News Summary
- Third quarter revenue was $3.46 billion, up 14% sequentially
(QoQ). Cloud revenue increased 45% (QoQ), Client revenue increased
5% (QoQ) and Consumer revenue decreased (13)% (QoQ).
- Third quarter GAAP earnings per share (EPS) was $0.34 and
Non-GAAP EPS was $0.63, which includes underutilization-related
charges in HDD.
- Expect fiscal fourth quarter 2024 revenue to be in the range of
$3.60 billion to $3.80 billion.
- Expect Non-GAAP EPS in the range of $0.90 to $1.20.
Western Digital Corp. (Nasdaq: WDC) today reported fiscal third
quarter 2024 financial results.
“As evidenced by our excellent third quarter results, Western
Digital continues improving through-cycle profitability and
dampening business cycles by leveraging our strategy of developing
a diversified portfolio of industry-leading products across a broad
range of end markets,” said David Goeckeler, Western Digital CEO.
“We are in the early innings of unlocking the full potential of
this company, and as industry supply and demand dynamics continue
to improve, we will remain disciplined around our capital spending
and focused on driving innovation and efficiency across our
businesses. We are confident in our strategy and the actions we
have taken to-date, which successfully position us to capitalize on
the promising growth prospects that lie ahead.”
Q3 2024 Financial Highlights
GAAP
Non-GAAP
Q3 2024
Q2 2024
Q/Q
Q3 2024
Q2 2024
Q/Q
Revenue ($M)
$3,457
$3,032
up 14%
$3,457
$3,032
up 14%
Gross Margin
29.0%
16.2%
up 12.8 ppt
29.3%
15.5%
up 13.8 ppt
Operating Expenses ($M)
$728
$702
up 4%
$632
$561
up 13%
Operating Income (Loss) ($M)
$273
$(210)
*
$380
$(91)
*
Diluted Net Income (Loss) Attributable to
Common Shareholders ($M)
$113
$(301)
*
$210
$(243)
*
Net Income (Loss) Per Share
$0.34
$(0.93)
*
$0.63
$(0.75)
*
* not a meaningful figure
GAAP
Non-GAAP
Q3 2024
Q3 2023
Y/Y
Q3 2024
Q3 2023
Y/Y
Revenue ($M)
$3,457
$2,803
up 23%
$3,457
$2,803
up 23%
Gross Margin
29.0%
10.2%
up 18.8 ppt
29.3%
10.6%
up 18.7 ppt
Operating Expenses ($M)
$728
$758
down 4%
$632
$602
up 5%
Operating Income (Loss) ($M)
$273
$(472)
*
$380
$(304)
*
Diluted Net Income (Loss) Attributable to
Common Shareholders ($M)
$113
$(580)
*
$210
($435)
*
Net Income (Loss) Per Share
$0.34
$(1.82)
*
$0.63
$(1.36)
*
* not a meaningful figure
The company had an operating cash inflow of $58 million and
ended the quarter with $1.89 billion of total cash and cash
equivalents.
Additional details can be found within the company’s earnings
presentation, which is accessible online at investor.wdc.com.
End Market Summary
Revenue ($M)
Q3 2024
Q2 2024
Q/Q
Q3 2023
Y/Y
Cloud
$1,553
$1,071
up 45%
$1,205
up 29%
Client
1,174
1,122
up 5%
975
up 20%
Consumer
730
839
down 13%
623
up 17%
Total Revenue
$3,457
$3,032
up 14%
$2,803
up 23%
In the fiscal third quarter:
- Cloud represented 45% of total revenue. The growth was
primarily attributed to higher nearline shipments and improved
nearline per unit pricing with flash revenue up both sequentially
and year-over-year.
- Client represented 34% of total revenue. Sequentially, the
increase in flash ASP more than offset a decline in flash bit
shipments while HDD revenue decreased. The year-over-year increase
was driven by growth in both flash and HDD ASPs and flash bit
shipments.
