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Micron Technology, Inc. Reports Results for the Fourth Quarter and Full Year of Fiscal 2020

Micron Technology, Inc.
·18 mins read

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 owners.

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.

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