10-KPeriod: FY2024

WESTERN DIGITAL CORP Annual Report, Year Ended Jun 28, 2024

Filed August 20, 2024For Securities:WDC

Summary

Western Digital Corporation (WDC) has filed its Annual Report on Form 10-K for the fiscal year ended June 27, 2024. The company, a leader in data storage solutions, is actively pursuing a strategic separation of its Hard Disk Drive (HDD) and Flash business units into two independent public companies, with the goal of completing this separation by the end of calendar year 2024. This move is intended to unlock greater value and specialized growth opportunities for each distinct business. Financially, WDC reported a net loss for the year, a reversal from the prior year's profit, primarily impacted by challenging market conditions early in the fiscal year that led to reduced demand, lower pricing, and supply-demand imbalances. Despite these headwinds, the company saw revenue growth in both its Flash and HDD segments in the latter half of fiscal 2024 due to improving market dynamics, including increased exabytes sold and recovering Average Selling Prices (ASPs). The company is managing its liquidity effectively and has sufficient resources for its operational needs.

Financial Highlights

29 data points
Beta

Revenue

$6.32B

28.1% Gross Margin

Net Income

-$798.00M

-12.6% Net Margin

EPS (Diluted)

$-2.61

Free Cash Flow

-$781.00M

Financial Statements
Beta
Revenue$6.32B
Cost of Revenue$4.54B
Gross Profit$1.77B
SG&A Expenses$726.00M
Operating Expenses$2.18B
Operating Income-$403.00M
Net Income-$798.00M
EPS (Basic)$-2.61
EPS (Diluted)$-2.61
Shares Outstanding (Basic)326.00M
Shares Outstanding (Diluted)326.00M

Key Highlights

  • 1Western Digital is progressing with its plan to separate its HDD and Flash business units into two independent companies by the end of calendar year 2024.
  • 2The company experienced a net loss for the fiscal year, contrasting with profitability in the prior year, driven by macroeconomic factors and resulting supply-demand imbalances.
  • 3Revenue for the fiscal year showed growth, particularly in the latter half, with improvements in both Flash and HDD segments driven by increased exabyte shipments and stabilizing Average Selling Prices (ASPs).
  • 4Flash revenue increased by 10% year-over-year, while HDD revenue remained relatively flat, reflecting different market dynamics for each segment.
  • 5The company is actively managing operating expenses and has implemented cost-saving measures, including headcount reductions and asset impairments related to capacity adjustments.
  • 6Significant progress has been made in resolving tax matters with the IRS, with a remaining liability expected to be settled within the next twelve months.
  • 7WDC has secured new financing, including $1.6 billion in convertible senior notes, to manage its capital structure and debt obligations.

Frequently Asked Questions

Western Digital announced a plan to separate its Hard Disk Drive (HDD) and Flash business units into two distinct, independent public companies. This strategic move is expected to be completed by the end of calendar year 2024 and aims to enhance focus, accelerate growth, and optimize operations for each business segment.

The company reported a net loss for the fiscal year ended June 27, 2024. This was largely due to challenging macroeconomic conditions earlier in the year that led to reduced demand and pricing pressures. However, the company noted an improvement in revenue and market conditions in the latter half of the year.

Western Digital's flash memory supply is substantially sourced from its joint ventures with Kioxia (Flash Ventures). While this partnership provides access to leading-edge technology, it also presents risks, including a dependence on Kioxia for wafer supply and potential misalignment of strategic priorities. The company has significant commitments and potential liabilities related to these ventures, including lease obligations and capital investment funding.

Key financial trends include a year-over-year increase in revenue, primarily driven by higher exabyte shipments and a recovery in ASPs, particularly in the Flash segment. The company's gross margin improved significantly compared to the prior year, benefiting from improved pricing and cost efficiencies. Operating expenses were managed, with decreases in R&D and SG&A expenses partly due to restructuring and asset amortization reductions.