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 fourth quarter
and fiscal year ended September 30, 2016.
Fiscal Year 2016 GAAP Results
- Revenue was $544.3 million, an
increase of 29.4%, compared to $420.6 million in fiscal
year 2015;
- Gross profit was $281.6 million, an
increase of 38.3%, compared to $203.6 million in fiscal 2015;
- Fiscal year 2016 gross margin was
51.7%, compared to 48.4% in fiscal year 2015;
- Operating income was $13.2 million,
compared to $10.1 million in fiscal 2015; and
- Fully diluted loss per share from
continuing operations was $0.07 per share compared to a
loss per fully diluted share from continuing operations
of $0.11 per share in fiscal 2015.
Fiscal Year 2016 Adjusted Non-GAAP Results
- Adjusted gross margin was 58.1%,
compared to 57.5% in fiscal year 2015, expanding by 60 basis
points;
- Adjusted operating income and operating
margin were $133.3 million and 24.5%, compared
to $96.9 million and 23.0% in fiscal 2015;
- Adjusted net income was $105.5 million,
or $1.91 per diluted share, compared to adjusted net
income of $68.1 million, or $1.28 per diluted share in
fiscal year 2015, growing 49.2%; and
- Adjusted EBITDA was $159.6
million compared to $111.0 million in fiscal year
2015, growing 43.7%
Fourth Quarter Fiscal Year 2016 GAAP Results
- Revenue was $152.7 million, an increase
of 7.3%, compared to $142.3 million in the prior fiscal quarter and
an increase of 35.7% compared to $112.6 million in the previous
year fiscal fourth quarter;
- Gross profit was $81.8 million, an
increase of 10.6%, compared to $74.0 million in the prior fiscal
quarter and an increase of 43.6% compared to $57.0 million in the
previous year fiscal fourth quarter;
- Gross margin was 53.6%, compared to
52.0% in the prior fiscal quarter and 50.6% in the previous year
fiscal fourth quarter;
- Operating income was $10.1 million,
compared to $10.2 million in the prior fiscal quarter and $4.7
million in the previous year fiscal fourth quarter; and
- Net income from continuing operations
was $3.9 million, resulting in $0.07 income per diluted share,
compared to $21.4 million, or $0.11 income per diluted share, in
the prior fiscal quarter and $13.8 million, or $0.08 income per
diluted share, in the previous year fiscal fourth quarter.
Fourth Quarter Fiscal Year 2016 Adjusted Non-GAAP
Results
- Adjusted gross margin was 58.5%,
compared to 57.3% in the prior fiscal quarter and 57.4% in the
previous year fiscal fourth quarter;
- Adjusted operating income was $38.3
million, or 25.1% of revenue, compared to $34.9 million, or 24.5%
of revenue, in the prior fiscal quarter and $26.2 million, or 23.2%
of revenue, in the previous year fiscal fourth quarter;
- Adjusted net income was $30.1 million,
or $0.54 per diluted share, compared to adjusted net income of
$27.9 million, or $0.51 per diluted share, in the prior fiscal
quarter and adjusted net income of $18.8 million, or $0.34 per
diluted share, in the previous year fiscal fourth quarter; and
- Adjusted EBITDA was $44.9 million,
compared to $42.1 million for the prior fiscal quarter and $29.9
million for the previous year fiscal fourth quarter.
Management Commentary
John Croteau, MACOM's President and Chief Executive Officer,
stated, "I am pleased to announce another quarter of solid
execution, with Networks up 5% sequentially driven primarily by
Metro/Long-haul. Aerospace and Defense saw a strong quarter and was
up 18% sequentially, while Multi-market saw strong growth of 10%
sequentially. Our R&D investments are showing results,
specifically with our high performance MMIC-based products, which
are expected to continue to drive growth in A&D and
Multi-market moving into 2017.
“Additionally, we continued to advance our GaN initiative,
completing Gen4 GaN qualification during the quarter. We now have
purchase orders in-house for two strategic basestation OEMs for
mainstream LTE frequency bands. Lastly, as we continue to expand
our footprint beyond just optoelectronics, and into photonic
content with our new 25G Lasers, we believe our Optical growth
aspirations remain sustainable over the short, medium and long
term.”
Mr. Croteau concluded, “With the close of 2016 we’ve posted
three years of unprecedented growth and Non-GAAP profitability.
