Seagate Technology Holdings plc (NASDAQ:STX) Q3 2024 Earnings Call Transcript April 23, 2024 5:00 PM ET Company Participants Shanye Hudson - SVP, IR Dave Mosley - CEO Gianluca Romano - CFO Conference Call Participants Erik Woodring - Morgan Stanley Amit Daryanani - Evercore ISI Aaron Rakers - Wells Fargo Wamsi Mohan - Bank of America Krish Sankar - TD Cowen Steven Fox - Fox Advisors Timothy Arcuri - UBS Securities Karl Ackerman - BNP Paribas Ananda Baruah - Loop Capital Mehdi Hosseini - SIG C.J. Muse - Cant ...

Exhibit 99.1 Investor Relations Contact: Shanye Hudson, (510) 661-1600 shanye.hudson@seagate.com Media Contact: Agnieszka Zielinska, (503) 380-0948 agnieszka.zielinska@seagate.com SEAGATE TECHNOLOGY REPORTS FISCAL THIRD QUARTER 2024 FINANCIAL RESULTS Fiscal Q3 2024 Highlights FREMONT, CA – April 23, 2024 - Seagate Technology Holdings plc (NASDAQ: STX) (the "Company" or "Seagate"), the leading innovator of mass-capacity storage solutions, today reported financial results for its fiscal third quarter ended Ma ...

PART I FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the three and six months ended December 29, 2023 Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | Dec 29, 2023 (In millions) | June 30, 2023 (In millions) | | :--- | :--- | :--- | | **Total Assets** | **$7,149** | **$7,556** | | Cash and cash equivalents | $787 | $786 | | Inventories | $1,053 | $1,140 | | **Total Liabilities** | **$8,963** | **$8,755** | | Long-term debt, less current portion | $5,669 | $5,388 | | **Total Shareholders' Deficit** | **$(1,814)** | **$(1,199)** | Condensed Consolidated Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended Dec 29, 2023 (In millions) | Three Months Ended Dec 30, 2022 (In millions) | | :--- | :--- | :--- | | Revenue | $1,555 | $1,887 | | Gross Profit | $362 | $246 | | Income (loss) from operations | $124 | $(160) | | Net loss | $(19) | $(33) | | Diluted net loss per share | $(0.09) | $(0.16) | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Metric | Six Months Ended Dec 29, 2023 (In millions) | Six Months Ended Dec 30, 2022 (In millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $296 | $496 | | Net cash used in investing activities | $(105) | $(210) | | Net cash used in financing activities | $(191) | $(131) | [Note 1. Basis of Presentation and Summary of Significant Accounting Policies](index=9&type=section&id=Note%201.%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) The company outlines its primary data storage products and a change in the estimated useful lives of manufacturing equipment - The company's principal products are hard disk drives (HDDs), complemented by a range of data storage products including solid state drives (SSDs), storage subsystems, and a scalable edge-to-cloud mass data platform (Lyve)[26](index=26&type=chunk) - Effective from the first quarter of fiscal year 2024, the company extended the useful lives of certain manufacturing equipment, which increased net income by approximately **$30 million** for the three months and **$40 million** for the six months ended December 29, 2023[37](index=37&type=chunk) [Note 2. Balance Sheet Information](index=11&type=section&id=Note%202.%20Balance%20Sheet%20Information) This note details balance sheet components, including a decrease in total inventories and the sale of trade receivables Inventories Breakdown | Category | Dec 29, 2023 (In millions) | June 30, 2023 (In millions) | | :--- | :--- | :--- | | Raw materials and components | $214 | $241 | | Work-in-process | $627 | $682 | | Finished goods | $212 | $217 | | **Total inventories** | **$1,053** | **$1,140** | - During the three months ended December 29, 2023, the company sold trade receivables without recourse for cash proceeds of **$290 million**[46](index=46&type=chunk) [Note 3. Debt](index=14&type=section&id=Note%203.%20Debt) The company details its total debt, the issuance of new Exchangeable Senior Notes, and the subsequent repayment of Term Loans - On September 13, 2023, the company issued **$1.5 billion** in 3.50% Exchangeable Senior Notes due 2028[56](index=56&type=chunk) - Proceeds from the 2028 Notes were used to repay the entire outstanding principal amount of Term Loans A1, A2, and A3, resulting in a net loss on debt extinguishment of **$29 million**[57](index=57&type=chunk) - In connection with the 2028 Notes issuance, the company purchased capped call transactions for **$95 million** to reduce potential dilution, with an initial cap price of **$107.848** per share[61](index=61&type=chunk) [Note 5. Restructuring and Other, net](index=16&type=section&id=Note%205.