MACOM Technology : Reports Fiscal Fourth Quarter and Fiscal Year 2017 Financial Results

11


11/14/2017 | 10:08pm CET

MACOM Technology Solutions Holdings, Inc. (NASDAQ: MTSI) (“MACOM”), a
leading supplier of high-performance RF, microwave, millimeterwave and
lightwave semiconductor products, today announced its financial results
for its fiscal fourth quarter and fiscal year ended September 29, 2017.

Fiscal Year 2017 GAAP Results

  • Revenue was $698.8 million, an increase of 28.4%, compared to $544.3
    million in fiscal year 2016;
  • Gross profit was $326.9 million, an increase of 16.1%, compared to
    $281.6 million in fiscal year 2016;
  • Fiscal year 2017 gross margin was 46.8%, compared to 51.7% in fiscal
    year 2016;
  • Operating loss was $16.1 million, compared to operating income of
    $13.2 million in fiscal year 2016; and
  • Fully diluted net loss from continuing operations was $2.48 per share,
    compared to a net loss per fully diluted share from continuing
    operations of $0.07 per share in fiscal year 2016.

Fiscal Year 2017 Adjusted Non-GAAP Results

  • Adjusted gross margin was 58.1%, compared to 58.1% in fiscal year 2016;
  • Adjusted operating income was $180.5 million, or 25.8% of revenue,
    compared to $133.3 million, or 24.5% of revenue, in fiscal year 2016;
  • Adjusted net income was $145.5 million, or $2.32 per diluted share,
    compared to adjusted net income of $105.5 million, or $1.91 per
    diluted share in fiscal year 2016, growing 37.9%; and
  • Adjusted EBITDA was $213.9 million, compared to $159.6 million in
    fiscal year 2016, growing 34%.

Fourth Quarter Fiscal Year 2017 GAAP Results

  • Revenue was $166.4 million, an increase of 9.0%, compared to $152.7
    million in the previous year fiscal fourth quarter and a decrease of
    14.5% compared to $194.6 million in the prior fiscal quarter;
  • Gross profit was $86.9 million, an increase of 6.2% compared to $81.8
    million in the previous year fiscal fourth quarter, and a decrease of
    6.2% compared to $92.6 million in the prior fiscal quarter;
  • Gross margin was 52.2%, compared to 53.6% in the previous year fiscal
    fourth quarter and 47.6% in the prior fiscal quarter;
  • Operating income was $0.3 million, compared to operating income of
    $10.1 million in the previous year fiscal fourth quarter and an
    operating income of $6.6 million in the prior fiscal quarter; and
  • Net loss from continuing operations was $1,000, or $0.21 loss per
    diluted share, compared to net income from continuing operations of
    $3.9 million, or $0.07 income per diluted share, in the previous year
    fiscal fourth quarter and net loss from continuing operations of $14.0
    million, or $0.22 loss per diluted share, in the prior fiscal quarter.

Fourth Quarter Fiscal Year 2017 Adjusted Non-GAAP Results

  • Adjusted gross margin was 58.1%, compared to 58.5% in the previous
    year fiscal fourth quarter and 58.5% in the prior fiscal quarter;
  • Adjusted operating income was $38.0 million, or 22.8% of revenue,
    compared to $38.3 million, or 25.1% of revenue, in the previous year
    fiscal fourth quarter and $52.9 million, or 27.2% of revenue, in the
    prior fiscal quarter;
  • Adjusted net income was $30.3 million, or $0.46 per diluted share,
    compared to adjusted net income of $30.1 million, or $0.54 per diluted
    share, in the previous year fiscal fourth quarter and adjusted net
    income of $43.9 million, or $0.67 per diluted share, in the prior
    fiscal quarter; and
  • Adjusted EBITDA was $47.3 million, compared to $44.9 million for the
    previous year fiscal fourth quarter and $61.6 million for the prior
    fiscal quarter.

Management Commentary

“As expected, fiscal Q4 was a very challenging quarter, as we navigated
through a hard pause in network infrastructure demand in China,
impacting our entire range of Networks businesses,” remarked John
Croteau, President and CEO of MACOM. “Networks was down 25%
sequentially, though it still grew 3% year on year. Somewhat offsetting
the decline in Networks, we had a very strong quarter in our A&D and
multi-market businesses, which grew 32% and 16% year-over-year,
respectively.