- Consumer represented 21% of total revenue. Sequentially, both
flash and HDD were down at approximately similar rates and in line
with seasonality. The year-over-year increase was driven by growth
in flash bit shipments and ASP.
Business Outlook for Fiscal Fourth Quarter of 2024
Three Months Ending
June 28, 2024
GAAP(1)
Non-GAAP(1)
Revenue ($B)
$3.60 - $3.80
$3.60 - $3.80
Gross margin
31.5% - 33.5%
32.0% - 34.0%
Operating expenses ($M)
$770 - $800
$670 - $690
Interest and other expense, net ($M)
~ $105
~ $105
Income tax expense ($M)(2)
N/A
$30 - $40
Diluted earnings per share
N/A
$0.90 - $1.20
Diluted shares outstanding (in
millions)
~342
~342
__________
(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 $100 million to $110 million. In the
aggregate, Non-GAAP diluted earnings per share guidance excludes
these items totaling approximately $110 million to $125 million.
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.
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. 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.
Revisions to Prior Period Financial Results
As previously reported, in connection with the preparation of
its condensed consolidated financial statements as of and for the
three and six months ended December 29, 2023, the company
identified certain errors related to the company’s reporting and
recording of its interests in its equity method investments in
Flash Ventures. These errors related to unadjusted differences
between Flash Ventures’ application of Japanese generally accepted
accounting principles to certain lease-related transactions
compared to the applicable U.S. generally accepted accounting
principles. These unadjusted differences resulted in differences in
the equity in earnings from these entities recognized by the
company in Other income (expense), net and the carrying value of
the company’s equity method investments in Flash Ventures in the
unaudited condensed consolidated financial statements. The company
evaluated the errors and determined the related impacts were not
material to its financial statements for the prior periods when
they occurred. The company has revised previously reported
financial information for such immaterial errors, and the unaudited
preliminary condensed consolidated financial statements included in
this press release incorporate revisions made to correct these
errors for the periods presented. Please refer to the tables
outlining revisions to results of operations in the company's
earnings presentation, which is accessible online at
investor.wdc.com, and to the company's upcoming Quarterly Report on
Form 10-Q for the fiscal third quarter ending March 29, 2024, for
additional information related to these revisions.
Investor Communications
The investment community conference call to discuss these
results and the company’s business outlook for the fiscal fourth
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 fourth quarter of 2024 and
beyond; the company's ability to dampen cyclicality and improve
through-cycle profitability; industry and supply conditions and
dynamics; and the company's approach to capital spending and
ability to capitalize on market opportunities. 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 third quarter ended
March 29, 2024 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; operational, financial and legal
challenges and difficulties inherent in implementing a separation
of the company's HDD and Flash businesses; the final approval of
the separation by the company's board of directors; inflation;
increase in interest rates and economic recession; future responses
to and effects of global health crises; the impact of business and
market conditions; the outcome and impact of the company's
