Slide 1: Fiscal Third Quarter 2021 Results
Fiscal Third Quarter 2021 Results Western Digital April 29, 2021
Slide 2: Forward Looking Statements
Forward Looking Statements SAFE HARBOR This presentation contains forward-looking statements that involve risks and uncertainties, including, but not limited to, the company’s preliminary financial results for its fiscal third quarter ended April 2, 2021; the company’s business outlook for the fisca
Slide 3: Executive Summary
Executive Summary Financial Results • Revenue of $4.1B • Operating cash flow of $116M • Non-GAAP diluted net earnings per share of $1.02* • Free cash flow of ($11M) • Non-GAAP gross margin is 27.7% • Cash and cash equivalents of $2.7B Corporate • Increased operational and strategic focus enabled by
Slide 4: Revenue Trends
Revenue Trends Client Devices Data Center Devices & Solutions Client Solutions In billions In billions In billions $ 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 $- $- $- Q3F20 Q4F20 Q1F21 Q2F21 Q3F21 Q3F20 Q4F20 Q1F21 Q2F21 Q3F21 Q3F20 Q4F20 Q1F21 Q2F21 Q3
Slide 5: Flash and Hard Drive Metrics
Flash and Hard Drive Metrics Flash Revenue and Non-GAAP Gross Margin Hard Drive Revenue and Non-GAAP Gross Margin In billions In billions 35% 35% $ 2.4 $ 2.4 30% 30% $ 2.0 $ 2.0 25% 25% $ 1.6 $ 1.6 20% 20% $ 1.2 $ 1.2 15% 15% $ 0.8 10% $ 0.8 10% $ 0.4 5% $ 0.4 5% $- 0% $- 0% Q3F20 Q4F20 Q1F21 Q2F21
Slide 6: Non-GAAP Financial Results
Non-GAAP Financial Results Q3F20 Q2F21 Q3F21 QoQ YoY Revenue ($M) $ 4,175 $ 3,943 $ 4,137 $ 194 ($ 38) Gross Margin % 27.9% 26.4% 27.7% 1.3 ppt (0.2 ppt) Operating Expenses ($M) $ 738 $ 696 $ 732 $ 36 ($ 6) Operating Income ($M) $ 427 $ 343 $ 412 $ 69 ($ 15) Interest and Other Expense, net $ 91 $ 68
Slide 7: Cash Flow Walk
Cash Flow Walk In millions $116 ($127) $2,956 ($212) $1 $2,734 (1) (2) Q2F21 Operating Cash Cash CapEx Debt Other Q3F21 Cash & Cash Flow Repayment Cash & Cash Equivalents Equivalents Quarterly debt repayment of $212 million, including optional payment of $150 million Strong liquidity position of
Slide 8: Fiscal Fourth Quarter Guidance
Fiscal Fourth Quarter Guidance (1) GAAP(2) NON-GAAP(2) Revenue ($B) $ 4.40 - $ 4.60 $ 4.40 - $ 4.60 Gross Margin % 29.0% - 31.0% 30.0% - 32.0% Operating Expenses ($M) $ 860 - $ 890 $ 760 - $ 790 Interest and Other Expense, net ($M) $ 75 - $ 80 $ 68 - $ 73 Tax Rate % N/A ~ 17%(3) EPS – Diluted N/A $
Slide 9: Joint Venture Operational Framework
Joint Venture Operational Framework Flash Ventures 49.9% Owned by Western Digital 50.1% Owned by Kioxia Co-develops flash (including process Owns and leases equipment for flash wafer Co-develops flash (including process technology and memory design) with Kioxia and production and R&D line technology
Slide 10: Capital Expenditure Framework
Capital Expenditure Framework 1 2 3 Flash Cash Capital HDD CapEx Non-Fab Flash Ventures (1) Parent Loans(2) Expenditures CapEx 3 4 5 Flash Ventures Capital Flash Ventures Flash Ventures Flash Ventures Lease Net Operating Expenditures Parent Loans(2) Financing(2) Cash Flow(2)(3) 1 2 3 4 5 Gross Capit
Slide 11: Gross Capital Expenditure Trends
Gross Capital Expenditure Trends In billions $ 3.5 $ 3.0 $ 2.5 $ 1.6 $ 2.0 $ 1.0 $ 2.1 $ 1.5 $ 1.1 $ 1.0 $ 2.0 $ 1.6 $ 1.4 $ 0.5 $ 0.8 $ 0.8 $ 0.0 -$ 0.3 -$ 0.5 (1) FY17 FY18 FY19 FY20 FY21F (2) (3) Cash CapEx WD portion of: Flash Ventures Cash Flow + Flash Ventures Lease Financing 1. FY21F: Gross C
Slide 12: Capital Allocation Priorities
