- Revenue of $3.12 billion
- GAAP operating margin of 18.8%; non-GAAP operating margin of
20.1%
- GAAP diluted earnings per share (EPS) of $2.28; non-GAAP
diluted EPS of $2.35
- Raised the quarterly cash dividend for third consecutive year
to $0.70 per share
- Cash flow from operations of $496 million and free cash flow of
$379 million
Seagate Technology Holdings plc (NASDAQ: STX) (the “Company” or
“Seagate”) today reported financial results for its fiscal first
quarter ended October 1, 2021.
“Seagate had an exceptional start to the fiscal year with solid
revenue growth, significant profit expansion and higher free cash
flow generation in the September quarter. Mass capacity revenue
topped the $2 billion mark for the first time, led by ongoing
demand from cloud data center customers and strength in the video
and image applications markets. Our results demonstrate consistent
execution, a sustained healthy demand environment and positive
structural change in storage industry dynamics. Collectively these
factors led to achieving margin levels consistent with our
long-term targets and support our increased revenue growth outlook
for fiscal 2022,” said Dave Mosley, Seagate’s chief executive
officer.
“Long-term, secular demand for mass capacity storage underpins
our multi-year financial growth targets. Seagate’s innovative
technology roadmap and operational agility position the company
well to capture these growing opportunities and continue generating
robust free cash flow to deliver value for customers and
shareholders.”
Quarterly Financial Results
GAAP
Non-GAAP
FQ1 2022
FQ1 2021
FQ1 2022
FQ1 2021
Revenue ($M)
$
3,115
$
2,314
$
3,115
$
2,314
Gross Margin
30.7
%
25.8
%
31.0
%
26.5
%
Operating Margin
18.8
%
10.8
%
20.1
%
12.7
%
Net Income ($M)
$
526
$
223
$
544
$
242
Diluted Earnings Per Share
$
2.28
$
0.86
$
2.35
$
0.93
The Company generated $496 million in cash flow from operations
and $379 million in free cash flow during the fiscal first quarter
2022. Seagate maintained a healthy balance sheet, and during the
fiscal first quarter the Company paid cash dividends of $153
million and repurchased 4.9 million ordinary shares for $425
million. Cash and cash equivalents totaled $991 million. There were
225 million ordinary shares issued and outstanding as of the end of
the quarter.
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 Investor Relations
website at investors.seagate.com.
Quarterly Cash Dividend
The Board of Directors of the Company (the “Board”) declared a
quarterly cash dividend of $0.70 per share, which will be payable
on January 5, 2022 to shareholders of record as of the close of
business on December 22, 2021. 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.
Business Outlook
The business outlook for the fiscal second quarter 2022 is based
on our current assumptions and expectations; actual results may
differ materially, as a result of, among other things, the
important factors discussed in the Cautionary Note Regarding
Forward-Looking Statements section of this release.
The Company is providing the following guidance for its fiscal
second quarter 2022:
- Revenue of $3.1 billion, plus or minus $150 million
- Non-GAAP diluted EPS of $2.35, plus or minus $0.15
Guidance regarding non-GAAP diluted EPS excludes known charges
related to amortization of acquired intangible assets of $0.02 per
share and estimated share-based compensation expenses of $0.17 per
share.
We have not reconciled our non-GAAP diluted EPS guidance for
fiscal second quarter 2022 to the most directly comparable GAAP
measure because material items that may impact these measures are
out of our control and/or cannot be reasonably predicted,
including, but not limited to, accelerated depreciation, impairment
and other charges related to cost saving efforts, restructuring
charges, losses and costs recognized on the modification or early
redemption and repurchase of debt, strategic investment gains,
losses or impairment recognized, income tax adjustments on these
measures, and other charges or benefits that may arise. The amounts
of these measures are not currently available but may be material
to future results. A reconciliation of the non-GAAP diluted EPS
guidance for fiscal second quarter 2022 to the corresponding GAAP
measures is not available without unreasonable effort. A
reconciliation of our historical non-GAAP financial measures to
their nearest GAAP equivalent is contained in this release.
Investor Communications
Seagate management will hold a public webcast today at 6:00 a.m.
Pacific / 9:00 a.m. Eastern that can be accessed on its Investor
Relations website at investors.seagate.com.
