Seagate Technology plc (NASDAQ:STX) (the “Company” or “Seagate”)
today reported financial results for the quarter ended September
29, 2017. For the first quarter, the Company reported revenue of
$2.6 billion, gross margin of 28.0%, net income of $181 million and
diluted earnings per share of $0.62. On a non-GAAP basis, which
excludes the net impact of certain items, Seagate reported gross
margin of 29.0%, net income of $279 million and diluted earnings
per share of $0.96.
During the first quarter, the Company generated $237 million in
cash flow from operations and returned approximately $350 million
to shareholders in the form of dividends and share repurchases.
Cash and cash equivalents totaled approximately $2.3 billion at the
end of the quarter. There were 289 million ordinary shares issued
and outstanding as of the end of the quarter.
“The results of our performance this quarter reflect solid
execution and market demand for our storage product portfolio,”
said Dave Mosley, Seagate’s chief executive officer. “Seagate
delivered record levels of exabyte shipments and generated
sequential growth in revenue and profit. As the demand for storage
continues to benefit from the proliferation of data, Seagate is in
a strong position to grow its businesses, improve profitability and
continue with its shareholder-return objectives.”
For a detailed reconciliation of GAAP to non-GAAP results, see
accompanying financial tables.
Seagate has issued a Supplemental Financial Information
document, which is available on Seagate’s Investors Relations
website at www.seagate.com/investors.
Quarterly Cash Dividend
The Board of Directors of the Company (the “Board”) has approved
a quarterly cash dividend of $0.63 per share, which will be payable
on January 3, 2018 to shareholders of record as of the close of
business on December 20, 2017. The payment of any future quarterly
dividends will be at the discretion of the Board and will be
dependent upon Seagate’s financial position, results of operations,
available cash, cash flow, capital requirements and other factors
deemed relevant by the Board.
Investor Communications
Seagate management will hold a public webcast today at 6:00 a.m.
Pacific Time that can be accessed on its Investor Relations website
at www.seagate.com/investors. During today’s webcast, the Company
will provide an outlook for its second fiscal quarter of 2018,
including key underlying assumptions.
An archived audio webcast of this event will be available on
Seagate’s Investors Relations website at www.seagate.com/investors
shortly following the event conclusion.
About Seagate
To learn more about the Company’s products and services, visit
www.seagate.com and follow us on Twitter, Facebook, LinkedIn,
Spiceworks, YouTube and subscribe to our blog. The contents of our
website and social media channels are not a part of this
release.
Cautionary Note Regarding
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, each as
amended, including, in particular, statements about the Company’s
plans, strategies and prospects, financial projections, estimates
of industry growth, market demand, shifts in technology and
dividend issuance plans for the fiscal quarter ending December 29,
2017 and beyond. These statements identify prospective
information and may include words such as “expects,” “intends,”
“plans,” “anticipates,” “believes,” “estimates,” “predicts,”
“projects,” “should,” “may,” “will,” or the negative of these
words, variations of these words and comparable terminology. These
forward-looking statements are based on information available to
the Company as of the date of this report and are based on
management’s current views and assumptions. These forward-looking
statements are conditioned upon and also involve a number of known
and unknown risks, uncertainties, and other factors that could
cause actual results, performance or events to differ materially
from those anticipated by these forward-looking statements. Such
risks, uncertainties, and other factors may be beyond the Company’s
control and may pose a risk to the Company’s operating and
financial condition. Such risks and uncertainties include, but are
not limited to: items that may be identified during its financial
statement closing process that cause adjustments to the estimates
included in this report; the uncertainty in global economic
conditions; the impact of the variable demand and adverse pricing
environment for disk drives; the Company’s ability to successfully
qualify, manufacture and sell its disk drive products in increasing
volumes on a cost-effective basis and with acceptable quality; the
impact of competitive product announcements; the Company’s ability
to achieve projected cost savings in connection with restructuring
plans; possible excess industry supply with respect to particular
disk drive products; disruptions to its supply chain or production
capabilities; unexpected advances in competing technologies or
changes in market trends; the development and introduction of
products based on new technologies and expansion into new data
storage markets; the Company’s ability to comply with certain
covenants in its credit facilities with respect to financial ratios
and financial condition tests; currency fluctuations that may
impact the Company’s margins and international sales; cyber-attacks
or other data breaches that disrupt the Company’s operations or
result in the dissemination of proprietary or confidential
information and cause reputational harm; and fluctuations in
interest rates. Information concerning risks, uncertainties and
other factors that could cause results to differ materially from
the expectations described in this press release is contained in
the Company’s Annual Report on Form 10-K filed with the U.S.
