Micron: Fiscal 1Q14 Financial Results

(in $ million)	1Q13	1Q14
Revenue	1,834	4,042
Growth		*120%*
Net income (loss)	(275)	358

Micron Technology, Inc. announced results of operations for its first quarter of fiscal 2014, which ended November 28, 2013.

Revenues in the first quarter of fiscal 2014 were $4.04 billion and were 42% higher compared to the fourth quarter of fiscal 2013 and 120% higher compared to the first quarter of fiscal 2013.

GAAP Income and Per Share Data
On a GAAP basis, net income attributable to Micron shareholders was $358 million, or $0.30 per diluted share, compared to net income of $1.71 billion, or $1.51 per diluted share, in the fourth quarter of fiscal 2013 and a net loss of ($275) million, or ($0.27) per diluted share, in the first quarter of fiscal 2013.

Non-GAAP Income and Per Share Data
On a non-GAAP basis, net income attributable to Micron shareholders was $881 million, or $0.77 per diluted share, compared to net income of $317 million, or $0.29 per diluted share, in the fourth quarter of fiscal 2013.

Revenues from sales of DRAM products were 69% higher in the first quarter of fiscal 2014 compared to the fourth quarter of fiscal 2013 due primarily to an increase in sales volume resulting from the acquisition of Elpida.

Revenues from sales of NAND flash products were 8% higher in the first quarter of fiscal 2014 compared to the fourth quarter of fiscal 2013 primarily due to an 11% increase in sales volume offset by a slight decrease in ASPs.

The company’s consolidated gross margin improved to 32% in the first quarter of fiscal 2014 compared to 25% in the fourth quarter of fiscal 2013 primarily due to an increase in volume of products resulting from the acquisition of Elpida and to product mix.

Cash flows from operations for the first quarter of fiscal 2014 were $1.51 billion, while investments in capital expenditures were $669 million. The company ended the first fiscal quarter with cash and marketable investments of $4.41 billion.

Comments

Mark Durcan, CEO:
"For NAND, we are projecting industry supply growth in the low 40% range for calendar 2014. This includes a 10% increase in industry wafer production with the remaining supply growth coming from technology. Micron's total NAND supply growth was below the industry in 2013 but it will be slightly above the industry in 2014, given our DRAM to NAND conversion. This supply forecast compares to the five-year NAND bit demand CAGR in the low-to-mid 40% range implying favorable long-term supply and demand balance."

Ron Foster, CFO:
"On the Trade NAND side, revenue was up approximately 10% as we benefited from increased NAND volumes from Fab 7 in Singapore. Gross margins were in the low-to-mid 30% range, up slightly quarter-over-quarter. Like-for-like market prices were generally flat to slightly down in the quarter, although initial output from Fab 7 is selling in component form at below average margins."
"Trade NAND guidance for Q2 is as follows. Production bit growth of high teens. Quarter to-date ASP down high teens, and cost per bit down mid-teens. The key trends affecting Q2 guidance are; first the continued conversion of Fab 7 to NAND, which achieved wafer output crossover in the first quarter. Also, considered are lower expected ASPs related to seasonal demand and increased production of high density products initially being sold in component form, which typically have a lower average ASP.
"Following fiscal Q2, we expect to see an increased mix of embedded systems sales, including SSDs, which should improve our ASP mix."

Mark Adams, president:
"Our overall NAND business surpassed the $1 billion mark for the first time an 8% quarter-on-quarter increase. Our Trade NAND business achieved revenue growth of roughly 10% quarter-on-quarter with margins up slightly as bit growth was up 17%, driven primarily from our Fab 7 conversion from DRAM to NAND.
"During the quarter, SSDs including component sales to strategic SSD customers represented 48% of our Trade NAND revenue with consumer sales coming in at 30%. We shipped our first 20nm enterprise drive, the M500 DC product to a large OEM in Q1. In addition, we are on track for customer qualifications of 20nm client drive at major OEMs and channel customers in fiscal Q2, and have plan to begin production of 60nm client drive in our fiscal third quarter.
"Outside of solid state storage, we are seeing increasing NAND penetration in the mobile where when packaged behind an MMC controller, it will offer attractive demand growth. In the embedded business, we are seeing growth for NAND, some of which is the NOR replacement option and some of which comes from the development of what I would refer to as industrial solid state applications such as the automotive.
"Revenue in the mobile segment represented 12% of our Trade NAND, while AIM was in aggregate, 10%. On the technology front, we are on track to ramp our 16nm planar NAND this calendar year and we continue to make good progress on 3D NAND which is on track for production samples in late calendar Q1, early Q2."