Seagate Technology Reports Fiscal Third Quarter 2019 Financial Results

Seagate Technology plc (NASDAQ: STX) (the “Company” or “Seagate”) today
reported financial results for its fiscal third quarter ending March 29,
2019.

“Seagate executed very well in the third quarter while navigating
near-term demand head-winds. Our focus on operational efficiency and
expense discipline drove better-than-expected EPS and free cash flow
generation,” said Dave Mosley, Seagate’s chief executive officer.

“We began shipping the industry’s first 16-terabyte high capacity drives
in the fiscal third quarter and expect to ramp high volume production in
the second half calendar 2019. The Data Age digital transformation has
given rise to many new applications including machine learning,
autonomous vehicles, and Smart Cities, which all rely on faster access
to an increasing amount of data. These trends are creating significant
opportunities for our mass data storage solutions and we are
successfully executing our technology roadmap to address growing demand.”

Quarterly Financial Results

In the third quarter, the Company generated $438 million in cash flow
from operations and $291 million in free cash flow. Year to date, the
Company has generated $1.3 billion in cash flow from operations and $862
million in free cash flow. Seagate’s balance sheet is healthy and during
the third quarter, the Company paid cash dividends of $178 million and
repurchased 7.2 million ordinary shares for $327 million. Cash and cash
equivalents totaled $1.4 billion at the end of the quarter. There were
277 million ordinary shares issued and outstanding as of the end of the
quarter.

For a detailed reconciliation of GAAP to non-GAAP results, see
accompanying financial tables.

Seagate has issued a Supplemental Financial Information document, which
is available on Seagate’s Investors Relations website at www.seagate.com/investors.

Quarterly Cash Dividend

The Board of Directors of the Company (the “Board”) declared a quarterly
cash dividend of $0.63 per share, which will be payable on July 3, 2019
to shareholders of record as of the close of business on June 19, 2019.
The payment of any future quarterly dividends will be at the discretion
of the Board and will be dependent upon Seagate’s financial position,
results of operations, available cash, cash flow, capital requirements
and other factors deemed relevant by the Board.

Business Outlook

Our outlook for the fourth fiscal quarter is based on our current
assumptions and expectations; actual results may differ materially, as a
result of, among other things, the important factors discussed in the
Cautionary Note Regarding Forward-Looking Statements section of this
release.

The Company is providing the following guidance for its fiscal fourth
quarter 2019:

• Revenue of approximately $2.32 billion, plus or minus 5%
• Non-GAAP diluted earnings per share of approximately $0.83, plus or
  minus 5%

Guidance regarding non-GAAP diluted earnings per share excludes known
charges related to amortization of acquired intangible assets of $0.06
per share.

We have not reconciled our non-GAAP diluted earnings per share to the
most directly comparable GAAP measure because material items that may
impact these measures are out of our control and/or cannot be reasonably
predicted including, but not limited to, accelerated depreciation,
impairment, and other charges related to cost saving efforts,
restructuring charges, strategic investment losses or impairment
recognized, income tax adjustments on these measures, and other charges
that may arise. The amounts of these measures are not currently
available, but may be material to future results. A reconciliation of
the non-GAAP diluted earnings per share to the corresponding GAAP
measures is not available without unreasonable effort. A reconciliation
of our historical non-GAAP financial measures to their nearest GAAP
equivalent is contained in this release.

Investor Communications

Seagate management will hold a public webcast today at 6:00 a.m. Pacific
Time that can be accessed on its Investor Relations website at www.seagate.com/investors.

An archived audio webcast of this event will be available on Seagate’s
Investors Relations website at www.seagate.com/investors
shortly following the event conclusion.

About Seagate

To learn more about the Company’s products and services, visit www.seagate.com
and follow us on Twitter,
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The contents of our website and social media channels are not a part of
this release.

Cautionary Note Regarding Forward-Looking
Statements

This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934, each as amended, including, in
particular, statements about the Company’s plans, strategies and
prospects, financial outlook for future periods, including the fourth
quarter of fiscal 2019, expectations regarding the Company’s products,
our ability to ramp production, market demand, shifts in technology, the
Company’s ability to meet market and industry expectations and the
effects of these future trends and expectations on the Company’s
business as well as dividend issuance plans for the fiscal quarter
ending June 28, 2019 and beyond. These statements identify prospective
information and may include words such as “expects,” “intends,” “plans,”
“anticipates,” “believes,” “estimates,” “predicts,” “projects,”
“should,” “may,” “will,” or the negative of these words, variations of
these words and comparable terminology. These forward-looking statements
are based on information available to the Company as of the date of this
report and are based on management’s current views and assumptions.
These forward-looking statements are conditioned upon and also involve a
number of known and unknown risks, uncertainties, and other factors that
could cause actual results, performance or events to differ materially
from those anticipated by these forward-looking statements. Such risks,
uncertainties, and other factors may be beyond the Company’s control and
may pose a risk to the Company’s operating and financial condition. Such
risks and uncertainties include, but are not limited to: items that may
be identified during its financial statement closing process that cause
adjustments to the estimates included in this report; the uncertainty in
global economic and political conditions; the impact of the variable
demand and adverse pricing environment for storage products; the
Company’s ability to successfully qualify, manufacture and sell its
storage products in increasing volumes on a cost-effective basis and
with acceptable quality; the impact of competitive product
announcements; the Company’s ability to achieve projected cost savings
in connection with restructuring plans and consolidation of
manufacturing activities; possible excess industry supply with respect
to particular storage products and competing alternative storage
technology solutions; the impact of trade barriers, such as
import/export duties and restrictions, tariffs and quotas, imposed by
the U.S. or other countries in which the Company conducts business;
disruptions to its supply chain or production capabilities; unexpected
advances in competing technologies or changes in market trends; the
development and introduction of products based on new technologies and
expansion into new data storage markets; the Company’s ability to
effectively manage its debt obligations and comply with certain
covenants in its credit facilities with respect to financial ratios and
financial condition tests; currency fluctuations that may impact the
Company’s margins, international sales and results of operations;
cyber-attacks or other data breaches that disrupt the Company’s
operations or result in the dissemination of proprietary or confidential
information and cause reputational harm; cybersecurity threats and
vulnerabilities associated with the Company’s infrastructure updates to
its information technology systems; and fluctuations in interest rates.
Information concerning risks, uncertainties and other factors that could
cause results to differ materially from the expectations described in
this press release is contained in the Company’s Annual Report on Form
10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on
August 3, 2018, the “Risk Factors” section of which is incorporated into
this press release by reference, and other documents filed with or
furnished to the SEC. These forward-looking statements should not be
relied upon as representing the Company’s views as of any subsequent
date and the Company undertakes no obligation to update forward-looking
statements to reflect events or circumstances after the date they were
made, except as required by applicable law.

