Western Digital Corporation · NASDAQ:WDC
Western Digital — Q3 2024 Earnings Presentation
27 slides from Western Digital's earnings presentation, Apr 25, 2024
Slide 1: Fiscal Third Quarter 2024 Financial Results
Fiscal Third Quarter 2024 Financial Results Western Digital April 25, 2024
Slide 2: Forward Looking Statements
2 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S 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
Slide 3: Fiscal Third Quarter Executive Summary
3 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Fiscal Third Quarter Executive Summary Financial Results1 • Revenue of $ 3.5B • Operating cash flow of $ 58M • Non-GAAP EPS of $ 0.63 • Free cash flow of $ 91M • Non-GAAP gross margin of 29.3% • Cash an
Slide 4: Revenue Trends by End Market
4 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Revenue Trends by End Market Cloud Client Consumer In billions In billions In billions $ 1.8 $ 1.2 $ 1.0 $ 1.5 $ 0.8 $ 0.9 $ 1.2 $ 0.6 $ 0.9 $ 0.6 $ 0.4 $ 0.6 $ 0.3 $ 0.2 $ 0.3 $- $- $- Q3F23 Q4F23 Q1F2
Slide 5: Flash and Hard Drive Metrics
5 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Flash and Hard Drive Metrics Flash Revenue and Gross Margin Hard Drive Revenue and Gross Margin In billions In billions $ 2.0 40% $ 2.0 40% $ 1.6 $ 1.6 25% 30% $ 1.2 $ 1.2 10% 20% $ 0.8 $ 0.8 -5% 10% $
Slide 6: Non-GAAP Financial Results
6 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Non-GAAP Financial Results ($ in millions, except for EPS) Q3 2023 Q2 2024 Q3 2024 QoQ YoY Revenue $ 2,803 $ 3,032 $ 3,457 up 14% up 23% Gross Margin % 10.6% 15.5% 29.3% up 13.8 ppt up 18.7 ppt Operatin
Slide 7: Cash Flow Walk
7 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Cash Flow Walk In millions $ 58 $ 33 $ 2,481 $ 1,894 $ (629) $ (49) (1) (2) (3) Q2F24 Operating Cash Cash CapEx Net Debt Other Q3F24 Cash & Cash Flow Cash & Cash Equivalents Equivalents ▪ Total liquidit
Slide 8: Fiscal Fourth Quarter Guidance
8 © 2024 Western Digital Corporation or its affiliates All rights reserved Fiscal Fourth Quarter Guidance(1) GAAP Non-GAAP(2) Revenue ($ B) $ 3.60 - $ 3.80 $ 3.60 - $ 3.80 Gross Margin % 31.5% - 33.5% 32.0% - 34.0% Operating Expenses ($ M) $ 770 - $ 800 $ 670 - $ 690 Interest and Other Expense, net
Slide 9: Joint Venture Operational Framework
9 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S 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 Digi
Slide 10: Capital Expenditure Framework
10 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED 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
Slide 11: Gross Capital Expenditure Trends
11 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Gross Capital Expenditure Trends In billions $ 3.5 $ 3.0 $ 2.5 $ 1.0 $ 1.6 $ 2.0 $ 1.5 $ 1.9 $ 1.5 $ 1.4 $ 1.0 $ 2.0 $ 1.6 ~ $ 1.4 $ 1.2 $ 0.5 $ 0.8 $ 0.8 ~ $ - $ (0.3) $ (0.5) FY18 FY19 FY20 FY21 FY22
Slide 12: Appendix
12 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Appendix
Slide 13: Quarterly Fact Sheet
13 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Quarterly Fact Sheet In millions, except Average Selling Price (ASP), Q3F23 Q4F23 Q1F24 Q2F24 Q3F24 percentages, and working capital related metrics Revenue by End Market(1) Cloud $ 1,205 $ 994 $ 872 $
Slide 14: Quarterly Fact Sheet (continued)
14 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S 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 Reven
Slide 15: Potential Changes to Income Statement Layout & EPS
15 © 2024 Western Digital Corporation or its affiliates All rights reserved Potential Changes to Income Statement Layout & EPS Convertible Preferred Stock (as of Q3F24) Convertible preferred stock liquidation preference 𝟏: $ 953M with a conversion price Income Statement Example ($ in millions…
Slide 16: Potential Changes to Income Statement Layout & EPS (cont.)
