MU
$42.92
Micron Technology
$.11
.26%
Earnings Details
1st Quarter November 2017
Tuesday, December 19, 2017 4:00:13 PM
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Summary

Micron Technology Beats

Micron Technology (MU) reported 1st Quarter November 2017 earnings of $2.41 per share on revenue of $6.8 billion. The consensus earnings estimate was $2.12 per share on revenue of $6.4 billion. The Earnings Whisper number was $2.23 per share. Revenue grew 71.4% on a year-over-year basis.

The company said in its earnings presentation it expects second quarter non-GAAP earnings of $2.51 to $2.65 per share on revenue of $6.80 billion to $7.20 billion. The current consensus earnings estimate is $2.04 per share on revenue of $6.21 billion for the quarter ending February 28, 2018.

Micron Technology Inc is a manufacturer and marketer of DRAM, NAND Flash memory, CMOS image sensors and other semiconductor components. It has two segments, Memory and Imaging.

Results
Reported Earnings
$2.41
Earnings Whisper
$2.23
Consensus Estimate
$2.12
Reported Revenue
$6.80 Bil
Revenue Estimate
$6.39 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Micron Technology, Inc., Reports Results for the First Quarter of Fiscal 2018

Micron Technology, Inc., (MU) today announced results of operations for its first quarter of fiscal 2018, which ended November 30, 2017.

Fiscal Q1 2018 Highlights

-- Revenues of $6.80 billion, 71 percent higher compared with the same period last year

-- GAAP net income of $2.68 billion, or $2.19 per diluted share

-- Non-GAAP net income of $2.99 billion, or $2.45 per diluted share

Operating cash flow of $3.64 billion, 220 percent higher compared with the same period last year

"Micron’s strong results were driven by double-digit sequential revenue growth in mobile, server and SSD applications, with expanded gross margins and improved profitability," said Micron President and CEO Sanjay Mehrotra.

"We are making solid progress on our strategic priorities to drive cost competitiveness, deploy high value solutions and strengthen our balance sheet. We believe these actions will position Micron to benefit from the broad demand trends ahead of us."

Quarterly Financial Results
GAAP
Non-GAAP
(in millions except per share amounts) FQ1-18
FQ4-17
FQ1-17
FQ1-18
FQ4-17
FQ1-17
Net sales
$ 6,803
$ 6,138
$ 3,970
$ 6,803
$ 6,138
$ 3,970
Gross margin
$ 3,747
$ 3,112
$ 1,011
$ 3,769
$ 3,147
$ 1,032
percent of net sales
55.1%
50.7%
25.5%
55.4%
51.3%
26.0%
Operating income
$ 3,097
$ 2,502
$ 359
$ 3,157
$ 2,546
$ 438
percent of net sales
45.5%
40.8%
9.0%
46.4%
41.5%
11.0%
Net income attributable to Micron
$ 2,678
$ 2,368
$ 180
$ 2,994
$ 2,386
$ 335
Diluted earnings per share
$ 2.19
$ 1.99
$ 0.16
$ 2.45
$ 2.02
$ 0.32

Revenues for the first quarter of 2018 were 11 percent higher compared to the fourth quarter of 2017, reflecting increased demand for our mobile, server, and SSD products. Our overall consolidated gross margin of 55.1 percent for the first quarter of 2018 was higher compared to 50.7 percent for the fourth quarter of 2017 and reflects margin expansion for both DRAM and Trade NAND products supported by ongoing strength in the pricing environment and a favorable product mix.

Investments in capital expenditures, net of amounts funded by partners, were $1.92 billion for the first quarter of 2018. During the quarter, we raised $1.36 billion from an equity offering and repurchased or converted $2.36 billion principal amount of our debt, lowering our total face value debt to $9.34 billion exiting the quarter. We ended the first quarter with cash, marketable investments, and restricted cash of $6.61 billion.