We’ve delivered 32 percent compound annual growth, more than
doubling revenue over the past three years. Adjusted gross margin
improved 970 basis points over the same period. Most importantly,
we’ve expanded non-GAAP earnings by 47 percent compounded annually
over that time.”
Business Outlook
For the fiscal first quarter ending December 30, 2016,
MACOM expects revenue to be in the range of $150 million to $154
million, adjusted gross margin between 57% and 59%, and adjusted
earnings per share to be between $0.54 and $0.58 utilizing a 12%
adjusted income tax rate on an anticipated 56.5 million fully
diluted shares outstanding.
Conference Call
MACOM will host a conference call on Tuesday, November 15,
2016 at 5:00 p.m. Eastern Time to discuss its fourth fiscal quarter
and fiscal year 2016 financial results and business outlook.
Investors and analysts may join the conference call by dialing
1-877-837-3908 and providing the passcode 96988646.
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 96988646. 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 concerning our high
performance MMIC products, growth in our A&D or Multi-Market
businesses in 2017, the results of our GaN base station initiative,
the sustainability of our optical growth aspirations, 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 MMICs, 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 July 1,
2016, as filed with the SEC on July 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 income
associated with the Automotive divestiture.
Management believes that these excluded 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 exclusion of these and other similar
items from 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, 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 regarding 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 operating 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.
Impairment Charges - includes expenses 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.
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.
Warrant Liability Expenses/Gains - are associated with
mark-to-market fair value adjustments which are largely based on
the value of our common stock, which may vary from period to period
due to factors such as stock price volatility. 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 and Term Loans 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 - historical amounts are primarily associated with the
impairment of a 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% 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
depreciation expense and consulting agreement income to our
Adjusted Non-GAAP Income from Operations. 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 analyzing a
company's cash flow.
MACOM TECHNOLOGY SOLUTIONS HOLDINGS,
INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(unaudited and in thousands, except per
share data)
Three Months Ended Fiscal
Year Ended September 30, July 1,
October 2, September 30,
October 2, 2016 2016 2015 2016
2015 Revenue $ 152,697 $ 142,288 $ 112,564 $ 544,338 $
420,609 Cost of revenue 70,893 68,326 55,603
262,729 217,019 Gross profit 81,804 73,962
56,961 281,609 203,590 Operating
expenses: Research and development 30,109 26,064 22,002 107,698
82,188 Selling, general and administrative 40,265 35,866 29,964
145,433 110,030 Impairment charges — 760 — 11,765 — Restructuring
charges 1,365 1,092 308 3,465 1,280
Total operating expenses 71,739 63,782 52,274
268,361 193,498 Income from operations 10,065
10,180 4,687 13,248 10,092 Other
