Delivers strong profitability and over $1 billion in free cash flow
BOISE, Idaho, March 29, 2022 – Micron Technology, Inc. (Nasdaq: MU) today announced results for its second quarter of fiscal 2022, which ended March 3, 2022.
Fiscal Q2 2022 highlights
•Revenue of $7.79 billion versus $7.69 billion for the prior quarter and $6.24 billion for the same period last year
•GAAP net income of $2.26 billion, or $2.00 per diluted share
•Non-GAAP net income of $2.44 billion, or $2.14 per diluted share
•Operating cash flow of $3.63 billion versus $3.94 billion for the prior quarter and $3.06 billion for the same period last year
“Micron’s excellent second quarter results exceeded the high end of our guidance for both revenue and margin, reflecting our strong execution,” said Micron Technology President and CEO Sanjay Mehrotra. “We’re leading the industry in technology across DRAM and NAND, and our product portfolio momentum is accelerating. With outstanding first half results, Micron is on track to deliver record revenue and robust profitability in fiscal 2022.”
Quarterly Financial Results
(in millions, except per share amounts)
GAAP(1)
Non-GAAP(2)
FQ2-22
FQ1-22
FQ2-21
FQ2-22
FQ1-22
FQ2-21
Revenue
$
7,786
$
7,687
$
6,236
$
7,786
$
7,687
$
6,236
Gross margin
3,676
3,565
1,649
3,724
3,616
2,054
percent of revenue
47.2
%
46.4
%
26.4
%
47.8
%
47.0
%
32.9
%
Operating expenses
1,130
934
986
974
891
797
Operating income
2,546
2,631
663
2,750
2,725
1,257
percent of revenue
32.7
%
34.2
%
10.6
%
35.3
%
35.4
%
20.2
%
Net income
2,263
2,306
603
2,444
2,471
1,128
Diluted earnings per share
2.00
2.04
0.53
2.14
2.16
0.98
Investments in capital expenditures, net(2) were $2.60 billion for the second quarter of 2022, which resulted in adjusted free cash flow(2) of $1.03 billion. Micron repurchased approximately 4.8 million shares of its common stock for $408 million during the second quarter of fiscal 2022 and ended the quarter with cash, marketable investments, and restricted cash of $11.95 billion, for a net cash(2) position of $4.87 billion.
On March 29, 2022, our Board of Directors declared a quarterly dividend of $0.10 per share, payable in cash on April 26, 2022, to shareholders of record as of the close of business on April 11, 2022.
1
Business Outlook
The following table presents Micron’s guidance for the third quarter of 2022:
FQ3-22
GAAP(1) Outlook
Non-GAAP(2) Outlook
Revenue
$8.7 billion ± $200 million
$8.7 billion ± $200 million
Gross margin
47.0% ± 1%
48.0% ± 1%
Operating expenses
$1.13 billion ± $25 million
$1.05 billion ± $25 million
Diluted earnings per share
$2.33 ± $0.10
$2.46 ± $0.10
Further information regarding Micron’s business outlook is included in the prepared remarks and slides, which have been posted at investors.micron.com.
Investor Webcast
Micron will host a conference call on Tuesday, March 29, 2022 at 2:30 p.m. Mountain time to discuss its second quarter financial results and provide forward-looking guidance for its third quarter. A live webcast of the call will be available online at investors.micron.com. A webcast replay will be available for one year after the call. For Investor Relations and other company updates, follow @MicronTech on Twitter at twitter.com/MicronTech.
Investor Day 2022
Micron will host an Investor Day on Thursday, May 12, 2022, from 8:30 a.m. – 12:30 p.m. Pacific time in San Francisco. For details and to complete registration, please visit investorday.micron.com. Please note, due to limited seating, registration for in-person attendance will be subject to confirmation.
Live webcast and subsequent replays of presentations will be accessible from Micron’s Investor Relations website at investors.micron.com.
About Micron Technology, Inc.
We are an industry leader in innovative memory and storage solutions transforming how the world uses information to enrich life for all. With a relentless focus on our customers, technology leadership, and manufacturing and operational excellence, Micron delivers a rich portfolio of high-performance DRAM, NAND, and NOR memory and storage products through our Micron® and Crucial® brands. Every day, the innovations that our people create fuel the data economy, enabling advances in artificial intelligence and 5G applications that unleash opportunities — from the data center to the intelligent edge and across the client and mobile user experience. To learn more about Micron Technology, Inc. (Nasdaq: MU), visit micron.com.
