10-QPeriod: Q2 FY2020

MICRON TECHNOLOGY INC Quarterly Report for Q2 Ended Feb 27, 2020

Filed March 26, 2020For Securities:MU

Summary

Micron Technology Inc. (MU) reported its second quarter fiscal year 2020 results for the period ending February 27, 2020. The company experienced a significant decline in revenue compared to the prior year, with total revenue decreasing by 18% year-over-year to $4.797 billion. This decline was primarily driven by lower average selling prices (ASPs) for DRAM products, although NAND product sales saw a modest increase due to higher ASPs and bit shipments. Despite the revenue challenges, gross margin improved slightly quarter-over-quarter to 28%, largely due to better performance in NAND. However, year-over-year, gross margin contracted significantly from 49% to 28%. Operating income also saw a substantial decrease, reflecting the challenging market conditions. The company is also navigating the early stages of the COVID-19 pandemic, acknowledging its potential to impact future demand and operations.

Financial Highlights

51 data points
Beta

Revenue

$4.80B

28.2% Gross Margin

Net Income

$405.00M

8.4% Net Margin

EPS (Diluted)

$0.36

Total Assets

$49.65B

Cash & Equivalents

$7.17B

Free Cash Flow

-$55.00M

Financial Statements
Beta
Revenue$4.80B
Cost of Revenue$3.44B
Gross Profit$1.35B
R&D Expenses$681.00M
SG&A Expenses$223.00M
Operating Income$440.00M
Interest Expense$46.00M
Net Income$405.00M
EPS (Basic)$0.37
EPS (Diluted)$0.36
Shares Outstanding (Basic)1.11B
Shares Outstanding (Diluted)1.13B

Key Highlights

  • 1Revenue for the second quarter of fiscal year 2020 was $4.797 billion, a decrease of 18% compared to $5.835 billion in the second quarter of fiscal year 2019.
  • 2Gross margin improved to 28% compared to 27% in the prior quarter, but significantly declined from 49% in the same quarter last year.
  • 3Operating income for the quarter was $440 million, a sharp decrease from $1.957 billion in the prior year's comparable quarter.
  • 4DRAM revenue decreased by 26% year-over-year, while NAND revenue increased by 9% year-over-year.
  • 5The company adopted ASC 842, the new lease accounting standard, which resulted in the recognition of $567 million in operating lease liabilities and right-of-use assets.
  • 6Micron announced an estimated capital expenditure range of $7 billion to $8 billion for fiscal year 2020.
  • 7The company is actively monitoring the impact of the COVID-19 pandemic and anticipates potential negative impacts on business activity and demand in certain sectors, while noting demand increases in others like server DRAM and NAND.

Frequently Asked Questions

Micron's revenue for the second quarter of fiscal year 2020 was $4.797 billion, representing an 18% decrease compared to $5.835 billion in the same period of fiscal year 2019. This decline was primarily attributed to lower average selling prices for DRAM products.

The company's gross margin improved to 28% in the second quarter of fiscal year 2020, up from 27% in the prior quarter. However, this is a significant decrease from 49% reported in the comparable quarter of fiscal year 2019, mainly due to declining average selling prices.

Micron acknowledged that the impact of COVID-19 is currently unknown but anticipates it will negatively impact business activity globally. While certain areas like server DRAM and NAND show demand increases, the company expects declining demand in sectors such as smartphones and automobiles.

Micron estimates capital expenditures for property, plant, and equipment for fiscal year 2020 to be in the range of $7 billion to $8 billion, with a focus on technology transitions and product enablement.