40 billion, with adjusted earnings per share (EPS) of $1.06 in the three months ending July 26. As such, the company outpaced market analyst expectations of $4.18 billion in sales with adjusted EPS of $0.95. The firm also improved its revenue and profit from a year ago by $833 million and $0.32 per share.

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The firm’s CEO, Gary Dickerson, said Applied Materials’ resurgence is due to its adjusting to the post-pandemic landscape. In May, the company declined to offer guidance for the July period because of limited supply chain visibility. However, the executive noted his firm’s productivity levels have returned to pre-coronavirus output.

On a per-segment basis, the firm saw growth in all three of its core businesses, with its semiconductor revenue jumping by 28.28 percent annually. Dickerson noted the company’s customers had shown increased interest in its elite electronic components fabrication machinery.

The Revival Continues

Applied Materials chief executive told investors he expects the company’s sales revival to continue through FQ4 based on recent activity. Dickerson offered a revenue range of $4.40 billion to $4.60 billion with adjusted EPS between $1.11 and $1.23. Even if the firm only hits the low end of its guidance, its October period gross income and profit will be up by 17.2 and 38.7 percent year-over-year, respectively.

The manufacturer anticipates the spike in demand for its semiconductor equipment will remain strong into 2021.

Since Applied Materials is a supplier for Intel, Samsung, and the Taiwanese Semiconductor Manufacturing Company (TSMC), its sales can offer insight into the sector’s overall health.

Although the pandemic is still ongoing, recent research suggests its negative impact on microelectronics supply chains is lessening. In addition, TSMC and Samsung have recently increased their capital expenditures to meet demand for 5G chips and data center memory modules.

Those developments and Applied Materials’ robust financial results indicate the worst part of the pandemic’s economic impact may have passed.

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