An archived audio webcast of this event will be available on
Seagate’s Investor Relations website at investors.seagate.com
shortly following the event conclusion.
About Seagate
Seagate Technology crafts the datasphere, helping to maximize
humanity’s potential by innovating world-class,
precision-engineered data storage and management solutions with a
focus on sustainable partnerships. A global technology leader for
more than 40 years, the company has shipped over three billion
terabytes of data capacity. Learn more about Seagate by visiting
www.seagate.com or following us on Twitter, Facebook, LinkedIn,
YouTube, and subscribing to our blog.
© 2021 Seagate Technology LLC. All rights reserved. Seagate,
Seagate Technology, and the Spiral logo are registered trademarks
of Seagate Technology LLC in the United States and/or other
countries.
Cautionary Note Regarding
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements provide current expectations of
future events based on certain assumptions and include any
statement that does not directly relate to any historical fact.
Forward-looking statements include, among other things, statements
about the Company’s plans, strategies and prospects, financial
outlook for future periods, including the fiscal second quarter
2022, expectations regarding the Company’s products, our ability to
ramp production, storage industry trends and market demand, shifts
in technology, the Company’s ability to meet market and industry
expectations and the effects of these future trends, the possible
effects of the economic conditions worldwide resulting from the
COVID-19 pandemic, and expectations on the Company’s business as
well as dividend issuance plans for the fiscal quarter ending
December 31, 2021 and beyond. Forward-looking statements generally
can be identified by words such as “expects,” “intends,” “plans,”
“anticipates,” “believes,” “estimates,” “predicts,” “projects,”
“should,” “may,” “will,” "will continue," "can," "could" or the
negative of these words, variations of these words and comparable
terminology, in each case, intended to refer to future events or
circumstances. However, the absence of these words or similar
expressions does not mean that a statement is not forward-looking.
Forward-looking statements are subject to various uncertainties and
risks that could cause our actual results to differ materially from
historical experience and our present expectations or projections.
These risks and uncertainties include, but are not limited to,
those described under the captions “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” in the Company’s Annual Report on Form 10-K for the
year ended July 2, 2021 filed with the U.S. Securities and Exchange
Commission on August 6, 2021. Undue reliance should not be placed
on the forward-looking statements in this press release, which are
based on information available to us on, and which speak only as
of, the date hereof. The Company undertakes no obligation to update
forward-looking statements to reflect events or circumstances after
the date they were made, unless required by applicable law.
The inclusion of Seagate’s website addresses in this press
release are provided for convenience only. The information
contained in, or that can be accessed through, Seagate’s websites
and social media channels are not part of this press release.
SEAGATE TECHNOLOGY HOLDINGS
PLC
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In millions)
October 1, 2021
July 2, 2021
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
991
$
1,209
Accounts receivable, net
1,301
1,158
Inventories
1,188
1,204
Other current assets
188
208
Total current assets
3,668
3,779
Property, equipment and leasehold
improvements, net
2,213
2,181
Goodwill
1,237
1,237
Other intangible assets, net
24
29
Deferred income taxes
1,128
1,117
Other assets, net
343
332
Total Assets
$
8,613
$
8,675
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
1,766
$
1,725
Accrued employee compensation
190
282
Accrued warranty
62
61
Current portion of long-term debt
245
245
Accrued expenses
626
608
Total current liabilities
2,889
2,921
Long-term accrued warranty
78
75
Other non-current liabilities
154
154
Long-term debt, less current portion
4,891
4,894
Total Liabilities
8,012
8,044
Total Equity
601
631
Total Liabilities and Equity
$
8,613
$
8,675
SEAGATE TECHNOLOGY HOLDINGS
PLC
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In millions, except per share
data)
(Unaudited)
For the Three Months
Ended
October 1, 2021
October 2, 2020
Revenue
$
3,115
$
2,314
Cost of revenue
2,159
1,718
Product development
233
223
Marketing and administrative
133
118
Amortization of intangibles
3
3
Restructuring and other, net
1
1
Total operating expenses
2,529
2,063
Income from operations
586
251
