Applied Materials Inc reports 25.0% Net Income growth and 12.1% Revenue growth
17/11/2016 • About Applied Materials Inc (
$4336) • By InTwits
Applied Materials Inc reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 23.5% in FY2016 vs. 21.4% in FY2015 vs. 9.6% in FY2012
- EBITDA Margin is quite volatile: 23.5% in FY2016, 21.4% in FY2015, 20.9% in FY2014, 11.2% in FY2013, 9.6% in FY2012
- Applied Materials Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.3%. At the same time it's a lot of higher than industry average of 9.9%.
- CAPEX is quite volatile: 5,545 in FY2016, 12,107 in FY2015, 3,332 in FY2014, 3,083 in FY2013, 2,327 in FY2012
- The company has highly profitable business model: ROIC is at 19.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Applied Materials Inc ($4336) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 8,719 | 7,509 | 9,072 | 9,659 | 10,825 | 12.1% |
| Gross Profit | 3,313 | 2,991 | 3,843 | 3,952 | 4,511 | 14.1% |
| SG&A | 1,076 | 902 | 890 | 883 | 819 | -7.2% |
| EBITDA | 833 | 842 | 1,895 | 2,064 | 2,541 | 23.1% |
| Net Income | 109 | 256 | 1,072 | 1,377 | 1,721 | 25.0% |
Balance Sheet
|
|---|
| Cash | 1,392 | 1,711 | 3,002 | 4,797 | 3,406 | -29.0% |
| Short Term Debt | 0 | 0 | 0 | 1,200 | 200 | -83.3% |
| Long Term Debt | 1,946 | 1,946 | 1,947 | 3,342 | 3,143 | -6.0% |
Cash flow
|
|---|
| Capex | 162 | 197 | 241 | 215 | 253 | 17.7% |
Ratios
|
|---|
| Revenue growth | -17.1% | -13.9% | 20.8% | 6.5% | 12.1% | |
| EBITDA growth | -68.5% | 1.1% | 125.1% | 8.9% | 23.1% | |
| Gross Margin | 38.0% | 39.8% | 42.4% | 40.9% | 41.7% | 0.8% |
| EBITDA Margin | 9.6% | 11.2% | 20.9% | 21.4% | 23.5% | 2.1% |
| Net Income Margin | 1.3% | 3.4% | 11.8% | 14.3% | 15.9% | 1.6% |
| SG&A, % of revenue | 12.3% | 12.0% | 9.8% | 9.1% | 7.6% | -1.6% |
| CAPEX, % of revenue | 1.9% | 2.6% | 2.7% | 2.2% | 2.3% | 0.1% |
| ROIC | 4.0% | 4.6% | 15.9% | 15.2% | 19.1% | 3.9% |
| ROE | 1.4% | 3.6% | 14.3% | 17.8% | 23.2% | 5.4% |
| Net Debt/EBITDA | 0.7x | 0.3x | -0.6x | -0.1x | -0.0x | 0.1x |
Revenue and profitability
Applied Materials Inc's Revenue jumped on 12.1%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 23.0 pp from 62.1% to 85.1% in FY2016.
Gross Margin increased slightly on 0.76 pp from 40.9% to 41.7% in FY2016. SG&A as a % of Revenue decreased slightly on 1.6 pp from 9.1% to 7.6% in FY2016.
Net Income marign increased slightly on 1.6 pp from 14.3% to 15.9% in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 2.3% in FY2016. CAPEX/Revenue showed almost no change from FY2013 to FY2016. For the last three years the average CAPEX/Revenue was 2.4%.
Return on investment
The company operates at high and attractive ROE (23.21%) while ROIC is a bit lower (19.11%). ROIC increased on 3.9 pp from 15.2% to 19.1% in FY2016. ROE increased on 5.4 pp from 17.8% to 23.2% in FY2016.
Leverage (Debt)
Debt level is -0.0x Net Debt / EBITDA and 1.3x Debt / EBITDA. Net Debt / EBITDA increased on 0.1x from -0.1x to -0.025x in FY2016. Debt dropped on 26.4% while cash dropped on 29.0%.
Management team
Gary E Dickerson is a Applied Materials Inc's CEO. Gary E Dickerson has spent 5 years at the company. The company's CFO Robert J Halliday "Bob" has spent 5 years at the company.
