MACOM Technology Solutions Holdings, Inc. (NASDAQ: MTSI)
(“MACOM”), a leading supplier of high-performance RF, microwave,
millimeterwave and lightwave semiconductor products, today
announced the launch of a repricing of MACOM’s existing $590
million Term Loan B. The existing term loan is currently priced at
LIBOR plus 3.75%. A lender call has been scheduled for 1:00PM EST
on February 28, 2017.
In connection with this repricing, MACOM is disclosing Pro Forma
GAAP Loss from Operations of $9.1 million and Non-GAAP Pro Forma
Credit Agreement EBITDA of $232.3 million for its last four
completed fiscal quarters ending December 30, 2016. Non-GAAP Pro
Forma Credit Agreement EBITDA is an adjusted EBITDA measure
calculated pursuant to MACOM’s credit agreement, and includes
additional adjustments as compared to the adjusted EBITDA MACOM
typically presents on a quarterly basis, and includes the pro forma
impact of MACOM’s recent acquisition of Applied Micro Circuits
Corporation (“AppliedMicro”). See the reconciliation of GAAP to
Non-GAAP results at the end of this release for more
information.
Goldman Sachs Bank USA is acting as Administrative Agent.
Additional details in connection to the repricing can be found in
the Current Report on Form 8-K filed by the Company with
the U.S. Securities and Exchange Commission today
at www.sec.gov.
About MACOMMACOM is a new breed of analog semiconductor
company — one that delivers a unique combination of high growth,
diversification and high profitability. We are enabling 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 data centers.
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 and 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
RF, microwave, millimeterwave and lightwave 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, The First Name in 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 StatementsThis
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 the anticipated launch of a repricing of the
Company’s existing Term Loan B. 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 benefits from the
AppliedMicro acquisition or related divistiture activity will not
be realized or will not be realized within the expected time
period; the risk that the businesses will not be integrated
successfully; delays in or inability to engage with potential
buyers of the Compute business or complete any of the anticipated
divestiture and restructuring activities following the AppliedMicro
acquisition; disruption or disputes with buyers, employees,
customers, suppliers or licensors arising from the AppliedMicro
acquisition or related divestiture activity; disruption from the
AppliedMicro acquisition making it more difficult to maintain
business, contractual and operational relationships; negative
effects of this press release or the consummation of the
AppliedMicro acquisition on the market price of MACOM’s common
stock and on MACOM’s operating results; significant transaction
costs; unknown liabilities; the risk of litigation and/or
regulatory actions related to the AppliedMicro acquisition or
otherwise; other business effects, including the effects of
industry, market, economic, political or regulatory conditions;
future exchange and interest rates; changes in tax and other laws,
regulations, rates and policies; future business combinations or
disposals; the uncertainties inherent in research and development
and product qualification, including our ability to sustain and
increase the rate of growth in revenues for our products; and
competitive developments, as well as those factors described in
“Risk Factors” in MACOM’s filings with the U.S. Securities and
Exchange Commission, including its Quarterly Report on Form 10-Q
for the quarter ended December 30, 2016 filed on February 1, 2017
and its Annual Report on Form 10-K for the fiscal year ended
September 30, 2016 filed on November 17, 2016 and available at
www.sec.gov. We caution the reader to carefully consider such
factors. 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 Non-GAAP Financial
MeasuresIn addition to United States Generally Accepted
Accounting Principles (“GAAP”) reporting, MACOM provides investors
with financial measures that have not been calculated in accordance
with GAAP, such as Pro Forma Adjusted EBITDA, Adjusted Income from
Operations and Pro Forma credit agreement EBITDA. This non-GAAP
information, as calculated pursuant to our credit agreement,
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. This non-GAAP information, as calculated pursuant to
our credit agreement, 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 Pro Forma Adjusted
EBITDA, Adjusted Income from Operations and Pro Forma credit
agreement EBITDA 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. This non-GAAP financial information
is 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.
Investors are cautioned against placing undue reliance on
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 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 financial 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.
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 primarily include transaction
expenses incurred as part of our Credit Agreement Amendment in the
fourth fiscal quarter of 2016. We believe these amounts are not
correlated to future business operations and including such charges
does not reflect our ongoing operations.
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.
Credit Agreement Adjustments - are amounts which under our
credit agreement we are required and or permitted to adjust in
arriving at our consolidated trailing twelve months EBITDA
including certain share-based compensation amounts and certain
estimated run rate savings and synergies associated with
acquisitions.
Reconciliation of GAAP to Non-GAAP
results:
Last Twelve Months Ended December30,
2016
(in millions)
MACOM
AppliedMicro
ProformaCombined
Income (loss) from operations -
GAAP
$ 23.6
$ (32.8 ) $
(9.1 ) Amortization expense
51.1 -
51.1 Share-based and non-cash compensation
35.1
28.2 63.3 Impairment and
restructuring charges 18.3
(0.1 ) 18.3
Litigation costs 2.4
- 2.4
Acquisition and integration related costs
15.5 4.7
20.2 Other
0.6 - 0.6
Adjusted income from operations (Non
GAAP)
146.6
0.1 146.7
Depreciation expense 20.3
6.2 26.6
Consulting income 7.4
- 7.4
Adjusted EBITDA (Non GAAP)
174.4
6.3 180.7
Credit agreement adjustments
(5.0 ) 56.7
51.7
Pro Forma Credit agreement EBITDA (Non
GAAP)
$
169.4 $ 63.0
$ 232.3
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version on businesswire.com: http://www.businesswire.com/news/home/20170228006082/en/
Company Contact:MACOM Technology Solutions Holdings,
Inc.Stephen Ferranti, 978-656-2977Vice President of
IRstephen.ferranti@macom.comorInvestor Relations
Contacts:Shelton GroupLeanne K. Sievers,
949-224-3874PresidentorBrett L. Perry, 214-272-0070Vice
Presidentsheltonir@sheltongroup.com
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