Marvell Technology Group Ltd. Reports Third Quarter of Fiscal Year 2021 Financial Results
Revenue for the third quarter of fiscal 2021 was
On
"
Fourth Quarter of Fiscal 2021 Financial Outlook
- Revenue is expected to be
$785 million +/- 5%. - GAAP gross margin is expected to be approximately 52.8%.
- Non-GAAP gross margin is expected to be approximately 64%.
- GAAP operating expenses are expected to be approximately
$379 million . - Non-GAAP operating expenses are expected to be approximately
$280 million . - Basic weighted average shares outstanding are expected to be 673 million.
- Diluted weighted average shares outstanding are expected to be 686 million.
- GAAP diluted income (loss) per share is expected to be
$(0.03) to$0.07 per share. - Non-GAAP diluted income per share is expected to be
$0.25 to$0.33 per share.
GAAP diluted EPS is calculated using basic weighted average shares outstanding when there is a GAAP net loss, and calculated using diluted weighted average shares outstanding when there is a GAAP net income. Non-GAAP diluted EPS is calculated using diluted weighted average shares outstanding.
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. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. 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: the completion of the proposed transaction with Inphi Corporation on anticipated terms and timing or at all, including obtaining shareholder and regulatory approvals, anticipated tax treatment, unforeseen liabilities and other conditions to the completion of the transaction; failure to realize the anticipated benefits of the proposed transaction with Inphi, including as a result of delay in completing the transaction or our ability to integrate the businesses of
About
To deliver the data infrastructure technology that connects the world, we're building solutions on the most powerful foundation: our partnerships with our customers. Trusted by the world's leading technology companies for 25 years, we move, store, process and secure the world's data with semiconductor solutions designed for our customers' current needs and future ambitions. Through a process of deep collaboration and transparency, we're ultimately changing the way tomorrow's enterprise, cloud, automotive, and carrier architectures transform—for the better.
|
||||||||||||||||||||
Condensed Consolidated Statements of Operations (Unaudited) |
||||||||||||||||||||
(In thousands, except per share amounts) |
||||||||||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||||||||||
|
|
|
|
|
||||||||||||||||
Net revenue |
$ |
750,143 |
$ |
727,297 |
$ |
662,470 |
$ |
2,171,081 |
$ |
1,981,490 |
||||||||||
Cost of goods sold |
369,083 |
368,041 |
322,403 |
1,103,863 |
929,293 |
|||||||||||||||
Gross profit |
381,060 |
359,256 |
340,067 |
1,067,218 |
1,052,197 |
|||||||||||||||
Operating expenses: |
||||||||||||||||||||
Research and development |
255,637 |
277,139 |
267,781 |
812,360 |
801,002 |
|||||||||||||||
Selling, general and administrative |
115,501 |
112,794 |
118,993 |
350,322 |
342,988 |
|||||||||||||||
Restructuring related charges |
19,312 |
120,590 |
14,802 |
161,189 |
37,070 |
|||||||||||||||
Total operating expenses |
390,450 |
510,523 |
401,576 |
1,323,871 |
1,181,060 |
|||||||||||||||
Operating loss |
(9,390) |
(151,267) |
(61,509) |
(256,653) |
(128,863) |
|||||||||||||||
Interest income |
608 |
577 |
1,092 |
2,243 |
3,437 |