Securities and Exchange Commission on August 4, 2017, the
“Risk Factors” section of which is incorporated into this press
release by reference, and other documents filed with or furnished
to the Securities and Exchange Commission. These forward-looking
statements should not be relied upon as representing the Company’s
views as of any subsequent date and the Company undertakes no
obligation to update forward-looking statements to reflect events
or circumstances after the date they were made.
The inclusion of Seagate’s website address in this press release
is intended to be an inactive textual reference only and not an
active hyperlink. The information contained in, or that can be
accessed through, Seagate’s website and social media channels are
not part of this press release.
SEAGATE TECHNOLOGY PLCCONDENSED
CONSOLIDATED BALANCE SHEETS(In
millions)(Unaudited)
September 29, 2017
June 30,2017 (a)
ASSETS Current assets: Cash and cash equivalents $ 2,285 $
2,539 Accounts receivable, net 1,209 1,199 Inventories 1,014 982
Other current assets 316 321 Total current assets 4,824
5,041 Property, equipment and leasehold improvements, net 1,817
1,875 Goodwill 1,237 1,238 Other intangible assets, net 255 281
Deferred income taxes 609 609 Other assets, net 214 224
Total Assets $ 8,956 $ 9,268
LIABILITIES AND EQUITY
Current liabilities: Accounts payable $ 1,539 $ 1,626 Accrued
employee compensation 150 237 Accrued warranty 111 113 Accrued
expenses 658 650 Total current liabilities 2,458 2,626
Long-term accrued warranty 119 120 Long-term accrued income taxes
15 15 Other non-current liabilities 120 122 Long-term debt 5,002
5,021 Total Liabilities 7,714 7,904 Equity: Total Equity
1,242 1,364 Total Liabilities and Equity $ 8,956 $
9,268
(a) The information in this column was derived from the
Company’s audited Consolidated Balance Sheet as of June 30,
2017.
SEAGATE TECHNOLOGY PLCCONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(In millions, except
per share data)(Unaudited)
For the Three Months Ended
September 29, 2017
September 30, 2016
Revenue $ 2,632 $ 2,797 Cost of revenue 1,896 1,996 Product
development 263 315 Marketing and administrative 145 155
Amortization of intangibles 22 28 Restructuring and other, net 51
82 Total operating expenses 2,377 2,576
Income from operations 255 221 Interest income 7 1
Interest expense (61 ) (50 ) Other, net (13 ) 1 Other
expense, net (67 ) (48 ) Income before income taxes 188 173
Provision for income taxes 7 6 Net income $ 181
$ 167 Net income per share: Basic $ 0.62 $
0.56 Diluted 0.62 0.55 Number of shares used in per share
calculations: Basic 290 299 Diluted 292 301 Cash dividends
declared per ordinary share $ 0.63 $ 0.63
SEAGATE TECHNOLOGY PLCCONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(In
millions)(Unaudited)
For the Three Months Ended
September 29, 2017
September 30, 2016
OPERATING ACTIVITIES Net income $ 181 $ 167 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization 161 200 Share-based compensation 32
40 Deferred income taxes (3 ) 1 Other non-cash operating
activities, net 1 (7 ) Changes in operating assets and liabilities:
Accounts receivable, net (10 ) 12 Inventories (32 ) (46 ) Accounts
payable (30 ) 101 Accrued employee compensation (87 ) 32 Accrued
expenses, income taxes and warranty 16 89 Other assets and
liabilities 8 2 Net cash provided by operating
activities 237 591
INVESTING ACTIVITIES
Acquisition of property, equipment and leasehold improvements (124
) (140 ) Maturities of short-term investments — 1 Other investing
activities, net (8 ) — Net cash used in investing activities
(132 ) (139 )
FINANCING ACTIVITIES Redemption and repurchase
of debt (22 ) — Taxes paid related to net share settlement of
equity awards (20 ) (23 ) Repurchases of ordinary shares (166 )
(101 ) Dividends to shareholders (184 ) — Proceeds from issuance of
ordinary shares under employee stock plans 29 35 Net
cash used in financing activities (363 ) (89 ) Effect of foreign
currency exchange rate changes on cash, cash equivalents, and
restricted cash 4 — (Decrease) increase in cash, cash
equivalents, and restricted cash (254 ) 363 Cash, cash equivalents,
