SanDisk Corp. (NASDAQ:SNDK) Q4 2014 Earnings Conference Call - Final Transcript
Jan 21, 2015 • 05:00 pm ET
Good day and welcome to the SanDisk fourth quarter 2014 financial results conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Jay Iyer. Please go ahead, sir.
Thank you, Tanisha, and good afternoon, everyone. With me on the call are Sanjay Mehrotra, President and CEO; and Judy Bruner, Executive Vice President of Administration and CFO. In a moment, we will hear remarks from both of them followed by Q&A. Before we begin, please note that any non-GAAP financial measures discussed during this call as defined by the SEC and Regulation G will be reconciled to the most directly comparable GAAP financial measure. That reconciliation is not available -- is now available with supplemental schedules on our Web site at SanDisk. com/IR. Please note that non-GAAP to GAAP reconciliation tables for all applicable guidance will also be posted on our Web site.
This guidance is exclusive of any one-time transactions and does not reflect the effect of any acquisitions, divestitures, or similar transactions that may be completed after January 21, 2015. In addition, during our call today, we will make forward-looking statements that refer to expectations, projections, or other future events. Please refer to today's press release and our SEC filings, including the most recent 10-Q, for more information on the risk factors that could cause actual results to differ materially from those expressed in these forward-looking statements. SanDisk does not -- assumes no obligation to update these forward-looking statements which speak as of today.
Before I turn the call over to Sanjay, I'd like to inform you that our first-quarter earnings conference call is being planned for April 15. We are also planning to host our 2015 Investor Day meeting on May 13 in Milpitas, California. Please mark your calendars. With that, I'll turn the call over to Sanjay.
Thank you, Jay, and good afternoon, everyone. 2014 was a record year for revenue and non-GAAP earnings, and our business generated strong cash flows. We are pleased to have returned more than 100% of our 2014 free cash flow to our investors through our capital return program. We successfully drove our portfolio mix shift toward high value solutions during the year, with total SSD revenue contributing 29% of 2014 revenue, up from 19% of 2013 revenue. Moving to the details of the business, we are disappointed with our fourth quarter execution. As we indicated in the October conference call, our inventory levels were extremely lean exiting the third quarter and were anticipated to become even leaner toward the fourth quarter.
We overestimated our ability to service our customers' demand variability with our lowered levels of inventory, creating supply shortfalls in certain products. Additionally, within the fourth quarter unplanned maintenance activities in our Yokkaichi fab operation, as well as lower yield on certain memory die led to unexpected reductions in production output. The combination of lean inventory and reduced memory output made our ability to meet our customer demand even more challenging