We will host a conference call on Tuesday, December 19, 2017 at 2:30 p.m. MT to discuss our financial results. The call, audio, and slides will be available online at investors.micron.com. A webcast replay will be available on our website until December 19, 2018. A taped audio replay of the conference call will also be available at 1-404-537-3406 or 1-855-859-2056 (conference number: 2696628) beginning at 5:30 p.m. MT, Tuesday, December 19, 2017 and continuing through Tuesday, December 26, 2017. For Investor Relations and other company updates, follow @MicronTech on Twitter at twitter.com/MicronTech.

We are an industry leader in innovative memory and storage solutions. Through our global brands - Micron(R), Crucial(R), and Ballistix(R) - our broad portfolio of high-performance memory and storage technologies, including DRAM, NAND, NOR Flash, and 3D XPoint(TM) memory, is transforming how the world uses information to enrich life. Backed by nearly 40 years of technology leadership, our memory and storage solutions enable disruptive trends, including artificial intelligence, machine learning, and autonomous vehicles in key market segments like cloud, data center, networking, and mobile. Our common stock is traded on the NASDAQ under the MU symbol. To learn more about Micron Technology, Inc., visit micron.com.

The Micron logo and Micron symbol are trademarks of Micron Technology, Inc. All other trademarks are the property of their respective owners.

This press release contains forward-looking statements regarding the industry and our strategic position and financial results. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially. Please refer to the documents we file with the Securities and Exchange Commission, specifically our most recent Form 10-K. These documents contain and identify important factors that could cause our actual results to differ materially from those contained in these forward-looking statements. These certain factors can be found at www.micron.com/certainfactors. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. We are under no duty to update any of the forward-looking statements after the date of this release to conform these statements to actual results.

GAAP represents U.S. Generally Accepted Accounting Principles.

Non-GAAP represents GAAP excluding the impact of certain activities which our management excludes in analyzing our operating results and understanding trends in our earnings. Non-GAAP also includes the impact on shares used in per share calculations of our outstanding capped call transactions and from the exclusion of stock-based compensation. For a reconciliation of GAAP to non-GAAP results, see the accompanying financial tables and footnotes.

MICRON TECHNOLOGY, INC.
CONSOLIDATED FINANCIAL SUMMARY
(in millions except per share amounts)
1st Qtr.
4th Qtr.
1st Qtr.
November 30,
August 31,
December 1,
2017
2017
2016
Net sales
$
6,803
$
6,138
$
3,970
Cost of goods sold
3,056
3,026
2,959
Gross margin
3,747
3,112
1,011
Selling, general, and administrative
191
193
159
Research and development
448
447
470
Other operating (income) expense, net
11
(30
)
23
Operating income
3,097
2,502
359
Interest income (expense), net
(101
)
(132
)
(132
)
Other non-operating income (expense), net
(204
)
(49
)
(14
)
Income tax (provision) benefit
(114
)
47
(31
)
Equity in net income (loss) of equity method investees
--
1
(2
)
Net (income) attributable to noncontrolling interests
--
(1
)
--
Net income attributable to Micron
$
2,678
$
2,368
$
180
Earnings per share
Basic
$
2.36
$
2.13
$
0.17
Diluted
2.19
1.99
0.16
Number of shares used in per share calculations
Basic
1,134
1,109
1,040
Diluted
1,225
1,187
1,091
CONSOLIDATED FINANCIAL SUMMARY, Continued
As of
November 30,
August 31,
2017
2017
Cash and short-term investments
$
6,174
$
5,428
Receivables
3,876
3,759
Inventories
3,160
3,123
Total current assets
13,358
12,457
Long-term marketable investments
314
617
Property, plant, and equipment, net
20,723
19,431
Total assets
37,191
35,336
Accounts payable and accrued expenses
3,766
3,664
Current debt
1,401
1,262
Total current liabilities
5,583
5,334
Long-term debt
7,644
9,872
Total Micron shareholders’ equity
22,526
18,621
Noncontrolling interests in subsidiaries
867
849
Total equity
23,393
19,470
Quarter Ended
November 30,
December 1,
2017
2016
Net cash provided by operating activities
$
3,636
$
1,138
Net cash provided by (used for) investing activities
(1,434
)
(936
)
Net cash provided by (used for) financing activities
(1,282
)
(212
)
Depreciation and amortization
1,119
803
Investments in capital expenditures
(2,089
)
(1,288
)
Proceeds from issuance of debt
150
16
Repayments of debt
(2,744
)
(188
)

