DRAM portfolio strengthened with 1z ramp; High-value NAND shipments reach record levels in FY20

BOISE, Idaho, Sept. 29, 2020 (GLOBE NEWSWIRE) — Micron Technology, Inc. (Nasdaq: MU) today announced results for its fourth quarter and full year of fiscal 2020, which ended Sept. 3, 2020.

Fiscal Q4 2020 highlights

  • Revenue of $6.06 billion versus $5.44 billion for the prior quarter and $4.87 billion for the same period last year
  • GAAP net income of $988 million, or $0.87 per diluted share
  • Non-GAAP net income of $1.23 billion, or $1.08 per diluted share
  • Operating cash flow of $2.27 billion versus $2.02 billion for the prior quarter and $2.23 billion for the same period last year

Fiscal 2020 highlights

  • Revenue of $21.44 billion versus $23.41 billion for the prior year
  • GAAP net income of $2.69 billion, or $2.37 per diluted share
  • Non-GAAP net income of $3.24 billion, or $2.83 per diluted share
  • Operating cash flow of $8.31 billion versus $13.19 billion for the prior year

“Micron delivered solid fiscal fourth quarter revenue and EPS resulting from strong DRAM sales in cloud, PC and gaming consoles and an extraordinary increase in QLC NAND shipments,” said Micron Technology President and CEO Sanjay Mehrotra. “We look forward to improving market conditions throughout calendar 2021, driven by 5G, cloud and automotive growth, and we are excited by the continued momentum in our product portfolio.”













Quarterly Financial Results
(in millions, except per share amounts) GAAP(1)   Non-GAAP(2)
FQ4-20 FQ3-20 FQ4-19   FQ4-20 FQ3-20 FQ4-19
               
Revenue $ 6,056   $ 5,438   $ 4,870     $ 6,056   $ 5,438   $ 4,870  
Gross margin 2,068   1,763   1,395     2,111   1,804   1,491  
percent of revenue 34.1 % 32.4 % 28.6 %   34.9 % 33.2 % 30.6 %
Operating expenses 911   875   745     809   823   797  
Operating income 1,157   888   650     1,302   981   694  
percent of revenue 19.1 % 16.3 % 13.3 %   21.5 % 18.0 % 14.3 %
Net income attributable to Micron 988   803   561     1,229   941   637  
Diluted earnings per share 0.87   0.71   0.49     1.08   0.82   0.56  













Annual Financial Results
(in millions, except per share amounts) GAAP(1)   Non-GAAP(2)
FY 20 FY 19   FY 20 FY 19
           
Revenue $ 21,435   $ 23,406     $ 21,435   $ 23,406  
Gross margin 6,552   10,702     6,718   10,973  
percent of revenue 30.6 % 45.7 %   31.3 % 46.9 %
Operating expenses 3,549   3,326     3,299   3,172  
Operating income 3,003   7,376     3,419   7,801  
percent of revenue 14.0 % 31.5 %   16.0 % 33.3 %
Net income attributable to Micron 2,687   6,313     3,235   7,314  
Diluted earnings per share 2.37   5.51     2.83   6.35  

Investments in capital expenditures, net(2) were $2.16 billion for the fourth quarter of 2020 and $7.95 billion for the full year of 2020, which resulted in adjusted free cash flows(2) of $111 million for the fourth quarter of 2020 and $361 million for the full year of 2020. Micron repurchased approximately 824,000 shares of its common stock for $41 million during the fourth quarter of 2020 and 3.6 million shares of its common stock for $176 million during the full year of 2020 and ended the year with cash, marketable investments, and restricted cash of $9.26 billion, for a net cash(2) position of $2.61 billion.

Business Outlook

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








FQ1-21 GAAP(1) Outlook Non-GAAP(2) Outlook
     
Revenue $5.2 billion ± $200 million $5.2 billion ± $200 million
Gross margin 26.5% ± 1% 27.5% ± 1%
Operating expenses $873 million ± $25 million $825 million ± $25 million
Interest (income) expense, net $37 million $35 million
Diluted earnings per share $0.39 ± $0.07 $0.47 ± $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 Tuesday, Sept. 29, 2020 at 2:30 p.m. MT to discuss its fourth quarter financial results and provide forward-looking guidance for its first 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® and Crucial® — 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 for all. Backed by more than 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 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 own
ers.

