MACOM Technology Solutions Holdings, Inc. (“MACOM”) (Nasdaq: MTSI), a leading supplier of semiconductor products, today announced its financial results for its fiscal first quarter ended December 29, 2023.

First Quarter Fiscal Year 2024 GAAP Results

  • Revenue was $157.1 million, a decrease of 12.7%, compared to $180.1 million in the previous year fiscal first quarter and an increase of 4.5% compared to $150.4 million in the prior fiscal quarter;
  • Gross margin was 55.6%, compared to 61.3% in the previous year fiscal first quarter and 57.6% in the prior fiscal quarter;
  • Income from operations was $11.0 million, or 7.0% of revenue, compared to income from operations of $38.6 million, or 21.4% of revenue, in the previous year fiscal first quarter and income from operations of $15.6 million, or 10.4% of revenue, in the prior fiscal quarter; and
  • Net income was $12.5 million, or $0.17 per diluted share, compared to net income of $29.5 million, or $0.41 per diluted share, in the previous year fiscal first quarter and net income of $24.5 million, or $0.34 per diluted share, in the prior fiscal quarter.

First Quarter Fiscal Year 2024 Adjusted Non-GAAP Results

  • Adjusted gross margin was 59.2%, compared to 62.6% in the previous year fiscal first quarter and 60.1% in the prior fiscal quarter;
  • Adjusted income from operations was $38.6 million, or 24.5% of revenue, compared to adjusted income from operations of $58.8 million, or 32.7% of revenue, in the previous year fiscal first quarter and adjusted income from operations of $37.2 million, or 24.7% of revenue, in the prior fiscal quarter; and
  • Adjusted net income was $41.8 million, or $0.58 per diluted share, compared to adjusted net income of $58.0 million, or $0.81 per diluted share, in the previous year fiscal first quarter and adjusted net income of $40.1 million, or $0.56 per diluted share, in the prior fiscal quarter.

Management Commentary

“Q1 was a solid start to fiscal year 2024,” said Stephen G. Daly, President and Chief Executive Officer. “We are pleased with the expansion of our product portfolio, and we continue to see new growth opportunities across the Industrial and Defense, Telecommunications and Data Center markets.”

Business Outlook

For the fiscal second quarter ending March 29, 2024, MACOM expects revenue to be in the range of $178 million to $184 million. Adjusted gross margin is expected to be between 56% and 58%, and adjusted earnings per diluted share is expected to be between $0.56 and $0.62 utilizing an anticipated non-GAAP income tax rate of 3% and 73.0 million fully diluted shares outstanding.

Conference Call

MACOM will host a conference call on Thursday, February 1, 2024 at 8:30 a.m. Eastern Time to discuss its fiscal first quarter 2024 financial results and business outlook. Investors and analysts may visit MACOM's Investor Relations website at https://ir.macom.com/events-webcasts to register for a user-specific access code for the live call or to access the live webcast. A replay of the call will be available within 24 hours and remain accessible by all interested parties for approximately 90 days.

About MACOM

MACOM designs and manufactures high-performance semiconductor products for the Telecommunications, Industrial and Defense and Data Center industries. MACOM services over 6,000 customers annually with a broad product portfolio that incorporates RF, Microwave, Analog and Mixed Signal and Optical semiconductor technologies. MACOM has achieved certification to the IATF16949 automotive standard, the AS9100D aerospace standard, the ISO9001 international quality standard and the ISO14001 environmental management standard. MACOM operates facilities across the United States, Europe, Asia and is headquartered in Lowell, Massachusetts.

Special Note Regarding Forward-Looking Statements

This press release and the associated earnings call contains forward-looking statements based on MACOM management’s beliefs and assumptions and on information currently available to our management. These forward-looking statements include, among others, statements about MACOM’s strategic plans, priorities and long-term growth drivers, our ability to execute our long-term strategy, strengthen our position and drive market share gains and growth, our ability to better address certain markets, expand our capabilities and extend our product offerings through the acquisitions of Linearizer Communications Group and the radio frequency (RF) business of Wolfspeed, Inc. and through the establishment of our European Semiconductor Center, and the teams’ capabilities and technologies and expansion thereof and any potential financial benefits derived by and financial impact to MACOM therefrom, strength and competitiveness of new product introductions and technology portfolio expansion, including the anticipated rate of new product introductions, anticipated demand for our products, MACOM’s profitability, revenue targets, prospects and growth opportunities in our three primary markets, the potential impact to our business of an economic downturn or recession, anticipated financial and business improvements, the estimated financial results for our 2024 fiscal second quarter and the stated business outlook and future results of operations.