%20Restructuring%20and%20Other%2C%20net) This note outlines a net benefit from restructuring activities, primarily driven by a gain on a property sale and leaseback - The company recorded a net benefit of **$31 million** for the three months ended December 29, 2023, mainly from a **$30 million** net gain on a property sale and leaseback transaction[69](index=69&type=chunk) Restructuring Accrual Activity (Six Months Ended Dec 29, 2023) | Description | Amount (In millions) | | :--- | :--- | | Accrual balance at June 30, 2023 | $119 | | Restructuring charges | $3 | | Cash payments | $(110) | | Adjustments | $(2) | | **Accrual balance at Dec 29, 2023** | **$10** | [Note 6. Derivative Financial Instruments](index=17&type=section&id=Note%206.%20Derivative%20Financial%20Instruments) The company discusses its use of derivatives to manage risk, including the termination of interest rate swaps for a significant gain - On September 13, 2023, the company terminated its interest rate swap agreements due to the repayment of its Term Loans, resulting in a realized net gain of **$104 million**[76](index=76&type=chunk) Notional Value of Foreign Currency Forward Contracts (as of Dec 29, 2023) | Currency | Designated as Hedges (In millions) | Not Designated as Hedges (In millions) | | :--- | :--- | :--- | | Singapore Dollar | $126 | $102 | | Thai Baht | $95 | $16 | | Chinese Renminbi | $40 | $19 | | British Pound Sterling | $38 | $7 | | **Total** | **$299** | **$144** | [Note 9. Revenue](index=24&type=section&id=Note%209.%20Revenue) This note provides a disaggregation of revenue by sales channel and geography, with OEMs and the Asia Pacific region being the largest segments Revenue by Channel (Three Months Ended) | Channel | Dec 29, 2023 (In millions) | Dec 30, 2022 (In millions) | | :--- | :--- | :--- | | OEMs | $1,140 | $1,365 | | Distributors | $218 | $297 | | Retailers | $197 | $225 | | **Total** | **$1,555** | **$1,887** | Revenue by Geography (Three Months Ended) | Geography | Dec 29, 2023 (In millions) | Dec 30, 2022 (In millions) | | :--- | :--- | :--- | | Asia Pacific | $777 | $760 | | Americas | $544 | $853 | | EMEA | $234 | $274 | | **Total** | **$1,555** | **$1,887** | [Note 12. Legal, Environmental and Other Contingencies](index=26&type=section&id=Note%2012.%20Legal%2C%20Environmental%20and%20Other%20Contingencies) The company details its legal proceedings, including a significant settlement with the U.S. Bureau of Industry and Security (BIS) - In April 2023, Seagate entered into a settlement agreement with the U.S. Bureau of Industry and Security (BIS) regarding sales to Huawei, agreeing to pay a **$300 million** penalty[114](index=114&type=chunk) - The BIS settlement is payable in quarterly installments of **$15 million** over five years; as of December 29, 2023, **$285 million** remains payable[114](index=114&type=chunk)[116](index=116&type=chunk) - A securities class action lawsuit was filed against the company and certain officers in July 2023, which the company believes is without merit and intends to defend vigorously[108](index=108&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial results, noting a gradual market recovery amidst macroeconomic headwinds while focusing on cost discipline [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Quarterly revenue increased sequentially to $1.6 billion, with gross margin improving significantly due to non-recurring charges in the prior quarter Quarterly Revenue and Margin Comparison | Metric | Dec 2023 Quarter | Sep 2023 Quarter | Dec 2022 Quarter | | :--- | :--- | :--- | :--- | | Revenue (in millions) | $1,555 | $1,454 | $1,887 | | Gross Margin | 23% | 10% | 13% | | Operating Margin | 8% | (9)% | (9)% | - Revenue increased sequentially due to a rise in mass capacity and legacy storage exabytes shipped, reflecting a gradual recovery in the U.S. cloud market and positive