MACOM Technology Solutions Holdings, Inc. (NASDAQ: MTSI)
(“MACOM”), a leading supplier of high-performance analog RF,
microwave, millimeterwave and photonic semiconductor products,
today announced its financial results for its fiscal third quarter
ended July 1, 2016.
Third Quarter Fiscal Year 2016 GAAP Results
- Revenue was $142.3 million, an increase
of 6.5%, compared to $133.6 million in the prior fiscal quarter and
an increase of 30.5% compared to $109.1 million in the previous
year fiscal third quarter;
- Gross profit was $74.0 million, an
increase of 12.9%, compared to $65.5 million in the prior fiscal
quarter and an increase of 40.9% compared to $52.5 million in the
previous year fiscal third quarter;
- Gross margin was 52.0%, compared to
49.1% in the prior fiscal quarter and 48.1% in the previous year
fiscal third quarter;
- Operating income was $10.2 million,
compared to an operating loss of $7.2 million in the prior fiscal
quarter and operating income of $4.4 million in the previous year
fiscal third quarter; and
- Net income from continuing operations
was $21.4 million, resulting in $0.11 income per diluted share,
compared to a net loss from continuing operations of $12.0 million,
or $0.23 loss per share, in the prior fiscal quarter and net income
from continuing operations of $1.8 million, or $0.02 income per
diluted share, in the previous year fiscal third quarter.
Third Quarter Fiscal Year 2016 Adjusted Non-GAAP
Results
- Adjusted gross margin was 57.3%,
compared to 58.1% in the prior fiscal quarter and 58.0% in the
previous year fiscal third quarter;
- Adjusted operating income was $34.9
million, or 24.5% of revenue, compared to $32.4 million, or 24.3%
of revenue, in the prior fiscal quarter and $25.8 million, or 23.6%
of revenue, in the previous year fiscal third quarter;
- Adjusted net income was $27.9 million,
or $0.51 per diluted share, compared to adjusted net income of
$25.7 million, or $0.46 per diluted share, in the prior fiscal
quarter and adjusted net income of $18.4 million, or $0.33 per
diluted share, in the previous year fiscal third quarter; and
- Adjusted EBITDA was $42.1 million,
compared to $39.0 million for the prior fiscal quarter and $29.0
million for the previous year fiscal third quarter.
Management Commentary
John Croteau, MACOM's President and Chief Executive Officer,
stated, "I am pleased to announce another quarter of solid
execution and growth, with Networks up 8.6 percent sequentially on
continued share expansion in Optical and strong demand for new
catalog products servicing the broader Networks market. Our
diversification, coupled with our leading market position in
Optical, allowed us to gain market share and grow even in the
presence of isolated headwinds. Revenue from the Aerospace and
Defense market was essentially flat, while Multi-market was up 1.9
percent sequentially. Our catalog business spanning all end markets
increased on the back of our new MMIC-based products.
“Additionally, we continued to advance our GaN initiative and
remain on track to ramp volume production programs beginning in the
first half of 2017. Lastly, Aerospace and Defense is shaping up to
deliver twice the growth rate of our target operating model next
quarter and through fiscal 2017.”
Business Outlook
For the fiscal fourth quarter ending September 30, 2016,
MACOM expects revenue to be in the range of $148 million to $152
million, adjusted gross margin between 57% and 59%, and adjusted
earnings per share to be between $0.54 and $0.58 on an anticipated
56 million fully diluted shares outstanding.
Conference Call
MACOM will host a conference call on Tuesday, July 26, 2016
at 5:00 p.m. Eastern Time to discuss its third fiscal quarter
financial results and business outlook. Investors and analysts may
join the conference call by dialing 1-877-837-3908 and providing
the passcode 42365500.
International callers may join the teleconference by dialing
+1-973-872-3000 and entering the same confirmation code at the
prompt. A telephone replay of the call will be made available
beginning two hours after the call and will remain available for 5
business days. The replay number is 1-855-859-2056 with a passcode
of 42365500. International callers should dial +1-404-537-3406 and
enter the same passcode at the prompt.
Additionally, this conference call will be broadcast live over
the Internet and can be accessed by all interested parties in the
Investors section of MACOM's website at http://www.macom.com. To listen to the live call,
please go to the Investors section of MACOM's website and click on
the conference call link at least fifteen minutes prior to the
start of the conference call. For those unable to participate
during the live broadcast, a replay will be available shortly after
the call and will remain available for approximately 30 days.
