Fiscal Q4 2024 Highlights
- Revenue of $1.89 billion
- GAAP diluted earnings per share (EPS) of $2.39; non-GAAP
diluted EPS of $1.05
- Cash flow from operations of $434 million and free cash flow of
$380 million
- Declared cash dividend of $0.70 per share
Fiscal Year 2024 Highlights
- Revenue of $6.55 billion
- GAAP diluted EPS of $1.58; non-GAAP diluted EPS of $1.29
- Cash flow from operations of $918 million and free cash flow of
$664 million
- Returned $585 million to shareholders through dividends
Seagate Technology Holdings plc (NASDAQ: STX) (the “Company” or
“Seagate”), a leading innovator of mass-capacity data storage,
today reported financial results for its fiscal fourth quarter and
fiscal year ended June 28, 2024.
“Seagate delivered robust financial performance for the June
quarter amid an improving cloud demand environment, capping off a
fiscal year of strong execution against our financial goals. Q4
revenue grew 18% year-over-year, non-GAAP gross margin expanded to
nearly 31%, and non-GAAP EPS exceeded the high end of our guidance
range,” said Dave Mosley, Seagate’s chief executive officer.
“In fiscal 2025, we are remaining focused on driving
profitability and maintaining supply discipline while continuing to
execute our mass capacity product roadmap, anchored by our HAMR
technology. Our data storage solutions offer our cloud and
enterprise customers with cost, power and space advantages that
support their investments in critical AI and other data-driven
initiatives,” Mosley concluded.
Quarterly Financial Results
GAAP
Non-GAAP
FQ4 2024
FQ4 2023
FQ4 2024
FQ4 2023
Revenue ($M)
$
1,887
$
1,602
$
1,887
$
1,602
Gross Margin
31.8
%
19.0
%
30.9
%
19.5
%
Operating Margin
16.6
%
1.6
%
17.3
%
3.4
%
Net Income (Loss) ($M)
$
513
$
(92
)
$
222
$
(37
)
Diluted Earnings (Loss) Per Share
$
2.39
$
(0.44
)
$
1.05
$
(0.18
)
Annual Financial Results
GAAP
Non-GAAP
2024
2023
2024
2023
Revenue ($M)
$
6,551
$
7,384
$
6,551
$
7,384
Gross Margin
23.4
%
18.3
%
25.5
%
21.1
%
Operating Margin
6.9
%
(4.6
%)
10.3
%
5.6
%
Net Income (Loss) ($M)
$
335
$
(529
)
$
272
$
40
Diluted Earnings (Loss) Per Share
$
1.58
$
(2.56
)
$
1.29
$
0.19
For a detailed reconciliation of GAAP to non-GAAP results, see
accompanying financial tables.
During the fiscal fourth quarter the Company generated $434
million in cash flow from operations, $380 million in free cash
flow, and returned $147 million of capital to shareholders through
its quarterly dividend. Additionally, the Company sold the
System-on-Chip Operations for $600 million during the fiscal fourth
quarter, which included cash proceeds of $560 million. The
remaining $40 million is expected to be received by the end of
fiscal year 2026. Of the $560 million cash proceeds, $326 million
was recorded as an investing inflow and $226 million, net of
transaction costs, was recorded in both cash flow from operations
and in free cash flow. For fiscal year 2024, the Company generated
$918 million in cash flow from operations, $664 million in free
cash flow, and paid cash dividends of $585 million. As of the end
of the fiscal year, cash and cash equivalents totaled approximately
$1.4 billion, and there were approximately 210 million ordinary
shares issued and outstanding. Additionally, during the fiscal
year, the Company issued $1.5 billion of convertible notes to
primarily retire its term loans in the fiscal first 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 October 7, 2024 to shareholders of record as of the close of
business on September 23, 2024. 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.
Business Outlook
The business outlook for the fiscal first quarter 2025 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
first quarter 2025:
- Revenue of $2.10 billion, plus or minus $150 million
- Non-GAAP diluted EPS of $1.40, 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.
