Western Digital Corp. (Nasdaq: WDC) today reported fiscal second quarter 2024 financial results. “Western Digital’s second quarter results demonstrate that the structural changes we have put in pl...
Autore: Business Wire
News Summary
SAN JOSE, Calif.: Western Digital Corp. (Nasdaq: WDC) today reported fiscal second quarter 2024 financial results.
“Western Digital’s second quarter results demonstrate that the structural changes we have put in place over the last few years and the strategy we have been executing are producing significant outperformance across our flash and HDD businesses,” said David Goeckeler, Western Digital CEO. “We are seeing our efforts come to fruition as our financial performance met, or exceeded, the non-GAAP guidance ranges we provided in October, and I am confident that our strategy of managing inventory proactively, offering a broad range of products, closely controlling our product cost through focused R&D and manufacturing, and bolstering the agility of our business will allow us to improve through-cycle profitability and dampen business cycles into the future.”
Q2 2024 Financial Highlights
|
| GAAP |
| Non-GAAP | ||||
|
| Q2 2024 | Q1 2024 | Q/Q |
| Q2 2024 | Q1 2024 | Q/Q |
Revenue ($M) |
| $3,032 | $2,750 | up 10% |
| $3,032 | $2,750 | up 10% |
Gross Margin |
| 16.2% | 3.6% | up 12.6 ppt |
| 15.5% | 4.1% | up 11.4 ppt |
Operating Expenses ($M) |
| $702 | $695 | up 1% |
| $561 | $555 | up 1% |
Operating Loss ($M) |
| $(210) | $(596) | * |
| $(91) | $(443) | * |
Net Loss ($M) |
| $(268) | $(685) | * |
| $(210) | $(554) | * |
Loss Per Share |
| $(0.87) | $(2.17) | * |
| $(0.69) | $(1.76) | * |
* not a meaningful figure |
|
| GAAP |
| Non-GAAP | ||||
|
| Q2 2024 | Q2 2023 | Y/Y |
| Q2 2024 | Q2 2023 | Y/Y |
Revenue ($M) |
| $3,032 | $3,107 | down 2% |
| $3,032 | $3,107 | down 2% |
Gross Margin |
| 16.2% | 17.0% | down 0.8 ppt |
| 15.5% | 17.4% | down 1.9 ppt |
Operating Expenses ($M) |
| $702 | $849 | down 17% |
| $561 | $659 | down 15% |
Operating Loss ($M) |
| $(210) | $(321) | * |
| $(91) | $(119) | * |
Net Loss ($M) |
| $(268) | $(446) | * |
| $(210) | ($135) | * |
Loss Per Share |
| $(0.87) | $(1.40) | * |
| $(0.69) | $(0.42) | * |
* not a meaningful figure |
The company had an operating cash outflow of $92 million and ended the quarter with $2.48 billion of total cash and cash equivalents.
Additional details can be found within the company’s earnings presentation, which is accessible online at investor.wdc.com.
End Market Summary
Revenue ($M) | Q2 2024 | Q1 2024 | Q/Q | Q2 2023 | Y/Y |
Cloud | $1,071 | $872 | up 23% | $1,224 | down 13% |
Client | 1,122 | 1,147 | down 2% | 1,089 | up 3% |
Consumer | 839 | 731 | up 15% | 794 | up 6% |
Total Revenue | $3,032 | $2,750 | up 10% | $3,107 | down 2% |
In the fiscal second quarter:
Business Outlook for Fiscal Third Quarter of 2024
| Three Months Ending | ||
| March 29, 2024 | ||
| GAAP(1) |
| Non-GAAP(1) |
Revenue ($B) | $3.20 - $3.40 |
| $3.20 - $3.40 |
Gross margin | 21.5% - 23.5% |
| 22.0% - 24.0% |
Operating expenses ($M) | $710 - $730 |
| $600 - $620 |
Interest and other expense, net ($M) | ~$95 |
| ~$95 |
Income tax expense ($M)(2) | N/A |
| $20 - $30 |
Preferred dividend ($M) | $15 |
| $15 |
Diluted earnings per share | N/A |
| $(0.10) - $0.20 |
Diluted shares outstanding (in millions) | ~330 |
| ~330 |
__________
(1) Non-GAAP gross margin guidance excludes amortization of acquired intangible assets and stock-based compensation expense of approximately $10 million to $15 million. The company’s Non-GAAP operating expenses guidance excludes stock-based compensation expense, and expenses related to business separation costs, totaling approximately $105 million to $115 million. In the aggregate, Non-GAAP diluted earnings per share guidance excludes these items totaling approximately $115 million to $130 million. The timing and amount of additional charges the company excludes from its Non-GAAP income tax expense and Non-GAAP diluted earnings per share are dependent on the timing and determination of certain actions and cannot be reasonably predicted. The timing and amount of these charges excluded from Non-GAAP gross margin, Non-GAAP operating expenses, and Non-GAAP diluted earnings per share cannot be further allocated or quantified with certainty. Accordingly, full reconciliations of Non-GAAP gross margin, Non-GAAP operating expenses, Non-GAAP income tax expense and Non-GAAP diluted earnings per share to the most directly comparable GAAP financial measures (GAAP gross profit, GAAP operating expenses, income tax expense and diluted earnings per share, respectively) are not available without unreasonable effort.
(2) Non-GAAP income tax expense is determined based on a percentage of Non-GAAP pre-tax income or loss. Our estimated Non-GAAP tax dollars may differ from our GAAP tax dollars (i) due to differences in the tax treatment of items excluded from our Non-GAAP net income or loss; (ii) the fact that our GAAP income tax expense or benefit recorded in any interim period is based on an estimated forecasted GAAP tax rate for the full year, excluding loss jurisdictions; and (iii) because our GAAP taxes recorded in any interim period are dependent on the timing and determination of certain GAAP operating expenses.
