Marvell Technology Group Ltd. Reports First Quarter of Fiscal Year 2021 Financial Results
Revenue for the first quarter of fiscal 2021 was
"In a challenging environment, solid execution by the
Second Quarter of Fiscal 2021 Financial Outlook
- Revenue is expected to be
$720 million +/- 5%. - GAAP gross margin is expected to be approximately 50.6%.
- Non-GAAP gross margin is expected to be approximately 63%.
- GAAP operating expenses are expected to be approximately
$393 million . - Non-GAAP operating expenses are expected to be approximately
$300 million . - GAAP diluted loss per share is expected to be
$(0.10) to$(0.02) per share. - Non-GAAP diluted income per share is expected to be
$0.17 to$0.23 per share.
Conference Call
Discussion of Non-GAAP Financial Measures
Non-GAAP financial measures exclude the effect of share-based compensation expense, amortization of the inventory fair value adjustment associated with the
Externally, management believes that investors may find
- Management's evaluation of
Marvell's operating performance; - Management's establishment of internal operating budgets;
- Management's performance comparisons with internal forecasts and targeted business models; and
- Management's determination of the achievement and measurement of certain performance-based equity awards (adjustments may vary from award to award).
Non-GAAP financial measures have limitations in that they do not reflect all of the costs associated with the operations of
Forward-Looking Statements under the Private Securities Litigation Reform Act of 1995
This press release contains forward-looking statements within the meaning of the federal securities laws that involve risks and uncertainties. Words such as "anticipates," "expects," "intends," "plans," "projects," "believes," "seeks," "estimates," "can," "may," "will," "would" and similar expressions identify such forward-looking statements. 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, but not limited to: risks related to the impact on our business of the novel coronavirus (COVID-19) pandemic which have impacted, and may continue to impact, our workforce and operations and the transportation and manufacturing of our products; risks related to the impact of the COVID-19 pandemic which have impacted, and may continue to impact the operations of our customers, distributors, vendors, suppliers, and partners; increased disruption and volatility in the capital markets and credit markets as a result of COVID-19, which could adversely affect our liquidity and capital resources; the impact of COVID-19, or other future pandemics, on the
About
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|||||||||||
Condensed Consolidated Statements of Operations (Unaudited) |
|||||||||||
(In thousands, except per share amounts) |
|||||||||||
Three Months Ended |
|||||||||||
|
|
|
|||||||||
Net revenue |
$ |
693,641 |
$ |
717,671 |
$ |
662,452 |
|||||
Cost of goods sold |
366,739 |
412,927 |
301,024 |
||||||||
Gross profit |
326,902 |
304,744 |
361,428 |
||||||||
Operating expenses: |
|||||||||||
Research and development |
279,584 |
279,389 |
266,867 |
||||||||
Selling, general and administrative |
122,027 |
121,592 |
110,005 |
||||||||
Restructuring related charges |
21,287 |
18,258 |
5,682 |
||||||||
Total operating expenses |
422,898 |
419,239 |
382,554 |
||||||||
Operating income (loss) |
(95,996) |
(114,495) |
(21,126) |
||||||||
Interest income |
1,058 |
1,379 |
1,268 |
||||||||
Interest expense |
(16,830) |
(22,656) |
(21,203) |
||||||||
Other income (loss), net |
3,754 |
1,124,179 |
(116) |
||||||||
Interest and other income (loss), net |