“In the December quarter, we expect Networks demand to remain soft, and
the A&D and Multi-market businesses to return to more normalized levels.
We expect the December quarter will be the bottom of the down-cycle in
network infrastructure, which appears to be on the verge of turning.

“We see 2018 providing a more positive environment. In addition to
expecting a cyclical recovery in Telecom networks, we’ve expanded our
customer footprint, and several of our secular growth drivers look to be
approaching major inflection points as we secure deals with industry
franchise players. We believe we are poised to be a major beneficiary of
the upgrade from 40G to 100G CWDM that’s well underway inside the Data
Center.”

Mr. Croteau concluded, “While the near-term environment remains
challenging, we believe we have the design wins and customer commitments
to support market share growth in areas of existing strength as well as
across new growth engines. When global demand recovers from the
temporary pause in China, MACOM will return to our long track record of
outperformance over the course of 2018.”

Business Outlook

For the fiscal first quarter ending December 29, 2017, we expect revenue
to be in the range of $130 million to $136 million. Adjusted gross
margin is expected to be between 55% and 58%, and adjusted earnings per
share between $0.10 and $0.16, on an anticipated 66.5 million fully
diluted shares outstanding.

Conference Call

MACOM will host a conference call on Tuesday, November 14, 2017 at 5:00
p.m. Eastern Time to discuss its fiscal fourth quarter and fiscal year
2017 financial results and business outlook. Investors and analysts may
join the conference call by dialing 1-877-837-3908 and providing the
passcode 2098371.

International callers may join the teleconference by dialing
+1-973-872-3000 and entering the same passcode at the prompt. A
telephone replay of the call will be made available beginning two hours
after the call and will remain available for five business days. The
replay number is 1-855-859-2056 with a passcode of 2098371.
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 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 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 for business and market conditions,
positioning and growth aspirations in the Aerospace & Defense,
Multi-market, Networks, Telecom, Mobile Infrastructure, Active Antenna,
PON, Metro-Long Haul and Data Center markets and elsewhere, our
expectation that the December quarter will be the bottom of the
down-cycle in network infrastructure, any expectations as to our
relationships with customers and vendors, our future market share, the
timing or nature of future Data Center and network upgrade cycles,
customer order activity and customer adoption of our solutions, our
expectations for the easing of outsourced manufacturing partner supply
constraints, our expectations for increasing unit shipments of 25G
lasers and other products from our Lowell fab, our expectations for
maximizing the value of our divestment of AppliedMicro’s Compute
business, our future investment decisions, our GaN strategy and
expectations for execution on that strategy, 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.

These forward-looking statements 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 we are unable to identify and timely enter into new
markets for our products, such as our publicly-announced market
opportunities in Cloud Data Centers, 100G optical networks, 10G PON, GaN
technology and Active Antennas, the potential that we are unable to
timely deliver the quantities of our products targeting these or other
applications at the right price point due to design challenges,
manufacturing bottlenecks, supply shortages, yield issues or otherwise,
the potential that the expected rollout of Cloud Data Center build-outs,
5G network upgrades, fiber-to-the-home network technology or other new
optical or other network technology deployments in the U.S., 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 Cloud Data Center market,
the optical network infrastructure market or any or all of our primary
end markets or from any or all of our large OEM customers based on
seasonal effects, regulatory action or inaction, technology shifts,
standards changes, 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, our potential inability to ramp
key new products into volume production with acceptable manufacturing
yields to satisfy key customer demand in a timely fashion, 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 Cloud Data Centers, MACsec, single-Lambda PAM4,
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 June 30, 2017, as filed with the SEC on August 2, 2017, its
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
2017, as filed with the SEC on April 26, 2017, its Quarterly Report on
Form 10-Q for the fiscal quarter ended December 30, 2016, as filed with
the SEC on February 1, 2017, and its Annual Report on Form 10-K for the
fiscal year ended September 30, 2016, as filed on November 17, 2016.
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 operating expenses, 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, research and
development 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, Net – includes amounts associated with the
amortization of certain fees associated with the establishment or
amendment 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 since we both derive income and
incur ongoing costs associated with the consulting services available
under the consulting agreement.