Forward-Looking Statements

This press release contains forward-looking statements regarding the 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)
































  4th Qtr. 3rd Qtr. 4th Qtr. Year Ended
  September 3,
2020
May 28,
2020
August 29,
2019
September 3,
2020
August 29,
2019
           
Revenue $ 6,056   $ 5,438   $ 4,870   $ 21,435   $ 23,406  
Cost of goods sold 3,988   3,675   3,475   14,883   12,704  
Gross margin 2,068   1,763   1,395   6,552   10,702  
           
Selling, general, and administrative 231   216   212   881   836  
Research and development 630   649   623   2,600   2,441  
Other operating (income) expense, net 50   10   (90)   68   49  
Operating income 1,157   888   650   3,003   7,376  
           
Interest income 13   23   57   114   205  
Interest expense (50)   (51)   (39)   (194)   (128)  
Other non-operating income (expense), net 5   10   (13)   60   (405)  
  1,125   870   655   2,983   7,048  
           
Income tax (provision) benefit (136)   (68)   (71)   (280)   (693)  
Equity in net income (loss) of equity method investees 1   3   2   7   3  
Net income 990   805   586   2,710   6,358  
           
Net income attributable to noncontrolling interests (2)   (2)   (25)   (23)   (45)  
Net income attributable to Micron $ 988   $ 803   $ 561   $ 2,687   $ 6,313  
           
Earnings per share          
Basic $ 0.89   $ 0.72   $ 0.51   $ 2.42   $ 5.67  
Diluted 0.87   0.71   0.49   2.37   5.51  
           
Number of shares used in per share calculations          
Basic 1,111   1,111   1,104   1,110   1,114  
Diluted 1,131   1,129   1,128   1,131   1,143  

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













































As of September 3,
2020
May 28,
2020
August 29,
2019
       
Assets      
Cash and equivalents $ 7,624   $ 8,267   $ 7,152  
Short-term investments 518   391   803  
Receivables 3,912   3,603   3,195  
Inventories 5,607   5,405   5,118  
Other current assets 304   233   235  
Total current assets 17,965   17,899   16,503  
Long-term marketable investments 1,048   577   1,164  
Property, plant, and equipment 31,031   30,081   28,240  
Intangible assets 334   332   340  
Deferred tax assets 707   775   837  
Goodwill 1,228   1,228   1,228  
Operating lease right-of-use assets 584   599    
Other noncurrent assets 781   514   575  
Total assets $ 53,678   $ 52,005   $ 48,887  
       
Liabilities and equity      
Accounts payable and accrued expenses $ 5,817   $ 5,364   $ 4,626  
Current debt 270   330   1,310  
Other current liabilities 548   491   454  
Total current liabilities 6,635   6,185   6,390  
Long-term debt 6,373   6,356   4,541  
Noncurrent operating lease liabilities 533   540    
Noncurrent unearned government incentives 643   553   636  
Other noncurrent liabilities 498   453   452  
Total liabilities 14,682   14,087   12,019  
       
Commitments and contingencies      
       
Redeemable noncontrolling interest   98   98  
       
Micron shareholders’ equity      
Common stock 119   119   118  
Additional capital 8,917   8,764   8,214  
Retained earnings 33,384   32,402   30,761  
Treasury stock (3,495)   (3,454)   (3,221)  
Accumulated other comprehensive income (loss) 71   (11)   9  
Total Micron shareholders’ equity 38,996   37,820   35,881  
Noncontrolling interest in subsidiary     889  
Total equity 38,996   37,820   36,770  
Total liabilities and equity $ 53,678   $ 52,005   $ 48,887  
       

