SanDisk: Fiscal 4Q13 Financial Results

(in $ million)	4Q13	4Q14	FY13	FY14
Revenue	1,541	1,728	5,053	6,170
*Growth*		12%		*22%*
Net income (loss)	213.5	337.8	417.4	1,043

SanDisk Corporation announced results for the fourth quarter and fiscal year ended December 29, 2013.

Fourth quarter revenue of $1.73 billion increased 12% on a year-over-year basis and increased 6% sequentially.

Total revenue for fiscal 2013 of $6.17 billion increased 22% from $5.05 billion in fiscal 2012.

On a GAAP basis, fourth quarter net income was $338 million, or $1.45 per diluted share, compared to net income of $214 million, or $0.87 per diluted share, in the fourth quarter of fiscal 2012 and $277 million, or $1.18 per diluted share, in the third quarter of fiscal 2013. Net income for fiscal 2013 was $1.04 billion, or $4.34 per diluted share, compared to $417 million, or $1.70 per diluted share in fiscal 2012.

On a non-GAAP basis, fourth quarter net income was $390 million, or $1.71 per diluted share, compared to net income of $257 million, or $1.05 per diluted share, in the fourth quarter of fiscal 2012 and net income of $371 million, or $1.59 per diluted share, in the third quarter of fiscal 2013. Net income for fiscal 2013 was $1.27 billion, or $5.31 per diluted share, compared to $582 million, or $2.38 per diluted share in fiscal 2012. For reconciliation of non-GAAP to GAAP results, see accompanying financial tables and footnotes.

“We delivered outstanding results in the fourth quarter and full year 2013 driven by strong execution and continued favorable portfolio mix shift,” said Sanjay Mehrotra, president and CEO, SanDisk. “Our SSD product revenue set another quarterly record and represented 19% of our annual revenue, and we also set a record for annual retail product revenue. SanDisk is enabling the next generation of mobile and enterprise storage solutions, and we are excited about our prospects for 2014.“

Highlights:

Fourth quarter and fiscal 2013 cash flow from operations set quarterly and annual records of $617 million and $1.86 billion, respectively.
SanDisk issued $1.50 billion of 0.5% senior convertible notes during the fourth quarter and repurchased a total of $150 million of stock in conjunction with the offering.
SanDisk announced its first-quarter dividend of $0.225 per share of common stock, payable on February 24, 2014 to shareholders of record as of the close of business on February 3, 2014.

Comments

Sanjay Mehrotra, president and CEO:
"Our fourth quarter client and enterprise SSD sales increased sequentially to account for 21% of total revenue. Our enterprise SSDs set a new revenue record in the fourth quarter with strong customer adoption of our lightning-fast drive as well as a full quarter of enterprise SSD revenue from our SMART Storage Systems acquisition. Business momentum for the SMART Storage Systems based solution is rising with SATA and fast SSDs achieving several new design wins and many others in the pipeline at traditional storage and server OEMs and at hyper scale accounts.
"I am extremely pleased with our execution in growing our SSD revenues, and we continue to target achieving 25% of our 2014 revenue from enterprise and end-client SSDs.
"Our expectation for the production ramp of 3D NAND technology in 2016 remains unchanged.
"In terms of supply growth, we continue to estimate the industry bit growth in 2014 to be approximately 40% the same as our estimate of the 2013 industry bit growth. SanDisk’s supply bit growth in 2013 was 18% and we estimate our 2014 supply bit growth range to be between 25% and 35% consistent with earlier projections."

Judy Bruner, CFO:
"We are proud to have produced 22% 2013 revenue growth with 22% gigabyte growth and zero change in our average selling price per gigabyte.
"Our fourth quarter revenue of 1.73 billion grew 12% year-over-year and was comprised of gigabyte growth of 13% and price decline of 2%. On a sequential basis our gigabyte growth was 12% and our price decline was 6%. The sequential price decline in Q4 reflected in part a seasonally higher mix of retail sales which carry a lower average price per gigabyte.
"Looking across all channels within our 2013 revenue of 6.17 billion, our embedded revenue grew 37%, removable product revenue declined 2% and SSD revenue grew 170%.
"For the first quarter, we expect to experience typical seasonality resulting in lower sequential revenue. Our first quarter revenue estimate is 1.45 billion to 1.525 billion and our full year estimate is 6.4 billion to 6.8 billion."