Micron Technology, Inc. (Nasdaq: MU) today announced results for
its first quarter of fiscal 2020, which ended November 28,
2019.
Fiscal Q1 2020 highlights
- Revenues of $5.14 billion versus $4.87 billion for the prior
quarter and $7.91 billion for the same period last year
- GAAP net income of $491 million, or $0.43 per diluted
share
- Non-GAAP net income of $548 million, or $0.48 per diluted
share
- Operating cash flow of $2.01 billion versus $2.23 billion for
the prior quarter and $4.81 billion for the same period last
year
"Micron posted solid first quarter results, delivering good
profitability and positive free cash flow. With our strong
execution and improving industry conditions, we are optimistic that
Micron's fiscal second quarter will be the cyclical bottom for our
financial performance," said Micron Technology President and CEO
Sanjay Mehrotra. "Our significantly improved competitive position,
dramatically stronger product portfolio, structurally higher
profitability and investment-grade balance sheet position Micron
very well to drive long-term shareholder value."
Quarterly
Financial Results |
(in millions,
except per share amounts) |
GAAP (1) |
|
Non-GAAP (2) |
FQ1-20 |
FQ4-19 |
FQ1-19 |
|
FQ1-20 |
FQ4-19 |
FQ1-19 |
|
|
|
|
|
|
|
|
Revenue |
$ |
5,144 |
|
$ |
4,870 |
|
$ |
7,913 |
|
|
$ |
5,144 |
|
$ |
4,870 |
|
$ |
7,913 |
|
Gross margin |
1,366 |
|
1,395 |
|
4,615 |
|
|
1,405 |
|
1,491 |
|
4,670 |
|
percent of revenue |
26.6 |
% |
28.6 |
% |
58.3 |
% |
|
27.3 |
% |
30.6 |
% |
59.0 |
% |
Operating expenses |
848 |
|
745 |
|
856 |
|
|
811 |
|
797 |
|
783 |
|
Operating income |
518 |
|
650 |
|
3,759 |
|
|
594 |
|
694 |
|
3,88 |
|
percent of revenue |
10.1 |
% |
13.3 |
% |
47.5 |
% |
|
11.5 |
% |
14.3 |
% |
49.1 |
% |
Net income attributable to
Micron |
491 |
|
561 |
|
3,293 |
|
|
548 |
|
637 |
|
3,508 |
|
Diluted earnings per
share |
0.43 |
|
0.49 |
|
2.81 |
|
|
0.48 |
|
0.56 |
|
2.97 |
|
Investments in capital expenditures, net of amounts funded by
partners, were $1.93 billion for the first quarter of fiscal 2020,
which resulted in adjusted free cash flows(3) of $79 million.
Micron repurchased an aggregate of 1 million shares of its common
stock for $50 million during the first quarter of fiscal 2020 and
ended the quarter with cash, marketable investments, and restricted
cash of $8.31 billion, for a net cash(4) position of $2.66
billion.
Business Outlook
The following table presents Micron’s guidance for the second
quarter of fiscal 2020:
FQ2-20 |
GAAP (1) Outlook |
Non-GAAP (2) Outlook |
|
|
|
Revenue |
$4.5 billion - $4.8 billion |
$4.5 billion - $4.8 billion |
Gross margin |
26% ± 1.5% |
27% ± 1.5% |
Operating expenses |
$878 million ± $25 million |
$825 million ± $25 million |
Interest (income) expense,
net |
$5 million |
$0 million |
Diluted earnings per
share |
$0.25 ± $0.06 |
$0.35 ± $0.06 |
Further information regarding Micron’s business outlook is
included in the prepared remarks and slides, which have been posted
at investors.micron.com.
Investor Webcast
Micron will host a conference call on Wednesday,
December 18, 2019 at 2:30 p.m. MT to discuss its first fiscal
quarter financial results and provide forward-looking guidance for
its second fiscal quarter. A live webcast of the call will be
available online at investors.micron.com. A webcast replay will be
available for one year after the call. For Investor Relations and
other company updates, follow @MicronTech on Twitter at
twitter.com/MicronTech.
About Micron Technology, Inc.
