Seagate Technology Holdings Plc · NASDAQ:STX
Seagate Technology — Q4 2020 Earnings Presentation
20 slides from Seagate Technology's earnings presentation, Jul 29, 2020
Slide 1: Supplemental Financial Information Q4 FY20
SUPPLEMENTAL FINANCIAL INFORMATION Q4 FY20
Slide 2: Safe Harbor Statement
Supplemental Financial Information Fiscal Q4 2020 (quarter ended July 3, 2020) July 28, 2020 Safe Harbor Statement This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Information concerning risks, uncertainties and other facto
Slide 3: Use of Non-GAAP Financial Information
Supplemental Financial Information Fiscal Q4 2020 (quarter ended July 3, 2020) July 28, 2020 Use of Non-GAAP Financial Information To supplement the consolidated financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses non-GAAP measures
Slide 4: Executive Summary
Supplemental Financial Information Fiscal Q4 2020 (quarter ended July 3, 2020) July 28, 2020 Executive Summary Executing Well in A Challenging Business Environment • Record nearline EB shipment & solid revenue on cloud data center FQ4’20 Results within strength Guidance Range • COVID-19 negatively i
Slide 5: Q4 FY20 Financial Highlights
Supplemental Financial Information Fiscal Q4 2020 (quarter ended July 3, 2020) July 28, 2020 Q4 FY20 Financial Highlights $2.5B 26.5% 10.6% $0.64 117EB REVENUE GROSS MARGIN OPERATING MARGIN DILUTED EPS HDD CAPACITY GAAP GAAP GAAP SHIPPED $388M 27.3% 14.8% $1.20 4.5TB CASH FLOW FROM GROSS MARGIN OPER
Slide 6: FY20 Financial Highlights
Supplemental Financial Information Fiscal Q4 2020 (quarter ended July 3, 2020) July 28, 2020 FY20 Financial Highlights $10.5B 27.0% 12.4% $3.79 442EB REVENUE GROSS MARGIN OPERATING MARGIN DILUTED EPS HDD CAPACITY GAAP GAAP GAAP SHIPPED $1.7B 27.7% 14.7% $4.95 3.6TB CASH FLOW FROM GROSS MARGIN OPERAT
Slide 7: Quarterly Financial Trends
Supplemental Financial Information Fiscal Q4 2020 (quarter ended July 3, 2020) July 28, 2020 Quarterly Financial Trends Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 GAAP Results Revenue ($M) 2,371 2,578 2,696 2,718 2,517 Gross Margin % 26.3% 26.0% 28.1% 27.4% 26.5% Operating Expenses ($M) 292 398 374 370 400
Slide 8: HDD Product Mix Trends
Supplemental Financial Information Fiscal Q4 2020 (quarter ended July 3, 2020) July 28, 2020 HDD Product Mix Trends Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Capacity Shipped (EB) Mass Capacity 52.2 63.9 71.3 91.1 90.5 Nearline 34.8 47.4 49.0 76.4 79.5 Legacy 32.2 34.5 35.6 29.1 26.4 Average Capacity per D
Slide 9: Mass Capacity Trends
Supplemental Financial Information Fiscal Q4 2020 (quarter ended July 3, 2020) July 28, 2020 Mass Capacity Trends Quarterly Mass Capacity Revenue Trend Annual Mass Capacity Revenue Trend Up 35% YoY (Q4FY20 / Q4FY19) 16% CAGR (FY16 – FY20) 63% 6,000 57% 60% 62% 1,600 60% 58% 53% 53% 51% 57% 45% 46% 4
Slide 10: Significant Secular Growth Opportunity
Supplemental Financial Information Fiscal Q4 2020 (quarter ended July 3, 2020) July 28, 2020 Significant Secular Growth Opportunity HDD Mass Capacity Storage ($TAM) Edge IT 4.0 $3B - $6B Incremental Edge Opportunity Mass Capacity IT 3.0 ~$24B Nearly doubling from LTM TAM of ~$12.5B Does not reflect
Slide 11: Seagate Nearline Demand Trend