income (expense): Warrant liability gain (expense) (12,691 ) 15,339
9,651 (16,431 ) (6,020 ) Interest expense, net (5,310 ) (4,363 )
(4,425 ) (18,427 ) (18,376 ) Other income (expense), net 5
16 131 39 (1,096 ) Total other (expense)
income (17,996 ) 10,992 5,357 (34,819 ) (25,492 )
(Loss) income before income taxes (7,931 ) 21,172 10,044
(21,571 ) (15,400 ) Income tax benefit (11,804 ) (181 ) (3,797 )
(17,983 ) (9,858 ) Income (loss) from continuing operations 3,873
21,353 13,841 (3,588 ) (5,542 ) Income from discontinued operations
1,228 1,199 40,564 5,022 54,131
Net income $ 5,101 $ 22,552 $ 54,405 $ 1,434
$ 48,589
Net income (loss) per share:
Basic: Income (loss) from continuing operations $ 0.07 $ 0.40 $
0.26 $ (0.07 ) $ (0.11 ) Income from discontinued operations 0.02
0.02 0.76 0.09 1.06 Income per
share - basic $ 0.10 $ 0.42 $ 1.02 $ 0.03
$ 0.95 Diluted: Income (loss) from continuing
operations $ 0.07 $ 0.11 $ 0.08 $ (0.07 ) $ (0.11 ) Income from
discontinued operations 0.02 0.02 0.74 0.09
1.06 Income per share - diluted $ 0.09 $ 0.13
$ 0.81 $ 0.03 $ 0.95 Shares -
Basic 53,676 53,516 53,287 53,364
51,146 Shares - Diluted 55,285 55,288 54,991
53,364 51,146
MACOM TECHNOLOGY SOLUTIONS HOLDINGS,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(unaudited and in thousands)
September 30, October 2, 2016 2015
ASSETS Current assets: Cash and cash equivalents $ 332,977 $
122,312 Short term investments 23,776 39,557 Accounts receivable,
net 108,331 83,950 Inventories 114,935 79,943 Deferred income taxes
— 31,431 Income tax receivable 21,607 15,854 Prepaids and other
current assets 11,318 11,172 Total current assets 612,944
384,219 Property and equipment, net 99,167 83,759 Goodwill and
intangible assets, net 379,626 337,012 Deferred income taxes 89,606
48,239 Other long-term assets 7,208 7,605 TOTAL ASSETS $
1,188,551 $ 860,834 LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities: Current portion of debt obligations $
7,203 $ 4,058 Accounts payable, accrued liabilities and other
84,947 67,418 Total current liabilities 92,150 71,476
Long-term debt obligations, less current portion 576,345 335,087
Common stock warrant liability 38,253 21,822 Deferred income taxes
11,765 — Other long-term liabilities 7,254 7,916 Total
liabilities 725,767 436,301 Stockholders' equity 462,784
424,533 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,188,551
$ 860,834
MACOM TECHNOLOGY SOLUTIONS HOLDINGS,
INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(unaudited and in thousands)
Fiscal Year Ended September 30,
October 2, 2016 2015 CASH
FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,434 $ 48,589
Adjustments to reconcile loss to net operating cash 118,813 109,045
Gain on sale of business — (63,256 ) Change in operating assets and
liabilities (41,015 ) (60,700 ) Net cash from operating activities
79,232 33,678 CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of businesses, net (85,517 ) (208,352 ) Purchases,
sales and maturities of investments 15,257 (40,183 ) Proceeds from
discontinued operations 7,500 — Sale of businesses — 81,208
Strategic investments — 1,500 Purchases of property and equipment
(31,326 ) (38,252 ) Acquisition of intellectual property (777 )
(3,346 ) Net cash used in investing activities (94,863 ) (207,425 )
CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from notes payable
247,625 — Payments of notes payable and assumed debt (14,076 )
(5,004 ) Proceeds from stock offering — 127,761 Proceeds from stock
option exercises and employee stock purchases 5,460 5,450