This press release contains forward-looking statements regarding our industry, our strategic position, and our financial and operating 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 and Form 10-Q. 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 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.
2
(1)GAAP represents U.S. Generally Accepted Accounting Principles.
(2)Non-GAAP represents GAAP excluding the impact of certain activities, which management excludes in analyzing our operating results and understanding trends in our earnings, adjusted free cash flow, net cash, and business outlook. Further information regarding Micron’s use of non-GAAP measures and reconciliations between GAAP and non-GAAP measures are included within this press release.
3
MICRON TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
(Unaudited)
2nd Qtr.
1st Qtr.
2nd Qtr.
Six months ended
March 3, 2022
December 2, 2021
March 4, 2021
March 3, 2022
March 4, 2021
Revenue
$
7,786
$
7,687
$
6,236
$
15,473
$
12,009
Cost of goods sold
4,110
4,122
4,587
8,232
8,624
Gross margin
3,676
3,565
1,649
7,241
3,385
Research and development
792
712
641
1,504
1,288
Selling, general, and administrative
263
259
214
522
428
Restructure and asset impairments
5
38
5
43
13
Other operating (income) expense, net
70
(75)
126
(5)
127
Operating income
2,546
2,631
663
5,177
1,529
Interest income
12
10
10
22
20
Interest expense
(55)
(45)
(42)
(100)
(90)
Other non-operating income (expense), net
6
(75)
4
(69)
17
2,509
2,521
635
5,030
1,476
Income tax (provision) benefit
(255)
(219)
(48)
(474)
(99)
Equity in net income (loss) of equity method investees
9
4
16
13
29
Net income
$
2,263
$
2,306
$
603
$
4,569
$
1,406
Earnings per share
Basic
$
2.02
$
2.06
$
0.54
$
4.08
$
1.26
Diluted
2.00
2.04
0.53
4.04
1.23
Number of shares used in per share calculations
Basic
1,119
1,119
1,120
1,119
1,118
Diluted
1,130
1,130
1,144
1,130
1,139
4
MICRON TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
As of
March 3, 2022
December 2, 2021
September 2, 2021
Assets
Cash and equivalents
$
9,116
$
8,680
$
7,763
Short-term investments
1,006
900
870
Receivables
5,384
5,250
5,311
Inventories
5,383
4,827
4,487
Assets held for sale
13
13
974
Other current assets
600
521
502
Total current assets
21,502
20,191
19,907
Long-term marketable investments
1,717
1,817
1,765
Property, plant, and equipment
36,171
35,155
33,213
Operating lease right-of-use assets
587
574
551
Intangible assets
414
347
349
Deferred tax assets
762
746
782
Goodwill
1,228
1,228
1,228
Other noncurrent assets
1,315
1,188
1,054
Total assets
$
63,696
$
61,246
$
58,849
Liabilities and equity
Accounts payable and accrued expenses
$
5,650
$
5,470
$
5,325
Current debt
123
118
155
Other current liabilities
1,145
924
944
Total current liabilities
6,918
6,512
6,424
Long-term debt
6,953
6,904
6,621
Noncurrent operating lease liabilities
535
523
504
Noncurrent unearned government incentives
704
767
808
Other noncurrent liabilities
741
632
559
Total liabilities
15,851
15,338
14,916
Commitments and contingencies
Shareholders’ equity
Common stock
122
122
122
Additional capital
9,816
9,564
9,453
Retained earnings
43,407
41,267
39,051
Treasury stock
(5,362)
(4,954)
(4,695)
Accumulated other comprehensive income (loss)
(138)
(91)
2
Total equity
47,845
45,908
43,933
Total liabilities and equity
$
63,696
$
61,246
$
58,849
5
MICRON TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Six months ended
March 3, 2022
March 4, 2021
Cash flows from operating activities
Net income
$
4,569
$
1,406
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation expense and amortization of intangible assets
3,413
3,036
Stock-based compensation
247
189
(Gain) loss on debt repurchases and conversions
83
—
Change in operating assets and liabilities
Receivables
(44)
533
Inventories
(900)
629
Accounts payable and accrued expenses
107
(777)
Other
91
8
Net cash provided by operating activities
7,566
5,024
Cash flows from investing activities
Expenditures for property, plant, and equipment
(5,876)
(5,756)
Purchases of available-for-sale securities
(922)
(1,349)
Proceeds from sale of Lehi, Utah fab
893
—
Proceeds from maturities of available-for-sale securities
631
746
Proceeds from sales of available-for-sale securities
172
178
Proceeds from government incentives
66
176
Other
(140)
31
Net cash provided by (used for) investing activities
(5,176)
(5,974)
Cash flows from financing activities
Repayments of debt
(1,981)
(103)
Repurchases of common stock - repurchase program
(667)
—
Payments of dividends to shareholders
(224)
—
Repurchases of common stock - withholdings on employee equity awards
(112)
(78)
Payments on equipment purchase contracts
(105)
(123)
Proceeds from issuance of debt
2,000
—
Other
110
95
Net cash provided by (used for) financing activities
(979)
(209)
Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash
(16)
43
Net increase (decrease) in cash, cash equivalents, and restricted cash
1,395
(1,116)
Cash, cash equivalents, and restricted cash at beginning of period
7,829
7,690
Cash, cash equivalents, and restricted cash at end of period
$
9,224
$
6,574
6
MICRON TECHNOLOGY, INC.