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 indicated by the forward-looking statements, including our ability to develop new products and achieve market acceptance of those products; component shortages or other disruptions in our supply chain, including as a result of geopolitical unrest or otherwise; inflationary pressures; any failure to accurately anticipate demand for our products and effectively manage our inventory; our dependence on a limited number of customers; risks related to any weakening of economic conditions; our ability to compete effectively; and those other factors described in “Risk Factors” in MACOM’s filings with the Securities and Exchange Commission (“SEC”), including its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and other filings with the SEC. These forward-looking statements speak only as of the date of this press release, and 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 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: non-GAAP gross profit and gross margin, non-GAAP operating expenses, non-GAAP income from operations and operating margin, non-GAAP EBITDA, non-GAAP net income, non-GAAP diluted earnings per share, non-GAAP income tax rate and non-GAAP interest income. 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 intangible amortization expense, share-based compensation expense, non-cash interest, net, acquisition and integration related costs, debt extinguishment costs and the tax effect of each non-GAAP adjustment.

Management believes these excluded items are not reflective of our underlying performance and 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. We believe this non-GAAP financial information provides additional insight into our ongoing performance and have therefore chosen to provide this information to investors 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 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 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. 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. This non-cash expense is not considered by management in making operating decisions.

Share-Based Compensation Expense – includes share-based compensation expense for awards that are equity and liability classified on our balance sheet and the related employer tax expense at vesting. 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. Share-based compensation expense amounts are not considered by management in making operating decisions.

Non-cash Interest, Net – includes amounts associated with the amortization of certain fees associated with the establishment or amendment of our term loans and convertible notes that are being amortized over the life of the agreements. We believe these amounts are non-cash in nature, are not correlated to future business operations and do not reflect our ongoing operations.

Acquisition and Integration Related Costs – includes items such as professional fees, employee severance and other costs incurred in connection with acquisitions and integration specific activities which are not expected to have a continuing contribution to operations 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.

Debt Extinguishment Costs – includes the write-off of unamortized deferred financing costs and professional fees associated with the paydown of our term loans. We believe these non-cash amounts are not correlated to future business operations and do not reflect our ongoing operations.

Tax Effect of Non-GAAP Adjustments – includes adjustments to arrive at an estimate of our non-GAAP income tax rate associated with our non-GAAP income over a period of time. We determine our non-GAAP income tax rate 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 non-GAAP net income before income taxes and our ability to realize tax assets. We generally assess this non-GAAP income tax rate quarterly and have utilized 3% for our first fiscal quarter of fiscal year 2024 and for our fiscal year 2023. Our historical effective income tax rate under GAAP has varied significantly from our non-GAAP income tax rate due primarily to income taxed in foreign jurisdictions at generally lower tax rates, research and development tax credits and acquisition expenses. We believe it is beneficial for management to review our 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 GAAP income tax expense and associated effective tax rate over time.

Adjusted EBITDA – is a calculation that adds depreciation expense to our adjusted income from operations. Management reviews and utilizes this measure for operational analysis purposes. We believe competitors and others in the financial industry also utilize this measure for analysis purposes.

MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited and in thousands, except per share data)

 

 

Three Months Ended

 

December 29, 2023

 

September 29, 2023

 

December 30, 2022

 

 

 

Revenue

$

157,148

 

$

150,375

 

 

$

180,104

 

Cost of revenue

 

69,838

 

 

63,749

 

 

 

69,749

 

Gross profit

 

87,310

 

 

86,626

 

 

 

110,355

 

Operating expenses:

 

 

 

 

 

Research and development

 

39,413

 

 

37,508

 

 

 

38,832

 

Selling, general and administrative

 

36,887

 

 

33,511

 

 

 

32,940

 

Total operating expenses

 

76,300

 

 

71,019

 

 

 

71,772

 

Income from operations

 

11,010

 

 

15,607

 

 

 

38,583

 

Other income (expense):

 

 

 

 

 

Interest income, net

 

4,266

 

 

3,843

 

 

 

602

 

Other expense, net

 

 

 

(458

)

 

 

(55

)

Total other income

 

4,266

 

 

3,385

 

 

 

547

 

Income before income taxes

 

15,276

 

 

18,992

 

 

 

39,130

 

Income tax expense (benefit)

 

2,750

 

 

(5,458

)

 

 

9,611

 

Net income

$

12,526

 

$

24,450

 

 

$

29,519

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

Income per share - Basic

$

0.18

 

$

0.34

 

 

$

0.42

 

Income per share - Diluted

$

0.17

 

$

0.34

 

 

$

0.41

 

Weighted average common shares:

 

 

 

 

 

Shares - Basic

 

71,425

 

 

70,988

 

 

 

70,481

 

Shares - Diluted

 

72,286

 

 

71,828

 

 

 

71,374

 

MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited and in thousands)

 

 

December 29, 2023

 

