Micron: Fiscal 4Q13 Financial Results

(in $ million)	4Q12	4Q13	FY12	FY13
Revenue	1,963	2,843	8,234	9,073
*Growth*		45%		*10%*
Net income (loss)	(243)	1,708	(1,032)	1,190

Micron Technology, Inc. announced results of operations for its fourth quarter and 2013 fiscal year, which ended August 29, 2013.

For the fourth quarter, the company had net income attributable to shareholders of $1.71 billion, or $1.51 per diluted share, on net sales of $2.8 billion.

The results for the fourth quarter of fiscal 2013 compare to net income of $43 million, or $0.04 per diluted share, on net sales of $2.3 billion for the third quarter of fiscal 2013, and a net loss of $243 million, or ($0.24) per diluted share, on net sales of $2.0 billion for the fourth quarter of fiscal 2012. For the 2013 fiscal year, the company had net income attributable to shareholders of $1.19 billion, or $1.13 per diluted share, on net sales of $9.1 billion.

Cash flows from operations were $1.8 billion for fiscal 2013.

The results for fiscal 2013 compare to a net loss of $1.03 billion, or ($1.04) per diluted share, on net sales of $8.2 billion for the 2012 fiscal year.

On July 31, 2013, the company completed its acquisition of Elpida Memory, Inc. and Rexchip Electronics Corporation. The company’s results for the fourth quarter of fiscal 2013 include $1,484 million, or $1.31 per diluted share, in purchase accounting gains relating to the acquisition and the results of operations of Elpida for the month of August.

“Micron is executing well on multiple fronts with the successful integration of Elpida and ongoing steady development of advanced memory solutions, including our hybrid memory cube that began sampling with key customers this quarter and our second generation family of PCIe enterprise SSD’s which recently qualified at a major OEM,” said Micron CEO Mark Durcan. “Our product portfolio and systems solutions position us well to compete in the current favorable market environment.”

Revenues from sales of DRAM products in the fourth quarter of fiscal 2013 were 50% higher compared to the third quarter due to a 42% increase in sales volume and a 5% increase in ASPs. Revenues from sales of NAND flash products were 5% higher in the fourth quarter of fiscal 2013 compared to the third quarter primarily due to a 17% increase in sales volume offset by an 11% decrease in ASPs.

The company’s consolidated gross margin improved to 25% in the fourth quarter of fiscal 2013 compared to 24% in the third quarter of fiscal 2013. Gross margins for DRAM benefitted from the improved ASPs. Gross margins for NAND flash products were unchanged as an 11% improvement in manufacturing costs was offset by the decrease in ASPs.

Cash flows from operations for the fourth quarter of fiscal 2013 were $717 million, while investments in capital expenditures were $332 million. The company ended the fourth fiscal quarter with cash and investments of $4.2 billion, which includes $556 million, reflected as current restricted cash, set aside for payment of the first Elpida creditor installment.

Comments

Abstracts the earnings call transcript: Mark Durcan, CEO: "Turning to the NAND business, we're building a large and solid foundation in SSDs, both through the expansion of our own SSD product lines as well as through strategic customer engagement in the space. Micron branded SSDs and sales of strategic SSD customers now consume in aggregate over 60% of our NAND trade bit. We also have a margin driven retail business and are focusing on a growing set of opportunities to expand the high value embedded - expand in the high value embedded applications. "In NAND, we're projecting industry supply this year up in the low 40% range, with next year very similar. The 2014 projection includes about a 10% increase in industry wafer production with our remaining supply growth coming from technology. This supply forecast compares to the five-year NAND demand CAGR of 43%, implying a favorable supply and demand balance." Ronald Foster, CFO: "Trade NAND sales increased 3% compared to the third quarter, which reflects 13% increase in bit sales volumes, offset by a 9% decrease in per bit average selling price. Margin on Trade NAND remained flat compared to the third quarter as the transition to higher density products brought about the offsetting effects of lower cost per part and lower per bit selling prices. NAND bits sold in Micron branded SSD increased 23% in the fourth quarter, driven primarily by growth in the enterprise space as we continued to build out our product portfolio in this key segment. "Looking at our NAND guidance for the first quarter, using quarter to-date selling prices and projected mix for the quarter, Trade NAND ASPs would be down high-single digits with the decline driven by mix of higher density products on advanced technology nodes. Bit costs are expected to be down high-single digits as well, while bit production is expected to be up low to mid-teens as we transition our former tech Singapore fab to NAND production." Mark Adams, president: "Our NAND Solutions Group recorded revenue of $781 million, up 7% when compared to our third quarter. Total NAND gross margins increased slightly in the quarter as we continue to improve our mix. Our NAND ASPs were down 9% quarter-over-quarter, partially driven by an increase in higher density, lower price per gigabyte SSD products and partially driven by early production capacity from our fab seven conversion, ending up in a transactional market such as memory cards and USB devices which generally produce a lower ASP. "Our SSD business is growing significantly faster than the overall SSD market. Micron branded SSD revenue for the year was 76% over 2012. It's worth noting that over 50% of our trade NAND revenue goes to either Micron branded SSDs or our strategic customers who serve the SSD category with Micron's NAND technology. "We continued to migrate our SSD product family to advanced lithography nodes. Our 20nm flash memory technology represented 40% of our client SSD shipments and our 25nm process represented over 80% of our enterprise shipments. Our newly announced M500 based on our 20nm technology is seeing strong acceptance not only in client, but data center applications. "We've also qualified two new enterprise drives at tier-1 OEMs, our P410 flash drive and our P420 PCIe drive. "Our mobile NAND revenue was constrained in the quarter, but gross margins were up mid-single digits compared to Q3."