NOTES
(Unaudited)
Lehi, Utah Fab and 3D XPoint
In the second quarter of 2021, we updated our portfolio strategy to further strengthen our focus on memory and storage innovations for the data center market. In connection therewith, we determined that there was insufficient market validation to justify the ongoing investments required to commercialize 3D XPoint at scale. Accordingly, we ceased development of 3D XPoint technology and engaged in discussions with potential buyers for the sale of our facility located in Lehi that was dedicated to 3D XPoint production. As a result, we classified the property, plant, and equipment as held for sale and ceased depreciating the assets. On June 30, 2021, we announced a definitive agreement to sell our Lehi facility to Texas Instruments Incorporated (“TI”) and closed the sale on October 22, 2021.
In the first quarter of 2022, we received $893 million from TI for the sale of the Lehi facility and disposed of $918 million of net assets, consisting primarily of property, plant, and equipment of $921 million; $55 million of other assets, consisting primarily of a receivable for reimbursement of property taxes, equipment spare parts, and raw materials; and $58 million of liabilities, consisting primarily of a finance lease obligation. As a result of the disposition of the Lehi facility, we recognized a loss of $23 million included in restructure and asset impairments in the first quarter of 2022.
In the third quarter of 2021, we recognized a charge of $435 million included in restructure and asset impairments in connection with the definitive agreement with TI (and a tax benefit of $104 million included in income tax (provision) benefit) to write down the assets held for sale to the expected consideration, net of estimated selling costs. In the second quarter of 2021, we also recognized a charge of $49 million in cost of goods sold to write down 3D XPoint inventory in connection with our decision to cease further development of this technology.
Debt Activity
On November 1, 2021, we issued in a public offering $1.00 billion in principal amount of 2.703% senior notes due 2032 (green bonds), $500 million in principal amount of 3.366% senior notes due 2041, and $500 million in principal amount of 3.477% senior notes due 2051, and received aggregate net proceeds of $1.99 billion.
On November 17, 2021, we redeemed $1.25 billion in principal amount of our 2.497% senior notes due 2023 and $600 million in principal amount of our 4.640% senior notes due 2024 for $1.93 billion in cash and recognized a non-operating loss of $83 million.
7
MICRON TECHNOLOGY, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(In millions, except per share amounts)
2nd Qtr.
1st Qtr.
2nd Qtr.