September 29, 2023

 

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

163,586

 

$

173,952

Short-term investments

 

299,705

 

 

340,574

Accounts receivable, net

 

101,075

 

 

91,253

Inventories

 

159,501

 

 

136,300

Prepaid and other current assets

 

21,084

 

 

19,114

Total current assets

 

744,951

 

 

761,193

Property and equipment, net

 

184,278

 

 

149,496

Goodwill and intangible assets, net

 

442,016

 

 

390,392

Deferred income taxes

 

217,463

 

 

218,107

Other long-term assets

 

62,094

 

 

34,056

Total assets

$

1,650,802

 

$

1,553,244

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Current portion of finance lease obligations

$

1,052

 

$

1,162

Accounts payable

 

27,137

 

 

24,966

Accrued liabilities

 

74,680

 

 

57,397

Total current liabilities

 

102,869

 

 

83,525

Finance lease obligations, less current portion

 

31,624

 

 

31,776

Financing obligation

 

9,232

 

 

9,307

Long-term debt obligations

 

447,421

 

 

447,134

Other long-term liabilities

 

35,565

 

 

33,902

Total liabilities

 

626,711

 

 

605,644

Stockholders’ equity

 

1,024,091

 

 

947,600

Total liabilities and stockholders’ equity

$

1,650,802

 

$

1,553,244

MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited and in thousands)

 

 

Three Months Ended

 

December 29, 2023

 

December 30, 2022

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net income

$

12,526

 

 

$

29,519

 

Depreciation and intangible asset amortization

 

14,289

 

 

 

12,855

 

Share-based compensation

 

8,657

 

 

 

11,047

 

Deferred income taxes

 

294

 

 

 

9,067

 

Other adjustments, net

 

(1,755

)

 

 

(381

)

Accounts receivable

 

(12,180

)

 

 

(10,489

)

Inventories

 

1,555

 

 

 

(6,375

)

Accrued and other liabilities

 

6,612

 

 

 

(10,349

)

Change in other operating assets and liabilities

 

3,101

 

 

 

3,379

 

Net cash provided by operating activities

 

33,099

 

 

 

38,273

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Acquisition of business, net

 

(75,000

)

 

 

 

Sales, purchases and maturities of investments

 

44,878

 

 

 

1,666

 

Purchases of property and equipment

 

(4,652

)

 

 

(9,616

)

Net cash used in investing activities

 

(34,774

)

 

 

(7,950

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Payments on finance leases and other

 

(349

)

 

 

(278

)

Proceeds from stock option exercises and employee stock purchases

 

2,848

 

 

 

2,320

 

Repurchase of common stock - tax withholdings on equity awards

 

(11,552

)

 

 

(26,375

)

Net cash used in financing activities

 

(9,053

)

 

 

(24,333

)

Foreign currency effect on cash

 

362

 

 

 

213

 

NET CHANGE IN CASH AND CASH EQUIVALENTS

 

(10,366

)

 

 

6,203

 

CASH AND CASH EQUIVALENTS — Beginning of period

 

173,952

 

 

 

119,952

 

CASH AND CASH EQUIVALENTS — End of period

$

163,586

 

 

$

126,155

 

 

 

 

 

Supplemental disclosure of non-cash activities

 

 

 

Issuance of common stock in connection with the acquisition of the RF business of Wolfspeed, Inc.

$

60,772

 

 

$

 

MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP RESULTS

(unaudited and in thousands, except per share data)

 

 

Three Months Ended

 

December 29, 2023

September 29, 2023

December 30, 2022

 

Amount

% Revenue

Amount

% Revenue

Amount

% Revenue

Gross profit - GAAP

$

87,310

 

 

55.6

 

$

86,626

 

 

57.6

 

$

110,355

 

 

61.3

 

Amortization expense

 

1,942

 

 

1.2

 

 

1,341

 

 

0.9

 

 

910

 

 

0.5

 

Share-based compensation expense

 

1,550

 

 

1.0

 

 

1,389

 

 

0.9

 

 

1,474

 

 

0.8

 

Acquisition and integration related costs

 

2,289

 

 

1.5

 

 

981

 

 

0.7

 

 

 

 

 

Adjusted gross profit (Non-GAAP)

$

93,091

 

 

59.2

 

$

90,337

 

 

60.1

 

$

112,739

 

 

62.6

 

 

 

Three Months Ended

 

December 29, 2023

September 29, 2023

December 30, 2022

 

Amount

% Revenue

Amount

% Revenue

Amount

% Revenue

Operating expenses - GAAP

$

76,300

 

 

48.6

 

$

71,019

 

 

47.2

 

$

71,772

 

 

39.9

 

Amortization expense

 

(4,798

)

 

(3.1

)

