Micron Technology, Inc. (Nasdaq: MU) today announced results for its second quarter of fiscal 2021, which ended March 4, 2021.

Fiscal Q2 2021 highlights

  • Revenue of $6.24 billion versus $5.77 billion for the prior quarter and $4.80 billion for the same period last year
  • GAAP net income of $603 million, or $0.53 per diluted share
  • Non-GAAP net income of $1.13 billion, or $0.98 per diluted share
  • Operating cash flow of $3.06 billion versus $1.97 billion for the prior quarter and $2.00 billion for the same period last year

“Micron’s strong fiscal second quarter performance reflects rapidly improving market conditions and continued solid execution,” said Micron Technology President and CEO Sanjay Mehrotra. “Our technology leadership in both DRAM and NAND places Micron in an excellent position to capitalize on the secular demand driven by AI and 5G, and to deliver new levels of user experience and innovation across the data center and intelligent edge.”

Quarterly Financial Results
(in millions, except per share amounts) GAAP(1)   Non-GAAP(2)
FQ2-21 FQ1-21 FQ2-20   FQ2-21 FQ1-21 FQ2-20
               
Revenue $ 6,236   $ 5,773   $ 4,797     $ 6,236   $ 5,773   $ 4,797  
Gross margin 1,649   1,736   1,355     2,054   1,784   1,398  
percent of revenue 26.4 % 30.1 % 28.2 %   32.9 % 30.9 % 29.1 %
Operating expenses 986   870   915     797   811   856  
Operating income 663   866   440     1,257   973   542  
percent of revenue 10.6 % 15.0 % 9.2 %   20.2 % 16.9 % 11.3 %
Net income attributable to Micron 603   803   405     1,128   897   517  
Diluted earnings per share 0.53   0.71   0.36     0.98   0.78   0.45  

Investments in capital expenditures, net(2) were $2.88 billion for the second quarter of 2021, which resulted in adjusted free cash flows(2) of $174 million. Micron ended the quarter with cash, marketable investments, and restricted cash of $8.57 billion, for a net cash(2) position of $1.95 billion.

Business Outlook

The following table presents Micron’s guidance for the third quarter of 2021:

FQ3-21 GAAP(1) Outlook Non-GAAP(2) Outlook
     
Revenue $7.1 billion ± $200 million $7.1 billion ± $200 million
Gross margin 40.5% ± 1% 41.5% ± 1%
Operating expenses $930 million ± $25 million $875 million ± $25 million
Interest (income) expense, net $27 million $25 million
Diluted earnings per share $1.52 ± $0.07 $1.62 ± $0.07

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, March 31, 2021, at 2:30 p.m. MT to discuss its second quarter financial results and provide forward-looking guidance for its third 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 transforming how the world uses information to enrich life for all. With a relentless focus on our customers, technology leadership, and manufacturing and operational excellence, Micron delivers a rich portfolio of high-performance DRAM, NAND, and NOR memory and storage products through our Micron® and Crucial® brands. Every day, the innovations that our people create fuel the data economy, enabling advances in artificial intelligence and 5G applications that unleash opportunities — from the data center to the intelligent edge and across the client and mobile user experience. To learn more about Micron Technology, Inc. (Nasdaq: MU), visit micron.com.

© 2021 Micron Technology, Inc. All rights reserved. Micron, the Micron logo, and all other Micron trademarks are the property 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 our industry, our strategic position, and our 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 and Form 10-Q. 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, adjusted free cash flow, net cash, and business outlook. 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)

  2nd Qtr. 1st Qtr. 2nd Qtr. Six Months Ended
  March 4, 2021 December 3, 2020 February 27, 2020 March 4, 2021 February 27, 2020
           
Revenue $ 6,236     $ 5,773     $ 4,797     $ 12,009     $ 9,941    
Cost of goods sold 4,587     4,037     3,442     8,624     7,220    
Gross margin 1,649     1,736     1,355     3,385     2,721    
           
Research and development 641     647     681     1,288     1,321    
Selling, general, and administrative 214     214     223     428     434    
Other operating (income) expense, net 131     9     11     140     8    
Operating income 663     866     440     1,529     958    
           
Interest income 10     10     34     20     78    
Interest expense (42 )   (48 )   (46 )   (90 )   (93 )  
Other non-operating income (expense), net 4     13     (1 )   17     45    
  635     841     427     1,476     988    
           