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










































For the year ended September 3,
2020
August 29,
2019
     
Cash flows from operating activities    
Net income $ 2,710   $ 6,358  
Adjustments to reconcile net income to net cash provided by operating activities    
Depreciation expense and amortization of intangible assets 5,650   5,424  
Amortization of debt discount and other costs 26   49  
Stock-based compensation 328   243  
(Gain) loss on debt prepayments, repurchases, and conversions (40)   396  
Change in operating assets and liabilities    
Receivables (723)   2,431  
Inventories (489)   (1,528)  
Accounts payable and accrued expenses 725   (174)  
Deferred income taxes, net 79   150  
Other 40   (160)  
Net cash provided by operating activities 8,306   13,189  
     
Cash flows from investing activities    
Expenditures for property, plant, and equipment (8,223)   (9,780)  
Purchases of available-for-sale securities (1,857)   (4,218)  
Proceeds from sales of available-for-sale securities 1,458   1,504  
Proceeds from maturities of available-for-sale securities 814   1,541  
Proceeds from government incentives 262   748  
Other (43)   120  
Net cash provided by (used for) investing activities (7,589)   (10,085)  
     
Cash flows from financing activities    
Repayments of debt (4,366)   (3,340)  
Acquisition of noncontrolling interest in IMFT (744)    
Payments to acquire treasury stock (251)   (2,729)  
Payments on equipment purchase contracts (63)   (75)  
Proceeds from issuance of debt 5,000   3,550  
Proceeds from issuance of stock 225   179  
Other (118)   (23)  
Net cash provided by (used for) financing activities (317)   (2,438)  
     
Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash 11   26  
     
Net increase (decrease) in cash, cash equivalents, and restricted cash 411   692  
Cash, cash equivalents, and restricted cash at beginning of period 7,279   6,587  
Cash, cash equivalents, and restricted cash at end of period $ 7,690   $ 7,279  

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 the existing equipment in our NAND wafer fabrication facilities and our research and development facilities from five years to seven years as of the beginning of the first quarter of 2020. This revision reduced our aggregate depreciation expense by approximately $675 million in 2020, of which approximately $165 million remained capitalized in inventory as of the end of 2020. Adjusting for the effect of the reduced amount of depreciation expense remaining in inventory, the revision in estimated useful lives benefited both operating income and net income by approximately $150 million and diluted earnings per share by approximately $0.13 for the fourth quarter of 2020, and benefited both operating income and net income by approximately $510 million and diluted earnings per share by approximately $0.45 for 2020.

Adoption of Lease Accounting Standard

In the first quarter of 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.

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












































  4th Qtr. 3rd Qtr. 4th Qtr. Year Ended
  September 3,
2020
May 28,
2020
August 29,
2019
September 3,
2020
August 29,
2019
           
GAAP gross margin $ 2,068   $ 1,763   $ 1,395   $ 6,552   $ 10,702  
Stock-based compensation 37   34   29   139   102  
Start-up and preproduction costs     12     58  
Employee severance (1)     47     73  
Other 7   7   8   27   38  
Non-GAAP gross margin $ 2,111   $ 1,804   $ 1,491   $ 6,718   $ 10,973  
           
GAAP operating expenses $ 911   $ 875   $ 745   $ 3,549   $ 3,326  
Stock-based compensation (52)   (48)   (38)   (189)   (141)  
Employee severance     (32)     (43)  
Restructure and asset impairments (50)   (4)   122   (60)   32  
Other       (1)   (2)  
Non-GAAP operating expenses $ 809   $ 823   $ 797   $ 3,299   $ 3,172  
           
GAAP operating income $ 1,157   $ 888   $ 650   $ 3,003   $ 7,376  
Stock-based compensation 89   82   67   328   243  
Start-up and preproduction costs     12     58  
Employee severance (1)     79     116  
Restructure and asset impairments 50   4   (122)   60   (32)  
Other 7   7   8   28   40  
Non-GAAP operating income $ 1,302   $ 981   $ 694   $ 3,419   $ 7,801  
           