(12,018) |
1,102,902 |
(20,051) |
||||||||
Income (loss) before income taxes |
(108,014) |
988,407 |
(41,177) |
||||||||
Provision (benefit) for income taxes |
5,019 |
(784,266) |
7,273 |
||||||||
Net income (loss) |
$ |
(113,033) |
$ |
1,772,673 |
$ |
(48,450) |
|||||
Net income (loss) per share — Basic: |
$ |
(0.17) |
$ |
2.66 |
$ |
(0.07) |
|||||
Net income (loss) per share — Diluted: |
$ |
(0.17) |
$ |
2.62 |
$ |
(0.07) |
|||||
Weighted average shares: |
|||||||||||
Basic |
663,547 |
665,562 |
658,963 |
||||||||
Diluted |
663,547 |
675,700 |
658,963 |
|
||||||||
Condensed Consolidated Balance Sheets (Unaudited) |
||||||||
(In thousands) |
||||||||
|
|
|||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ |
667,548 |
$ |
647,604 |
||||
Accounts receivable, net |
468,760 |
492,346 |
||||||
Inventories |
270,374 |
322,980 |
||||||
Prepaid expenses and other current assets |
72,282 |
74,567 |
||||||
Total current assets |
1,478,964 |
1,537,497 |
||||||
Property and equipment, net |
348,066 |
357,092 |
||||||
|
5,337,405 |
5,337,405 |
||||||
Acquired intangible assets, net |
2,651,678 |
2,764,600 |
||||||
Deferred tax assets |
639,470 |
639,791 |
||||||
Other non-current assets |
525,946 |
496,850 |
||||||
Total assets |
$ |
10,981,529 |
$ |
11,133,235 |
||||
Liabilities and Shareholders' Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ |
185,711 |
$ |
213,747 |
||||
Accrued liabilities |
380,653 |
346,639 |
||||||
Accrued employee compensation |
124,277 |
149,780 |
||||||
Total current liabilities |
690,641 |
710,166 |
||||||
Long-term debt |
1,439,852 |
1,439,024 |
||||||
Deferred tax liabilities |
33,284 |
31,233 |
||||||
Other non-current liabilities |
282,130 |
274,232 |
||||||
Total liabilities |
2,445,907 |
2,454,655 |
||||||
Shareholders' equity: |
||||||||
Common shares |
1,330 |
1,328 |
||||||
Additional paid-in capital |
6,144,907 |
6,135,939 |
||||||
Accumulated other comprehensive income |
868 |
— |
||||||
Retained earnings |
2,388,517 |
2,541,313 |
||||||
Total shareholders' equity |
8,535,622 |
8,678,580 |
||||||
Total liabilities and shareholders' equity |
$ |
10,981,529 |
$ |
11,133,235 |
|
|||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) |
|||||||
(In thousands) |
|||||||
Three Months Ended |
|||||||
|
|
||||||
Cash flows from operating activities: |
|||||||
Net loss |
$ |
(113,033) |
$ |
(48,450) |
|||
Adjustments to reconcile net loss to net cash provided by operating activities: |
|||||||
Depreciation and amortization |
50,483 |
38,654 |
|||||
Share-based compensation |
59,687 |
58,598 |
|||||
Amortization of acquired intangible assets |
112,922 |
79,740 |
|||||
Amortization of inventory fair value adjustment associated with acquisitions |
17,284 |
— |
|||||
Other expense, net |
11,451 |
12,577 |
|||||
Deferred income taxes |
2,372 |
4,356 |
|||||
Changes in assets and liabilities: |
|||||||
Accounts receivable |
23,586 |
22,775 |
|||||
Inventories |
35,834 |
15,848 |
|||||
Prepaid expenses and other assets |
(6,694) |
8,004 |
|||||
Accounts payable |
(3,557) |
(1,873) |
|||||
Accrued liabilities and other non-current liabilities |
10,796 |
(30,929) |
|||||
Accrued employee compensation |
(25,503) |
6,516 |
|||||
Net cash provided by operating activities |
175,628 |
165,816 |
|||||
Cash flows from investing activities: |
|||||||
Purchases of technology licenses |
(3,684) |
(1,484) |
|||||
Purchases of property and equipment |
(35,343) |
(19,183) |
|||||
Other, net |
665 |
(342) |
|||||
Net cash used in investing activities |
(38,362) |
(21,009) |
|||||
Cash flows from financing activities: |
|||||||
Repurchases of common stock |
(25,202) |