Repurchase of common stock (9,995 ) (8,626 ) Borrowings on
revolving facility — 100,000 Payments on revolving facility —
(100,000 ) Other financing activities (1,660 ) 2,826 Net
cash from financing activities 227,354 122,407 EFFECT
OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (1,058 ) (243
) NET CHANGE IN CASH AND CASH EQUIVALENTS 210,665 (51,583 ) CASH
AND CASH EQUIVALENTS — Beginning of period 122,312 173,895
CASH AND CASH EQUIVALENTS — End of period $ 332,977 $
122,312
MACOM TECHNOLOGY SOLUTIONS HOLDINGS,
INC.
RECONCILIATION OF GAAP TO NON-GAAP
RESULTS
(unaudited and in thousands, except per
share data)
Three Months Ended Fiscal Year
Ended September 30, 2016 July 1,
2016 October 2, 2015
September 30, 2016 October 2, 2015
Amount % Revenue
Amount % Revenue
Amount % Revenue
Amount % Revenue
Amount % Revenue Gross profit - GAAP $
81,804 53.6 $ 73,962 52.0
$ 56,961 50.6 $ 281,609
51.7 $ 203,590 48.4
Amortization expense 6,366 4.2 6,440 4.5 7,647 6.8 26,615 4.9
27,285 6.5 Share-based and non-cash compensation 628 0.4 685 0.5
586 0.5 2,546 0.5 2,254 0.5 Impairment and restructuring charges —
— — — — — 1,950 0.4 — — Acquisition and integration related costs
542 0.4 422 0.3 (590 ) (0.5 ) 3,645 0.7 7,086 1.7 Other —
— — —
— —
— — 1,625
0.4 Adjusted gross profit (NonGAAP) $ 89,340
58.5 $ 81,509
57.3 $ 64,604 57.4
$ 316,365 58.1
$ 241,840 57.5
Three Months Ended Fiscal Year Ended
September 30, 2016 July 1, 2016
October 2, 2015 September 30,
2016 October 2, 2015 Amount
% Revenue Amount
% Revenue Amount %
Revenue Amount %
Revenue Amount %
Revenue Operating expenses - GAAP $ 71,739 47.0 $ 63,782 44.8 $
52,274 46.4 $ 268,362 49.3 $ 193,498 46.0 Amortization expense
(6,498 ) (4.3 ) (6,415 ) (4.5 ) (4,345 ) (3.9 ) (23,640 ) (4.3 )
(11,695 ) (2.8 ) Share-based and non-cash compensation (9,099 )
(6.0 ) (6,206 ) (4.4 ) (7,769 ) (6.9 ) (33,904 ) (6.2 ) (29,000 )
(6.9 ) Impairment and restructuring charges (1,365 ) (0.9 ) (1,852
) (1.3 ) (309 ) (0.3 ) (15,230 ) (2.8 ) (1,280 ) (0.3 ) Litigation
costs (1,037 ) (0.7 ) (818 ) (0.6 ) (188 ) (0.2 ) (2,194 ) (0.4 )
(933 ) (0.2 ) Acquisition and integration related costs (2,146 )
(1.4 ) (1,911 ) (1.3 ) (1,218 ) (1.1 ) (9,784 ) (1.8 ) (7,241 )
(1.7 ) Other (573 ) (0.4 ) —
— — —
(573 ) (0.1 )
1,625 0.4 Adjusted operating expenses
(NonGAAP) $ 51,021 33.4 $
46,580 32.7 $ 38,445
34.2 $ 183,037
33.6 $ 144,974
34.5
Three Months Ended
Fiscal Year Ended September 30, 2016
July 1, 2016 October 2, 2015
September 30, 2016 October 2,
2015 Amount % Revenue
Amount % Revenue
Amount % Revenue
Amount % Revenue
Amount % Revenue Income (loss) from
operations - GAAP $ 10,065 6.6 $ 10,180 7.2 $ 4,687 4.2 $ 13,247
2.4 $ 10,092 2.4 Amortization expense 12,864 8.4 12,855 9.0 11,992
10.7 50,255 9.2 38,983 9.3 Share-based and non-cash compensation
9,727 6.4 6,891 4.8 8,354 7.4 36,450 6.7 31,253 7.4 Impairment and
restructuring charges 1,365 0.9 1,852 1.3 308 0.3 17,180 3.2 1,280
0.3 Litigation costs 1,037 0.7 817 0.6 188 0.2 2,194 0.4 933 0.2
Acquisition and integration related costs 2,688 1.8 2,334 1.6 628
0.6 13,428 2.5 14,326 3.4 Other 573 0.4
— — —
— 573
0.1 — —
Adjusted income from operations (NonGAAP) $ 38,319
25.1 $ 34,929 24.5
$ 26,157 23.2
$ 133,327 24.5
$ 96,867 23.0 Depreciation
expense 4,689 3.1 5,278 3.7 3,786 3.4 18,710 3.4 14,128 3.4 Other
income (expense), net 1,880 1.2
1,890 1.3 —
— 7,516 1.4
— — Adjusted
EBITDA $ 44,888 29.4 $
42,097 29.6 $ 29,943
26.6 $ 159,553
29.3 $ 110,995
26.4
Three Months Ended
Fiscal Year Ended September 30, 2016
July 1, 2016 October 2, 2015
September 30, 2016 October 2,
