Applied Materials Inc. (NASDAQ:AMAT)

Current Income Tax Expense

The current income tax expense demonstrated a generally upward trend over the six-year period examined. Starting at $512 million in 2019, the figure slightly decreased to $479 million in 2020, which represents a minor dip. Subsequently, from 2020 onwards, there was a consistent increase each year, rising to $823 million in 2021, then to $879 million in 2022, reaching $1.218 billion in 2023, and peaking at $1.653 billion in 2024. This pattern indicates a growing current tax liability, which may relate to increased taxable income or adjustments in tax rates or policies.

Deferred Income Tax Expense

The deferred income tax expense exhibited more variability and volatility in comparison to the current tax expense. Initially, there was a gradual increase from $51 million in 2019 to $68 million in 2020. The amount then decreased slightly to $60 million in 2021, followed by a sharp increase to $195 million in 2022. However, in the following years, there was a significant reversal: a substantial negative deferred tax expense of -$358 million in 2023 and a further increase in the negative value to -$678 million in 2024. The negative values in the last two periods indicate deferred tax benefits or reversals of previously recognized deferred tax liabilities, implying changes in temporary differences or tax planning strategies.

Total Provision for Income Taxes

Overall provision for income taxes, which combines current and deferred expenses, revealed an increasing trend from $563 million in 2019 to $1.074 billion in 2022. Notably, despite the significant negative deferred tax expenses in 2023 and 2024, the total provision was somewhat moderated but still relatively high at $860 million in 2023 and $975 million in 2024. This suggests that the increases in current tax expense were partially offset by deferred tax benefits during these years.

Summary of Trends

The analysis reveals that current tax expenses steadily expanded, suggesting growing taxable income or tax rate impacts. Conversely, deferred tax expense fluctuated considerably, with a transition to large negative amounts in the most recent years, indicating notable deferred tax asset realizations or reversals. The total income tax provision generally increased over time but showed signs of tempering in the latest two years due to the impact of deferred taxes. These dynamics may reflect evolving tax positions, timing differences, or strategic tax management influences.

Statutory U.S. federal income tax rate

The statutory tax rate remained constant at 21% throughout the entire period from 2019 to 2024.

Effect of foreign operations taxed at various rates

This item displayed increasing variability over the years. It started at -5.9% in 2019 and showed a somewhat fluctuating pattern, reaching its lowest adjustment of -8.2% in 2023 before slightly improving to -7.6% in 2024. The data indicates continuing significant benefits or adjustments resulting from foreign operations consistently reducing the effective tax rate.

Changes in prior years’ unrecognized tax benefits

Except for a slight positive impact at the beginning of the period, this item generally moved towards neutral or slightly negative territory. It peaked at 2.6% in 2019 and progressively decreased, becoming negative at -0.9% in 2022 and then stabilizing to near zero in the last two years, with a missing value in 2024.

Resolutions of prior years’ income tax filings

The effects of resolving prior years’ tax filings were consistently negative but relatively small in magnitude, mostly ranging between -0.1% and -1%. A notable peak in negative impact occurred in 2020 at -1%, but aside from that year, the adjustments remained minor and stable at about -0.1% to -0.2%.

Research and other tax credits

This component consistently contributed to reducing the effective tax rate, with values ranging between -0.9% and -1.6%. The impact deepened to -1.6% in 2023 from previous years’ milder changes, then slightly improved to -1.4% in 2024, reflecting sustained utilization of tax credits.

Other

This line item showed minor fluctuations, generally near zero with a range from -0.4% to 0.7%. The data shows a small positive peak in 2019 (0.7%) and a slight improvement to 0.2% or 0.1% in the last years, indicating minimal but consistent minor adjustments.

Effective income tax rate

The effective income tax rate demonstrated a declining trend overall from 17.2% in 2019 to 12% in 2024. There was a significant reduction from 2019 to 2020, stabilizing around 13% during 2020 and 2021, a minor increase to 14.1% in 2022, followed by a marked decline to the lowest point of 11.1% in 2023, before a modest rise to 12% in 2024. This trend reflects the net influence of foreign operations, tax credits, and prior year adjustments consistently lowering the effective rate below the statutory level.

