Seagate Technology Reports Fiscal Third Quarter 2023 Financial Results
FREMONT, Calif., April 21, 2023 -- Seagate Technology Holdings plc (NASDAQ: STX) reported financial results for its fiscal third quarter ended March 31, 2023.
“We are seeing a more elongated customer inventory correction that led to weaker than expected nearline demand among a few large customers late in the quarter. Consequently, our March quarter revenue came in at the low-end of our guidance range, which along with underutilization charges and other factors had a severe impact on our reported margins and profitability,” said Seagate CEO Dave Mosley.
“Looking ahead, we now expect demand recovery to begin towards the end of the calendar year. In response to this dynamic environment, we are taking aggressive actions to lower our cost structure while still positioning Seagate to thrive over the long-term and sustain our technology leadership. To that end, we continue to execute on our product roadmap, including our strategically vital HAMR platform that we launched in April, as anticipated.”
Quarterly Financial Results
GAAP operating expenses for the fiscal third quarter included a $300 million settlement penalty for alleged violations of U.S. Export Administration Regulations by the U.S. Department of Commerce's Bureau of Industry and Security (“BIS”), that were subsequently resolved by a settlement agreement on April 18, 2023. Quarterly payments of $15 million will be made over the course of 5 years, starting in fiscal second quarter 2024.
During the fiscal third quarter the Company generated $228 million in cash flow from operations and $174 million in free cash flow, and paid cash dividends of $145 million. Cash and cash equivalents totaled $766 million. There were 207 million ordinary shares issued and outstanding as of the end of the quarter.
Seagate has issued a Supplemental Financial Information document, which is available on Seagate’s Investor Relations website at investors.seagate.com.
Quarterly Cash Dividend
The Board of Directors of the Company (the “Board”) declared a quarterly cash dividend of $0.70 per share, which will be payable on July 5, 2023 to shareholders of record as of the close of business on June 21, 2023. The payment of any future quarterly dividends will be at the discretion of the Board and will be dependent upon Seagate’s financial position, results of operations, available cash, cash flow, capital requirements and other factors deemed relevant by the Board.
Restructuring Plan
On April 20, 2023, the Company committed to a restructuring plan (the “Plan”) to reduce its cost structure in response to changes in macroeconomic and business conditions. The Plan is intended to align the Company’s operational needs with the near-term demand environment while continuing to support the long-term business strategy. The Plan, which the Company expects to be substantially completed by the end of the fiscal fourth quarter 2023, is expected to result in total pre-tax charges of approximately $150 million. The charges are expected to be primarily cash-based and consist of employee severance and other one-time termination benefits. The Company expects to realize run-rate savings of approximately $200 million on an annualized basis starting in the fiscal first quarter 2024.
Business Outlook
The business outlook for the fiscal fourth quarter 2023 is based on our current assumptions and expectations; actual results may differ materially, as a result of, among other things, the important factors discussed in the Cautionary Note Regarding Forward-Looking Statements section of this release.
The Company is providing the following guidance for its fiscal fourth quarter 2023:
- Revenue of $1.7 billion, plus or minus $150 million.
- Non-GAAP (loss) per share of $(0.20), plus or minus $0.20.
Guidance regarding non-GAAP diluted EPS excludes known pre-tax charges related to estimated share-based compensation expenses of $0.16 per share and restructuring costs of approximately $0.72 per share.
We have not reconciled our non-GAAP diluted EPS guidance for fiscal fourth quarter 2023 to the most directly comparable GAAP measure because material items that may impact these measures are out of our control and/or cannot be reasonably predicted, including, but not limited to, accelerated depreciation, impairment and other charges related to cost saving efforts, net (gain) recognized from early redemption of debt and debt modification costs, pandemic-related lockdown charges, purchase order cancellation fees, strategic investment losses (gains) or impairment charges, income tax adjustments on these measures, and other charges or benefits that may arise. The amounts of these measures are not currently available but may be material to future results. A reconciliation of the non-GAAP diluted EPS guidance for fiscal fourth quarter 2023 to the corresponding GAAP measures is not available without unreasonable effort. A reconciliation of our historical non-GAAP financial measures to their nearest GAAP equivalent is contained in this release.
Investor Communications
Seagate management will hold a public webcast today at 6:00 AM PT / 9:00 AM ET that can be accessed on its Investor Relations website at investors.seagate.com.
An archived audio webcast of this event will be available on Seagate’s Investor Relations website at investors.seagate.com shortly following the event conclusion.
More Information
For detailed charts and further information on Seagate's quarterly financial reporting, click here.
About Seagate
Seagate Technology crafts the datasphere, helping to maximize humanity’s potential by innovating world-class, precision-engineered data storage and management solutions with a focus on sustainable partnerships. A global technology leader for more than 40 years, the company has shipped over four billion terabytes of data capacity.
Source: Seagate
