MACOM Reports Fiscal Fourth Quarter and Fiscal Year 2019 Financial Results

Adjusted EBITDA - is a calculation that adds depreciation expense to our adjusted 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 GAAP cash flow from operating activities, reduces this amount by our capital expenditures in the applicable period. 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.

Incremental Shares - is the number of potential shares of common stock issuable upon the exercise of stock options, restricted stock, restricted stock units and warrants which were not included in the calculation of our GAAP diluted shares. We believe competitors and others in the financial industry utilize this non-GAAP 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

 

Twelve Months Ended

 

September 27,
2019

 

June 28, 2019

 

September 28,
2018

 

September 27,
2019

 

September 28,
2018

 

 

 

 

 

Revenue

$

112,248

 

$

108,306

 

$

151,188

 

$

499,708

 

$

570,398

Cost of revenue

59,323

 

74,478

 

80,206

 

279,000

 

324,692

Gross profit

52,925

 

33,828

 

70,982

 

220,708

 

245,706

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development

34,875

 

42,708

 

46,226

 

163,469

 

177,713

Selling, general and administrative

26,849

 

41,920

 

42,280

 

153,286

 

161,673

Impairment charges

700

 

264,086

 

 

264,786

 

6,575

Restructuring charges

2,496

 

8,887

 

(36)

 

19,543

 

6,265

Total operating expenses

64,920

 

357,601

 

88,470

 

601,084

 

352,226

Loss from operations

(11,995)

 

(323,773)

 

(17,488)

 

(380,376)

 

(106,520)

Other (expense) income:

 

 

 

 

 

 

 

 

 

Warrant liability (expense) gain

(5,023)

 

1,927

 

2,750

 

765

 

27,646

Interest expense, net

(8,661)

 

(8,967)

 

(8,089)

 

(35,803)

 

(31,338)

Other (expense) income, net

(3,507)

 

4,777

 

(3,609)

 

(7,739)

 

(45,023)

Total other expense

(17,191)

 

(2,263)

 

(8,948)

 

(42,777)

 

(48,715)

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

(29,186)

 

(326,036)

 

(26,436)

 

(423,153)

 

(155,235)

Income tax benefit

(37,297)

 

(1,322)

 

(10,320)

 

(36,950)

 

(21,473)

Income (loss) from continuing operations

8,111

 

(324,714)

 

(16,116)

 

(386,203)

 

(133,762)

Loss from discontinued operations

 

 

(378)

 

 

(6,215)

Net income (loss)

$

8,111

 

$

(324,714)

 

$

(16,494)

 

$

(386,203)

 

$

(139,977)

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

$

0.12

 

$

(4.93)

 

$

(0.25)

 

$

(5.88)

 

$

(2.07)

Loss from discontinued operations

 

 

(0.01)

 

 

(0.10)

Income (loss) per share - basic

$

0.12

 

$

(4.93)

 

$

(0.25)

 

$

(5.88)

 

$

(2.16)

 

 

 

 

 

 

 

 

 

 

Diluted:

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

$

0.12

 

$

(4.95)

 

$

(0.29)

 

$

(5.88)

 

$

(2.47)

Loss from discontinued operations

 

 

(0.01)

 

 

(0.10)

Income (loss) per share - diluted

$

0.12

 

$

(4.95)

 

$

(0.29)

 

$

(5.88)

 

$

(2.57)

 

 

 

 

 

 

 

 

 

 

Shares - Basic

66,077

 

65,858

 

65,170

 

65,686

 

64,741

Shares - Diluted

66,378

 

65,945

 

65,648

 

65,686

 

65,311

 

MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited and in thousands, except per share data)

 

 

September 27, 2019

 

September 28, 2018

 

 

 

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

75,519

 

$

94,676

Short term investments

 

101,226

 

98,221

Accounts receivable, net

 

69,790

 

97,375

Inventories

 

107,880

 

122,837

Income tax receivable

 

16,661

 

17,601

Assets held for sale, current

 

 

4,840

Prepaids and other current assets

 

27,506

 

23,311

Total current assets

 

398,582

 

458,861

Property and equipment, net

 

132,647

 

149,923

Goodwill and intangible assets, net

 

495,955

 

826,861

Deferred income taxes

 

