Seagate Technology Holdings plc Quarterly Report for Q2 Ended Dec 28, 2018

Summary

Seagate Technology Holdings plc (STX) reported revenue of $2.7 billion for the fiscal quarter ended December 27, 2018, a decrease from the previous quarter and the same quarter last year. This decline was primarily attributed to less favorable market conditions and price erosion in its hard disk drive (HDD) segment, despite an increase in exabytes shipped year-over-year for the six-month period. While revenue saw a dip, the company demonstrated strong operational cash flow of $288 million in the quarter. Seagate also actively managed its capital structure, repaying $499 million in senior notes, returning $180 million to shareholders through dividends, and repurchasing shares for $136 million. The company remains confident in its liquidity position, with approximately $1.4 billion in cash and equivalents and an undrawn $700 million senior revolving credit facility, expecting to meet its financial obligations for the next 12 months.

Key Highlights

• 1Revenue for the December 2018 quarter was $2.7 billion, down from $3.0 billion in the prior quarter and $2.9 billion in the year-ago quarter.
• 2Gross margin for the December 2018 quarter was 29%, a decrease from 31% in the September 2018 quarter and 30% in the December 2017 quarter, driven by price erosion and unfavorable product mix.
• 3Operating cash flow for the quarter was $288 million, demonstrating the company's ability to generate cash from its operations.
• 4Seagate repaid $499 million of its 2018 Senior Notes during the quarter.
• 5The company returned $180 million to shareholders via dividends and repurchased approximately 3 million ordinary shares for $136 million.
• 6The Asia Pacific region remains the largest revenue contributor, accounting for 51% of revenue in the December 2018 quarter.
• 7The company ended the quarter with $1.357 billion in cash and cash equivalents and has a $700 million senior revolving credit facility available.

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