Gen Digital (US:GEN)2024-05-15 23:45Financial Performance - Net revenues for fiscal 2024 increased by $474 million to $3,812 million, a 14% increase compared to fiscal 2023[165][183] - Operating income decreased by $105 million to $1,122 million, primarily due to increased legal accruals and amortization from the Avast acquisition[166] - Net income decreased by $733 million to $616 million, with diluted net income per share dropping from $2.16 to $0.96[165][166] - Direct customer revenue increased to $3,353 million in fiscal 2024 from $2,933 million in fiscal 2023, representing a growth of 14.4%[190] - Total cyber safety revenues rose to $3,749 million in fiscal 2024, up from $3,274 million in fiscal 2023, marking an increase of 14.5%[190] Cash Flow and Shareholder Returns - Cash and cash equivalents increased by $96 million to $846 million, driven by cash generated from operating activities[166] - The company returned $1,947 million to shareholders and bondholders, including $441 million in stock repurchases and $323 million in dividends[166] - Cash provided by operating activities significantly increased to $2,064 million in fiscal 2024, up from $757 million in fiscal 2023, an increase of $1,307 million[208][209] - Cash flows from investing activities improved to $2 million in fiscal 2024, a significant recovery from $(6,547) million in fiscal 2023, primarily due to the absence of acquisition costs[210] - The company announced a cash dividend of $0.125 per share of common stock to be paid in June 2024, reflecting ongoing commitment to shareholder returns[219] Expenses and Cost Management - Cost of revenues as a percentage of net revenues increased from 18% to 19%, while gross profit margin decreased from 82% to 81%[182] - Total operating expenses as a percentage of net revenues rose from 46% to 51%, with significant increases in general and administrative expenses[182] - Operating expenses surged to $1,959 million in fiscal 2024, a 29% increase from $1,522 million in fiscal 2023, primarily due to higher legal accruals and amortization of intangible assets[195] - Cost of revenues increased by 24% to $731 million in fiscal 2024, up from $589 million in fiscal 2023, driven by higher amortization of acquired intangible assets[193][194] Tax and Legal Matters - The company experienced a $899 million income tax refund related to fiscal 2023 tax filings[166] - The company expects to incur total costs up to $150 million related to the restructuring plan following the acquisition of Avast, with $41 million in cash payments made during fiscal 2024[221] Debt and Financial Obligations - As of March 29, 2024, total outstanding debt amounted to $8,716 million, including $6,110 million in term loans and $2,600 million in senior notes[218] - As of March 29, 2024, the company has total contractual obligations of $12,031 million, including $8,716 million in debt principal payments and $2,438 million in interest payments[224] - The company has $1,346 million in long-term income taxes payable excluded from the contractual obligations table due to uncertainty regarding future cash flows[223] - The company has $2,606 million in fixed-rate Senior Notes, with a fair value of $2,624 million, and $6,110 million in variable interest rate debt based on SOFR[226][227] Interest Rate and Currency Risk Management - A hypothetical 100 basis point change in SOFR would result in a $61 million increase in annual interest expense for the company[227] - The company entered into interest rate swap agreements to hedge $1 billion of variable rate borrowings, effectively converting them to fixed rates of 3.762% and 3.55%[228] - The company is exposed to foreign currency exchange rate risks due to operations in multiple currencies, which may impact revenue expressed in USD[230][231] - Monthly foreign exchange forward contracts are executed to hedge foreign currency balance sheet exposures, with gains and losses recorded in Other income (expense)[232] - The company maintains a $1,500 million revolving credit facility that bears interest at a variable rate based on SOFR, subject to the same risks associated with adverse changes in SOFR[229] - The company does not use derivative financial instruments for speculative trading purposes and will continue to reassess its approach to managing foreign currency risks as international operations grow[233]