Fiscal Q1 2025 Highlights
- Revenue increased to $2.17 billion
- GAAP diluted earnings per share (EPS) of $1.41; non-GAAP
diluted EPS of $1.58
- Cash flow from operations of $95 million and free cash flow of
$27 million
- Increased quarterly cash dividend by approximately 3% to $0.72
per share
Seagate Technology Holdings plc (NASDAQ: STX) (the “Company” or
“Seagate”), a leading innovator of mass-capacity data storage,
today reported financial results for its fiscal first quarter ended
September 27, 2024.
"Seagate is off to an outstanding start to the fiscal year,
highlighted by gross margin expanding to the highest level in more
than a decade," said Dave Mosley, Seagate’s chief executive
officer.
"We executed on our plans to aggressively ramp our 28-terabyte
nearline drives and broaden the number of cloud customers entering
qualification on HAMR-based Mozaic products. We are excited by the
strong product momentum which positions us well to address customer
demand while delivering profitable growth. Our confidence in
Seagate’s future opportunities is reflected in the decision to
raise the quarterly dividend as announced today," Mosley
concluded.
Quarterly Financial Results
GAAP
Non-GAAP
FQ1 2025
FQ1 2024
FQ1 2025
FQ1 2024
Revenue ($M)
$
2,168
$
1,454
$
2,168
$
1,454
Gross Margin
32.9
%
10.2
%
33.3
%
19.8
%
Operating Margin
18.6
%
(8.9
%)
20.4
%
2.8
%
Net Income (Loss) ($M)
$
305
$
(184
)
$
337
$
(46
)
Diluted Earnings (Loss) Per Share
$
1.41
$
(0.88
)
$
1.58
$
(0.22
)
For a detailed reconciliation of GAAP to non-GAAP results, see
accompanying financial tables.
During the fiscal first quarter the Company generated $95
million in cash flow from operations, $27 million in free cash flow
and returned $147 million of capital to shareholders through its
quarterly dividend. As of the end of the quarter, cash and cash
equivalents totaled $1.2 billion, and there were 211 million
ordinary shares issued and outstanding.
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 $0.72 per share, which will be payable
on January 6, 2025 to shareholders of record as of the close of
business on December 15, 2024. 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 second quarter 2025 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
second quarter 2025:
- Revenue of $2.30 billion, plus or minus $150 million
- Non-GAAP diluted EPS of $1.85, plus or minus $0.20
Guidance regarding non-GAAP diluted EPS excludes known pre-tax
charges related to estimated share-based compensation expenses of
$0.22 per share.
We have not reconciled our non-GAAP diluted EPS guidance for
fiscal second quarter 2025 to the most directly comparable GAAP
measure, other than estimated share-based compensation expenses,
because material items that may impact these measures are out of
our control and/or cannot be reasonably predicted, including, but
not limited to, net (gain) loss recognized from early redemption of
debt, purchase order cancellation fees, strategic investment losses
(gains) or impairment charges, 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 second quarter 2025 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 2:00 PM
PT / 5:00 PM ET 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 is a leading innovator of mass-capacity data
storage. We create breakthrough technology so you can confidently
store your data and easily unlock its value. Founded over 45 years
ago, Seagate has shipped over four billion terabytes of data
capacity and offers a full portfolio of storage devices, systems,
and services from edge to cloud. To learn more about how Seagate
leads storage innovation, visit www.seagate.com and our blog, or
follow us on X, Facebook, LinkedIn, and YouTube.
