Summary
Seagate Technology Holdings plc (STX) reported a net income of $200 million for the fiscal quarter ended October 4, 2019, a significant decrease from $450 million in the same period of the previous year. This decline was primarily driven by a substantial drop in revenue, which fell to $2.58 billion from $2.99 billion year-over-year, impacted by less favorable market conditions and price erosion in the HDD market. Despite the revenue decline, the company maintained its gross margin percentage at 26% sequentially, though it was down from 31% in the prior year quarter, largely due to price erosion and factory under-utilization. Financially, Seagate actively managed its capital structure during the quarter. The company repurchased $620 million of its senior notes and borrowed $500 million under a new Term Loan. Significant share repurchases ($450 million) and dividends ($170 million) were also executed. The company ended the quarter with $1.78 billion in cash and cash equivalents, demonstrating a focus on returning capital to shareholders while also managing debt. The company also made a change in accounting estimate regarding the useful lives of its manufacturing equipment, which increased net income by $23 million for the quarter.
Financial Highlights
54 data points| Revenue | $2.58B |
| Cost of Revenue | $1.91B |
| Gross Profit | $671.00M |
| R&D Expenses | $255.00M |
| SG&A Expenses | $122.00M |
| Operating Expenses | $2.31B |
| Operating Income | $273.00M |
| Interest Expense | $55.00M |
| Net Income | $200.00M |
| EPS (Basic) | $0.75 |
| EPS (Diluted) | $0.74 |
| Shares Outstanding (Basic) | 266.00M |
| Shares Outstanding (Diluted) | 270.00M |
Key Highlights
- 1Revenue for the quarter declined to $2.58 billion from $2.99 billion in the prior year's comparable quarter, impacted by market conditions and price erosion.
- 2Net income decreased significantly to $200 million, compared to $450 million in the prior year quarter.
- 3Gross margin percentage was 26%, flat sequentially but down from 31% year-over-year, attributed to price erosion and factory under-utilization.
- 4The company actively managed its debt, repurchasing $620 million in senior notes and obtaining a $500 million Term Loan.
- 5Shareholder returns remained a focus, with $450 million in share repurchases and $170 million in dividends paid during the quarter.
- 6Cash and cash equivalents stood at $1.78 billion, with an additional $1.5 billion available under its revolving credit facility.
- 7A change in the estimated useful life of manufacturing equipment positively impacted net income by $23 million for the quarter.