Seagate Technology : Reports Fourth Quarter and Fiscal Year 2021 Financial Resultsopens in a new window

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SEAGATE TECHNOLOGY REPORTS FOURTH QUARTER AND FISCAL YEAR 2021 FINANCIAL RESULTS

Fiscal Q4 2021 Highlights

• Revenue of $3.01 billion
• GAAP operating margin of 16.8%; non-GAAP operating margin of 18.1%
• GAAP diluted earnings per share (EPS) of $2.07; non-GAAP diluted EPS of $2.00
• Cash flow from operations of $478 million and free cash flow of $354 million
• Revenue from mass capacity storage markets increased 29% year-over-year and represented 69% of FQ4 HDD revenue

Fiscal Year 2021 Highlights

• Revenue of $10.68 billion
• GAAP operating margin of 14.0%; non-GAAP operating margin of 15.4%
• GAAP diluted EPS of $5.36; non-GAAP diluted EPS of $5.64
• Cash flow from operations of $1.6 billion and free cash flow of $1.1 billion
• Returned $2.7 billion to shareholders through dividends and share repurchases
• Revenue from mass capacity storage markets increased 15% year-over-year and represented 65% of annual HDD revenue

FREMONT, CA - July 21, 2021 - Seagate Technology Holdings plc (NASDAQ: STX) (the "Company" or "Seagate") today reported financial results for its fourth quarter and fiscal year ended July 2, 2021.

"Seagate delivered very strong June quarter results achieving the highest revenue in the last 6 years and the highest non-GAAP EPS in 9 years, which capped a fiscal 2021 in which we outperformed our expectations," said Dave Mosley, Seagate's chief executive officer.

"Demand for data is rapidly accelerating in the cloud and at the edge, driving secular growth for mass capacity data storage. Seagate's industry-leading product portfolio for mass data infrastructure places the company in an outstanding position to capitalize on robust demand trends, generate solid and increasing free cash flow and achieve our long-term financial objectives."

Quarterly Financial Results
			GAAP				Non-GAAP
			FQ4 2021		FQ4 2020			FQ4 2021		FQ4 2020
	Revenue ($M)	$	3,013	$	2,517	$	3,013	$	2,517
	Gross Margin		29.4 %		26.5 %			29.6 %		27.3 %
	Operating Margin		16.8 %		10.6 %			18.1 %		14.8 %
	Net Income ($M)	$	482	$	166	$	466	$	311
	Diluted Earnings Per Share	$	2.07	$	0.64	$	2.00	$	1.20

Annual Financial Results
			GAAP				Non-GAAP
			FY 2021		FY 2020			FY 2021		FY 2020
	Revenue ($M)	$	10,681	$	10,509			10,681	$	10,509
	Gross Margin		27.3 %		27.0 %			27.7 %		27.7 %
	Operating Margin		14.0 %		12.4 %			15.4 %		14.7 %
	Net Income ($M)	$	1,314	$	1,004	$	1,381	$	1,311
	Diluted Earnings Per Share	$	5.36	$	3.79	$	5.64	$	4.95

The Company generated $478 million in cash flow from operations and $354 million in free cash flow during the fiscal fourth quarter 2021. For fiscal year 2021, the Company generated $1.6 billion in cash flow from operations and $1.1 billion in free cash flow. Seagate maintained a healthy balance sheet and during the fiscal fourth quarter, the Company paid cash dividends of $154 million and repurchased 2.6 million ordinary shares for $228 million. For the full year, the Company paid cash dividends of $649 million and used $2.0 billion to repurchase 33.6 million ordinary shares, or 13% of the outstanding shares. Additionally, the Company raised $1.0 billion of debt and ended the fiscal year with cash and cash equivalents of $1.2 billion. There were 227 million ordinary shares issued and outstanding as of the end of the fiscal year.

For a detailed reconciliation of GAAP to non-GAAP results, see accompanying financial tables.

Seagate has issued a Supplemental Financial Information document, which is available on Seagate's Investor Relations website at investors.seagate.com.

Quarterly Cash Dividend

The Board of Directors of the Company (the "Board") declared a quarterly cash dividend of $0.67 per share, which will be payable on October 6, 2021 to shareholders of record as of the close of business on September 22, 2021. The payment of any future quarterly dividends will be at the discretion of the Board and will be dependent upon Seagate's financial position, results of operations, available cash, cash flow, capital requirements and other factors deemed relevant by the Board.

Business Outlook

The business outlook for the fiscal first quarter 2022 is based on our current assumptions and expectations; actual results may differ materially, as a result of, among other things, the important factors discussed in the Cautionary Note Regarding Forward- Looking Statements section of this release.

The Company is providing the following guidance for its fiscal first quarter 2022:

• Revenue of $3.1 billion, plus or minus $150 million
• Non-GAAPdiluted EPS of $2.20, plus or minus $0.15

Guidance regarding non-GAAP diluted EPS excludes known charges related to amortization of acquired intangible assets of $0.02 per share and estimated share-based compensation expenses of $0.15 per share.