Income tax (provision) benefit (48 )   (51 )   (21 )   (99 )   (76 )  
Equity in net income (loss) of equity method investees 16     13     1     29     3    
Net income 603     803     407     1,406     915    
           
Net income attributable to noncontrolling interests         (2 )       (19 )  
Net income attributable to Micron $ 603     $ 803     $ 405     $ 1,406     $ 896    
           
Earnings per share          
Basic $ 0.54     $ 0.72     $ 0.37     $ 1.26     $ 0.81    
Diluted 0.53     0.71     0.36     1.23     0.79    
           
Number of shares used in per share calculations          
Basic 1,120     1,115     1,111     1,118     1,109    
Diluted 1,144     1,135     1,133     1,139     1,131    
                               

MICRON TECHNOLOGY, INC.CONSOLIDATED BALANCE SHEETS(In millions)(Unaudited)

As of March 4, 2021 December 3, 2020 September 3, 2020
       
Assets      
Cash and equivalents $ 6,507     $ 5,985     $ 7,624    
Short-term investments 677     1,047     518    
Receivables 3,353     3,691     3,912    
Inventories 4,743     5,242     5,373    
Assets held for sale 1,461            
Other current assets 538     564     538    
Total current assets 17,279     16,529     17,965    
Long-term marketable investments 1,316     1,264     1,048    
Property, plant, and equipment 31,848     32,229     31,031    
Operating lease right-of-use assets 575     577     584    
Intangible assets 342     336     334    
Deferred tax assets 726     726     707    
Goodwill 1,228     1,228     1,228    
Other noncurrent assets 821     802     781    
Total assets $ 54,135     $ 53,691     $ 53,678    
       
Liabilities and equity      
Accounts payable and accrued expenses $ 4,550     $ 4,856     $ 5,817    
Current debt 323     273     270    
Other current liabilities 560     559     548    
Total current liabilities 5,433     5,688     6,635    
Long-term debt 6,298     6,356     6,373    
Noncurrent operating lease liabilities 528     529     533    
Noncurrent unearned government incentives 661     656     643    
Other noncurrent liabilities 552     555     498    
Total liabilities 13,472     13,784     14,682    
       
Commitments and contingencies      
       
Shareholders’ equity      
Common stock 120     120     119    
Additional capital 9,234     9,034     8,917    
Retained earnings 34,723     34,138     33,384    
Treasury stock (3,495 )   (3,495 )   (3,495 )  
Accumulated other comprehensive income (loss) 81     110     71    
Total equity 40,663     39,907     38,996    
Total liabilities and equity $ 54,135     $ 53,691     $ 53,678    
                         

MICRON TECHNOLOGY, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(In millions)(Unaudited)

Six months ended March 4,2021 February 27,2020
     
Cash flows from operating activities    
Net income $ 1,406     $ 915    
Adjustments to reconcile net income to net cash provided by operating activities    
Depreciation expense and amortization of intangible assets 3,036     2,661    
Amortization of debt discount and other costs 15     16    
Stock-based compensation 189     157    
(Gain) loss on debt prepayments, repurchases, and conversions     (42 )  
Change in operating assets and liabilities    
Receivables 533     104    
Inventories 629     (69 )  
Accounts payable and accrued expenses (777 )   257    
Deferred income taxes, net (11 )   38    
Other 4     (25 )  
Net cash provided by operating activities 5,024     4,012    
     
Cash flows from investing activities    
Expenditures for property, plant, and equipment (5,756 )   (3,999 )  
Purchases of available-for-sale securities (1,349 )   (566 )  
Proceeds from maturities of available-for-sale securities 746     523    
Proceeds from sales of available-for-sale securities 178     1,059    
Proceeds from government incentives 176     105    
Other 31     (21 )  
Net cash provided by (used for) investing activities (5,974 )   (2,899 )  
     
Cash flows from financing activities    
Payments on equipment purchase contracts (123 )   (29 )  
Repayments of debt (103 )   (1,676 )  
Acquisition of noncontrolling interest in IMFT     (744 )  
Proceeds from issuance of debt     1,250    
Other 17     (8 )  
Net cash provided by (used for) financing activities (209 )   (1,207 )  
     
Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash 43     (14 )  
     