March 3, 2022
December 2, 2021
March 4, 2021
GAAP gross margin
$
3,676
$
3,565
$
1,649
Stock-based compensation
44
43
57
Inventory accounting policy change to FIFO
—
—
133
Change in inventory cost absorption
—
—
160
3D XPoint inventory write-down
—
—
49
Other
4
8
6
Non-GAAP gross margin
$
3,724
$
3,616
$
2,054
GAAP operating expenses
$
1,130
$
934
$
986
Stock-based compensation
(75)
(73)
(55)
Patent license charges
—
—
(128)
Restructure and asset impairments
(5)
(38)
(5)
Other
(76)
68
(1)
Non-GAAP operating expenses
$
974
$
891
$
797
GAAP operating income
$
2,546
$
2,631
$
663
Stock-based compensation
119
116
112
Inventory accounting policy change to FIFO
—
—
133
Change in inventory cost absorption
—
—
160
3D XPoint inventory write-down
—
—
49
Patent license charges
—
—
128
Restructure and asset impairments
5
38
5
Other
80
(60)
7
Non-GAAP operating income
$
2,750
$
2,725
$
1,257
GAAP net income
$
2,263
$
2,306
$
603
Stock-based compensation
119
116
112
Inventory accounting policy change to FIFO
—
—
133
Change in inventory cost absorption
—
—
160
3D XPoint inventory write-down
—
—
49
Patent license charges
—
—
128
Restructure and asset impairments
5
38
5
Amortization of debt discount and other costs
8
9
8
(Gain) loss on debt repurchases and conversions
—
83
—
Other
80
(60)
7
Estimated tax effects of above and other tax adjustments
(31)
(21)
(77)
Non-GAAP net income
$
2,444
$
2,471
$
1,128
GAAP weighted-average common shares outstanding - Diluted
1,130
1,130
1,144
Adjustment for stock-based compensation
13
11
10
Non-GAAP weighted-average common shares outstanding - Diluted
1,143
1,141
1,154
GAAP diluted earnings per share
$
2.00
$
2.04
$
0.53
Effects of the above adjustments
0.14
0.12
0.45
Non-GAAP diluted earnings per share
$
2.14
$
2.16
$
0.98
8
RECONCILIATION OF GAAP TO NON-GAAP MEASURES, Continued
2nd Qtr.
1st Qtr.
2nd Qtr.
March 3, 2022
December 2, 2021
March 4, 2021
GAAP net cash provided by operating activities
$
3,628
$
3,938
$
3,057
Expenditures for property, plant, and equipment
(2,611)
(3,265)
(3,018)
Proceeds from sales of property, plant, and equipment
27
21
18
Payments on equipment purchase contracts
(27)
(78)
(26)
Amounts funded by partners
11
55
143
Investments in capital expenditures, net
(2,600)
(3,267)
(2,883)
Adjusted free cash flow
$
1,028
$
671
$
174
As of
March 3, 2022
December 2, 2021
September 2, 2021
Cash and short-term investments
$
10,122
$
9,580
$
8,633
Current and noncurrent restricted cash
108
83
66
Long-term marketable investments
1,717
1,817
1,765
Current and long-term debt
(7,076)
(7,022)
(6,776)
Net cash
$
4,871
$
4,458
$
3,688
The tables above reconcile GAAP to non-GAAP measures of gross margin, operating expenses, operating income, net income, diluted shares, diluted earnings per share, adjusted free cash flow, and net cash. 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 in 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 varies from amounts 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;
•Acquisition-related costs;
•Employee severance;
•Gains and losses from settlements and patent license charges;
•Restructure and asset impairments;
•Amortization of debt discount and other costs;
•Gains and losses from debt repurchases and conversions;
•Gains and losses from business acquisition activities;
•Initial impact of inventory accounting policy change to FIFO and change in inventory cost absorption in the second quarter of 2021; and
•The estimated tax effects of above, non-cash changes in net deferred income taxes, assessments of tax exposures, certain tax matters related to prior fiscal periods, and significant changes in tax law.
Non-GAAP diluted shares are adjusted for the impact of additional shares resulting from the exclusion of stock-based compensation from non-GAAP income.
9
MICRON TECHNOLOGY, INC.
RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK
FQ3-22
GAAP Outlook
Adjustments
Non-GAAP Outlook
Revenue
$8.7 billion ± $200 million
—
$8.7 billion ± $200 million
Gross margin
47.0% ± 1%
1%
A
48.0% ± 1%
Operating expenses
$1.13 billion ± $25 million
$80 million
B
$1.05 billion ± $25 million
Diluted earnings per share(1)
$2.33 ± $0.10
$0.13
A, B, C
$2.46 ± $0.10
Non-GAAP Adjustments
(in millions)
A
Stock-based compensation – cost of goods sold
$
56
A
Other – cost of goods sold
5
B
Stock-based compensation – research and development
47
B
Stock-based compensation – sales, general, and administrative
33
C
Tax effects of the above items and other tax adjustments
1
$
142
(1)GAAP earnings per share based on approximately 1.13 billion diluted shares and non-GAAP earnings per share based on approximately 1.14 billion diluted shares.
The tables above reconcile our GAAP to non-GAAP guidance based on the current outlook. The guidance does not incorporate the impact of any potential business combinations, divestitures, restructuring activities, balance sheet valuation adjustments, strategic investments, financing transactions, and other significant transactions. The timing and impact of such items are dependent on future events that may be uncertain or outside of our control.