|||||||||||||||
Interest expense |
(16,066) |
(15,635) |
(21,241) |
(48,531) |
(62,975) |
|||||||||||||||
Other income (loss), net |
299 |
(440) |
689 |
3,613 |
(1,624) |
|||||||||||||||
Interest and other income |
(15,159) |
(15,498) |
(19,460) |
(42,675) |
(61,162) |
|||||||||||||||
Loss before income taxes |
(24,549) |
(166,765) |
(80,969) |
(299,328) |
(190,025) |
|||||||||||||||
Provision (benefit) for income taxes |
(1,641) |
(8,872) |
1,532 |
(5,494) |
(1,743) |
|||||||||||||||
Net loss |
$ |
(22,908) |
$ |
(157,893) |
$ |
(82,501) |
$ |
(293,834) |
$ |
(188,282) |
||||||||||
Net loss per share — basic: |
$ |
(0.03) |
$ |
(0.24) |
$ |
(0.12) |
$ |
(0.44) |
$ |
(0.28) |
||||||||||
Net loss per share — diluted: |
$ |
(0.03) |
$ |
(0.24) |
$ |
(0.12) |
$ |
(0.44) |
$ |
(0.28) |
||||||||||
Weighted average shares: |
||||||||||||||||||||
Basic |
670,487 |
667,574 |
668,178 |
667,186 |
667,184 |
|||||||||||||||
Diluted |
670,487 |
667,574 |
668,178 |
667,186 |
667,184 |
|
||||||||
Condensed Consolidated Balance Sheets (Unaudited) |
||||||||
(In thousands) |
||||||||
|
|
|||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ |
832,041 |
$ |
647,604 |
||||
Accounts receivable, net |
490,271 |
492,346 |
||||||
Inventories |
268,396 |
322,980 |
||||||
Prepaid expenses and other current assets |
68,618 |
74,567 |
||||||
Total current assets |
1,659,326 |
1,537,497 |
||||||
Property and equipment, net |
331,769 |
357,092 |
||||||
|
5,336,356 |
5,337,405 |
||||||
Acquired intangible assets, net |
2,380,382 |
2,764,600 |
||||||
Deferred tax assets |
646,837 |
639,791 |
||||||
Other non-current assets |
470,102 |
496,850 |
||||||
Total assets |
$ |
10,824,772 |
$ |
11,133,235 |
||||
Liabilities and Shareholders' Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ |
224,112 |
$ |
213,747 |
||||
Accrued liabilities |
406,986 |
346,639 |
||||||
Accrued employee compensation |
187,982 |
149,780 |
||||||
Short-term debt |
349,004 |
— |
||||||
Total current liabilities |
1,168,084 |
710,166 |
||||||
Long-term debt |
992,801 |
1,439,024 |
||||||
Other non-current liabilities |
274,270 |
305,465 |
||||||
Total liabilities |
2,435,155 |
2,454,655 |
||||||
Shareholders' equity: |
||||||||
Common shares |
1,343 |
1,328 |
||||||
Additional paid-in capital |
6,260,906 |
6,135,939 |
||||||
Retained earnings |
2,127,368 |
2,541,313 |
||||||
Total shareholders' equity |
8,389,617 |
8,678,580 |
||||||
Total liabilities and shareholders' equity |
$ |
10,824,772 |
$ |
11,133,235 |
|
||||||||||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) |
||||||||||||||||
(In thousands) |
||||||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||||||
|
|
|
|
|||||||||||||
Cash flows from operating activities: |
||||||||||||||||
Net loss |
$ |
(22,908) |
$ |
(82,501) |
$ |
(293,834) |
$ |
(188,282) |
||||||||
Adjustments to reconcile net loss to net cash provided by |
||||||||||||||||
Depreciation and amortization |
47,834 |
36,082 |
149,922 |
112,662 |
||||||||||||
Share-based compensation |
59,787 |
66,762 |
182,060 |
189,036 |
||||||||||||
Amortization of acquired intangible assets |
109,433 |
92,760 |
333,934 |
253,467 |
||||||||||||
Amortization of inventory fair value |
— |
3,316 |
17,284 |
3,316 |
||||||||||||
Restructuring related impairment charges |
6,013 |
6,146 |
123,559 |
16,243 |
||||||||||||
Other expense (income), net |
8,614 |
(2,094) |
23,080 |
14,814 |
||||||||||||
