Micron Technology, Inc. Reports Results for the Second Quarter of Fiscal 2023


Achieving technology milestones while cutting expenses and reducing supply

BOISE, Idaho, March 28, 2023 (GLOBE NEWSWIRE) -- Micron Technology, Inc. (Nasdaq: MU) today announced results for its second quarter of fiscal 2023, which ended March 2, 2023.

Fiscal Q2 2023 highlights

  • Revenue of $3.69 billion versus $4.09 billion for the prior quarter and $7.79 billion for the same period last year
  • GAAP net loss of $2.31 billion, or $2.12 per diluted share
  • Non-GAAP net loss of $2.08 billion, or $1.91 per diluted share
  • Inventory write-downs of $1.43 billion, impact of $1.34 per diluted share
  • Operating cash flow of $343 million versus $943 million for the prior quarter and $3.63 billion for the same period last year

“Micron delivered fiscal second quarter revenue within our guidance range in a challenging market environment,” said Micron Technology President and CEO Sanjay Mehrotra. “Customer inventories are getting better, and we expect gradual improvements to the industry’s supply-demand balance. We remain confident in long-term demand and are investing prudently to preserve our technology and product portfolio competitiveness.”

Quarterly Financial Results
(in millions, except per share amounts)
GAAP(1) Non-GAAP(2)
FQ2-23FQ1-23FQ2-22 FQ2-23FQ1-23FQ2-22
        
Revenue$3,693 $4,085 $7,786  $3,693 $4,085 $7,786 
Gross margin (1,206) 893  3,676   (1,161) 934  3,724 
percent of revenue (32.7%) 21.9% 47.2%  (31.4%) 22.9% 47.8%
Operating expenses 1,097  1,102  1,130   916  999  974 
Operating income (loss) (2,303) (209) 2,546   (2,077) (65) 2,750 
percent of revenue (62.4%) (5.1%) 32.7%  (56.2%) (1.6%) 35.3%
Net income (loss) (2,312) (195) 2,263   (2,081) (39) 2,444 
Diluted earnings (loss) per share (2.12) (0.18) 2.00   (1.91) (0.04) 2.14 


Investments in capital expenditures, net(2) were $2.16 billion for the second quarter of 2023, which resulted in adjusted free cash flows(2) of negative $1.81 billion. Micron ended the second quarter of 2023 with cash, marketable investments, and restricted cash of $12.12 billion. Micron’s Board of Directors has declared a quarterly dividend of $0.115 per share, payable in cash on April 25, 2023, to shareholders of record as of the close of business on April 10, 2023.

Business Outlook

The table below presents Micron’s guidance for the third quarter of 2023. This guidance assumes a write down of approximately $500 million associated with inventory produced during the third quarter, impacting both GAAP and non-GAAP diluted earnings (loss) per share by approximately $0.45.

FQ3-23GAAP(1) OutlookNon-GAAP(2) Outlook
   
Revenue$3.70 billion ± $200 million$3.70 billion ± $200 million
Gross margin(23.0%) ± 2.5%(21.0%) ± 2.5%
Operating expenses$1.07 billion ± $15 million$900 million ± $15 million
Diluted earnings (loss) per share($1.79) ± $0.07($1.58) ± $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, March 28, 2023 at 2:30 p.m. Mountain Time 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.

© 2023 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, including 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 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 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, 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 2,
2023
December 1,
2022
March 3,
2022
March 2,
2023
March 3,
2022
      
Revenue$3,693 $4,085 $7,786 $7,778 $15,473 
Cost of goods sold 4,899  3,192  4,110  8,091  8,232 
Gross margin (1,206) 893  3,676  (313) 7,241 
      
Research and development 788  849  792  1,637  1,504 
Selling, general, and administrative 231  251  263  482  522 
Restructure and asset impairments 86  13  5  99  43 
Other operating (income) expense, net (8) (11) 70  (19) (5)
Operating income (loss) (2,303) (209) 2,546  (2,512) 5,177 
      
Interest income 119  88  12  207  22 
Interest expense (89) (51) (55) (140) (100)
Other non-operating income (expense), net 2  (4) 6  (2) (69)
  (2,271) (176) 2,509  (2,447) 5,030 
      
Income tax (provision) benefit (54) (8) (255) (62) (474)
Equity in net income (loss) of equity method investees 13  (11) 9  2  13 
Net income (loss)$(2,312)$(195)$2,263 $(2,507)$4,569 
      