Interest income
—
1
Interest expense
(59
)
(50
)
Other, net
6
19
Other expense, net
(53
)
(30
)
Income before income taxes
533
221
Provision (benefit) for income taxes
7
(2
)
Net income
$
526
$
223
Net income per share:
Basic
$
2.33
$
0.87
Diluted
2.28
0.86
Number of shares used in per share
calculations:
Basic
226
257
Diluted
231
259
Cash dividends declared per ordinary
share
$
0.67
$
0.65
SEAGATE TECHNOLOGY HOLDINGS
PLC
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
For the Three Months
Ended
October 1, 2021
October 2, 2020
OPERATING ACTIVITIES
Net income
$
526
$
223
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
104
99
Share-based compensation
34
28
Deferred income taxes
(4
)
(18
)
Other non-cash operating activities,
net
2
(8
)
Changes in operating assets and
liabilities:
Accounts receivable, net
(143
)
249
Inventories
16
(181
)
Accounts payable
28
(24
)
Accrued employee compensation
(92
)
(67
)
Accrued expenses, income taxes and
warranty
11
(21
)
Other assets and liabilities
14
17
Net cash provided by operating
activities
496
297
INVESTING ACTIVITIES
Acquisition of property, equipment and
leasehold improvements
(117
)
(111
)
Proceeds from sale of investments
15
11
Purchases of investments
(18
)
(4
)
Net cash used in investing activities
(120
)
(104
)
FINANCING ACTIVITIES
Redemption and repurchase of debt
(6
)
(13
)
Dividends to shareholders
(153
)
(167
)
Repurchases of ordinary shares
(425
)
(68
)
Taxes paid related to net share settlement
of equity awards
(43
)
(31
)
Proceeds from issuance of ordinary shares
under employee stock plans
33
29
Other financing activities, net
—
(1
)
Net cash used in financing activities
(594
)
(251
)
Decrease in cash, cash equivalents and
restricted cash
(218
)
(58
)
Cash, cash equivalents and restricted cash
at the beginning of the period
1,211
1,724
Cash, cash equivalents and restricted cash
at the end of the period
$
993
$
1,666
Use of non-GAAP financial information
The Company uses non-GAAP measures of gross profit, gross
margin, operating expenses, income from operations, operating
margin, net income, diluted EPS, and free cash flow, which are
adjusted from results based on GAAP to exclude certain benefits,
expenses, gains and losses. These non-GAAP financial measures are
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 benefits, 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 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 or replacement 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 HOLDINGS
PLC
RECONCILIATIONS OF GAAP TO
NON-GAAP MEASURES
(In millions, except per share
amounts and gross margin)
(Unaudited)
For the Three Months
Ended
October 1, 2021
October 2, 2020
GAAP Gross Profit
$
956
$
596
Accelerated depreciation, impairment and
other charges related to cost saving efforts
—
2
Amortization of acquired intangible
assets
1
9
Share-based compensation
9
7
Non-GAAP Gross Profit
$
966
$
614
GAAP Gross Margin
30.7
%
25.8
%
Non-GAAP Gross Margin
31.0
%
26.5
%
GAAP Operating Expenses
$
370
$
345
Amortization of acquired intangible
assets
(3
)
(3
)
Restructuring and other, net
(1
)
(1
)
Share-based compensation
(25
)
(21
)
Other charges
(2
)
—
Non-GAAP Operating Expenses
$
339
$
320
GAAP Income From Operations
$
586
$
251
Accelerated depreciation, impairment and
other charges related to cost saving efforts
—
2
Amortization of acquired intangible
assets
4
12
Restructuring and other, net
1
1
Share-based compensation
34
28
Other charges
2
—
Non-GAAP Income From Operations
$
627
$
294
GAAP Operating Margin
18.8
%
10.8
%
Non-GAAP Operating Margin
20.1
%
12.7
%
GAAP Net Income
$
526
$
223
Accelerated depreciation, impairment and
other charges related to cost saving efforts
—
2
Amortization of acquired intangible
assets
4
12
Restructuring and other, net
1
1
Losses and costs recognized on the
modification or early redemption and repurchase of debt
—
2
Strategic investment gains recognized
(9
)
(31
)
Share-based compensation
34
28
Other charges
2
14
Income tax adjustments
(14
)
(9
)
Non-GAAP Net Income
$
544
$
242
Shares used in diluted net income per
share calculation
231
259
GAAP Diluted Net Income Per
Share
$
2.28
$
0.86
Non-GAAP Diluted Net Income Per
Share
2.35
0.93
GAAP Net Cash Provided by Operating
Activities
$
496
$
297
Acquisition of property, equipment and
leasehold improvements
117
111
Free Cash Flow
$
379
$
186
The Company’s Non-GAAP measures are adjusted for the
following items:
Accelerated depreciation, impairment and other charges
related to cost saving efforts
These expenses are excluded in the non-GAAP measures due to the
inconsistency in amount and frequency and are excluded to
facilitate a more meaningful evaluation of the Company’s current
operating performance and comparison to its past periods’ operating
performance.