© 2024 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 and our other communications regarding our
quarterly financial results 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, programs, strategies, prospects, and
opportunities; financial outlook for future periods, including the
fiscal second quarter 2025; expectations regarding our ability to
service debt and continue to generate free cash flow; expectations
regarding our ability to make timely quarterly payments under the
settlement agreement with the U.S. Department of Commerce’s Bureau
of Industry and Security; expectations regarding logistical,
macroeconomic, or other factors affecting the Company; expectations
regarding market demand for the Company’s products, our visibility
into such demand and our ability to optimize our level of
production and meet market and industry expectations and the
effects of these future trends on Company’s financial and
operational performance, including our ability to deliver
profitable growth; anticipated shifts in technology and storage
industry trends, and anticipated demand and performance of new
storage product introductions, including HAMR-based Mozaic
products; and expectations regarding the Company’s business
strategy and performance, as well as dividend issuance plans for
the fiscal quarter ending December 27, 2024 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, in each case,
intended to refer to future events or circumstances. However, the
absence of these words or similar expressions does not mean that a
statement is not forward-looking. Forward-looking statements are
subject to various uncertainties and risks that could cause our
actual results to differ materially from historical experience and
our present expectations or projections. These risks and
uncertainties include, but are not limited to, those described
under the captions “Risk Factors” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” in the
Company’s latest periodic report on Form 10-Q or Form 10-K filed
with the U.S. Securities and Exchange Commission. 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)
September 27, 2024
June 28, 2024
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
1,239
$
1,358
Accounts receivable, net
628
429
Inventories, net
1,383
1,239
Other current assets
358
306
Total current assets
3,608
3,332
Property, equipment and leasehold
improvements, net
1,599
1,614
Goodwill
1,219
1,219
Deferred income taxes
1,038
1,037
Other assets, net
508
537
Total Assets
$
7,972
$
7,739
LIABILITIES AND SHAREHOLDERS’
DEFICIT
Current liabilities:
Accounts payable
$
1,778
$
1,786
Accrued employee compensation
148
106
Accrued warranty
71
74
Current portion of long-term debt
479
479
Accrued expenses
685
654
Total current liabilities
3,161
3,099
Long-term accrued warranty
70
75
Other non-current liabilities
844
861
Long-term debt, less current portion
5,197
5,195
Total Liabilities
9,272
9,230
Total Shareholders’ Deficit
(1,300
)
(1,491
)
Total Liabilities and Shareholders’
Deficit
$
7,972
$
7,739
SEAGATE TECHNOLOGY HOLDINGS
PLC
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In millions, except per share
data)
(Unaudited)
For the Three Months
Ended
September 27, 2024
September 29, 2023
Revenue
$
2,168
$
1,454
Cost of revenue
1,454
1,305
Product development
181
171
Marketing and administrative
129
105
Restructuring and other, net
1
2
Total operating expenses
1,765
1,583
Income (loss) from operations
403
(129
)
Interest income
7
2
Interest expense
(85
)
(84
)
Net gain from termination of interest rate
swap
—
104
Net loss from early redemption of debt
—
(29
)
Other, net
(9
)
(11
)
Other expense, net
(87
)
(18
)
Income (loss) before income taxes
316
(147
)
Provision for income taxes
11
37
Net income (loss)
$
305
$
(184
)
Net income (loss) per share:
Basic
$
1.45
$
(0.88
)
Diluted
$
1.41
$
(0.88
)
Number of shares used in per share
calculations:
Basic
211
208
Diluted
216
208
Cash dividends declared per ordinary
share
$
0.70
$
0.70
SEAGATE TECHNOLOGY HOLDINGS
PLC
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
For the Three Months
Ended
September 27, 2024
September 29, 2023
OPERATING ACTIVITIES
Net income (loss)
$
305
$
(184
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
64
76
Share-based compensation
38
25
Net loss from redemption and repurchase of
debt
—
7
Deferred income taxes
(3
)
28
Other non-cash operating activities,
net
23
(50
)
Changes in operating assets and
liabilities:
Accounts receivable, net
(199
)
100
Inventories, net
(144
)
88
Accounts payable
10
(70
)
Accrued employee compensation
37
(12
)
BIS settlement penalty
(15
)
—
Accrued expenses, income taxes and
warranty
16
54
Other assets and liabilities
(37
)
65
Net cash provided by operating
activities
95
127
INVESTING ACTIVITIES
Acquisition of property, equipment and
leasehold improvements
(68
)
(70
)
Net cash used in investing activities
(68
)
(70
)
FINANCING ACTIVITIES
Redemption and repurchase of debt
—
(1,288
)
Proceeds from issuance of long-term
debt
—
1,500
Dividends to shareholders
(147
)
(145
)
Taxes paid related to net share settlement
of equity awards
(28
)
(25
)
Proceeds from issuance of ordinary shares
under employee stock plans
29
35
Other financing activities, net
—
(126
)
Net cash used in financing activities
(146
)
(49
)
Effect of foreign currency exchange rate
changes on cash, cash equivalents and restricted cash
—
1
(Decrease) increase in cash, cash
equivalents and restricted cash
(119
)
9
Cash, cash equivalents and restricted cash
at the beginning of the period
1,360
788
Cash, cash equivalents and restricted cash
at the end of the period
$
1,241
$
797
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, free cash flow, EBITDA, adjusted
EBITDA and last twelve months adjusted EBITDA, which are adjusted
from results based on GAAP to exclude certain benefits, expenses,
gains and losses. These non-GAAP financial measures are used by
management to evaluate the business and 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
investors as these non-GAAP results exclude certain benefits,
expenses, gains and losses that the Company believes are not part
of the Company's ongoing operations and not indicative of its core
operating results.