About MACOM
MACOM enables a better-connected and safer world by delivering
breakthrough semiconductor technologies for optical, wireless and
satellite networks that satisfy society’s insatiable demand for
information.
Today, MACOM powers the infrastructure that millions of lives
and livelihoods depend on every minute to communicate, transact
business, travel, stay informed and be entertained. Our technology
increases the speed and coverage of the mobile Internet and enables
fiber optic networks to carry previously unimaginable volumes of
traffic to businesses, homes and datacenters.
Keeping us all safe, MACOM technology enables next-generation
radars for air traffic control and weather forecasting, as well as
mission success on the modern networked battlefield.
MACOM is the partner of choice to the world’s leading
communications infrastructure, aerospace and defense companies,
helping solve their most complex challenges in areas including
network capacity, signal coverage, energy efficiency and field
reliability, through its best-in-class team and broad portfolio of
analog RF, microwave, millimeterwave and photonic semiconductor
products.
MACOM is a pillar of the semiconductor industry, thriving for
more than 60 years of daring to change the world for the better,
through bold technological strokes that deliver true competitive
advantage to customers and superior value to investors.
Headquartered in Lowell, Massachusetts, MACOM is certified to
the ISO9001 international quality standard and ISO14001
environmental management standard. MACOM has design centers and
sales offices throughout North America, Europe, Asia and
Australia.
MACOM, M/A-COM, M/A-COM Technology Solutions, M/A-COM Tech,
Partners in RF & Microwave, and related logos are trademarks of
MACOM. All other trademarks are the property of their respective
owners. For more information about MACOM, please
visit www.macom.com follow @MACOMtweets on
Twitter, join MACOM on LinkedIn, or visit the
MACOM YouTube Channel.
Special Note Regarding Forward-Looking Statements
This press release and our commentary in our conference call
held today each contain forward-looking statements based on MACOM
management's beliefs and assumptions and on information currently
available to our management. Forward-looking statements include,
among others, information concerning our stated business outlook
and future results of operations, our expectations to ramp up
volume GaN base station production programs beginning in the first
half of fiscal year 2017, our expectations that our aerospace and
defense business unit can deliver twice the growth rate of our
target business model next quarter and through fiscal 2017, any
statements concerning our expectations for our optical business or
the expected outcome of our ongoing litigation against Infineon and
any other statements regarding future trends, business strategies,
competitive position, industry conditions, acquisitions and market
opportunities. Forward-looking statements include all statements
that are not historical facts and generally may be identified by
terms such as "anticipates," "believes," "could," "estimates,"
"expects," "intends," "may," "plans," "potential," "predicts,"
"projects," "seeks," "should," "will," "would" or similar
expressions and the negatives of those terms.
Forward-looking statements contained in this press release
reflect MACOM's current views about future events and are subject
to risks, uncertainties, assumptions and changes in circumstances
that may cause those events or our actual activities or results to
differ materially from those expressed in any forward-looking
statement. Although MACOM believes that the expectations reflected
in the forward-looking statements are reasonable, it cannot and
does not guarantee future events, results, actions, levels of
activity, performance or achievements. Readers are cautioned not to
place undue reliance on these forward-looking statements. A number
of important factors could cause actual results to differ
materially from those indicated by the forward-looking statements,
including the potential that the expected rollout of 5G network
upgrades, fiber-to-the-home network technology or other new optical
or other network technology deployments in China, Japan and other
geographies fails to occur, occurs more slowly than we expect or
does not result in the amount or type of new business we
anticipate, lower than expected demand in the optical network
infrastructure market or any or all of our primary end markets or
from Huawei or any or all of our large OEM customers based on
seasonal effects, regulatory action or inaction, macro-economic
weakness or otherwise, the potential for greater than expected
pricing pressure and average selling price erosion based on
attempts to win or maintain market share, competitive factors,
technology shifts or otherwise, the potential for inventory
obsolescence and related write-offs, the expense, business
disruption or other impact of any current or future investigations,
administrative actions, litigation or enforcement proceedings
we may be involved in, the potential loss of access to any
in-licensed intellectual property or inability to license
technology we may require on reasonable terms, the impact of any
claims of intellectual property infringement or misappropriation,
which could require us to pay substantial damages for infringement,
expend significant resources in prosecuting or defending such
matters or developing non-infringing technology, incur material
liability for royalty or license payments, or prevent us from
