MACOM Reports Fiscal Third Quarter 2019 Financial Results

LOWELL, Mass. — (BUSINESS WIRE) — August 1, 2019 — MACOM Technology Solutions Holdings, Inc. ("MACOM" or the "Company") (NASDAQ: MTSI), a leading supplier of semiconductor products, today announced its financial results for its fiscal third quarter ended June 28, 2019.

Third Quarter Fiscal Year 2019 GAAP Results

  • Revenue was $108.3 million, a decrease of 21.4% compared to $137.9 million in the previous year fiscal third quarter and a decrease of 15.7% compared to $128.5 million in the prior fiscal quarter;
  • Gross profit was $33.8 million, a decrease of 29.8% compared to $48.2 million in the previous year fiscal third quarter and a decrease of 41.0% compared to $57.3 million in the prior fiscal quarter;
  • Gross margin was 31.2%, compared to 34.9% in the previous year fiscal third quarter and 44.6% in the prior fiscal quarter;
  • Operating loss was $323.8 million, inclusive of $264.1 million of impairment charges, compared to a loss of $42.6 million in the previous year fiscal third quarter and a loss of $30.2 million in the prior fiscal quarter; and
  • Net loss from continuing operations was $324.7 million, or $4.95 loss per diluted share, compared to net loss of $85.2 million, or $1.31 loss per diluted share, in the previous year fiscal third quarter and net loss of $46.2 million, or $0.71 loss per diluted share, in the prior fiscal quarter.

Third Quarter Fiscal Year 2019 Adjusted Non-GAAP Results

  • Adjusted revenue was $108.3 million, a decrease of 25.3% compared to $144.9 million in the previous year fiscal third quarter and a decrease of 10.9% compared to $121.5 million in the prior fiscal quarter;
  • Adjusted gross margin was 39.4%, compared to 56.0% in the previous year fiscal third quarter and 48.7% in the prior fiscal quarter;
  • Adjusted operating loss was $22.3 million, or 20.6% of revenue, compared to adjusted operating income of $16.5 million, or 11.4% of revenue, in the previous year fiscal third quarter and adjusted operating loss of $4.2 million, or 3.4% of revenue, in the prior fiscal quarter;
  • Adjusted net loss was $27.7 million, or $0.42 loss per diluted share, compared to adjusted net income of $8.6 million, or $0.13 per diluted share, in the previous year fiscal third quarter and adjusted net loss of $11.6 million, or $0.18 per diluted share, in the prior fiscal quarter; and
  • Adjusted EBITDA was negative $15.0 million, compared to $24.1 million for the previous year fiscal third quarter and $3.4 million for the prior fiscal quarter.

Management Commentary

"This was a pivotal quarter for MACOM," said Stephen G. Daly, President and Chief Executive Officer. "Our priority is to return the Company to profitability and to improve performance on key development projects so that we can achieve our growth objectives."

Business Outlook

For the fiscal fourth quarter ending September 27, 2019, MACOM expects revenue to be in the range of $108 million to $112 million. Adjusted gross margin is expected to be between 52% and 54%, and adjusted loss per share is expected to be between $(0.04) and $0.00 on an anticipated 66.5 million fully diluted shares outstanding.

Conference Call

MACOM will host a conference call on Thursday, August 1, 2019 at 5:00 p.m. Eastern Time to discuss its fiscal third quarter 2019 financial results and business outlook. Investors and analysts may join the conference call by dialing 1-877-837-3908 and providing the passcode 1260659.

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 1260659. 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 designs and manufactures semiconductor products for Data Center, Telecommunication and Industrial and Defense applications. Headquartered in Lowell, Massachusetts, MACOM has design centers and sales offices throughout North America, Europe and Asia. MACOM is certified to the ISO9001 international quality standard and ISO14001 environmental management standard.

Special Note Regarding Forward-Looking Statements

This press release 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 and priorities, the estimated financial results for our fiscal fourth 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 expressed in any forward-looking statement. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements, including those 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 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 revenue, non-GAAP gross profit and gross margin, non-GAAP income (loss) from operations and operating margin, non-GAAP operating expenses, non-GAAP net income, non-GAAP diluted earnings per share, non-GAAP income tax rate, adjusted EBITDA, non-GAAP interest expense 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, deferred revenue, intangible amortization expense, share-based and non-cash compensation costs, impairment and restructuring charges, changes in common stock warrant liability, financing and litigation costs, acquisition and integration related costs, equity investment gains and losses, divested business losses, other costs and the tax effect of each adjustment.

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.


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