Western Digital Corporation · NASDAQ:WDC
Western Digital — Q1 2023 Earnings Presentation
22 slides from Western Digital's earnings presentation, Oct 27, 2022
Slide 1: Fiscal First Quarter 2023 Financial Results
Fiscal First Quarter 2023 Financial Results Western Digital October 27, 2022
Slide 2: Forward Looking Statements
2 © 2 0 2 2 W ESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Forward Looking Statements SAFE HARBOR This presentation contains forward-looking statements within the meaning of federal securities laws, including statements regarding expectations for the company’s business outlook an
Slide 3: Fiscal First Quarter Executive Summary
3 © 2 0 2 2 W ESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Fiscal First Quarter Executive Summary Financial Results • Revenue of $ 3.7B • Operating cash flow of $ 6M • Non-GAAP EPS of $ 0.20 • Free cash flow of $ (215)M • Non-GAAP gross margin of 26.7% • Cash and cash equivalents
Slide 4: Revenue Trends by End Market
4 © 2 0 2 2 W ESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Revenue Trends by End Market Cloud Client Consumer In billions In billions In billions $ 2.4 $ 2.4 $ 2.4 $ 2.0 $ 2.0 $ 2.0 $ 1.6 $ 1.6 $ 1.6 $ 1.2 $ 1.2 $ 1.2 $ 0.8 $ 0.8 $ 0.8 $ 0.4 $ 0.4 $ 0.4 $- $- $- Q1F22 Q2F22 Q3F22
Slide 5: Flash and Hard Drive Metrics
5 © 2 0 2 2 W ESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Flash and Hard Drive Metrics Flash Revenue and Gross Margin Hard Drive Revenue and Gross Margin In billions In billions $ 2.8 40% $ 2.8 40% $ 2.4 35% $ 2.4 35% 30% 30% $ 2.0 $ 2.0 25% 25% $ 1.6 $ 1.6 20% 20% $ 1.2 $ 1.2 1
Slide 6: Non-GAAP Financial Results
6 © 2 0 2 2 W ESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Non-GAAP Financial Results ($ in millions, except for EPS) Q1 2022 Q4 2022 Q1 2023 QoQ YoY Revenue $ 5,051 $ 4,528 $ 3,736 down 17% down 26% Gross Margin % 33.9% 32.3% 26.7% down 5.6 ppt down 7.2 ppt Operating Expenses $
Slide 7: Cash Flow Walk
7 © 2 0 2 2 W ESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Cash Flow Walk In millions $ 2,327 $6 $ 2,049 $ (221) $ (63) (1) (2) Q4F22 Operating Cash Cash CapEx Other Q1F23 Cash & Cash Flow Cash & Cash Equivalents Equivalents ▪ Strong liquidity position. Ended the fiscal first qua
Slide 8: Fiscal Second Quarter Guidance
8 © 2 0 2 2 W ESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Fiscal Second Quarter Guidance(1) GAAP Non-GAAP(2) Revenue ($ B) $ 2.90 - $ 3.10 $ 2.90 - $ 3.10 Gross Margin % 19.5% - 21.5% 20.0% - 22.0% Operating Expenses ($ M) $ 760 - $ 780 $ 650 - $ 670 Interest and Other Expense,
Slide 9: Joint Venture Operational Framework
9 © 2 0 2 2 W ESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Joint Venture Operational Framework For more information on Flash Ventures, please visit investor.wdc.com for a recently published Flash Ventures presentation. Flash Ventures 49.9% Owned by Western Digital 50.1% Owned by
Slide 10: Capital Expenditure Framework
10 © 2 0 2 2 W ESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Capital Expenditure Framework 1 2 3 Flash Cash Capital HDD CapEx Non-Fab Flash Ventures Expenditures(1) CapEx Parent Loans(2) 3 4 5 Flash Ventures Capital Flash Ventures Flash Ventures Flash Ventures Lease Net Operating
Slide 11: Gross Capital Expenditure Trends