Other – primarily includes transaction expenses incurred as part
of our Credit Agreement Amendments in the fourth fiscal quarter of 2016
as well as the second and third fiscal quarters of 2017. 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 tax rate associated with our Adjusted
Non-GAAP income over a period of time. We determine our Adjusted
Non-GAAP income tax rate by using applicable rates in taxing
jurisdictions and assessing certain factors including our historical and
forecast earnings by jurisdiction, discrete items, cash taxes paid in
relation to our Adjusted Non-GAAP Net Income before income taxes and our
ability to realize tax assets. We generally assess this Adjusted
Non-GAAP income tax rate quarterly and have utilized 10% for our second
and third fiscal quarters of 2017, 12% for our first fiscal quarter of
2017 and 15% for our fiscal year 2016. Our historical effective income
tax rate under GAAP has varied significantly from our Adjusted Non-GAAP
income tax rate. Items that have historically resulted in significant
difference between our effective income tax rate under GAAP and our
Adjusted Non-GAAP income tax rate include changes in fair values of the
common stock warrant liability, which is excluded from our Adjusted
Non-GAAP net Income and is neither deductible nor taxable for tax
purposes, income taxed in foreign jurisdictions at generally lower tax
rates, non-deductible compensation, research and development tax credits
and merger expenses, as well as the establishment of a valuation
allowance against our U.S. deferred tax assets during the three months
ended March 31, 2017. We believe it is beneficial for our management to
review our Adjusted Non-GAAP income tax rate on a consistent basis over
periods of time. Items such as those noted above may have a significant
impact on our U.S. GAAP income tax expense and associated effective tax
rate over time. Our Adjusted Non-GAAP income tax rate is an estimate,
and may differ from our effective income tax rate determined under GAAP.

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, reduces this amount by our capital expenditures in
the applicable period and adds AppliedMicro transaction related
payments. 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 Twelve Months Ended

September 29,
2017

   

June 30,
2017

   

September 30,
2016

September 29,
2017

   

September 30,
2016

Revenue $ 166,381 $ 194,555 $ 152,697 $ 698,772 $ 544,338
Cost of revenue 79,485   101,926   70,893   371,888   262,729  
Gross profit 86,896   92,629   81,804   326,884   281,609  
Operating expenses:
Research and development 39,398 38,729 30,109 147,986 107,698
Selling, general and administrative 42,398 46,666 40,265 187,886 145,433
Impairment charges 4,352 4,352 11,765
Restructuring charges 401   586   1,365   2,744   3,465  
Total operating expenses 86,549   85,981   71,739   342,968   268,361  
Income (loss) from operations 347   6,648   10,065   (16,084 ) 13,248  
Other income (expense):
Warrant liability gain (expense) 13,958 (9,085 ) (12,691 ) (2,522 ) (16,431 )
Interest expense, net (6,953 ) (7,178 ) (5,310 ) (28,855 ) (18,427 )
Other (expense) income, net (1 ) (1,139 ) 5   (2,044 ) 39  
Total other income (expense) 7,004   (17,402 ) (17,996 ) (33,421 ) (34,819 )
 
Income (loss) before income taxes 7,351 (10,754 ) (7,931 ) (49,505 ) (21,571 )
Income tax expense (benefit) 7,352   3,223   (11,804 ) 100,911   (17,983 )
Income (loss) from continuing operations (1 ) (13,977 ) 3,873 (150,416 ) (3,588 )
(Loss) income from discontinued operations (10,719 ) (13,700 ) 1,228   (19,077 ) 5,022  
Net (loss) income $ (10,720 ) $ (27,677 ) $ 5,101   $ (169,493 ) $ 1,434  
 
Net (loss) income per share:
Basic:
Income (loss) from continuing operations $ (0.00 ) $ (0.22 ) $ 0.07 $ (2.48 ) $ (0.07 )
(Loss) income from discontinued operations (0.17 ) (0.21 ) 0.02   (0.31 ) 0.09  
(Loss) income per share – basic $ (0.17 ) $ (0.43 ) $ 0.10   $ (2.79 ) $ 0.03  
 
Diluted:
Income (loss) from continuing operations $ (0.21 ) $ (0.22 ) $ 0.07 $ (2.48 ) $ (0.07 )
(Loss) income from discontinued operations (0.16 ) (0.21 ) 0.02   (0.31 ) 0.09  
(Loss) income per share – diluted $ (0.38 ) $ (0.43 ) $ 0.09   $ (2.79 ) $ 0.03  
 
Shares – Basic 64,243   64,019   53,676   60,704   53,364  
Shares – Diluted 65,156   64,019   55,285   60,704   53,364  
 

MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS

(unaudited and in
thousands)

 

       

