01—Abstract
Summary
Summary of the 10-K filed August 25, 2022. Cited figures are marked; the original filing is the authoritative source.
Western Digital Corporation (WDC) reported a strong fiscal year 2022 with a significant increase in net revenue to $18.79 billiona, up 11% from the prior year.
This growth was driven by higher exabyte shipments in both Flash and HDD segments, particularly in the Cloud market. The company also saw an improvement in gross margin to 31.3%b from 26.7% in the previous year, attributed to product mix shifts and cost efficiencies. Despite macroeconomic headwinds and supply chain challenges that impacted the Client segment, WDC maintained a positive outlook.
The company continued to invest in R&D and took steps to strengthen its financial position by reducing debt levels. Notably, WDC announced in June 2022 that it is exploring strategic alternatives, including the potential separation of its Flash and HDD business units, to further optimize stockholder value. The company ended the fiscal year with a solid cash position and sufficient liquidity to meet its ongoing obligations.
02—Key points
Key Highlights
- Net revenue increased by 11% to $18.79 billion in fiscal year 2022, driven by increased exabyte shipments in both Flash and HDD segments.
- Gross profit increased by 30% to $5.87 billion, and consolidated gross margin improved to 31.3% from 26.7% in the prior year.
- Flash revenue grew 12% year-over-year, primarily due to a 21% increase in exabytes sold, with strong demand from the Cloud and Consumer segments.
- HDD revenue increased by 10% year-over-year, driven by a 19% increase in exabytes sold, particularly from capacity enterprise drives for cloud customers.
- The company is reviewing potential strategic alternatives, including the separation of its Flash and HDD business units.
- Western Digital strengthened its financial position by reducing overall debt levels and extending debt maturities.
- The company incurred $207 million in charges related to a contamination incident at its Flash Ventures fabrication facilities in Japan.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Western Digital Corp kept $0.08.
- Revenue$18.79B100.0%
- Cost of revenue−$12.92B68.7%
- Gross profit$5.87B31.3%
- Operating costs−$3.48B18.5%
- Operating income$2.39B12.7%
- Interest, other & tax−$845.0M4.5%
- Net income$1.55B8.2%
Where FY2022 revenue went
$18.79B- Cost of revenue: $12.92B, 69% of revenue
- Other operating costs: $2.37B, 13% of revenue
- Net income: $1.55B, 8.2% of revenue
- SG&A: $1.12B, 5.9% of revenue
- Interest, other & tax: $845.0M, 4.5% of revenue
Kept 8.2% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed August 25, 2022Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $18.79B$16.92B | +11.1% |
| Cost of Revenue | $12.92B$12.40B | +4.2% |
| Gross Profit | $5.87B$4.52B | +29.9% |
| SG&A Expenses | $1.12B$1.10B | +1.1% |
| Operating Expenses | $3.48B$3.30B | +5.5% |
| Operating Income | $2.39B$1.22B | +96.0% |
| Interest Expense | $304.00M$326.00M | −6.7% |
| Net Income | $1.55B$821.00M | +88.3% |
| EPS (Basic) | $4.96$2.69 | +84.4% |
| EPS (Diluted) | $4.89$2.66 | +83.8% |
| Shares Outstanding (Basic) | 312.00M305.00M | +2.3% |
| Shares Outstanding (Diluted) | 316.00M309.00M | +2.3% |
05—Questions
Frequently Asked Questions
What were the main drivers of Western Digital's revenue growth in fiscal year 2022?
Western Digital's revenue growth in fiscal year 2022 was primarily driven by a significant increase in the exabytes of both Flash and Hard Disk Drive (HDD) products shipped. The Cloud segment, in particular, showed strong demand for capacity enterprise HDD drives and enterprise SSDs, while the Consumer segment also contributed positively, especially with WD_Black products.
What is the company's outlook on the current market conditions, such as macroeconomic headwinds and supply chain issues?
Western Digital acknowledged macroeconomic headwinds, including inflation, rising interest rates, and declines in consumer confidence, which have impacted demand, particularly in the PC market. Supply chain disruptions and component shortages also affected the company and its customers. Management noted that customers are aggressively right-sizing inventory, which is expected to impact the PC market in the latter half of the calendar year. While the company believes these impacts will be transitory, the duration and severity remain uncertain.
What are the 'strategic alternatives' Western Digital is exploring?
In June 2022, Western Digital announced it is reviewing potential strategic alternatives to optimize long-term stockholder value. This review includes exploring options for separating its Flash and HDD business units. This strategic review was initiated in conjunction with an investment from Elliott Investment Management L.P.
How has the company managed its debt and financial liquidity?
Western Digital has focused on reducing its overall debt levels and extending debt maturities. In fiscal year 2022, the company repaid significant portions of its debt and issued new notes, resulting in over 80% of its debt now due in 2026 or later. The company also has a substantial revolving credit facility available and believes its cash on hand, cash generated from operations, and available credit facilities provide sufficient liquidity for the next twelve months and the foreseeable future.
06—Continue