10-QPeriod: Q3 FY2024

MICRON TECHNOLOGY INC Quarterly Report for Q3 Ended May 30, 2024

Filed June 27, 2024For Securities:MU

Summary

Micron Technology, Inc. reported a significant rebound in its third quarter of fiscal year 2024, demonstrating a strong recovery from the challenging conditions of the previous year. Revenue surged by 82% year-over-year to $6.811 billion, driven by robust demand and improved pricing for both DRAM and NAND products. The company returned to profitability, posting a net income of $332 million, a stark contrast to the net loss incurred in the prior year's comparable period. This performance highlights the positive impact of an improving industry supply and demand balance, fueled by increasing demand for AI and other compute-intensive applications. Management's focus on cost reductions and strategic capacity management appears to be paying off, as evidenced by the substantial improvement in gross margins. Investors should note the company's continued strategic investments in future capacity, particularly in the U.S., supported by government incentives, as it positions itself for long-term growth in the evolving memory and storage market.

Financial Highlights

52 data points
Beta

Revenue

$6.81B

26.9% Gross Margin

Net Income

$332.00M

4.9% Net Margin

EPS (Diluted)

$0.30

Total Assets

$66.25B

Cash & Equivalents

$7.66B

Free Cash Flow

$396.00M

Financial Statements
Beta
Revenue$6.81B
Cost of Revenue$4.98B
Gross Profit$1.83B
R&D Expenses$850.00M
SG&A Expenses$291.00M
Operating Income$719.00M
Interest Expense$150.00M
Net Income$332.00M
EPS (Basic)$0.30
EPS (Diluted)$0.30
Shares Outstanding (Basic)1.11B
Shares Outstanding (Diluted)1.12B

Key Highlights

  • 1Revenue significantly increased by 82% year-over-year to $6.811 billion, indicating a strong recovery in the memory market.
  • 2The company achieved profitability with a net income of $332 million, a substantial improvement from a net loss of $1.896 billion in the prior year's quarter.
  • 3Gross margin improved dramatically to 27% from -18% in the prior year's quarter, driven by higher average selling prices and cost efficiencies.
  • 4Both DRAM and NAND product revenues saw substantial year-over-year growth (76% and 104% respectively), reflecting broad market demand.
  • 5Operating cash flow for the nine months ended May 30, 2024, was strong at $5.102 billion, demonstrating effective cash generation.
  • 6Micron continues to invest in future growth with significant capital expenditures and plans for new U.S. manufacturing facilities, supported by government incentives.
  • 7The company declared a quarterly dividend of $0.115 per share, signaling confidence in its financial stability and commitment to returning capital to shareholders.

Frequently Asked Questions

The primary drivers for the significant improvement in revenue and profitability are the recovering semiconductor memory market conditions, characterized by increasing demand, particularly for AI applications, and an improved industry supply-demand balance. This has led to higher average selling prices (ASPs) for both DRAM and NAND products, coupled with effective cost management and manufacturing cost reductions by Micron.

Micron is making substantial capital investments, with an estimated $8.0 billion for property, plant, and equipment in fiscal year 2024. Key investments include expanding manufacturing capacity, particularly in the U.S. with new fab facilities planned in Idaho and New York, supported by significant government incentives from the CHIPS Act and state programs. They are also advancing global assembly and test capabilities.

Micron faces several risks, including the inherent volatility in average selling prices of its products, intense industry competition, geopolitical risks related to international operations (especially in China), potential supply chain disruptions, the need for continuous innovation in technology, and risks associated with large-scale capacity expansions. Significant litigation, particularly concerning intellectual property, also presents a notable risk.

The dramatic improvement in gross margin from negative 18% to 27% year-over-year is attributable to several factors. These include a substantial increase in average selling prices for DRAM and NAND products, successful manufacturing cost reduction efforts, and the favorable impact of selling inventory that was previously written down to net realizable value in prior periods. The company's strategy to manage wafer starts and optimize capacity also contributes to improved margins.