MU - Earnings call transcript Q1 2019 | Micron Technology, Inc.

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Operator

Good afternoon. My name is Brian and I'll be your conference facilitator today. At this time, I would like to welcome everyone to Micron's First Quarter 2019 Financial Release Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-answer period. you. Thank Instructions] [Operator my Farhan turn Relations. Ahmad, now to floor your host, Head pleasure is the to over It of Investor

may conference. begin You your

Farhan Ahmad

quarter and financial you welcome Micron first Thank to conference fiscal call. Technology's XXXX

with call from Dave slides, approximately is audio at and XX Financial and Chief in our length. website the Sanjay This investors.micron.com. Mehrotra, me On Zinsner, will call and webcast Investor President Today's Relations also Officer. minutes being CEO are be including today call,

the contains ago. GAAP website otherwise call capped our the press financial release will be while addition, In reconciliation table. on to dilution unless short a earnings measures with can convertible financial found Today's results debt of filed financial specified. A basis, of on and discussion non-GAAP along a our be presented non-GAAP website

the you most -- conferences be the reminder, monitor a also company, can available on be current encourage Twitter, us our attending. As call this We @MicronTech. we information prepared website from our replay the will at for on you the -- that and today. information will webcast also will follow throughout website on quarter We to can various later financial on remarks micron.com including

materially our SEC, our a reminder, We differ recent statements. documents discussion refer from matters today actual the statements affect that filed uncertainties and XX-K specifically, risks may future most today. and you a are be subject the risks XX-Q to of to Form with include will results. Form for we made These discussing As the we forward-looking to statements cause forward-looking that results may

can't cannot or forward-looking levels future that statements guarantee believe the in of we expectations activity, are reasonable, the we -- Although, performance, achievements. results, reflected

statements of actual Sanjay. no under update call to these I'll today's after are We date over results. now to to conform the the forward-looking turn to any statements duty

Sanjay Mehrotra

on the adjustments our everyone. delivered CPU despite our afternoon program. buyback sheet, $XX first customers, executing We Good headwinds several quarter, and improved billion further strong In balance inventory demonstrated from and at solid Farhan. industry-wide execution, began share the you, profitability Thank we shortages. revenue

Our in business as results businesses in diversifying also evidenced the industrial our further by sales automotive, quarter. in mobile, and success reflect record our our

enter we our from we customers. weakening calendar seeing are As XXXX, demand

As taking actions, in our highlights start I'll after items XXXX later with a our call the I'll execution a NAND meaningful will both first including materially reviewing result, on plan, details we bit provide reduce DRAM quarter. supply are decisive the in our reduction that fiscal progress. the CapEx more and growth. in of these

focused benefits and our of We strengthen our improving profitable structure growth. which are on cost increasing and provide of in both drive to immediate long term ability mix high-value Micron's the portfolio, solutions

Our three the have the cost and industry over years. meaningfully reductions last in outpaced DRAM NAND

shipments deliver technology DRAM advanced referenced even year-over-year nanometer taking in gives on nanometer achieved XX we the cost we of I that In quarter, progress which into XY revenue Our fiscal declines XXXX, and DRAM crossover and of will healthy supply after confidence CapEx us shipments, first changes, NAND started and the earlier. products. account in

to the techniques. Our and progress highest excellent in we leadership high-value shipping lead power also We're introduced DRAM, for which products. portfolio nanometer SSDs started market. advanced leverages In on offers introduced first quarter. investing QLC offerings, quarter, QLC XY our for solutions lithography we In of the for the on NAND have We mobile differentiated remain technology, XY by low are XX-layer our on our NAND, density ramp product our and enterprise remain ahead XX-layer increasing and QLC XX-gigabit In fiscal third we plan. Yields production ahead with and materials and both track is consumer of SATA and meaningful available making effective VME schedule, our of cost year our we the XZ the on focused in products SSDs. DRAM in customers. which continue mix

The NAND quarter, by despite this toward SSDs, gaining solutions oversupply. strong margin market our points now market higher products, increases share which We one The according profit percentage this continues number above which as XX%, demand about driven NAND, product high-value managed better NAND XX% of high-value our stability. move was and overall is helped us important high-value In industry to milestone to for densities. We the represent gross SATA position strength three solutions our strengthened gross NAND of mix of of opportunity sequentially an enterprise improving margins our share for reports. are in maintain provides us. seeing industry bits, over solutions

In the addition earlier, VME and we the industry's introduced consumer NVMe to quarter. SSD in first terabyte the SSD, one automotive also first QLC TLC mentioned

enterprise, We are calendar course of introduce portfolio XXXX. working through to markets targeting NVMe SSDs client, and to cloud expand further our and product the plan

multiple mobile In managed high-value nearly of high-performance Looking ahead, Fiscal resume tripling will opportunity where to continue opportunity share we believe NVMe. the our significant portfolio year transition products, gains be XXXX. the fiscal in our share. first we shift In increase will in a from shipped for our solutions, to SSD SATA quarter, UFS and we the to of by SSD bit expect we fiscal solutions to high-capacity, expect NAND XXXX NAND the shipments be have driven will SSD we market meantime, growth quarter-over-quarter. our XXXX our

