Summary
Seagate Technology Holdings plc (STX) reported financial results for the second fiscal quarter ended January 3, 2020. Revenue for the quarter was $2.70 billion, a slight decrease of 0.7% compared to the prior year quarter, primarily due to price erosion, although this was partially offset by an increase in exabytes shipped. Net income for the quarter stood at $318 million, or $1.20 per diluted share, a decrease from $384 million, or $1.34 per diluted share, in the same period last year. The company experienced a decline in gross margin to 28% from 29% year-over-year, impacted by price erosion and factory underutilization, though improved product mix and a change in depreciation schedules provided some offset. The company continued its capital allocation strategies, returning $335 million to shareholders through dividends and share repurchases in the six-month period ending January 3, 2020. Despite a decrease in cash and cash equivalents from $2.22 billion to $1.74 billion, Seagate maintains a strong liquidity position with $1.7 billion in cash and cash equivalents and $1.5 billion available under its revolving credit facility. Management indicated confidence in meeting its liquidity needs for the next 12 months, remaining compliant with its financial covenants.
Financial Highlights
55 data points| Revenue | $2.70B |
| Cost of Revenue | $1.94B |
| Gross Profit | $758.00M |
| R&D Expenses | $250.00M |
| SG&A Expenses | $120.00M |
| Operating Expenses | $2.31B |
| Operating Income | $384.00M |
| Interest Expense | $48.00M |
| Net Income | $318.00M |
| EPS (Basic) | $1.21 |
| EPS (Diluted) | $1.20 |
| Shares Outstanding (Basic) | 262.00M |
| Shares Outstanding (Diluted) | 265.00M |
Key Highlights
- 1Revenue for the quarter was $2.70 billion, down 0.7% year-over-year, driven by price erosion offset by increased exabyte shipments.
- 2Net income decreased to $318 million ($1.20/diluted share) from $384 million ($1.34/diluted share) in the prior year quarter.
- 3Gross margin declined to 28% from 29% year-over-year due to price erosion and factory underutilization.
- 4The company repurchased $600 million of ordinary shares and paid $335 million in dividends during the first six months of fiscal year 2020.
- 5Cash and cash equivalents decreased to $1.74 billion from $2.22 billion year-over-year, primarily due to debt repurchases, share buybacks, capital expenditures, and dividends.
- 6Seagate has $1.7 billion in cash and cash equivalents and $1.5 billion available under its revolving credit facility, indicating strong liquidity.
- 7The company changed its estimate for the useful lives of manufacturing equipment, increasing net income by $42 million and $65 million for the three and six months ended January 3, 2020, respectively.