Marvell Technology Group Ltd. reports 985% Net Income growth in 2020 and almost no change in EBITDA Margin of 12.3%
03/04/2020 • About Marvell Technology Group Ltd. (
$MRVL) • By InTwits
Marvell Technology Group Ltd. reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Marvell Technology Group Ltd. is a company in decline: FY2020 revenue growth was -5.8%, 5 years revenue CAGR was -6.1%
- EBITDA Margin is quite volatile: 12.3% in FY2020, 12.2% in FY2019, 21.4% in FY2018, 10.8% in FY2017, -24.3% in FY2016
- Marvell Technology Group Ltd. motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2016-FY2020 was 2.6% while average EBITDA Margin was 6.3% for the sames years
- Marvell Technology Group Ltd. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.2%. At the same time it's a lot of higher than industry average of 6.0%.
- CAPEX is quite volatile: $82m in FY2020, $76m in FY2019, $39m in FY2018, $45m in FY2017, $47m in FY2016
- The company has unprofitable business model: ROIC is -2.5%
- It operates with high leverage: Net Debt/EBITDA is 2.8x while industry average is 0.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue decreased on 5.8%. Annual revenue decline showed slowdown in FY20Q4 - revenue decreased on 3.6%. During the last 5 years Revenue growth topped in FY2019 at 19.0%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 5.4 pp from 57.6% to 52.2% in 2020.
Gross Margin decreased slightly on 0.62 pp from 50.9% to 50.3% in FY2020. During the last 5 years Gross Margin topped in FY2018 at 60.7% and was declining since that time. SG&A as a % of Revenue increased on 2.4 pp from 14.8% to 17.2% in FY2020.
Net Income margin jumped on 64.9 pp from -6.2% to 58.7% in FY2020.
Investments (CAPEX, working capital and M&A)
In FY2020 Marvell Technology Group Ltd. had CAPEX/Revenue of 3.0%. The company showed small growth in CAPEX/Revenue of 1.1 pp from 1.9% in FY2017 to 3.0% in FY2020. It's average CAPEX/Revenue for the last three years was 2.4%.
Return on investment
The company operates at negative ROIC (-2.5%) and low but positive ROE (19.8%). ROIC decreased on 3.2 pp from 0.65% to -2.5% in FY2020. ROE jumped on 23.0 pp from -3.1% to 19.8% in FY2020. During the last 5 years ROIC topped in FY2018 at 10.5% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.8x and Debt / EBITDA is 4.8x. Net Debt / EBITDA dropped on 0.5x from 3.3x to 2.8x in FY2020. Debt decreased on 8.6% while cash jumped on 11.2%.
Marvell Technology Group Ltd. has no short term refinancing risk: cash is higher than short term debt (2,259.5%).
Valuation and dividends
The company's trades at EV/EBITDA 47.4x and P/E 9.3x.
Management team
Marvell Technology Group Ltd.'s CEO is Matthew J Murphy "Matt". Matthew J Murphy "Matt" has 4 years tenure with the company. Jean X Hu is a the company's CFO. Jean X Hu has spent 4 years at the company.