XXXX continue developing towards of using solutions plan We discussed. and make XPoint calendar differentiated XD end products high-value in progress introduce previously technology to our as good the to

we opportunities to Lehi, in to in IMFT XXXX. announcement Intel's intend in our in our option early acquire Facility that reflected calendar in interest October the is Our exercise Utah, the ahead conviction

I Now, set turning first records quarter. margins, to fiscal margins first operating start and in end we revenue, with where markets, for mobile, gross will the

our managed which NAND we driving from In share strong is with addition to benefited seasonal wins several gains. product sales, major customers,

with portfolio, in and our mobile up was shipped in sequentially We more and XX% do density a XX% growth NAND DRAM per demand our to are elasticity seeing than also growth year-on-year Content strong XXX% this on year-on-year. average unit well MCP over basis. over within market density in continues

content smartphone. mobile the artificial broader our expect implementation. XG data a driven record-setting primarily markets, due We elements to number while in at of increasing reduced inventory center fourth These saw average to adjustments devices, coming of customers. readies use cameras and revenue fiscal intelligence, by quarter, for will growth continue in industry the off become the pervasive, In we

headwind persist We for couple will this of quarters. expect a

believe two customers demand cloud period early We market. digestion are through strong are go over years. strong in very of the we and still trends remain long-term a We following end some growth growth innings cloud this the seeing last in customer

be data now Revenue XX-gigabyte includes our to roadmap. XPoint our across center grew deep Higher quarter-over-quarter. Our from engagement our with demand product collaboration density high-density DRAM DRAM products market. XD XX% stronger customers the and on than more are continues modules seeing

continue couple customers created expect We our a closely ramp cards memory are and focused XX-gigabit on crypto-related GDDRX third than in working DRAM, gaming eight inventories our new DRAM revenue the and of XX-gigabit expect fall-off upcoming we fiscal start from industry demand, sampling our to our quarter. by Higher more to are the in quarters. and for this in to volume segment. started which high-performance with key graphics, headwinds, normal we transition In

in enablement interest segments for broadening see we and data automotive. high like in performance center ahead, graphics AI memory Looking

Our GDDRX segments. these creating is new product opportunities leadership already in in

by expansion a cycle Turning industrial sequential requiring in for revenue life the in-vehicle Strength markets automotive driver we with systems. and to demand first markets quarter, long fiscal our driven in continues infotainment margins. in be advanced increasing assistance auto products, and in record to had gross

products. announced and with BMW growing next-generation As a strong in and automotive to a to result, for another This leadership point our In applications. we November, define of demand and collaboration we criticality of memory leading-edge automotive generation the solutions. automotive of storage is see Micron's proof latest automotive validate

Turning prices, and and than high bringing end weakening levels to demand our their this is our the weakened period caught first of unit industry quarter. slow had the these mentioned limited. Since second are down demand some DRAM we Due at carry of visibility DRAM is demand, DRAM believe course supply as to quarter, customers of up start is a rising a inventory demand outlook, in to Smartphone with levels. higher our seasonally through particularly decided inventory trend customers the near-term DRAM fiscal as fiscal weaken, lengthy mobile. of also normal what for has to continued our continuing I've quarter previously,

Lastly, we are to impact shortages. of see the CPU continuing

at half of market expectation DRAM after XXXX our for announced supply XXXX. DRAM XX% growth of calendar likely weaker industrial, segments the the our XXXX. across in compute adjustment above cuts CapEx factoring growth in bit now approximately demand will our We While period tracking publicly client demand healthy, in inventory recent growth compared in view and the DRAM is with and the approximately industry, demand of persist through first is enterprise, cloud, in demand Even calendar that customers industry will to contribute this XX%. conditions expect calendar like prior

sequentially basis to weaker on bit DRAM plan bit our of fiscal shows dynamic, quarter. current but in year adjustments include output Barring XX% to decisive our to well grow our down conditions, our Based quarter that our significantly quarter be fiscal significant shipments growth with the supply/demand weak to expect long-term XXXX rate. second actions we a prior year-over-year on lower underway. in approximately growth. are capital consistent and growth our to memory as estimates, around for This industry DRAM more reduction sequentially, demand a a bit this DRAM we will third the importantly our flat for actions bit are customers for to are our calendar below Given taking likely demand demand versus the well These XX% macroeconomic expenditures fiscal decline inventory XXXX. by

growth announced Even XXXX, calendar exceed smartphone taking year. publicly supply expect CPU in growth weaker several calendar recently the and last in CapEx with bit to unit high expect levels are into of successful client calendar NAND be the over the fiscal suppliers for improved after planar contribute the resulted performance. levels manufacturers have we of better in transition the XD to while NAND to elevated we in industry has beyond an enter at second The QX, customers ramp should half which XXXX, NAND and NAND is picture, inventory. currently industry that reductions coming a supply industry will We from demand the In demand. as oversupply to end assessment improved shape, in calendar demand healthier XXXX across environment due ongoing of quarters. NAND, to account NAND the the impacts NAND growth approximately industry appear industry financial inventory shortages XX% market alongside Looking XX-layer demand our compute

