Micron Technology, Inc. (Nasdaq: MU), today announced results for
its second quarter of fiscal 2019, which ended Feb. 28, 2019.
Fiscal Q2 2019 Highlights
- Revenue of $5.84 billion, versus $7.35 billion for the same
period last year
- GAAP net income of $1.62 billion, or $1.42 per diluted
share
- Non-GAAP net income of $1.97 billion, or $1.71 per diluted
share
- Operating cash flow of $3.44 billion versus $4.35 billion for
the same period last year
- Share repurchases of $702 million under the authorized buyback
program
"Micron continues to execute well across a range of product,
operational and financial initiatives against the backdrop of a
challenging market environment," said Micron Technology President
and CEO Sanjay Mehrotra. "These initiatives and our focus on
high-value solutions, cost competitiveness and innovation will
enable us to emerge even stronger as the market environment
improves."
Quarterly Financial Results
|
|
GAAP (1) |
|
Non-GAAP (2) |
(in millions, except per share amounts) |
FQ2-19 |
FQ1-19 |
FQ2-18 |
|
FQ2-19 |
FQ1-19 |
FQ2-18 |
Revenue |
$ |
5,835 |
|
$ |
7,913 |
|
$ |
7,351 |
|
|
$ |
5,835 |
|
$ |
7,913 |
|
$ |
7,351 |
|
Gross margin |
$ |
2,864 |
|
$ |
4,615 |
|
$ |
4,270 |
|
|
$ |
2,928 |
|
$ |
4,670 |
|
$ |
4,296 |
|
percent of revenue |
49.1% |
|
58.3% |
|
58.1% |
|
|
50.2% |
|
59.0% |
|
58.4% |
|
Operating income |
$ |
1,957 |
|
$ |
3,759 |
|
$ |
3,567 |
|
|
$ |
2,110 |
|
$ |
3,887 |
|
$ |
3,630 |
|
percent of revenue |
33.5% |
|
47.5% |
|
48.5% |
|
|
36.2% |
|
49.1% |
|
49.4% |
|
Net income attributable to Micron |
$ |
1,619 |
|
$ |
3,293 |
|
$ |
3,309 |
|
|
$ |
1,971 |
|
$ |
3,508 |
|
$ |
3,495 |
|
Diluted earnings per share |
$ |
1.42 |
|
$ |
2.81 |
|
$ |
2.67 |
|
|
$ |
1.71 |
|
$ |
2.97 |
|
$ |
2.82 |
|
Investments in capital expenditures, net of amounts funded by
partners, were $2.45 billion for the second quarter of 2019, which
resulted in adjusted free cash flow(3) of $988 million. Micron
repurchased an aggregate of 21 million shares of its common stock
for $702 million during the quarter in connection with its $10
billion share repurchase authorization. The company ended the
second quarter with cash, marketable investments, and restricted
cash of $9.22 billion for a net cash(4) position of $2.99
billion.
Micron will host a conference call on Wednesday, March 20, 2019
at 2:30 p.m. MT to discuss financial results and provide
forward-looking guidance for its fiscal third quarter. The call,
audio, and slides will be available online at investors.micron.com.
A webcast replay will be available on our website until March 20,
2020. A taped audio replay of the conference call will also be
available at 1-404-537-3406 or 1-855-859-2056 (conference number:
7383577) beginning at 5:30 p.m. MT, March 20, 2019 and continuing
through March 27, 2019. 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, NOR Flash, and 3D
XPoint™ memory, 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, machine learning, and autonomous vehicles,
in key market segments like data center, networking, automotive,
industrial, mobile, graphics, and client. Our common stock is
traded on the Nasdaq under the MU symbol. To learn more about
Micron Technology, Inc., visit micron.com.
The Micron logo and Micron symbol are trademarks of Micron
Technology, Inc. All other trademarks are the property of their
respective owners.
This press release contains forward-looking statements regarding
the industry and our strategic position and financial 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 our 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. For a reconciliation of GAAP to
non-GAAP results, see the accompanying financial tables and
footnotes.(3) Adjusted free cash flow consists of cash provided by
operating activities of $3.44 billion for the second quarter of
2019 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 of
$6.24 billion.