September 29,
2017

September 30,
2016

ASSETS
Current assets:
Cash and cash equivalents $ 130,104 $ 332,977
Short term investments 84,121 23,776
Accounts receivable, net 136,096 108,331
Inventories 136,074 114,935
Income tax receivable 18,493 21,607
Assets held for sale, current 35,571
Prepaids and other current assets 22,438   11,318
Total current assets 562,897 612,944
Property and equipment, net 131,019 99,167
Goodwill and intangible assets, net 934,857 379,626
Deferred income taxes 948 89,606
Other long-term assets 7,402   7,208
TOTAL ASSETS $ 1,637,123   $ 1,188,551
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of lease payable $ 815 $ 1,152
Current portion of long-term debt obligations 6,885 6,051
Liabilities held for sale 2,144
Accounts payable, accrued liabilities and other 107,275   84,947
Total current liabilities 117,119 92,150
Lease payable, less current portion 17,275 2,463
Long-term debt obligations, less current portion 661,471 573,882
Common stock warrant liability 40,775 38,253
Deferred income taxes 15,172 11,765
Other long-term liabilities 7,937   7,254
Total liabilities 859,749 725,767
Stockholders’ equity 777,374   462,784
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,637,123   $ 1,188,551
 

MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited and
in thousands)

 

 
    Twelve Months Ended

September 29,
2017

   

September 30,
2016

 
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (169,493 ) $ 1,434
Adjustments to reconcile (loss) income to net operating cash 253,377 118,813
Change in operating assets and liabilities (22,834 ) (41,015 )
Net cash provided by operating activities 61,050   79,232  
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of businesses, net (270,008 ) (85,517 )
Purchases, sales and maturities of investments (60,493 ) 15,257
Proceeds from discontinued operations 25,520 7,500
Proceeds from sale of assets 215
Purchases of property and equipment (32,804 ) (31,326 )
Acquisition of intellectual property   (777 )
Net cash used in investing activities (337,570 ) (94,863 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable 96,558 247,625
Payments of notes payable and assumed debt (5,884 ) (14,076 )
Proceeds from stock option exercises and employee stock purchases 8,281 5,460
Repurchase of common stock (18,534 ) (9,995 )
Other adjustments (6,768 ) (1,660 )
Net cash provided by financing activities 73,653   227,354  
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (6 ) (1,058 )
NET CHANGE IN CASH AND CASH EQUIVALENTS (202,873 ) 210,665
CASH AND CASH EQUIVALENTS — Beginning of period 332,977   122,312  
CASH AND CASH EQUIVALENTS — End of period $ 130,104   $ 332,977  
 
Supplemental disclosure of non-cash activities
Issuance of common stock in connection with the AppliedMicro
Acquisition
465,082
 

MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.
RECONCILIATION
OF GAAP TO NON-GAAP RESULTS

(unaudited and in
thousands, except per share data)

                           
Three Months Ended     Twelve Months Ended
September 29, 2017     June 30, 2017     September 30, 2016     September 29, 2017     September 30, 2016
Amount     % Revenue     Amount     % Revenue     Amount     % Revenue     Amount     % Revenue     Amount     % Revenue
Gross profit – GAAP $ 86,896     52.2 $ 92,629     47.6 $ 81,804     53.6 $ 326,884     46.8 $ 281,609     51.7
Amortization expense 8,592 5.2 8,416 4.3 6,366 4.2 30,286 4.3 26,615 4.9
Share-based and non-cash compensation 931 0.6 956 0.5 628 0.4 3,647 0.5 2,546 0.5
Impairment and restructuring charges 1,950 0.4
Acquisition and integration related costs 208     0.1     11,736     6.0     542     0.4     45,283     6.5     3,645     0.7
Adjusted gross profit (Non-GAAP) $ 96,627     58.1     $ 113,737     58.5     $ 89,340     58.5     $ 406,100     58.1     $ 316,365     58.1
                             