We have not reconciled our non-GAAP diluted EPS guidance for fiscal first quarter 2022 to the most directly comparable GAAP measure because material items that may impact these measures are out of our control and/or cannot be reasonably predicted, including, but not limited to, accelerated depreciation, impairment and other charges related to cost saving efforts, restructuring charges, strategic investment losses or impairment recognized, income tax adjustments on these measures, and other charges or benefits that may arise. The amounts of these measures are not currently available, but may be material to future results. A reconciliation of the non-GAAP diluted EPS guidance for fiscal first quarter 2022 to the corresponding GAAP measures is not available without unreasonable effort. A reconciliation of our historical non-GAAP financial measures to their nearest GAAP equivalent is contained in this release.

Investor Communications

Seagate management will hold a public webcast today at 6:00 a.m. Pacific / 9:00 a.m. Eastern that can be accessed on its Investor Relations website at investors.seagate.com.

An archived audio webcast of this event will be available on Seagate's Investor Relations website at investors.seagate.com shortly following the event conclusion.

About Seagate

Seagate Technology crafts the datasphere, helping to maximize humanity's potential by innovating world-class, precision- engineered data storage and management solutions with a focus on sustainable partnerships. A global technology leader for more than 40 years, the company has shipped over three billion terabytes of data capacity. Learn more about Seagate by visiting www.seagate.com or following us on Twitter, Facebook, LinkedIn, YouTube, and subscribing to our blog.

• 2021 Seagate Technology LLC. All rights reserved. Seagate, Seagate Technology, and the Spiral logo are registered trademarks of Seagate Technology LLC in the United States and/or other countries.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical fact. Forward-looking statements include, among other things, statements about the Company's plans, strategies and prospects, financial outlook for future periods, including the fiscal first quarter 2022, expectations regarding the Company's products, our ability to ramp production, storage industry trends and market demand, shifts in technology, the Company's ability to meet market and industry expectations and the effects of these future trends, the possible effects of the economic conditions worldwide resulting from the COVID-19 pandemic, and expectations on the Company's business as well as dividend issuance plans for the fiscal quarter ending October 1, 2021 and beyond. Forward-looking statements generally can be identified by words such as "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "projects," "should," "may," "will," "will continue," "can," "could" or the negative of these words, variations of these words and comparable terminology. Information concerning risks, uncertainties and other factors that could cause results to differ materially from the expectations described in this press release include, among others, those risks and uncertainties included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the year ended July 3, 2020 filed with the U.S. Securities and Exchange Commission ("SEC") on August 7, 2020, and in our Quarterly Reports on Form 10-Q filed with the SEC on October 29, 2020, January 28, 2021 and April 29, 2021. Additional information will also be set forth in the Company's Annual Report on Form 10-K for the year ended July 2, 2021. Undue reliance should not be placed on the forward-looking statements in this press release, which are based on information available to us on, and which speak only as of, the date hereof. The Company undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made, unless required by applicable law.

The inclusion of Seagate's website addresses in this press release are provided for convenience only. The information contained in, or that can be accessed through, Seagate's websites and social media channels are not part of this press release.

SEAGATE TECHNOLOGY HOLDINGS PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

		July 2,			July 3,
		2021			2020
		(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,209	$	1,722
Accounts receivable, net		1,158			1,115
Inventories		1,204			1,142
Other current assets		208			135
Total current assets		3,779			4,114
Property, equipment and leasehold improvements, net		2,181			2,129
Goodwill		1,237			1,237
Other intangible assets, net		29			58
Deferred income taxes		1,117			1,120
Other assets, net		332			272
Total Assets	$	8,675	$	8,930
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	1,725	$	1,808
Accrued employee compensation		282			224
Accrued warranty		61			69
Current portion of long-term debt		245			19
Accrued expenses		608			602
Total current liabilities		2,921			2,722
Long-term accrued warranty		75			82
Other non-current liabilities		154			183
Long-term debt, less current portion		4,894			4,156
Total Liabilities		8,044			7,143
Total Equity		631			1,787
Total Liabilities and Equity	$	8,675	$	8,930

SEAGATE TECHNOLOGY HOLDINGS PLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

	For the Three Months Ended			For the Fiscal Years Ended
		July 2,			July 3,			July 2,			July 3,
		2021			2020			2021			2020
		(unaudited)				(unaudited)
Revenue	$	3,013	$	2,517	$	10,681	$	10,509
Cost of revenue		2,128			1,850			7,764			7,667
Product development		232			222			903			973
Marketing and administrative		136			112			502			473
Amortization of intangibles		3			3			12			14
Restructuring and other, net		7			63			8			82
Total operating expenses		2,506			2,250			9,189			9,209
Income from operations		507			267			1,492			1,300
Interest income		-			1			2			20
Interest expense		(59)			(49)			(220)			(201)
Other, net		49			(59)			74			(87)
Other expense, net		(10)			(107)			(144)			(268)
Income before income taxes		497			160			1,348			1,032
Provision (benefit) for income taxes		15			(6)			34			28
Net income	$	482	$	166	$	1,314	$	1,004
Net income per share:
Basic	$	2.11	$	0.65	$	5.43	$	3.83
Diluted	$	2.07	$	0.64	$	5.36	$	3.79
Number of shares used in per share calculations:
Basic		228			257			242			262
Diluted		233			260			245			265
Cash dividends declared per ordinary share1	$	0.67	$	0.65	$	2.66	$	2.58

1. Condensed Consolidated Statements of Operations updated on July 26, 2021 to accurately reflect dividends declared in fiscal year 2021