Marvell Technology Group Ltd. Reports Third Quarter of Fiscal Year 2014 Financial Results
Santa Clara, California (November 21, 2013) – Marvell (NASDAQ: MRVL), a global leader in integrated silicon solutions, today reported financial results for the third quarter of fiscal year 2014, ended November 2, 2013.
Key 3Q FY2014 Financial Highlights
- Revenue: $931 Million
- GAAP Net Income: $103 Million
- GAAP EPS (diluted): $0.21
- Non-GAAP Net Income: $163 Million
- Non-GAAP EPS (diluted): $0.32
- Free Cash Flow: $157 Million
4Q FY2014 Financial Outlook
Marvell’s financial outlook does not include the potential impact of future share repurchases, pending litigation matters, business combinations, asset acquisitions or other investments that may be completed after November 21, 2013.
- Revenue is expected to be in the range of $880 to $920 Million.
- GAAP Gross Margin is expected to be in the range of 49.7% +/- 100 bps. Non-GAAP Gross Margin is expected to be in the range of 50% +/- 100 bps.
- GAAP Operating Expenses are expected to be in the range of $360 Million +/- $10 Million. Non-GAAP Operating Expenses to be in the range of $315 Million +/- $10 Million.
- GAAP EPS (diluted) expected to be in the range of $0.16 +/- $0.02. Non-GAAP EPS (diluted) expected to be in the range of $0.25 +/- $0.02.
3Q FY2014 Summary
Revenue for the third quarter of fiscal 2014 was $931 million, a 15 percent sequential increase from $807 million in the second quarter of fiscal 2014, ended August 3, 2013, and a 19 percent increase from revenue of $781 million in the third quarter of fiscal 2013, ended October 27, 2012.
GAAP net income for the third quarter of fiscal 2014 was $103 million, or $0.21 per share (diluted), compared with GAAP net income of $62 million, or $0.12 per share (diluted), for the second quarter of fiscal 2014, and $69 million, or $0.12 per share (diluted), for the third quarter of fiscal 2013.
Non-GAAP net income was $163 million, or $0.32 per share (diluted), for the third quarter of fiscal 2014, compared with non-GAAP net income of $118 million, or $0.23 per share (diluted), for the second quarter of fiscal 2014, and $113 million, or $0.20 per share (diluted), for the third quarter of fiscal 2013.
“Our results in the third quarter were above the high-end of our guidance mainly due to better demand from our mobile, wireless and storage customers,” said Dr. Sehat Sutardja, Marvell’s Chairman and Chief Executive Officer. “We continue to make excellent progress in our end markets with new innovative products and remain committed to delivering above industry revenue and profit growth as we head into next year.”
Marvell reports net income, basic and diluted net income per share, in accordance with U.S. generally accepted accounting principles (GAAP) and on a non-GAAP basis as outlined below. Reconciliations of GAAP net income to non-GAAP net income for the three months ended November 2, 2013, August 3, 2013 and October 27, 2012 appear in the financial statements below. Non-GAAP net income, where applicable, excludes the effect of stock-based compensation, amortization of acquired intangible assets, acquisition-related costs, restructuring and other exit-related costs, and certain one-time expenses and benefits.
GAAP gross margin for the third quarter of fiscal 2014 was 50.1 percent, compared to 52.2 percent for the second quarter of fiscal 2014 and 52 percent for the third quarter of fiscal 2013.
Non-GAAP gross margin for the third quarter of fiscal 2014 was 50.3 percent, compared to 53.0 percent for the second quarter of fiscal 2014 and 52.3 percent for the third quarter of fiscal 2013.
Shares used to compute GAAP net income per diluted share for the third quarter of fiscal 2014 were 501 million shares, compared with 501 million shares in the second quarter of fiscal 2014 and 559 million shares in the third quarter of fiscal 2013. Shares used to compute non-GAAP net income per diluted share for the third quarter of fiscal 2014 were 514 million shares, compared with 516 million shares for the second quarter of fiscal 2014 and 578 million shares for the third quarter of fiscal 2013. The decrease in shares used to compute both Marvell’s GAAP and non-GAAP net income per diluted share was primarily due to Marvell’s share repurchase program.
Cash flow from operations for the third quarter of fiscal 2014 was $177 million, compared to the $86 million reported in the second quarter of fiscal 2014 and the $137 million reported in the third quarter of fiscal 2013. Free cash flow for the third quarter of fiscal 2014 was $157 million, compared to the $65 million reported in the second quarter of fiscal 2014 and the $113 million reported in the third quarter of fiscal 2013. Free cash flow as presented above is defined as cash flow from operations, less capital expenditures and purchases of technology licenses reported under investing and financing activities in the consolidated statement of cash flows.
Under the share repurchase program, Marvell repurchased approximately 6.1 million shares for a total of $71 million in the third quarter of fiscal 2014. Over the past 13 quarters, Marvell has repurchased and retired approximately 217 million shares, or about 31 percent of its outstanding shares.