Financial and operational results
FY ended 02/01/2020
Marvell Technology Group Ltd. ($MRVL) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 2,602 | 2,301 | 2,409 | 2,866 | 2,699 | -5.8% |
| Gross Profit | 1,196 | 1,283 | 1,462 | 1,458 | 1,357 | -7.0% |
| SG&A | 279 | 251 | 238 | 424 | 465 | 9.5% |
| EBITDA | -633 | 249 | 517 | 351 | 331 | -5.6% |
| EBIT | -745 | 130 | 430 | | | |
| Interest expence | 1 | 0 | 1 | | | |
| Tax | 11 | 73 | 18 | | | |
| Net Income | -811 | 21 | 521 | -179 | 1,584 | |
| Stock Based Compensation | 134 | 114 | 87 | | | |
Balance Sheet
|
|---|
| Cash | 1,278 | 814 | 888 | 582 | 648 | 11.2% |
| Accounts Receivable | 321 | 335 | 280 | | | |
| Inventory | 201 | 171 | 170 | | | |
| Accounts Payable | 180 | 143 | 145 | | | |
| Short Term Debt | 0 | 0 | 0 | 0 | 29 | |
| Long Term Debt | 0 | 0 | 0 | 1,733 | 1,555 | -10.3% |
Cash flow
|
|---|
| Capex | 47 | 45 | 39 | 76 | 82 | 7.9% |
| Dividends | 123 | 122 | 119 | | | |
Ratios
|
|---|
| Revenue growth | -29.8% | -11.6% | 4.7% | 19.0% | -5.8% | |
| EBITDA growth | -218.6% | -139.3% | 107.6% | -32.2% | -5.6% | |
|
|---|
| Gross Margin | 46.0% | 55.8% | 60.7% | 50.9% | 50.3% | -0.6% |
| EBITDA Margin | -24.3% | 10.8% | 21.4% | 12.2% | 12.3% | 0.0% |
| EBIT Margin | -28.6% | 5.7% | 17.8% | | |
| SG&A, % of revenue | 10.7% | 10.9% | 9.9% | 14.8% | 17.2% | 2.4% |
| SBC, % of revenue | 5.1% | 5.0% | 3.6% | | |
| Net Income Margin | -31.2% | 0.9% | 21.6% | -6.2% | 58.7% | 64.9% |
| CAPEX, % of revenue | 1.8% | 1.9% | 1.6% | 2.6% | 3.0% | 0.4% |
|
|---|
| ROIC | -16.0% | 3.2% | 10.5% | 0.6% | -2.5% | -3.2% |
| ROE | -17.5% | 0.5% | 12.8% | -3.1% | 19.8% | 23.0% |
| Net Debt/EBITDA | | -3.3x | -1.7x | 3.3x | 2.8x | -0.5x |
People
|
|---|
| Insider ownership | 4.4% | 4.4% | 4.4% | | | |
| Employees | 5,437 | 4,617 | 3,749 | | | |
| Revenue/Employee, th. $ | 479 | 498 | 643 | | | |
Marvell Technology Group Ltd. ($MRVL) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 662 | 657 | 662 | 718 | | 9.6% | -1.3% | -22.2% | -3.6% |
| EBITDA | 114 | 90 | 86 | 55 | | -21.9% | 103.6% | -11.6% | -13.0% |
| Net Income | -48 | -57 | -83 | 1,773 | | -137.7% | -948.2% | - | - |
Balance Sheet
|
|---|
| Cash | 572 | 573 | 438 | 648 | | -51.0% | 15.0% | -28.2% | 11.2% |
| Short Term Debt | 28 | 27 | 28 | 29 | | - | - | - | - |
| Long Term Debt | 1,803 | 1,802 | 2,155 | 1,555 | | - | -4.1% | 19.3% | -10.3% |
Ratios
|
|---|
| Gross Margin | 54.6% | 53.4% | 51.3% | 42.5% | | -7.6% | -3.3% | 6.3% | -0.8% |
| EBITDA Margin | 17.1% | 13.8% | 13.0% | 7.7% | | -6.9% | 7.1% | 1.5% | -0.8% |
| Net Income Margin | -7.3% | -8.7% | -12.5% | 247.0% | | -28.6% | -9.7% | -6.1% | 282.0% |
Peers in Semiconductors
Below we provide Marvell Technology Group Ltd. benchmarking against other companies in Semiconductors industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Inphi Corporation ($IPHI) | - | 30.8% | -15.4% | 24.2% | 86.8% |
| Sequans Communications S.A. ($SQNS) | - | 5.9% | -16.6% | -23.3% | 65.0% |
| MaxLinear, Inc ($MXL) | - | 8.4% | -8.4% | -17.6% | 50.9% |