(48,022) |
|||||
Proceeds from employee stock plans |
5,458 |
31,084 |
|||||
Tax withholding paid on behalf of employees for net share settlement |
(31,501) |
(28,758) |
|||||
Dividend payments to shareholders |
(39,763) |
(39,467) |
|||||
Payments on technology license obligations |
(23,807) |
(15,268) |
|||||
Principal payments of debt |
— |
(50,000) |
|||||
Other, net |
(2,507) |
(4,893) |
|||||
Net cash used in financing activities |
(117,322) |
(155,324) |
|||||
Net increase (decrease) in cash and cash equivalents |
19,944 |
(10,517) |
|||||
Cash and cash equivalents at beginning of period |
647,604 |
582,410 |
|||||
Cash and cash equivalents at end of period |
$ |
667,548 |
$ |
571,893 |
|
||||||||||||
Reconciliations from GAAP to Non-GAAP (Unaudited) |
||||||||||||
(In thousands, except per share amounts) |
||||||||||||
Three Months Ended |
||||||||||||
|
|
|
||||||||||
GAAP gross profit: |
$ |
326,902 |
$ |
304,744 |
$ |
361,428 |
||||||
Special items: |
||||||||||||
Share-based compensation |
3,538 |
3,181 |
2,926 |
|||||||||
Amortization of acquired intangible assets |
86,567 |
86,383 |
59,906 |
|||||||||
Other cost of goods sold (a) |
18,562 |
52,510 |
450 |
|||||||||
Total special items |
108,667 |
142,074 |
63,282 |
|||||||||
Non-GAAP gross profit |
$ |
435,569 |
$ |
446,818 |
$ |
424,710 |
||||||
GAAP gross margin |
47.1 |
% |
42.5 |
% |
54.6 |
% |
||||||
Non-GAAP gross margin |
62.8 |
% |
62.3 |
% |
64.1 |
% |
||||||
Total GAAP operating expenses |
$ |
422,898 |
$ |
419,239 |
$ |
382,554 |
||||||
Special items: |
||||||||||||
Share-based compensation |
(56,149) |
(49,989) |
(55,672) |
|||||||||
Restructuring related charges (b) |
(21,287) |
(18,258) |
(5,682) |
|||||||||
Amortization of acquired intangible assets |
(26,355) |
(28,232) |
(19,834) |
|||||||||
Other operating expenses (c) |
(19,403) |
(16,621) |
(6,569) |
|||||||||
Total special items |
(123,194) |
(113,100) |
(87,757) |
|||||||||
Total non-GAAP operating expenses |
$ |
299,704 |
$ |
306,139 |
$ |
294,797 |
||||||
GAAP operating margin |
(13.8) |
% |
(16.0) |
% |
(3.2) |
% |
||||||
Other cost of goods sold (a) |
2.7 |
% |
7.3 |
% |
0.1 |
% |
||||||
Share-based compensation |
8.6 |
% |
7.4 |
% |
8.8 |
% |
||||||
Restructuring related charges (b) |
3.1 |
% |
2.5 |
% |
0.9 |
% |
||||||
Amortization of acquired intangible assets |
16.3 |
% |
16.0 |
% |
12.0 |
% |
||||||
Other operating expenses (c) |
2.7 |
% |
2.4 |
% |
1.0 |
% |
||||||
Non-GAAP operating margin |
19.6 |
% |
19.6 |
% |
19.6 |
% |
||||||
GAAP interest and other income (loss), net |
$ |
(12,018) |
$ |
1,102,902 |
$ |
(20,051) |
||||||
Special items: |
||||||||||||
Restructuring and other related items (d) |
434 |
(1,122,988) |
(338) |
|||||||||
Write-off of debt issuance costs (e) |
— |
1,621 |
458 |
|||||||||
Total special items |
434 |
(1,121,367) |
120 |
|||||||||
Total non-GAAP interest and other income (loss), net |
$ |
(11,584) |
$ |
(18,465) |
$ |
(19,931) |
||||||
GAAP net income (loss) |
$ |
(113,033) |
$ |
1,772,673 |
$ |
(48,450) |
||||||
Special items: |
||||||||||||
Other cost of goods sold (a) |
18,562 |
52,510 |
450 |
|||||||||
Share-based compensation |
59,687 |
53,170 |
58,598 |
|||||||||
Restructuring related charges in operating expenses (b) |
21,287 |
18,258 |
5,682 |
|||||||||
Other operating expenses (c) |
19,403 |
16,621 |
6,569 |
|||||||||
Restructuring and other related items in interest and other income, net (d) |
434 |
(1,122,988) |
(338) |
|||||||||
Amortization of acquired intangible assets |
112,922 |
114,615 |
79,740 |
|||||||||
Write-off of debt issuance costs (e) |
— |
1,621 |
458 |
|||||||||