We have not reconciled our non-GAAP diluted EPS guidance for
fiscal first quarter 2025 to the most directly comparable GAAP
measure, other than estimated share-based compensation expenses,
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) loss recognized
from early redemption of debt, 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 first quarter 2025
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 2:00 PM
PT / 5:00 PM 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.
About Seagate
Seagate Technology is a leading innovator of mass-capacity data
storage. We create breakthrough technology so you can confidently
store your data and easily unlock its value. Founded over 45 years
ago, Seagate has shipped over four billion terabytes of data
capacity and offers a full portfolio of storage devices, systems,
and services from edge to cloud. To learn more about how Seagate
leads storage innovation, visit www.seagate.com and our blog, or
follow us on X, Facebook, LinkedIn, and YouTube.
© 2024 Seagate Technology LLC. All rights reserved. Seagate,
Seagate Technology, and the Spiral logo are registered trademarks
of Seagate Technology LLC in the United States and/or other
countries.
Cautionary Note Regarding
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements provide current expectations of
future events based on certain assumptions and include any
statement that does not directly relate to any historical fact.
Forward-looking statements include, among other things, statements
about the Company’s plans, programs, strategies, prospects, and
opportunities; financial outlook for future periods, including the
fiscal first quarter 2025; expectations regarding our ability to
service debt and continue to generate free cash flow; expectations
regarding our ability to make timely quarterly payments under the
settlement agreement with the U.S. Department of Commerce’s Bureau
of Industry and Security; expectations regarding logistical,
macroeconomic, or other factors affecting the Company; expectations
regarding market demand for the Company’s products, our visibility
into such demand and our ability to optimize our level of
production and meet market and industry expectations and the
effects of these future trends on Company’s financial and
operational performance; anticipated shifts in technology and
storage industry trends, and anticipated demand and performance of
new storage product introductions, including HAMR-based products;
and expectations regarding the Company’s business strategy and
performance, as well as dividend issuance plans for the fiscal
quarter ending September 27, 2024 and beyond. Forward-looking
statements generally can be identified by words such as “expects,”
“intends,” “plans,” “anticipates,” “believes,” “estimates,”
“predicts,” “projects,” “should,” “may,” “will,” “will continue,”
“can,” “could” or the negative of these words, variations of these
words and comparable terminology, in each case, intended to refer
to future events or circumstances. However, the absence of these
words or similar expressions does not mean that a statement is not
forward-looking. Forward-looking statements are subject to various
uncertainties and risks that could cause our actual results to
differ materially from historical experience and our present
expectations or projections. These risks and uncertainties include,
but are not limited to, those described under the captions “Risk
Factors” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in the Company’s latest
periodic report on Form 10-Q or Form 10-K filed with the U.S.
Securities and Exchange Commission. Undue reliance should not be
placed on the forward-looking statements in this press release,
which are based on information available to us on, and which speak
only as of, the date hereof. The Company undertakes no obligation
to update forward-looking statements to reflect events or
circumstances after the date they were made, unless required by
applicable law.
The inclusion of Seagate’s website addresses in this press
release are provided for convenience only. The information
contained in, or that can be accessed through, Seagate’s websites
and social media channels are not part of this press release.