Net increase (decrease) in cash, cash equivalents, and restricted cash (1,116 )   (108 )  
Cash, cash equivalents, and restricted cash at beginning of period 7,690     7,279    
Cash, cash equivalents, and restricted cash at end of period $ 6,574     $ 7,171    
                 

MICRON TECHNOLOGY, INC.NOTES(Unaudited)

Inventory

Effective as of the beginning of the second quarter of 2021, we changed our method of inventory costing from average cost to FIFO. This change in accounting principle is preferable because in an environment with continuously changing production costs FIFO more closely matches the actual cost of goods sold with the revenues from sales of those specific units, better represents the actual cost of inventories remaining on hand at any period-end, and improves comparability with our semiconductor industry peers. The change to FIFO was not material to any prior periods, nor is the cumulative effect of $133 million material to the second quarter of 2021. As such, prior periods were not retrospectively adjusted, and the cumulative effect was reported as an increase to cost of goods sold for the second quarter of 2021 of $133 million, with an offsetting reduction to beginning inventories. This charge resulted in a corresponding reduction to operating income, a $128 million reduction to net income, and an $0.11 reduction to diluted earnings per share for the second quarter of 2021.

Beginning in the second quarter of 2021, we changed the classification of spare parts for equipment to better align with the manner in which they are used in operations. As a result, we now present spare parts as other current assets and no longer as a component of raw materials inventories. This reclassification was applied on a retrospective basis. As a result, $270 million of spare parts were presented in other current assets as of March 4, 2021, and we reclassified spare parts from inventories to other current assets of $279 million and $234 million in the accompanying balance sheets as of December 3, 2020 and September 3, 2020, respectively.

Assets Held for Sale

In the second quarter of 2021, we updated our portfolio strategy to further strengthen our focus on memory and storage innovations for the data center market. In connection therewith, we determined that there was insufficient market validation to justify the ongoing investments required to commercialize 3D XPointTM at scale. Effective as of the end of the second quarter of 2021, we ceased development of 3D XPoint technology and engaged in discussions with potential buyers for the sale of our facility located in Lehi, Utah, that was dedicated to 3D XPoint production. As a result, we classified the property, plant, and equipment as held-for-sale and ceased depreciating the assets. As of March 4, 2021, the significant balances of assets and liabilities classified as held-for-sale in connection with our Lehi facility included $1.44 billion of property, plant, and equipment included in assets held for sale and $51 million of a finance lease obligation included in current portion of long-term debt. We also recognized a charge of $49 million to cost of goods sold in the second quarter of 2021 to write down 3D XPoint inventory due to our decision to cease further development of this technology. We expect to reach an agreement for the sale of our Lehi facility within calendar year 2021.

MICRON TECHNOLOGY, INC.RECONCILIATION OF GAAP TO NON-GAAP MEASURES(In millions, except per share amounts)

  2nd Qtr. 1st Qtr. 2nd Qtr.
  March 4, 2021 December 3, 2020 February 27, 2020
       
GAAP gross margin $ 1,649     $ 1,736     $ 1,355    
Inventory accounting policy change to FIFO 133            
Change in inventory cost absorption 160            
3D XPoint inventory write-down 49            
Stock-based compensation 57     41     37    
Other 6     7     6    
Non-GAAP gross margin $ 2,054     $ 1,784     $ 1,398    
       
GAAP operating expenses $ 986     $ 870     $ 915    
Stock-based compensation (55 )   (51 )   (48 )  
Patent license charges (128 )          
Restructure and asset impairments (5 )   (8 )   (10 )  
Other (1 )       (1 )  
Non-GAAP operating expenses $ 797     $ 811     $ 856    
       
GAAP operating income $ 663     $ 866     $ 440    
Inventory accounting policy change to FIFO 133            
Change in inventory cost absorption 160            
3D XPoint inventory write-down 49            
Stock-based compensation 112     92     85    
Patent license charges 128            
Restructure and asset impairments 5     8     10    
Other 7     7     7    
Non-GAAP operating income $ 1,257     $ 973     $ 542    
       
GAAP net income attributable to Micron $ 603      $ 803      $ 405     
Inventory accounting policy change to FIFO 133      —      —     
Change in inventory cost absorption 160      —      —     
3D XPoint inventory write-down 49      —      —     
Stock-based compensation 112      92      85     
Patent license charges 128      —      —     
Restructure and asset impairments         10     
Amortization of debt discount and other costs            
Other            
Estimated tax effects of above and non-cash changes in net deferred income taxes (77 )   (20 )      
Non-GAAP net income attributable to Micron $ 1,128      $ 897      $ 517     
       