consumer seasonality[130](index=130&type=chunk) - The sequential increase in gross margin was primarily driven by the non-recurrence of **$118 million** in order cancellation fees from the September quarter, reduced factory underutilization charges, and lower depreciation expense[134](index=134&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained stable cash reserves and believes its liquidity sources are sufficient for the next 12 months - Primary liquidity sources as of December 29, 2023, consist of **$787 million** in cash, expected cash from operations, and **$1.5 billion** available under a revolving credit facility[156](index=156&type=chunk) - During the six months ended December 29, 2023, the company used **$1.3 billion** to redeem term loans and paid **$291 million** in dividends[154](index=154&type=chunk)[162](index=162&type=chunk) - As of December 29, 2023, the company had unconditional long-term purchase obligations of approximately **$2.6 billion**, primarily for inventory components[118](index=118&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from interest rates and foreign currency exchange rates, which it manages through derivatives - The company's primary market risks are related to interest rates on its cash portfolio and foreign currency exchange rates on its international operations[173](index=173&type=chunk) - On September 13, 2023, the company terminated its interest rate swap agreements after repaying its variable-rate Term Loans, eliminating that source of interest rate variability[176](index=176&type=chunk) Foreign Currency Forward Exchange Contracts (as of Dec 29, 2023) | Currency | Notional Amount (In millions) | Estimated Fair Value (In millions) | | :--- | :--- | :--- | | Singapore Dollar | $228 | $2 | | Thai Baht | $111 | $2 | | Chinese Renminbi | $59 | $(1) | | British Pound Sterling | $45 | $2 | | **Total** | **$443** | **$5** | [Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective, with no material changes in internal controls - Based on an evaluation, the CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of December 29, 2023[183](index=183&type=chunk) - **No changes** in internal control over financial reporting occurred during the quarter that have materially affected, or were reasonably likely to materially affect, internal controls[184](index=184&type=chunk) PART II OTHER INFORMATION [Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 12 of the financial statements for a detailed discussion of the company's legal proceedings - For a discussion of legal proceedings, see "Part I, Item 1. Financial Statements—Note 12. Legal, Environmental and Other Contingencies"[186](index=186&type=chunk) [Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) This section outlines principal risks including dependence on new products, key customers, supply chain vulnerabilities, and macroeconomic headwinds - The company's ability to increase revenue depends on **successfully introducing new products** in a timely manner to keep pace with rapid technological change[197](index=197&type=chunk) - The business has been adversely affected by **reduced or canceled purchases from key customers**, including large hyperscale data center companies and CSPs[207](index=207&type=chunk) - The company relies on **single-source or limited suppliers** for critical components like read/write heads, substrates, and NAND flash memory, creating supply chain risks[229](index=229&type=chunk)[230](index=230&type=chunk) - Changes in the **macroeconomic environment**, including inflation and reduced spending, have negatively impacted and may continue to impact results of operations[239](index=239&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any shares during the quarter, with $1.9 billion remaining under its repurchase authorization - As of December 29, 2023, **$1.9 billion** remained available for repurchase under the company's existing share repurchase authorization[284](index=284&type=chunk) - **No shares were repurchased** under the publicly announced plan during the quarter ended December 29, 2023[285](index=285&type=chunk)

