10-QPeriod: Q3 FY2020

MICRON TECHNOLOGY INC Quarterly Report for Q3 Ended May 28, 2020

Filed June 29, 2020For Securities:MU

Summary

Micron Technology, Inc. reported revenue of $5.44 billion for the third quarter of fiscal year 2020, a 13% increase from the previous quarter and a 14% increase year-over-year. This growth was primarily driven by strong demand for DRAM and NAND products, particularly from data center and networking customers. Net income attributable to Micron was $803 million, or $0.71 per diluted share, compared to $840 million ($0.74 per diluted share) in the prior year's third quarter. The company's gross margin improved to 32% from 28% in the prior quarter, benefiting from higher average selling prices and an improved product mix, although it was lower than the 38% margin reported in the same quarter last year. Micron continued to invest heavily in research and development and capital expenditures, with R&D expenses increasing year-over-year, driven by higher employee compensation and development wafer volumes. The company also highlighted its proactive measures to manage the impact of the COVID-19 pandemic on its operations and supply chain, noting demand shifts and implementing safety protocols.

Financial Highlights

51 data points
Beta

Revenue

$5.44B

32.4% Gross Margin

Net Income

$803.00M

14.8% Net Margin

EPS (Diluted)

$0.71

Total Assets

$52.01B

Cash & Equivalents

$8.32B

Free Cash Flow

$79.00M

Financial Statements
Beta
Revenue$5.44B
Cost of Revenue$3.67B
Gross Profit$1.76B
R&D Expenses$649.00M
SG&A Expenses$216.00M
Operating Income$888.00M
Interest Expense$51.00M
Net Income$803.00M
EPS (Basic)$0.72
EPS (Diluted)$0.71
Shares Outstanding (Basic)1.11B
Shares Outstanding (Diluted)1.13B

Key Highlights

  • 1Revenue increased 14% year-over-year to $5.44 billion, driven by strong demand in DRAM and NAND products.
  • 2Gross margin improved sequentially to 32% but decreased year-over-year, impacted by DRAM price declines.
  • 3Net income attributable to Micron was $803 million, resulting in diluted EPS of $0.71.
  • 4Research and Development expenses increased year-over-year to $649 million.
  • 5The company is actively managing the impacts of COVID-19, adapting to demand shifts and implementing safety protocols.
  • 6Capital expenditures are projected to be approximately $8 billion for fiscal year 2020.
  • 7The company ended the quarter with $8.27 billion in cash and cash equivalents.

Frequently Asked Questions

Revenue growth was primarily driven by increases in both DRAM and NAND product sales. Specifically, DRAM sales saw higher bit shipment volumes and mid-single-digit increases in average selling prices due to strong demand from data center and networking customers. NAND sales also increased due to higher SSD sales to data center customers and an upper-single-digit increase in average selling prices.

Micron revised the estimated useful lives of equipment in its NAND wafer fabrication and R&D facilities from five to seven years. This revision reduced depreciation expense by approximately $425 million in the first nine months of 2020, benefiting cost of goods sold by approximately $275 million for the same period. This had a positive impact on gross margin and operating income.

Micron estimates capital expenditures for fiscal year 2020 to be approximately $8 billion, focused on technology transitions and product enablement. The company expects its cash and investments, cash flows from operations, and available financing to be sufficient to meet its requirements for at least the next 12 months. As of the end of the quarter, $2.50 billion was available under its Revolving Credit Facility.

Micron has implemented comprehensive preventative protocols to safeguard employees and ensure business continuity. These include health screenings, social distancing, team separation, work-from-home policies, travel suspensions, and mandatory mask usage. The company is also adapting to changing market conditions by shifting supply to meet demand in areas like data centers and has evaluated its supply chain for continuity. Despite these measures, the extent of COVID-19's impact on demand and operations remains uncertain.