01—Abstract
Summary
Summary of the 10-K filed August 7, 2020. Cited figures are marked; the original filing is the authoritative source.
Seagate Technology Holdings plc's 10-K filing for the fiscal year ended July 3, 2020, highlights a year of steady revenue, with total revenue reaching $10.5 billiona, a slight increase from the previous year.
Despite the broader economic impact of COVID-19, the company demonstrated resilience, supported by strong demand in mass capacity storage markets, which offset declines in legacy markets. The company's strategic focus on high-capacity drives and enterprise data solutions continues to shape its product mix, with mass capacity storage representing 53%b of revenue, up from 43% in the prior year.
Seagate's operational efficiency and vertical integration remain key strengths, although the filing notes increased logistics and factory under-utilization costs due to the pandemic. The company also continued its capital allocation strategy, repurchasing shares and paying dividends, while managing its debt portfolio.
02—Key points
Key Highlights
- Revenue for fiscal year 2020 was $10.5 billion, a 1% increase from $10.39 billion in fiscal year 2019, driven by growth in mass capacity storage.
- Mass capacity storage accounted for 53% of revenue, an increase from 43% in the prior year, indicating a strategic shift towards higher-demand segments.
- Gross margin decreased to 27% from 28% year-over-year, impacted by price erosion and increased logistics and factory under-utilization costs due to COVID-19.
- The company repurchased approximately $850 million of its ordinary shares and paid $673 million in dividends during fiscal year 2020.
- Seagate reported $1.7 billion in operating cash flow, demonstrating solid cash generation.
- Despite a $153 million increase in 'Other expense, net' largely due to debt repurchase losses and investment impairments, net income was $1.0 billion.
- The company continues to invest in product development, though overall operating expenses decreased slightly, primarily due to lower depreciation and restructuring charges compared to prior years.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, Seagate Technology Holdings plc kept $0.10.
- Revenue$10.51B100.0%
- Cost of revenue−$7.67B73.0%
- Gross profit$2.84B27.0%
- Operating costs−$1.54B14.7%
- Operating income$1.30B12.4%
- Interest, other & tax−$296.0M2.8%
- Net income$1.00B9.6%
Where FY2020 revenue went
$10.51B- Cost of revenue: $7.67B, 73% of revenue
- Net income: $1.00B, 9.6% of revenue
- R&D: $973.0M, 9.3% of revenue
- SG&A: $473.0M, 4.5% of revenue
- Other operating costs: $96.0M, 0.9% of revenue
- Interest, other & tax: $296.0M, 2.8% of revenue
Kept 9.6% as net incomeNet income $1.00B · 9.6%Other operating costs $96.0M · 0.9%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2020filed August 7, 2020Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $10.51B$10.39B | +1.1% |
| Cost of Revenue | $7.67B$7.46B | +2.8% |
| Gross Profit | $2.84B$2.93B | −3.1% |
| R&D Expenses | $973.00M$991.00M | −1.8% |
| SG&A Expenses | $473.00M$453.00M | +4.4% |
| Operating Expenses | $9.21B$8.90B | +3.4% |
| Operating Income | $1.30B$1.49B | −12.6% |
| Interest Expense | $201.00M$224.00M | −10.3% |
| Net Income | $1.00B$2.01B | −50.1% |
| EPS (Basic) | $3.83$7.13 | −46.3% |
| EPS (Diluted) | $3.79$7.06 | −46.3% |
| Shares Outstanding (Basic) | 262.00M282.00M | −7.1% |
| Shares Outstanding (Diluted) | 265.00M285.00M | −7.0% |
05—Questions
Frequently Asked Questions
What were Seagate's primary revenue drivers in fiscal year 2020?
Seagate's revenue in fiscal year 2020 was primarily driven by the mass capacity storage market, which saw increased exabyte shipments. This growth helped offset a decline in revenue from legacy markets. The shift towards higher-capacity drives and enterprise data solutions continues to be a key strategic focus.
How did the COVID-19 pandemic impact Seagate's financial performance?
The COVID-19 pandemic led to supply chain and demand disruptions, factory under-utilization, and increased logistics and operational costs. These factors negatively impacted gross margins. However, the company managed to maintain steady revenue and operating cash flow, indicating a degree of resilience against the pandemic's broader economic effects.
What is Seagate's strategy regarding its product portfolio and R&D?
Seagate is strategically focusing on mass capacity storage and enterprise data solutions, which represented 53% of revenue in fiscal year 2020. The company continues to invest in product development and advanced technologies like HAMR (heat-assisted magnetic recording) to enhance areal density and capacity, aiming to maintain its competitive edge in high-growth market segments.
How did Seagate manage its capital and debt during fiscal year 2020?
Seagate actively managed its capital structure by repurchasing $1.137 billion of senior notes, exchanging some for longer-duration notes, borrowing $500 million under its term loan, and issuing $500 million in new senior notes. Additionally, the company repurchased $850 million of its ordinary shares and paid $673 million in dividends, indicating a commitment to returning value to shareholders while managing its debt.
06—Continue