16 © 2024 Western Digital Corporation or its affiliates All rights reserved Potential Changes to Income Statement Layout & EPS (cont.) Convertible Senior Notes + Capped Calls • Principal balance: $ 1,600M with a conversion price of $ 52.20 Financial reporting (diluted shares for EPS) • Conversion pr
Slide 17: Debt Capital Structure
17 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Debt Capital Structure Current Cap Table Debt Maturity Profile (in billions) As of March Over 60% of debt to mature All-in Maturity 29, 2024 in 2027 or later Rate Rate1 (in millions) Delayed Draw Term
Slide 18: Credit Agreement Defined Leverage Ratio
18 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Credit Agreement Defined Leverage Ratio In millions; unaudited; trailing 12 months Q3F23 Q4F23 Q1F24 Q2F24 Q3F24 Net Loss $ (657) $ (1,684) $ (2,416) $ (2,252) $ (1,546) Income tax expense 369 134 91 4
Slide 19: Credit Agreement Defined Adjusted EBITDA (Q3F24)
19 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Credit Agreement Defined Adjusted EBITDA (Q3F24) In millions; unaudited Q3F24 Net Income $ 135 Income tax expense 43 Interest and other expense, net 95 Depreciation and amortization 140 EBITDA $ 413 St
Slide 20: GAAP to Non-GAAP Reconciliations
20 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED GAAP to Non-GAAP Reconciliations In millions; unaudited Q3F23 Q2F24 Q3F24 GAAP Gross Profit $ 286 $ 492 $ 1,001 Stock-based compensation expense 12 13 11 Amortization of acquired intangible assets — 1
Slide 21: GAAP to Non-GAAP Reconciliations (cont'd)
21 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED GAAP to Non-GAAP Reconciliations (cont'd) In millions, except per share amounts; unaudited Q3F23 Q2F24 Q3F24 GAAP Net Income (Loss) $ (571) $ (287) $ 135 Stock-based compensation expense 74 72 77 Busin
Slide 22: Supplemental Operating Segment Results
22 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Supplemental Operating Segment Results In millions, except percentages; unaudited Q3F23 Q4F23 Q1F24 Q2F24 Q3F24 Net Revenue Flash $ 1,307 $ 1,377 $ 1,556 $ 1,665 $ 1,705 HDD 1,496 1,295 1,194 1,367 1,7
Slide 23: GAAP to Non-GAAP Reconciliations
23 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S 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 g
Slide 24: Revisions to Previously Reported Financial Information
24 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Revisions to Previously Reported Financial Information As previously reported, in connection with the preparation of its condensed consolidated financial statements as of and for the three and six mont
Slide 25: Revisions to Previously Reported Financial Information (Cont'd)
25 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Revisions to Previously Reported Financial Information (Cont'd) In millions, unaudited Q1F22 Q2F22 Q3F22 Q4F22 Q1F23 Q2F23 Q3F23 Q4F23 Q1F24 Q2F24(1) GAAP Net Income (Loss) as previously reported $ 610
Slide 26: Revisions to Previously Reported Financial Information (Cont'd)
26 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Revisions to Previously Reported Financial Information (Cont'd) In millions, except per share amounts; unaudited Q1F22 Q2F22 Q3F22 Q4F22 Q1F23 Q2F23 Q3F23 Q4F23 Q1F24 Q2F24(1) Diluted Income (Loss) Per
Slide 27: Western Digital. Create What's Next
SN. Western Digital. Create What’s Next