11 © 2 0 2 2 W ESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Gross Capital Expenditure Trends In billions $ 3.5 $ 3.0 $ 2.5 $ 1.6 $ 2.0 $ 1.0 ~ $ 1.4 $ 1.5 $ 1.9 $ 1.5 $ 1.0 $ 2.0 $ 1.6 $ 1.4 $ 1.2 ~ $ 1.3 $ 0.5 $ 0.8 $ 0.0 -$ 0.3 -$ 0.5 (1) FY18 FY19 FY20 FY21 FY22 FY23F (2) (3)
Slide 12: Capital Allocation Framework
12 © 2 0 2 2 W ESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Capital Allocation Framework Highest Priority Reinvestment in the Strategically reinvest to drive innovation Company Reduce Leverage Target 1.0x – 3.25x Debt-to-EBITDA Shareholder Return Dividend Share Committed to retur
Slide 13: Appendix
13 © 2 0 2 2 W ESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Appendix
Slide 14: Quarterly Fact Sheet
14 © 2 0 2 2 W ESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Quarterly Fact Sheet In millions, except Average Selling Price (ASP), Q1F22 Q2F22 Q3F22 Q4F22 Q1F23 percentages, and working capital related metrics Revenue by End Market(1) Cloud $ 2,225 $ 1,920 $ 1,774 $ 2,098 $ 1,829
Slide 15: Quarterly Fact Sheet (continued)
15 © 2 0 2 2 W ESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Quarterly Fact Sheet (continued) FOOTNOTES FORMULAS Days Sales Outstanding (DSO) = Accounts Receivable / (Revenue / # of days in quarter) Days Inventory Outstanding (DIO) = Inventories / (Cost of Revenue / # of days in q
Slide 16: Debt Capital Structure
16 © 2 0 2 2 W ESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Debt Capital Structure Current Cap Table Debt Maturity Profile (in billions) As of Over 80% of debt to mature All-in Maturity September Rate1 30, 2022 in 2026 or later Rate2 (in millions) Convertible Debt Due 2024 3 1.50
Slide 17: Credit Agreement Defined Leverage Ratio
17 © 2 0 2 2 W ESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Credit Agreement Defined Leverage Ratio In millions; unaudited; trailing 12 months Q1F22 Q2F22 Q3F22 Q4F22 Q1F23 Net Income $ 1,491 $ 1,993 $ 1,821 $ 1,500 $ 917 Income tax expense 143 202 387 623 586 Interest and other
Slide 18: GAAP to Non-GAAP Reconciliations
18 © 2 0 2 2 W ESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED GAAP to Non-GAAP Reconciliations In millions; unaudited Q1F22 Q4F22 Q1F23 GAAP Gross Profit $ 1,665 $ 1,445 $ 981 Stock-based compensation expense 9 12 14 Amortization of acquired intangible assets 39 1 1 Contamination r
Slide 19: GAAP to Non-GAAP Reconciliations (cont'd)
19 © 2 0 2 2 W ESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED GAAP to Non-GAAP Reconciliations (cont'd) In millions, except per share amounts; unaudited Q1F22 Q4F22 Q1F23 GAAP Net Income $ 610 $ 301 $ 27 Stock-based compensation expense 76 77 86 Amortization of acquired intangible
Slide 20: Supplemental Operating Segment Results
20 © 2 0 2 2 W ESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Supplemental Operating Segment Results In millions, except percentages; unaudited Q1F22 Q2F22 Q3F22 Q4F22 Q1F23 Net Revenue Flash $ 2,490 $ 2,620 $ 2,243 $ 2,400 $ 1,722 HDD 2,561 2,213 2,138 2,128 2,014 Total Net Revenu
Slide 21: GAAP to Non-GAAP Reconciliations
21 © 2 0 2 2 W ESTERN DIGITAL CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED GAAP to Non-GAAP Reconciliations FOOTNOTES This presentation contains the following financial measures that are not in accordance with U.S. generally accepted accounting principles (“GAAP”): Non-GAAP gross profit; Non-GA
Slide 22: Western Digital. Create What's Next
SN. Western Digital. Create What’s Next