We are an industry leader in innovative memory and storage
solutions. Through our global brands — Micron®, Crucial®, and
Ballistix® — our broad portfolio of high-performance memory
and storage technologies, including DRAM, NAND, 3D XPoint™ memory,
and NOR, is transforming how the world uses information to enrich
life. Backed by 40 years of technology leadership, our memory and
storage solutions enable disruptive trends, including artificial
intelligence, 5G, machine learning, and autonomous vehicles, in key
market segments like mobile, data center, client, consumer,
industrial, graphics, automotive, and networking. Our common stock
is traded on the Nasdaq under the MU symbol. To learn more about
Micron Technology, Inc., visit micron.com.
Micron and the Micron orbit logo are trademarks of Micron
Technology, Inc. All other trademarks are the property of their
respective owners.
Forward-Looking Statements
This press release contains forward-looking statements regarding
the industry, our strategic position, and financial and operating
results. These forward-looking statements are subject to a number
of risks and uncertainties that could cause actual results to
differ materially. Please refer to the documents we file with the
Securities and Exchange Commission, specifically our most recent
Form 10-K. These documents contain and identify important factors
that could cause our actual results to differ materially from those
contained in these forward-looking statements. These certain
factors can be found at www.micron.com/certainfactors. Although we
believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results,
levels of activity, performance, or achievements. We are under no
duty to update any of the forward-looking statements after the date
of this release to conform these statements to actual results.
(1) |
GAAP
represents U.S. Generally Accepted Accounting Principles. |
(2) |
Non-GAAP represents GAAP excluding the impact of certain
activities, which management excludes in analyzing our operating
results and understanding trends in our earnings. Non-GAAP shares
used in per share calculations also include the impact of our
outstanding capped call transactions and the effect of stock-based
compensation. |
(3) |
Adjusted free cash flow consists of cash provided by operating
activities less investments in capital expenditures, net of amounts
funded by partners. |
(4) |
Net cash consists of cash, marketable investments, and
restricted cash less current and long-term debt. |
Further information regarding Micron’s use of non-GAAP measures
and reconciliations between GAAP and non-GAAP measures are included
within this press release.
MICRON TECHNOLOGY,
INC.CONSOLIDATED STATEMENTS OF
OPERATIONS(In millions, except per share
amounts)(Unaudited)
|
1st Qtr. |
4th Qtr. |
1st Qtr. |
|
November 28, 2019 |
August 29, 2019 |
November 29, 2018 |
|
|
|
|
Revenue |
$ |
5,144 |
|
$ |
4,870 |
|
$ |
7,913 |
|
Cost of goods sold |
3,778 |
|
3,475 |
|
3,298 |
|
Gross margin |
1,366 |
|
1,395 |
|
4,615 |
|
|
|
|
|
Selling, general, and
administrative |
211 |
|
212 |
|
209 |
|
Research and development |
640 |
|
623 |
|
611 |
|
Other operating (income)
expense, net |
(3 |
) |
(90 |
) |
36 |
|
Operating income |
518 |
|
650 |
|
3,759 |
|
|
|
|
|
Interest income |
44 |
|
57 |
|
38 |
|
Interest expense |
(47 |
) |
(39 |
) |
(33 |
) |
Other non-operating income
(expense), net |
46 |
|
(13 |
) |
9 |
|
|
561 |
|
655 |
|
3,773 |
|
|
|
|
|
Income tax (provision)
benefit |