41,407

 

2,272

Other investments

 

23,613

 

31,094

Other long-term assets

 

10,965

 

13,484

TOTAL ASSETS

 

$

1,103,169

 

$

1,482,495

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Current portion of lease payable

 

$

1,084

 

$

467

Current portion of long-term debt

 

6,885

 

6,885

Accounts payable

 

24,822

 

41,951

Accrued liabilities

 

39,908

 

49,945

Deferred revenue

 

2,137

 

7,757

Total current liabilities

 

74,836

 

107,005

Lease payable, less current portion

 

29,506

 

29,023

Long-term debt obligations, less current portion

 

655,272

 

658,372

Common stock warrant liability

 

12,364

 

13,129

Deferred income taxes

 

632

 

389

Other long-term liabilities

 

19,068

 

5,902

Total liabilities

 

791,678

 

813,820

Stockholders' equity

 

311,491

 

668,675

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

1,103,169

 

$

1,482,495

 

MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited and in thousands)

 

 

 

Twelve Months Ended

 

 

September 27,
2019

 

September 28,
2018

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

Net loss

 

$

(386,203)

 

$

(139,977)

Depreciation and amortization

 

104,418

 

112,383

Share based compensation

 

23,792

 

31,937

Warrant liability gain

 

(765)

 

(27,646)

Acquired inventory step-up amortization

 

 

224

Loss on disposition of business

 

 

34,343

Deferred income taxes

 

(38,893)

 

(16,528)

Loss on minority equity investment

 

7,481

 

10,406

Restructuring and impairment related charges

 

273,572

 

9,143

Other adjustments to reconcile loss to net operating cash

 

4,255

 

(594)

Inventories

 

14,964

 

(2,166)

Accounts receivable

 

27,585

 

38,679

Change in other operating assets and liabilities

 

(9,506)

 

(13,911)

Net cash provided by operating activities

 

20,700

 

36,293

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

Acquisition of businesses, net

 

(375)

 

(1,000)

Sales, purchases and maturities of investments

 

(1,094)

 

(14,086)

Purchases of other investments

 

 

(5,000)

Proceeds associated with discontinued operations

 

 

4,737

Sale of businesses and assets

 

5,541

 

1,274

Purchases of property and equipment

 

(37,963)

 

(53,044)

Net cash used in investing activities

 

(33,891)

 

(67,119)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

Payments of financing costs

 

 

(505)

Proceeds from corporate facility financing obligation

 

 

4,000

Payments of notes payable and assumed debt

 

(8,306)

 

(7,598)

Proceeds from stock option exercises and employee stock purchases

 

7,193

 

6,957

Repurchase of common stock - tax withholding on equity awards

 

(4,137)

 

(6,828)

Other adjustments

 

(578)

 

(477)

Net cash used in financing activities

 

(5,828)

 

(4,451)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

 

(138)

 

(151)

NET CHANGE IN CASH AND CASH EQUIVALENTS

 

(19,157)

 

(35,428)

CASH AND CASH EQUIVALENTS — Beginning of period

 

94,676

 

130,104

CASH AND CASH EQUIVALENTS — End of period

 

$

75,519

 

$

94,676

 

MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

RECONCILIATIONS OF GAAP TO NON-GAAP RESULTS

(unaudited and in thousands, except per share data)

 

 

Three Months Ended

Twelve Months Ended

 

September 27, 2019

June 28, 2019

September 28, 2018

September 27, 2019

September 28, 2018

 

Amount

% Revenue

Amount

% Revenue

Amount

% Revenue

Amount

% Revenue

Amount

% Revenue

Gross profit - GAAP

$

52,925

47.2

$

33,828

31.2

$

70,982

46.9

$

220,708

44.2

$

245,706

43.1

Amortization expense

5,773

5.1

8,149

7.5

8,515

5.6

29,847

6.0

33,428

5.9

Share-based and non-cash compensation

836

0.7

662

0.6

1,115

0.7

2,973

0.6

4,053

0.7

Impairment related charges

(991)

(0.2)

2,568

0.5

Acquisition, integration and restructuring related costs

1,176

0.8

547

0.1

1,966

0.3

Production and product line exits

1,000

0.7

17,165

3.0

Adjusted gross profit (Non-GAAP)