We are, approximately expect to reduced therefore, demand line bit NAND from lowering our NAND bit prior expectations meaningfully reducing and expect be We industry at and our our calendar XXXX further XXXX NAND our XX%. fiscal CapEx. in with the growth growth XXXX planned to growth now shipment bit supply be

to of demand the in the We mobile, second and in demand kicks also accelerate expect markets. half for year elasticity calendar as client NAND the enterprise,

cost NAND Given our manage carry will we leading-edge necessary on as structure environment, pricing DRAM, and optimize inventory market attractive our and profitability. to in this

on an decisive are robust manage to fashion in with return a investments. supply taking towards action side delivering eye a our on We the prudent business our

on to priorities first while significantly quarter. for investing for XXXX financial opportunities Dave flow continue the to details second to free turn to us delivering we CapEx of in profitability and I'll healthy will capitalize over and strategic strong actions now our it reduce and fiscal position Micron our exciting cash allow fiscal provide company. as quarter guidance the Our our the growth

David Zinsner

strong Thanks double-digit fiscal earnings per gross first share. profits, results Sanjay. revenue, Micron growth delivered in including quarter, our in and year-over-year

represented up year billion, our to challenging, healthy was cash from taken profitability graphics, and that Total adjustments net and XX% more fourth the financial quantities total markets. remains mobile, fiscal fiscal shipment year-over-year high-value reaching automotive Trade with quarter. While increase quarter, basis, and DRAM down DRAM XX% fiscal first XX% at structure and of our our customers NAND was first Offsetting revenue year-over-year improved to high the DRAM markets. position XX% in key declined record cost solutions declined improve by near-term mix represented quarter. in X% flat. become inventory quarter. has in percent the ASPs On and the company revenue will declines Trade while with revenue cloud, fiscal of X% liquidity we strong. revenue remains an the total record a total compared ensure quarter-over-quarter. were revenue impacted the target from profile increased enterprise delivered quarter our headwinds, our $X.X industrial, prior revenue adversely revenue NAND XX% in levels. quarter. Revenue from outlook and single-digits and relatively of these the the position Micron's the X% prior blended company increased prior first actions Moreover,

shipment percent to percent Our the overall NAND the low mid-teens in low quantities quarter. ASP and the in compared to declined prior mid-teens increased to

to growth at revenue turning down graphics, record XX% our enterprise the inventory business low-power several ongoing -- continued fiscal this sales quarter-on-quarter. businesses finally, Revenue Now, up NOR first year-on-year for cloud billion, weaker of XX% leading revenue and and The impact Embedded billion, The of continue and XX% SATA of driven and a driven sequential share up business revenue And SSDs. decline networking by customers. from and of increased customers adjustments billion, record gains through revenue, compute our unit the DRAM and was was The transition strong with impact million delivered business $X.X of XXXX. by The up of unit. and the quarter-on-quarter. SBU, or revenue the down DRAM business revenue by driven will from to The and trends and in business quarter-on-quarter. year-over-year had by $XXX was Revenue business decline X% revenue our automotive driven to in our handset the unit, XX% with $X.X some quarter in industrial products. mobile was turning unit XX% pricing business mobile quarter. X% by was sequential and NVMe managed of markets. our storage was offerings the prior calendar $X.X quarter year-on-year strength XX% unit strong year-on-year transition NAND the

a Our for strategy points the basis includes and is XD XXX mobile also to move from revenue costs. to from solutions margin in components gross from first down prior prior XPoint XX%, points fiscal consolidated contributing up The the basis SBU. a SBU basis underutilization bits to for high-value This the in decline XXX XXX year point was from impact quarter. quarter approximately

China During fiscal first margin. months, XX trade we supply our the chain to mitigate our less than last of successfully tariffs points to global basis leveraged gross few impact to consolidated the the quarter

We tariffs impact that impacted from than to guidance, will prequalification mainly our with mitigate expenses slightly were the of by in any million, associated January be above additional We expenses introductions. starting of expect approximately able to product to XXXX. expected tariffs XX% due trade product categories. Micron believe to new higher Operating directly not be $XXX expansion

of and between conclusion R&D approximately as joint $XX this the reduce come to forward, around our million. share the of work fiscal naturally Looking end. cost to was Intel's first Intel end development a the with an fiscal joint comes year; quarter, sharing companies R&D In will the expenses

the future high-value increase quarters combination as continue due as the that contributions expect R&D solutions to portfolio. well and will our Intel coming R&D technologies declining in of expenses to these across investments increased from in our We

fiscal to three We profitability from fourth the This in strong representing up operating down income quarter percentage revenue. fiscal year-over-year continue points with first percentage of XX% the and three of points $X.X margin drive is billion, quarter.