The financial data reveals various trends and changes over the periods analyzed. Several balance sheet items and deferred tax-related figures exhibit notable shifts, indicating evolving financial and operational conditions.

Tax and R&D-related Items

The Corporate Alternative Minimum Tax appears only in the most recent period with a recorded amount of 410 million USD, suggesting either a new tax charge or a reclassification. Capitalized R&D expenses show a substantial increase from 83 million USD to 217 million USD over the last two periods, highlighting intensified investment in research and development activities.

Allowance and Reserves

Allowance for doubtful accounts remains relatively stable, fluctuating slightly between 4 and 8 million USD, indicating consistent credit risk management. Inventory reserves and basis difference oscillate around 120 million USD, with a slight increase towards the latest periods. Installation and warranty reserves display a marked upward trend, more than doubling from 11 million USD in 2019 to 70 million USD in 2024, which could reflect increasing warranty commitments or anticipated installation costs.

Intangible Assets and Property

Intangible assets show a steady decline from 1472 million USD in 2019 to 977 million USD in 2024, pointing to amortization, impairment, or disposals. Property, plant and equipment details are partially missing for earlier periods but rise sharply from 9 million USD in 2023 to 101 million USD in 2024, suggesting recent capital expenditure or asset additions. Lease liability follows an upward trajectory from 55 million USD in 2020 to a peak of 98 million USD in 2023 before declining to 72 million USD; this reflects recent leasing activity and possible repayments or lease terminations. Conversely, right of use assets increase in magnitude negatively from -54 million USD in 2020 to -103 million USD in 2023, then improve marginally to -76 million USD, implying adjustments in lease accounting or asset usage.

Liabilities and Accrued Items

Accrued liabilities rise from 15 million USD in 2019 to a high of 35 million USD in 2022 before stabilizing around the mid-20 million USD range. Deferred revenue decreased from 36 million USD in 2019 to 25 million USD in 2021 but then rose sharply to 82 million USD in 2022 and remained around 72 million USD thereafter, indicating fluctuations in customer prepayments or contract balances. Deferred compensation shows a significant upward movement from 98 million USD in 2019 to 261 million USD in 2024, signaling increased employee benefit obligations or compensation accruals.

Share-based Compensation and Other Items

Share-based compensation fluctuates moderately between 30 and 50 million USD, peaking in 2023. The category “Other” is somewhat volatile, with amounts oscillating without a clear trend, indicating irregular or miscellaneous items impacting finances.

Deferred Taxes and Valuation Allowances

Gross deferred tax assets hover near 2000-3000 million USD with a rising trend peaking at 3050 million USD in 2024. The valuation allowance increases negatively over time from -257 million USD to -569 million USD, which reduces net deferred tax assets correspondingly. Consequently, deferred tax assets first decreased from 1858 million USD in 2019 to 1574 million USD in 2022 but recovered to 2481 million USD in 2024, showing improved asset recognition or tax planning outcomes. Deferred tax liabilities also rise in negative value from -103 million USD to a peak of -230 million USD in 2022 but then decline to -99 million USD, indicating changes in taxable temporary differences. Net deferred tax assets decreased over the early years to a low of 1344 million USD in 2022, followed by recovery to 2382 million USD in 2024, reflecting overall strengthening of deferred tax asset positions.

Undistributed Foreign Earnings

These amounts remain fairly consistent and negative, varying slightly around -23 to -39 million USD, implying stable or marginally changing foreign earnings retention.

In summary, the data depicts a company managing its deferred tax assets with cautious valuation allowances amidst fluctuating deferred liabilities. The increase in certain reserves, deferred compensation, and lease liabilities points towards growing obligations over time. Meanwhile, capitalized R&D and property additions suggest ongoing investments. Declining intangible assets indicate amortization or impairment impacts. Overall, the financial items reflect active asset and liability management with an emphasis on deferred taxes, compensation obligations, and capital investments in recent periods.