Financial Data and Key Metrics - Revenue for Q2 2024 was $1.56 billion, up 7% quarter-over-quarter, driven by improved cloud near-line demand and seasonal consumer drive sales [7][20] - Non-GAAP operating income tripled sequentially to $127 million, with non-GAAP operating margin expanding to 8.2% of revenue, up 540 basis points quarter-over-quarter [19][20] - Non-GAAP EPS was $0.12, exceeding the high end of the guidance range, reflecting improved demand trends and profitability focus [19][20] - Exabyte shipments grew 6% sequentially to 95 exabytes, with mass capacity shipments totaling 83 exabytes, up from 79 exabytes in the prior quarter [20][21] Business Line Performance - Mass capacity revenue increased 4% sequentially to $1.1 billion, driven by strong nearline cloud demand, offsetting declines in the VIA market [20] - Nearline product shipments grew to 65 exabytes, up from 56 exabytes in the prior quarter, reflecting improved demand among U.S. and China cloud customers [21] - Legacy product revenue rose to $324 million, driven by seasonal consumer demand, but is expected to decline in the March quarter post-holiday season [22] - Non-HDD business revenue increased to $171 million, primarily due to improved SSD demand [22] Market Performance - U.S. cloud market demand showed gradual recovery, with enterprise OEM demand stabilizing, while China's recovery is expected to be slower due to economic challenges [9][10] - Incremental demand was observed among non-U.S. cloud and enterprise customers in the December quarter, with expectations for VIA market recovery post-Lunar New Year [10] Strategic Direction and Industry Competition - The company launched the Mozaic platform, a breakthrough in mass capacity storage, leveraging HAMR technology to achieve higher aerial density and lower TCO for data center operators [6][13] - Mozaic is expected to drive significant TCO and sustainability benefits, with the first HAMR-based product nearing qualification completion and volume ramp starting in the March quarter [12][13] - The company is vertically integrating laser manufacturing to enhance supply flexibility and reduce production costs, supporting long-term profitability [16] Management Commentary on Operating Environment and Future Outlook - Management expects the September 2023 quarter to mark the bottom of the down cycle, with gradual recovery in demand and improved profitability [8][9] - The company is confident in achieving a 30% non-GAAP gross margin benchmark at quarterly revenues 20% below prior cyclical peaks [9] - Demand recovery is expected to continue, with nearline demand improving in the March quarter and beyond, supported by normalized inventory levels among CSP customers [21] Other Important Information - The company generated $100 million in free cash flow and returned $146 million to shareholders through dividends, maintaining strong liquidity with $2.3 billion available [25] - Capital expenditures were flat at $70 million, with fiscal 2024 CapEx expected to be significantly lower than fiscal 2023 [25] Q&A Session Summary Question: Outlook for HAMR units in H2 2024 and 2025 [30] - The company is focused on ramping HAMR aggressively in 2024, with expectations to drive significant exabyte growth in 2025 [31][32] Question: Margin ramp and underutilization charges [33] - Margins are expected to improve sequentially through 2024, driven by cost actions, pricing adjustments, and the ramp of HAMR products [35][36] Question: Hyperscaler inventory dynamics and pricing actions [38] - Hyperscaler inventory levels have improved, with demand expected to accelerate, particularly as AI applications drive data center investments [39][40] Question: OpEx trajectory and capital structure [43] - OpEx is expected to remain around $240 million for the next few quarters, with free cash flow improving as revenue and profitability increase [44][45] Question: Customer value of HAMR drives [46] - HAMR drives offer TCO benefits, with price per terabyte expected to be nominally lower, incentivizing transitions from lower-capacity drives [47] Question: HAMR transition timeline [48] - The HAMR transition is expected to be slower than the PMR transition due to longer cycle times, but the company aims to accelerate as yields improve [50] Question: Qualification to revenue recognition timeline [51] - Qualification timelines vary