01—Abstract
Summary
Summary of the 10-Q filed March 23, 2018. Cited figures are marked; the original filing is the authoritative source.
Micron Technology, Inc. reported a very strong financial performance for the quarter ended February 28, 2018, with net sales soaring to $7.35 billiona, 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 billionb, 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.
02—Key points
Key Highlights
- Net sales for the quarter surged to $7.35 billion, a 58% increase year-over-year, demonstrating strong market demand.
- Gross margin significantly improved to 58% from 37% in the prior year period, highlighting improved pricing power and cost efficiencies.
- Operating income more than tripled year-over-year to $3.57 billion, reflecting the company's enhanced profitability.
- The Compute and Networking (CNBU) segment showed exceptional growth, with sales increasing by 93% year-over-year, indicating strength in cloud, server, and client markets.
- Diluted earnings per share (EPS) rose dramatically to $2.67, compared to $0.77 in the prior year period, significantly benefiting shareholders.
- The company reported strong operating cash flow of $7.98 billion for the six months ended March 1, 2018, indicating robust cash generation capabilities.
- Micron's balance sheet remains strong, with cash and equivalents and short-term investments totaling $8.04 billion as of March 1, 2018.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2018, Micron Technology Inc kept $0.49.
- Revenue$7.80B100.0%
- Cost of revenue−$3.07B39.4%
- Gross profit$4.72B60.6%
- Operating costs−$770.0M9.9%
- Operating income$3.95B50.7%
- Interest, other & tax−$130.0M1.7%
- Net income$3.82B49.0%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2018filed March 23, 2018Financial Statements
Q3 FY2018 against Q3 FY2017
| Line item | Q3 FY2018Q3 FY2017 | Change |
|---|---|---|
| Revenue | $7.80B$5.57B | +40.1% |
| Cost of Revenue | $3.07B$2.96B | +4.0% |
| Gross Profit | $4.72B$2.61B | +81.0% |
| R&D Expenses | $603.00M$434.00M | +38.9% |
| SG&A Expenses | $211.00M$204.00M | +3.4% |
| Operating Income | $3.95B$1.96B | +101.4% |
| Interest Expense | $80.00M$153.00M | −47.7% |
| Net Income | $3.82B$1.65B | +132.1% |
| EPS (Basic) | $3.30$1.49 | +121.5% |
| EPS (Diluted) | $3.10$1.40 | +121.4% |
| Shares Outstanding (Basic) | 1.16B1.11B | +4.8% |
| Shares Outstanding (Diluted) | 1.24B1.18B | +4.9% |
05—Questions
Frequently Asked Questions
What was the primary driver of Micron's revenue growth in this quarter?
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.
How did the company's profitability change compared to the prior year?
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.
What is the company's outlook regarding capital expenditures and investments?
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.
Are there any significant legal matters or contingencies that investors should be aware of?
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.
06—Continue