December 1, 2016 amount adjusted for the retrospective adoption of ASU 2016-18 - Restricted Cash.

(1) In the first quarter of 2018, we redeemed our 2023 Secured Notes and 2023 Notes with an aggregate principal amount of $2.25 billion for cash of $2.42 billion and recognized non-operating losses of $190 million. In the fourth quarter of 2017, we redeemed our 2022 Notes with a principal amount of $600 million and recognized a non-operating loss of $34 million.

(2) Our income taxes reflect operations in tax jurisdictions, including Singapore and Taiwan, where our earnings are indefinitely reinvested and the tax rates are significantly lower than the U.S. statutory rate; operations outside the United States, including Singapore, where we have tax incentive arrangements that further decrease our effective tax rates; and a valuation allowance against substantially all of our net deferred tax assets in the United States. Income tax (provision) benefit consisted of the following (in millions):

1st Qtr.
4th Qtr.
1st Qtr.
November 30,
August 31,
December 1,
2017
2017
2016
Utilization of and other changes in net deferred tax assets of MMJ, MMT, and MTTW
$
(26
)
$
106
$
(13 )
Other income tax (provision) benefit, primarily other non-U.S. operations
(88
)
(59
)
(18
)
$
(114 )
$
47
$
(31 )

We have a full valuation allowance for our net deferred tax asset associated with our U.S. operations. The amount of the deferred tax asset considered realizable could be adjusted if significant positive evidence increases. Income taxes on U.S. operations in the first quarters of 2018 and 2017 were substantially offset by changes in the valuation allowance.

(3) In October 2017, we issued 34 million shares of our common stock for $41.00 per share in a public offering, for proceeds of $1.36 billion, net of underwriting fees and other offering costs.