Amortization of acquired intangible assets
The Company records expense from amortization of intangible
assets that were acquired in connection with its business
combinations over their estimated useful lives. Such charges are
inconsistent in size and are significantly impacted by the timing
and magnitude of the Company’s acquisitions. Consequently, these
expenses are excluded in the non-GAAP measures to facilitate a more
meaningful evaluation of its current operating performance and
comparison to its past periods’ operating performance.
Share-based compensation
These expenses consist primarily of expenses for employee
share-based compensation. Given the variety of equity awards used
by companies, the varying methodologies for determining share-based
compensation expense, the subjective assumptions involved in those
determinations, and the volatility in valuations that can be driven
by market conditions outside the Company’s control, the Company
believes excluding share-based compensation expense enhances the
ability of management and investors to understand and assess the
underlying performance of its business over time and compare it
against the Company’s peers, a majority of whom also exclude
share-based compensation expense from their non-GAAP results.
Restructuring and other, net
Restructuring and other, net are costs associated with
restructuring plans that are primarily related to costs associated
with reduction in the Company’s workforce, exiting certain
facilities and other related costs. These also exclude charges or
gains from sale of properties. These costs or benefits do not
reflect the Company’s ongoing operating performance and
consequently are excluded from the non-GAAP measures to facilitate
a more meaningful evaluation of its current operating performance
and comparison to its past periods’ operating performance.
Losses and costs recognized on the modification or early
redemption and repurchase of debt
From time to time, the Company incurs losses and fees from the
early redemption and repurchase of certain long-term debt
instruments. The losses represent the difference between the
reacquisition costs and the par value of the debt extinguished.
Other fees include any new fees associated with a modification and
the write-off of any unamortized debt issuance costs associated
with an extinguishment of debt. The amount of these charges may be
inconsistent in size and varies depending on the timing of the
repurchase of debt and consequently is excluded from the non-GAAP
measures to facilitate a more meaningful evaluation of its current
operating performance and comparison to its past periods’ operating
performance.
Strategic investment gains recognized
From time to time, the Company incurs losses or gains from
strategic investments accounted for under the equity method of
accounting or records downward or upward adjustments to the
carrying value of strategic investments accounted for under the
measurement alternative if an impairment or observable price
adjustment is recognized in the current period that are not
considered as part of its ongoing operating performance. The
resulting expense or gain is inconsistent in amount and frequency
and consequently is excluded from the non-GAAP measures to
facilitate a more meaningful evaluation of its current operating
performance and comparison to its past periods’ operating
performance.
Other charges
The other charges primarily include write-offs related to an
internal reorganization and IT transformation costs. These charges
are inconsistent in amount and frequency and are excluded in the
non-GAAP measures to facilitate a more meaningful evaluation of its
current operating performance and comparison to its past periods’
operating performance.
Income tax adjustments
Provision or benefit 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.
Free cash flow
Free cash flow is a non-GAAP measure defined as net cash
provided by operating activities less acquisition of property,
equipment and leasehold improvements. Free cash flow does not
reflect non-cash items, net cash used or provided by financing
activities, and net cash used or provided by investing activities,
other than acquisition of property, equipment and leasehold
improvements. This non-GAAP financial measure is used by management
to assess the Company's sources of liquidity, capital structure and
operating performance.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211022005061/en/
Investor Relations Contact: Shanye Hudson, (510) 661-1600
shanye.hudson@seagate.com
Media Contact: Gregory Belloni, (415) 235-9092
gregory.belloni@seagate.com
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