announced separation transaction, including with respect to
customer and supplier relationships, regulatory and 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; the impact of
international conflicts; 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 Reports on Form 10-Q
filed with the SEC on November 7, 2023 and February 12, 2024, 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)
March 29, 2024
June 30, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
1,894
$
2,023
Accounts receivable, net
1,800
1,598
Inventories
3,215
3,698
Other current assets
623
567
Total current assets
7,532
7,886
Property, plant and equipment, net
3,253
3,620
Notes receivable and investments in Flash
Ventures
1,099
1,410
Goodwill
10,034
10,037
Other intangible assets, net
78
80
Other non-current assets
1,805
1,513
Total assets
$
23,801
$
24,546
LIABILITIES, CONVERTIBLE
PREFERRED STOCK AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
1,400
$
1,293
Accounts payable to related parties
310
292
Accrued expenses
972
1,288
Income taxes payable
476
999
Accrued compensation
445
349
Current portion of long-term debt
450
1,213
Total current liabilities
4,053
5,434
Long-term debt
7,318
5,857
Other liabilities
1,433
1,415
Total liabilities
12,804
12,706
Convertible preferred stock, aggregate
liquidation preference of $968 and $924, respectively
876
876
Total shareholders’ equity
10,121
10,964
Total liabilities, convertible preferred
stock and shareholders’ equity
$
23,801
$
24,546
WESTERN DIGITAL CORPORATION
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in
millions, except per share amounts; unaudited; on a US GAAP
basis)
Three Months Ended
Nine Months Ended
March 29, 2024
March 31, 2023
March 29, 2024
March 31, 2023
Revenue, net
$
3,457
$
2,803
$
9,239
$
9,646
Cost of revenue
2,456
2,517
7,647
7,851
Gross profit
1,001
286
1,592
1,795
Operating expenses:
Research and development
494
476
1,369
1,551
Selling, general and administrative
203
242
608
739
Employee termination, asset impairment,
and other
8
40
89
140
Business separation costs
23
—
59
—
Total operating expenses
728
758
2,125
2,430
Operating income (loss)
273
(472
)
(533
)
(635
)
Interest and other expense
(95
)
(56
)
(230
)
(181
)
Income (loss) before taxes
178
(528
)
(763
)
(816
)
Income tax expense
43
43
74
159
Net income (loss)
135
(571
)
(837
)
(975
)
Less: cumulative dividends allocated to
preferred shareholders
15
9
44
9
Less: income attributable to preferred
shareholders
7
—
—
—
Net income (loss) attributable to common
shareholders
$
113
$
(580
)
$
(881
)
$
(984
)
Net income (loss) per common share:
Basic
$
0.35
$
(1.82
)
$
(2.72
)
$
(3.09
)
Diluted
$
0.34
$
(1.82
)
$
(2.72
)
$
(3.09
)
Weighted average shares outstanding:
Basic
326
319
324
318
Diluted
335
319
324
318
WESTERN DIGITAL CORPORATION
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in
millions; unaudited; on a US GAAP basis)
Three Months Ended
Nine Months Ended
March 29, 2024
March 31, 2023
March 29, 2024
March 31, 2023
Operating Activities
Net income (loss)
$
135
$
(571
)
$
(837
)
$
(975
)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operations:
Depreciation and amortization
140
213
430
643
Stock-based compensation
77
74
226
246
Deferred income taxes
(52
)
9
(120
)
30
Gain on disposal of assets
—
(8
)
(87
)
(7
)
Non-cash asset impairment
4
3
99
18
Gain on repurchase of debt
—
—
(4
)
—
Amortization of debt issuance costs and
discounts
5
4
14
9
Other non-cash operating activities,
net
52
(64
)
24
(8
)
Changes in:
Accounts receivable, net
(277
)
314
(202
)
1,213
Inventories
1
(206
)
483
(341
)
Accounts payable
(88
)
79
211
(442
)
Accounts payable to related parties
59
(103
)
18
(54
)
Accrued expenses
(64
)
(258
)
(310
)
(484
)
Income taxes payable
(30
)
(12
)
(524
)
144
Accrued compensation
