Try our mobile app

Published: 2023-11-09 07:30:55 ET
<<<  go to MTSI company page
EX-99.1 2 ex99_1earningsreleaseq4fy23.htm EX-99.1 Document

logoa.jpg

MACOM Reports Fiscal Fourth Quarter and Fiscal Year 2023 Financial Results

LOWELL, MA, November 9, 2023 – MACOM Technology Solutions Holdings, Inc. (“MACOM”) (Nasdaq: MTSI), a leading supplier of semiconductor products, today announced its financial results for its fiscal fourth quarter and fiscal year ended September 29, 2023.
Fourth Quarter Fiscal Year 2023 GAAP Results
•Revenue was $150.4 million, a decrease of 15.6%, compared to $178.1 million in the previous year fiscal fourth quarter and an increase of 1.2% compared to $148.5 million in the prior fiscal quarter;
•Gross margin was 57.6%, compared to 60.9% in the previous year fiscal fourth quarter and 58.0% in the prior fiscal quarter;
•Income from operations was $15.6 million, or 10.4% of revenue, compared to income from operations of $37.0 million, or 20.8% of revenue, in the previous year fiscal fourth quarter and income from operations of $17.3 million, or 11.7% of revenue, in the prior fiscal quarter; and
•Net income was $24.5 million, or $0.34 per diluted share, compared to net income of $239.3 million, or $3.36 per diluted share, in the previous year fiscal fourth quarter and net income of $11.9 million, or $0.17 per diluted share, in the prior fiscal quarter. Net income for fiscal year 2022 includes a $202.8 million non-cash income tax benefit associated with the release of the valuation allowance on the majority of our deferred tax assets.

Fourth Quarter Fiscal Year 2023 Adjusted Non-GAAP Results
•Adjusted gross margin was 60.1%, compared to 62.6% in the previous year fiscal fourth quarter and 60.1% in the prior fiscal quarter;
•Adjusted income from operations was $37.2 million, or 24.7% of revenue, compared to adjusted income from operations of $56.9 million, or 32.0% of revenue, in the previous year fiscal fourth quarter and adjusted income from operations of $37.0 million, or 24.9% of revenue, in the prior fiscal quarter; and
•Adjusted net income was $40.1 million, or $0.56 per diluted share, compared to adjusted net income of $55.1 million, or $0.77 per diluted share, in the previous year fiscal fourth quarter and adjusted net income of $38.5 million, or $0.54 per diluted share, in the prior fiscal quarter.
Fiscal Year 2023 GAAP Results
•Revenue was $648.4 million, a decrease of 4.0%, compared to $675.2 million in fiscal year 2022;
•Gross margin was 59.5%, compared to 60.2% in fiscal year 2022;
•Income from operations was $107.4 million, compared to $132.7 million in fiscal year 2022; and
•Net income was $91.6 million, or $1.28 per diluted share, compared to a net income of $440.0 million, or $6.18 income per diluted share in fiscal year 2022. Net income for fiscal year 2022 includes a $118.2 million gain associated with the sale of an equity interest and a non-cash income tax benefit of $202.8 million associated with the release of the valuation allowance on the majority of our deferred tax assets.