$

59,534

53.0

$

42,639

39.4

$

82,788

54.8

$

253,084

50.6

$

304,886

53.5

 

 

Three Months Ended

Twelve Months Ended

 

September 27, 2019

June 28, 2019

September 28, 2018

September 27, 2019

September 28, 2018

 

Amount

% Revenue

Amount

% Revenue

Amount

% Revenue

Amount

% Revenue

Amount

% Revenue

Operating expenses - GAAP

$

64,920

57.8

$

357,601

330.2

$

88,470

58.5

$

601,084

120.3

$

352,226

61.8

Amortization expense

(6,757)

(6.0)

(13,713)

(12.7)

(12,438)

(8.2)

(44,872)

(9.0)

(48,266)

(8.5)

Share-based and non-cash compensation

(3,551)

(3.2)

(2,383)

(2.2)

(6,984)

(4.6)

(22,742)

(4.6)

(27,614)

(4.8)

Impairment and restructuring charges

(3,196)

(2.8)

(272,973)

(252.0)

36

(284,329)

(56.9)

(12,840)

(2.3)

Litigation costs

(982)

(0.6)

(167)

(3,507)

(0.6)

Acquisition, integration and restructuring related costs

(366)

(0.3)

(3,612)

(3.3)

(3,117)

(2.1)

(6,799)

(1.4)

(9,948)

(1.7)

Production and product line exits

(857)

(0.6)

(2,445)

(0.4)

Adjusted operating expenses (Non-GAAP)

$

51,050

45.5

$

64,920

59.9

$

64,128

42.4

$

242,175

48.5

$

247,606

43.4

 

 

Three Months Ended

Twelve Months Ended

 

September 27, 2019

June 28, 2019

September 28, 2018

September 27, 2019

September 28, 2018

 

Amount

% Revenue

Amount

% Revenue

Amount

% Revenue

Amount

% Revenue

Amount

% Revenue

Loss from operations - GAAP

$

(11,995)

(10.7)

$

(323,773)

(298.9)

$

(17,488)

(11.6)

$

(380,376)

(76.1)

$

(106,520)

(18.7)

Amortization expense

12,530

11.2

21,862

20.2

20,953

13.9

74,719

15.0

81,694

14.3

Share-based and non-cash compensation

4,387

3.9

3,045

2.8

8,099

5.4

25,684

5.1

31,666

5.6

Impairment and restructuring charges

3,196

2.8

272,973

252.0

(36)

283,338

56.7

15,408

2.7

Litigation costs

982

0.6

167

3,507

0.6

Acquisition, integration and restructuring related costs

366

0.3

3,612

3.3

4,293

2.8

7,377

1.5

11,914

2.1

Production and product line exits

1,857

1.2

19,610

3.4

Adjusted income (loss) from operations (Non-GAAP)

$

8,484

7.6

$

(22,281)

(20.6)

$

18,660

12.3

$

10,909

2.2

$

57,279

10.0

 

 

 

 

 

 

 

 

 

 

 

Depreciation expense

7,276

6.5

7,272

6.7

7,416

4.9

29,699

5.9

30,099

5.3

Adjusted EBITDA (Non-GAAP)

$

15,760

14.0

$

(15,009)

(13.9)

$

26,076

17.2

$

40,608

8.1

$

87,378

15.3

 

 

Three Months Ended

Twelve Months Ended

 

September 27, 2019

June 28, 2019

September 28, 2018

September 27, 2019

September 28, 2018

 

Amount

% Revenue

Amount

% Revenue

Amount

% Revenue

Amount

% Revenue

Amount

% Revenue

Net income (loss) - GAAP

$

8,111

7.2

$

(324,714)

(299.8)

$

(16,494)

(10.9)

$

(386,203)

(77.3)

$

(139,977)

(24.5)

Amortization expense

12,530

11.2

21,862

20.2

20,953

13.9

74,719

15.0

81,694

14.3

Share-based and non-cash compensation

4,387

3.9

3,075

2.8

8,099

5.4

25,715

5.1

31,666

5.6

Impairment and restructuring charges

3,196

2.8

272,973

252.0

(36)

283,338

56.7

15,408

2.7

Warrant liability expense (gain)

5,023

4.5

(1,927)

(1.8)