These non-GAAP financial measures 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
September 27, 2024
September 29, 2023
GAAP Gross Profit
$
714
$
149
Accelerated depreciation, impairment and
other charges related to cost saving efforts
—
13
Purchase order cancellation fees
(1
)
118
Share-based compensation
10
7
Other charges
—
1
Non-GAAP Gross Profit
$
723
$
288
GAAP Gross Margin
32.9
%
10.2
%
Non-GAAP Gross Margin
33.3
%
19.8
%
GAAP Operating Expenses
$
311
$
278
Restructuring and other, net
(1
)
(2
)
Share-based compensation
(28
)
(18
)
Other charges
(1
)
(10
)
Non-GAAP Operating Expenses
$
281
$
248
GAAP Income (Loss) From
Operations
$
403
$
(129
)
Accelerated depreciation, impairment and
other charges related to cost saving efforts
—
13
Purchase order cancellation fees
(1
)
118
Restructuring and other, net
1
2
Share-based compensation
38
25
Other charges
1
11
Non-GAAP Income From Operations
$
442
$
40
GAAP Operating Margin
18.6
%
(8.9
)%
Non-GAAP Operating Margin
20.4
%
2.8
%
GAAP Net Income (Loss)
$
305
$
(184
)
Accelerated depreciation, impairment and
other charges related to cost saving efforts
—
13
Net gain from termination of interest rate
swap
—
(104
)
Net loss from early redemption of debt
—
29
Purchase order cancellation fees
(1
)
118
Restructuring and other, net
1
2
Share-based compensation
38
25
Strategic investment losses or impairment
charges
1
—
Other charges
1
11
Income tax adjustments
(8
)
44
Non-GAAP Net Income (Loss)
$
337
$
(46
)
GAAP Diluted Net Income (Loss) Per
Share
$
1.41
$
(0.88
)
Accelerated depreciation, impairment and
other charges related to cost saving efforts
—
0.06
Net gain from termination of interest rate
swap
—
$
(0.50
)
Net loss from early redemption of debt
—
0.14
Purchase order cancellation fees
—
0.57
Restructuring and other, net
—
0.01
Share-based compensation
0.18
0.12
Strategic investment losses or impairment
charges
—
—
Other charges
—
0.05
Income tax adjustments
(0.04
)
0.21
Non-GAAP diluted share count
adjustments1
0.03
—
Non-GAAP Diluted Net Income (Loss) Per
Share1
$
1.58
$
(0.22
)
Shares Used In Diluted Net Income
(Loss) Per Share Calculation
GAAP
216
208
Non-GAAP diluted share count
adjustments1
(3
)
—
Non-GAAP
213
208
GAAP Net Cash Provided by Operating
Activities
$
95
$
127
Acquisition of property, equipment and
leasehold improvements
(68
)
(70
)
Free Cash Flow
$
27
$
57
_____________________________________
1
For the three months ended September 27,
2024, using the if-converted method, approximately 3 million shares
are issuable upon conversion of our 2028 exchangeable senior notes.
These dilutive effects are expected to be offset in full by the
capped call transactions and are excluded from non-GAAP shares used
in diluted net income per share calculation. For the three months
ended September 29, 2023, GAAP and non-GAAP diluted net loss per
share were computed using weighted average basic shares of 208
million, as a result of the net loss reported during the
period.
SEAGATE TECHNOLOGY HOLDINGS PLC
RECONCILIATIONS OF GAAP TO
NON-GAAP MEASURES
(In millions)
(Unaudited)
For the Three Months
Ended
September 27,
2024
June 28, 2024
March 29, 2024
December 29,
2023
Last Twelve Months
GAAP Net Income (Loss)
$
305
$
513
$
25
$
(19
)
$
824
Depreciation and amortization
64
63
63
62
252
Interest expense
85
82
82
84
333
Interest income
(7
)
(7
)
(3
)
(3
)
(20
)
Income tax expense
11
25
33
15
84
Non-GAAP EBITDA
458
676
200
139
1,473
Net gain from business divestiture
—
(313
)
—
—
(313
)
Purchase order cancellation fees
(1
)
(26
)
(1
)
(4
)
(32
)
Restructuring and other, net
1
(3
)
2
(31
)
(31
)
Share-based compensation
38
38
34
30
140
Strategic investment losses or impairment
charges
1
8
—
43
52
Underutilization charges, net of
depreciation and amortization
—
20
38
31
89
Other charges
1
4
5
8
18
Non-GAAP Adjusted EBITDA
$
498
$
404
$
278
$
216
$
1,396
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 they are not normal
operating expenses or indicative of the Company's operating
performance. Exclusion of these amounts provides a supplemental
view of the Company's operating performance to investors to enable
them to evaluate the Company's current operating performance
compared to the past periods' operating performance.