ago down capital commenced year about prior We shares up and that a quarter XX%. in representing the year rate several approximately we our mentioned, program As years the $X.XX, our structurally earnings quarter per in over $X.XX in common has have to quarter. outstanding. from from quarter billion XX% tax the rate fiscal first for prior totaled expect reduction shares of or million $X.X XX the margins. first previously quarter be was fiscal XXXX of return X.X% Non-GAAP share made in first improvements fiscal in Micron The tax of resulted with the fiscal around repurchase higher $X.XX the stock, and the the of

billion to cash fiscal our as continue at program We make stock of our free flows our we ongoing expect second by on $XX with in active remain the repurchase to to shareholders. least progress buybacks quarter, XX% returning

flows was deployed quarter's $X.X restricted flow with generated in cash, outlay cash Capital representing we from we of the and first position in billion, of billion, about repurchase for with the fiscal the prior the free the record and up from Even and quarter, quarter, fiscal billion net XX% repurchases, year cash share to quarter the $X.X in Turning third-party the our quarter $X.X billion from billion $X.X and billion down ago marketable of a In $X.X $XXX in approximately in flow cash approximately ended from XX% operations, revenue. capital $XXX $X.X million spending, approximately quarter. cash program. share the of was investments, in cash up spending, free contributions fiscal We first quarter. towards cash $X.X prior billion million substantial approximately net our debt.

our meaningfully fiscal Due fiscal to position context second capital expect excellent second our in deleveraging scheduled by liquidity While in million NAND I'd put bit to environment, and completed of further be down DRAM. we approximately $XXX for the returns like our for demand largely of sequential activities shipments other program. and provide reduced $XXX to our balance quarter debt weaker flow, the robust execute note an convertible redemptions cash in our million us quarter through on balance Prior to Overall, outstanding outlook. issuing and year our solid sheet, the some strong both payments. XXXX, to quarter fiscal guidance, we settlement we

$X.XX to of front CapEx equipment At flexible to the and guidance fiscal to midpoint, outlook, $X.X second CapEx XXXX. for the a remain our prior are capital near-term reduction With fiscal respond range lowering quarter from $X year-on-year. a in spending plans billion our mind, guidance this represents non-GAAP market with our to billion follows. down we billion We'll is end for weaker the Given to conditions. as continue now that is our

$X.X be We expected range of plus $XX expect to to expenses million, in in be margins the billion, range XX%. gross XX% million. or the billion revenue minus to to be are Operating of $X.X to $XXX and

headcount, on longer of holiday OpEx including spending. implementing and slowdowns, As by expect across actively EPS diluted minus schedule on a X.XX managing growth controls we to investments, Based execute fully company, plus closing, we're a shares, approximately $X.XX, work to controls foundation. Micron expense continues the be in reductions In on discretionary results billion performance solid we term share tighter on stronger or $X.XX. count financial deliver

We fiscal profile, portfolio, record progress program, capital with our of the cash financial cost at product the initiatives and of our all are a billion first net end on and quarter. including structure liquidity our position making key solutions high-value return of $X.X

near-term is transition challenging, history healthy, to spending While we remains strongest market company's no to doubt to position and are the manage There next-generation are in remarks. appropriate steps the now concluding for Micron over and profitability, order as I'll cash some in production conditions we in and products. call flows. turn taking Sanjay financial deliver the to technologies

Sanjay Mehrotra

you, Thank Dave.

revenue the profitability we the for heels end we market do of conditions. XXXX Micron period calendar we weaker entering of and both a and industry, are While believe on unprecedented

demand the our to environment. plans adapt changing to prudent are We actions taking manufacturing

cost and controls, economy that as well the are long-term Memory is in While value we portfolio storage the of added ingredients strengthening are data innovation. of to we have value virtual competitiveness this and and our is a essential continuing to our high-value it also technology solutions. cycle as expense by and created growth become implementing driving invest

to and stronger moderating this environment solid results over be is and We in the more a the We our continue will ahead. ever the structurally of better have I our is balance look past industry and Micron win drivers capability. memory with our sharing that XXXX supply profitability to several diversified growth positioned the than before structural forward made to strong demand to year model improvements believe believe with we sheet quarters in years. operating

open for now will questions. We

Operator

you, UBS. [Operator will question first Thank come Instructions] our with sir. Timothy And Arcuri from