2015 Amount % Revenue
Amount % Revenue
Amount % Revenue
Amount % Revenue
Amount % Revenue Net income (loss) -
GAAP $ 5,101 3.3 $ 22,552 15.8 $ 54,405 48.3 $ 1,434 0.3 $ 48,589
11.6 Amortization expense 12,864 8.4 12,855 9.0 11,992 10.7 50,255
9.2 38,980 9.3 Share-based and non-cash compensation 9,727 6.4
6,891 4.8 8,355 7.4 36,450 6.7 31,254 7.4 Impairment and
restructuring charges 1,365 0.9 1,852 1.3 308 0.3 17,180 3.2 1,280
0.3 Warrant liability expense (gain) 12,691 8.3 (15,339 ) (10.8 )
(9,651 ) (8.6 ) 16,432 3.0 6,020 1.4 Non-cash interest 503 0.3 405
0.3 405 0.4 1,731 0.3 1,652 0.4 Litigation costs 1,037 0.7 817 0.6
188 0.2 2,194 0.4 933 0.2 Acquisition and integration related costs
2,688 1.8 2,334 1.6 628 0.6 13,406 2.5 12,326 2.9 Discontinued
operations 647 — 676 0.5 (40,564 ) (36.0 ) 2,478 0.5 (54,131 )
(12.9 ) Other 573 0.4 — — (130 ) (0.1 ) 573 0.1 3,096 0.7 Tax
effect of non-GAAP adjustments (17,114 ) (11.2 )
(5,111 ) (3.6 ) (7,117 )
(6.3 ) (36,605 ) (6.7 )
(21,877 ) (5.2 ) Adjusted net income
(NonGAAP) $ 30,082 19.7 $
27,932 19.6 $ 18,819
16.7 $ 105,528
19.4 $ 68,122
16.2
Three Months Ended
Fiscal Year Ended September 30, 2016
July 1, 2016 October 2, 2015
September 30, 2016 October 2,
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 - GAAP 5,101 22,552 54,405 1,434 48,589 Warrant liability
gain — (15,339 )
(9,651 )
— —
Net income (loss) - diluted $ 5,101
$ 0.09 $ 7,213 $
0.13 $ 44,754 $ 0.81
$ 1,434 $ 0.03
$ 48,589 $ 0.95 Adjusted
(NonGAAP) $ 30,082 $ 0.54
$ 27,932 $ 0.51 $ 18,819
$ 0.34 $ 105,528
$ 1.91 $ 68,122
$ 1.28
Three Months Ended
Fiscal Year Ended September 30, 2016
July 1, 2016 October 2, 2015
September 30, 2016 October 2,
2015 Shares
Shares Shares
Shares
Shares Diluted
shares - GAAP 55,285 53,516 54,991 53,364 51,146 Incremental shares
— 1,772
—
1,855 2,056
Adjusted diluted shares (NonGAAP) 55,285
55,288
54,991
55,219
53,202
Three Months Ended
Fiscal Year Ended September 30, 2016
July 1, 2016 October 2,
2015 September 30, 2016
October 2, 2015 Amount % Revenue
Amount % Revenue
Amount % Revenue
Amount % Revenue
Amount % Revenue Interest expense- GAAP
5,512 3.6 4,477 3.1 4,425 3.9 18,942 3.5 18,376 4.4 Non-cash
interest expense (503 ) (0.3 ) (405 )
(0.3 ) (405 ) (0.4 )
(1,731 ) (0.3 ) (1,652 )
(0.4 ) Adjusted Interest Expense (NonGAAP) $ 5,009
3.3 $ 4,072
2.9 $ 4,020 3.6
$ 17,211 3.2
$ 16,724 4.0
Three Months Ended Fiscal Year Ended
September 30, 2016 July 1, 2016
October 2, 2015 September 30,
2016 October 2, 2015 Amount
% Revenue Amount
% Revenue Amount %
Revenue Amount %
Revenue Amount %
Revenue Cash flow from operations 24,885 16.3 19,249 13.5 5,483
4.9 79,232 14.6 33,678 8.0 Capital expenditures (7,226 )
(4.7 ) (7,138 ) (5.0 )
(6,627 ) (5.9 ) (32,103 )
(5.9 ) (41,598 ) (9.9 ) Free
cash flow $ 17,659 11.6 $
12,111 8.5 $ (1,144 )
(1.0 ) $ 47,129
8.7 $ (7,920 ) (1.9 )
Three Months Ended
September 30, 2016
July 1, 2016
April 1, 2016
January 1, 2016 Amount
Amount Amount
Amount Revenue - GAAP 152,697 142,288 133,579 115,774 FiBest
and Aeroflex/Metelics revenue 20,682 20,052
18,780 4,577
Adjusted revenue - excluding acquisitions (NonGAAP) 132,015
122,236 114,799
111,197 Adjusted gross profit (NonGAAP) 89,340
81,509 77,556 67,959 FiBest and Aeroflex/Metelics gross profit
9,356 7,312 7,026
1,234 Adjusted gross profit - excluding
acquisitions (NonGAAP) 79,984 74,197
70,530 66,725 Adjusted
gross margin (NonGAAP) 61 % 61 % 61 %
60 %
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161115006637/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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