selling certain of our products, greater than expected dilutive
effect on earnings of our equity issuances, outstanding
indebtedness and related interest expense and other costs, our
failure to realize the expected economies of scale, lowered
production cost and other anticipated benefits of our previously
announced GaN intellectual property licensing program, the
potential for defense spending cuts, program delays, cancellations
or sequestration, failures or delays by any customer in winning
business or to make purchases from us in support of such business,
lack of adoption or delayed adoption by customers and industries we
serve of Active Antennas, SPAR tiles, GaN, InP lasers or other
solutions offered by us, failures or delays in porting and
qualifying GaN or InP process technology to our fabrication
facilities or third party facilities and achieving anticipated
manufacturing economies of scale, lower than expected utilization
and absorption in our manufacturing facilities, lack of success or
slower than expected success in our new product development or new
product introduction efforts, loss of key personnel to competitors
or otherwise, failure of any announced transaction to close in
accordance with its terms, failure to successfully integrate
acquired companies, technologies or products or realize synergies
associated with acquisitions, the potential that we will experience
difficulties in managing the personnel and operations associated
with our acquisitions, loss of business due to competitive factors,
product or technology obsolescence, customer program shifts or
otherwise, the potential for a shift in the mix of products sold in
any period toward lower-margin products or a shift in the
geographical mix of our revenues, the impact of any executed or
abandoned acquisition, divestiture, joint venture, financing or
restructuring activity, the impact of supply shortages or other
disruptions in our internal or outsourced supply chain, the impact
of changes in export, environmental or other laws applicable to us,
the relative success of our cost-savings initiatives, as well as
those factors described in "Risk Factors" in MACOM's filings with
the Securities and Exchange Commission (SEC), including its
Quarterly Report on Form 10-Q for the fiscal quarter ended April 1,
2016, as filed with the SEC on April 27, 2016 and its Annual Report
on Form 10-K for the fiscal year ended October 2, 2015 as filed
with the SEC on November 24, 2015. MACOM undertakes no obligation
to publicly update or revise any forward-looking statement, whether
as a result of new information, future events or otherwise.
Discussion Regarding the Use of Historical and
Forward-Looking Non-GAAP Financial Measures
In addition to GAAP reporting, MACOM provides investors with
financial measures that have not been calculated in accordance with
United States Generally Accepted Accounting Principles ("GAAP"),
such as: non-GAAP gross profit and gross margin, non-GAAP income
from operations and operating margin, non-GAAP net income, non-GAAP
diluted earnings per share, adjusted EBITDA, and Free Cash Flow.
From time to time in this release or elsewhere, we may
alternatively refer to such non-GAAP measures as “adjusted”
measures. This non-GAAP information excludes the effect, where
applicable, of discontinued operations, intangible amortization
expense, share-based compensation costs, impairment and
restructuring charges, changes in common stock warrant liability,
financing and litigation costs, acquisition and integration related
costs, other costs and the tax effect of each adjustment. The
non-GAAP information includes consulting agreement related to
income associated with the Automotive divestiture.
Management believes that these items are not reflective of our
underlying performance. Management uses these non-GAAP financial
measures to; evaluate our ongoing operating performance and compare
it against prior periods, make operating decisions, forecast future
periods, evaluate potential acquisitions, compare our operating
performance against peer companies and assess certain compensation
programs. The presentation of these and other similar items in our
non-GAAP financial results should not be interpreted as implying
that these items are non-recurring, infrequent or unusual. We
believe this non-GAAP financial information provides additional
insight into our ongoing performance and have therefore chosen to
provide this information to investors for a more consistent basis
of comparison and to help them evaluate the results of our ongoing
operations and enable more meaningful period-to-period comparisons.
These non-GAAP measures are provided in addition to, and not as a
substitute for, or superior to, measures of financial performance
prepared in accordance with GAAP.
A reconciliation between GAAP and non-GAAP financial data is
included in the supplemental financial data attached to this press
release. We have not provided a reconciliation with respect to any
forward-looking non-GAAP financial data presented, because we do
not have and cannot reliably estimate certain key inputs required
to calculate the most comparable GAAP financial data, such as the
future price per share of our common stock for purposes of
calculating the value of our common stock warrant liability and
share-based compensation costs, future acquisition costs, the
possibility and impact of any litigation costs, changes in our GAAP
effective tax rate, and impairment charges. We believe these
unknown inputs are likely to have a significant impact on any
estimate of the comparable GAAP financial data.
