01—Abstract
Summary
Summary of the 10-K filed August 27, 2021. Cited figures are marked; the original filing is the authoritative source.
Western Digital Corporation (WDC) filed its 10-K for the fiscal year ending July 2, 2021, presenting a complex financial picture characterized by revenue stabilization and significant shifts in product segment performance.
While overall revenue saw a modest 1% increase to $16.9 billiona, driven by strong performance in Client Devices, the Data Center segment experienced a notable decline due to cloud digestion and qualification delays, though there are signs of recovery. The company's strategic reorganization into two dedicated business units (flash-based and HDD) aims to enhance focus and execution. Financially, WDC reported a return to profitability with net income of $821 million, a significant improvement from the prior year's net loss of $250 million.
This turnaround was supported by improved gross margins, partly due to lower amortization expenses and reduced COVID-19 related charges, as well as cost management in R&D and SG&A. However, the company continues to manage substantial debt and has significant capital expenditure plans for the upcoming fiscal year, including its joint venture with Kioxia.
02—Key points
Key Highlights
- For fiscal year 2021, Western Digital reported net revenue of $16.922 billion, a 1% increase compared to $16.736 billion in fiscal year 2020.
- The company achieved a net income of $821 million in fiscal year 2021, a significant turnaround from a net loss of $250 million in fiscal year 2020.
- Gross margin improved to 26.7% in fiscal year 2021 from 22.6% in fiscal year 2020, driven by lower amortization expenses and cost reductions.
- Client Devices revenue increased by 15% year-over-year, primarily due to higher flash product volume, while Data Center Devices & Solutions revenue decreased by 20% year-over-year.
- Western Digital is undergoing a reorganization into two distinct product business units: flash-based products and hard disk drives (HDD) to improve focus and execution.
- The company reported cash flow from operating activities of $1.9 billion for fiscal year 2021, and expects capital expenditures for fiscal year 2022 to aggregate $3.1 billion (including its portion of Flash Ventures' CAPEX).
- As of July 2, 2021, the company maintained $3.37 billion in cash and cash equivalents, while total debt stood at $8.825 billion.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Western Digital Corp kept $0.05.
- Revenue$16.92B100.0%
- Cost of revenue−$12.40B73.3%
- Gross profit$4.52B26.7%
- Operating costs−$3.30B19.5%
- Operating income$1.22B7.2%
- Interest, other & tax−$399.0M2.4%
- Net income$821.0M4.9%
Where FY2021 revenue went
$16.92B- Cost of revenue: $12.40B, 73% of revenue
- Other operating costs: $2.20B, 13% of revenue
- Net income: $821.0M, 4.9% of revenue
- SG&A: $1.10B, 6.5% of revenue
- Interest, other & tax: $399.0M, 2.4% of revenue
Kept 4.9% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed August 27, 2021Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $16.92B$16.74B | +1.1% |
| Cost of Revenue | $12.40B$12.96B | −4.3% |
| Gross Profit | $4.52B$3.78B | +19.6% |
| SG&A Expenses | $1.10B$1.15B | −4.2% |
| Operating Expenses | $3.30B$3.45B | −4.2% |
| Operating Income | $1.22B$335.00M | +264.2% |
| Interest Expense | $326.00M$413.00M | −21.1% |
| Net Income | $821.00M-$250.00M | +428.4% |
| EPS (Basic) | $2.69$-0.84 | +420.2% |
| EPS (Diluted) | $2.66$-0.84 | +416.7% |
| Shares Outstanding (Basic) | 305.00M298.00M | +2.3% |
| Shares Outstanding (Diluted) | 309.00M298.00M | +3.7% |
05—Questions
Frequently Asked Questions
What is the financial performance of Western Digital in fiscal year 2021?
In fiscal year 2021, Western Digital reported net revenue of $16.922 billion, a slight increase from the previous year. The company returned to profitability, posting a net income of $821 million, a significant improvement from the net loss of $250 million in fiscal year 2020. This was driven by improved gross margins and cost management efforts.
How did different product segments perform in fiscal year 2021?
The Client Devices segment showed strong growth, with revenue up 15% driven by higher flash product volumes. Conversely, the Data Center Devices & Solutions segment saw a 20% decline in revenue, attributed to factors like cloud digestion and product qualification delays, though the company noted signs of recovery.
What are Western Digital's key strategic initiatives and financial priorities?
Western Digital is reorganizing into two distinct business units (flash-based products and HDD) to enhance focus and execution. Key financial priorities include managing substantial debt, which stood at $8.825 billion at fiscal year-end, and executing significant capital expenditure plans for fiscal year 2022, totaling $3.1 billion, including its joint venture with Kioxia.
What is the company's financial health and liquidity position?
As of July 2, 2021, Western Digital had $3.37 billion in cash and cash equivalents. The company generated $1.9 billion in cash from operating activities and believes its liquidity is sufficient to meet its obligations for at least the next twelve months. However, the company's substantial debt level remains a key factor to monitor.
06—Continue