SEAGATE TECHNOLOGY HOLDINGS
PLC
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In millions)
June 28, 2024
June 30, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
1,358
$
786
Accounts receivable, net
429
621
Inventories, net
1,239
1,140
Other current assets
306
358
Total current assets
3,332
2,905
Property, equipment and leasehold
improvements, net
1,614
1,706
Goodwill
1,219
1,237
Deferred income taxes
1,037
1,117
Other assets, net
537
591
Total Assets
$
7,739
$
7,556
LIABILITIES AND SHAREHOLDER’S
DEFICIT
Current liabilities:
Accounts payable
$
1,786
$
1,603
Accrued employee compensation
106
100
Accrued warranty
74
78
Current portion of long-term debt
479
63
Accrued expenses
654
748
Total current liabilities
3,099
2,592
Long-term accrued warranty
75
90
Other non-current liabilities
861
685
Long-term debt, less current portion
5,195
5,388
Total Liabilities
9,230
8,755
Total Shareholders’ Deficit
(1,491
)
(1,199
)
Total Liabilities and Shareholders’
Deficit
$
7,739
$
7,556
SEAGATE TECHNOLOGY HOLDINGS
PLC
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In millions, except per share
data)
For the Three Months
Ended
For the Fiscal Years
Ended
June 28, 2024
June 30, 2023
June 28, 2024
June 30, 2023
Revenue
$
1,887
$
1,602
$
6,551
$
7,384
Cost of revenue
1,287
1,298
5,015
6,033
Product development
158
172
654
797
Marketing and administrative
131
114
460
491
Amortization of intangibles
—
—
—
3
BIS settlement penalty
—
—
—
300
Restructuring and other, net
(3
)
(8
)
(30
)
102
Total operating expenses
1,573
1,576
6,099
7,726
Income (loss) from operations
314
26
452
(342
)
Interest income
7
6
15
10
Interest expense
(82
)
(84
)
(332
)
(313
)
Net gain from termination of interest rate
swap
—
—
104
—
Net gain from business divestiture
313
—
313
—
Net (loss) gain from early redemption of
debt
—
(17
)
(29
)
190
Other, net
(14
)
(16
)
(78
)
(41
)
Other income (expense), net
224
(111
)
(7
)
(154
)
Income (loss) before income taxes
538
(85
)
445
(496
)
Provision for income taxes
25
7
110
33
Net income (loss)
$
513
$
(92
)
$
335
$
(529
)
Net income (loss) per share:
Basic
$
2.44
$
(0.44
)
$
1.60
$
(2.56
)
Diluted
$
2.39
$
(0.44
)
$
1.58
$
(2.56
)
Number of shares used in per share
calculations:
Basic
210
207
209
207
Diluted
215
207
212
207
Cash dividends declared per ordinary
share
$
0.70
$
0.70
$
2.80
$
2.80
SEAGATE TECHNOLOGY HOLDINGS
PLC
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In millions)
For the Fiscal Years
Ended
June 28, 2024
June 30, 2023
OPERATING ACTIVITIES
Net income (loss)
$
335
$
(529
)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
264
513
Share-based compensation
127
115
Net loss (gain) from redemption and
repurchase of debt
7
(204
)
Net gain from business divestiture
(313
)
—
Deferred income taxes
78
10
Other non-cash operating activities,
net
34
(125
)
Changes in operating assets and
liabilities:
Accounts receivable, net
192
911
Inventories, net
(99
)
425
Accounts payable
227
(421
)
Accrued employee compensation
6
(152
)
BIS settlement penalty
(45
)
—
Accrued expenses, income taxes and
warranty
(138
)
101
Other assets and liabilities
243
298
Net cash provided by operating
activities
918
942
INVESTING ACTIVITIES
Acquisition of property, equipment and
leasehold improvements
(254
)
(316
)
Proceeds from sale of assets
40
534
Purchases of investments
—
(1
)
Proceeds from sale of investments
14
—
Proceeds from business divestiture
326
—
Net cash provided by (used in) investing
activities
126
217
FINANCING ACTIVITIES
Redemption and repurchase of debt
(1,288
)
(1,578
)
Proceeds from issuance of long-term
debt
1,500
1,600
Dividends to shareholders
(585
)
(582
)
Repurchases of ordinary shares
—
(408
)
Taxes paid related to net share settlement
of equity awards
(38
)
(44
)
Proceeds from issuance of ordinary shares
under employee stock plans
66
68
Other financing activities, net
(128
)
(44
)
Net cash used in financing activities
(473
)
(988
)
Effect of foreign currency exchange rate
changes on cash, cash equivalents and restricted cash
1
—
Increase (decrease) in cash, cash
equivalents and restricted cash
572
171
Cash, cash equivalents and restricted cash
at the beginning of the year
788
617
Cash, cash equivalents and restricted cash
at the end of the year
$
1,360
$
788
Use of non-GAAP financial information
The Company uses non-GAAP measures of gross profit, gross
margin, operating expenses, income from operations, operating
margin, net income, diluted EPS, free cash flow, EBITDA, adjusted
EBITDA and last twelve months adjusted EBITDA, which are adjusted
from results based on GAAP to exclude certain benefits, expenses,
gains and losses. These non-GAAP financial measures are used by
management to evaluate the business and provided to enhance the
user’s overall understanding of the Company’s current financial
performance and its prospects for the future. Specifically, the
Company believes non-GAAP results provide useful information to
investors as these non-GAAP results exclude certain benefits,
expenses, gains and losses that the Company believes are not part
of the Company's ongoing operations and not indicative of its core
operating results.
