Slide 1: Fiscal First Quarter 2022 Financial Results
Fiscal First Quarter 2022 Financial Results Western Digital October 28, 2021 (Updated QFS table on slide 15 on November 8, 2021, all other data unchanged)
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 business outlook for the fiscal second quarter of 2022; demand trends; market conditions; expectations regarding the company
Slide 3: Executive Summary
Executive Summary Financial Results • Revenue of $5.1B • Operating cash flow of $521M • Non-GAAP diluted net earnings per share of $2.49 • Free cash flow of $224M • Non-GAAP gross margin of 33.9% • Cash and cash equivalents of $3.3B Corporate • Western Digital’s unique ability to deliver innovative
Slide 4: Revenue Trends by End Market
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 $- $- $- Q1F21 Q2F21 Q3F21 Q4F21 Q1F22 Q1F21 Q2F21 Q3F21 Q4F21 Q1F22 Q1F21 Q2F21 Q3F21 Q4F21 Q1F22 Revenu
Slide 5: Flash and Hard Drive Metrics
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 15% 15% $ 0.8 $ 0.8 10% 10% $ 0.4 5% $ 0.4 5% $- 0% $- 0% Q1F21 Q2F21 Q3F21 Q4F2
Slide 6: Non-GAAP Financial Results
Non-GAAP Financial Results Q1F21 Q4F21 Q1F22 QoQ YoY Revenue ($M) $ 3,922 $ 4,920 $ 5,051 $ 131 $ 1,129 Gross Margin % 26.3% 32.9% 33.9% 1.0 ppt 7.6 ppt Operating Expenses ($M) $ 708 $ 790 $ 761 ($ 29) $ 53 Operating Income ($M) $ 323 $ 828 $ 952 $ 124 $ 629 Interest and Other Expense, net $ 68 $ 79
Slide 7: Cash Flow Walk
Cash Flow Walk In millions $521 ($297) ($213) ($91) $3,370 $3,290 (1) (2) Q4F21 Operating Cash Cash CapEx Debt Other Q1F22 Cash & Cash Flow Repayment Cash & Cash Equivalents Equivalents ▪ Quarterly debt repayment of $213 million, including optional payment of $150 million ▪ Strong liquidity position
Slide 8: Fiscal Second Quarter Guidance
Fiscal Second Quarter Guidance (1) GAAP(2) NON-GAAP(2) Revenue ($B) $ 4.70 - $ 4.90 $ 4.70 - $ 4.90 Gross Margin % 31.0% - 33.0% 32.0% - 34.0% Operating Expenses ($M) $ 870 - $ 890 $ 760 - $ 780 Interest and Other Expense, net ($M) ~ $ 80 ~ $ 70 Tax Rate % N/A ~11%(3) EPS – Diluted N/A $ 1.95 - $ 2.
Slide 9: Joint Venture Operational Framework
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 Kioxia Co-develops flash (including process technology and Owns and leases equi
Slide 10: Capital Expenditure Framework
Capital Expenditure Framework 1 2 3 Cash Capital HDD CapEx Flash Flash Ventures (1) Non-Fab CapEx Parent Loans(2) Expenditures 3 4 5 Flash Ventures Capital Flash Ventures Flash Ventures Flash Ventures Net Operating Expenditures Parent Loans(2) Lease 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 $ 1.1 $ 2.5 $ 1.6 $ 2.0 $ 1.0 $ 1.9 $ 1.5 $ 1.1 $ 1.0 $ 2.0 $ 2.0 $ 1.6 $ 1.4 $ 0.5 $ 0.8 $ 0.8 $ 0.0 -$ 0.3 -$ 0.5 (1) FY17 FY18 FY19 FY20 FY21 FY22F (2) (3) Cash CapEx WD portion of: Flash Ventures Cash Flow + Flash Ventures Lease Financing
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 6 NOVEMBER DECEMBER DECEMBER 30 1 7 DECEMBER Wells Fargo Nasdaq UBS Global Barclays TMT Global TMT London TMT Conference Conference Conference Conference Events and participation are subject to change. Please visit our website at investor.wdc.com for the latest information.
Slide 14: Appendix
Western Digital. 10/28/2021 © 2021 Westem Digital Corporation or its affiliates. All ights reserved. | WESTERN DIGITAL CONFIDENTIAL 4
Slide 15: Quarterly Fact Sheet
Quarterly Fact Sheet In millions, except Average Selling Price (ASP), Q1F21 Q2F21 Q3F21 Q4F21 Q1F22 percentages, and working capital related metrics Revenue by End Market(1) Client $ 1,750 $ 1,869 $ 1,767 $ 1,895 $ 1,853 Cloud 1,291 1,014 1,423 1,995 2,225 Consumer 881 1,060 947 1,030 973 Total Reve
Slide 16: Quarterly Fact Sheet Footnotes
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) Q1F22 (in millions) Revolver drawn(2)(3) L+150 February 27, 2023 $ 0 1.582% Term Loan A-1(4) L+150 February 27, 2023 4,269 2.761%(4) Term Loan B-4(4)(5) L+175 April 29, 2023 943 1.832% Co
Slide 18: Credit Agreement Defined Leverage Ratio
Credit Agreement Defined Leverage Ratio In millions; unaudited; trailing 12 months Q1F21 Q2F21 Q3F21 Q4F21 Q1F22 Net Income (Loss) ($ 34) $ 167 $ 347 $ 821 $ 1,491 Income tax expense 222 146 169 106 143 Interest and other expense, net 346 329 290 293 294 Depreciation and amortization 1,534 1,471 1,3
Slide 19: Net Income to Adjusted EBITDA Reconciliation
Net Income to Adjusted EBITDA Reconciliation In millions; unaudited Q1F21 Q2F21 Q3F21 Q4F21 Q1F22 Net Income (Loss) ($ 60) $ 62 $ 197 $ 622 $ 610 Income Tax Expense 57 23 52 (26) 94 Interest And Other Expense, Net 73 73 68 79 74 Depreciation And Amortization 374 336 251 251 250 EBITDA(1) $ 444 $ 494
Slide 20: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation In millions; unaudited Q4F21 Q1F22 Q1F21 GAAP Gross Profit $ 904 $ 1,566 $ 1,665 Amortization of acquired intangible assets 145 38 39 Stock-based compensation expense 12 14 9 Charges related to a power outage incident and related recovery (30) - - Non-GAAP Gross Profi
Slide 21: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation In millions, except per share amounts; unaudited Q1F21 Q4F21 Q1F22 GAAP Net Income (Loss) ($ 60) $ 622 $ 610 Amortization of acquired intangible assets 184 76 78 Stock-based compensation expense 76 79 76 Employee termination, asset impairment and other charges 23 (4)
Slide 22: Supplemental Operating Segment Results
Supplemental Operating Segment Results In millions, except percentages; unaudited Q1F21 Q2F21 Q3F21 Q4F21 Q1F22 Net Revenue HDD $ 1,844 $ 1,909 $ 1,962 $ 2,501 $ 2,561 Flash 2,078 2,034 2,175 2,419 2,490 Total Net Revenue $ 3,922 $ 3,943 $ 4,137 $ 4,920 $ 5,051 Gross Profit By Segment HDD $ 483 $ 48
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.