Fiscal Q4 2021 Highlights – Revenue of $3.01 billion – GAAP
operating margin of 16.8%; non-GAAP operating margin of 18.1% –
GAAP diluted earnings per share (EPS) of $2.07; non-GAAP diluted
EPS of $2.00 – Cash flow from operations of $478 million and free
cash flow of $354 million – Revenue from mass capacity storage
markets increased 29% year-over-year and represented 69% of FQ4 HDD
revenue
Fiscal Year 2021 Highlights – Revenue of $10.68 billion – GAAP
operating margin of 14.0%; non-GAAP operating margin of 15.4% –
GAAP diluted EPS of $5.36; non-GAAP diluted EPS of $5.64 – Cash
flow from operations of $1.6 billion and free cash flow of $1.1
billion – Returned $2.7 billion to shareholders through dividends
and share repurchases – Revenue from mass capacity storage markets
increased 15% year-over-year and represented 65% of annual HDD
revenue
Seagate Technology Holdings plc (NASDAQ: STX) (the “Company” or
“Seagate”) today reported financial results for its fourth quarter
and fiscal year ended July 2, 2021.
“Seagate delivered very strong June quarter results achieving
the highest revenue in the last 6 years and the highest non-GAAP
EPS in 9 years, which capped a fiscal 2021 in which we outperformed
our expectations,” said Dave Mosley, Seagate’s chief executive
officer.
“Demand for data is rapidly accelerating in the cloud and at the
edge, driving secular growth for mass capacity data storage.
Seagate’s industry-leading product portfolio for mass data
infrastructure places the company in an outstanding position to
capitalize on robust demand trends, generate solid and increasing
free cash flow and achieve our long-term financial objectives.”
Quarterly Financial Results
GAAP
Non-GAAP
FQ4 2021
FQ4 2020
FQ4 2021
FQ4 2020
Revenue ($M)
$
3,013
$
2,517
$
3,013
$
2,517
Gross Margin
29.4
%
26.5
%
29.6
%
27.3
%
Operating Margin
16.8
%
10.6
%
18.1
%
14.8
%
Net Income ($M)
$
482
$
166
$
466
$
311
Diluted Earnings Per Share
$
2.07
$
0.64
$
2.00
$
1.20
Annual Financial Results
GAAP
Non-GAAP
FY 2021
FY 2020
FY 2021
FY 2020
Revenue ($M)
$
10,681
$
10,509
10,681
$
10,509
Gross Margin
27.3
%
27.0
%
27.7
%
27.7
%
Operating Margin
14.0
%
12.4
%
15.4
%
14.7
%
Net Income ($M)
$
1,314
$
1,004
$
1,381
$
1,311
Diluted Earnings Per Share
$
5.36
$
3.79
$
5.64
$
4.95
The Company generated $478 million in cash flow from operations
and $354 million in free cash flow during the fiscal fourth quarter
2021. For fiscal year 2021, the Company generated $1.6 billion in
cash flow from operations and $1.1 billion in free cash flow.
Seagate maintained a healthy balance sheet and during the fiscal
fourth quarter, the Company paid cash dividends of $154 million and
repurchased 2.6 million ordinary shares for $228 million. For the
full year, the Company paid cash dividends of $649 million and used
$2.0 billion to repurchase 33.6 million ordinary shares, or 13% of
the outstanding shares. Additionally, the Company raised $1.0
billion of debt and ended the fiscal year with cash and cash
equivalents of $1.2 billion. There were 227 million ordinary shares
issued and outstanding as of the end of the fiscal year.
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 $0.67 per share, which will be payable
on October 6, 2021 to shareholders of record as of the close of
business on September 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 first 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
first quarter 2022:
- Revenue of $3.1 billion, plus or minus $150 million
- Non-GAAP diluted EPS of $2.20, 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 $0.15 per
share.