The financial data reveals information about non-current deferred tax assets and liabilities over a six-year period from October 2019 through October 2024.

Non-current deferred tax assets

The value of non-current deferred tax assets shows a generally declining trend from 2019 to 2022, decreasing from 1,766 million US dollars in 2019 to 1,395 million US dollars in 2022. Notably, there is a reversal of this trend beginning in 2023, where the asset value increases sharply to 1,729 million US dollars and continues to rise significantly in 2024, reaching 2,393 million US dollars. This indicates a recent strengthening in the recognition or realization of deferred tax assets.

Non-current deferred tax liabilities

The non-current deferred tax liabilities remain relatively stable and low in absolute terms compared to the assets throughout the period. The liabilities start at 11 million US dollars in 2019, then slightly decrease to 9 and 8 million US dollars in 2020 and 2021, respectively. However, there is a notable spike to 51 million US dollars in 2022, after which the value reverts to previous levels of around 10 to 11 million US dollars in 2023 and 2024. This temporary increase in 2022 may indicate a specific event or adjustment impacting deferred tax liabilities in that year.

Overall, the data suggest that deferred tax assets experienced a downward trend before rebounding strongly in the last two reported years, while deferred tax liabilities remained mostly stable except for an unusual increase in 2022. The significant rise in deferred tax assets by 2024 could imply improved tax planning or changes in tax regulations affecting expected future tax benefits.

The data indicates an overall growth trend in the company's financial position over the six-year period from 2019 to 2024, with both assets and equity increasing consistently.

Total Assets

Reported total assets rose steadily from $19,024 million in 2019 to $34,409 million in 2024, reflecting a compound growth. Adjusted total assets follow a similar growth pattern, increasing from $17,258 million in 2019 to $32,016 million in 2024. The adjusted figures remain slightly lower than reported values, indicative of adjustments related to income tax considerations.

Total Liabilities

Reported total liabilities increased from $10,810 million in 2019 to $15,408 million in 2024, showing a more moderate upward trend. Adjusted liabilities closely mirror reported liabilities at each point in time, with minimal differences, which suggests that deferred income tax adjustments have limited impact on the liabilities account.

Stockholders' Equity

Reported stockholders' equity exhibits a significant rise from $8,214 million in 2019 to $19,001 million in 2024. The increase is notably marked between 2022 and 2023, where equity jumped from $12,194 million to $16,349 million. Adjusted equity, which factors in tax adjustments, shows a similar yet consistently lower level, moving from $6,459 million in 2019 to $16,619 million in 2024. The growing gap between reported and adjusted equity over time may reflect increasing deferred tax adjustments affecting equity accounts.

Net Income

Reported net income increased from $2,706 million in 2019 to a peak of $7,177 million in 2024, indicating strong profitability growth. Adjusted net income values present comparable growth but are generally slightly higher than reported net income in earlier years (2019 to 2022) and then slightly lower or flat from 2023 to 2024, suggesting that tax adjustments have varied impacts on profitability over time.

In summary, the company has demonstrated steady expansion in its asset base and equity, accompanied by rising net income. The close alignment of reported and adjusted liabilities suggests limited tax timing differences affecting this category. However, more pronounced differences in equity highlight the influence of deferred tax adjustments, which have increased over the reported periods. Profitability remains strong, though adjusted net income reflects some variability attributable to tax-related adjustments in recent years.

The financial data reveals several noteworthy trends in profit margins, asset utilization, leverage, and return metrics over the observed periods.

Net Profit Margin

The reported net profit margin showed a consistent upward trend from 18.52% in 2019 to 26.41% in 2024, peaking at 25.86% in 2023. The adjusted net profit margin followed a similar growth trajectory until 2022, reaching 26.06%, but then declined to 23.91% by 2024. This divergence suggests that while the reported figures continued to improve, adjustments related to income tax may have impacted adjusted profitability in the latest years.

