10-QPeriod: Q3 FY2018

MICRON TECHNOLOGY INC Quarterly Report for Q2 Ended Mar 1, 2018

Filed March 23, 2018For Securities:MU

Summary

Micron Technology, Inc. reported a very strong financial performance for the quarter ended February 28, 2018, with net sales soaring to $7.35 billion, a substantial increase from $4.65 billion in the prior year period. This growth was driven by robust demand across all key segments, particularly Compute and Networking (CNBU), which saw its revenue nearly double year-over-year. The company also experienced significant improvements in profitability, with gross margin expanding to 58% and operating income reaching $3.57 billion, up from $1.04 billion in the same quarter last year. This performance reflects favorable market conditions for DRAM and NAND products, leading to increased average selling prices and sales volumes. Micron's strategic focus on higher-value solutions and technological advancements continues to pay off, positioning the company favorably in the dynamic memory and storage market. Investors should note the strong operational execution and the company's ability to capitalize on market demand, which are translating into impressive financial results.

Financial Highlights

53 data points
Beta

Revenue

$7.80B

60.6% Gross Margin

Net Income

$3.82B

49.0% Net Margin

EPS (Diluted)

$3.10

Total Assets

$41.84B

Cash & Equivalents

$6.81B

Free Cash Flow

$1.85B

Financial Statements
Beta
Revenue$7.80B
Cost of Revenue$3.07B
Gross Profit$4.72B
R&D Expenses$603.00M
SG&A Expenses$211.00M
Operating Income$3.95B
Interest Expense$80.00M
Net Income$3.82B
EPS (Basic)$3.30
EPS (Diluted)$3.10
Shares Outstanding (Basic)1.16B
Shares Outstanding (Diluted)1.24B

Key Highlights

  • 1Net sales for the quarter surged to $7.35 billion, a 58% increase year-over-year, demonstrating strong market demand.
  • 2Gross margin significantly improved to 58% from 37% in the prior year period, highlighting improved pricing power and cost efficiencies.
  • 3Operating income more than tripled year-over-year to $3.57 billion, reflecting the company's enhanced profitability.
  • 4The Compute and Networking (CNBU) segment showed exceptional growth, with sales increasing by 93% year-over-year, indicating strength in cloud, server, and client markets.
  • 5Diluted earnings per share (EPS) rose dramatically to $2.67, compared to $0.77 in the prior year period, significantly benefiting shareholders.
  • 6The company reported strong operating cash flow of $7.98 billion for the six months ended March 1, 2018, indicating robust cash generation capabilities.
  • 7Micron's balance sheet remains strong, with cash and equivalents and short-term investments totaling $8.04 billion as of March 1, 2018.

Frequently Asked Questions

The primary driver of Micron's revenue growth was a significant increase in demand for its memory and storage products, particularly DRAM. This led to higher sales volumes and improved average selling prices across key markets, especially in the Compute and Networking (CNBU) segment, which serves cloud, server, and client customers. Strong performance in the Mobile Business Unit (MBU) also contributed significantly.

Profitability saw a substantial improvement. Gross margin increased from 37% to 58%, and operating income grew from $1.04 billion to $3.57 billion year-over-year. This enhancement in profitability is attributed to favorable market conditions, leading to better pricing power for DRAM, coupled with ongoing efforts in manufacturing cost reductions.

Micron estimates capital expenditures for property, plant, and equipment in 2018 to be in the range of $7.5 billion, plus or minus 5%. These investments are primarily focused on technology transitions and product enablement, reflecting the company's commitment to maintaining its technological leadership and supporting future growth in the dynamic semiconductor market.

Micron is involved in several ongoing legal proceedings, including patent infringement cases. While the company notes that it is unable to predict the outcome of these matters and they could potentially result in significant liability or require changes to products and processes, it does not currently expect them to have a material adverse effect on its business, results of operations, or financial condition, except for specific patent cases where impacts are still being evaluated. The company has also settled a patent infringement case with Harvard University and is involved in new complaints filed by Fujian Jinhua and United Microelectronics Corporation.