The inclusion of Seagate’s website address in this press release is
intended to be an inactive textual reference only and not an active
hyperlink. The information contained in, or that can be accessed
through, Seagate’s website and social media channels are not part of
this press release.

Use of non-GAAP financial information

The Company uses non-GAAP measures of adjusted revenue, gross margin,
operating expenses, net income, diluted earnings per share and free cash
flow which are adjusted from results based on GAAP to exclude certain
gains, losses and expenditures. These non-GAAP financial measures may be
provided to enhance the user’s overall understanding of the Company’s
current financial performance and its prospects for the future.
Specifically, the Company believes non-GAAP results provide useful
information to both management and investors as these non-GAAP results
exclude certain gains, losses and expenditures that it believes are not
indicative of its core operating results and because it is similar to
the approach used in connection with the financial models and estimates
published by financial analysts who follow the Company.

These non-GAAP results are some of the measurements management uses to
assess the Company’s performance, allocate resources and plan for future
periods. Reported non-GAAP results should only be considered as
supplemental to results prepared in accordance with GAAP, and not
considered as a substitute for, or superior to, GAAP results. These
non-GAAP measures may differ from the non-GAAP measures reported by
other companies in its industry.

The Company’s Non-GAAP measures are adjusted for the following items:

Adjustment to discontinued products

These adjustments relate to sales of certain discontinued products or
changes in sales provision for discontinued products. These adjustments
are inconsistent in amount and frequency and are excluded in the
non-GAAP measures as these adjustments are not indicative of the
underlying ongoing operating performance.

Accelerated depreciation, impairment and other charges related to
cost saving efforts

These expenses are excluded in the non-GAAP measure due to its
inconsistency in amount and frequency and are excluded to facilitate a
more meaningful evaluation of the Company’s current operating
performance and comparison to its past periods operating performance.

Amortization of acquired intangible assets

The Company records expense from amortization of intangible assets that
were acquired in connection with its business combinations over their
estimated useful lives. Such charges are inconsistent in size and are
significantly impacted by the timing and magnitude of the Company’s
acquisitions. Consequently, these expenses are excluded in the non-GAAP
measures to facilitate a more meaningful evaluation of its current
operating performance and comparison to its past periods operating
performance.

Other charges

The other charges primarily include write-off of certain discontinued
inventory and expense related to disposed business. These charges are
inconsistent in amount and frequency and are excluded in the non-GAAP
measures to facilitate a more meaningful evaluation of its current
operating performance and comparison to its past periods operating
performance.

Restructuring and other, net

Restructuring charges and other, net are costs associated with
restructuring plans that are primarily related to costs associated with
reduction in the Company’s workforce, exiting certain facilities and
other related costs. These also exclude charges or gains from sale of
properties classified as held-for-sale. These costs or benefits do not
reflect the Company’s ongoing operating performance and consequently are
excluded from the non-GAAP measures to facilitate a more meaningful
evaluation of its current operating performance and comparison to its
past periods operating performance.

Losses Recognized on the early redemption and repurchase of debt

From time to time, the Company incurs losses from the early redemption
and repurchase of certain long-term debt instruments. These losses
represent the difference between the reacquisition costs and the par
value of the debt extinguished and include the write off of any related
unamortized debt issuance costs. The amount of these charges may be
inconsistent in size and varies depending on the timing of the
repurchase of debt.

Strategic investment losses, (gains) or impairment recognized

From time to time, the Company incurs losses or gains from strategic
investment accounted under equity method of accounting or records
impairments charges which are not considered as part of its ongoing
operating performance. The resulting expense or gain is inconsistent in
amount and frequency and consequently are excluded from the non-GAAP
measures to facilitate a more meaningful evaluation of its current
operating performance and comparison to its past periods operating
performance.

Income tax adjustments

Provision for income taxes represents the tax effects of non-GAAP
adjustments determined using a hybrid with and without method and
effective tax rate for the applicable adjustment and jurisdiction. It
also includes a provisional tax benefit for the re-measurement of the
Company’s U.S. deferred tax assets at the lower 21% tax rate resulting
from the U.S. Tax Cuts and Jobs Act enacted on December 22, 2017.

Free cash flow

Free cash flow is a non-GAAP measure defined as net cash provided by
operating activities less acquisition of property, equipment and
leasehold improvements. This non-GAAP financial measure is used by
management to assess the Company’s sources of liquidity, capital
structure and operating performance.

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