Total Asset Turnover

The reported total asset turnover ratio increased steadily from 0.77 in 2019 to 0.96 in 2022, indicating improved efficiency in asset utilization. However, it declined thereafter to 0.79 in 2024. Adjusted total asset turnover mirrored this pattern but consistently showed slightly higher values, peaking at 1.02 in 2022 before decreasing to 0.85 in 2024. This indicates that asset efficiency improved until 2022 but faced some decline in later years.

Financial Leverage

Reported financial leverage showed a decreasing trend from 2.32 in 2019 to 1.81 in 2024, demonstrating a reduction in reliance on debt or borrowed capital over time. Adjusted financial leverage also declined, from 2.67 in 2019 to 1.93 in 2024, maintaining a higher level than reported figures but following the same downward trajectory. This overall reduction in leverage might reflect a strategic shift toward a more conservative capital structure.

Return on Equity (ROE)

The reported ROE increased substantially from 32.94% in 2019 to a peak of 53.51% in 2022, then decreased to 37.77% by 2024. Adjusted ROE exhibited a similar but more pronounced increase, rising from 42.68% in 2019 to 61.94% in 2022, followed by a decline to 39.11% in 2024. The higher adjusted ROE figures suggest that when accounting for tax effects, the company achieved superior returns on equity, especially during the peak years.

Return on Assets (ROA)

Reported ROA climbed from 14.22% in 2019 to 24.41% in 2022, then declined to 20.86% in 2024. Adjusted ROA rose from 15.98% in 2019 to a high of 26.53% in 2022, before decreasing to 20.3% in 2024. These trends reflect improved asset profitability until 2022, with a moderate pullback thereafter, consistent with the observed patterns in asset turnover and net margins.

In summary, the data indicates a period of strengthening financial performance up to around 2022, marked by improved profitability, asset efficiency, and return measures, accompanied by declining leverage. Post-2022, there is a mild regression in some metrics, particularly in asset turnover and adjusted profitability, which merits further scrutiny to understand underlying causes. The differences between reported and adjusted data highlight the impact of income tax adjustments on the company’s financial results, with adjusted metrics generally higher but showing earlier signs of performance moderation.

Net Income Trends

The reported net income illustrates a steady growth trajectory over the six-year period. Beginning at 2,706 million USD in 2019, it rose consistently each year, reaching 7,177 million USD by 2024. This represents a notable increase of approximately 165% from the initial value. Adjusted net income follows a similar upward trend, increasing from 2,757 million USD in 2019 to 6,499 million USD in 2024. However, adjusted net income shows a slight decline in the most recent periods, peaking at 6,720 million USD in 2022 before diminishing marginally to 6,499 million USD in 2023 and maintaining the same level in 2024.

Profit Margin Analysis

The reported net profit margin demonstrates a positive trend, increasing from 18.52% in 2019 to 26.41% in 2024. This steady improvement indicates enhanced profitability relative to revenue over the years. Conversely, the adjusted net profit margin initially mirrors this upward movement, rising from 18.87% in 2019 to a peak of 26.06% in 2022. Following this peak, a decline is observed, with margins falling to 24.51% in 2023 and further to 23.91% in 2024. This reversal suggests that, post-adjustment, the company's profit efficiency has slightly decreased in the last two years.

Comparison Between Reported and Adjusted Figures

Both reported and adjusted net income and profit margins exhibit strong growth up to 2022. After that point, adjusted figures reflect a flattening or modest reduction, while reported figures continue to grow or improve, notably in 2023 and 2024. The divergence between reported and adjusted net profit margins in recent years implies that deferred income tax adjustments and other factors captured in the adjusted data may be impacting profitability metrics, highlighting differences in realized versus adjusted financial outcomes.