Pre-tax total special items |
232,295 |
(866,193) |
151,159 |
|||||||||
Other income tax effects and adjustments (f) |
(1,229) |
(789,761) |
2,324 |
|||||||||
Non-GAAP net income |
$ |
118,033 |
$ |
116,719 |
$ |
105,033 |
||||||
Weighted average shares — basic |
663,547 |
665,562 |
658,963 |
|||||||||
Weighted average shares — diluted |
663,547 |
675,700 |
658,963 |
|||||||||
GAAP diluted net income (loss) per share |
$ |
(0.17) |
$ |
2.62 |
$ |
(0.07) |
||||||
Non-GAAP diluted net income per share (g) |
$ |
0.18 |
$ |
0.17 |
$ |
0.16 |
(a) |
Other costs of goods sold includes amortization of acquired inventory fair value adjustment. |
(b) |
Restructuring related charges include employee severance, facilities related costs, and impairment of equipment and other assets. |
(c) |
Other operating expenses include integration costs associated with recent acquisitions. |
(d) |
Interest and other income (loss), net, includes restructuring and other related items such as gain on sale of business and foreign currency remeasurement associated with restructuring related accruals. |
(e) |
Write-off of debt issuance costs is associated with the partial term loan repayment. |
(f) |
Other income tax effects and adjustments relate to tax provision based on a non-GAAP income tax rate of 5.0% for the three months ended |
(g) |
Non-GAAP diluted net income per share for the three months ended |
Marvell Technology Group Ltd. |
||||
Outlook for the Second Quarter of Fiscal Year 2021 |
||||
Reconciliations from GAAP to Non-GAAP (Unaudited) |
||||
(In millions, except per share amounts) |
||||
Outlook for Three Months Ended |
||||
GAAP revenue |
|
|||
Special items: |
— |
|||
Non-GAAP revenue |
|
|||
GAAP gross margin |
50.6% |
|||
Special items: |
||||
Share-based compensation |
0.3% |
|||
Amortization of acquired intangible assets |
12.1% |
|||
Non-GAAP gross margin |
63% |
|||
Total GAAP operating expenses |
|
|||
Special items: |
||||
Share-based compensation |
64 |
|||
Amortization of acquired intangible assets |
26 |
|||
Other operating expenses |
3 |
|||
Total non-GAAP operating expenses |
|
|||
GAAP diluted net loss per share |
$(0.10) - |
|||
Special items: |
||||
Share-based compensation |
0.10 |
|||
Amortization of acquired intangible assets |
0.17 |
|||
Other income tax effects and adjustments |
(0.01) |
|||
Non-GAAP diluted net income per share |
|
Quarterly Revenue Trend (Unaudited) |
|||||||||||||||||
(In thousands) |
|||||||||||||||||
Three Months Ended |
% Change |
||||||||||||||||
|
|
|
YoY |
QoQ |
|||||||||||||
Networking (1) |
$ |
393,920 |
$ |
376,724 |
$ |
341,344 |
15 |
% |
5 |
% |
|||||||
Storage (2) |
258,688 |
296,486 |
278,667 |
(7) |
% |
(13) |
% |
||||||||||
Total Core |
652,608 |
673,210 |
620,011 |
5 |
% |
(3) |
% |
||||||||||
Other (3) |
41,033 |
44,461 |
42,441 |
(3) |
% |
(8) |
% |
||||||||||
Total Revenue |
$ |
693,641 |
$ |
717,671 |
$ |
662,452 |
5 |
% |
(3) |
% |
Three Months Ended |
||||||||
% of Total |
|
|
|
|||||
Networking (1) |
57 |
% |
52 |
% |
52 |
% |
||
Storage (2) |
37 |
% |
41 |
% |
42 |
% |
||
Total Core |
94 |
% |
93 |
% |
94 |
% |
||
Other (3) |
6 |
% |
7 |
% |
6 |
% |
||
Total Revenue |
100 |
% |
100 |
% |
100 |
% |
(1) Networking products are comprised primarily of Ethernet Solutions, Embedded Processors and Custom ASICs. |
(2) Storage products are comprised primarily of Storage Controllers and Fibre Channel Adapters. |
(3) Other products are comprised primarily of Printer Solutions and Application Processors. |
For further information, contact:
Vice President, Investor Relations
408-222-0777
ir@marvell.com
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