Investors are cautioned against placing undue reliance on these
non-GAAP financial measures and are urged to review and consider
carefully the adjustments made by management to the most directly
comparable GAAP financial measures to arrive at these non-GAAP
financial measures. Non-GAAP financial measures may have limited
value as analytical tools because they may exclude certain expenses
that some investors consider important in evaluating our operating
performance or ongoing business performance. Further, non-GAAP
financial measures may have limited value for purposes of drawing
comparisons between companies because different companies may
calculate similarly titled non-GAAP financial measures in different
ways because non-GAAP measures are not based on any comprehensive
set of accounting rules or principles.
Additional information and management’s assessment as why
certain items are excluded from our Non-GAAP measures are
summarized below:
Amortization Expense - is related to acquired intangible assets
which are based upon valuation methodologies, and are generally
amortized over the expected life of the intangible asset at the
time of acquisition, which may result in amortization amounts that
vary over time. The expense is not considered by management in
making operating decisions, and the expense is non-cash.
Share-Based and Non-cash Compensation Expense - includes share
based compensation including awards that are equity and liability
classified on our balance sheet as well as non-cash compensation
expense primarily associated with amounts due to employees of an
acquired business that were placed in escrow at the time of the
acquisition and amortized as expense over a 2-year period. Share
Based Compensation expense is partially outside of our control due
to factors such as stock price volatility and interest rates, which
may be unrelated to our performance during the period in which the
expense is incurred. It is an expense based upon valuation
methodologies and assumptions that vary over time, and the amount
of the expense can vary significantly between companies due to
factors that can be outside of their control. Share-based and
Non-Cash Compensation Expense amounts are not considered by
management in making operating decisions.
Restructuring Charges - includes amounts primarily associated
with approved plans to reduce staffing and manufacturing or
administrative footprints. We believe these amounts are not
correlated to future business operations and including such charges
does not reflect our ongoing operations.
Impairment Charges - includes amounts associated with our
strategic decision to exit a product line and end programs with a
license and technology transfer as well as certain related fixed
assets and inventory. We believe these charges are one-time in
nature and are not correlated to future business operations and
including such charges does not reflect our ongoing operations.
Warrant Liability Charges- are associated with market to market
fair value adjustments which are largely based on the value of our
common stock, which may vary from period to period. We believe
these amounts are not correlated to future business operations and
including such charges does not reflect our ongoing operations.
Non Cash Interest Expense - includes amounts associated with the
amortization of certain fees associated with the establishment of
our Credit Agreement that are being amortized over the life of the
agreement. We believe these amounts are non-cash in nature and not
correlated to future business operations and including such charges
does not reflect our ongoing operations.
Litigation Costs - includes gains, losses and expenses related
to the resolution of other-than-ordinary-course threatened and
actually filed lawsuits and other-than-ordinary-course contractual
disputes and legal matters. We exclude these gains and losses
because they are not considered by management in making operating
decisions. We believe such gains, losses and expenses do not
necessarily reflect the performance of our ongoing operations for
the period in which such charges are recognized and the amount of
such gains or losses and expenses can vary significantly between
companies and make comparisons less reliable.
Acquisition and Integration Related Costs - includes such items
as professional fees incurred in connection with pre-acquisition
and integration specific activities, post-acquisition employee
retention amounts, contingent consideration adjustments, severance
and other amounts accrued or paid to terminated employees of
acquired businesses, costs including salaries incurred which are
not expected to have a continuing contribution to operations or are
expected to have a diminishing contribution during the integration
period and the amortization of the fair market step-up value of
acquired inventory and fixed assets. We believe the exclusion of
these items is useful in providing management a basis to evaluate
ongoing operating activities and strategic decision making.
Discontinued Operations excluding consulting income - includes
the profit and loss amounts of discontinued operations, with the
exception of consulting income associated with a consulting
agreement we entered into at the time of our Automotive business
divestiture. We believe excluding gains and losses associated with
historically divested businesses from our net income provides
management with a comparable basis to our current ongoing operating
activities. We do not exclude the consulting agreement income
classified as discontinued operations because management views this
income as part of our ongoing operations and correlated with future
operations.
Other - includes historical amounts primarily associated with
the impairment of minority investment of $3.5 million during the
second fiscal quarter of 2015 as well as income associated with
transition service agreements entered in connection with divested
businesses. We believe these amounts are not correlated to future
business operations and including such charges does not reflect our
ongoing operations.