Overall Insights

The overall financial performance, as indicated by reported figures, shows robust growth and improving profitability from 2019 through 2024. The adjusted results, while generally supportive of these trends, reveal some moderation in profitability and net income growth during the last two reporting years. Monitoring the factors driving the adjusted results' deceleration will be important for assessing sustainable earnings quality and long-term profitability.

Total Assets

The reported total assets show a consistent upward trend, increasing from 19,024 million US dollars in 2019 to 34,409 million US dollars in 2024. This represents substantial asset growth of approximately 81% over the six-year period. The adjusted total assets likewise exhibit steady growth, rising from 17,258 million in 2019 to 32,016 million in 2024. The adjusted figures remain slightly lower than the reported figures but follow a very similar growth trajectory, indicating stability in asset base adjustments related to income tax considerations.

Total Asset Turnover - Reported

Reported total asset turnover was stable at 0.77 for 2019 and 2020, followed by an increase to a peak of 0.96 in 2022. After this peak, turnover decreased to 0.86 in 2023 and further declined slightly to 0.79 in 2024. This suggests that asset utilization efficiency improved notably through 2022 but then diminished in the subsequent two years, indicating either slower revenue growth relative to assets or expanded asset base not yet generating proportional revenue.

Total Asset Turnover - Adjusted

Adjusted total asset turnover mirrored the reported turnover trends but consistently exhibited higher ratios each year. Starting at 0.85 in 2019, it increased steadily to 1.02 in 2022, demonstrating very efficient use of assets at that peak. The ratio declined to 0.91 in 2023 and then to 0.85 in 2024, again indicating reduced turnover efficiency in the most recent years. The adjusted turnover ratios being higher than reported suggest that deferred tax adjustments positively impact the measure of asset productivity.

The financial data reveals consistent growth in total assets over the six-year period. Reported total assets increased steadily from 19,024 million US dollars in 2019 to 34,409 million US dollars in 2024. Similarly, adjusted total assets follow a comparable upward trajectory, rising from 17,258 million US dollars to 32,016 million US dollars within the same timeframe. This indicates robust expansion in the company’s asset base.

Stockholders’ equity also exhibits notable growth, both on a reported and adjusted basis. Reported stockholders’ equity rose from 8,214 million US dollars in 2019 to 19,001 million US dollars in 2024. Adjusted stockholders’ equity increased correspondingly from 6,459 million US dollars to 16,619 million US dollars. The rising equity figures suggest an improvement in the company’s net worth and a strengthened capital structure over time.

Regarding financial leverage, the reported ratio shows a declining trend, moving from 2.32 in 2019 down to 1.81 in 2024. The adjusted financial leverage ratio similarly decreases from 2.67 in 2019 to 1.93 in 2024. This diminution in leverage ratios implies a gradual reduction in the reliance on debt relative to equity, reflecting a possible strategic shift toward deleveraging or prudent financial management aimed at reducing financial risk.

Total Assets

Progressive increase each year with reported figures growing approximately 81% over six years and adjusted figures growing similarly.

Stockholders’ Equity

Consistent expansion with reported equity more than doubling and adjusted equity showing a similar doubling, indicating stronger capitalization.

Financial Leverage

Continuous sharp decline in ratios for both reported and adjusted values, denoting improved balance sheet strength and decreased risk exposure.

Overall, the trends suggest a company experiencing solid growth in asset size and equity base while simultaneously managing to lower its financial leverage. This pattern is indicative of enhanced financial stability and potential resilience to economic fluctuations.

The analysis of the financial data over the six-year period reveals several key trends and insights related to net income, stockholders’ equity, and return on equity (ROE), both reported and adjusted for deferred income tax impacts.

Net Income Trends

Reported net income shows a consistent upward trajectory from 2019 through 2024, increasing from $2,706 million to $7,177 million. This reflects strong profitability growth over the period.

