Micron Technology, Inc. Reports Results for the First Quarter of Fiscal 2021

Boise, Idaho, UNITED STATES


Industry’s first 176-layer NAND in production

BOISE, Idaho, Jan. 07, 2021 (GLOBE NEWSWIRE) -- Micron Technology, Inc. (Nasdaq: MU) today announced results for its first quarter of fiscal 2021, which ended Dec. 3, 2020.

Fiscal Q1 2021 highlights

  • Revenue of $5.77 billion versus $6.06 billion for the prior quarter and $5.14 billion for the same period last year
  • GAAP net income of $803 million, or $0.71 per diluted share
  • Non-GAAP net income of $897 million, or $0.78 per diluted share
  • Operating cash flow of $1.97 billion versus $2.27 billion for the prior quarter and $2.01 billion for the same period last year

“Micron delivered outstanding fiscal first quarter results, driven by focused execution and strong end-market demand,” said Micron Technology President and CEO Sanjay Mehrotra. “We are excited about the strengthening DRAM industry fundamentals. For the first time in our history, Micron is simultaneously leading on DRAM and NAND technologies, and we are in an excellent position to benefit from accelerating digital transformation of the global economy fueled by AI, 5G, cloud, and the intelligent edge.”

Quarterly Financial Results
(in millions, except per share amounts)
GAAP(1) Non-GAAP(2)
FQ1-21FQ4-20FQ1-20 FQ1-21FQ4-20FQ1-20
        
Revenue$5,773 $6,056 $5,144  $5,773 $6,056 $5,144 
Gross margin1,736 2,068 1,366  1,784 2,111 1,405 
percent of revenue30.1%34.1%26.6% 30.9%34.9%27.3%
Operating expenses870 911 848  811 809 811 
Operating income866 1,157 518  973 1,302 594 
percent of revenue15.0%19.1%10.1% 16.9%21.5%11.5%
Net income attributable to Micron803 988 491  897 1,229 548 
Diluted earnings per share0.71 0.87 0.43  0.78 1.08 0.48 

Investments in capital expenditures, net(2) were $2.78 billion for the first quarter of 2021. Micron ended the quarter with cash, marketable investments, and restricted cash of $8.36 billion, for a net cash(2) position of $1.73 billion.

Business Outlook

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

FQ2-21GAAP(1) OutlookNon-GAAP(2) Outlook
   
Revenue$5.8 billion ± $200 million$5.8 billion ± $200 million
Gross margin25% ± 1%31% ± 1%
Operating expenses$882 million ± $25 million$825 million ± $25 million
Interest (income) expense, net$37 million$35 million
Diluted earnings per share$0.41 ± $0.07$0.75 ± $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 Thursday, Jan. 7, 2021, at 2:30 p.m. MT to discuss its first quarter financial results and provide forward-looking guidance for its second 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 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)

 1st Qtr.4th Qtr.1st Qtr.
 December 3,
2020
September 3,
2020
November 28,
2019
    
Revenue$5,773  $6,056  $5,144 
Cost of goods sold4,037  3,988  3,778 
Gross margin1,736  2,068  1,366 
    
Research and development647  630  640 
Selling, general, and administrative214  231  211 
Other operating (income) expense, net9  50  (3)
Operating income866  1,157  518 
    
Interest income10  13  44 
Interest expense(48) (50) (47)
Other non-operating income (expense), net13  5  46 
 841  1,125  561 
    
Income tax (provision) benefit(51) (136) (55)
Equity in net income (loss) of equity method investees13  1  2 
Net income803  990  508 
    
Net income attributable to noncontrolling interests  (2) (17)
Net income attributable to Micron$803  $988  $491 
    
Earnings per share   
Basic$0.72  $0.89  $0.44 
Diluted0.71  0.87  0.43 
    
Number of shares used in per share calculations   
Basic1,115  1,111  1,107 
Diluted1,135  1,131  1,129 
         

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

As ofDecember 3,
2020
September 3,
2020
   
Assets  
Cash and equivalents$5,985  $7,624 
Short-term investments1,047  518 
Receivables3,691  3,912 
Inventories5,521  5,607 
Other current assets285  304 
Total current assets16,529  17,965 
Long-term marketable investments1,264  1,048 
Property, plant, and equipment32,229  31,031 
Operating lease right-of-use assets577  584 
Intangible assets336  334 
Deferred tax assets726  707 
Goodwill1,228  1,228 
Other noncurrent assets802  781 
Total assets$53,691  $53,678 
   
Liabilities and equity  
Accounts payable and accrued expenses$4,856  $5,817 
Current debt273  270 
Other current liabilities559  548 
Total current liabilities5,688  6,635 
Long-term debt6,356  6,373 
Noncurrent operating lease liabilities529  533 
Noncurrent unearned government incentives656  643 
Other noncurrent liabilities555  498 
Total liabilities13,784  14,682 
   
Commitments and contingencies  
   
Shareholders’ equity  
Common stock120  119 
Additional capital9,034  8,917 
Retained earnings34,138  33,384 
Treasury stock(3,495) (3,495)
Accumulated other comprehensive income (loss)110  71 
Total equity39,907  38,996 
Total liabilities and equity$53,691  $53,678 
        