Fiscal Year 2023 Adjusted Non-GAAP Results
•Adjusted gross margin was 61.3%, compared to 62.0% in fiscal year 2022;
•Adjusted income from operations was $189.6 million, or 29.2% of revenue, compared to $211.0 million, or 31.2% of adjusted revenue, in fiscal year 2022; and
•Adjusted net income was $193.3 million, or $2.70 per diluted share, compared to adjusted net income of $201.0 million, or $2.82 per diluted share in fiscal year 2022.
Management Commentary
“We believe focusing on the highest frequency, highest power and highest data rate applications will further strengthen our market position and results in fiscal year 2024,” said Stephen G. Daly, President and Chief Executive Officer.
Business Outlook
For the fiscal first quarter ending December 29, 2023, MACOM expects revenue to be in the range of $149 million to $153 million. Adjusted gross margin is expected to be between 59% and 61%, and adjusted earnings per diluted share is expected to be between $0.55 and $0.59 utilizing an anticipated non-GAAP income tax rate of 3% and 72.2 million fully diluted shares outstanding.
Conference Call
MACOM will host a conference call on Thursday, November 9, 2023 at 8:30 a.m. Eastern Time to discuss its fiscal fourth quarter and fiscal year 2023 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 acquisition of Linearizer Communications Group (“Linearizer Acquisition”), statements about the potential market and product expansion opportunities resulting from MACOM’s establishment of its European Semiconductor Center (“MESC”), the team’s capabilities and technology and expansion thereof and any potential financial benefits derived by and financial impact to MACOM from the Linearizer Acquisition or the OMMIC SAS asset acquisition and MESC establishment and the pending acquisition of the RF business of Wolfspeed, Inc., 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 first 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) expense. 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, acquisition and integration related costs, equity method investment gains and losses, 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 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.
Equity Method Investment Gain, net – primarily includes non-cash gains and losses associated with a non-marketable equity investment we had and the $118.2 million cash gain on the sale of this investment in December 2021. We believe these items are not correlated to future business operations and including such amounts does not reflect our ongoing operations.
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 no 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 fiscal year 2023 and for our second, third and fourth quarters of fiscal year 2022 and 5% for our first quarter of fiscal year 2022. Our historical effective income tax rate under GAAP has varied significantly from our non-GAAP income tax rate due primarily to gains or losses associated with our equity method investment in a private business, 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.


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


MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in thousands, except per share data)
 Three Months EndedTwelve Months Ended
September 29, 2023June 30, 2023September 30, 2022September 29, 2023September 30, 2022
Revenue$150,375 $148,522 $178,143 $648,407 $675,170 
Cost of revenue63,749 62,396 69,636 262,610 268,989 
Gross profit86,626 86,126 108,507 385,797 406,181 
Operating expenses:
Research and development37,508 36,668 39,678 148,545 148,228 
Selling, general and administrative33,511 32,152 31,798 129,852 125,279 
 Total operating expenses71,019 68,820 71,476 278,397 273,507 
Income from operations15,607 17,306 37,031 107,400 132,674 
Other income (expense):
 Interest income (expense), net3,843 2,344 (372)8,423 (4,300)
 Other (expense) income, net(458)(29)(120)(665)114,746 
 Total other income (expense)3,385 2,315 (492)7,758 110,446 
Income before income taxes18,992 19,621 36,539 115,158 243,120 
Income tax expense (benefit)(5,458)7,768 (202,797)23,581 (196,835)
Net income$24,450 $11,853 $239,336 $91,577 $439,955 
Net income per share:
Income per share - Basic$0.34 $0.17 $3.42 $1.29 $6.30 
Income per share - Diluted$0.34 $0.17 $3.36 $1.28 $6.18 
Weighted average common shares:
Shares - Basic70,988 70,937 69,998 70,801 69,783 
Shares - Diluted71,828 71,408 71,274 71,503 71,166 



MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited and in thousands)
September 29, 2023September 30, 2022
 ASSETS
 Current assets:
 Cash and cash equivalents$173,952 $119,952 
 Short-term investments340,574 466,580 
 Accounts receivable, net91,253 101,551 
 Inventories136,300 114,960 
 Prepaid and other current assets19,114 10,040 
 Total current assets761,193 813,083 
 Property and equipment, net149,496 123,701 
 Goodwill and intangible assets, net390,392 362,671 
 Deferred income taxes218,107 237,415 
 Other long-term assets34,056 34,947 
Total assets$1,553,244 $1,571,817 
 LIABILITIES AND STOCKHOLDERS’ EQUITY
 Current liabilities:
Current portion of finance lease obligations$1,162 $1,006 
Accounts payable24,966 30,733 
Accrued liabilities57,397 65,475 
 Total current liabilities83,525 97,214 
 Finance lease obligations, less current portion31,776 27,032 
 Financing obligation9,307 9,544 
 Long-term debt obligations447,134 565,920 
 Other long-term liabilities33,902 29,359 
 Total liabilities605,644 729,069 
Stockholders’ equity
947,600 842,748 
Total liabilities and stockholders’ equity
$1,553,244 $1,571,817 





MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)
Twelve Months Ended
September 29, 2023September 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income$91,577 $439,955 
Depreciation and intangible asset amortization52,153 57,229 
Share-based compensation38,103 41,185 
Gain on equity method investment, net— (114,908)
Deferred income taxes19,798 (200,431)
Other adjustments, net(6,948)644 
Accounts receivable12,253 (16,981)
Inventories(10,570)(32,261)
Accrued and other liabilities(21,315)(5,643)
Change in other operating assets and liabilities(8,134)8,193 
Net cash provided by operating activities166,917 176,982 
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of business, net(87,692)— 
Proceeds from sale of equity method investment— 127,750 
Sales, purchases and maturities of investments140,727 (284,121)
Purchases of property and equipment(24,699)(26,513)
Proceeds from sale of assets8,005 23 
Net cash provided by (used in) investing activities36,341 (182,861)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term debt(120,766)— 
Payments on finance leases and other(1,209)(957)
Proceeds from stock option exercises and employee stock purchases5,574 8,052 
Repurchase of common stock - tax withholdings on equity awards(32,619)(36,003)
Net cash used in financing activities(149,020)(28,908)
Foreign currency effect on cash(238)(1,798)
NET CHANGE IN CASH AND CASH EQUIVALENTS54,000 (36,585)
CASH AND CASH EQUIVALENTS — Beginning of period119,952 156,537 
CASH AND CASH EQUIVALENTS — End of period$173,952 