MICRON TECHNOLOGY,
INC.CONSOLIDATED FINANCIAL
SUMMARY(in millions except per share
amounts)
|
|
2nd Qtr. |
|
1st Qtr. |
|
2nd Qtr. |
|
Six Months Ended |
|
|
February 28, 2019 |
|
November 29, 2018 |
|
March 1, 2018 |
|
February 28, 2019 |
|
March 1, 2018 |
Revenue (1) |
|
$ |
5,835 |
|
|
$ |
7,913 |
|
|
$ |
7,351 |
|
|
$ |
13,748 |
|
|
$ |
14,154 |
|
Cost of goods sold |
|
2,971 |
|
|
3,298 |
|
|
3,081 |
|
|
6,269 |
|
|
6,137 |
|
Gross
margin |
|
2,864 |
|
|
4,615 |
|
|
4,270 |
|
|
7,479 |
|
|
8,017 |
|
Selling, general, and
administrative |
|
209 |
|
|
209 |
|
|
196 |
|
|
418 |
|
|
387 |
|
Research and
development |
|
601 |
|
|
611 |
|
|
523 |
|
|
1,212 |
|
|
971 |
|
Other operating
(income) expense, net |
|
97 |
|
|
36 |
|
|
(16 |
) |
|
133 |
|
|
(5 |
) |
Operating
income |
|
1,957 |
|
|
3,759 |
|
|
3,567 |
|
|
5,716 |
|
|
6,664 |
|
Interest income
(expense), net |
|
31 |
|
|
5 |
|
|
(61 |
) |
|
36 |
|
|
(162 |
) |
Other non-operating
income (expense), net (2) |
|
(84 |
) |
|
9 |
|
|
(53 |
) |
|
(75 |
) |
|
(257 |
) |
Income tax provision
(3) |
|
(280 |
) |
|
(477 |
) |
|
(143 |
) |
|
(757 |
) |
|
(257 |
) |
Equity in net income of
equity method investees |
|
1 |
|
|
— |
|
|
1 |
|
|
1 |
|
|
1 |
|
Net income attributable
to noncontrolling interests |
|
(6 |
) |
|
(3 |
) |
|
(2 |
) |
|
(9 |
) |
|
(2 |
) |
Net income attributable
to Micron |
|
$ |
1,619 |
|
|
$ |
3,293 |
|
|
$ |
3,309 |
|
|
$ |
4,912 |
|
|
$ |
5,987 |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.45 |
|
|
$ |
2.91 |
|
|
$ |
2.86 |
|
|
$ |
4.37 |
|
|
$ |
5.23 |
|
Diluted |
|
1.42 |
|
|
2.81 |
|
|
2.67 |
|
|
4.24 |
|
|
4.86 |
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares used
in per share calculations |
|
|
|
|
|
|
|
|
|
|
Basic |
|
1,114 |
|
|
1,133 |
|
|
1,156 |
|
|
1,123 |
|
|
1,145 |
|
Diluted |
|
1,141 |
|
|
1,174 |
|
|
1,238 |
|
|
1,157 |
|
|
1,232 |
|
CONSOLIDATED FINANCIAL SUMMARY, Continued
As of |
|
February 28, 2019 |
|
November 29, 2018 |
|
August 30, 2018 |
Cash and short-term
investments |
|
$ |
7,533 |
|
|
$ |
5,563 |
|
|
$ |
6,802 |
|
Receivables (1) |
|
4,416 |
|
|
5,418 |
|
|
5,478 |
|
Inventories |
|
4,390 |
|
|
3,876 |
|
|
3,595 |
|
Total current assets
(1) |
|
16,550 |
|
|
15,039 |
|
|
16,039 |
|
Long-term marketable
investments |
|
1,614 |
|
|
1,565 |
|
|
473 |
|
Property, plant, and
equipment |
|
26,204 |
|
|
24,807 |
|
|
23,672 |
|
Restricted cash |
|
76 |
|
|
78 |
|
|
81 |
|
Total assets (1) |
|
47,487 |
|
|
44,595 |
|
|
43,376 |
|
|
|
|
|
|
|
|
Accounts payable and
accrued expenses |
|
4,062 |
|
|
4,200 |
|
|
4,374 |
|
Current debt
(2)(4) |
|
2,634 |
|
|
398 |
|
|
859 |
|
Total current
liabilities |
|
7,361 |
|
|
5,189 |
|
|
5,754 |
|
Long-term debt (2) |
|
3,604 |
|
|
3,734 |
|
|
3,777 |
|
|
|
|
|
|
|
|
Total Micron
shareholders' equity (1)(2)(5) |
|
34,567 |
|
|
33,869 |
|
|
32,294 |
|
Noncontrolling
interests in subsidiaries (4) |
|
863 |
|
|
870 |
|
|
870 |
|
Total equity |
|
35,430 |
|
|
34,739 |
|
|
33,164 |
|
|
|
Six Months Ended |
|
|
February 28, 2019 |
|
March 1, 2018 |
Net cash provided by
operating activities |
|
$ |
8,245 |
|
|
$ |
7,984 |
|
Net cash provided by
(used for) investing activities |
|
(6,919 |
) |
|
(3,843 |
) |
Net cash provided by
(used for) financing activities |
|
(1,483 |
) |
|
(1,420 |
) |
|
|
|
|
|
Depreciation and
amortization |
|
2,677 |
|
|
2,296 |
|
Investments in capital
expenditures |
|
(5,386 |
) |
|
(4,370 |
) |
Repayments of debt |
|
(705 |
) |
|
(3,379 |
) |
Payments to acquire
treasury stock (5) |
|
(2,568 |
) |
|
(67 |
) |
Proceeds from issuance
of stock |
|
92 |
|
|
1,554 |
|
Proceeds from issuance