These non-GAAP financial measures are some of the measurements
management uses to assess the Company’s performance, allocate
resources and plan for future periods. Reported non-GAAP results
should only be considered as supplemental to results prepared in
accordance with GAAP, and not considered as a substitute or
replacement for, or superior to, GAAP results. These non-GAAP
measures may differ from the non-GAAP measures reported by other
companies in its industry.
SEAGATE TECHNOLOGY HOLDINGS
PLC
RECONCILIATIONS OF GAAP TO
NON-GAAP MEASURES
(In millions, except per share
amounts, gross margin and operating margin)
(Unaudited)
For the Three Months
Ended
For the Twelve Months
Ended
June 28, 2024
June 30, 2023
June 28, 2024
June 30, 2023
GAAP Gross Profit
$
600
$
304
$
1,536
$
1,351
Accelerated depreciation, impairment and
other charges related to cost saving efforts
—
3
13
60
Amortization of acquired intangible
assets
—
—
—
3
Pandemic-related lockdown charges
—
—
—
7
Purchase order cancellation fees
(26
)
—
87
108
Share-based compensation
9
5
32
29
Other charges
—
1
2
3
Non-GAAP Gross Profit
$
583
$
313
$
1,670
$
1,561
GAAP Gross Margin
31.8
%
19.0
%
23.4
%
18.3
%
Non-GAAP Gross Margin
30.9
%
19.5
%
25.5
%
21.1
%
GAAP Operating Expenses
$
286
$
278
$
1,084
$
1,693
Accelerated depreciation, impairment and
other charges related to cost saving efforts
—
—
—
(25
)
Amortization of acquired intangible
assets
—
—
—
(3
)
BIS settlement penalty
—
—
—
(300
)
Restructuring and other, net
3
8
30
(102
)
Share-based compensation
(29
)
(17
)
(95
)
(86
)
Other charges
(4
)
(11
)
(26
)
(29
)
Non-GAAP Operating Expenses
$
256
$
258
$
993
$
1,148
GAAP Income (Loss) From
Operations
$
314
$
26
$
452
$
(342
)
Accelerated depreciation, impairment and
other charges related to cost saving efforts
—
3
13
85
Amortization of acquired intangible
assets
—
—
—
6
BIS settlement penalty
—
—
—
300
Pandemic-related lockdown charges
—
—
—
7
Purchase order cancellation fees
(26
)
—
87
108
Restructuring and other, net
(3
)
(8
)
(30
)
102
Share-based compensation
38
22
127
115
Other charges
4
12
28
32
Non-GAAP Income From Operations
$
327
$
55
$
677
$
413
GAAP Operating Margin
16.6
%
1.6
%
6.9
%
(4.6
)%
Non-GAAP Operating Margin
17.3
%
3.4
%
10.3
%
5.6
%
GAAP Net Income (Loss)
$
513
$
(92
)
$
335
$
(529
)
Accelerated depreciation, impairment and
other charges related to cost saving efforts
—
3
13
85
Amortization of acquired intangible
assets
—
—
—
6
BIS settlement penalty
—
—
—
300
Net gain from business divestiture
(313
)
—
(313
)
—
Net gain from termination of interest rate
swap
—
—
(104
)
—
Net loss (gain) from early redemption of
debt
—
17
29
(190
)
Pandemic-related lockdown charges
—
—
—
7
Purchase order cancellation fees
(26
)
—
87
108
Restructuring and other, net
(3
)
(8
)
(30
)
102
Share-based compensation
38
22
127
115
Strategic investment losses or impairment
charges
8
9
51
10
Other charges
