Micron: Fiscal 4Q15 Financial Results

(in $ million)	4Q14	4Q15	FY14	FY15
Revenue	4,227	3,600	16,358	16,192
*Growth*		-15%		*-1%*
Net income (loss)	1,150	471	3,045	2,899

Micron Technology, Inc. announced results of operations for its fourth quarter and 2015 fiscal year, which ended September 3, 2015.

Revenues for the fourth quarter of fiscal 2015 were $3.60 billion and were 7% lower compared to the third quarter of fiscal 2015 and 15% lower compared to the fourth quarter of fiscal 2014.

Revenues for fiscal year 2015 were $16.19 billion and net income attributable to Micron shareholders was $2.90 billion, or $2.47 per diluted share.

Cash flows from operations were $5.21 billion for fiscal year 2015.

“We are pleased to report FY15 results that include revenue of $16.2 billion, $2.72 in non-GAAP earnings per share, and $2.3 billion in dilution management activities, including convert retirements and share repurchases,” stated D. Mark Durcan, CEO. “While fourth quarter results were impacted by continued weakness in the PC sector, we believe that memory industry fundamentals remain favorable over the long term.”

GAAP Income and Per Share Data – On a GAAP basis, net income attributable to Micron shareholders for the fourth quarter of fiscal 2015 was $471 million, or $0.42 per diluted share, compared to net income of $491 million, or $0.42 per diluted share, for the third quarter of fiscal 2015 and net income of $1.15 billion, or $0.96 per diluted share, for the fourth quarter of fiscal 2014.

Non-GAAP Income and Per Share Data – On a non-GAAP) basis, net income attributable to Micron shareholders for the fourth quarter of fiscal 2015 was $399 million, or $0.37 per diluted share, compared to net income of $620 million, or $0.54 per diluted share, for the third quarter of fiscal 2015. For a reconciliation of GAAP to non-GAAP results, see the accompanying financial tables and footnotes.

Revenues for the fourth quarter of fiscal 2015 were 7% lower compared to the third quarter of fiscal 2015 primarily due to a 7% decline in DRAM ASPs and relatively flat DRAM sales volume. Non-volatile trade revenues for the fourth quarter of fiscal 2015 also declined 7% compared to the third quarter primarily as a result of lower sales volume. The company’s overall consolidated gross margin of 27% for the fourth quarter of fiscal 2015 was 4% lower compared to the third quarter of fiscal 2015 primarily due to lower ASPs for DRAM.

Cash flows from operations were $1.03 billion for the fourth quarter of fiscal 2015, while investments in capital expenditures were $1.85 billion. For fiscal year 2015, cash flows from operations were $5.21 billion and investments in capital expenditures were $4.12 billion. The company ended the fourth quarter of fiscal 2015 with cash and marketable investments of $5.63 billion.

Comments

Mark Durcan, CEO:
"Demand for NAND is relatively stable. We are encouraged by customer response to early sample of our 16-nanometer TLC products, as well as a significant customer interest in our early 3D NAND product. We expect the majority of our NAND production on 3D by late calendar 2016, which should put us in a stronger competitive position.
"We expect the demand environment to stabilize and improve as we move through calendar 2016. In general, we expect the industry supply and demand for both DRAM and NAND to be relatively balanced in 2016."

Mark Adams, president:
"Moving on to our non-volatile memory business, trade revenue represented 32% of total revenue in fiscal Q4. Performance was consistent with our guidance highlighted by stable gross margins. As a percent of trade, Non-Volatile memory revenues in fiscal Q4, consumer represented about 40%; that includes our cards, USB, and components. Mobile included in multi chip packages was in the low 20%. SSDs were in the mid-teens, and Automotive and Industrial mid-markets and other embedded segments were in mid-teens as well, while 3D cross point technology was immaterial. These percentages were generally consistent with the prior quarter.
"Positive mix effects, including growth and enterprise SSDs and a reduction of our spot market more transactional type businesses led to stable ASPs and gross margins for our non-volatile memory business.
"Revenues in Micron’s storage business unit were $848 million in fiscal Q4, down 6% sequentially. SBU'’s gross margins were flat quarter over quarter. Operating margins were negative, reflecting our continued investment in development of next generation Flash-storage technologies.
"We continue to make progress in TLC as well during Q4, which will help us better serve the lower end value segments in NAND. Our 16-nanometer planar TLC NAND was qualified with several customers. We began shipping components in the quarter and will begin shipping consumer SSDs based on TLC in the current quarter.
"An important milestone for our 3D NAND progress is beginning tool installation in the Singapore Fab by the spring of 2016 and we are on track to meet that timeline."

Ernie Maddock, CFO:
"On the trade NAND non-volatile side revenue decreased approximately 7% in the fourth quarter, primarily as a result of lower bit sales volume. Gross margin was relatively flat compared to the prior quarter in the low to mid 20% range. Both bit cost and selling prices decreased slightly for the quarter.
"For Micron’s first fiscal quarter 2016, our non-GAAP guidance is as follows: consolidated revenue in the range of $3.35 billion to $3.6 billion; gross margin in the range of 24.5% to 27%; operating expenses between $580 million and $620 million and operating income between $260 million and $320 million with EPS between $0.20 and $0.26 per diluted share based on an estimate of 1.1 billion diluted shares and a tax rate in the mid-teens."