by customer, with some hyperscalers expected to complete qualifications in 2024, driving revenue recognition [52] Question: Gross margin trajectory [53] - The company expects to achieve 30% gross margins at lower revenue levels than previously anticipated, driven by HAMR ramp and demand recovery [54] Question: Pricing actions and margin improvement [55] - Pricing actions and mix improvements are contributing to margin recovery, with further improvements expected as demand strengthens [56][57] Question: Build-to-order program update [59] - The build-to-order program is active, providing better visibility and predictability for the supply chain, with progress improving each quarter [60] Question: Vertical integration of laser technology [61] - Vertical integration aims to enhance supply chain control and reduce costs over time, supporting the ramp of Mozaic products [62] Question: Gross margin drivers [64] - HAMR ramp and demand recovery are key drivers of gross margin improvement, with sequential improvements expected through 2024 [65][67] Question: Back-end testing capacity [68] - The company has sufficient back-end testing capacity to support the HAMR ramp, despite longer test cycles for higher-capacity drives [69][71] Question: Book-to-bill trends [72] - The company is seeing improved visibility and predictability in orders, supporting the build-to-order framework and supply chain stability [73] Question: Enterprise HDD revenue outlook [74] - The company expects sequential improvement in enterprise HDD revenue but does not provide specific guidance beyond the March quarter [75] Question: AI-related opportunities [85] - AI-related opportunities are still in early stages, with potential for increased demand as data center architectures evolve to support AI workloads [86][87]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ____________________________ FORM 10-Q ___________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 29, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from: to Commission File Number 001-31560 _______________________________________ SEAGATE TECHNOLOGY HOLDINGS PUBLIC L ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K _________________________________________________ ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2023 OR (I.R.S. Employer Identification Number) 38/39 Fitzwilliam Square SEAGATE TECHNOLOGY HOLDINGS PUBLIC LIMITED COMPANY (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) ☐ TRANSITION REP ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ____________________________ FORM 10-Q ___________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from: to Commission File Number 001-31560 _______________________________________ SEAGATE TECHNOLOGY HOLDINGS PUBLIC LIMIT ...

Seagate Technology Holdings plc (NASDAQ:STX) Q3 2023 Results Conference Call April 20, 2023 9:00 AM ET Company Participants Shanye Hudson - Investor Relations Dave Mosley - Chief Executive Officer Gianluca Romano - Chief Financial Officer Conference Call Participants Erik Woodring - Morgan Stanley Tom O'Malley - Barclays Wamsi Mohan - Bank of America Timothy Arcuri - UBS Aaron Rakers - Wells Fargo C.J. Muse - Evercore ISI Krish Sankar - TD Cowen Toshiya Hari - Goldman Sachs Sidney Ho - Deutsche Bank Ananda ...

Seagate Technology Holdings plc (NASDAQ:STX) Q2 2023 Earnings Conference Call January 25, 2023 5:00 PM ET Company Participants Shanye Hudson - SVP, IR and Treasury Dave Mosley - CEO Gianluca Romano - CFO Conference Call Participants Thomas O'Malley - Barclays Erik Woodring - Morgan Stanley Karl Ackerman - BNP Paribas Exane Aaron Rakers - Wells Fargo Jason Park - UBS Sidney Ho - Deutsche Bank Ananda Baruah - Loop Capital Markets Wamsi Mohan - Bank of America Ashley Ellis - Credit Suisse Tristan Gerra - Rober ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ____________________________ FORM 10-Q For the transition period from: to Commission File Number 001-31560 _______________________________________ SEAGATE TECHNOLOGY HOLDINGS PUBLIC LIMITED COMPANY (Exact name of registrant as specified in its charter) _______________________________________ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) Ireland 98-1597419 38/39 Fitzwilliam Square Du ...