93
(7
)
97
(169
)
Other assets and liabilities, net
3
152
(178
)
(163
)
Net cash provided by (used in) operating
activities
58
(381
)
(660
)
(340
)
Investing Activities
Purchases of property, plant and
equipment, net
(95
)
(110
)
(176
)
(688
)
Activity related to Flash Ventures,
net
128
(36
)
207
46
Strategic investments and other, net
(26
)
8
—
22
Net cash provided by (used in) investing
activities
7
(138
)
31
(620
)
Financing Activities
Employee stock plans, net
(16
)
(13
)
(26
)
(20
)
Net proceeds from convertible preferred
stock
—
882
(5
)
882
Purchase of capped calls
—
—
(155
)
—
Repurchases of debt
—
—
(505
)
—
Proceeds from debt, net of repayments
(629
)
—
1,233
—
Debt issuance costs
—
(1
)
(36
)
(6
)
Net cash provided by (used in) financing
activities
(645
)
868
506
856
Effect of exchange rate changes on
cash
(7
)
—
(6
)
(3
)
Net increase (decrease) in cash and cash
equivalents
(587
)
349
(129
)
(107
)
Cash and cash equivalents, beginning of
period
2,481
1,871
2,023
2,327
Cash and cash equivalents, end of
period
$
1,894
$
2,220
$
1,894
$
2,220
WESTERN DIGITAL CORPORATION
SUPPLEMENTAL OPERATING SEGMENT RESULTS (in millions; except
percentages; unaudited)
Three Months Ended
Nine Months Ended
March 29, 2024
March 31, 2023
March 29, 2024
March 31, 2023
Net revenue:
Flash
$
1,705
$
1,307
$
4,926
$
4,686
HDD
1,752
1,496
4,313
4,960
Total net revenue
$
3,457
$
2,803
$
9,239
$
9,646
Gross profit:
Flash
$
467
$
(65
)
$
437
$
597
HDD
545
363
1,157
1,237
Total gross profit for segments
1,012
298
1,594
1,834
Unallocated corporate items:
Stock-based compensation expense
(11
)
(12
)
(37
)
(38
)
Amortization of acquired intangible
assets
(1
)
—
(2
)
(1
)
Recovery from contamination incident
1
—
37
—
Total unallocated corporate items
(11
)
(12
)
(2
)
(39
)
Consolidated gross profit
$
1,001
$
286
$
1,592
$
1,795
Gross margin:
Flash
27.4
%
(5.0
)%
8.9
%
12.7
%
HDD
31.1
%
24.3
%
26.8
%
24.9
%
Total gross margin for segments
29.3
%
10.6
%
17.3
%
19.0
%
Consolidated gross margin
29.0
%
10.2
%
17.2
%
18.6
%
The Company manages and reports under two reportable segments:
flash-based products (“Flash”) and hard disk drives (“HDD”). In the
table above, total gross profit for segments and total gross margin
for segments are Non-GAAP financial measures, which are also
referred to herein as Non-GAAP gross profit and Non-GAAP gross
margin, respectively.
WESTERN DIGITAL CORPORATION
PRELIMINARY RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in millions; unaudited)
Three Months Ended
Nine Months Ended
March 29, 2024
December 29,
2023
March 31, 2023
March 29, 2024
March 31, 2023
GAAP gross profit
$
1,001
$
492
$
286
$
1,592
$
1,795
Stock-based compensation expense
11
13
12
37
38
Amortization of acquired intangible
assets
1
1
—
2
1
Recovery from contamination incident
(1
)
(36
)
—
(37
)
—
Non-GAAP gross profit
$
1,012
$
470
$
298
$
1,594
$
1,834
GAAP operating expenses
$
728
$
702
$
758
$
2,125
$
2,430
Stock-based compensation expense
(66
)
(59
)
(62
)
(189
)
(208
)
Business separation costs
(23
)
(36
)
—
(59
)
—
Employee termination, asset impairment,
and other
(8
)
(24
)
(40
)
(89
)
(140
)
Strategic review
—
(20
)
(15
)
(37
)
(15
)
Amortization of acquired intangible
assets
—
—
(39
)
—
(116
)
Other
1
(2
)
—
(3
)
(1
)
Non-GAAP operating expenses
$
632
$
561
$
602
$
1,748
$
1,950
GAAP operating income (loss)
$
273
$
(210
)
$
(472
)
$
(533
)
$
(635
)
Gross profit adjustments
11
(22
)
12
2
39
Operating expense adjustments
96
141
156
377
480
Non-GAAP operating income
(loss)
$
380
$
(91
)
$
(304
)
$
(154
)
$
(116
)
GAAP interest and other expense,
net
$
(95
)
$
(49
)
$
(56
)
$
(230
)
$
(181
)
Other
3
(64
)
(6
)
(61
)
(7
)
Non-GAAP interest and other expense,
net
$
(92
)
$
(113
)
$
(62
)
$
(291
)
$
(188
)
GAAP income tax expense
$