Tax Effect of Non-GAAP Adjustments - adjustments to arrive at an
estimate of our Adjusted Non-GAAP cash tax rate associated with our
Adjusted Non-GAAP income over a period of time. These adjustments
have resulted in an estimated Adjusted Non-GAAP cash tax rate of
15% and 18% for our fiscal years 2016 and 2015, respectively. We
believe it is beneficial for our management to review Adjusted
Non-GAAP cash tax rate on a consistent basis over periods of time.
Certain items including many of the items noted above may have a
significant impact on our US GAAP tax expense and associated tax
rate during a specific period of time.
Adjusted EBITDA - is a calculation that adds interest income
taxes and depreciation expense to our Adjusted Non-GAAP Net Income.
Adjusted EBITDA is a measure that management reviews and utilizes
for operational analysis purposes. We believe competitors and
others in the financial industry utilize this Non-GAAP measure for
analysis purposes.
Free Cash Flow - is a calculation that starts with cash flow
from operating activities and reduces this amount by our capital
expenditures in the applicable period. Free Cash Flow is a measure
that management reviews and utilizes for cash flow analysis
purposes. We believe competitors and others in the financial
industry utilize this Non-GAAP measure for analysis purposes.
MACOM TECHNOLOGY SOLUTIONS HOLDINGS,
INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(unaudited and in thousands, except per share
data)
Three Months Ended Nine Months
Ended July 1,2016 April
1,2016 July 3,2015 July
1,2016 July 3,2015 Revenue $
142,288 $ 133,579 $ 109,058 $ 391,641 $ 308,045 Cost of revenue
68,326 68,054 56,562
191,836 161,416 Gross profit
73,962 65,525 52,496
199,805 146,629 Operating expenses: Research
and development 26,064 26,203 20,965 77,589 60,186 Selling, general
and administrative 35,866 34,617 26,592 105,169 80,067 Impairment
charges 760 11,005 — 11,765 — Restructuring charges 1,092
851 558 2,100
971 Total operating expenses 63,782
72,676 48,115 196,623
141,224 Income (loss) from operations 10,180
(7,151 ) 4,381 3,182
5,405 Other income (expense): Warrant liability gain
(expense) 15,339 (4,201 ) 546 (3,741 ) (15,671 ) Interest expense,
net (4,363 ) (4,408 ) (4,505 ) (13,117 ) (13,951 ) Other income
(expense), net 16 (81 ) (225 )
36 (1,227 ) Total other income (expense)
10,992 (8,690 ) (4,184 ) (16,822 )
(30,849 ) Income (loss) before income taxes 21,172
(15,841 ) 197 (13,640 ) (25,444 ) Income tax benefit (181 )
(3,796 ) (1,559 ) (6,178 ) (6,059 )
Income (loss) from continuing operations 21,353 (12,045 ) 1,756
(7,462 ) (19,385 ) Income from discontinued operations 1,199
1,396 6,271 3,794
13,568 Net income (loss) $ 22,552 $ (10,649 )
$ 8,027 $ (3,668 ) $ (5,817 )
Net income (loss)
per share: Basic: Income (loss) from continuing operations $
0.40 $ (0.23 ) $ 0.03 $ (0.14 ) $ (0.38 ) Income from discontinued
operations 0.02 0.03 0.12
0.07 0.27 Income (loss) per share -
basic $ 0.42 $ (0.20 ) $ 0.15 $ (0.07 ) $ (0.12 )
Diluted: Income (loss) from continuing operations $ 0.11 $
(0.23 ) $ 0.02 $ (0.14 ) $ (0.38 ) Income from discontinued
operations 0.02 0.03 0.11
0.07 0.27 Income (loss) per share -
diluted $ 0.13 $ (0.20 ) $ 0.14 $ (0.07 ) $ (0.12 )
Shares - Basic 53,516 53,228
53,098 53,253 50,433
Shares - Diluted 55,288 53,228
55,174 53,253 50,433
MACOM TECHNOLOGY SOLUTIONS HOLDINGS,
INC.CONDENSED CONSOLIDATED BALANCE SHEETS(unaudited and
in thousands)
July 1,2016 October
2,2015 ASSETS Current assets: Cash and cash equivalents
$ 66,842 $ 122,312 Short term investments 23,726 39,557 Accounts
receivable, net 91,962 83,950 Inventories 117,078 79,943 Deferred
income taxes (1) — 31,431 Income tax receivable 16,123 15,854
Prepaids and other current assets 12,353 11,172 Total
current assets 328,084 384,219 Property and equipment, net 100,452
83,759 Goodwill and intangible assets, net 388,700 337,012 Deferred
income taxes 83,900 48,239 Other long-term assets 12,015
13,022 TOTAL ASSETS $ 913,151 $ 866,251 LIABILITIES
AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of
debt obligations $ 4,513 $ 4,058 Accounts payable, accrued
liabilities and other 73,624 67,418 Total current
liabilities 78,137 71,476 Long-term debt obligations, less current
portion 340,581 340,504 Common stock warrant liability 25,563
21,822 Deferred income taxes 14,293 — Long-term liabilities and
other 7,945 7,916 Total liabilities 466,519 441,718
Stockholders' equity 446,632 424,533 TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY $ 913,151 $ 866,251
(1) During the second quarter of fiscal 2016, we early-adopted
Accounting Standards Update (ASU) No. 2015-17, Balance Sheet
Classification of Deferred Taxes, and applied ASU 2015-17 on a
prospective basis. This standard requires that all deferred tax
assets and liabilities, and any related valuation allowance, be
classified as noncurrent on the balance sheet. As of the second
quarter of fiscal 2016, we included $31.4 million of current
deferred income tax assets with our noncurrent deferred income tax
assets; no adjustments were made to deferred tax liabilities.
