MACOM Reports Fiscal Second Quarter 2018 Financial Results

LOWELL, Mass. — (BUSINESS WIRE) — May 1, 2018 — 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 second quarter ended March 30, 2018.

Second Quarter Fiscal Year 2018 GAAP Results

  • Revenue was $150.4 million, a decrease of 19.2% compared to $186.1 million in the previous year fiscal second quarter and an increase of 14.9% compared to $130.9 million in the prior fiscal quarter;
  • Gross profit was $65.6 million, a decrease of 4.7% compared to $68.9 million in the previous year fiscal second quarter and an increase of 7.6% compared to $61.0 million in the prior fiscal quarter;
  • Gross margin was 43.6%, compared to 37.0% in the previous year fiscal second quarter and 46.6% in the prior fiscal quarter;
  • Operating loss was $23.4 million, compared to operating loss of $33.6 million in the previous year fiscal second quarter and operating loss of $23.0 million in the prior fiscal quarter; and
  • Net loss from continuing operations was $15.5 million, or $0.50 loss per diluted share, compared to net loss from continuing operations of $134.3 million, or $2.21 loss per diluted share, in the previous year fiscal second quarter and net loss from continuing operations of $17.0 million, or $0.49 loss per diluted share, in the prior fiscal quarter.

Second Quarter Fiscal Year 2018 Adjusted Non-GAAP Results

  • Adjusted gross margin was 51.6%, compared to 58.5% in the previous year fiscal second quarter and 53.7% in the prior fiscal quarter;
  • Adjusted operating income was $15.7 million, or 10.5% of revenue, compared to $48.6 million, or 26.1% of revenue, in the previous year fiscal second quarter and $13.4 million, or 10.3% of revenue, in the prior fiscal quarter;
  • Adjusted net income was $8.5 million, or $0.13 per diluted share, compared to $39.4 million, or $0.63 per diluted share, in the previous year fiscal second quarter and $6.6 million, or $0.10 per diluted share, in the prior fiscal quarter; and
  • Adjusted EBITDA was $23.4 million, compared to $56.7 million for the previous year fiscal second quarter and $20.9 million for the prior fiscal quarter.

Management Commentary
“The December quarter marked the bottom of the cycle for MACOM in terms of revenue and demand, as evidenced by our 15% sequential growth. Across our served markets, order intake and customer forecasts returned to more normalized patterns in our fiscal second quarter,” commented John Croteau, President and CEO of MACOM.

“Following last year’s cyclical downturn in China, we believe we are entering the next phase of global infrastructure spending driven by 5G Telecom, continued strong investment by Cloud Service Providers, and now, a surge in defense spending and industrial capital investment. We’ve spent the last couple of years developing a portfolio of disruptive products and technologies to service these targeted areas of secular growth. Major customers have validated our technology and capabilities and are actively sponsoring us as we work to ramp volume.”

“Moving forward, we expect sales across all our end markets to contribute to top line growth quarter-by-quarter throughout calendar 2018. The exact slope will be paced by our ability to scale operationally, both with our strategic suppliers and in our own factories. We believe the future contribution from these sales can provide significant operating leverage as we monetize what were previously strategic investments for the company.”

Mr. Croteau concluded, “Finally, last quarter we highlighted the impact that certain competitive developments had on our LR4 subassembly business. In response, we took proactive action to exit the manufacture and sale of optical subassemblies. Consistent with our overall goal of providing high-margin analog and photonic semiconductor components we will now sell chipsets. This action is expected to result in better overall cost structures for our TOSA customers, with improved gross margins for MACOM.”

Business Outlook
For the fiscal third quarter ending June 29, 2018, MACOM expects revenue to be in the range of $142 million to $150 million. Adjusted gross margin is expected to be between 54% and 57%, and adjusted earnings per share between $0.09 and $0.15 on an anticipated 66 million fully diluted shares outstanding.

For comparison, if MACOM were to report fiscal second quarter financial results on a pro forma basis without the LR4 business, revenue would have been $138 million, adjusted gross margin 54%, and adjusted earnings per share of $0.09.

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