Micron Technology, Inc. (NASDAQ:MU)
Q4 2014 Earnings Conference Call
September 25, 2014 16:30 pm ET
Kipp Bedard – VP, IR
Mark Durcan – CEO
Mark Adams – President
Ron Foster – CFO, VP, Finance
CJ Muse – ISI Group
Betsy Van Hees – Wedbush
Romit Shah – Nomura Securities
Mark Delaney – Goldman Sachs
John Pitzer – Credit Suisse
Rajvindra Gill – Needham & Company
Vijay Rakesh – Sterne Agee
Alex Gauna – JMP Securities
Mark Newman – Bernstein
Good afternoon. My name is Kate and I will be our conference facilitator today. At this time, I would like to welcome everyone to Micron Technology’s Fourth Quarter 2014 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-and-answer period. (Operator Instructions) Thank you.
It’s now my pleasure to turn the floor over to your host, Kipp Bedard. You may begin your conference.
Kipp Bedard – VP, IR
Thank you very much and welcome everyone to Micron Technology’s fourth quarter 2014 financial release conference call. On the call today is Mark Durcan, CEO and Director; Mark Adams, President; and Ron Foster, Chief Financial Officer and Vice President of Finance.
This conference call, including audios and slides is also available on our Web site at micron.com. In addition, our Web site has a file containing the quarterly operational and financial information and guidance, non-GAAP information with reconciliation, slides used during the conference call and a convertible debt and capped call dilution table. If you have not had an opportunity to review the fourth quarter 2014 financial press release, again, it is also available on our Web site at micron.com. Our call will be approximately 60 minutes in length. There will be an audio replay of the call. You may access that by dialing 4045373406 with the confirmation code of 2237916. This replay will run through Thursday, October 2 at 11:30 pm Mountain Time. A webcast replay will be available on the company’s Web site until September of 2015. We encourage you to monitor our Web site at micron.com throughout the quarter for the most current information on the company, including information on various financial conferences that we will be attending. You can also follow us on Twitter @microntech.
Now please note the following Safe Harbor statement.
Unidentified Company Representative
During the course of this meeting we may make projections or other forward-looking statements regarding future events or the future financial performance of the company and the industry. We wish to caution you that such statements are predictions and that actual events or results may differ materially. We refer you to the documents the company files on a consolidated basis from time to time with the Securities and Exchange Commission, specifically the company’s most recent form 10-K and form 10-Q.
These documents contain and identify important factors that could cause the actual results for the company on a consolidated basis to differ materially from those contained in our projections or forward-looking statements. These certain factors can be found in the Investor Relations section of micron’s Web site. Although, we believe that the expectations reflected in the forward-looking statement are reasonable, we cannot guarantee future results, levels of activity, performance or achievement. We are under no duty to update any of the forward-looking statements after the date of the presentation to conform these statements to actual results.
Kipp Bedard – VP, IR
I’ll now turn the call over to Mark Durcan. Mark?
Mark Durcan – CEO
Thanks, Kipp. We had another strong quarter benefiting from robust market demand as well as solid operational execution. We set a new record for revenue of over $4.2 billion for the quarter. Net income was $1.15 billion or $0.96 per diluted share. For the fiscal year 2014, we generated record revenue of $16.4 billion, record net income over $3 billion, and record free cash flow of $2.6 billion based on record operating cash flow of $5.7 billion less CapEx of $3.1 billion.
As we enter fiscal 2015, I’d like to touch on a few key areas of focus as well as provide a brief industry update. Ron Foster will follow with a financial summary and before turning to Q&A, we’ll close our prepared comments with Mark Adams covering additional details of our operational performance and market conditions.
Beyond ongoing advanced component and technology development, we have three main operational focus areas for fiscal 2015. The first is technology deployment and includes continued 25-nanometer DRAM conversion and 20-nanometer DRAM ramp, completion of 16-nanometer planar NAND conversion and introduction of 3D NAND, TLC NAND deployment for cost sensitive applications and building out our capability to deliver advanced packaging solutions and controllers.
The second is optimizing manufacturing capacity, which includes improving our manufacturing efficiency through line balancing, cycle time, yield, and metrology initiatives, and managing our product mix in order to generate the best possible long-term margins and returns for our business.
And finally in 2015, we will focus on growing our memory systems and subsystem solutions, including expanding the market penetration and our offering breadth of our advanced bit addressable memory solutions, building additional storage solutions such as enterprise SSDs, and designing new and innovative mobile memory systems solutions.
As we outlined at our Analyst Day last month, fiscal 2015 CapEx is expected to be in the range of $3.6 billion to $4 billion. Roughly 30% of this CapEx will go towards non-supply expanding investments, including manufacturing efficiency improvements, emerging memories, backend capability and additional system manufacturing and engineering tooling to support system and subsystem level products. This compares to about 25% of our $3.1 billion CapEx bill in fiscal 2014, and highlights our belief that these investments, which are designed among other things to enhance our value-added product portfolio will generate some of the highest returns going forward.