Investor Communications
The investment community conference call to discuss these results and the company’s business outlook for the fiscal third quarter of 2024 will be broadcast live online today at 1:30 p.m. Pacific/4:30 p.m. Eastern. The live and archived conference call/webcast and the earnings presentation can be accessed online at investor.wdc.com.
About Western Digital
Western Digital is on a mission to unlock the potential of data by harnessing the possibility to use it. With Flash and HDD franchises, underpinned by advancements in storage technologies, we create breakthrough innovations and powerful data storage solutions that enable the world to actualize its aspirations. Core to our values, we recognize the urgency to combat climate change and have committed to ambitious carbon reduction goals approved by the Science Based Targets initiative. Learn more about Western Digital and the Western Digital®, SanDisk® and WD® brands at www.westerndigital.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of federal securities laws, including statements regarding expectations for the company’s business outlook and financial performance for the fiscal third quarter of 2024 and beyond; the impact of structural changes in the company’s business and corporate strategy on operating and financial performance; and the impact of the company’s inventory management, range of products, cost controls and business agility on cyclicality and through-cycle profitability. These forward-looking statements are based on management’s current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. The preliminary financial results for the company’s fiscal second quarter ended December 29, 2023 included in this press release represent the most current information available to management. Actual results when disclosed in the company's Form 10-Q may differ from these preliminary results as a result of the completion of the company’s financial closing procedures, final adjustments, completion of the review by the company’s independent registered accounting firm; and other developments that may arise between now and the filing of the company's Form 10-Q. Other key risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements include: volatility in global economic conditions; future responses to and effects of global health crises; the impact of business and market conditions; the outcome and impact of the company's planned separation of its HDD and Flash business units, including with respect to customer and supplier relationships, contractual restrictions, stock price volatility and the diversion of management’s attention from ongoing business operations and opportunities; the impact of competitive products and pricing; the company's development and introduction of products based on new technologies and expansion into new data storage markets; risks associated with cost saving initiatives, restructurings, acquisitions, divestitures, mergers, joint ventures and the company's strategic relationships; difficulties or delays in manufacturing or other supply chain disruptions; hiring and retention of key employees; the company's level of debt and other financial obligations; changes to the company's relationships with key customers; compromise, damage or interruption from cybersecurity incidents or other data system security risks; actions by competitors; the company's ability to achieve its GHG emissions reduction and other ESG goals; risks associated with compliance with changing legal and regulatory requirements and the outcome of legal proceedings; and other risks and uncertainties listed in the company’s filings with the Securities and Exchange Commission (the “SEC”), including the company’s Annual Report on Form 10-K filed with the SEC on August 22, 2023 and Quarterly Report on Form 10-Q filed with the SEC on November 7, 2023 to which your attention is directed. You should not place undue reliance on these forward-looking statements, which speak only as of the date hereof, and the company undertakes no obligation to update or revise these forward-looking statements to reflect new information or events, except as required by law.
Western Digital, the Western Digital logo, SanDisk and WD are registered trademarks or trademarks of Western Digital Corporation or its affiliates in the US and/or other countries.
WESTERN DIGITAL CORPORATION PRELIMINARY CONDENSED CONSOLIDATED BALANCE SHEETS (in millions; unaudited; on a US GAAP basis) | |||||
| December 29, |
| June 30, | ||
|
|
|
| ||
ASSETS | |||||
Current assets: |
|
|
| ||
Cash and cash equivalents | $ | 2,481 |
| $ | 2,023 |
Accounts receivable, net |
| 1,523 |
|
| 1,598 |
Inventories |
| 3,216 |
|
| 3,698 |
Other current assets |
| 618 |
|
| 567 |
Total current assets |
| 7,838 |
|
| 7,886 |
Property, plant and equipment, net |
| 3,315 |
|
| 3,620 |
Notes receivable and investments in Flash Ventures |
| 1,248 |
|
| 1,297 |
Goodwill |
| 10,037 |
|
| 10,037 |
Other intangible assets, net |
| 79 |
|
| 80 |
Other non-current assets |
| 1,768 |
|
| 1,509 |
Total assets | $ | 24,285 |
| $ | 24,429 |
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY | |||||
Current liabilities: |
|
|
| ||
Accounts payable | $ | 1,504 |
| $ | 1,293 |
Accounts payable to related parties |
| 251 |
|
| 292 |
Accrued expenses |
| 1,037 |
|
| 1,288 |
Income taxes payable |
| 506 |
|
| 999 |
Accrued compensation |
| 353 |
|
| 349 |
Current portion of long-term debt |
| 1,042 |
|
| 1,213 |
Total current liabilities |
| 4,693 |
|
| 5,434 |
Long-term debt |
| 7,351 |
|
| 5,857 |
Other liabilities |
| 1,397 |
|
| 1,415 |
Total liabilities |
| 13,441 |
|
| 12,706 |
Convertible preferred stock, aggregate liquidation preference of $953 and $924, respectively |
| 876 |
|
| 876 |
Total shareholders’ equity |
| 9,968 |
|
| 10,847 |
Total liabilities, convertible preferred stock and shareholders’ equity | $ | 24,285 |
| $ | 24,429 |
WESTERN DIGITAL CORPORATION PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share amounts; unaudited; on a US GAAP basis) | |||||||||||||||
| Three Months Ended |
| Six Months Ended | ||||||||||||
| December 29, |
| December 30, |
| December 29, |
| December 30, | ||||||||
Revenue, net | $ | 3,032 |
|
| $ | 3,107 |
|
| $ |