(55 |
) |
(71 |
) |
(477 |
) |
Equity in net income (loss) of
equity method investees |
2 |
|
2 |
|
— |
|
Net income |
508 |
|
586 |
|
3,296 |
|
|
|
|
|
Net income attributable to
noncontrolling interests |
(17 |
) |
(25 |
) |
(3 |
) |
Net income attributable to Micron |
$ |
491 |
|
$ |
561 |
|
$ |
3,293 |
|
|
|
|
|
Earnings per share |
|
|
|
Basic |
$ |
0.44 |
|
$ |
0.51 |
|
$ |
2.91 |
|
Diluted |
0.43 |
|
0.49 |
|
2.81 |
|
|
|
|
|
Number of shares used in per
share calculations |
|
|
|
Basic |
1,107 |
|
1,104 |
|
1,133 |
|
Diluted |
1,129 |
|
1,128 |
|
1,174 |
|
MICRON TECHNOLOGY,
INC.CONSOLIDATED BALANCE SHEETS(In
millions)(Unaudited)
As of |
November 28, 2019 |
August 29, 2019 |
|
|
|
Assets |
|
|
Cash and equivalents |
$ |
6,969 |
|
$ |
7,152 |
|
Short-term investments |
619 |
|
803 |
|
Receivables |
3,419 |
|
3,195 |
|
Inventories |
4,943 |
|
5,118 |
|
Other current assets |
217 |
|
235 |
|
Total current assets |
16,167 |
|
16,503 |
|
Long-term marketable
investments |
599 |
|
1,164 |
|
Property, plant, and
equipment |
29,352 |
|
28,240 |
|
Intangible assets |
333 |
|
340 |
|
Deferred tax assets |
783 |
|
837 |
|
Goodwill |
1,228 |
|
1,228 |
|
Operating lease right-of-use
assets |
608 |
|
— |
|
Other noncurrent assets |
579 |
|
575 |
|
Total assets |
$ |
49,649 |
|
$ |
48,887 |
|
|
|
|
Liabilities and
equity |
|
|
Accounts payable and accrued
expenses |
$ |
5,408 |
|
$ |
4,626 |
|
Current debt |
462 |
|
1,310 |
|
Other current liabilities |
447 |
|
454 |
|
Total current liabilities |
6,317 |
|
6,390 |
|
Long-term debt |
5,188 |
|
4,541 |
|
Noncurrent operating lease
liabilities |
511 |
|
— |
|
Noncurrent unearned government
incentives |
609 |
|
636 |
|
Other noncurrent
liabilities |
426 |
|
452 |
|
Total liabilities |
13,051 |
|
12,019 |
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
Redeemable noncontrolling
interest |
98 |
|
98 |
|
|
|
|
Micron shareholders’
equity |
|
|
Common stock |
119 |
|
118 |
|
Additional capital |
8,428 |
|
8,214 |
|
Retained earnings |
31,218 |
|
30,761 |
|
Treasury stock |
(3,271 |
) |
(3,221 |
) |
Accumulated other comprehensive income |
6 |
|
9 |
|
Total Micron shareholders’ equity |
36,500 |
|
35,881 |
|
Noncontrolling interest in
subsidiary |
— |
|
889 |
|
Total equity |
36,500 |
|
36,770 |
|
Total liabilities and equity |
$ |
49,649 |
|
$ |
48,887 |
|
MICRON TECHNOLOGY,
INC.CONSOLIDATED STATEMENTS OF CASH
FLOWS(In millions)(Unaudited)
Three months
ended |
November 28, 2019 |
November 29, 2018 |
|
|
|
Cash flows from
operating activities |
|
|
Net income |
$ |
508 |
|
$ |
3,296 |
|
Adjustments to reconcile net
income to net cash provided by operating activities |
|
|
Depreciation expense and amortization of intangible assets |
1,296 |
|
1,335 |
|
Amortization of debt discount and other costs |
10 |
|
18 |
|
Stock-based compensation |
72 |
|
61 |
|
Gain on debt prepayments, repurchases, and conversions |
(42 |
) |
(14 |
) |
Change in operating assets and liabilities |
|
|
Receivables |
(208 |
) |
189 |
|
Inventories |
175 |
|
(286 |
) |
Accounts payable and accrued expenses |
178 |
|
(46 |
) |
Deferred income taxes, net |
19 |
|
192 |
|
Other |
3 |
|
65 |
|
Net cash provided by operating activities |
2,011 |
|
4,810 |
|
|
|
|
Cash flows from
investing activities |
|
|
Expenditures for property,
plant, and equipment |
(1,943 |
) |
(2,700 |
) |
Purchases of
available-for-sale securities |
(407 |
) |
(2,047 |
) |
Proceeds from sales of
available-for-sale securities |
988 |
|
77 |
|
