Marvell: Fiscal 4Q14 Financial Results

Marvell Technology Group Ltd reported financial results for the fourth fiscal quarter and fiscal year 2014, ended February 1, 2014.

Fourth Quarter of Fiscal 2014 and Fiscal Year 2014 Financial Highlights

• Revenue: Q4 FY 2014 $932 million; FY 2014, $3.40 billion
• GAAP Net Income: Q4 FY 2014, $107 million; FY 2014, $325 million
• GAAP Diluted EPS: Q4 FY 2014, $0.21; FY 2014, $0.64
• Non-GAAP Net Income: Q4 FY 2014, $151 million; FY 2014, $530 million
• Non-GAAP Diluted EPS: Q4 FY 2014, $0.29; FY 2014, $1.02
• Free Cash Flow: Q4 FY 2014, $82 million, FY 2014, $356 million

First Quarter of Fiscal 2015 Financial Outlook

• Revenue is expected to be in the range of $870 to $910 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 50.0% +/- 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 $330 million +/- $10 million.
• GAAP Diluted EPS expected to be in the range of $0.14 +/- $0.02. Non-GAAP Diluted EPS expected to be in the range of $0.22 +/- $0.02.

Fourth Quarter of Fiscal 2014 and Fiscal Year 2014 Summary
Revenue for the fourth quarter of fiscal 2014 was $932 million, essentially flat from $931 million in the third quarter of fiscal 2014, ended November 2, 2013, and a 20% increase from revenue of $775 million in the fourth quarter of fiscal 2013, ended February 2, 2013.

For the fiscal year ended February 1, 2014, revenue was $3.4 billion, an increase of 7% from revenue of $3.17 billion for the fiscal year ended February 2, 2013.

GAAP net income for the fourth quarter of fiscal 2014 was $107 million, or $0.21 per share (diluted), compared with GAAP net income of $103 million, or $0.21 per share (diluted), for the third quarter of fiscal 2014, and $50 million, or $0.09 per share (diluted), for the fourth quarter of fiscal 2013.

For the year ended February 1, 2014, GAAP net income was $325 million, or $0.64 per share (diluted), compared with GAAP net income of $307 million, or $0.54 per share (diluted), for the year ended February 2, 2013.

Non-GAAP net income was $151 million, or $0.29 per share (diluted), for the fourth quarter of fiscal 2014, compared with non-GAAP net income of $163 million, or $0.32 per share (diluted), for the third quarter of fiscal 2014 and $104 million, or $0.19 per share (diluted), for the fourth quarter of fiscal 2013.

For the fiscal year ended February 1, 2014, non-GAAP net income was $530 million, or $1.02 per share (diluted), compared with non-GAAP net income of $498 million, or $0.86 per share (diluted) for the fiscal year ended February 2, 2013.

“Fiscal year 2014 was the start of a turnaround for Marvell as we delivered year over year growth in revenue and profits. We made good progress in a number of critical areas during the year,” said Dr. Sehat Sutardja, Marvell’s chairman and CEO. “We are investing in advanced technologies that will help drive increased business opportunities and continued revenue and profit growth in all of our target end markets.”

GAAP gross margin for the fourth quarter of fiscal 2014 was 49.8%, compared to 50.1% for the third quarter of fiscal 2014 and 52.2% for the fourth quarter of fiscal 2013. GAAP gross margin for fiscal year 2014 was 51.4% compared to 52.9% for fiscal year 2013.

Non-GAAP gross margin for the fourth quarter of fiscal 2014 was 50.1%, compared to 50.3% for the third quarter of fiscal 2014 and 53.2% for the fourth quarter of fiscal 2013. Non-GAAP gross margin for fiscal year 2014 was 51.8% compared to 53.4% for fiscal year 2013.

Shares used to compute GAAP net income per diluted share for the fourth quarter of fiscal 2014 were 510 million shares, compared with 501 million shares in the third quarter of fiscal 2014 and 528 million shares in the fourth quarter of fiscal 2013. Shares used to compute GAAP net income per diluted share for fiscal year 2014 were 504 million shares as compared with 563 million shares for fiscal year 2013.

Shares used to compute non-GAAP net income per diluted share for the fourth quarter of fiscal 2014 were 523 million shares, compared with 514 million shares for the third quarter of fiscal 2014 and 544 million shares for the fourth quarter of fiscal 2013. Shares used to compute non-GAAP net income per diluted share for fiscal year 2014 were 519 million shares as compared with 579 million shares for fiscal year 2013.

Cash flow from operations for the fourth quarter of fiscal 2014 was $100 million, compared to the $177 million reported in the third quarter of fiscal 2014 and the $205 million reported in the fourth quarter of fiscal 2013. Free cash flow for the fourth quarter of fiscal 2014 was $82 million, compared to the $157 million reported in the third quarter of fiscal 2014 and the $161 million reported in the fourth 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.

Marvell paid a quarterly dividend of $0.06 per share on December 23, 2013 to all shareholders of record as of December 12, 2013. It intends to pay its next quarterly dividend of $0.06 per share on March 27, 2014 to all shareholders of record as of March 13, 2014. Developments in on-going litigation could affect Marvell’s ability to pay the dividend on March 27, 2014 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.