and restricted cash at the beginning of the period 2,543
1,132 Cash, cash equivalents, and restricted cash at the end
of the period $ 2,289 $ 1,495
Use of non-GAAP financial information
The Company uses non-GAAP measures of adjusted revenue, gross
margin, net income, diluted earnings per share and operating
expenses which are adjusted from results based on GAAP to exclude
certain expenses, gains and losses. These non-GAAP financial
measures may be provided to enhance the user’s overall
understanding of the Company’s current financial performance and
its prospects for the future. Specifically, the Company believes
non-GAAP results provide useful information to both management and
investors as these non-GAAP results exclude certain expenses, gains
and losses that it believes are not indicative of its core
operating results and because it is similar to the approach used in
connection with the financial models and estimates published by
financial analysts who follow the Company.
These non-GAAP results are some of the primary measurements
management uses to assess the Company’s performance, allocate
resources and plan for future periods. Reported non-GAAP results
should only be considered as supplemental to results prepared in
accordance with GAAP, and not considered as a substitute for, or
superior to, GAAP results. These non-GAAP measures may differ from
the non-GAAP measures reported by other companies in its
industry.
SEAGATE TECHNOLOGY
PLCADJUSTMENTS TO GAAP NET INCOME AND DILUTED NET INCOME PER
SHARE(In millions, except per share
amounts)(Unaudited)
For the Three MonthsEnded
September 29,2017
For the Three MonthsEnded
September 30, 2016
Reconciliation of GAAP Net Income: GAAP Net income $ 181 $ 167
Non-GAAP adjustments: Revenue — — Cost of revenue A 26 25 Product
development B 1 — Marketing and administrative C — (1 )
Amortization of intangibles D 21 27 Restructuring and other, net E
51 82 Other expense, net F (1 ) (1 ) Provision for income taxes G —
— Non-GAAP net income $ 279 $ 299
Reconciliation of GAAP Diluted Net Income Per Share: GAAP $
0.62 $ 0.55 Non-GAAP $ 0.96 $ 0.99 Shares used in diluted net
income per share calculation 292 301
A
For the three months ended September 29, 2017, Cost of
revenue has been adjusted on a non-GAAP basis to exclude
amortization of intangibles associated with acquisitions and write
off of certain inventory and other charges related to
restructuring. For the three months ended September 30, 2016, Cost
of revenue has been adjusted on a non-GAAP basis to exclude
amortization of intangibles associated with acquisitions and write
off of certain fixed assets.
B
For the three months ended September 29,
2017, Product development expenses have been adjusted on a non-GAAP
basis to exclude other charges related to restructuring.
C
For the three months ended September 30, 2016, Marketing and
administrative expenses have been adjusted on a non-GAAP basis
primarily to reflect the impact of our disposed data service
business.
D
For the three months ended September 29, 2017 and September 30,
2016, Amortization of intangibles primarily related to our
acquisitions has been excluded on a non-GAAP basis.
E
For the three months ended September 29, 2017 and September 30,
2016, Restructuring and other net, has been adjusted on a non-GAAP
basis primarily related to reductions in our workforce as a result
of our ongoing focus on cost efficiencies in all areas of our
business.
F
For the three months ended September 29, 2017 and September 30,
2016, Other expense, net has been adjusted on a non-GAAP basis to
exclude the impact of our disposed data service business.
G
For the three months ended September 29, 2017 and September 30,
2016, Provision for income taxes represents the tax effects of
non-GAAP adjustments determined using a hybrid with and without
method and effective tax rate for the applicable adjustment and
jurisdiction.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171023005270/en/
Media Contact:Seagate Technology plcHelen Farrier,
408-658-1616helen.farrier@seagate.com
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