Earnings (loss) per share     
Basic$(2.12)$(0.18)$2.02 $(2.30)$4.08 
Diluted (2.12) (0.18) 2.00  (2.30) 4.04 
      
Number of shares used in per share calculations     
Basic 1,091  1,090  1,119  1,091  1,119 
Diluted 1,091  1,090  1,130  1,091  1,130 


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

As ofMarch 2,
2023
December 1,
2022
September 1,
2022
    
Assets   
Cash and equivalents$9,798 $9,574 $8,262 
Short-term investments 1,020  1,007  1,069 
Receivables 2,278  3,318  5,130 
Inventories 8,129  8,359  6,663 
Other current assets 673  663  657 
Total current assets 21,898  22,921  21,781 
Long-term marketable investments 1,212  1,426  1,647 
Property, plant, and equipment 39,085  39,335  38,549 
Operating lease right-of-use assets 673  693  678 
Intangible assets 410  428  421 
Deferred tax assets 697  672  702 
Goodwill 1,228  1,228  1,228 
Other noncurrent assets 1,317  1,171  1,277 
Total assets$66,520 $67,874 $66,283 
    
Liabilities and equity   
Accounts payable and accrued expenses$4,310 $5,438 $6,090 
Current debt 237  171  103 
Other current liabilities 708  916  1,346 
Total current liabilities 5,255  6,525  7,539 
Long-term debt 12,037  10,094  6,803 
Noncurrent operating lease liabilities 610  625  610 
Noncurrent unearned government incentives 529  516  589 
Other noncurrent liabilities 832  808  835 
Total liabilities 19,263  18,568  16,376 
    
Commitments and contingencies   
    
Shareholders’ equity   
Common stock 123  123  123 
Additional capital 10,633  10,335  10,197 
Retained earnings 44,426  46,873  47,274 
Treasury stock (7,552) (7,552) (7,127)
Accumulated other comprehensive income (loss) (373) (473) (560)
Total equity 47,257  49,306  49,907 
Total liabilities and equity$66,520 $67,874 $66,283 


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

Six months endedMarch 2,
2023
March 3,
2022
   
Cash flows from operating activities  
Net income (loss)$(2,507)$4,569 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:  
Depreciation expense and amortization of intangible assets 3,863  3,413 
Provision to write-down inventories to net realizable value 1,430   
Stock-based compensation 303  247 
(Gain) loss on debt repurchases   83 
Change in operating assets and liabilities:  
Receivables 2,910  (44)
Inventories (2,896) (900)
Accounts payable and accrued expenses (1,795) 107 
Other (22) 91 
Net cash provided by operating activities 1,286  7,566 
   
Cash flows from investing activities  
Expenditures for property, plant, and equipment (4,654) (5,876)
Purchases of available-for-sale securities (293) (922)
Proceeds from maturities of available-for-sale securities 765  631 
Proceeds from government incentives 64  66 
Proceeds from sales of available-for-sale securities 8  172 
Proceeds from sale of Lehi, Utah fab   893 
Other (71) (140)
Net cash provided by (used for) investing activities (4,181) (5,176)
   
Cash flows from financing activities  
Proceeds from issuance of debt 5,221  2,000 
Repurchases of common stock - repurchase program (425) (667)
Payments of dividends to shareholders (252) (224)
Payments on equipment purchase contracts (76) (105)
Repayments of debt (53) (1,981)
Other 19  (2)
Net cash provided by (used for) financing activities 4,434  (979)
   
Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash 9  (16)
   
Net increase (decrease) in cash, cash equivalents, and restricted cash 1,548  1,395 
Cash, cash equivalents, and restricted cash at beginning of period 8,339  7,829 
Cash, cash equivalents, and restricted cash at end of period$9,887 $9,224 


MICRON TECHNOLOGY, INC.
NOTES
(Unaudited)

Inventories

In the second quarter of 2023, we recorded a charge of $1.43 billion to cost of goods sold to write down the carrying value of work in process and finished goods inventories to their estimated net realizable values.

Debt Activity

Term Loan Agreement: On November 3, 2022, we entered into a Term Loan Agreement consisting of three tranches and borrowed $2.60 billion in aggregate principal amount, including $927 million due November 3, 2025, $746 million due November 3, 2026, and $927 million due November 3, 2027.

On January 5, 2023, we amended the Term Loan Agreement and borrowed an additional $600 million in aggregate principal amount, including $125 million due November 3, 2025, $250 million due November 3, 2026, and $225 million due November 3, 2027. Borrowings under the Term Loan Agreement will generally bear interest at adjusted term SOFR plus an applicable interest rate margin ranging from 1.00% to 2.00%, varying by tranche and depending on our corporate credit ratings.