Your open. line is now

Tim Arcuri

scale if in Thank you. inventory It at Sanjay, you sounds aggregate months. I wondering your big was help could quantify its two like maybe customers. hyper the

that So, I'm if you Thank with you. wondering help number. can

Sanjay Mehrotra

is some be mobile some related be improved the we'll just all calendar near-term impacting that stronger first an is So, levels outlook. expect corrected, end market, the primarily of inventory inventory as longer -- some the course, year. strong, going well as cloud, near-term air seasonal, it from year we the the for markets, indicating of our of through segments to demand level do tends graphics will with continue requirements compared markets inventory, needing terms first We're And is adjustments as that more half of the the in enterprise, varies through of requirements. environment and cuts, as well continue system certainly, carrying half our compared optimism And customers customers second of end in And weak that quarters of those be as customer the and customer to demand, of the mobile of seasonally in the at an to our second keep and and, year, as through couple take second of the have higher ultimately. long-term it as customers demand trends these for storage effect will to to work high be our through our in of to we to that demand mind here system assessment stronger And the inventory well trends as this term that our work customers the in adjustments in work meantime, half customers are half visibility end entirely smartphones we half the year. of industry, of believe. their especially, various including year, inventory the to inventory of the more the by and understanding towards of the to on memory just are our demand that adjustments come pocket the client, supply those

Tim Arcuri

for that. then just a Dave. I you And guess quick Thank as follow-up,

I maybe for you surprise that what guidance and both Or said, the bit the cutting are think NAND are Thank through for Can down, means to think you you DRAM. Are that ship going of out So, inventories? wondering, I utilization? of shipments walk sort the meaningfully in I'm inventory? you. us that? you

David Zinsner

our are and we both NAND. for DRAM So, reducing production

DRAM we're year Sanjay from XX% approximately bringing As calendar indicated, a perspective, bit supply growth in down to XXXX.

For ship the for and about to would we down think NAND, that indicate meaningfully we're bringing production also NAND did is demand we close that we XX%. and demand

that we're This to days. next be. increasing the of where XXX low very down long-term, So, comfortable that the -- sheet. with it time, those putting no and numbers want be through of part it's with to There go with But get I it's years aligned the days, will I'm I'm do and of course, on balance time aligned. first around up for will demand some cost up think had over we'll there likely obviously, as that. XXX very very obsolescence, it is risk again, again -- have quarter; product the more we'll comfortable we more adjust we inventory very is ultimately have supply then, where quarter, we inventory days it of we period periods as In

Tim Arcuri

Thank you, Dave.

Operator

Pitzer our question of Credit from And the will line John Suisse. you. come with next Thank

now is line open. Your

John Pitzer

levels or me think the for kind Thanks relative kind move we gains, for guys. we of you does similar burdened million what OpEx the Dave, at saw Intel? this OpEx $XXX should of afternoon OpEx million this shared the as is we And does Because sort guidance at that the $XX good with that than the XXXX $X plus per in a billion in $XXX quarter from revenue correction? about XXXX, to above this Analyst summer, sort operational ask letting quarter you about in just XXXX, reflect, February minus now Day, with past fully away million, of per more as in and question. fit OpEx the guide? of talked what about quarter back efficiency about $XXX of cost Yes, of it's to relative saw million, how

David Zinsner

question. good Yes,

to We did second guide burdened. through R&D It fiscal quarter, the of million the the a but the of million minus had about little less course year or in for first in quarter expenses. will related phase Intel's that's over we probably So, kind not plus of $XX contribution -- second certainly benefit down. bit $XXX be That's the in OpEx of $XX the quarter, will million. fully rest

certainly the So, that our we the second This sort as side. elevate are just closely, discretionary expenses side on the long-term while and mentioned, certainly don't an and Sanjay necessary prudently investments impact are we the still very will way, product any and of our the monitoring fourth event. we strategy managing in we're some the want making reducing is, pocket, taking to to technology near-term relative headcount of third quarter for air -- terms we also, not OpEx in and And spending quarter. are steps in

a the you at was of It's margin. So, get of take gave midpoint I operating we plus of number, midpoint relative kind on OpEx. point kind what if quarter would guidance and first OpEx go you'll like, bit. XX% the the number, the revenue the up the will earnings if little with of revenue to the the likely the fair you say, or a second guidance even quarter look guidance for

kind company; So, trying obviously. a number good that my It's is aspirationally to of we get really a previous to. were number in of,

in terms driving We and have it think solutions operating high-value of mix at both number. Analyst improvements I And competitiveness, more terms the So, it's the achieved we $X still we the margin make on billion that improving of to Day. think of operation cost a very side. would we good our we do said in -- work the reflects towards fact back-end that front-end the on the

we committed that come, good and about is there is that. there billion more we $X So, feel very to another

John Pitzer

puts sort the those short-lived build the follow-up us of then be strategic And would would to you you opposed trying through view reflection bits into can as before Is too into will inventory the risky? takes inventory think my And sort what that and to out Sanjay, as of that of just couple take need to walk over? quarters? see your you a and quarter intangible building marketplace of for February this elasticity relatively of was this let let

Sanjay Mehrotra

DRAM our the both think inventory, as NAND structure on I well as So, our side. cost on very is good,

over in And definitely over, manage pricing profitability, as has primary that first necessary. of inventory prepared be kick-in carry our DRAM, inventory demand with is we we'll accordingly customers environment inventory occur; NAND absolutely that so consumption to in the focus, the and manage will will In compared be terms supply our our to compared half. If overall in demand cuts -- will driving to carried the it we are will with elasticity. because to second half which return managing stronger

on requirements as focus remain also with time-to-time a opportunities. of a manage course, terms of will the inventory demand business using aligned be that of as our lever as well. our lever be our for manage the growth inventory be the to of use profitability of CAGR, the to and we'll from course customers' certainly, to to as also And manage terms in and, our output And CAGR, company. in necessary really ultimately half of will capitalize we use profitability that second inventory So, best prepared,

