Broadcom Beats Street
September 4, 2020
Broadcom reported financial results for its third quarter of
fiscal year 2020, ended August 2, 2020, provided guidance for the fourth
quarter of its fiscal year 2020 and announced its quarterly dividends.
The firm's profit of
$5.40 per share was 16 cents a share above what was expected.
Revenue was just a hair above forecasts. Broadcom issued a rosier than
expected current-quarter outlook.
"We delivered third quarter revenue results in-line with our
expectations, driven by healthy demand from cloud and telecom customers,
which more than offset the expected reset in wireless," said Hock Tan,
President and CEO of Broadcom Inc. "Our outlook for the fourth quarter
reflects a strong anticipated ramp in wireless, as well as the
continuing surge in demand for networking from cloud and telecom
customers, more than offsetting expected softness in enterprise."
"We generated record free cash flow of over $3 billion, which
represented 33 percent growth on a year on year basis, and reduced total
debt by $1.9 billion in the quarter," said Tom Krause, CFO of Broadcom
Inc. "Looking ahead, our cash flow outlook remains robust and we plan to
pay down an additional $3 billion in debt in the fourth quarter."
The Company's cash and cash
equivalents at the end of the third fiscal quarter were $8,857 million,
compared to $9,207 million at the end of the prior quarter.
During the third fiscal quarter, the Company generated $3,178 million in
cash from operations and spent $105 million on capital expenditures.
On June 30, 2020, the Company paid a cash dividend of $3.25 per share of
common stock, totaling $1,312 million and a cash dividend of $20.00 per
share of mandatory convertible preferred stock, totaling $74 million.
The differences between the Company's GAAP and non-GAAP results are
described generally under "Non-GAAP Financial Measures" below, and
presented in detail in the financial reconciliation tables attached to
Fourth Quarter Fiscal Year 2020 Business Outlook
on current business trends and conditions, the outlook for the fourth
quarter of fiscal year 2020, ending November 1, 2020, is expected to be
Fourth quarter revenue guidance of $6.4 billion plus or minus $150
Fourth quarter Adjusted EBITDA of
$3,744 million plus or minus $75 million, or 58.5% of revenue at the
midpoint of guidance.
The guidance provided above is only
an estimate of what the Company believes is realizable as of the date of
this release. The Company is not readily able to provide a
reconciliation of projected Adjusted EBITDA to projected net income
without unreasonable effort. Actual results will vary from the guidance
and the variations may be material. The Company undertakes no intent or
obligation to publicly update or revise any of these projections,
whether as a result of new information, future events or otherwise,
except as required by law.
Broadcom Inc. will be presenting to investors at Deutsche Bank's Virtual
Technology Conference on September 15, 2020.
The Company's Board of Directors has approved a quarterly cash dividend
on its common stock of $3.25 per share. The common stock dividend is
payable on September 30, 2020 to common stockholders of record at the
close of business (5:00 p.m. Eastern Time) on September 22, 2020.
The Company's Board of Directors has also approved a quarterly cash
dividend on its 8.00% Mandatory Convertible Preferred Stock, Series A,
of $20.00 per share. This dividend is payable on September 30, 2020 to
preferred stockholders of record at the close of business (5:00 p.m.
Eastern Time) on September 15, 2020.