Marvell: Fiscal 2Q14 Financial Results

Marvell Technology Group Ltd. reported financial results for the second quarter of fiscal year 2014, ended August 3, 2013.

Key 2Q FY2014 Financial Highlights

• Revenue: $807 million
• GAAP Net Income: $62 million
• GAAP EPS: $0.12
• Non-GAAP Net Income: $118 million
• Non-GAAP EPS: $0.23
• Free Cash Flow: $65 million

3Q 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 August 21, 2013.
• Revenue is expected to be in the range of $850 to $890 million.
• GAAP Gross Margin is expected to be in the range of 50.7% 100 bps. Non-GAAP Gross Margin is expected to be in the range of 51% 100 bps.
• GAAP Operating Expenses are expected to be in the range of $370 million $10 Million. Non-GAAP Operating Expenses to be in the range of $315 million $10 million.
• GAAP EPS expected to be in the range of $0.15 $0.02. Non-GAAP EPS expected to be in the range of $0.25 $0.02.

2Q FY2014 Summary
Revenue for the second quarter of fiscal 2014 was $807 million, a 10% sequential increase from $734 million in the first quarter of fiscal 2014, ended May 4, 2013, and a 1% decrease from revenue of $816 million in the second quarter of fiscal 2013, ended July 28, 2012.

GAAP net income for the second quarter of fiscal 2014 was $62 million, or $0.12 per share (diluted), compared with GAAP net income of $53 million, or $0.11 per share (diluted), for the first quarter of fiscal 2014, and $93 million, or $0.16 per share (diluted), for the second quarter of fiscal 2013.

Non-GAAP net income was $118 million, or $0.23 per share (diluted), for the second quarter of fiscal 2014, compared with non-GAAP net income of $98 million, or $0.19 per share (diluted), for the first quarter of fiscal 2014, and $142 million, or $0.24 per share (diluted), for the second quarter of fiscal 2013.

"Our results in the second quarter were at the high-end of our guidance mainly due to better demand and share gains in our storage end market and strong double digit growth in our mobile and wireless end markets," said Dr. Sehat Sutardja, Marvell’s chairman and CEO. "Many of our customers are introducing new devices using our innovative solutions, which should drive continued success across all of our end markets. We expect growth to be driven by increased traction in areas such as mobile handsets, tablets, connectivity, smart home devices and SSDs."

GAAP gross margin for the second quarter of fiscal 2014 was 52.2%, compared to 54.3% for the first quarter of fiscal 2014 and 53.2% for the second quarter of fiscal 2013.

Non-GAAP gross margin for the second quarter of fiscal 2014 was 53.0%, compared to 54.6% for the first quarter of fiscal 2014 and 53.6% for the second quarter of fiscal 2013.

Shares used to compute GAAP net income per diluted share for the second quarter of fiscal 2014 were 501 million shares, compared with 505 million shares in the first quarter of fiscal 2014 and 570 million shares in the second quarter of fiscal 2013. Shares used to compute non-GAAP net income per diluted share for the second quarter of fiscal 2014 were 516 million shares, compared with 522 million shares for the first quarter of fiscal 2014 and 587 million shares for the second 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 second quarter of fiscal 2014 was $86 million, compared to the $84 million reported in the first quarter of fiscal 2014 and the $189 million reported in the second quarter of fiscal 2013. Free cash flow for the second quarter of fiscal 2014 was $65 million, compared to the $53 million reported in the first quarter of fiscal 2014 and the $174 million reported in the second 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 7.2 million shares for a total of $83 million in the second quarter of fiscal 2014. Over the past 12 quarters, Marvell has repurchased and retired approximately 211 million shares, or about 30% of its outstanding shares.

Marvell also paid a quarterly dividend of $0.06 per share on July 3, 2013 to all shareholders of record as of June 13, 2013. Marvell intends to pay its next quarterly dividend of $0.06 per share on October 3, 2013 to all shareholders of record as of September 12, 2013.