43
$
28
$
43
$
74
$
159
Income tax adjustments
8
(3
)
17
27
21
Non-GAAP income tax expense
$
51
$
25
$
60
$
101
$
180
WESTERN DIGITAL CORPORATION
PRELIMINARY RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in millions, except per share amounts; unaudited)
Three Months Ended
Nine Months Ended
March 29, 2024
December 29,
2023
March 31, 2023
March 29, 2024
March 31, 2023
GAAP net income (loss)
$
135
$
(287
)
$
(571
)
$
(837
)
$
(975
)
Stock-based compensation expense
77
72
74
226
246
Business separation costs
23
36
—
59
—
Employee termination, asset impairment and
other
8
24
40
89
140
Strategic review
—
20
15
37
15
Amortization of acquired intangible
assets
1
1
39
2
117
Recovery from contamination incident
(1
)
(36
)
—
(37
)
—
Other
2
(62
)
(6
)
(58
)
(6
)
Income tax adjustments
(8
)
3
(17
)
(27
)
(21
)
Non-GAAP net income (loss)
237
(229
)
(426
)
(546
)
(484
)
Less: amount allocated to preferred
shareholders
27
14
9
44
9
Non-GAAP diluted net income (loss)
attributable to common shareholders
$
210
$
(243
)
$
(435
)
$
(590
)
$
(493
)
Diluted income (loss) per common
share
GAAP
$
0.34
$
(0.93
)
$
(1.82
)
$
(2.72
)
$
(3.09
)
Non-GAAP
$
0.63
$
(0.75
)
$
(1.36
)
$
(1.82
)
$
(1.55
)
Diluted weighted average shares
outstanding:
GAAP
335
325
319
324
318
Non-GAAP
335
325
319
324
318
Cash flows
Cash flow provided by (used in) operating
activities
$
58
$
(92
)
$
(381
)
$
(660
)
$
(340
)
Purchases of property, plant and
equipment, net
(95
)
(150
)
(110
)
(176
)
(688
)
Activity related to Flash Ventures,
net
128
66
(36
)
207
46
Free cash flow
$
91
$
(176
)
$
(527
)
$
(629
)
$
(982
)
To supplement the condensed consolidated financial statements
presented in accordance with U.S. generally accepted accounting
principles (“GAAP”), the table above sets forth Non-GAAP gross
profit; Non-GAAP gross margin; Non-GAAP operating expenses;
Non-GAAP operating income and loss; Non-GAAP interest and other
expense, net; Non-GAAP income tax expense; Non-GAAP net income and
loss; Non-GAAP diluted income and loss per common share and free
cash flow (“Non-GAAP measures”). These Non-GAAP measures are not in
accordance with, or an alternative for, measures prepared in
accordance with GAAP and may be different from Non-GAAP measures
used by other companies. The company believes the presentation of
these Non-GAAP measures, when shown in conjunction with the
corresponding GAAP measures, provides useful information to
investors for measuring the company’s earnings performance and
comparing it against prior periods. Specifically, the company
believes these Non-GAAP measures provide useful information to both
management and investors as they exclude certain expenses, gains
and losses that the company believes are not indicative of its core
operating results or because they are consistent with the financial
models and estimates published by many analysts who follow the
company and its peers. As discussed further below, these Non-GAAP
measures exclude, as applicable, stock-based compensation expense,
business separation costs, employee termination, asset impairment,
and other, expenses related to our strategic review, amortization
of acquired intangible assets, recovery from contamination
incident, other adjustments, and income tax adjustments, and the
company believes these measures along with the related
reconciliations to the GAAP measures provide additional detail and
comparability for assessing the company’s results. These Non-GAAP
measures are some of the primary indicators management uses for
assessing the company’s performance and planning and forecasting
future periods. These measures should be considered in addition to
results prepared in accordance with GAAP, but should not be
considered a substitute for, or superior to, GAAP results.