4
12
28
32
Income tax adjustments
1
—
49
(6
)
Non-GAAP Net Income (Loss)
$
222
$
(37
)
$
272
$
40
GAAP Diluted Net Income (Loss) Per
Share
$
2.39
$
(0.44
)
$
1.58
$
(2.56
)
Accelerated depreciation, impairment and
other charges related to cost saving efforts
—
0.01
0.06
0.41
Amortization of acquired intangible
assets
—
—
—
0.03
BIS settlement penalty
—
—
—
1.45
Net gain from business divestiture
(1.46
)
—
(1.48
)
—
Net gain from termination of interest rate
swap
—
—
(0.49
)
—
Net loss (gain) from early redemption of
debt
—
0.08
0.14
(0.91
)
Pandemic-related lockdown charges
—
—
—
0.03
Purchase order cancellation fees
(0.12
)
—
0.41
0.52
Restructuring and other, net
(0.01
)
(0.04
)
(0.14
)
0.49
Share-based compensation
0.18
0.11
0.6
0.56
Strategic investment losses or impairment
charges
0.04
0.04
0.24
0.05
Other charges
0.02
0.06
0.13
0.15
Income tax adjustments
—
—
0.23
(0.03
)
Non-GAAP diluted share count
adjustments1,2
0.01
—
0.01
—
Non-GAAP Diluted Net Income (Loss) Per
Share1,2
$
1.05
$
(0.18
)
$
1.29
$
0.19
Shares Used In Diluted Net Income
(Loss) Per Share Calculation
GAAP
215
207
212
207
Non-GAAP diluted share count
adjustments1,2
(3
)
—
(1
)
2
Non-GAAP
212
207
211
209
GAAP Net Cash Provided by Operating
Activities
$
434
$
218
$
918
$
942
Acquisition of property, equipment and
leasehold improvements
54
50
254
316
Free Cash Flow
$
380
$
168
$
664
$
626
For the Three Months
Ended
June 28, 2024
March 29, 2024
December 29,
2023
September 29,
2023
Last Twelve Months
GAAP Net Income (Loss)
$
513
$
25
$
(19
)
$
(184
)
$
335
Depreciation and amortization
63
63
62
76
264
Interest expense
82
82
84
84
332
Interest income
(7
)
(3
)
(3
)
(2
)
(15
)
Income tax expense (benefit)
25
33
15
37
110
Non-GAAP EBITDA
676
200
139
11
1,026
Net gain from business divestiture
(313
)
—
—
—
(313
)
Net gain from termination of interest rate
swap
—
—
—
(104
)
(104
)
Net loss from early redemption of debt
—
—
—
29
29
Purchase order cancellation fees
(26
)
(1
)
(4
)
118
87
Restructuring and other, net
(3
)
2
(31
)
2
(30
)
Share-based compensation
38
34
30
25
127
Strategic investment losses or impairment
charges
8
—
43
—
51
Underutilization charges, net of
depreciation and amortization
20
38
31
51
140
Other charges
4
5
8
11
28
Non-GAAP Adjusted EBITDA
$
404
$
278
$
216
$
143
$
1,041
_____________________________________
1
For the three months ended June 30, 2023,
GAAP and non-GAAP diluted net loss per share were computed using
weighted average basic shares of 207 million, as a result of the
net loss reported during the period. For the twelve months ended
June 30, 2023, GAAP diluted net loss per share was computed using
weighted average basic shares of 207 million, as a result of the
net loss reported during the period. Non-GAAP diluted net income
per share was computed using weighted average diluted shares of 209
million, as a result of non-GAAP net income reported during the
period.
