01—Abstract
Summary
Summary of the 10-Q filed June 29, 2020. Cited figures are marked; the original filing is the authoritative source.
Micron Technology, Inc. reported revenue of $5.44 billiona 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 millionb, 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.
02—Key points
Key Highlights
- Revenue increased 14% year-over-year to $5.44 billion, driven by strong demand in DRAM and NAND products.
- Gross margin improved sequentially to 32% but decreased year-over-year, impacted by DRAM price declines.
- Net income attributable to Micron was $803 million, resulting in diluted EPS of $0.71.
- Research and Development expenses increased year-over-year to $649 million.
- The company is actively managing the impacts of COVID-19, adapting to demand shifts and implementing safety protocols.
- Capital expenditures are projected to be approximately $8 billion for fiscal year 2020.
- The company ended the quarter with $8.27 billion in cash and cash equivalents.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2020, Micron Technology Inc kept $0.15.
- Revenue$5.44B100.0%
- Cost of revenue−$3.67B67.6%
- Gross profit$1.76B32.4%
- Operating costs−$875.0M16.1%
- Operating income$888.0M16.3%
- Interest, other & tax−$85.0M1.6%
- Net income$803.0M14.8%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2020filed June 29, 2020Financial Statements
Q3 FY2020 against Q3 FY2019
| Line item | Q3 FY2020Q3 FY2019 | Change |
|---|---|---|
| Revenue | $5.44B$4.79B | +13.6% |
| Cost of Revenue | $3.67B$2.96B | +24.2% |
| Gross Profit | $1.76B$1.83B | −3.6% |
| R&D Expenses | $649.00M$606.00M | +7.1% |
| SG&A Expenses | $216.00M$206.00M | +4.9% |
| Operating Income | $888.00M$1.01B | −12.1% |
| Interest Expense | $51.00M$29.00M | +75.9% |
| Net Income | $803.00M$840.00M | −4.4% |
| EPS (Basic) | $0.72$0.76 | −5.3% |
| EPS (Diluted) | $0.71$0.74 | −4.1% |
| Shares Outstanding (Basic) | 1.11B1.10B | +0.5% |
| Shares Outstanding (Diluted) | 1.13B1.13B | 0.0% |
05—Questions
Frequently Asked Questions
What were the primary drivers of Micron's revenue growth in Q3 2020?
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.
How did the revision in estimated useful lives of equipment impact the financial results?
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.
What is Micron's outlook regarding capital expenditures and liquidity?
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.
How is Micron addressing the impact of COVID-19?
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.
06—Continue