GAAP net income attributable to Micron $ 988   $ 803   $ 561   $ 2,687   $ 6,313  
Stock-based compensation 89   82   67   328   243  
Start-up and preproduction costs     12     58  
Employee severance (1)     79     116  
Restructure and asset impairments 50   4   (122)   60   (32)  
Amortization of debt discount and other costs 6   4   10   26   49  
(Gain) loss on debt repurchases and conversions   2   10   (40)   396  
Other 7   7   13   28   57  
Estimated tax effects of above, non-cash changes in net deferred income taxes, assessments of tax exposures, and impact of U.S. income tax reform 90   39   7   146   114  
Non-GAAP net income attributable to Micron $ 1,229   $ 941   $ 637   $ 3,235   $ 7,314  
           
GAAP weighted-average common shares outstanding – Diluted 1,131   1,129   1,128   1,131   1,143  
Adjustment for stock-based compensation and capped calls 11   13   6   10   7  
Non-GAAP weighted-average common shares outstanding – Diluted 1,142   1,142   1,134   1,141   1,150  
           
GAAP diluted earnings per share $ 0.87   $ 0.71   $ 0.49   $ 2.37   $ 5.51  
Effects of the above adjustments 0.21   0.11   0.07   0.46   0.84  
Non-GAAP diluted earnings per share $ 1.08   $ 0.82   $ 0.56   $ 2.83   $ 6.35  

RECONCILIATION OF GAAP TO NON-GAAP MEASURES, Continued










  4th Qtr. 3rd Qtr. 4th Qtr. Year Ended
  September 3,
2020
May 28,
2020
August 29,
2019
September 3,
2020
August 29,
2019
           
GAAP net cash provided by operating activities $ 2,271   $ 2,023   $ 2,233   $ 8,306   $ 13,189  
Investments in capital expenditures, net          
Expenditures for property, plant, and equipment, net(1) (2,268)   (1,937)   (1,983)   (8,154)   (9,634)  
Payments on equipment purchase contracts (14)   (20)   (21)   (63)   (75)  
Amounts funded by partners 122   35   80   272   754  
Adjusted free cash flow $ 111   $ 101   $ 309   $ 361   $ 4,234  


(1) Expenditures for property, plant, and equipment, net include proceeds from sales of property, plant, and equipment of $12 million for the fourth quarter of 2020, $7 million for the third quarter of 2020, $45 million for the fourth quarter of 2019, $69 million for the full year of 2020, and $146 million for the full year of 2019.








As of September 3,
2020
May 28,
2020
August 29,
2019
       
Cash and short-term investments $ 8,142   $ 8,658   $ 7,955  
Current and noncurrent restricted cash 66   53   127  
Long-term marketable investments 1,048   577   1,164  
Current and long-term debt (6,643)   (6,686)   (5,851)  
Net cash $ 2,613   $ 2,602   $ 3,395  

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;
  • 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.

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








  GAAP Outlook   Adjustments   Non-GAAP Outlook
             
Revenue $5.2 billion ± $200 million   —        $5.2 billion ± $200 million
Gross margin 26.5% ± 1%   1%   A   27.5% ± 1%
Operating expenses $873 million ± $25 million   $48 million   B   $825 million ± $25 million
Interest (income) expense, net $37 million   $2 million   C   $35 million
Diluted earnings per share(1) $0.39 ± $0.07   $0.08   A, B, C, D   $0.47 ± $0.07










Non-GAAP Adjustments
(in millions)
 
     
A Stock-based compensation – cost of goods sold $ 39  
A Other – cost of goods sold 7  
B Stock-based compensation – sales, general, and administrative 25  
B Stock-based compensation – research and development 23  
C Amortization of debt discount and other costs 2  
D Tax effects of the above items and non-cash changes in net deferred income taxes (1)  
    $ 95  


(1) GAAP earnings per share based on approximately 1.13 billion diluted shares and non-GAAP earnings per share based on approximately 1.15 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 [email protected] (408) 834-1927 Erica Rodriguez Pompen Media Relations [email protected] (408) 834-1873

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