Proceeds from maturities of
available-for-sale securities |
163 |
|
60 |
|
Proceeds from government
incentives |
22 |
|
236 |
|
Other |
(12 |
) |
(53 |
) |
Net cash provided by (used for) investing activities |
(1,189 |
) |
(4,427 |
) |
|
|
|
Cash flows from
financing activities |
|
|
Repayments of debt |
(1,415 |
) |
(577 |
) |
Acquisition of noncontrolling
interest in IMFT |
(744 |
) |
— |
|
Payments to acquire treasury
stock |
(89 |
) |
(1,836 |
) |
Payments on equipment purchase
contracts |
(11 |
) |
(20 |
) |
Proceeds from issuance of
debt |
1,250 |
|
— |
|
Other |
17 |
|
(2 |
) |
Net cash provided by (used for) financing activities |
(992 |
) |
(2,435 |
) |
|
|
|
Effect of changes in currency
exchange rates on cash, cash equivalents, and restricted cash |
(14 |
) |
(10 |
) |
|
|
|
Net decrease in cash, cash
equivalents, and restricted cash |
(184 |
) |
(2,062 |
) |
Cash, cash equivalents, and
restricted cash at beginning of period |
7,279 |
|
6,587 |
|
Cash, cash equivalents, and
restricted cash at end of period |
$ |
7,095 |
|
$ |
4,525 |
|
MICRON TECHNOLOGY,
INC.NOTES (Unaudited)
Property, Plant, and Equipment
We periodically assess the estimated useful lives of our
property, plant, and equipment. Based on our assessment of planned
technology node transitions, capital spending, and re-use rates, we
revised the estimated useful lives of equipment in our NAND wafer
fabrication facilities and our research and development facilities
from five years to seven years as of the beginning in the first
quarter of fiscal 2020. As a result, we estimate the reduction in
non-cash depreciation expense benefited operating income and net
income by approximately $74 million and diluted earnings per
share by approximately $0.07 for the first quarter of fiscal
2020.
Acquisition of Intel's Interests in IMFT
On October 31, 2019, we purchased Intel’s noncontrolling
interests in IMFT and IMFT member debt for $1.25 billion. We
recognized a non-operating gain of $72 million for the
difference between the $505 million of cash consideration allocated
to the extinguishment of IMFT member debt and its $577 million
carrying value, and a $160 million adjustment to equity for
the difference between the $744 million of cash consideration
allocated to the purchase of Intel’s noncontrolling interest and
its $904 million carrying value.
Adoption of Lease Accounting Standard
In the first quarter of fiscal 2020, we adopted ASU 2016-02 –
Leases (as amended, “ASC 842”), which amends a number of aspects of
lease accounting, including requiring lessees to recognize
operating leases with a term greater than one year on their balance
sheet as a right-of-use asset and corresponding lease liability,
measured at the present value of lease payments. In adoption, we
applied the modified retrospective method and elected to not recast
prior periods. As a result, we recognized $567 million for
operating lease liabilities and right-of-use assets and
reclassified an additional $66 million of other balances to
right-of-use assets to conform to the new presentation requirements
of ASC 842.
Debt Activity
On November 18, 2019, we prepaid $519 million of our 2025 Notes
and recognized a loss of $18 million in other non-operating income
(expense), net. On October 30, 2019, we drew all of the $1.25
billion available under our term loan credit facility. Prior to our
acquisition of Intel's interests in IMFT, IMFT repaid Intel $116
million of IMFT member debt in the first quarter of fiscal
2020.