GAAP weighted-average common shares outstanding - Diluted 1,144      1,135      1,133     
Adjustment for stock-based compensation and capped calls 10      11      11     
Non-GAAP weighted-average common shares outstanding - Diluted 1,154      1,146      1,144     
       
GAAP diluted earnings per share $ 0.53      $ 0.71      $ 0.36     
Effects of the above adjustments 0.45      0.07      0.09     
Non-GAAP diluted earnings per share $ 0.98      $ 0.78      $ 0.45     
                         

RECONCILIATION OF GAAP TO NON-GAAP MEASURES, Continued

  2nd Qtr. 1st Qtr. 2nd Qtr.
  March 4,2021 December 3,2020 February 27,2020
       
GAAP net cash provided by operating activities $ 3,057      $ 1,967      $ 2,001     
Investments in capital expenditures, net      
Expenditures for property, plant, and equipment, net(1) (3,000 )   (2,726 )   (2,013 )  
Payments on equipment purchase contracts (26 )   (97 )   (18 )  
Amounts funded by partners 143      40      93     
Adjusted free cash flow $ 174      $ (816 )   $ 63     
(1)   Expenditures for property, plant, and equipment, net include proceeds from sales of property, plant, and equipment of $18 million for the second quarter of 2021, $12 million for the first quarter of 2021, and $43 million for the second quarter of 2020.

 

As of March 4, 2021 December 3, 2020 September 3, 2020
       
Cash and short-term investments $ 7,184     $ 7,032     $ 8,142    
Current and noncurrent restricted cash 67     67     66    
Long-term marketable investments 1,316     1,264     1,048    
Current and long-term debt (6,621 )   (6,629 )   (6,643 )  
Net cash $ 1,946     $ 1,734     $ 2,613    
                         

The tables above reconcile GAAP to non-GAAP measures of gross margin, operating expenses, 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 amounts 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;
  • Patent license charges;
  • Restructure and asset impairments;
  • Amortization of debt discount and other costs, including the accretion of non-cash interest expense associated with our convertible notes and other debt;
  • Gains and losses from debt repurchases and conversions;
  • Gains and losses from business acquisition activities;
  • Initial impact of inventory accounting policy change to FIFO and change in inventory cost absorption in the second quarter of 2021; and
  • The estimated tax effects of above, non-cash changes in net deferred income taxes, assessments of tax exposures, and significant changes in tax law.

Non-GAAP diluted shares are adjusted for the impact of additional shares resulting from the exclusion of stock-based compensation from non-GAAP income. Non-GAAP diluted shares also include the impact of capped calls, which are anti-dilutive in GAAP earnings per share but are expected to mitigate the dilutive effect of convertible notes, based on the average share price for the period the capped calls were outstanding.

MICRON TECHNOLOGY, INC.RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK

FQ3-21 GAAP Outlook   Adjustments   Non-GAAP Outlook
               
Revenue $7.1 billion ± $200 million   —        $7.1 billion ± $200 million
Gross margin 40.5% ± 1%   1%   A   41.5% ± 1%
Operating expenses $930 million ± $25 million   $55 million   B   $875 million ± $25 million
Interest (income) expense, net $27 million   $2 million   C   $25 million
Diluted earnings per share(1) $1.52 ± $0.07   $0.10   A, B, C, D   $1.62 ± $0.07
Non-GAAP Adjustments(in millions)    
       
A Stock-based compensation – cost of goods sold   $ 46   
A Other – cost of goods sold    
B Stock-based compensation – research and development   29   
B Stock-based compensation – sales, general, and administrative   26   
C Amortization of debt discount and other costs    
D Tax effects of the above items and non-cash changes in net deferred income taxes    
      $ 112   
(1)   GAAP earnings per share based on approximately 1.15 billion diluted shares and non-GAAP earnings per share based on approximately 1.16 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 Jul 2021 to Aug 2021 Click Here for more Micron Technology Charts.
Micron Technology (NASDAQ:MU)
Historical Stock Chart
From Aug 2020 to Aug 2021 Click Here for more Micron Technology Charts.