John Pitzer

you. Thank

David Zinsner

John. you, Thank

Sanjay Mehrotra

you. Thank

Operator

next C.J. our come with Evercore. question will And Muse from

open. line is Your now

C.J. Muse

for efforts well you higher-value I down XY, thinking terms NAND, good changing XZ afternoon. particularly DRAM about you can XX guess and to you're question. Thank for taking XXXX layers in move you of question, cost what as solutions mix, the Yes, talk both including my in first as as timeframe?

Sanjay Mehrotra

to solutions, year them of NAND SSD continue they for those as respect With well said our margins, cost term pricing healthy mix higher of NAND do high-value reductions, to higher our tend increase we well. as you're cost example, that we good But structure, with costs. our incur bring the as right increase be to higher increase for or mix that in higher XXXX, the note we for have both the DRAM. managed solutions, course position, associated we'll longer as as we also as profitability, very to fiscal our And over

good in are shape. we wise, cost So,

C.J. Muse

a I That's follow-up, as a guess, you question Dave. helpful. for And

gross the you I talked the roughly wanting you've on of liquidity basically including which would in think put here. revolver to have about past cash one year and screws CapEx,

So, incremental used question about that what generation? is think free of how flow would the buybacks? And for cash percentage to be

David Zinsner

question Yes, C.J. good

$X.X liquidity sheet, when billion with we the let's we're have we the the the have. count So, billion contribute cash -- balance on you -- of about revolver plus that at start $X.X we

where target as good we're to would liquidity point be. very in, shape relative So, our you out,

will ton rest You of There's flow quarter. first saw the a further in cash of and really, shareholders went About pretty our go of healthy the a through shareholders year, that the XX% form return free the to the went deleveraging of not the sheet. quite in the cash balance on to honestly. rest to of deleverage buyback,

so form the to portion the so free would good of be a expect be contribute flow three a buyback. the buyers stock, to through in next continue speak, -- And cash us high our quarters of I to of and

C.J. Muse

Very helpful. you. Thank

Operator

Thank you. Mark with question come Newman will from next our Bernstein. And

Your open. line is now

Mark Newman

my Yes, thanks for taking question.

I'd you're and for guidance the the supply adjustments down reduction. making, NAND First you're question like really, both to taking on DRAM ask

to about inventory, useful You understand being a of reduction adjustments. that. being mentioned you of bit about some some also that It be more but mentioned some that would

For additions to is are is calendar capacity what competitors been on utilization? no what pushing so doing and understand useful that it of example, some lower or of your capacity would of here, forecasting be this additions adjustments is that? Micron some out that have a get the their for XXXX? Is capacity growth you that reduction Because bit more slightly to

Sanjay Mehrotra

our of are specifics output. we certainly, in to get reduce we actions and won't we of actions a what are taking actions, really So, into here taking any range terms

so is to align reduction in our NAND DRAM. about as provide are In taking now actions our very mean, around that supply of to we as in adjust demand in manage reduce output compared output output about DRAM, in in feel production taken in contributor not we our taken. to prior to that here actions capacity. And actions You the we will our a both And output a be to well, And we've have very guidance. billion important understand are reducing I just our any calendar will new decisive XX% the is actions course, prior as terms be growth And basis. that in in XXXX; $X.XX have expectations as inventory. to our shipments taken earlier the profitability. our said, our bit we we as match clear expect demand well we supply we pointed the to carry But necessary that of wafer we growth inventory out thing trends to good the on to our with we DRAM adding of XX% to always to and industry XXXX. CapEx with that intention want course, year-over-year compared have output have supply XX% that's line mentioned of

all the -- basis reduction going XXXX discussed is a course year way equipment the best CapEx are wafer of lowered achieve those is the we ROI that that today, transitions the CapEx from which discussed, only. We towards fiscal a that on to CapEx investments. technology And is we on

Mark Newman

temporary perhaps does utilization or for technology it slightly mean migration that period? lower slower So, mean does

Sanjay Mehrotra

we this have take and going not output think of to our we will thing as the I'm to continue Mark, some effect will manage CapEx expectations. managed of as to important the demand into actions showing these lower specifics. So, fact align And Most early get our our to our actions -- is, lower quarter. in with actions production I start these supply

David Zinsner

at-- you look if And

Mark Newman

then-- and Sanjay Thanks

David Zinsner

Go ahead.

Sorry Mark.

Mark Newman

I'm sorry, you go ahead Dave.