Changes in assets and liabilities: |
||||||||||||||||
Accounts receivable |
(6,729) |
(32,002) |
2,075 |
8,374 |
||||||||||||
Inventories |
(5,984) |
(39,276) |
29,817 |
(30,602) |
||||||||||||
Prepaid expenses and other assets |
(5,677) |
(3,046) |
(8,692) |
(11,039) |
||||||||||||
Accounts payable |
5,121 |
8,304 |
34,768 |
30,801 |
||||||||||||
Accrued liabilities and other non-current |
5,289 |
(26,141) |
26,817 |
(106,258) |
||||||||||||
Accrued employee compensation |
56,741 |
37,193 |
38,202 |
11,927 |
||||||||||||
Net cash provided by operating |
257,534 |
65,503 |
658,992 |
304,459 |
||||||||||||
Cash flows from investing activities: |
||||||||||||||||
Sales of available-for-sale securities |
— |
18,832 |
— |
18,832 |
||||||||||||
Purchases of technology licenses |
(1,712) |
(414) |
(8,476) |
(1,936) |
||||||||||||
Purchases of property and equipment |
(35,359) |
(20,742) |
(88,242) |
(62,935) |
||||||||||||
Cash payment for acquisition, net of cash and |
— |
(477,579) |
— |
(477,579) |
||||||||||||
Other, net |
(476) |
(1,404) |
223 |
(1,793) |
||||||||||||
Net cash used in investing activities |
(37,547) |
(481,307) |
(96,495) |
(525,411) |
||||||||||||
Cash flows from financing activities: |
||||||||||||||||
Repurchases of common stock |
— |
— |
(25,202) |
(64,272) |
||||||||||||
Proceeds from employee stock plans |
2,256 |
21,795 |
50,490 |
103,109 |
||||||||||||
Tax withholding paid on behalf of employees |
(25,912) |
(19,220) |
(82,626) |
(80,862) |
||||||||||||
Dividend payments to shareholders |
(40,229) |
(40,140) |
(120,111) |
(119,496) |
||||||||||||
Payments on technology license obligations |
(34,285) |
(28,889) |
(76,794) |
(57,213) |
||||||||||||
Proceeds from issuance of debt |
— |
350,000 |
— |
350,000 |
||||||||||||
Principal payments of debt |
(100,000) |
— |
(100,000) |
(50,000) |
||||||||||||
Payment of debt financing costs |
(22,313) |
— |
(22,313) |
— |
||||||||||||
Other, net |
1,003 |
(2,869) |
(1,504) |
(4,355) |
||||||||||||
Net cash provided by (used in) |
(219,480) |
280,677 |
(378,060) |
76,911 |
||||||||||||
Net increase (decrease) in cash and cash equivalents |
507 |
(135,127) |
184,437 |
(144,041) |
||||||||||||
Cash and cash equivalents at beginning of period |
831,534 |
573,496 |
647,604 |
582,410 |
||||||||||||
Cash and cash equivalents at end of period |
$ |
832,041 |
$ |
438,369 |
$ |
832,041 |
$ |
438,369 |
|
||||||||||||||||||||
Reconciliations from GAAP to Non-GAAP (Unaudited) |
||||||||||||||||||||
(In thousands, except per share amounts) |
||||||||||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||||||||||
|
|
|
|
|
||||||||||||||||
GAAP gross profit: |
$ |
381,060 |
$ |
359,256 |
$ |
340,067 |
$ |
1,067,218 |
$ |
1,052,197 |
||||||||||
Special items: |
||||||||||||||||||||
Share-based compensation |
4,435 |
4,082 |
3,990 |
12,055 |
10,578 |
|||||||||||||||
Amortization of acquired intangible assets |
83,078 |
85,225 |
72,146 |
254,870 |
193,184 |
|||||||||||||||
Other cost of goods sold (a) |
4,296 |
11,630 |
4,758 |
34,488 |
5,208 |
|||||||||||||||
Total special items |
91,809 |
100,937 |
80,894 |
301,413 |
208,970 |
|||||||||||||||
Non-GAAP gross profit |
$ |
472,869 |
$ |
460,193 |
$ |
420,961 |
$ |
1,368,631 |
$ |
1,261,167 |
||||||||||
GAAP gross margin |
50.8 |
% |
49.4 |
% |
51.3 |
% |
49.2 |
% |
53.1 |
% |
||||||||||
Non-GAAP gross margin |
63.0 |
% |
63.3 |
% |
63.5 |
% |
63.0 |
% |
63.6 |
% |
||||||||||