 

(6,092

)

 

(4.1

)

 

(5,903

)

 

(3.3

)

Share-based compensation expense

 

(8,319

)

 

(5.3

)

 

(9,180

)

 

(6.1

)

 

(11,973

)

 

(6.6

)

Acquisition and integration related costs

 

(8,644

)

 

(5.5

)

 

(2,462

)

 

(1.6

)

 

 

 

 

Debt extinguishment costs

 

 

 

 

 

(143

)

 

(0.1

)

 

 

 

 

Adjusted operating expenses (Non-GAAP)

$

54,539

 

 

34.7

 

$

53,142

 

 

35.3

 

$

53,896

 

 

29.9

 

 

 

Three Months Ended

 

December 29, 2023

September 29, 2023

December 30, 2022

 

Amount

% Revenue

Amount

% Revenue

Amount

% Revenue

Income from operations - GAAP

$

11,010

 

 

7.0

 

$

15,607

 

 

10.4

 

$

38,583

 

 

21.4

 

Amortization expense

 

6,740

 

 

4.3

 

 

7,433

 

 

4.9

 

 

6,813

 

 

3.8

 

Share-based compensation expense

 

9,869

 

 

6.3

 

 

10,569

 

 

7.0

 

 

13,447

 

 

7.5

 

Acquisition and integration related costs

 

10,933

 

 

7.0

 

 

3,443

 

 

2.3

 

 

 

 

 

Debt extinguishment costs

 

 

 

 

 

143

 

 

0.1

 

 

 

 

 

Adjusted income from operations (Non-GAAP)

$

38,552

 

 

24.5

 

$

37,195

 

 

24.7

 

$

58,843

 

 

32.7

 

 

 

 

 

 

 

 

Depreciation expense

 

6,254

 

 

4.0

 

 

6,218

 

 

4.1

 

 

6,042

 

 

3.4

 

Adjusted EBITDA (Non-GAAP)

$

44,806

 

 

28.5

 

$

43,413

 

 

28.9

 

$

64,885

 

 

36.0

 

 

 

Three Months Ended

 

December 29, 2023

September 29, 2023

December 30, 2022

 

Amount

% Revenue

Amount

% Revenue

Amount

% Revenue

Net income - GAAP

$

12,526

 

 

8.0

 

$

24,450

 

 

16.3

 

$

29,519

 

 

16.4

 

Amortization expense

 

6,740

 

 

4.3

 

 

7,433

 

 

4.9

 

 

6,813

 

 

3.8

 

Share-based compensation expense

 

9,869

 

 

6.3

 

 

10,569

 

 

7.0

 

 

13,447

 

 

7.5

 

Non-cash interest, net

 

287

 

 

0.2

 

 

328

 

 

0.2

 

 

412

 

 

0.2

 

Acquisition and integration related costs

 

10,933

 

 

7.0

 

 

3,443

 

 

2.3

 

 

 

 

 

Debt extinguishment costs

 

 

 

 

 

560

 

 

0.4

 

 

 

 

 

Tax effect of non-GAAP adjustments

 

1,457

 

 

0.9

 

 

(6,698

)

 

(4.5

)

 

7,816

 

 

4.3

 

Adjusted net income (Non-GAAP)

$

41,812

 

 

26.6

 

$

40,085

 

 

26.7

 

$

58,007

 

 

32.2

 

 

 

Three Months Ended

 

December 29, 2023

September 29, 2023

December 30, 2022

 

Net income

Income per diluted share

Net income

Income per diluted share

Net income

Income per diluted share

Net income - GAAP diluted

$

12,526

 

$

0.17

 

$

24,450

 

$

0.34

 

$

29,519

 

$

0.41

 

 

 

 

 

 

 

 

Adjusted net income (Non-GAAP)

$

41,812

 

$

0.58

 

$

40,085

 

$

0.56

 

$

58,007

 

$

0.81

 

 

 

Three Months Ended

 

December 29, 2023

September 29, 2023

December 30, 2022

 

Amount

% Revenue

Amount

% Revenue

Amount

% Revenue

Interest income, net - GAAP

$

(4,266

)

 

(2.7

)

$

(3,843

)

 

(2.6

)

$

(602

)

 

(0.3

)

Non-cash interest expense

 

(287

)

 

(0.2

)

 

(328

)

 

(0.2

)

 

(412

)

 

(0.2

)

Adjusted interest income (Non-GAAP)

$

(4,553

)

 

(2.9

)

$

(4,171

)

 

(2.8

)

$

(1,014

)

 

(0.6

)

 

Company: MACOM Technology Solutions Holdings, Inc. Stephen Ferranti Vice President, Corporate Development and Investor Relations P: 978-656-2977 E: stephen.ferranti@macom.com

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