MACOM TECHNOLOGY SOLUTIONS HOLDINGS,
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(unaudited and in thousands)
Nine Months Ended July
1,2016 July 3,2015 CASH
FLOWS FROM OPERATING ACTIVITIES: Net loss $ (3,668 ) $ (5,817 )
Adjustments to reconcile loss to net operating cash 91,282 86,208
Change in operating assets and liabilities (33,267 )
(52,196 ) Net cash from operating activities 54,347
28,195 CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of businesses, net (85,516 ) (208,352 ) Purchases,
sales and maturities of investments 15,412 (250 ) Gain on
disposition of business 3,750 — Strategic investments — 1,500
Purchases of property and equipment (24,100 ) (32,488 ) Acquisition
of intellectual property (777 ) (2,483 ) Net cash
used in investing activities (91,231 ) (242,073 )
CASH FLOWS FROM FINANCING ACTIVITIES: Payments of notes payable
(12,178 ) (3,997 ) Proceeds from stock offering — 127,697 Proceeds
from stock option exercises and employee stock purchases 5,336
5,329 Repurchase of common stock (9,966 ) (7,919 ) Borrowings on
revolving facility — 100,000 Payments on revolving facility —
(100,000 ) Other financing activities (1,195 ) (39 )
Net cash from financing activities (18,003 ) 121,071
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
(583 ) (401 ) NET CHANGE IN CASH AND CASH EQUIVALENTS (55,470 )
(93,208 ) CASH AND CASH EQUIVALENTS — Beginning of period
122,312 173,895 CASH AND CASH EQUIVALENTS —
End of period $ 66,842 $ 80,687
MACOM TECHNOLOGY SOLUTIONS HOLDINGS,
INC.RECONCILIATION OF GAAP TO NON-GAAP RESULTS(unaudited
and in thousands, except per share data)
Three Months Ended
Nine Months Ended July 1, 2016 April 1,
2016 July 3, 2015 July 1, 2016
July 3, 2015 Amount % Revenue
Amount % Revenue Amount
% Revenue Amount %
Revenue Amount % Revenue Gross
profit - GAAP $ 73,962 52.0 $ 65,525 49.1
$ 52,496 48.1 $ 199,805 51.0 $
146,629 47.6 Amortization expense 6,440 4.5 6,642 5.0 6,932
6.4 20,249 5.2 19,638 6.4 Share-based and non-cash compensation 685
0.5 691 0.5 512 0.5 1,918 0.5 1,668 0.5 Impairment and
restructuring charges — — 1,950 1.5 — — 1,950 0.5 — — Acquisition
and integration related costs 422 0.3 2,748 2.1 2,951 2.7 3,102 0.8
7,676 2.5 Other — —
— — 396
0.4 — —
1,625 0.5 Adjusted
gross profit (NonGAAP) $ 81,509 57.3
$ 77,556 58.1 $ 63,287
58.0 $ 227,024
58.0 $ 177,236 57.5
Three Months Ended Nine Months
Ended July 1, 2016 April 1, 2016
July 3, 2015 July 1, 2016 July 3,
2015 Amount % Revenue Amount
% Revenue Amount %
Revenue Amount % Revenue
Amount % Revenue Operating expenses - GAAP $
63,782 44.8 $ 72,676 54.4 $ 48,115 44.1 $ 196,623 50.2 $ 141,224
45.8 Amortization expense (6,415 ) (4.5 ) (6,304 ) (4.7 ) (3,201 )
(2.9 ) (17,142 ) (4.4 ) (7,350 ) (2.4 ) Share-based and non-cash