(2,750)

(1.8)

(765)

(0.2)

(27,646)

(4.8)

Non-cash interest, net

1,015

0.9

1,015

0.9

1,015

0.7

4,061

0.8

4,587

0.8

Litigation costs

982

0.6

167

3,507

0.6

Acquisition, integration and restructuring related costs

366

0.3

3,582

3.3

4,293

2.8

7,346

1.5

11,914

2.1

Production and product line exits

1,857

1.2

19,610

3.4

Discontinued operations

378

0.3

6,215

1.1

Equity investment and sale of business (gains) losses

3,545

3.2

(4,705)

(4.3)

3,462

2.3

7,700

1.5

44,749

7.8

Other

Tax effect of non-GAAP adjustments

(37,367)

(33.3)

1,091

1.0

(11,235)

(7.4)

(35,281)

(7.1)

(23,893)

(4.2)

Adjusted net income (loss) (Non-GAAP)

$

806

0.7

$

(27,748)

(25.6)

$

10,524

7.0

$

(19,203)

(3.8)

$

27,834

4.9

 

Three Months Ended

Twelve Months Ended

 

September 27, 2019

June 28, 2019

September 28, 2018

September 27, 2019

September 28, 2018

 

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 income (loss) - GAAP

$

8,111

 

$

(324,714)

 

$

(16,494)

 

$

(386,203)

 

$

(139,977)

 

Warrant liability gain

 

(1,927)

 

(2,750)

 

 

(27,646)

 

Net income (loss) - diluted

$

8,111

$

0.12

$

(326,641)

$

(4.95)

$

(19,244)

$

(0.29)

$

(386,203)

$

(5.88)

$

(167,623)

$

(2.57)

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income (loss) (Non-GAAP)

$

806

$

0.01

$

(27,748)

$

(0.42)

$

10,524

$

0.16

$

(19,203)

$

(0.29)

$

27,834

$

0.42

 

Three Months Ended

Twelve Months Ended

 

September 27, 2019

June 28, 2019

September 28, 2018

September 27, 2019

September 28, 2018

 

Shares

 

Shares

 

Shares

 

Shares

 

Shares

 

Diluted shares - GAAP

66,378

 

65,945

 

65,648

 

65,686

 

65,311

 

Incremental shares

358

 

80

 

236

 

387

 

376

 

Adjusted diluted shares (Non-GAAP)

66,736

 

66,025

 

65,884

 

66,073

 

65,687

 

 

Three Months Ended

Twelve Months Ended

 

September 27, 2019

June 28, 2019

September 28, 2018

September 27, 2019

September 28, 2018

 

Amount

% Revenue

Amount

% Revenue

Amount

% Revenue

Amount

% Revenue

Amount

% Revenue

Interest expense, net - GAAP

$

8,661

7.7

$

8,967

8.3

$

8,089

5.4

$

35,803

7.2

$

31,338

5.5

Non-cash interest expense

(1,015)

(0.9)

(1,015)

(0.9)

(1,015)

(0.7)

(4,061)

(0.8)

(4,588)

(0.8)

Adjusted Interest Expense (Non-GAAP)

$

7,646

6.8

$

7,952

7.3

$

7,074

4.7

$

31,742

6.4

$

26,750

4.7

 

Three Months Ended

Twelve Months Ended

 

September 27, 2019

June 28, 2019

September 28, 2018

September 27, 2019

September 28, 2018

 

Amount

% Revenue

Amount

% Revenue

Amount

% Revenue

Amount

% Revenue

Amount

% Revenue

Cash flow from operations - GAAP

$

(7,578)

(6.8)

$

1,439

1.3

$

25,076

16.6

$

20,700

4.1

$

36,293

6.4

Capital expenditures

(6,058)

(5.4)

(9,305)

(8.6)

(13,601)

(9.0)

(37,963)

(7.6)

(53,044)

(9.3)

Free cash flow (Non-GAAP)

$

(13,636)

(12.1)

$

(7,866)

(7.3)

$

11,475

7.6

$

(17,263)

(3.5)

$

(16,751)

(2.9)

Free cash flow as a percentage of Adjusted net income

(1,692)

%

 

(28)

%

 

109

%

 

(90)

%

 

(60)

%

 

 

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