David Zinsner

I was going margin, at good have products. that cost very if for our our it would you structure reflect just a we to look say, gross

Sanjay Mehrotra

that in cost with And our reduction even actually, NAND both very that. outputs in good reductions we we above structure industry, above industry. basis, are a reductions of Cost cost, about, cost on remain shape the DRAM our will talking the And year-over-year the will remain in these and yes. fact, be believe in we of terms

Mark Newman

is the demand. question follow-up on My

about of perhaps Is side how explain get NAND the that DRAM elasticity? on more on it Is to a to customers burnt about a of demand that confidence competitors about have this little have you to of example of give confidence confident kind level well. your sense it going be some XXXX, would Anything bit data bit to that about seem would you that inventory by half -- the have of inventory come been just the will which that demand within the been correction demand You that also then. that amongst any talked back? magnitude -- the suggests great The up do pay us be would've side? talked been have be the used you some second is be kind as But should helpful. quarters of customer's Thanks. It helpful, mostly of inventory that back that'll customers; inventory reasonably should couple then. a for used to points come up by up calendar very have

Sanjay Mehrotra

to the bits on the and trends, our to show a XX%, us in first customers end think and for will with be long-term first range. talk be CAGR remarks, we year-over-year that also large, all, the compared are by remain here, we in that to realize the DRAM should market noted bits about DRAM our demand trends. my demand long-term needs DRAM me and this the I teens the for really basis down around of to as fiscal optimism high quarter, demand So, -- healthy absolutely quite continuing XX% of DRAM second let And

it a basis, adjustments kind say the and that that's you FQX, be of reduction contrast then you during So, occur. certainly we it adjustments demand quarters then occurring. will it on XX% you inventory will of trends why couple the lot long-term growth, quarter, for with fiscal second to of that tells And demand in of a year-over-year inventory take

of and an at and industrial this course, underway. the learning all continues be end all more trend. And again, machine inventory point understanding And adjustment AI machine demand year-over-year about these our shipments and our drivers some all So, continue end of point reduction memory. in in the the our while is important demand by and more much DRAM the continuing AI well is is the of customers IoT need market terms that of data, towards continuing And you and automotive and drive of Investor absolutely to at the as average with out for laid as to flash and increases on well trends end to see and are upward intact opportunities very these of smartphones healthy. learning The demand driven Day more as more cloud, content market be level we vibrant. capacity market opportunities smartphones applications the storage DRAM of stay like be of by driver from in all to those

itself reduction look coming inventory first that is And you quarter these a below of in quarter So, well as the course, basis as at as of the I industry have well. terms really adjustments the to showing year-over-year shipment to underway. that points was points think the in backdrop November well was on the seasonal output are couple in overall this down of

We have XXXX, have our terms calendar here outlook our output year announced of we well DRAM. the provided NAND growth decisive in for actions as and both today in as

said So, to these -- half. of year half the be tends first that before, I part compared to of and then, seasonally second terms as in stronger the a demand

than and half of really, year as well. in when industry, here the are at thing really cuts confidence, CapEx compared past at in cycle terms all out of I And on level in let much terms even the higher of happening past. one much, of that, profitability mean, at the the cycles, you levels look in more inputs -- industry the happening trends earlier of much fundamentals built are point in first the pointing and than the of the up customers being terms our second these just stronger our from year to and half definitely So, in me demand to ever

Micron. I this, long believe, all bodes as of the certainly fundamentals industry for the as well well So, for overall, term

Mark Newman

Great. you very right. Appreciate Thank All that. much.

Operator

will our of question Wells with Thank the Fargo. Aaron you. from come next Rakers And line

open. Your line is now

Aaron Rakers

wondering characterize plans follow-up. the But a terms the your I have comment, competitive will on over own both some in what taking Thank competitors off NAND? build just year. in are change in month of the and And off quarter, or the of this maybe was half given and lot last of Yes. questions. I'm calendar your how landscape? so a I about you've talked your curious capacity I last a if could expansion for you quarter, you curtailing context you to that seen that Maybe DRAM relative of you've

Sanjay Mehrotra

the about, as that our trends our that course about continued in over think course, analysts reduction since been weaken has last said, as near-term do has the continued heard been the industry, those couple started, know And I have also indicated demand regard, weakening as of well. as have as the have have and that several discussed in also, months, reductions to and those have a but you the even much of timeframe that talked we have there manufacturers FQX you well. of of FQX outlook course through I

we certainly have but So, ourselves of our terms using, with line we're in expectations. I is output in decisive can managing out is -- talk think what can we about this we taken and here the demand that information actions only growth there, our is

Aaron Rakers

year about there Okay. the a NVMe you it product enterprise seeing previously how year curious, just XXXX? so And part kind than kind into And to enterprise maybe around maybe you? portfolio, the like market calendar the is possibly even follow-up, from you're what products get ramp thinking calendar latter -- then I your sounds of moving of seen. market is of you mean as a quick much the away or towards SSD way market, of a this quicker your SSD in I'm have particularly, quantify