| Advanced Micro Devices, Inc. ($AMD) | - | 21.6% | 23.3% | 4.0% | 45.0% |
| Kopin Corporation ($KOPN) | - | 23.0% | -12.1% | 20.7% | 35.9% |
| |
|---|
| Median (43 companies) | 1.2% | 11.0% | 4.6% | -3.2% | 2.8% |
|---|
| Marvell Technology Group Ltd. ($MRVL) | - | -11.6% | 4.7% | 19.0% | -5.8% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| CEVA, Inc. ($CEVA) | 91.6% | 92.1% | 89.8% | 88.4% | 89.3% |
| Universal Display Corporation ($OLED) | 83.9% | 80.8% | 75.5% | 78.5% | 80.1% |
| Rambus, Inc. ($RMBS) | 80.1% | 79.9% | 76.8% | 77.1% | 75.0% |
| Analog Devices, Inc. ($ADI) | 65.1% | 59.9% | 68.3% | 67.0% | 65.9% |
| MoSys, Inc. ($MOSY) | 49.0% | 46.9% | 61.8% | 61.0% | 65.7% |
| |
|---|
| Median (43 companies) | 48.0% | 48.6% | 50.2% | 50.4% | 49.2% |
|---|
| Marvell Technology Group Ltd. ($MRVL) | 46.0% | 55.8% | 60.7% | 50.9% | 50.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Texas Instruments Incorporated ($TXN) | 43.5% | 46.7% | 48.6% | 47.5% | 47.6% |
| Intel Corp ($INTC) | 35.2% | 41.7% | 45.7% | 45.9% | 46.7% |
| Broadcom Inc. ($AVGO) | 19.9% | 40.4% | 44.2% | 40.9% | 46.2% |
| Universal Display Corporation ($OLED) | 44.8% | 51.6% | 35.3% | 48.0% | 45.9% |
| Analog Devices, Inc. ($ADI) | 36.2% | 32.1% | 43.2% | 42.1% | 42.0% |
| |
|---|
| Median (41 companies) | 9.2% | 10.7% | 9.3% | 13.6% | 17.4% |
|---|
| Marvell Technology Group Ltd. ($MRVL) | -24.3% | 10.8% | 21.4% | 12.2% | 12.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Micron Technology, Inc. ($MU) | 46.9% | 23.3% | 29.2% | 41.8% | 38.4% |
| Sequans Communications S.A. ($SQNS) | 11.8% | 13.3% | 22.9% | 29.6% | 27.1% |
| Intel Corp ($INTC) | 16.2% | 18.8% | 21.4% | 22.5% | 18.6% |
| First Solar, Inc. ($FSLR) | 7.9% | 17.5% | 33.0% | 21.8% | 15.4% |
| Power Integrations, Inc. ($POWI) | 3.1% | 7.5% | 5.9% | 5.7% | 14.5% |
| |
|---|
| Median (40 companies) | 3.7% | 4.7% | 4.4% | 3.8% | 4.0% |
|---|
| Marvell Technology Group Ltd. ($MRVL) | 1.8% | 1.9% | 1.6% | 2.6% | 3.0% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Texas Instruments Incorporated ($TXN) | 34.9% | 43.1% | 47.5% | 39.7% | 38.2% |
| Applied Materials Inc ($AMAT) | 19.0% | 31.2% | 36.4% | 27.7% | 32.1% |
| Advanced Micro Devices, Inc. ($AMD) | -21.7% | 7.3% | 21.6% | 21.5% | 31.8% |
| QUALCOMM Incorporated ($QCOM) | 15.8% | 5.7% | 2.2% | 38.0% | 28.1% |
| NVIDIA Corporation ($NVDA) | 13.1% | 27.3% | 35.3% | 36.9% | 22.7% |
| |
|---|
| Median (45 companies) | 1.7% | 3.2% | 2.2% | 3.8% | 5.5% |
|---|
| Marvell Technology Group Ltd. ($MRVL) | -16.0% | 3.2% | 10.5% | 0.6% | -2.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| SunPower Corporation ($SPWR) | - | - | - | - | 8.2x |
| MACOM Technology Solutions Holdings, Inc. ($MTSI) | 3.0x | 7.2x | 98.6x | - | 6.6x |
| Rambus, Inc. ($RMBS) | -0.1x | -0.1x | - | - | 5.9x |
| Inphi Corporation ($IPHI) | 4.5x | 33.7x | 32.2x | 4.5x | 3.4x |
| Canadian Solar Inc. ($CSIQ) | 11.3x | 6.8x | 2.7x | 3.4x | 3.3x |
| |
|---|
| Median (31 companies) | 0.2x | 0.4x | 0.3x | 0.5x | 0.1x |
|---|
| Marvell Technology Group Ltd. ($MRVL) | - | -3.3x | -1.7x | 3.3x | 2.8x |