2
For the three months and twelve months
ended June 28, 2024, non-GAAP shares used in diluted net income per
share calculation excluded approximately 3 million and 1 million
shares, respectively, that are issuable upon conversion of our 2028
exchangeable senior notes using the if-converted method. This is
because these dilutive effects are expected to be offset partially
or in full by the capped call transactions entered by the Company
in conjunction with the issuance of our 2028 exchangeable senior
notes in order to reduce the potential dilution to the Company's
ordinary shares upon the conversion.
The Company’s Non-GAAP measures are adjusted for the
following items:
Accelerated depreciation, impairment and other charges
related to cost saving efforts
These expenses are excluded in the non-GAAP measures due to the
inconsistency in amount and frequency, and they are not normal
operating expenses or indicative of the Company's operating
performance. Exclusion of these amounts provides a supplemental
view of the Company's operating performance to investors to enable
them to evaluate the Company's current operating performance
compared to the past periods' operating performance.
Amortization of acquired intangible assets
The Company records expense from amortization of intangible
assets that were acquired in connection with its business
combinations over their estimated useful lives. Such charges are
inconsistent in size and are significantly impacted by the timing
and magnitude of the Company’s acquisitions. The Company excludes
these expenses because they are not normal operating expenses or
indicative of its operating performance. Exclusion of these amounts
provides a supplemental view of the Company's operating performance
to investors to enable them to evaluate the Company's current
operating performance compared to the past periods’ operating
performance.
BIS settlement penalty
The Company accrued a settlement penalty of $300 million in the
fiscal third quarter of 2023 related to the alleged violations of
the U.S. Export Administration Regulations between August 17, 2020
and September 29, 2021 by the U.S. Department of Commerce’s Bureau
of Industry and Security (“BIS”), which were subsequently resolved
by a settlement agreement on April 18, 2023. This settlement
penalty is excluded because it is not normal operating expense or
indicative of the Company's operating performance. Exclusion of
this expense provides a supplemental view to investors to evaluate
the Company's current operating performance compared to the past
periods' operating performance.
Net gain from business divestiture
The Company recorded a pre-tax net gain of $313 million in
connection to the sale of System-on-Chip Operations in April 2024.
The net gain is excluded in the non-GAAP measures because it is not
indicative of the Company's operating performance. The Company
excludes this amount to provide a supplemental view to investors to
evaluate the Company's current operating performance compared to
the past periods' operating performance.
Net loss (gain) from early redemption of debt and termination
of interest rate swap
From time to time, the Company incurs gains, losses and fees
from the early redemption and repurchase of certain long-term debt
instruments and termination of related interest rate swap
agreements. The amount of these charges may be inconsistent in size
and varies depending on the timing of the early redemption of debt
and/or termination of interest rate swap. The Company does not
believe these are part of its normal operating performance.
Exclusion of these amounts provides a supplemental view of the
Company's operating performance to investors to enable them to
evaluate the Company's current operating performance compared to
the past periods' operating performance.
Pandemic-related lockdown charges
Pandemic-related lockdown charges are factory under-utilization
costs incurred due to the pandemic-related lockdown measures at our
factory in Wuxi, China. These charges were incurred as a result of
specific lockdown measures that were unusual and infrequent and
therefore, not part of the Company's normal operations. Exclusion
of these amounts provides a supplemental view of the Company's
operating performance to investors to enable them to evaluate the
Company's current operating performance compared to the past
periods’ operating performance.
