10-QPeriod: Q2 FY2022

Seagate Technology Holdings plc Quarterly Report for Q2 Ended Dec 31, 2021

Filed January 27, 2022For Securities:STX

Summary

Seagate Technology Holdings plc reported strong financial results for the second quarter and first half of fiscal year 2022, ending December 31, 2021. Revenue reached $3.1 billion for the quarter and $6.2 billion for the six-month period, demonstrating significant year-over-year growth, particularly driven by increased shipments in mass capacity storage. Net income for the quarter was $501 million, resulting in diluted earnings per share of $2.23, a substantial increase from the prior year's $1.12. The company also maintained a solid operating cash flow of $521 million for the quarter. Despite ongoing supply chain challenges and increased logistics costs related to the COVID-19 pandemic, Seagate has effectively managed its operations and financial position. The company also strengthened its balance sheet by issuing $1.2 billion in long-term debt while continuing its share repurchase program and dividend payments.

Key Highlights

  • 1Revenue increased to $3.1 billion for the three months ended December 31, 2021, and $6.2 billion for the six months ended December 31, 2021, up significantly from the prior year periods.
  • 2Net income for the quarter was $501 million, with diluted EPS of $2.23, compared to $280 million and $1.12 in the prior year quarter.
  • 3Operating cash flow for the six months ended December 31, 2021, was $1.0 billion, indicating strong cash generation.
  • 4The company secured $1.2 billion in new long-term debt financing, which was used in part to repay outstanding debt.
  • 5Seagate continued to return capital to shareholders through $151 million in dividends and $471 million in share repurchases during the quarter.
  • 6Despite supply chain disruptions and increased costs related to the COVID-19 pandemic, the company maintained a gross margin of 30% for the quarter.

Frequently Asked Questions

Revenue growth was primarily driven by an increase in mass capacity storage exabytes shipped, coupled with strong performance in non-HDD products. While legacy market shipments decreased, the overall increase in mass capacity demand significantly boosted top-line results.

Seagate acknowledges ongoing supply chain disruptions and higher logistics and operational costs due to the COVID-19 pandemic. The company is actively monitoring these impacts and working on opportunities to lower its cost structure and drive operational efficiencies to mitigate these pressures.

Seagate continues to prioritize returning capital to shareholders through a combination of quarterly cash dividends and share repurchases. In this quarter, the company paid $151 million in dividends and repurchased $471 million of its ordinary shares, with a significant repurchase authorization remaining.

Seagate issued $1.2 billion in new long-term debt through a term loan facility. A portion of these proceeds was used to fully repay the $475 million outstanding principal amount of its September 2019 Term Loan. The company's credit agreement was also amended to extend the maturity of its revolving credit facility.