compensation (6,206 ) (4.4 ) (7,717 ) (5.8 ) (6,704 ) (6.1 )
(24,806 ) (6.3 ) (21,231 ) (6.9 ) Impairment and restructuring
charges (1,852 ) (1.3 ) (11,856 ) (8.9 ) (558 ) (0.5 ) (13,865 )
(3.5 ) (971 ) (0.3 ) Litigation costs (818 ) (0.6 ) (232 ) (0.2 )
21 — (1,159 ) (0.3 ) (745 ) (0.2 ) Acquisition and integration
related costs (1,911 ) (1.3 )
(1,413 ) (1.1 ) (171 )
(0.2 ) (7,637 ) (2.0 )
(4,398 ) (1.4 ) Adjusted operating expenses (NonGAAP)
$ 46,580 32.7 $ 45,154
33.8 $ 37,502 34.4
$ 132,015 33.7 $
106,529 34.6
Three Months
Ended Nine Months Ended July 1, 2016
April 1, 2016 July 3, 2015
July 1, 2016 July 3, 2015 Amount
% Revenue Amount % Revenue
Amount % Revenue Amount
% Revenue Amount %
Revenue Income (loss) from operations - GAAP $ 10,180 7.2 $
(7,151 ) (5.4 ) $ 4,381 4.0 $ 3,182 0.8 $ 5,405 1.8 Amortization
expense 12,855 9.0 12,946 9.7 10,133 9.3 37,391 9.5 26,991 8.8
Share-based and non-cash compensation 6,891 4.8 8,409 6.3 7,216 6.6
26,723 6.8 22,899 7.4 Impairment and restructuring charges 1,852
1.3 13,806 10.3 558 0.5 15,815 4.0 971 0.3 Litigation costs 817 0.6
232 0.2 (21 ) — 1,157 0.3 745 0.2 Acquisition and integration
related costs 2,334 1.6
4,160 3.1 3,518
3.2 10,740
2.7 13,696 4.4
Adjusted income from operations (NonGAAP) $ 34,929
24.5 $ 32,402 24.3
$ 25,785 23.6 $
95,008 24.3 $ 70,707
23.0 Depreciation expense 5,278 3.7 4,840 3.6
3,253 3.0 14,021 3.6 10,342 3.4 Other income (expense), net
1,890 1.3 1,792
1.3 — —
5,637 1.4
— — Adjusted EBITDA $ 42,097
29.6 $ 39,034
29.2 $ 29,038 26.6
$ 114,666 29.3 $ 81,049
26.3
Three Months Ended
Nine Months Ended July 1, 2016 April 1,
2016 July 3, 2015 July 1, 2016
July 3, 2015 Amount % Revenue
Amount % Revenue Amount
% Revenue Amount %
Revenue Amount % Revenue Net income
(loss) - GAAP $ 22,552 15.8 $ (10,649 ) (8.0 ) $ 8,027 7.4 $ (3,668
) (0.9 ) $ (5,817 ) (1.9 ) Amortization expense 12,855 9.0 12,946
9.7 10,133 9.3 37,391 9.5 26,991 8.8 Share-based and non-cash
compensation 6,891 4.8 8,409 6.3 7,216 6.6 26,723 6.8 22,899 7.4
Impairment and restructuring charges 1,852 1.3 13,806 10.3 558 0.5
15,815 4.0 971 0.3 Warrant liability expense (gain) (15,339 ) (10.8
) 4,201 3.1 (546 ) (0.5 ) 3,741 1.0 15,671 5.1 Non-cash interest
405 0.3 425 0.3 405 0.4 1,228 0.3 1,247 0.4 Litigation costs 817
0.6 232 0.2 (21 ) — 1,157 0.3 745 0.2 Acquisition and integration
related costs 2,334 1.6 4,158 3.1 3,518 3.2 10,717 2.7 11,696 3.8
Discontinued operations 676 0.5 479 0.4 (6,271 ) (5.8 ) 1,831 0.4
(13,567 ) (4.4 ) Other — — — — 225 0.2 — — 3,226 1.0 Tax effect of
non-GAAP adjustments (5,111 ) (3.6 )
(8,327 ) (6.2 ) (4,812 )
(4.4 ) (19,491 ) (5.0 )
(14,760 ) (4.8 ) Adjusted net income (NonGAAP)
$ 27,932 19.6 $ 25,680
19.2 $ 18,432 16.9
$ 75,445 19.3 $
49,302 16.0
Three Months Ended
Nine Months Ended July 1, 2016 April
