Wednesday, October 26th 2022
Seagate Technology Reports Fiscal First Quarter 2023 Financial Results
Seagate Technology Holdings plc (NASDAQ: STX) (the "Company" or "Seagate") today reported financial results for its fiscal first quarter ended September 30, 2022. "Global economic uncertainties and broad-based customer inventory corrections worsened in the latter stages of the September quarter, and these dynamics are reflected in both near-term industry demand and Seagate's financial performance. We have taken quick and decisive actions to respond to current market conditions and enhance long-term profitability, including adjusting our production output and annual capital expenditure plans, and announcing a restructuring plan that will deliver meaningful cost savings while maintaining investments in the mass capacity solutions driving our future growth," said Dave Mosley, Seagate's chief executive officer.
"We continue to meet our development milestones for the 30+ terabyte product family, which is based on industry leading HAMR technology. Our team is executing well on our innovation roadmap, and we are seeing strong engagement from cloud customers. Looking beyond the current macro uncertainties, we are confident in the secular demand for mass capacity storage driven by the underlying growth in data and believe Seagate is in a great position to capture growth opportunities over the long-term."
During the fiscal first quarter the Company generated $245 million in cash flow from operations and $112 million in free cash flow, paid cash dividends of $147 million and repurchased 5.4 million ordinary shares for $408 million. The Company raised $600 million in new capital through a new term loan facility, exiting the fiscal first quarter with cash and cash equivalents totaling $761 million. There were 206 million ordinary shares issued and outstanding as of the end of the quarter.
For a detailed reconciliation of GAAP to non-GAAP results, see accompanying financial tables.
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 January 5, 2023 to shareholders of record as of the close of business on December 21, 2022. 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 October 24, 2022, the Company's Board of Directors approved and committed to a restructuring plan (the "Plan") to reduce its cost structure to better align the Company's operational needs to current economic conditions while continuing to support the long-term business strategy. The Plan includes reducing its worldwide headcount by approximately 3,000 employees, or 8% of the global workforce, along with other cost saving measures.
The Plan, which the Company expects to be substantially completed by the end of the fiscal second quarter 2023, is expected to result in total pre-tax charges between $60 million and $70 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 $110 million on an annualized basis starting in the fiscal third quarter 2023.
Business Outlook
The business outlook for the fiscal second 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 second quarter 2023:
We have not reconciled our non-GAAP diluted EPS guidance for fiscal second 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, pandemic-related lockdown charges, losses and costs on the modification or redemption and repurchase of debt, 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 second 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.
"We continue to meet our development milestones for the 30+ terabyte product family, which is based on industry leading HAMR technology. Our team is executing well on our innovation roadmap, and we are seeing strong engagement from cloud customers. Looking beyond the current macro uncertainties, we are confident in the secular demand for mass capacity storage driven by the underlying growth in data and believe Seagate is in a great position to capture growth opportunities over the long-term."
For a detailed reconciliation of GAAP to non-GAAP results, see accompanying financial tables.
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 January 5, 2023 to shareholders of record as of the close of business on December 21, 2022. 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 October 24, 2022, the Company's Board of Directors approved and committed to a restructuring plan (the "Plan") to reduce its cost structure to better align the Company's operational needs to current economic conditions while continuing to support the long-term business strategy. The Plan includes reducing its worldwide headcount by approximately 3,000 employees, or 8% of the global workforce, along with other cost saving measures.
The Plan, which the Company expects to be substantially completed by the end of the fiscal second quarter 2023, is expected to result in total pre-tax charges between $60 million and $70 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 $110 million on an annualized basis starting in the fiscal third quarter 2023.
Business Outlook
The business outlook for the fiscal second 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 second quarter 2023:
- Revenue of $1.85 billion, plus or minus $150 million
- Non-GAAP diluted EPS of $0.15, plus or minus $0.20
We have not reconciled our non-GAAP diluted EPS guidance for fiscal second 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, pandemic-related lockdown charges, losses and costs on the modification or redemption and repurchase of debt, 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 second 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.
21 Comments on Seagate Technology Reports Fiscal First Quarter 2023 Financial Results
Here's a thought: how about "restructuring" all of those executive bonuses, stock grants, beach houses, lear jets, and slush fund expense accounts....
Yea right :)
Yes I know that they aren't just in the dying HDD business; through Kioxia, they are one of the few SSD manufacturers to have their own NAND too.
I don't know, but to me it sounds like you are coming from a position of PC enthusiast consumer that has no idea what these other segments of the market are looking for which is fine. I actually work in it and get to see how things change firsthand and honestly the adoption of SSDs in big datacenters, cloud, enterprise is not high at all (Mostly for caching from what I've seen. Not being used for storing mass quantities of data), and nothing that should conclude to anyone that HDD is EOL any time soon, not even in the next decade. Also, hard drive capacity has grown immensely and will continue with new recording technology that both WD and Seagate are working on.
If there was huge demand for SSD in these kind of markets you better believe WD and Seagate would be going at it hard, but neither really are. WD is going harder in consumer space that users of this forum occopy, but so is Seagate. However Seagate uses Toshiba NAND and Phison controllers.
www.newegg.ca/seagate-barracuda-st8000dm004-8tb/p/N82E16822183793?Description=8%20TB%20HDD&cm_re=8_TB%20HDD-_-22-183-793-_-Product
vs
www.newegg.ca/samsung-8tb-870-qvo-series/p/N82E16820147784?Description=8%20%20TB%20SSD&cm_re=8_%20TB%20SSD-_-20-147-784-_-Product
And look they have 8 TB NVME
www.amazon.ca/Corsair-MP600-Gen4-PCIe-NVMe/dp/B0BFDKPWPR/ref=sr_1_4?gclid=CjwKCAjw5P2aBhAlEiwAAdY7dHJwwfsqchYOxuMXNCJsWTJGOUaJX4b6UrKI704-E1eF5wuAS9m5yRoCVEUQAvD_BwE&hvadid=588814392622&hvdev=c&hvlocphy=9000811&hvnetw=g&hvqmt=e&hvrand=209720555330831383&hvtargid=kwd-302629540505&hydadcr=937_1014995673&keywords=8+tb+ssd&qid=1667261603&qu=eyJxc2MiOiIzLjQyIiwicXNhIjoiMi40OSIsInFzcCI6IjEuODgifQ%3D%3D&refinements=p_n_availability%3A12035748011&sr=8-4
I don't see HDD catching SSD prices anytime soon.
Though it's not a lot the 660P used to be no more than $99 but now is also over that. Intel does not even manufacture that drive anymore.
www.newegg.ca/intel-660p-series-1tb/p/N82E16820167462?Description=Intel%20660P&cm_re=Intel_660P-_-20-167-462-_-Product
You act like hard drive capacity hasnt moved. It has, at roughly the same rate that SSDs have, and are cheaper, more endurance, etc. . Hard drives arent used for fast data read and writes, and thats not why any company uses them. They will use SSD for that (caching mostly) but data is stored more than put to work. 20-30% of all the data in the world is actually put to work and used.
Also what percentage from WD and Seagate do you think their sales volume goes too between enterprise channel vs retail/consumer channels?