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

Three months endedDecember 3,
2020
November 28,
2019
   
Cash flows from operating activities  
Net income$803  $508 
Adjustments to reconcile net income to net cash provided by operating activities  
Depreciation expense and amortization of intangible assets1,487  1,296 
Amortization of debt discount and other costs7  10 
Stock-based compensation92  72 
(Gain) loss on debt prepayments, repurchases, and conversions  (42)
Change in operating assets and liabilities  
Receivables251  (208)
Inventories86  175 
Accounts payable and accrued expenses(753) 178 
Deferred income taxes, net(24) 19 
Other18  3 
Net cash provided by operating activities1,967  2,011 
   
Cash flows from investing activities  
Expenditures for property, plant, and equipment(2,738) (1,943)
Purchases of available-for-sale securities(1,002) (407)
Proceeds from maturities of available-for-sale securities216  163 
Proceeds from sales of available-for-sale securities45  988 
Proceeds from government incentives40  22 
Other21  (12)
Net cash provided by (used for) investing activities(3,418) (1,189)
   
Cash flows from financing activities  
Payments on equipment purchase contracts(97) (11)
Repayments of debt(84) (1,415)
Acquisition of noncontrolling interest in IMFT  (744)
Proceeds from issuance of debt  1,250 
Other(33) (72)
Net cash provided by (used for) financing activities(214) (992)
   
Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash27  (14)
   
Net increase (decrease) in cash, cash equivalents, and restricted cash(1,638) (184)
Cash, cash equivalents, and restricted cash at beginning of period7,690  7,279 
Cash, cash equivalents, and restricted cash at end of period$6,052  $7,095 
        

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

 1st Qtr.4th Qtr.1st Qtr.
 December 3,
2020
September 3,
2020
November 28,
2019
    
GAAP gross margin$1,736  $2,068  $1,366 
Stock-based compensation41  37  31 
Other7  6  8 
Non-GAAP gross margin$1,784  $2,111  $1,405 
    
GAAP operating expenses$870  $911  $848 
Stock-based compensation(51) (52) (41)
Restructure and asset impairments(8) (50) 4 
Non-GAAP operating expenses$811  $809  $811 
    
GAAP operating income$866  $1,157  $518 
Stock-based compensation92  89  72 
Restructure and asset impairments8  50  (4)
Other7  6  8 
Non-GAAP operating income$973  $1,302  $594 
    
GAAP net income attributable to Micron$803  $988  $491 
Stock-based compensation92  89  72 
Restructure and asset impairments8  50  (4)
Amortization of debt discount and other costs7  6  10 
(Gain) loss on debt prepayments, repurchases, and conversions    (42)
Other7  6  8 
Estimated tax effects of above and non-cash changes in net deferred income taxes(20) 90  13 
Non-GAAP net income attributable to Micron$897  $1,229  $548 
    
GAAP weighted-average common shares outstanding - Diluted1,135  1,131  1,129 
Adjustment for stock-based compensation and capped calls11  11  9 
Non-GAAP weighted-average common shares outstanding - Diluted1,146  1,142  1,138 
    
GAAP diluted earnings per share$0.71  $0.87  $0.43 
Effects of the above adjustments0.07  0.21  0.05 
Non-GAAP diluted earnings per share$0.78  $1.08  $0.48 

RECONCILIATION OF GAAP TO NON-GAAP MEASURES, Continued

 1st Qtr.4th Qtr.1st Qtr.
 December 3,
2020
September 3,
2020
November 28,
2019
    
GAAP net cash provided by operating activities$1,967  $2,271  $2,011 
Investments in capital expenditures, net   
Expenditures for property, plant, and equipment, net(1) (2,726) (2,268) (1,936)
Payments on equipment purchase contracts(97) (14) (11)
Amounts funded by partners40  122  22 
Adjusted free cash flow$(816) $111  $86 


(1)Expenditures for property, plant, and equipment, net include proceeds from sales of property, plant, and equipment of $12 million for the first quarter of 2021, $12 million for the fourth quarter of 2020, and $7 million for the first quarter of 2020.
  


As ofDecember 3,
2020
September 3,
2020
   
Cash and short-term investments$7,032  $8,142 
Current and noncurrent restricted cash67  66 
Long-term marketable investments1,264  1,048 
Current and long-term debt(6,629) (6,643)
Net cash$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;
  • 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

  GAAP Outlook Adjustments Non-GAAP Outlook
        
Revenue$5.8 billion ± $200 million —   $5.8 billion ± $200 million
Gross margin25% ± 1% 6%A 31% ± 1%
Operating expenses$882 million ± $25 million $57 millionB $825 million ± $25 million
Interest (income) expense, net$37 million $2 millionC $35 million
Diluted earnings per share(1)$0.41 ± $0.07 $0.34A, B, C, D $0.75 ± $0.07
       


Non-GAAP Adjustments
(in millions)
      
        
AInventory accounting policy change to FIFO – cost of goods sold $135 
AChange in inventory cost absorption – cost of goods sold 165 
AStock-based compensation – cost of goods sold 54 
AOther – cost of goods sold 7 
BStock-based compensation – research and development 30 
BStock-based compensation – sales, general, and administrative 27 
CAmortization of debt discount and other costs 2 
DTax effects of the above items and non-cash changes in net deferred income taxes (27)
       $393 


(1)GAAP earnings per share based on approximately 1.14 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.

 

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