Net gain from business divestiture
The Company recorded a pre-tax net gain of $313 million in
connection to the sale of System-on-Chip Operations in April 2024.
The net gain is excluded in the non-GAAP measures because it is not
indicative of the Company's operating performance. The Company
excludes this amount to provide a supplemental view to investors to
evaluate the Company's current operating performance compared to
the past periods' operating performance.
Net loss (gain) from early redemption of debt and termination
of interest rate swap
From time to time, the Company incurs gains, losses and fees
from the early redemption and repurchase of certain long-term debt
instruments and termination of related interest rate swap
agreements. The amount of these charges may be inconsistent in size
and varies depending on the timing of the early redemption of debt
and/or termination of interest rate swap. The Company does not
believe these are part of its normal operating performance.
Exclusion of these amounts provides a supplemental view of the
Company's operating performance to investors to enable them to
evaluate the Company's current operating performance compared to
the past periods' operating performance.
Purchase order cancellation fees
Purchase order cancellation fees are the costs incurred to
cancel certain purchase commitments made with the Company's
suppliers for component and equipment purchases that will not be
received due to change in forecasted demand. These charges are
inconsistent in amount and frequency. The Company does not believe
these are part of its normal operating expenses. Exclusion of these
amounts provides a supplemental view to investors to evaluate the
Company's current operating performance compared to the past
periods’ operating performance.
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, as well as charges or gains
from sale of properties. These costs or benefits do not reflect the
Company’s normal or ongoing operating performance and consequently
the Company excludes these expenses to provide a supplemental view
to investors to evaluate the Company's current operating
performance compared to the 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.
Strategic investment gains, losses and impairment
charges
From time to time, the Company incurs gains, losses or
impairment charges from strategic investments that are measured and
accounted at fair value, under the equity method of accounting, as
available-for-sale debt securities or adjust for downward or upward
adjustments to the carrying value under the measurement alternative
if an impairment or observable price adjustment is recognized in
the current period that are not considered normal operating
expenses or gains. The resulting expense, gain or impairment loss
is inconsistent in amount and frequency and the Company excludes
these amounts to provide a supplemental view to investors to
evaluate the Company's current operating performance compared to
the past periods’ operating performance.
Other charges
The other charges primarily include IT transformation costs.
These charges are inconsistent in amount and frequency and are
excluded to provide a supplemental view to investors to evaluate
the Company's current operating performance compared to 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.
Non-GAAP diluted share count adjustments
Using the if-converted method, diluted net income per share is
calculated assuming that the excess value above the principal of
the 2028 exchangeable notes were converted solely into shares of
common stock at the beginning of the reporting period, unless the
result would be anti-dilutive. Non-GAAP shares used in diluted net
income per share calculation excluded certain dilutive shares,
which are expected to be offset partially or in full by the capped
call transactions entered by the Company in conjunction with our
2028 exchangeable senior notes in order to reduce the potential
dilution to the Company’s ordinary shares upon the conversion.
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.
EBITDA, adjusted EBITDA and last twelve months (LTM) adjusted
EBITDA
EBITDA is defined as net income (loss) before income tax
expense, interest expense, interest income, depreciation and
amortization. Adjusted EBITDA excludes certain expenses, gains and
losses that the Company believes are not indicative of its core
operating results. These adjustments primarily include impairment
and other charges related to cost saving efforts, net loss (gain)
from early redemption of debt, net gain from termination of
interest rate swap, net gain from business divestiture, purchase
order cancellation fees, restructuring and other, net, share-based
compensation, strategic investment losses or impairment charges,
other extraordinary charges such as factory underutilization
charges. LTM adjusted EBITDA is defined as the total of last twelve
months adjusted EBITDA. These non-GAAP financial measures are used
by management to evaluate the Company’s debt portfolio and
structure to comply with its financial debt covenants.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241022235947/en/
Investor Relations Contact: Shanye Hudson, (510) 661-1600
shanye.hudson@seagate.com
Media Contact: Karin Taylor (408) 772-8279
karin.h.taylor@seagate.com
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