of debt (2) |
|
1,800 |
|
|
650 |
|
(1) In the first quarter of 2019, we adopted ASU 2014-09 –
Revenue from Contracts with Customers (as amended, "ASC 606"),
which supersedes nearly all existing revenue recognition guidance
under generally accepted accounting principles in the United
States. The core principal of ASC 606 is that an entity should
recognize revenue when it transfers control of promised goods or
services to customers in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for those
goods or services. We adopted ASC 606 in the first quarter of 2019
under the modified retrospective method and, in connection
therewith, made certain adjustments to our opening balances as of
August 31, 2018. Adjustments to opening balances included an
increase to receivables of $114 million, reduction of deferred tax
assets of $92 million, increase of other current assets of $30
million, and an increase to retained earnings of $50 million.
(2) On February 6, 2019, we issued $600 million, $500
million, and $700 million in principal of senior unsecured notes
due in 2024, 2026, and 2029, respectively. On February 8, 2019, we
notified the holders of our convertible senior notes due in 2043
("2043G Notes") that we would redeem all of the outstanding 2043G
Notes on March 13, 2019. In connection with our notice, we made an
irrevocable election to settle any conversions in cash. As a
result, we reclassified $336 million from equity to a
derivative debt liability. As of February 28, 2019, current
debt included an aggregate of $1.11 billion for the settlement
obligation (including principal and amounts in excess of principal)
of all of our 2043G Notes. In the second quarter of 2019, we
recognized non-operating losses of $84 million related to the
redemption of the 2043G notes. On March 13, 2019, we paid $1.43
billion to settle the conversions.
(3) On December 22, 2017, the United States enacted
comprehensive tax legislation, commonly referred to as the Tax Cuts
and Jobs Act (the "Tax Act"), which imposed a one-time transition
tax in 2018 (the "Repatriation Tax") and created a new minimum tax
on certain foreign earnings. Our income tax provision consisted of
the following:
|
|
2nd Qtr. |
|
1st Qtr. |
|
2nd Qtr. |
|
Six Months Ended |
|
|
February 28, 2019 |
|
November 29, 2018 |
|
March 1, 2018 |
|
February 28, 2019 |
|
March 1, 2018 |
Income tax (provision)
benefit, excluding items below |
|
$ |
(216 |
) |
|
$ |
(378 |
) |
|
$ |
5 |
|
|
$ |
(594 |
) |
|
$ |
(83 |
) |
Utilization of and
other changes in net deferred tax assets of MMJ, MMT, and MTTW |
|
(78 |
) |
|
(52 |
) |
|
(17 |
) |
|
(130 |
) |
|
(43 |
) |
Repatriation Tax, net
of adjustments related to uncertain tax positions |
|
14 |
|
|
(47 |
) |
|
(1,335 |
) |
|
(33 |
) |
|
(1,335 |
) |
Release of the
valuation allowance on the net deferred tax assets of our U.S.
operations |
|
— |
|
|
— |
|
|
1,337 |
|
|
— |
|
|
1,337 |
|
Remeasurement of
deferred tax assets and liabilities reflecting the lower U.S.
corporate tax rates |
|
— |
|
|
— |
|
|
(133 |
) |
|
— |
|
|
(133 |
) |
|
|
$ |
(280 |
) |
|
$ |
(477 |
) |
|
$ |
(143 |
) |
|
$ |
(757 |
) |
|
$ |
(257 |
) |
(4) On January 14, 2019, we exercised our option to acquire
Intel's interest in our joint venture, IM Flash Technologies, LLC
("IMFT"). Intel can elect to set the closing date of the
transaction to be any time between approximately six months to one
year from the date we exercised our call option. At the time of
closing, we expect to pay Intel approximately $1.5 billion in cash
for Intel's noncontrolling interest in IMFT and IMFT member debt.