We have not reconciled our non-GAAP diluted EPS guidance for
fiscal first 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, strategic investment 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
first 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 first 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
October 1, 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. Information concerning risks, uncertainties and other
factors that could cause results to differ materially from the
expectations described in this press release include, among others,
those risks and uncertainties included 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 3, 2020 filed with the U.S.
Securities and Exchange Commission (“SEC”) on August 7, 2020, and
in our Quarterly Reports on Form 10-Q filed with the SEC on October
29, 2020, January 28, 2021 and April 29, 2021. Additional
information will also be set forth in the Company's Annual Report
on Form 10-K for the year ended July 2, 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)
July 2, 2021
July 3, 2020
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
1,209
$
1,722
Accounts receivable, net
1,158
1,115
Inventories
1,204
1,142
Other current assets
208
135
Total current assets
3,779
4,114
Property, equipment and leasehold
improvements, net
2,181
2,129
Goodwill
1,237
1,237
Other intangible assets, net
29
58
Deferred income taxes
1,117
1,120
Other assets, net
332
272
Total Assets
$
8,675
$
8,930
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
1,725
$
1,808
Accrued employee compensation
282
224
Accrued warranty
61
69
Current portion of long-term debt
245
19
Accrued expenses
608
602
Total current liabilities
2,921
2,722
Long-term accrued warranty
75
82
Other non-current liabilities
154
183
Long-term debt, less current portion
4,894
4,156
Total Liabilities
8,044
7,143
Total Equity
631
1,787
Total Liabilities and Equity
$
8,675
$
8,930
SEAGATE TECHNOLOGY HOLDINGS
PLC
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In millions, except per share
data)
For the Three Months
Ended
For the Fiscal Years
Ended
July 2, 2021
July 3, 2020
July 2, 2021
July 3, 2020
(unaudited)
(unaudited)
Revenue
$
3,013
$
2,517
$
10,681
$
10,509
Cost of revenue
2,128
1,850
7,764
7,667
Product development
232
222
903
973
Marketing and administrative
136
112
502
473
Amortization of intangibles
3
3
12
14
Restructuring and other, net
7
63
8
82
Total operating expenses
2,506
2,250
9,189
9,209
Income from operations
507
267
1,492
1,300
Interest income
—
1
2
20
Interest expense
(59
)
(49
)
(220
)
(201
)
Other, net
49
(59
)
74
(87
)
Other expense, net
(10
)
(107
)
(144
)
(268
)
Income before income taxes
497
160
1,348
1,032
Provision (benefit) for income taxes
15
(6
)
34
28
Net income
$
482
$
166
$
1,314
$
1,004
Net income per share:
Basic
$
2.11
$
0.65
$
5.43
$
3.83
Diluted
$
2.07
$
0.64
$
5.36
$
3.79
Number of shares used in per share
calculations:
Basic
228
257
242
262
Diluted
233
260
245
265
Cash dividends declared per ordinary
share
$
0.67
$
0.65
$
2.64
$
2.58
SEAGATE TECHNOLOGY HOLDINGS
PLC
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In millions)
For the Fiscal Years
Ended
July 2, 2021
July 3, 2020
(unaudited)
OPERATING ACTIVITIES
Net income
$
1,314
$
1,004
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
397
379
Share-based compensation
112
109
Loss on redemption and repurchase of
debt
1
58
Deferred income taxes
(4
)
(6
)
Other non-cash operating activities,
net
(50
)
52
Changes in operating assets and
liabilities:
Accounts receivable, net
(42
)
(127
)
Inventories
(64
)
(166
)
Accounts payable
(14
)
394
Accrued employee compensation
58
55
Accrued expenses, income taxes and
warranty
(38
)
(39
)
Other assets and liabilities
