Western Digital Announces Financial Results for First Quarter Fiscal Year 2020

Western Digital Corp. (Nasdaq: WDC) today reported revenue of $4.0 billion for its first fiscal quarter ended October 4, 2019. The operating loss was $129 million with a net loss of $276 million, or ($0.93) per share. Excluding certain non-GAAP adjustments, the company achieved non-GAAP operating income of $235 million and non-GAAP net income of $101 million, or $0.34 per share.

In the year-ago quarter, the company reported revenue of $5.0 billion, operating income of $686 million and net income of $511 million, or $1.71 per share. Non-GAAP operating income in the year-ago quarter was $1.1 billion and non-GAAP net income was $906 million, or $3.04 per share.  The company's first fiscal quarter of 2020 was a 14-week fiscal quarter, compared to a 13-week fiscal quarter for the year-ago quarter.

The company generated $253 million in cash from operations during the first fiscal quarter of 2020, and ended the quarter with $3.2 billion of total cash and cash equivalents. The company returned $147 million to shareholders through dividends and used $319 million to reduce debt. On August 7, 2019, the company declared a cash dividend of $0.50 per share of its common stock, which was paid to shareholders on October 22, 2019.

"Fiscal year 2020 is off to a good start.  The continued success of our capacity enterprise drives for the data center was the primary driver of the upside we experienced in the fiscal first quarter," said Steve Milligan, chief executive officer, Western Digital. "The overall demand environment remains solid. We continue to believe the flash industry has passed a cyclical trough, with improving trends across our flash product portfolio. With a broad and growing product portfolio, Western Digital remains well positioned to benefit from the long-term drivers of the growth and value of data."

(1) Non-GAAP gross margin guidance excludes amortization of acquired intangible assets, stock-based compensation expense, and charges related to cost saving initiatives totaling approximately $170 million to $190 million. The company's non-GAAP operating expenses guidance excludes amortization of acquired intangible assets; stock-based compensation expense; employee termination, asset impairment and other charges; and charges related to cost saving initiatives totaling approximately $120 million to $140 million. The company's non-GAAP interest and other expense guidance excludes approximately $5 million of convertible debt activity. In the aggregate, non-GAAP diluted earnings per share guidance excludes these items totaling $295 million to $335 million. The timing and amount of these charges excluded from non-GAAP gross margin, non-GAAP operating expenses, non-GAAP interest and other expense, net and non-GAAP diluted earnings per share cannot be further allocated or quantified with certainty. Additionally, the timing and amount of additional charges the company excludes from its non-GAAP tax rate and non-GAAP diluted earnings per share are dependent on the timing and determination of certain actions and cannot be reasonably predicted. Accordingly, full reconciliations of non-GAAP gross margin, non-GAAP operating expenses, non-GAAP interest and other expense, non-GAAP tax rate and non-GAAP diluted earnings per share to the most directly comparable GAAP financial measures (gross margin, operating expenses, interest and other expense, tax rate and diluted earnings per share, respectively) are not available without unreasonable effort.

(2) The non-GAAP tax rates provided are based on a percentage of non-GAAP pre-tax income.

Investor Communications

The investment community conference call to discuss these results and the company's guidance for the first fiscal quarter of 2020 will be broadcast live online today at 1:30 p.m. Pacific/4:30 p.m. Eastern. The live and archived conference call/webcast and the earnings presentation can be accessed online at investor.wdc.com.

About Western Digital

Western Digital, a leader in data infrastructure, creates environments for data to thrive. The company is driving the innovation needed to help customers capture, preserve, access and transform an ever-increasing diversity of data. Everywhere data lives, from advanced data centers to mobile sensors to personal devices, the company's industry-leading solutions deliver the possibilities of data. Western Digital data-centric solutions are comprised of the Western Digital®, G-Technology™, SanDisk® and WD® brands. Financial and investor information is available on the company's Investor Relations website at investor.wdc.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements concerning the company's preliminary financial results for its first fiscal quarter ended October 4, 2019; the company's financial guidance for the second fiscal quarter of 2020 and expectations for financial results in fiscal year 2020; expectations regarding market conditions; the company's product portfolio; and market positioning. These forward-looking statements are based on management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. The preliminary financial results for the company's first fiscal quarter ended October 4, 2019 included in this press release represent the most current information available to management. The company's actual results when disclosed in its Form 10-Q may differ from these preliminary results as a result of the completion of the company's financial closing procedures; final adjustments; completion of the review by the company's independent registered accounting firm; and other developments that may arise between now and the disclosure of the final results. Other risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements include: volatility in global economic conditions; business conditions and growth in the storage ecosystem; impact of restructuring activities and cost saving initiatives; impact of competitive products and pricing; market acceptance and cost of commodity materials and specialized product components; actions by competitors; unexpected advances in competing technologies; our development and introduction of products based on new technologies and expansion into new data storage markets; risks associated with acquisitions, mergers and joint ventures; difficulties or delays in manufacturing; the outcome of legal proceedings; and other risks and uncertainties listed in the company's filings with the Securities and Exchange Commission (the "SEC"), including the company's Form 10-K filed with the SEC on August 27, 2019, to which your attention is directed. You should not place undue reliance on these forward-looking statements, which speak only as of the date hereof, and the company undertakes no obligation to update these forward-looking statements to reflect new information or events.

First Quarter Fiscal 2020 Press Release with Financial Tables and Guidance Summary

First Quarter Fiscal 2020 Earnings Presentation

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Western Digital, the Western Digital logo, G-Technology, SanDisk and WD are registered trademarks or trademarks of Western Digital Corporation or its affiliates in the US and/or other countries.