Appendix 1: Peers in Semiconductors
Below you can find Applied Materials Inc benchmarking vs. other companies in Semiconductors industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Phoenitron Holdings Ltd ($8066) | -7.2% | 4.0% | 243.8% | 405.3% | |
| Jun Yang Solar Power Investments Ltd ($397) | -81.0% | 256.8% | 1.1% | 168.9% | |
| Honbridge Holdings Ltd ($8137) | -76.4% | -97.5% | 608.9% | 57.0% | |
| Shanghai Fudan Microelectronics Group Co Ltd ($1385) | 15.5% | 16.0% | 3.3% | 23.2% | |
| Shunfeng International Clean Energy Ltd ($1165) | -46.3% | 44.4% | 275.6% | 22.4% | |
| |
|---|
| Median (22 companies) | -10.2% | 3.8% | 10.4% | -0.6% | -36.4% |
|---|
| Applied Materials Inc ($4336) | | -13.9% | 20.8% | 6.5% | 12.1% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Jun Yang Solar Power Investments Ltd ($397) | 87.3% | 79.3% | 53.8% | 73.8% | |
| Intel Corp ($4335) | 62.1% | 59.8% | 63.7% | 62.6% | |
| PacMOS Technologies Holdings Ltd ($1010) | 68.8% | 65.7% | 65.7% | 57.5% | |
| Shanghai Fudan Microelectronics Group Co Ltd ($1385) | 47.7% | 48.7% | 47.5% | 52.9% | |
| Shenzhen Mingwah Aohan High Technology Corp Ltd ($8301) | 26.1% | 26.7% | 16.3% | 52.8% | |
| |
|---|
| Median (22 companies) | 22.1% | 23.7% | 29.5% | 31.3% | 5.6% |
|---|
| Applied Materials Inc ($4336) | 38.0% | 39.8% | 42.4% | 40.9% | 41.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| China Ruifeng Renewable Energy Ltd ($527) | 9.1% | 37.2% | 88.0% | 78.3% | |
| Intel Corp ($4335) | 41.5% | 38.6% | 42.8% | 41.0% | |
| Jun Yang Solar Power Investments Ltd ($397) | -218.5% | -16.7% | -9.9% | 35.0% | |
| Semiconductor Manufacturing International Corp ($981) | 34.3% | 35.5% | 34.5% | 33.3% | |
| Hua Hong Semiconductor Ltd ($1347) | 38.5% | 29.7% | 31.5% | 30.0% | |
| |
|---|
| Median (22 companies) | 7.4% | 6.1% | -0.9% | 3.9% | -3.5% |
|---|
| Applied Materials Inc ($4336) | 9.6% | 11.2% | 20.9% | 21.4% | 23.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Heng Xin China Holdings Ltd ($8046) | 16.1% | 4.1% | 11.9% | 110.8% | |
| Jun Yang Solar Power Investments Ltd ($397) | 671.1% | 25.9% | 78.9% | 104.2% | |
| China Ruifeng Renewable Energy Ltd ($527) | 5.5% | 35.9% | 10.6% | 60.9% | |
| Semiconductor Manufacturing International Corp ($981) | 23.5% | 35.1% | 33.2% | 55.0% | |
| Hanergy Thin Film Power Group Ltd ($566) | 1.3% | 2.8% | 4.8% | 32.0% | |
| |
|---|
| Median (22 companies) | 4.7% | 5.5% | 7.0% | 6.8% | 0.5% |
|---|
| Applied Materials Inc ($4336) | 1.9% | 2.6% | 2.7% | 2.2% | 2.3% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Shanghai Fudan Microelectronics Group Co Ltd ($1385) | 25.5% | 22.7% | 21.1% | 20.9% | |
| Intel Corp ($4335) | 23.7% | 17.1% | 20.6% | 17.7% | |
| ASM Pacific Technology Ltd ($522) | 12.3% | 9.2% | 21.9% | 13.7% | |
| Hua Hong Semiconductor Ltd ($1347) | 5.3% | 4.8% | 7.8% | 6.7% | |
| Shunfeng International Clean Energy Ltd ($1165) | -13.0% | 1.5% | 17.4% | 5.0% | |
| |
|---|
| Median (22 companies) | -2.2% | -0.4% | -0.5% | -1.1% | -29.9% |
|---|
| Applied Materials Inc ($4336) | 4.0% | 4.6% | 15.9% | 15.2% | 19.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Solargiga Energy Holdings Ltd ($757) | | 13.8x | 4.4x | 9.0x | |
| China Ruifeng Renewable Energy Ltd ($527) | 16.4x | 6.9x | 4.9x | 7.3x | |
| Shunfeng International Clean Energy Ltd ($1165) | | 25.8x | 3.4x | 5.7x | |
| Semiconductor Manufacturing International Corp ($981) | 1.3x | 1.0x | 1.0x | 0.5x | |
| Intel Corp ($4335) | 0.2x | 0.4x | 0.5x | 0.3x | |
| |
|---|
| Median (11 companies) | 0.1x | 0.7x | 0.5x | 0.2x | |
|---|
| Applied Materials Inc ($4336) | 0.7x | 0.3x | -0.6x | -0.1x | -0.0x |