As described above, the company excludes the following items
from its Non-GAAP measures:
Stock-based compensation expense.
Because of the variety of equity awards used by companies, the
varying methodologies for determining stock-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 stock-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
stock-based compensation expense from their Non-GAAP results.
Business separation cost. The
company incurred expenses associated with the separation of its HDD
and Flash business units to create two independent, public
companies. The Company believes these charges do not reflect the
company's operating results and that they are not indicative of the
underlying performance of its business.
Employee termination, asset impairment,
and other. From time-to-time, in order to realign the
company’s operations with anticipated market demand or to achieve
cost synergies from the integration of acquisitions, the company
may terminate employees and/or restructure its operations. From
time-to-time, the company may also incur charges from the
impairment of intangible assets and other long-lived assets. In
addition, the company may record credits related to gains upon sale
of property due to restructuring or reversals of charges recorded
in prior periods. In addition, the Company has taken actions to
reduce the amount of capital invested in facilities, including the
sale-leaseback of facilities. These charges or credits are
inconsistent in amount and frequency, and the company believes they
are not indicative of the underlying performance of its
business.
Strategic review. The company
incurred expenses associated with its review of strategic
alternatives that resulted in the planned separation of its HDD and
Flash business units to create two independent, public companies.
The company believes these charges do not reflect the company’s
operating results and that they are not indicative of the
underlying performance of its business.
Amortization of acquired intangible
assets. The company incurs expenses from the amortization of
acquired intangible assets over their economic lives. Such charges
are significantly impacted by the timing and magnitude of the
company’s acquisitions and any related impairment charges.
Recovery from contamination
incident. In February 2022, a contamination of certain
materials used in the company's manufacturing process occurred and
affected production operations at the flash-based memory
manufacturing facilities in Yokkaichi and Kitakami, Japan, which
are operated through the company's joint business ventures with
Kioxia Corporation (collectively, "Flash Ventures"). The
contamination resulted in scrapped inventory and rework costs,
decontamination and other costs needed to restore the facilities to
normal capacity, and under absorption of overhead costs which were
expensed as incurred. During the quarters ended December 29, 2023,
and March 29, 2024, the company received a partial recovery of
these losses from other parties. The contamination charges and the
related recovery are inconsistent in amount and frequency, and the
company believes they are not part of the ongoing production
operation of its business.
Other adjustments. From
time-to-time, the company sells or impairs investments or other
assets which are not considered necessary to its business
operations, or incurs other charges or gains that the company
believes are not a part of the ongoing operation of its business.
The resulting expense or benefit is inconsistent in amount and
frequency.
Income tax adjustments. Income tax
adjustments include the difference between income taxes based on a
forecasted annual Non-GAAP tax rate and a forecasted annual GAAP
tax rate as a result of the timing of certain Non-GAAP pre-tax
adjustments. The income tax adjustments also include adjustments
for the re-measurement of certain unrecognized tax benefits
primarily related to tax positions taken in prior quarters,
including interest. These adjustments are excluded because the
company believes that they are not indicative of the underlying
performance of its ongoing business.
Additionally, free cash flow is defined as cash flows provided
by (used in) operating activities less purchases of property, plant
and equipment, net, and the activity related to Flash Ventures,
net. The company considers free cash flow generated in any period
to be a useful indicator of cash that is available for strategic
opportunities including, among others, investing in the company’s
business, making strategic acquisitions, repaying debt and
strengthening the balance sheet.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240425732968/en/
Western Digital Corp.
Investor Contact: T. Peter Andrew 949.672.9655
peter.andrew@wdc.com investor@wdc.com
Media Contact: Media Relations 408.801.0021
WD.Mediainquiries@wdc.com
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