Marvell also paid a quarterly dividend of $0.06 per share on October 3, 2013 to all shareholders of record as of September 12, 2013. Marvell intends to pay its next quarterly dividend of $0.06 per share on December 23, 2013 to all shareholders of record as of December 12, 2013. Developments in on-going litigation could affect Marvell’s ability to pay the dividend on December 23, 2013 under Bermuda law, where Marvell is incorporated. In such an event, the dividend payment could be delayed until such time as Marvell can meet statutory requirements under Bermuda law.
The payment of future quarterly cash dividends on Marvell’s common shares is subject to, among other things, the best interests of its shareholders, its results of operations, cash balances and future cash requirements, financial condition, statutory requirements under Bermuda law, and other factors that the board of directors may deem relevant.
Marvell will be conducting a conference call on Thursday, November 21, 2013 at 1:45 p.m. Pacific Time to discuss results for the third quarter of fiscal 2014. Interested parties may join the conference call by dialing 1-866-515-2912 or 1-617-399-5126, pass-code 84616401. The call will be webcast by Thomson Reuters and can be accessed at the Marvell Investor Relations website at http://investor.marvell.com/ with a replay available following the call until December 19, 2013.
Discussion of Non-GAAP Financial Measures
Non-GAAP financial measures exclude the effect of stock-based compensation expense, amortization of acquired intangible assets, acquisition-related costs, restructuring and other exit-related costs, and certain one-time expenses and benefits that are driven primarily by discrete events that management does not consider to be directly related to Marvell’s core operating performance. Non-GAAP net income per share is calculated by dividing non-GAAP net income by non-GAAP weighted average shares outstanding (diluted). For purposes of calculating non-GAAP net income per share, the GAAP weighted average shares outstanding (diluted) is adjusted to exclude the potential benefits of stock-based compensation expected to be incurred in future periods but not yet recognized in the financial statements. The expected compensation costs are treated as proceeds assumed to be used to repurchase shares under the GAAP treasury stock method and also include the dilutive/anti-dilutive effects of common stock options and restricted stock units.
Marvell believes that the presentation of non-GAAP financial measures provide important supplemental information to management and investors regarding financial and business trends relating to Marvell’s financial condition and results of operations. While Marvell uses non-GAAP financial measures as a tool to enhance its understanding of certain aspects of its financial performance, Marvell does not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial measures. Consistent with this approach, Marvell believes that disclosing non-GAAP financial measures to the readers of its financial statements provides such readers with useful supplemental data that, while not a substitute for GAAP financial measures, allows for greater transparency in the review of its financial and operational performance. For further information regarding why Marvell believes that these non-GAAP measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to Marvell’s Current Report on Form 8-K filed today with the SEC. The Form 8-K is available on the SEC’s website at www.sec.gov as well as on the Marvell website in the Investor Relations section at www.marvell.com.
Forward-Looking Statements under the Private Securities Litigation Reform Act of 1995
This press release contains forward-looking statements that involve risks and uncertainties, including Marvell’s expectations and statements regarding: its financial outlook for the fourth quarter of fiscal 2014; its innovative products and ability to deliver above industry revenue and profit growth as Marvell head’s into the new year; its dividend program including the declaration of, timing of, funding of, payment of and quarterly amount of dividends; and its use of non-GAAP financial measures as important supplemental information. These statements are not guarantees of results and should not be considered as an indication of future activity or future performance. Actual events or results may differ materially from those described in this press release due to a number of risks and uncertainties, including, among others, Marvell’s reliance on a few customers for a significant portion of its revenue; costs and liabilities relating to current and future litigation; Marvell’s ability to develop and introduce new and enhanced products in a timely and cost effective manner and the adoption of those products in the market; seasonality in sales of consumer devices in which our products are incorporated; Marvell’s ability to compete in products and prices in an intensely competitive industry; uncertainty in the worldwide economic conditions; Marvell’s ability to recruit and retain skilled personnel; Marvell’s ability to generate cash flows; and other risks detailed in Marvell’s SEC filings from time to time. When Marvell files its Quarterly Report on Form 10-Q for the quarter ended November 2, 2013, the financial statements may differ from the results disclosed in this press release because judgments and estimates that management used in preparing the financial results reported in this press release may need to be updated to the date of the filing. For other factors that could cause Marvell’s results to vary from expectations, please see the risk factors identified in the Marvell’s latest Quarterly Report on Form 10-Q for the quarter ended August 3, 2013 as filed with the SEC, and other factors detailed from time to time in Marvell’s filings with the SEC. Marvell undertakes no obligation to revise or update publicly any forward-looking statements.
Marvell is a global leader in providing complete silicon solutions enabling the digital connected lifestyle. From mobile communications to storage, cloud infrastructure, digital entertainment and in-home content delivery, Marvell’s diverse product portfolio aligns complete platform designs with industry-leading performance, security, reliability and efficiency. At the core of powerful consumer, network and enterprise systems, Marvell empowers partners and their customers to always stand at the forefront of innovation, performance and mass appeal. By providing people around the world with mobility and ease of access to services adding value to their social, private and work lives, Marvell is committed to enhancing the human experience.
As used in this release, the term “Marvell” refers to Marvell Technology Group Ltd. and its subsidiaries. For more information please visit www.marvell.com.
Marvell® and the Marvell logo are registered trademarks of Marvell and/or its affiliates.