(44
)
1
Net cash provided by operating
activities
1,626
1,714
INVESTING ACTIVITIES
Acquisition of property, equipment and
leasehold improvements
(498
)
(585
)
Proceeds from sale of investments
29
7
Proceeds from the sale of assets
4
1
Purchases of investments
(4
)
(58
)
Maturities of short-term investments
3
—
Net cash used in investing activities
(466
)
(635
)
FINANCING ACTIVITIES
Redemption and repurchase of debt
(33
)
(1,137
)
Dividends to shareholders
(649
)
(673
)
Repurchases of ordinary shares
(2,047
)
(850
)
Taxes paid related to net share settlement
of equity awards
(33
)
(40
)
Proceeds from issuance of long-term
debt
1,000
994
Proceeds from issuance of ordinary shares
under employee stock plans
108
103
Other financing activities, net
(19
)
(2
)
Net cash used in financing activities
(1,673
)
(1,605
)
Effect of foreign currency exchange rate
changes on cash, cash equivalents and restricted cash
—
(1
)
Decrease in cash, cash equivalents and
restricted cash
(513
)
(527
)
Cash, cash equivalents and restricted cash
at the beginning of the year
1,724
2,251
Cash, cash equivalents and restricted cash
at the end of the year
$
1,211
$
1,724
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, gross margin and operating margin)
(Unaudited)
For the Three Months
Ended
For the Twelve Months
Ended
July 2, 2021
July 3, 2020
July 2, 2021
July 3, 2020
GAAP Gross Profit
885
$
667
$
2,917
$
2,842
Accelerated depreciation, impairment and
other charges related to cost saving efforts
—
3
2
3
Amortization of acquired intangible
assets
1
9
12
38
Share-based compensation
6
7
28
27
Non-GAAP Gross Profit
$
892
$
686
$
2,959
$
2,910
GAAP Gross Margin
29.4
%
26.5
%
27.3
%
27.0
%
Non-GAAP Gross Margin
29.6
%
27.3
%
27.7
%
27.7
%
GAAP Operating Expenses
$
378
$
400
$
1,425
$
1,542
Amortization of acquired intangible
assets
(3
)
(2
)
(12
)
(11
)
Restructuring and other, net
(7
)
(63
)
(8
)
(82
)
Share-based compensation
(19
)
(22
)
(84
)
(82
)
Other charges
(3
)
—
(7
)
(5
)
Non-GAAP Operating Expenses
$
346
$
313
$
1,314
$
1,362
GAAP Income From Operations
$
507
$
267
$
1,492
$
1,300
Accelerated depreciation, impairment and
other charges related to cost saving efforts
—
3
2
3
Amortization of acquired intangible
assets
4
11
24
49
Restructuring and other, net
7
63
8
82
Share-based compensation
25
29
112
109
Other charges
3
—
7
5
Non-GAAP Income From Operations
$
546
$
373
$
1,645
$
1,548
GAAP Operating Margin
16.8
%
10.6
%
14.0
%
12.4
%
Non-GAAP Operating Margin
18.1
%
14.8
%
15.4
%
14.7
%
GAAP Net Income
$
482
$
166
$
1,314
$
1,004
Accelerated depreciation, impairment and
other charges related to cost saving efforts
—
3
2
3
Amortization of acquired intangible
assets
4
11
24
49
Restructuring and other, net
7
63
8
82
Losses and costs recognized on the
modification or early redemption and repurchase of debt
—
32
2
62
Strategic investment (gains) losses or
impairment recognized
(50
)
19
(87
)
20
Share-based compensation
25
29
112
109
Other charges
3
1
21
5
Income tax adjustments
(5
)
(13
)
(15
)
(23
)
Non-GAAP Net Income
$
466
$
311
$
1,381
$
1,311
Shares used in diluted net income per
share calculation
233
260
245
265
GAAP Diluted Net Income Per
Share
$
2.07
$
0.64
$
5.36
$
3.79
Non-GAAP Diluted Net Income Per
Share
$
2.00
$
1.20
$
5.64
$
4.95
GAAP Net Cash Provided by Operating
Activities
$
478
$
388
$
1,626
$
1,714
Acquisition of property, equipment and
leasehold improvements
124
114
498
585
Free Cash Flow
$
354
$
274
$
1,128
$
1,129
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) losses 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/20210721005186/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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