Seagate Technology Reports Fiscal Third Quarter 2021 Financial Results

tags:

– Revenue of $2.73 billion

– GAAP operating margin of 14.1%; non-GAAP operating margin of 15.4%

– GAAP diluted earnings per share (EPS) of $1.39; non-GAAP diluted EPS of $1.48

– Generated $378 million in cash flow from operations and $274 million in free cash flow

– Returned $912 million to shareholders through dividends and the repurchase of 11.3 million ordinary shares

– Declared cash dividend of $0.67 per share

FREMONT, Calif.–(BUSINESS WIRE)–Seagate Technology plc (NASDAQ: STX) (the “Company” or “Seagate”), a world leader in data storage infrastructure solutions, today reported financial results for its fiscal third quarter ended April 2, 2021.

Seagate delivered another quarter of strong financial performance driven by ongoing operational execution and record sales of our high capacity nearline drives. We grew revenue, expanded profitability and achieved non-GAAP EPS above our guided range. Our March quarter results underscore the strength of our HDD product portfolio and increasing demand for mass capacity storage,” said Dave Mosley, Seagate’s chief executive officer.

These trends lend further support to our June outlook, including an anticipated return to solid year-over-year revenue growth in the June quarter and enhanced profitability. As the datasphere continues to grow in scale and complexity, our innovative technology, flexible product roadmap and mass data expertise make us well positioned to capture significant opportunities in our core HDD business and address customers’ emerging needs to move, secure and store data across a more distributed enterprise.”

Quarterly Financial Results

 

GAAP

Non-GAAP

 

FQ3 2021

FQ3 2020

FQ3 2021

FQ3 2020

Revenue ($M)

$

2,731

 

$

2,718

 

$

2,731

 

$

2,718

 

Gross Margin

27.1

%

27.4

%

27.4

%

28.0

%

Operating Margin

14.1

%

13.8

%

15.4

%

15.5

%

Net Income ($M)

$

329

 

$

320

 

$

350

 

$

363

 

Diluted Earnings Per Share

$

1.39

 

$

1.22

 

$

1.48

 

$

1.38

 

The Company generated $378 million in cash flow from operations and $274 million in free cash flow during the fiscal third quarter 2021. Seagate maintained a healthy balance sheet and during the fiscal third quarter 2021, the Company paid cash dividends of $161 million and repurchased 11.3 million ordinary shares for $751 million. Cash and cash equivalents totaled $1.2 billion at the end of the quarter. There were 230 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 $0.67 per share, which will be payable by the Company on July 7, 2021 to shareholders of record as of the close of business on May 12, 2021 (“the record date”). The record date has been set to occur before the Irish High Court (“Irish Court”) hearing that we expect to be held on or around May 18, 2021, subject to the Irish Court’s availability, to approve the Scheme of Arrangement that Seagate shareholders approved on April 14, 2021. The Scheme of Arrangement is part of the proposed transaction described in the proxy statement filed with the U.S. Securities and Exchange Commission on March 3, 2021. ​Assuming the Scheme of Arrangement is approved by the Irish Court and consummated, the proposed transaction is intended to create additional distributable reserves in the new group parent company, Seagate Technology Holdings plc, which are required under Irish law for shareholder distributions such as dividends or share repurchases.

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, distributable reserves, and other factors deemed relevant by the Board.

Business Outlook

The business outlook for the fiscal fourth quarter 2021 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 fourth quarter 2021:

  • Revenue of $2.85 billion, plus or minus $150 million
  • Non-GAAP diluted EPS of $1.60, 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 $0.14 per share.

We have not reconciled our non-GAAP diluted EPS guidance for fiscal fourth quarter 2021 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 fourth quarter 2021 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 1:30 p.m. Pacific / 4:30 p.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 fourth quarter 2021, 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, our plans and expectations regarding our corporate reorganization, and expectations on the Company’s business as well as dividend issuance plans for the fiscal quarter ending July 2, 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 on August 7, 2020. Additional information will also be set forth in the Company’s Quarterly Report on Form 10-Q for the quarter ended April 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 PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

 

 

April 2,
2021

July 3,
2020

 

(unaudited)

 

ASSETS

 

 

Current assets:

 

 

Cash and cash equivalents

$

1,212

$

1,722

Accounts receivable, net

978

1,115

Inventories

1,281

1,142

Other current assets

221

135

Total current assets

3,692

4,114

Property, equipment and leasehold improvements, net

2,215

2,129

Goodwill

1,237

1,237

Other intangible assets, net

35

58

Deferred income taxes

1,118

1,120

Other assets, net

307

272

Total Assets

$

8,604

$

8,930

LIABILITIES AND EQUITY

 

 

Current liabilities:

 

 

Accounts payable

$

1,861

$

1,808

Accrued employee compensation

178

224

Accrued warranty

60

69

Current portion of long-term debt

245

19

Accrued expenses

649

602

Total current liabilities

2,993

2,722

Long-term accrued warranty

74

82

Other non-current liabilities

156

183

Long-term debt

4,897

4,156

Total Liabilities

8,120

7,143

 

 

 

Total Equity

484

1,787

Total Liabilities and Equity

$

8,604

$

8,930

SEAGATE TECHNOLOGY PLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

(Unaudited)

 

 

For the Three Months Ended

For the Nine Months Ended

 

April 2,
2021

April 3,
2020

April 2,
2021

April 3,
2020

Revenue

$

2,731

 

$

2,718

 

$

7,668

 

$

7,992

 

 

 

 

 

 

Cost of revenue

1,991

 

1,972

 

5,636

 

5,817

 

Product development

227

 

246

 

671

 

751

 

Marketing and administrative

126

 

119

 

366

 

361

 

Amortization of intangibles

3

 

3

 

9

 

11

 

Restructuring and other, net

(2

)

2

 

1

 

19

 

Total operating expenses

2,345

 

2,342

 

6,683

 

6,959

 

 

 

 

 

 

Income from operations

386

 

376

 

985

 

1,033

 

 

 

 

 

 

Interest income

1

 

4

 

2

 

19

 

Interest expense

(59

)

(49

)

(161

)

(152

)

Other, net

11

 

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