Seagate(STX)2025-05-02 20:09Financial Performance - In the March 2025 quarter, the company shipped 144 exabytes of HDD storage capacity and generated revenue of approximately $2.2 billion with a gross margin of 35.2%[125]. - Revenue for the March 2025 quarter decreased by $165 million compared to the December 2024 quarter, primarily due to a decrease in mass capacity exabytes shipped[129]. - Revenue for the three and nine months ended March 28, 2025 increased by $505 million and $2 billion from the three and nine months ended March 29, 2024, respectively[130]. - The gross margin for the March 2025 quarter increased by 9 percentage points compared to the March 2024 quarter, driven by favorable product mix and pricing actions[133]. - The gross margin for the nine months ended March 28, 2025 increased by 14 percentage points compared to the nine months ended March 29, 2024[134]. Operating Expenses - Operating expenses for the quarter ended March 28, 2025, were $329 million, a slight increase from $324 million in the previous quarter, and $282 million in the same quarter last year[136]. - Product development expenses increased by $16 million in the March 2025 quarter compared to March 2024, primarily due to a $17 million increase in compensation and other employee benefits[137]. - Marketing and administrative expenses increased by $23 million in the March 2025 quarter compared to March 2024, mainly due to a $22 million increase in compensation and other employee benefits[139]. - Sales incentive programs were approximately 14% of gross revenue for the March 2025 quarter[131]. Cash Flow and Debt Management - Operating cash flow for the March 2025 quarter was $259 million, and the company paid $152 million in dividends[125]. - The company reduced its outstanding debt by $536 million through repayment of the 2025 Notes and partial repurchase of certain senior notes[125]. - Cash and cash equivalents decreased by $544 million from June 28, 2024, to $814 million as of March 28, 2025, primarily due to $531 million repayment of debt and $447 million in dividends paid[148]. - Cash provided by operating activities for the nine months ended March 28, 2025, was $575 million, reflecting net income adjusted for non-cash items[149]. - As of March 28, 2025, the future principal payment obligation on long-term debt was $5.2 billion, with estimated future interest payments of approximately $1.8 billion[160]. Shareholder Returns - The company declared a quarterly cash dividend of $0.72 per share, payable on July 8, 2025, to shareholders of record as of June 25, 2025[162]. - As of March 28, 2025, $1.8 billion remained available for share repurchase under the existing authorization limit[163]. Capital Expenditures and Investments - The company expects capital expenditures for fiscal year 2025 to be higher than in fiscal year 2024, requiring substantial cash to fund increased working capital and scheduled debt payments[164]. - As of March 28, 2025, the company has a cash investment portfolio with floating rate assets totaling $171 million at an average interest rate of 4.24%[170]. - The company has fixed rate debt obligations amounting to $5,193 million, with an average interest rate of 5.74%[170]. - The company has fixed rate debt obligations maturing in 2028 totaling $1,500 million at an average interest rate of 3.50%[170]. Risk Management - The company manages interest rate risk primarily through fixed rate debt obligations and has immaterial available-for-sale investments[169]. - The company hedges foreign currency exposure with contracts that mature within 12 months, aiming to reduce earnings volatility from currency fluctuations[172]. - The company has entered into foreign currency forward exchange contracts with a total notional amount of $247 million, including contracts in Singapore Dollar ($154 million) and Thai Baht ($47 million)[175]. - The company performs ongoing credit evaluations to manage counterparty credit risk related to foreign currency forward exchange contracts[176]. - Changes in corporate issuer credit ratings have minimal near-term financial impact but may affect future capital raising and transaction costs[176]. - The company utilizes a Total Return Swap to manage equity market risks associated with its non-qualified deferred compensation plan[177]. - The company has exposure to market risks including interest rates, foreign currency exchange rates, and credit rating changes, which could impact financial results[168].