Three Months Ended       Twelve Months Ended
September 29, 2017     June 30, 2017     September 30, 2016     September 29, 2017     September 30, 2016
Amount     % Revenue     Amount     % Revenue     Amount     % Revenue     Amount     % Revenue     Amount     % Revenue
Operating expenses – GAAP $ 86,549     52.0     $ 85,981     44.2     $ 71,739     47.0     $ 342,968     49.1     $ 268,362     49.3
Amortization expense (10,993 ) (6.6 ) (10,832 ) (5.6 ) (6,498 ) (4.3 ) (35,456 ) (5.1 ) (23,640 ) (4.3 )
Share-based and non-cash compensation (7,606 ) (4.6 ) (9,833 ) (5.1 ) (9,099 ) (6.0 ) (37,991 ) (5.4 ) (33,904 ) (6.2 )
Impairment and restructuring charges (4,753 ) (2.9 ) (586 ) (0.3 ) (1,365 ) (0.9 ) (7,096 ) (1.0 ) (15,230 ) (2.8 )
Litigation costs (675 ) (0.4 ) (569 ) (0.3 ) (1,037 ) (0.7 ) (2,284 ) (0.3 ) (2,194 ) (0.4 )
Acquisition and integration related costs (3,635 ) (2.2 ) (2,645 ) (1.4 ) (2,146 ) (1.4 ) (33,382 ) (4.8 ) (9,784 ) (1.8 )
Other (220 )     (0.1 )     (719 )     (0.4 )     (573 )     (0.4 )     (1,123 )     (0.2 )     (573 )     (0.1 )
Adjusted operating expenses (Non-GAAP) $ 58,667       35.3       $ 60,797       31.2       $ 51,021       33.4       $ 225,636       32.3       $ 183,037       33.6  
                                                         
Three Months Ended     Twelve Months Ended
September 29, 2017     June 30, 2017     September 30, 2016     September 29, 2017     September 30, 2016
Amount     % Revenue     Amount     % Revenue     Amount     % Revenue     Amount     % Revenue     Amount     % Revenue
Income (loss) from operations – GAAP $ 347     0.2     $ 6,648     3.4     $ 10,065     6.6     $ (16,084 )     (2.3 )     $ 13,247     2.4
Amortization expense 19,585 11.8 19,248 9.9 12,864 8.4 65,742 9.4 50,255 9.2
Share-based and non-cash compensation 8,538 5.1 10,789 5.5 9,727 6.4 41,638 6.0 36,450 6.7
Impairment and restructuring charges 4,753 2.9 586 0.3 1,365 0.9 7,096 1.0 17,180 3.2
Litigation costs 675 0.4 569 0.3 1,037 0.7 2,284 0.3 2,194 0.4
Acquisition and integration related costs 3,843 2.3 14,380 7.4 2,688 1.8 78,664 11.3 13,428 2.5
Other 218     0.1     719     0.4     573     0.4     1,123       0.2       573     0.1
Adjusted income from operations (Non-GAAP) $ 37,959     22.8     $ 52,939     27.2     $ 38,319     25.1     $ 180,463       25.8       $ 133,327     24.5
 
Depreciation expense 7,461 4.5 6,739 3.5 4,689 3.1 25,908 3.7 18,710 3.4
Consulting income 1,875     1.1     1,875     1.0     1,880     1.2     7,500       1.1       7,516     1.4
Adjusted EBITDA (Non-GAAP) $ 47,295     28.4     $ 61,553     31.6     $ 44,888     29.4     $ 213,871       30.6       $ 159,553     29.3
           
Three Months Ended    

Twelve Months Ended

September 29, 2017     June 30, 2017     September 30, 2016     September 29, 2017     September 30, 2016
Amount     % Revenue     Amount     % Revenue     Amount     % Revenue     Amount     % Revenue     Amount     % Revenue
Net (loss) income – GAAP $ (10,720 )     (6.4 )     $ (27,677 )     (14.2 )     $ 5,101     3.3     $ (169,493 )     (24.3 )     $ 1,434     0.3
Amortization expense 19,585 11.8 19,248 9.9 12,864 8.4 65,742 9.4 50,255 9.2
Share-based and non-cash compensation 8,538 5.1 10,789 5.5 9,727 6.4 41,638 6.0 36,450 6.7
Impairment and restructuring charges 4,753 2.9 586 0.3 1,365 0.9 7,096 1.0 17,180 3.2
Warrant liability expense (13,958 ) (8.4 ) 9,085 4.7 12,691 8.3 2,522 0.4 16,432 3.0
Non-cash interest, net 827 0.5 1,122 0.6 503 0.3 3,373 0.5 1,731 0.3
Litigation costs 675 0.4 569 0.3 1,037 0.7 2,284 0.3 2,194 0.4
Acquisition and integration related costs 3,843 2.3 14,380 7.4 2,688 1.8 78,664 11.3 13,406 2.5
Discontinued operations, excluding consulting income 12,594 7.6 15,575 8.0 647 0.4 26,577 3.8 2,478 0.5
Other 218 0.1 1,856 1.0 573 0.4 3,131 0.4 573 0.1
Tax effect of non-GAAP adjustments 3,981       2.4       (1,653 )     (0.8 )     (17,114 )     (11.2 )     83,943       12.0       (36,605 )     (6.7 )
Adjusted net income (Non-GAAP) $ 30,336       18.2       $ 43,880       22.6       $ 30,082       19.7       $ 145,477       20.8       $ 105,528       19.4  
                 