Current debt as of February 28, 2019 included $1.0 billion for
IMFT member debt.
(5) In the second quarter of 2019, we repurchased 21
million shares of our common stock for $702 million through a Rule
10b5-1 plan. The shares were recorded as treasury stock. In the
first quarter of 2019, we repurchased 42 million shares of our
common stock for $1.80 billion.
MICRON TECHNOLOGY,
INC.RECONCILIATION OF GAAP TO NON-GAAP
RESULTS(in millions except per share
amounts)
|
|
2nd Qtr. |
|
1st Qtr. |
|
2nd Qtr. |
|
|
February 28, 2019 |
|
November 29, 2018 |
|
March 1, 2018 |
GAAP gross margin |
|
$ |
2,864 |
|
|
$ |
4,615 |
|
|
$ |
4,270 |
|
Stock-based compensation |
|
23 |
|
|
26 |
|
|
22 |
|
Start-up
and preproduction costs |
|
15 |
|
|
8 |
|
|
— |
|
Employee
severance |
|
13 |
|
|
13 |
|
|
— |
|
Other |
|
13 |
|
|
8 |
|
|
4 |
|
Non-GAAP gross
margin |
|
$ |
2,928 |
|
|
$ |
4,670 |
|
|
$ |
4,296 |
|
|
|
|
|
|
|
|
GAAP operating
income |
|
$ |
1,957 |
|
|
$ |
3,759 |
|
|
$ |
3,567 |
|
Stock-based compensation |
|
57 |
|
|
61 |
|
|
52 |
|
Start-up
and preproduction costs |
|
15 |
|
|
8 |
|
|
— |
|
Employee
severance |
|
17 |
|
|
20 |
|
|
— |
|
Restructure and asset impairments |
|
51 |
|
|
30 |
|
|
7 |
|
Other |
|
13 |
|
|
9 |
|
|
4 |
|
Non-GAAP operating
income |
|
$ |
2,110 |
|
|
$ |
3,887 |
|
|
$ |
3,630 |
|
|
|
|
|
|
|
|
GAAP net income
attributable to Micron |
|
$ |
1,619 |
|
|
$ |
3,293 |
|
|
$ |
3,309 |
|
Stock-based compensation |
|
57 |
|
|
61 |
|
|
52 |
|
Start-up
and preproduction costs |
|
15 |
|
|
8 |
|
|
— |
|
Employee
severance |
|
17 |
|
|
20 |
|
|
— |
|
Restructure and asset impairments |
|
51 |
|
|
30 |
|
|
7 |
|
Amortization of debt discount and other costs |
|
11 |
|
|
18 |
|
|
26 |
|
(Gain)
loss on debt repurchases and conversions |
|
83 |
|
|
(14 |
) |
|
23 |
|
(Gain)
loss from changes in currency exchange rates |
|
3 |
|
|
5 |
|
|
27 |
|
Other |
|
13 |
|
|
10 |
|
|
7 |
|
Impact of
U.S. income tax reform |
|
(14 |
) |
|
47 |
|
|
131 |
|
Estimated
tax effects of above, non-cash changes in net deferred income
taxes, and assessments of tax exposures |
|
116 |
|
|
30 |
|
|
(87 |
) |
Non-GAAP net income
attributable to Micron |
|
$ |
1,971 |
|
|
$ |
3,508 |
|
|
$ |
3,495 |
|
|
|
|
|
|
|
|
GAAP weighted-average
common shares outstanding - Diluted |
|
1,141 |
|
|
1,174 |
|
|
1,238 |
|
Adjustment for capped calls and stock-based compensation |
|
8 |
|
|
5 |
|
|
2 |
|
Non-GAAP
weighted-average common shares outstanding - Diluted |
|
1,149 |
|
|
1,179 |
|
|
1,240 |
|
|
|
|
|
|
|
|
GAAP diluted earnings
per share |
|
$ |
1.42 |
|
|
$ |
2.81 |
|
|
$ |
2.67 |
|
Effects
of the above adjustments |
|
0.29 |
|
|
0.16 |
|
|
0.15 |
|
Non-GAAP diluted
earnings per share |
|
$ |
1.71 |
|
|
$ |
2.97 |
|
|
$ |
2.82 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The tables above reconcile GAAP to non-GAAP gross margin,
operating income, net income attributable to Micron, diluted
shares, and diluted earnings per share. 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 to 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 changes in currency exchange rates;
- Gains and losses from business acquisition activities;
- Impact of the U.S. income tax reform for the Repatriation Tax,
release of U.S. valuation allowance, and remeasurement of net
deferred taxes reflecting the 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.
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)
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