Sanjay Mehrotra

NVMe NVMe to start when place I one NVMe fiscal out year been early again But year have products a NVMe we we'll talked NVMe is NVMe we on up And the And us. applications from why, transition for have to for in SSDs SATA at the SSDs. cloud NVMe product of the in course as a why, out in be products first market our cloud no pace, And products. SATA products some the as calendar applications bringing XXXX, well. across enterprise, And market. year as focused consumer gaining for during well our to is timeframe, year, will of is being that in client And we that's a as have XXXX taking have -- and that more market, our bring Certainly, just and the in share while, the the question SSD as later the year been year look own SSDs ends calendar enterprise automotive, we fast introduced moving calendar there we speaking be applications. calendar then and our said that's how Board. XXXX our market of bring we'll our we for from we transition have about introduced new we to at certainly developing -- XXXX,

Aaron Rakers

you. Thank

Operator

Thank will Romit you. question come line the from And our next of Nomura. Shah with

now Your is line open.

Romit Shah

announced of today Yes. declines, expect we hit XXXX think aren't XXXX? Thank actions I about you've above but you per a cost the you cost guess average heard bit How I indicate you. do Sanjay, in more that? that versus question to is, that my probably

Sanjay Mehrotra

that actions think them that mean, to when fast. the we have record we was and are take shown first able company decisive I able saw today for inventory year FQX, take what just remember and to signs I is we a adjustment. are we FQX of you is

CapEx of cutting as During of terms we react able to have growth. the been FQX, output our manage our course in down as well

basis, closely we changes review sure focused on very Micron. that is we for very on is point marketplace that react the an remain term long this long-term maximizing we opportunity the something growth we ongoing are needed So, can are in to very, -- and the making fast profitability and

-- very We nodes. feel very make beyond something is to of continue XXXX of this our we good that. that for position good in on So, cost, progress and beyond technology terms our going about course

well As and I continue profile. high-value for our solutions and our you, that focus us on XXXX timeframe. discussed portfolio roadmap as strengthen want just XXXX I well. feel well that with our also position for progress And those shifting all is point NAND roadmap to make good about will will We on as out our profitability also our to good well. XZ is technology that And on to as progressing

Romit Shah

sort basis. for on leverage up as you reduce are this any is Is year, but there curious its levels? than of ends I CapEx guess any being if a the your mean, CapEx, cutting I CapEx a year-on-year current longer my downturn on anticipate? forecast still further follow-up us to from I'm of up

Sanjay Mehrotra

on also which side, reductions test I question as cost, are cost significant us the will assembly So, as as just CapEx, benefits on well out your supply well. give will back-end managing, the touch cost operations, on chain wanted we your on I on previous making tremendous progress transforming and to cost point that our

feel capabilities. So, cost technology about roadmap, beyond, as XXXX all-in well overall very our good as roadmap, all, and capability manufacturing

in year is fiscal and transition with clean and adjustments transitions XXXX the we have significantly made, versus as are equipment years facilities, needed as going we've facilities have implement really of, that future last actually well. needed that the CapEx with as and terms side, to be in over before, will have clean wafer down the in few And over our room XXXX. big in shared In just technology technology on room is keep buildings that mind, we future buildings part year the shell past, the we ongoing that CapEx underinvested actually for towards CapEx have the that said of you just Micron CapEx fiscal discussed coming

any significant contribute assembly over in we test our All of year bit year bit increase terms flexibility, not have growth. doesn't reduce as on have -- managing of to CapEx not intended again and in fiscal and is XXXX we we to does towards CapEx it shown that CapEx. have that And And go similarly, XXXX growth. And back-end operations already, as costs, in well. fiscal

a and factors market We are as requirements, as will our always our real-time in technology, to continue and of outlook continue status fashion. will transitions, environment adjustments carefully any it production absolutely us to change require CapEx look making at We prudent timely we to and as evaluate address again, well if needed. we this own

Romit Shah

very actions be some are I the don't I'm confusing that process there guys what mean then is -- guess like you just are understand you're migration, should prudent, but quite taking bit. I -- it just to per I the just, not impact And slowing for seems I'm cost impact I that's part quite your me if is?

Sanjay Mehrotra

with expectations. in be here of at. our details we per that terms bringing cost bit, not are to all get that lot a message line there demand Key in are of looked to our production output into of have details We're Again, going is those here.

of Second, absolutely in well. significant as Cost actually and we making. improvements good as also, our about our mobile, on the we will and but oversupply, and how mobile regard. technology and third, talked we well we high-value portfolio strategy, of about this benefits position, we gains are even market And well focused test position delivered stay NAND feel assembly executing continue solutions level, area, strong our cost solutions have course, includes of wafer position that cost the in very very environment position, in we're a to high-value do in in includes our cost die

Romit Shah

you. Thank right. All

Operator

for you. on may Thank wonderful we our question-and-answer Thank conference. concludes you have Everybody, program today. and the this conclude participation and your day. gentlemen, Ladies all for a This does disconnect. today's session

Micron Technology (MU) 18 Dec 182019 Q1 Earnings call transcript