/Micron Technology, Inc. Reports Results for the Second Quarter of Fiscal 2021 – Yahoo Finance

Micron Technology, Inc. Reports Results for the Second Quarter of Fiscal 2021 – Yahoo Finance


Strong execution drives robust growth across multiple end markets

BOISE, Idaho, March 31, 2021 (GLOBE NEWSWIRE) — 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

5

8

10

Amortization of debt discount and other costs

8

7

6

Other

7

7

7

Estimated tax effects of above and non-cash changes in net deferred income taxes

(77

)

(20

)

4

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

7

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

2

D

Tax effects of the above items and non-cash changes in net deferred income taxes

2

$

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.

CONTACT: Contacts: Farhan Ahmad Investor Relations farhanahmad@micron.com (408) 834-1927 Erica Rodriguez Pompen Media Relations epompen@micron.com (408) 834-1873
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