Capital Allocation Priorities Highest Priority Strategically reinvest to continue driving Reinvestment in the Company technological innovation Reduce Debt Target 1.0x – 3.5x Debt-to-EBITDA Shareholder Return Dividend Share Shareholder return opportunities will be reevaluated Program Repurchases
Slide 13: Upcoming Events
Upcoming Events 26 1 8 9 10 MAY JUNE JUNE JUNE JUNE Bank of JP Morgan Stifel Evercore America Cowen Tech, Media & Cross Sector TMT Global TMT Telecom Insight Conference Technology Conference Conference Conference Conference Events and participation are subject to change. Please visit our website at
Slide 14: Appendix
Western Digital. Appendix 412912021 © 2021 Westem Digital Corporation or is afflfates. All ights reserved. | WESTERN DIGITAL CONFIDENTIAL 4
Slide 15: Quarterly Fact Sheet
Quarterly Fact Sheet In millions, except Average Selling Price (ASP), Q3F20 Q4F20 Q1F21 Q2F21 Q3F21 percentages, and working capital related metrics Revenue Client Devices(1) $ 1,831 $ 1,916 $ 1,946 $ 2,131 $ 2,012 Data Center Devices & Solutions(1) 1,523 1,684 1,129 807 1,237 Client Solutions(1) 82
Slide 16: Quarterly Fact Sheet
Quarterly Fact Sheet FOOTNOTES FORMULAS Days Sales Outstanding (DSO) = Accounts Receivable / (Revenue / # of days in quarter) Days Inventory Outstanding (DIO) = Inventories / (Cost of Revenue / # of days in quarter) Days Payables Outstanding (DPO) = Accounts Payable (including Accounts Payable to Re
Slide 17: Debt Tranches and Interest Rates
Debt Tranches and Interest Rates Principal Balance Debt Base Rate Maturity Outstanding as of Applicable Rates(1) Q3F21 (in millions) Revolver drawn(2)(3) L+150 February 27, 2023 $ 0 1.615% Term Loan A-1(4) L+150 February 27, 2023 4,394 2.745%(4) Term Loan B-4(4) L+175 April 29, 2023 1,243 1.865% Con
Slide 18: Credit Agreement Defined Leverage Ratio
Credit Agreement Defined Leverage Ratio In millions; unaudited; trailing 12 months Q3F20 Q4F20 Q1F20 Q2F21 Q3F21 Net Income (Loss) ($ 595) ($ 250) ($ 34) $ 167 $ 347 Income tax expense (110) 204 222 146 169 Interest and other expense, net 398 381 346 329 290 Depreciation and amortization 1,605 1,566
Slide 19: Net Income to Adjusted EBITDA Reconciliation
Net Income to Adjusted EBITDA Reconciliation In millions; unaudited Q3F20 Q4F20 Q1F21 Q2F21 Q3F21 Net Income (Loss) $ 17 $ 148 ($ 60) $ 62 $ 197 Income Tax Expense 29 37 57 23 52 Interest And Other Expense, Net 107 76 73 73 68 Depreciation And Amortization 384 377 374 336 251 EBITDA(1) $ 537 $ 638 $
Slide 20: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation In millions; unaudited Q3F20 Q2F21 Q3F21 GAAP Gross Profit $ 1,005 $ 960 $ 1,091 Amortization of acquired intangible assets 145 109 39 Stock-based compensation expense 13 15 14 Charges related to cost savings initiatives 2 - - Charges related to a power outage inciden
Slide 21: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation In millions, except per share amounts; unaudited Q3F20 Q2F21 Q3F21 GAAP Net Income $ 17 $ 62 $ 197 Amortization of acquired intangible assets 185 148 78 Stock-based compensation expense 78 80 83 Employee termination, asset impairment and other charges 8 2 (68) Charges
Slide 22: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation In millions, except percentages; unaudited Q3F20 Q4F20 Q1F21 Q2F21 Q3F21 Gross Profit $ 1,005 $ 1,083 $ 904 $ 960 $ 1,091 Amortization of acquired intangible assets 145 144 145 109 39 Stock-based compensation expense 13 13 12 15 14 Charges related to cost saving initi
Slide 23: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation 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-GAAP gross margin; non-GAAP operating expenses; non-GAAP operating income; non-GAAP
Slide 24: Western Digital.
Western Digital.