Seagate: Fiscal 4Q20 Financial Results Results

4FQ20 Highlights
• Revenue of $2.52 billion
• GAAP operating margin of 10.6%; non-GAAP operating margin of 14.8%
• GAAP diluted earnings per share (EPS) of $0.64; non-GAAP diluted EPS of $1.20
• Cash flow from operations of $388 million and free cash flow of $274 million
• Revenue from mass capacity storage markets increased 35% Y/Y and represented 63% of 4FQ20 HDD revenue

FY20 Highlights
• Revenue of $10.51 billion
• GAAP operating margin of 12.4%; non-GAAP operating margin of 14.7%
• GAAP diluted EPS of $3.79; non-GAAP diluted EPS of $4.95
• Cash flow from operations of $1.7 billion and free cash flow of $1.1 billion
• Returned $1.5 billion to shareholders through dividends and share repurchases
• Revenue from mass capacity storage markets increased 25% Y/Y and represented 57% of annual HDD revenue

Seagate Technology plc reported financial results for its fourth quarter and fiscal year ended July 3, 2020.

“The June quarter was led by robust cloud and data center demand, which drove record exabyte shipments for our nearline mass capacity drives and strongly contributed to the company’s overall revenue and solid free cash flow gen. However, continued economic uncertainty and Covid-19 related disruptions impacted demand in other key end markets including video and image applications, mission critical and consumer markets and also impacted profitability as we incurred higher logistics and labor costs which together weighed on our fourth quarter results,” said Dave Mosley, CEO. “We are focused on managing the business well and executing on what we can control. FY20 marked a strong year of progress as we grew mass capacity storage revenue by 25% and increased our overall revenue. We executed our technology roadmap, strengthened our balance sheet and delivered on our capital return program. Entering FY21, the level of macro uncertainty remains high and we will continue to carefully manage our cash and expenses. However, we anticipate demand across our end markets to improve within the next 6 months and currently model revenue to be fairly flat in FY21, supported by the strength of our mass capacity product portfolio. Longer-term, the unabated growth in data at the edge and in the cloud is driving secular demand for mass capacity storage and we believe Seagate’s financial strength and innovative product portfolio position us well for these trends.“

The company generated $388 million in cash flow from operations and $274 million in free cash flow during the fiscal fourth quarter 2020. For FY20, the company generated $1.7 billion in cash flow from operations and $1.1 billion in free cash flow.

Seagate maintained a healthy balance sheet and during the 4FQ20, the company paid cash dividends of $168 million and repurchased 1.1 million ordinary shares for $55 million.

The company restructured debt, increasing average debt maturity to nearly 7 years and reduced the amount payable in the next 2 fiscal years to approximately 6% of principal debt balance.

The company ended the fiscal year with cash and cash equivalents of $1.7 billion. There were 257 million ordinary shares issued and outstanding as of the end of the fiscal year.

Quarterly Cash Dividend
The board of directors declared a quarterly cash dividend of $0.65 per share, which will be payable on October 7, 2020 to shareholders of record as of the close of business on September 23, 2020. 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 for 1FQ21
• Revenue of $2.3 billion, plus or minus $200 million
• Non-GAAP diluted EPS of $0.85, plus or minus $0.15