Purchase order cancellation fees
Purchase order cancellation fees are the costs incurred to
cancel certain purchase commitments made with the Company's
suppliers for component and equipment purchases that will not be
received due to change in forecasted demand. These charges are
inconsistent in amount and frequency. The Company does not believe
these are part of its normal operating expenses. Exclusion of these
amounts provides a supplemental view to investors to evaluate the
Company's current operating performance compared to the past
periods’ operating performance.
Restructuring and other, net
Restructuring and other, net are costs associated with
restructuring plans that are primarily related to costs associated
with reduction in the Company’s workforce, exiting certain
facilities and other related costs, as well as charges or gains
from sale of properties. These costs or benefits do not reflect the
Company’s normal or ongoing operating performance and consequently
the Company excludes these expenses to provide a supplemental view
to investors to evaluate the Company's current operating
performance compared to the past periods’ operating
performance.
Share-based compensation
These expenses consist primarily of expenses for employee
share-based compensation. Given the variety of equity awards used
by companies, the varying methodologies for determining share-based
compensation expense, the subjective assumptions involved in those
determinations, and the volatility in valuations that can be driven
by market conditions outside the Company’s control, the Company
believes excluding share-based compensation expense enhances the
ability of management and investors to understand and assess the
underlying performance of its business over time and compare it
against the Company’s peers, a majority of whom also exclude
share-based compensation expense from their non-GAAP results.
Strategic investment gains, losses and impairment
charges
From time to time, the Company incurs gains, losses or
impairment charges from strategic investments that are measured and
accounted at fair value, under the equity method of accounting, as
available-for-sale debt securities or adjust for downward or upward
adjustments to the carrying value under the measurement alternative
if an impairment or observable price adjustment is recognized in
the current period that are not considered normal operating
expenses or gains. The resulting expense, gain or impairment loss
is inconsistent in amount and frequency and the Company excludes
these amounts to provide a supplemental view to investors to
evaluate the Company's current operating performance compared to
the past periods’ operating performance.
Other charges
The other charges primarily include IT transformation costs.
These charges are inconsistent in amount and frequency and are
excluded to provide a supplemental view to investors to evaluate
the Company's current operating performance compared to past
periods’ operating performance.
Income tax adjustments
Provision or benefit for income taxes represents the tax effects
of non-GAAP adjustments determined using a hybrid with and without
method and effective tax rate for the applicable adjustment and
jurisdiction.
Free cash flow
Free cash flow is a non-GAAP measure defined as net cash
provided by operating activities less acquisition of property,
equipment and leasehold improvements. Free cash flow does not
reflect non-cash items, net cash used or provided by financing
activities and net cash used or provided by investing activities,
other than acquisition of property, equipment and leasehold
improvements. This non-GAAP financial measure is used by management
to assess the Company's sources of liquidity, capital structure and
operating performance.
EBITDA, adjusted EBITDA and last twelve months (LTM) adjusted
EBITDA
EBITDA is defined as net income (loss) before income tax
expense, interest expense, interest income, depreciation and
amortization. Adjusted EBITDA excludes certain expenses, gains and
losses that the Company believes are not indicative of its core
operating results. These adjustments primarily include impairment
and other charges related to cost saving efforts, net loss (gain)
from early redemption of debt, net gain from termination of
interest rate swap, net gain from business divestiture,
pandemic-related lockdown charges, purchase order cancellation
fees, restructuring and other, net, share-based compensation,
strategic investment losses or impairment charges, other
extraordinary charges such as factory underutilization charges and
BIS settlement penalty. LTM adjusted EBITDA is defined as the total
of last twelve months adjusted EBITDA. These non-GAAP financial
measures are used by management to evaluate the Company’s debt
portfolio and structure to comply with its financial debt
covenants.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240723676876/en/
Investor Relations Contact: Shanye Hudson, (510) 661-1600
shanye.hudson@seagate.com
Media Contact: Agnieszka Zielinska, (503) 380-0948
agnieszka.zielinska@seagate.com
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