Three Months Ended     Twelve Months Ended
September 29, 2017     June 30, 2017     September 30, 2016     September 29, 2017     September 30, 2016

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 (loss) income – GAAP $ (10,720 )         $ (27,677 )        

$

5,101

       

$

(169,493

)        

$

1,434

   
Warrant liability gain (13,958 )                      

 

           

 

           

 

       
Net (loss) income – diluted $ (24,678 )     $ (0.38 )     $ (27,677 )     $ (0.43 )     $ 5,101       $ 0.09       $ (169,493 )     $ (2.79 )     $ 1,434       $ 0.03
Adjusted (Non-GAAP) $ 30,336       $ 0.46       $ 43,880       $ 0.67       $ 30,082       $ 0.54       $ 145,477       $ 2.32       $ 105,528       $ 1.91
                                         
Three Months Ended     Twelve Months Ended
September 29, 2017     June 30, 2017     September 30, 2016     September 29, 2017     September 30, 2016
Shares           Shares           Shares           Shares           Shares
Diluted shares – GAAP 64,243         64,019         55,285         60,704         53,364
Incremental shares 1,687           1,916                     1,877           1,855
Adjusted diluted shares (Non-GAAP) 65,930           65,935           55,285           62,581           55,219
           
Three Months Ended     Twelve Months Ended
September 29, 2017     June 30, 2017     September 30, 2016     September 29, 2017     September 30, 2016
Amount     % Revenue     Amount     % Revenue     Amount     % Revenue     Amount     % Revenue     Amount     % Revenue
Interest expense, net – GAAP $ 6,953     4.2     $ 7,178     3.7     $ 5,512     3.6     $ 28,855     4.1     $ 18,942     3.5
Non-cash interest expense (827 )     (0.5 )     (1,122 )     (0.6 )     (503 )     (0.3 )     (3,373 )     (0.5 )     (1,731 )     (0.3 )
Adjusted Interest Expense (Non-GAAP) $ 6,126       3.7       $ 6,056       3.1       $ 5,009       3.3       $ 25,482       3.6       $ 17,211       3.2  
           
Three Months Ended     Twelve Months Ended
September 29, 2017     June 30, 2017     September 30, 2016     September 29, 2017     September 30, 2016
Amount     % Revenue     Amount     % Revenue     Amount     % Revenue     Amount     % Revenue     Amount     % Revenue
Cash flow from operations $ 12,361     7.4     $ 27,850     14.3     $ 24,885     16.3     $ 61,050     8.7     $ 79,232     14.6
Capital expenditures (8,308 ) (5.0 ) (8,201 ) (4.2 ) (7,226 ) (4.7 ) (32,804 ) (4.7 ) (32,103 ) (5.9 )
AppliedMicro transaction related payments 3,426       2.1       419       0.2                   31,959       4.6              
Free cash flow (Non-GAAP) $ 7,479       4.5       $ 20,068       10.3       $ 17,659       11.6       $ 60,205       8.6       $ 47,129       8.7  
Free cash flow as a percentage of adjusted net income 25 %           46 %           59 %           41 %           45 %      

Business Wire 2017

Latest news on MACOM TECHNOLOGY SOLUTIONS





Sales 2017

703 M

EBIT 2017

174 M

Net income 2017

-160 M

Debt 2017



460 M

Yield 2017



P/E ratio 2017


P/E ratio 2018

1 219,00


EV / Sales 2017

4,00x

EV / Sales 2018

3,60x

Capitalization

2 349 M

Chart MACOM TECHNOLOGY SOLUTIONS


Duration :


Period :


MACOM Technology Solutions Technical Analysis Chart | MTSI | US55405Y1001 | 4-Traders

Technical analysis trends MACOM TECHNOLOGY SOLUTIONS

Short Term Mid-Term Long Term
Trends Bearish Bearish Bearish

Income Statement Evolution

Consensus



Sell

Buy


Mean consensus
OUTPERFORM
Number of Analysts
11
Average target price
48,9 $
Spread / Average Target
34%



Source