1, 2016 July 3, 2015 July 1, 2016
July 3, 2015
Net Income (Loss)
Income (loss) per diluted share Net Income
(Loss) Income (loss) per diluted share
Net Income (Loss) Income (loss) per diluted
share Net Income (Loss) Income (loss)
per diluted share Net Income (Loss)
Income (loss) per diluted share Net income (loss) - GAAP
22,552 (10,649 ) 8,027 (3,668 ) (5,817 ) Warrant liability gain
(15,339 ) —
(546 ) —
— Net income (loss) -
diluted $ 7,213 $ 0.13 $ (10,649 )
$ (0.20 ) $ 7,481 $ 0.14
$ (3,668 ) $ (0.07 ) $ (5,817 ) $ (0.12 )
Adjusted (NonGAAP) $ 27,932 $ 0.51 $
25,680 $ 0.46 $ 18,432 $
0.33 $ 75,445 $ 1.37 $
49,302 $ 0.94
Three Months Ended
Nine Months Ended July 1, 2016 April
1, 2016 July 3, 2015 July 1, 2016
July 3, 2015 Shares
Shares Shares
Shares Shares
Diluted shares - GAAP 53,516 53,228 53,098 53,253 50,433
Incremental shares 1,772
2,139 2,076
2,007 2,127
Adjusted diluted shares (NonGAAP) 55,288
55,367
55,174 55,260
52,560
Three Months Ended Nine Months Ended
July 1, 2016 April 1, 2016 July 3,
2015 July 1, 2016 July 3, 2015
Amount % Revenue Amount
% Revenue Amount % Revenue
Amount % Revenue Amount
% Revenue Interest expense- GAAP 4,477 3.1 4,478 3.4
4,505 4.1 13,430 3.4 13,951 4.5 Non-cash interest expense
(405 ) (0.3 ) (425 ) (0.3
) (405 ) (0.4 ) (1,228 )
(0.3 ) (1,247 ) (0.4 )
Adjusted Interest Expense (NonGAAP) $ 4,072
2.9 $ 4,053 3.0 $
4,100 3.8 $ 12,202
3.1 $ 12,704 4.1
Three Months Ended Nine Months Ended
July 1, 2016 April 1, 2016 July 3,
2015 July 1, 2016 July 3, 2015
Amount % Revenue Amount
% Revenue Amount % Revenue
Amount % Revenue Amount
% Revenue Cash flow from operations 19,249 13.5
19,584 14.7 26,763 24.5 54,347 13.9 28,195 9.2 Capital expenditures
(7,138 ) (5.0 ) (11,033 )
(8.3 ) (19,348 ) (17.7 )
(24,877 ) (6.4 ) (34,971 )
(11.4 ) Free cash flow $ 12,111
8.5 $ 8,551 6.4 $
7,415 6.8 $ 29,470
7.5 $ (6,776 ) (2.2 )
Three Months Ended
July 1,2016
April 1,2016
January 1, 2016
Amount Amount Amount Revenue -
GAAP 142,288 133,579 115,774 FiBest and Aeroflex/Metelics revenue
20,052 18,780
4,577 Adjusted revenue - excluding acquisitions (NonGAAP)
122,236 114,799
111,197 Sequential growth % 85 % 20 % Adjusted
gross profit (NonGAAP) 81,509 77,556 67,959 FiBest and
Aeroflex/Metelics gross profit 6,195
3,605 1,234 Adjusted gross profit -
excluding acquisitions (NonGAAP) 75,314
73,951 66,725 Adjusted gross margin
(NonGAAP) 62 % 64 % 60 %
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160726006349/en/
Company Contact:MACOM Technology Solutions Holdings,
Inc.Robert J. McMullan, 978-656-2753Senior Vice President and Chief
Financial Officerbob.mcmullan@macom.comorInvestor Relations
Contact:Shelton GroupLeanne K. Sievers, 949-224-3874EVP,
Investor Relationslsievers@sheltongroup.com
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