Senior Unsecured Notes: On October 31, 2022, we issued $750 million principal amount of 6.750% senior unsecured notes due November 1, 2029 in a public offering and received proceeds of $744 million.

On February 9, 2023, we issued an additional $500 million principal amount of 6.750% senior unsecured notes due November 1, 2029 and received proceeds of $520 million. Additionally, we issued $750 million principal amount of 5.875% senior unsecured notes due February 9, 2033 and received proceeds of $745 million.

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

 2nd Qtr.1st Qtr.2nd Qtr.
 March 2,
2023
December 1,
2022
March 3,
2022
    
GAAP gross margin$(1,206)$893 $3,676 
Stock-based compensation 41  36  44 
Other 4  5  4 
Non-GAAP gross margin$(1,161)$934 $3,724 
    
GAAP operating expenses$1,097 $1,102 $1,130 
Stock-based compensation (95) (90) (75)
Restructure and asset impairments (86) (13) (5)
Other     (76)
Non-GAAP operating expenses$916 $999 $974 
    
GAAP operating income (loss)$(2,303)$(209)$2,546 
Stock-based compensation 136  126  119 
Restructure and asset impairments 86  13  5 
Other 4  5  80 
Non-GAAP operating income (loss)$(2,077)$(65)$2,750 
    
GAAP net income (loss)$(2,312)$(195)$2,263 
Stock-based compensation 136  126  119 
Restructure and asset impairments 86  13  5 
Amortization of debt discount and other costs 4  5  8 
Other 4  5  80 
Estimated tax effects of above and other tax adjustments 1  7  (31)
Non-GAAP net income (loss)$(2,081)$(39)$2,444 
    
GAAP weighted-average common shares outstanding - Diluted 1,091  1,090  1,130 
Adjustment for stock-based compensation     13 
Non-GAAP weighted-average common shares outstanding - Diluted 1,091  1,090  1,143 
    
GAAP diluted earnings (loss) per share$(2.12)$(0.18)$2.00 
Effects of the above adjustments 0.21  0.14  0.14 
Non-GAAP diluted earnings (loss) per share$(1.91)$(0.04)$2.14 


RECONCILIATION OF GAAP TO NON-GAAP MEASURES, Continued

 2nd Qtr.1st Qtr.2nd Qtr.
 March 2,
2023
December 1,
2022
March 3,
2022
    
GAAP net cash provided by operating activities$343 $943 $3,628 
    
Expenditures for property, plant, and equipment (2,205) (2,449) (2,611)
Proceeds from sales of property, plant, and equipment 17  23  27 
Payments on equipment purchase contracts (29) (47) (27)
Amounts funded by partners 62  2  11 
Investments in capital expenditures, net (2,155) (2,471) (2,600)
Adjusted free cash flow$(1,812)$(1,528)$1,028 


The tables above reconcile GAAP to non-GAAP measures of gross margin, operating expenses, operating income (loss), net income (loss), diluted shares, diluted earnings (loss) per share, and adjusted free cash flow. 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 routinely 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;
  • Employee severance;
  • Gains and losses from settlements;
  • Restructure and asset impairments;
  • Amortization of debt discount and other costs;
  • Gains and losses from debt repurchases and conversions;
  • Gains and losses from business acquisition activities; and
  • The estimated tax effects of above, non-cash changes in net deferred income taxes, assessments of tax exposures, certain tax matters related to prior fiscal periods, 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 (loss).

MICRON TECHNOLOGY, INC.
RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK

FQ3-23GAAP Outlook Adjustments Non-GAAP Outlook
       
Revenue$3.70 billion ± $200 million    $3.70 billion ± $200 million
Gross margin(23.0%) ± 2.5% 2.0% A (21.0%) ± 2.5%
Operating expenses$1.07 billion ± $15 million $166 million B $900 million ± $15 million
Diluted earnings (loss) per share(1)($1.79) ± $0.07 $0.21 A, B, C ($1.58) ± $0.07


Non-GAAP Adjustments
(in millions)
  
    
AStock-based compensation – cost of goods sold $55
AOther – cost of goods sold  5
BStock-based compensation – research and development  62
BStock-based compensation – selling, general, and administrative  44
BRestructure and asset impairments  60
CTax effects of the above items and other tax adjustments  5
   $231

(1)   GAAP and non-GAAP earnings (loss) per share based on approximately 1.09 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, additional 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.

 

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