Adjusted net income follows a similar pattern, rising from $2,757 million in 2019 to a peak of $6,720 million in 2022 before slightly declining to approximately $6,499 million in 2023 and remaining stable into 2024. The adjustment for deferred income taxes appears to slightly moderate the income growth in the later years compared to reported figures.

Stockholders’ Equity Patterns

Reported stockholders’ equity increases steadily from $8,214 million in 2019 to $19,001 million in 2024, with a notable acceleration in growth beginning in 2022. This indicates a strengthening capital base and increased net assets available to shareholders.

Adjusted stockholders’ equity mirrors the reported figures in trend but at consistently lower values, moving from $6,459 million in 2019 to $16,619 million in 2024. The gap between reported and adjusted equity widens over time, suggesting that deferred income tax adjustments have an increasing impact on the equity measurement.

Return on Equity (ROE) Observations

Reported ROE shows a peak in 2022 at 53.51% after rising from 32.94% in 2019, before declining to 37.77% in 2024. This pattern suggests that while the company improved its profitability relative to shareholder equity through 2022, the efficiency in generating returns diminished somewhat in subsequent years.

Adjusted ROE follows a similar pattern but with higher levels relative to reported ROE, peaking at 61.94% in 2022 and then declining to 39.11% in 2024. This highlights the impact of deferred tax adjustments enhancing the perception of equity efficiency, especially in peak years.

Overall, the data points to strong earnings growth and equity expansion over the reviewed period, accompanied by peak efficiency in equity utilization around 2022. The adjustment for deferred income taxes consistently lowers equity values and moderates net income growth after 2022, slightly elevating calculated ROE levels compared to reported figures. These patterns suggest that tax-related accounting adjustments play a significant role in the interpretation of the company’s financial performance and capital structure over time.

The analysis of the income and asset data over the six-year period shows a consistent growth trend with some variations in recent years. Reported net income exhibits steady growth from 2,706 million US dollars in 2019 to 7,177 million US dollars in 2024. Adjusted net income, which factors in deferred income tax and other adjustments, follows a similar upward trajectory, increasing from 2,757 million US dollars in 2019 to 6,499 million US dollars in 2024. Notably, adjusted net income reaches its peak in 2022 at 6,720 million US dollars before declining slightly in 2023 and stabilizing in 2024.

Total assets, both reported and adjusted, demonstrate expansion throughout the period. Reported total assets increase from 19,024 million US dollars in 2019 to 34,409 million US dollars in 2024, while adjusted total assets grow from 17,258 million US dollars to 32,016 million US dollars over the same timeframe. The growth in adjusted total assets is relatively steady, mirroring the growth in reported assets with a slight lag in magnitude.

Return on assets (ROA) provides insight into asset profitability and efficiency. Reported ROA rises from 14.22% in 2019 to a peak of 24.41% in 2022, then declines to 20.86% in 2024. Adjusted ROA reflects a similar pattern but at generally higher levels, beginning at 15.98% in 2019, peaking at 26.53% in 2022, and decreasing to 20.3% in 2024. This pattern suggests improved asset utilization up to 2022 followed by a reduction in efficiency in subsequent years.

Income Trends

Both reported and adjusted net income consistently increase, indicating strong earnings growth. However, adjusted net income peaks in 2022 before a modest decline, which could reflect the impact of tax adjustments or other non-operating factors.

Asset Growth

Total assets expand steadily in both reported and adjusted terms, signaling ongoing investment or acquisition activity. The adjusted asset figures remain consistently below reported figures, reflecting accounting adjustments related to deferred taxes or asset valuation.

Profitability and Efficiency

ROA trends suggest that profitability relative to asset base improved significantly until 2022 but experienced a downward trend afterward. Adjusted ROA being higher than reported ROA implies that adjustments enhance the perceived efficiency or profitability of asset use.

Overall Insights

The data reflects strong financial growth and asset expansion over the medium term, with peak profitability indicators occurring around 2022. Post-2022, a mild decline in profitability ratios despite continued asset growth may warrant further investigation into operational efficiency or market conditions affecting income generation.