MICRON TECHNOLOGY,
INC.RECONCILIATION OF GAAP TO NON-GAAP
MEASURES(In millions, except per share amounts)
|
1st Qtr. |
4th Qtr. |
1st Qtr. |
|
November 28, 2019 |
August 29, 2019 |
November 29, 2018 |
|
|
|
|
GAAP gross margin |
$ |
1,366 |
|
$ |
1,395 |
|
$ |
4,615 |
|
Stock-based compensation |
31 |
|
29 |
|
26 |
|
Start-up and preproduction costs |
— |
|
12 |
|
8 |
|
Employee severance |
1 |
|
47 |
|
13 |
|
Other |
7 |
|
8 |
|
8 |
|
Non-GAAP gross
margin |
$ |
1,405 |
|
$ |
1,491 |
|
$ |
4,670 |
|
|
|
|
|
GAAP operating
expenses |
$ |
848 |
|
$ |
745 |
|
$ |
856 |
|
Stock-based compensation |
(41 |
) |
(38 |
) |
(35 |
) |
Employee severance |
— |
|
(32 |
) |
(7 |
) |
Restructure and asset impairments |
4 |
|
122 |
|
(30 |
) |
Other |
— |
|
— |
|
(1 |
) |
Non-GAAP operating
expenses |
$ |
811 |
|
$ |
797 |
|
$ |
783 |
|
|
|
|
|
GAAP operating
income |
$ |
518 |
|
$ |
650 |
|
$ |
3,759 |
|
Stock-based compensation |
72 |
|
67 |
|
61 |
|
Start-up and preproduction costs |
— |
|
12 |
|
8 |
|
Employee severance |
1 |
|
79 |
|
20 |
|
Restructure and asset impairments |
(4 |
) |
(122 |
) |
30 |
|
Other |
7 |
|
8 |
|
9 |
|
Non-GAAP operating
income |
$ |
594 |
|
$ |
694 |
|
$ |
3,887 |
|
|
|
|
|
GAAP net income
attributable to Micron |
$ |
491 |
|
$ |
561 |
|
$ |
3,293 |
|
Stock-based compensation |
72 |
|
67 |
|
61 |
|
Start-up and preproduction costs |
— |
|
12 |
|
8 |
|
Employee severance |
1 |
|
79 |
|
20 |
|
Restructure and asset impairments |
(4 |
) |
(122 |
) |
30 |
|
Amortization of debt discount and other costs |
10 |
|
10 |
|
18 |
|
(Gain) loss on debt repurchases and conversions |
(42 |
) |
10 |
|
(14 |
) |
Other |
7 |
|
13 |
|
15 |
|
Impact of U.S. income tax reform |
— |
|
— |
|
47 |
|
Estimated tax effects of above, non-cash changes in net deferred
income taxes, and assessments of tax exposures |
13 |
|
7 |
|
30 |
|
Non-GAAP net income
attributable to Micron |
$ |
548 |
|
$ |
637 |
|
$ |
3,508 |
|
|
|
|
|
GAAP weighted-average
common shares outstanding - Diluted |
1,129 |
|
1,128 |
|
1,174 |
|
Adjustment for capped calls and stock-based compensation |
9 |
|
6 |
|
5 |
|
Non-GAAP
weighted-average common shares outstanding - Diluted |
1,138 |
|
1,134 |
|
1,179 |
|
|
|
|
|
GAAP diluted earnings
per share |
$ |
0.43 |
|
$ |
0.49 |
|
$ |
2.81 |
|
Effects of the above adjustments |
0.05 |
|
0.07 |
|
0.16 |
|
Non-GAAP diluted
earnings per share |
$ |
0.48 |
|
$ |
0.56 |
|
$ |
2.97 |
|
RECONCILIATION OF GAAP TO NON-GAAP MEASURES,
Continued
|
1st Qtr. |
4th Qtr. |
1st Qtr. |
|
November 28, 2019 |
August 29, 2019 |
November 29, 2018 |
|
|
|
|
GAAP net cash provided by operating
activities |
$ |
2,011 |
|
$ |
2,233 |
|
$ |
4,810 |
|
Expenditures for property, plant, and equipment |
(1,943 |
) |
(2,028 |
) |
(2,700 |
) |
Payments on equipment purchase contracts |
(11 |
) |
(21 |
) |
(20 |
) |
Amounts funded by partners |
22 |
|
79 |
|
236 |
|
Adjusted free cash
flow |
$ |
79 |
|
$ |
263 |
|
$ |
2,326 |
|
As of |
November 28, 2019 |
August 29, 2019 |
|
|
|
Cash and short-term investments |
$ |
7,588 |
|
$ |
7,955 |
|
Current and noncurrent restricted cash |
126 |
|
127 |
|
Long-term marketable investments |
599 |
|
1,164 |
|
Current and long-term debt |
(5,650 |
) |
(5,851 |
) |
Net cash |
$ |
2,663 |
|
$ |
3,395 |
|
The tables above reconcile GAAP to non-GAAP measures of gross
margin, operating income, net income attributable to Micron,
diluted shares, diluted earnings per share, adjusted free cash
flow, and net cash. The non-GAAP adjustments above may or may not
be infrequent or nonrecurring in nature, but are a result of
periodic or non-core operating activities. We believe this non-GAAP
information is helpful in understanding trends and in analyzing our
operating results and earnings. We are providing this information
to investors to assist in performing analysis of our operating
results. When evaluating performance and making decisions on how to
allocate our resources, management uses this non-GAAP information