$119,952 



MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.
RECONCILIATIONS OF GAAP TO NON-GAAP RESULTS
(unaudited and in thousands, except per share data)
Three Months EndedTwelve Months Ended
September 29, 2023June 30, 2023September 30, 2022September 29, 2023September 30, 2022
 Amount % Revenue Amount % Revenue Amount % Revenue Amount % Revenue Amount % Revenue
Gross profit - GAAP$86,626 57.6 $86,126 58.0 $108,507 60.9 $385,797 59.5 $406,181 60.2 
Amortization expense1,341 0.9 1,131 0.8 1,778 1.0 4,369 0.7 7,839 1.2 
Share-based compensation expense1,389 0.9 1,180 0.8 1,166 0.7 5,304 0.8 4,597 0.7 
Acquisition and integration related costs981 0.7 760 0.5 — — 1,962 0.3 — — 
Adjusted gross profit (Non-GAAP)$90,337 60.1 $89,197 60.1 $111,451 62.6 $397,432 61.3 $418,617 62.0 
Three Months EndedTwelve Months Ended
September 29, 2023June 30, 2023September 30, 2022September 29, 2023September 30, 2022
 Amount % Revenue Amount % Revenue Amount % Revenue Amount % Revenue Amount % Revenue
Operating expenses - GAAP$71,019 47.2 $68,820 46.3 $71,476 40.1 $278,397 42.9 $273,507 40.5 
Amortization expense(6,092)(4.1)(5,976)(4.0)(6,258)(3.5)(23,735)(3.7)(25,592)(3.8)
Share-based compensation expense(9,180)(6.1)(7,538)(5.1)(10,692)(6.0)(38,285)(5.9)(40,276)(6.0)
Acquisition and integration related costs(2,462)(1.6)(3,095)(2.1)— — (8,379)(1.3)— — 
Debt extinguishment costs(143)(0.1)— — — — (143)— — — 
Adjusted operating expenses (Non-GAAP)$53,142 35.3 $52,211 35.2 $54,526 30.6 $207,855 32.1 $207,639 30.8 
Three Months EndedTwelve Months Ended
September 29, 2023June 30, 2023September 30, 2022September 29, 2023September 30, 2022
 Amount % Revenue Amount % Revenue Amount % Revenue Amount % Revenue Amount % Revenue
Income from operations - GAAP$15,607 10.4 $17,306 11.7 $37,031 20.8 $107,400 16.6 $132,674 19.7 
Amortization expense7,433 4.9 7,107 4.8 8,036 4.5 28,104 4.3 33,431 5.0 
Share-based compensation expense10,569 7.0 8,718 5.9 11,859 6.7 43,589 6.7 44,873 6.6 
Acquisition and integration related costs3,443 2.3 3,855 2.6 — — 10,341 1.6 — — 
Debt extinguishment costs143 0.1 — — — — 143 — — — 
Adjusted income from operations (Non-GAAP)$37,195 24.7 $36,986 24.9 $56,926 32.0 $189,577 29.2 $210,978 31.2 
Depreciation expense6,218 4.1 5,827 3.9 6,141 3.4 23,846 3.7 23,798 3.5 
Adjusted EBITDA (Non-GAAP)$43,413 28.9 $42,813 28.8 $63,067 35.4 $213,423 32.9 $234,776 34.8 
Three Months EndedTwelve Months Ended
September 29, 2023June 30, 2023September 30, 2022September 29, 2023September 30, 2022
 Amount % Revenue Amount % Revenue Amount % Revenue Amount % Revenue Amount % Revenue
Net income - GAAP$24,450 16.3 $11,853 8.0 $239,336 134.4 $91,577 14.1 $439,955 65.2 
Amortization expense7,433 4.9 7,107 4.8 8,036 4.5 28,104 4.3 33,431 5.0 
Share-based compensation expense10,569 7.0 8,718 5.9 11,859 6.7 43,589 6.7 44,873 6.6 
Non-cash interest, net328 0.2 412 0.3 412 0.2 1,563 0.2 1,692 0.3 
Acquisition and integration related costs3,443 2.3 3,855 2.6 — — 10,341 1.6 — — 
Equity method investment gain, net— — — — — — — — (114,908)(17.0)
Debt extinguishment costs560 0.4 — — — — 560 0.1 — — 
Tax effect of non-GAAP adjustments(6,698)(4.5)6,576 4.4 (204,503)(114.8)17,601 2.7 (204,037)(30.2)
Adjusted net income (Non-GAAP)$40,085 26.7 $38,521 25.9 $55,140 31.0 $193,335 29.8 $201,006 29.8 
Three Months EndedTwelve Months Ended
September 29, 2023June 30, 2023September 30, 2022September 29, 2023September 30, 2022
Net income Income per diluted shareNet incomeIncome per diluted shareNet incomeIncome per diluted shareNet incomeIncome per diluted shareNet incomeIncome per diluted share
Net income - GAAP diluted$24,450 $0.34 $11,853 $0.17 $239,336 $3.36 $91,577 $1.28 $439,955 $6.18 
Adjusted net income (Non-GAAP)$40,085 $0.56 $38,521 $0.54 $55,140 $0.77 $193,335 $2.70 $201,006 $2.82 
Three Months EndedTwelve Months Ended
September 29, 2023June 30, 2023September 30, 2022September 29, 2023September 30, 2022
 Amount % Revenue Amount % Revenue Amount % Revenue Amount % Revenue Amount % Revenue
Interest (income) expense, net - GAAP$(3,843)(2.6)$(2,344)(1.6)$372 0.2 $(8,423)(1.3)$4,300 0.6 
Non-cash interest expense(328)(0.2)(412)(0.3)(412)(0.2)(1,563)(0.2)(1,692)(0.3)
Adjusted interest (income) expense (Non-GAAP)$(4,171)(2.8)$(2,756)(1.9)$(40)— $(9,986)(1.5)$2,608 0.4