Total GAAP operating expenses |
$ |
390,450 |
$ |
510,523 |
$ |
401,576 |
$ |
1,323,871 |
$ |
1,181,060 |
||||||||||
Special items: |
||||||||||||||||||||
Share-based compensation |
(55,352) |
(58,504) |
(63,375) |
(170,005) |
(179,061) |
|||||||||||||||
Restructuring related charges (b) |
(19,312) |
(120,590) |
(14,802) |
(161,189) |
(37,070) |
|||||||||||||||
Amortization of acquired intangible assets |
(26,355) |
(26,354) |
(20,614) |
(79,064) |
(60,283) |
|||||||||||||||
Other operating expenses (c) |
(9,490) |
(8,125) |
(19,495) |
(37,018) |
(46,740) |
|||||||||||||||
Total special items |
(110,509) |
(213,573) |
(118,286) |
(447,276) |
(323,154) |
|||||||||||||||
Total non-GAAP operating expenses |
$ |
279,941 |
$ |
296,950 |
$ |
283,290 |
$ |
876,595 |
$ |
857,906 |
||||||||||
GAAP operating margin |
(1.3) |
% |
(20.8) |
% |
(9.3) |
% |
(11.8) |
% |
(6.5) |
% |
||||||||||
Other cost of goods sold (a) |
0.6 |
% |
1.6 |
% |
0.7 |
% |
1.6 |
% |
0.3 |
% |
||||||||||
Share-based compensation |
8.0 |
% |
8.6 |
% |
10.2 |
% |
8.4 |
% |
9.6 |
% |
||||||||||
Restructuring related charges (b) |
2.6 |
% |
16.6 |
% |
2.2 |
% |
7.4 |
% |
1.9 |
% |
||||||||||
Amortization of acquired intangible assets |
14.6 |
% |
15.3 |
% |
14.0 |
% |
15.4 |
% |
12.8 |
% |
||||||||||
Other operating expenses (c) |
1.2 |
% |
1.1 |
% |
3.0 |
% |
1.7 |
% |
2.3 |
% |
||||||||||
Non-GAAP operating margin |
25.7 |
% |
22.4 |
% |
20.8 |
% |
22.7 |
% |
20.4 |
% |
||||||||||
GAAP interest and other income (loss), net |
$ |
(15,159) |
$ |
(15,498) |
$ |
(19,460) |
$ |
(42,675) |
$ |
(61,162) |
||||||||||
Special items: |
||||||||||||||||||||
Restructuring and other related items (d) |
(1,002) |
— |
(946) |
(568) |
(1,209) |
|||||||||||||||
Write-off of debt issuance costs (e) |
453 |
— |
— |
453 |
458 |
|||||||||||||||
Deal costs (f) |
— |
— |
496 |
— |
1,505 |
|||||||||||||||
Total special items |
(549) |
— |
(450) |
(115) |
754 |
|||||||||||||||
Total non-GAAP interest and other income (loss), net |
$ |
(15,708) |
$ |
(15,498) |
$ |
(19,910) |
$ |
(42,790) |
$ |
(60,408) |
||||||||||
GAAP net loss |
$ |
(22,908) |
$ |
(157,893) |
$ |
(82,501) |
$ |
(293,834) |
$ |
(188,282) |
||||||||||
Special items: |
||||||||||||||||||||
Other cost of goods sold (a) |
4,296 |
11,630 |
4,758 |
34,488 |
5,208 |
|||||||||||||||
Share-based compensation |
59,787 |
62,586 |
67,365 |
182,060 |
189,639 |
|||||||||||||||
Restructuring related charges in operating expenses (b) |
19,312 |
120,590 |
14,802 |
161,189 |
37,070 |
|||||||||||||||
Other operating expenses (c) |
9,490 |
8,125 |
19,495 |
37,018 |
46,740 |
|||||||||||||||
Restructuring and other related items in interest and other income, net (d) |
(1,002) |
— |
(946) |
(568) |
(1,209) |
|||||||||||||||
Amortization of acquired intangible assets |
109,433 |
111,579 |
92,760 |
333,934 |
253,467 |
|||||||||||||||
Write-off of debt issuance costs (e) |
453 |
— |
— |
453 |
458 |
|||||||||||||||
Transaction costs included in interest and other income, net (f) |
— |
— |
496 |
— |
1,505 |
|||||||||||||||
Pre-tax total special items |
201,769 |
314,510 |
198,730 |
748,574 |
532,878 |
|||||||||||||||
Other income tax effects and adjustments (g) |
(10,502) |
(16,226) |
(3,773) |
(27,957) |
(17,177) |
|||||||||||||||
Non-GAAP net income |
$ |
168,359 |
$ |
140,391 |
$ |
112,456 |
$ |
426,783 |
$ |
327,419 |
||||||||||
GAAP weighted average shares — basic |
670,487 |
667,574 |
668,178 |
