Seagate Technology Public Limited Company (NASDAQ:STX) Q3 2015 Earnings Conference Call - Final Transcript

Apr 17, 2015 • 09:00 am ET

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Seagate Technology Public Limited Company (NASDAQ:STX) Q3 2015 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning and welcome to the Seagate Technology Fiscal Third Quarter 2015 Financial Results Conference Call. My name is Candis and I'll be your coordinator for today. At this time, all participants are in a listen-only mode. Following the prepared remarks, there will be a question-and-answer session. As a reminder, this conference is being recorded for replay proposes. At this time, I'd like to turn the call over to Kate Scolnick, Vice President of Investor Relations. Please proceed, Kate.

Executive
Kate Scolnick

Thank you. Good morning, everyone, and welcome to today's call. Joining me today from Seagate's executive team are Steve Luczo, Chairman and CEO; Pat O'Malley, Executive Vice President and CFO; Dave Mosley, President, Operations and Technology; Rocky Pimentel, President, Global Markets and Customers and our General Counsel, Ken Massaroni. We posted our press release and detailed supplemental information about our fiscal third quarter on our Investor Relations site at seagate.com.

During today's call, we will review the highlights from the March quarter, provide the Company outlook for the fourth fiscal quarter 2015 and then open the call for questions. We will refer to non-GAAP measures on this call, which are reconciled to GAAP figures in our supplemental information on our website. We're planning for the call today to go approximately half an hour and we will do our best to accommodate your questions in that time frame.

As a reminder, this conference call contains forward-looking statements about the Company's anticipated future operating and financial performance, customer demand and general market conditions. These forward-looking statements are based on management's current views and assumptions and should not be relied upon as of any subsequent date. Actual results may vary materially from today's statements. Information concerning risks, uncertainties and other factors that could cause results to differ from these forward-looking statements are contained in the Company's SEC filings and supplemental information posted on the Investors section of the Company's website.

I would now like to turn the call over to Steve Luczo. Please go ahead, Steve.

Executive
Steve Luczo

Thanks, Kate. Good morning, everyone, and thank you for joining us today. For the fiscal third quarter 2015, Seagate achieved revenues of $3.3 billion on a non-GAAP basis, gross margins of 28.9%, net income of $357 million and diluted earnings per share of $1.08. As we indicated in our business outlook in January, challenges from macroeconomic pressures in Europe and PC demand were factors we needed to manage through the quarter. The magnitude of these factors actually increased in third quarter, resulting in an impact to our top line revenue beyond our initial expectations, particularly in our EMEA business, which was down approximately $100 million sequentially.

In light of these dynamic market conditions, we are satisfied with the Company's overall execution this quarter and we're particularly pleased with our sequential gross margin improvements and demonstration of operational expense control. Overall, storage shipments for the March quarter were 55 exabytes, up 9% year over year, with average gigabytes per drive for the quarter increasing sequentially and continuing to average over