MICRON TECHNOLOGY, INC.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(in millions except per share amounts)
1st Qtr.
4th Qtr.
1st Qtr.
November 30, 2017
August 31, 2017
December 1, 2016
GAAP
Adj
Non-
GAAP
Adj
Non-
GAAP
Adj
Non-
GAAP
GAAP
GAAP
Net sales
$ 6,803
$ --
$ 6,803
$ 6,138
$
--
$ 6,138
$ 3,970
$ --
$ 3,970
Cost of goods sold
3,056
(22
) 3,034
3,026
(35
) 2,991
2,959
(21
) 2,938
Gross margin
3,747
22
3,769
3,112
35
3,147
1,011
21
1,032
percent of net sales
55.1%
55.4%
50.7%
51.3%
25.5%
26.0%
Selling, general, and administrative
191
(18
) 173
193
(22
) 171
159
(16
) 143
Research and development
448
(14
) 434
447
(14
) 433
470
(13
) 457
Other operating (income) expense, net
11
(6
) 5
(30
) 27
(3
)
23
(29
) (6
)
Operating expenses
650
(38
) 612
610
(9
) 601
652
(58
) 594
Operating income
3,097
60
3,157
2,502
44
2,546
359
79
438
percent of net sales
45.5%
46.4%
40.8%
41.5%
9.0%
11.0%
Interest income (expense), net
(101
) 29
(72
)
(132
) 32
(100
)
(132
) 32
(100
)
Other non-operating income (expense), net
(204
) 204
--
(49
) 49
--
(14
) 14
--
2,792
293
3,085
2,321
125
2,446
213
125
338
Income tax (provision) benefit
(114
) 23
(91
)
47
(107
) (60
)
(31
) 13
(18
)
Equity in net income (loss) of equity method investees
--
--
--
1
--
1
(2
) 17
15
Net income
2,678
316
2,994
2,369
18
2,387
180
155
335
Net income (loss) attributable to noncontrolling interests --
--
--
(1
) --
(1
)
--
--
--
Net income attributable to Micron
$ 2,678
$ 316
$ 2,994
$ 2,368
$
18
$ 2,386
$ 180
$ 155
$ 335
Shares used in calculations
1,225
(5
) 1,220
1,187
(6
) 1,181
1,091
(29
) 1,062
Diluted earnings per share
$ 2.19
$ 0.26
$ 2.45
$ 1.99
$
0.03
$ 2.02
$ 0.16
$ 0.16
$ 0.32
MICRON TECHNOLOGY, INC.
NON-GAAP ADJUSTMENTS
(in millions)
1st Qtr.
4th Qtr.
1st Qtr.
November 30,
August 31,
December 1,
2017
2017
2016
Non-GAAP adjustments
Cost of goods sold
Stock-based compensation
$
20
$
22
$
19
Flow-through of Inotera inventory step up
--
11
--
Other
2
2
2
22
35
21
Selling, general, and administrative
Stock-based compensation
18
22
15
Other
--
--
1
18
22
16
Research and development
Stock-based compensation
13
13
12
Other
1
1
1
14
14
13
Other operating (income) expense, net
Restructure and asset impairments
6
(27
)
29
Interest income (expense), net
Amortization of debt discount and other costs
29
32
32
Other non-operating income (expense)
Loss on debt repurchases and conversions
195
37
2
(Gain) loss from changes in currency exchange rates
9
12
12
204
49
14
Income taxes
Estimated tax effects of above and non-cash changes in net deferred income taxes 23
(107
)
13
Equity in net income (loss) of equity method investments
Impairment of equity method investments
--
--
16
Other
--
--
1
--
--
17
$
316
$
18
$
155

The tables above reconcile GAAP to non-GAAP results, diluted shares, and diluted earnings per share. The non-GAAP adjustments above may or may not be infrequent or nonrecurring in nature but are a result of periodic or non-core operating activities. We believe this non-GAAP information is helpful to understanding trends and in analyzing our operating results and earnings. We are providing this information to investors to assist in performing analysis of our operating results. When evaluating performance and making decisions on how to allocate our resources, management uses this non-GAAP information and believes investors should have access to similar data when making their investment decisions. We believe these non-GAAP financial measures increase transparency by providing investors with useful supplemental information about the financial performance of our business, enabling enhanced comparison of our operating results between periods and with peer companies. The presentation of these adjusted amounts vary from numbers presented in accordance with U.S. GAAP and therefore may not be comparable to amounts reported by other companies.

Our management excludes the following items in analyzing our operating results and understanding trends in our earnings:

-- Stock-based compensation;

-- Flow-through of business acquisition-related inventory adjustments;

-- Restructure and asset impairments;

Amortization of debt discount and other costs, including the accretion of non-cash interest expense associated with our convertible debt and MMJ installment debt;

-- Losses from debt repurchases and conversions;

-- Gains and losses from changes in currency exchange rates;

The estimated tax effects of above and non-cash changes in net deferred income taxes; and

-- Impairments of equity method investments.

Our outstanding capped call transactions are anti-dilutive in GAAP earnings per share but are expected to mitigate the dilutive effect of our convertible notes. In periods with non-GAAP income attributable to Micron, non-GAAP diluted shares include the impact of the capped calls, based on the average share price for the period the capped calls are outstanding. Non-GAAP diluted shares are also adjusted for the impact of additional shares resulting from the exclusion of stock-based compensation from non-GAAP income.

Contacts:
Shanye Hudson
Investor Relations
shudson@micron.com
(208) 492-1205
Marc Musgrove
Media Relations
mmusgrove@micron.com
(208) 363-2405

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