667,186 |
667,184 |
|||||||||||||||
GAAP weighted average shares — diluted |
670,487 |
667,574 |
668,178 |
667,186 |
667,184 |
|||||||||||||||
Non-GAAP weighted average shares — diluted (h) |
682,724 |
678,304 |
679,345 |
677,273 |
678,986 |
|||||||||||||||
GAAP diluted net loss per share |
$ |
(0.03) |
$ |
(0.24) |
$ |
(0.12) |
$ |
(0.44) |
$ |
(0.28) |
||||||||||
Non-GAAP diluted net income per share |
$ |
0.25 |
$ |
0.21 |
$ |
0.17 |
$ |
0.63 |
$ |
0.48 |
(a) |
Other costs of goods sold includes inventory write-downs and amortization of acquired inventory fair value adjustments. |
(b) |
Restructuring related charges include asset impairment charges (including asset impairment charges due to changes to the scope of the server processor product line), employee severance costs, facilities related charges, and other. |
(c) |
Other operating expenses include integration and merger costs associated with acquisitions. |
(d) |
Interest and other income (loss), net, includes restructuring and other related items such as foreign currency remeasurement associated with restructuring related accruals. |
(e) |
Write-off of debt issuance costs is associated with partial term loan repayment. |
(f) |
Deal costs include transaction costs incurred in connection with divestiture of the Wi-Fi Connectivity business. |
(g) |
Other income tax effects and adjustments relate to tax provision based on a non-GAAP income tax rate of 5.0% for the three and nine months ended |
(h) |
Non-GAAP diluted weighted average shares differs from GAAP diluted weighted average shares due to the non-GAAP net income reported. |
Marvell Technology Group Ltd. |
|
Outlook for the Fourth 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 |
~52.8% |
Special items: |
|
Share-based compensation |
0.5% |
Amortization of acquired intangible assets |
10.7% |
Non-GAAP gross margin |
~64% |
Total GAAP operating expenses |
|
Special items: |
|
Share-based compensation |
53 |
Amortization of acquired intangible assets |
26 |
Restructuring related charges |
15 |
Other operating expenses |
5 |
Total non-GAAP operating expenses |
|
GAAP diluted net income (loss) per share |
$(0.03) - |
Special items: |
|
Share-based compensation |
0.08 |
Amortization of acquired intangible assets |
0.16 |
Restructuring related charges |
0.02 |
Other operating expenses |
0.01 |
Other expense |
0.01 |
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) |
$ |
444,756 |
$ |
406,008 |
$ |
329,962 |
35 |
% |
10 |
% |
|||||||
Storage (2) |
276,279 |
290,495 |
287,708 |
(4) |
% |
(5) |
% |
||||||||||
Total Core |
721,035 |
696,503 |
617,670 |
17 |
% |
4 |
% |
||||||||||
Other (3) |
29,108 |
30,794 |
44,800 |
(35) |
% |
(5) |
% |
||||||||||
Total Revenue |
$ |
750,143 |
$ |
727,297 |
$ |
662,470 |
13 |
% |
3 |
% |
|||||||
Three Months Ended |
|||||||||||||||||
% of Total |
|
|
|
||||||||||||||
Networking (1) |
59 |
% |
56 |
% |
50 |
% |
|||||||||||
Storage (2) |
37 |
% |
40 |
% |
43 |
% |
|||||||||||
Total Core |
96 |
% |
96 |
% |
93 |
% |
|||||||||||
Other (3) |
4 |
% |
4 |
% |
7 |
% |
|||||||||||
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. |
For further information, contact:
Vice President, Investor Relations
408-222-0777
ir@marvell.com
View original content to download multimedia:http://www.prnewswire.com/news-releases/marvell-technology-group-ltd-reports-third-quarter-of-fiscal-year-2021-financial-results-301186158.html
SOURCE