and believes investors should have access to similar data when
making their investment decisions. We believe these non-GAAP
financial measures increase transparency by providing investors
with useful supplemental information about the financial
performance of our business, enabling enhanced comparison of our
operating results between periods and with peer companies. The
presentation of these adjusted amounts varies from numbers
presented in accordance with U.S. GAAP and therefore may not be
comparable to amounts reported by other companies. Our management
excludes the following items in analyzing our operating results and
understanding trends in our earnings:
- Stock-based compensation;
- Flow-through of business acquisition-related inventory
adjustments;
- Acquisition-related costs;
- Start-up and preproduction costs;
- Employee severance;
- Restructure and asset impairments;
- Amortization of debt discount and other costs, including the
accretion of non-cash interest expense associated with our
convertible debt and MMJ creditor debt;
- Gains and losses from debt repurchases and conversions;
- Gains and losses from business acquisition activities;
- Impact of U.S. income tax reform for the one-time transition
tax, release of U.S. valuation allowance, and remeasurement of net
deferred taxes reflecting lower U.S. corporate tax rates; and
- The estimated tax effects of above, non-cash changes in net
deferred income taxes, and assessments of tax exposures.
Our outstanding capped call transactions are anti-dilutive in
GAAP earnings per share but are expected to mitigate the dilutive
effect of our convertible notes. In periods with non-GAAP income
attributable to Micron, non-GAAP diluted shares include the impact
of capped calls based on the average share price for the period the
capped calls are outstanding. Non-GAAP diluted shares are also
adjusted for the impact of additional shares resulting from the
exclusion of stock-based compensation from non-GAAP income.
MICRON TECHNOLOGY,
INC.RECONCILIATION OF GAAP TO NON-GAAP
OUTLOOK(In millions, except per share amounts)
|
|
GAAP Outlook |
|
Adjustments |
|
Non-GAAP Outlook |
|
|
|
|
|
|
|
|
|
Revenue |
$4.5 billion - $4.8 billion |
|
— |
|
|
|
$4.5 billion - $4.8 billion |
Gross margin |
26% ± 1.5% |
|
1% |
|
A |
|
27% ± 1.5% |
Operating
expenses |
$878 million ± $25 million |
|
$53 million |
|
B |
|
$825 million ± $25 million |
Interest (income)
expense, net |
$5 million |
|
$5 million |
|
C |
|
$0 million |
Diluted earnings
per share (1) |
$0.25 ± $0.06 |
|
$0.10 |
|
A, B, C, D |
|
$0.35 ± $0.06 |
Non-GAAP
Adjustments |
|
|
A |
Stock-based compensation – cost of goods sold |
$ |
32 |
|
A |
Other – cost of
goods sold |
7 |
|
B |
Stock-based
compensation – sales, general, and administrative |
20 |
|
B |
Stock-based
compensation – research and development |
21 |
|
B |
Other - operating
expenses |
12 |
|
C |
Amortization of
debt discount and other costs |
5 |
|
D |
Tax effects of the
above items and non-cash changes in net deferred income taxes |
14 |
|
|
|
$ |
111 |
|
(1) GAAP earnings per share based on approximately
1.13 billion diluted shares and non-GAAP earnings per share based
on approximately 1.14 billion diluted shares.
The tables above reconcile our GAAP to non-GAAP guidance based
on the current outlook. The guidance does not incorporate the
impact of any potential business combinations, divestitures,
restructuring activities, balance sheet valuation adjustments,
strategic investments, financing transactions, and other
significant transactions. The timing and impact of such items are
dependent on future events that may be uncertain or outside of our
control.
Contacts:
Farhan Ahmad
Investor Relations
farhanahmad@micron.com
(408) 834-1927
Erica Rodriguez Pompen
Media Relations
epompen@micron.com
(408) 834-1873
Micron Technology (NASDAQ:MU)
Historical Stock Chart
From Apr 2024 to May 2024
Micron Technology (NASDAQ:MU)
Historical Stock Chart
From May 2023 to May 2024