Supplemental Financial Information Fiscal Q4 2020 (quarter ended July 3, 2020) July 28, 2020 Seagate Nearline Demand Trend 38% CAGR FY16-FY20 100.0 79.5 EB 80.0 47.4 EB 60.0 25.1 EB 40.0 12.2 20.0 EB - Q1FY16 Q1FY18 Q1FY20 Q4FY20 Nearline Exabyte Shipped (EB) NOTE: Minor changes and calculation vari
Slide 12: Cash, Cash Flow, and Operational Trends
Supplemental Financial Information Fiscal Q4 2020 (quarter ended July 3, 2020) July 28, 2020 Cash, Cash Flow, and Operational Trends Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Cash1 ($M) 2,220 1,784 1,744 1,612 1,722 Debt ($M) 4,253 4,140 4,141 4,103 4,175 Cash Flow From Operations ($M) 448 456 480 390 388
Slide 13: Strategy and Perspectives on Debt
Supplemental Financial Information Fiscal Q4 2020 (quarter ended July 3, 2020) July 28, 2020 Strategy and Perspectives on Debt • Earned and maintained Investment Grade benchmarks Sound Capital • Debt with a pro forma weighted average maturity of ~7 years Management • Maintain strong balance sheet wi
Slide 14: Financial Covenants: Total Leverage Ratio
Supplemental Financial Information Fiscal Q4 2020 (quarter ended July 3, 2020) July 28, 2020 Financial Covenants: Total Leverage Ratio1 6.0 4.5x $4.8 $4.8 $4.5 $4.3 $4.3 $4.1 $4.1 $4.2 $4.1 4.0 $3.1 3.0x $3.0 $3.0 $2.9 $2.4 $2.5 $2.4 $2.5 $2.0 2.2x 2.4x 2.2x 2.2x 2.0 2.0x 2.0x 1.8x 1.9x 1.5x 1.7x 0.
Slide 15: Financial Covenants: Interest Coverage Ratio
Supplemental Financial Information Fiscal Q4 2020 (quarter ended July 3, 2020) July 28, 2020 Financial Covenants: Interest Coverage Ratio1 300 18.0x $237 $233 $229 $229 $234 $223 $227 $226 $209 200 12.0x 11.3x 11.3x 10.3x 10.4x 9.6x 8.8x 8.3x 8.2x 100 7.5x 6.0x 0 0.0x Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4F
Slide 16: Debt Maturity Profile
Supplemental Financial Information Fiscal Q4 2020 (quarter ended July 3, 2020) July 28, 2020 Debt Maturity Profile1 Characteristics of Maturity Profile: • Staggered Maturity • Manageable tranche levels provide ample liquidity at maturity 800 600 $571 $525 $504 $505 $500 $500 $490 400 $381 $254 200 $
Slide 17: Reconciliation Tables
RECONCILIATION TABLES SEAGATE
Slide 18: Reconciliation of Gross Margin and Operating Expenses to Non-GAAP
Supplemental Financial Information Fiscal Q4 2020 (quarter ended July 3, 2020) July 28, 2020 Reconciliation of Gross Margin to Non-GAAP Gross Margin ($M) Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 FY20 Gross Margin 624 671 758 746 667 2,842 Accelerated depreciation, impairment and other charges related to c
Slide 19: Reconciliation of Net Income to Credit Agreement Defined EBITDA
Supplemental Financial Information Fiscal Q4 2020 (quarter ended July 3, 2020) July 28, 2020 Reconciliation of Net Income to Credit Agreement Defined EBITDA ($M) Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Net Income 461 450 384 195 983 200 318 320 166 Interest Income (15) (24) (2
Slide 20: Non-GAAP Measures Adjusted for the Following Items
Supplemental Financial Information Fiscal Q4 2020 (quarter ended July 3, 2020) July 28, 2020 Non-GAAP Measures Adjusted for the Following Items: Accelerated depreciation, impairment and other charges related to cost saving efforts These expenses are excluded in the non-GAAP measure due to its incons
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