MTSI MACOM Technology Solutions Holdings Inc

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 January 3, 2025.

First Quarter Fiscal Year 2025 GAAP Results

• Revenue was $218.1 million, an increase of 38.8%, compared to $157.1 million in the previous year fiscal first quarter and an increase of 8.7% compared to $200.7 million in the prior fiscal quarter;

• Gross margin was 53.7%, compared to 55.6% in the previous year fiscal first quarter and 54.7% in the prior fiscal quarter;

• Income from operations was $17.5 million, or 8.0% of revenue, compared to income from operations of $11.0 million, or 7.0% of revenue, in the previous year fiscal first quarter and income from operations of $27.5 million, or 13.7% of revenue, in the prior fiscal quarter; and

• Net loss, which includes a one-time, primarily non-cash, charge of $193.1 million loss on extinguishment of debt related to the previously-announced refinancing of a portion of the Company’s 0.25% convertible senior notes due 2026, was $167.5 million, or $2.30 loss per diluted share, compared to net income of $12.5 million, or $0.17 per diluted share, in the previous year fiscal first quarter and net income of $29.4 million, or $0.39 per diluted share, in the prior fiscal quarter.

First Quarter Fiscal Year 2025 Adjusted Non-GAAP Results

• Adjusted gross margin was 57.5%, compared to 59.2% in the previous year fiscal first quarter and 58.1% in the prior fiscal quarter;

• Adjusted income from operations was $55.4 million, or 25.4% of revenue, compared to adjusted income from operations of $38.6 million, or 24.5% of revenue, in the previous year fiscal first quarter and adjusted income from operations of $50.7 million, or 25.2% of revenue, in the prior fiscal quarter; and

• Adjusted net income was $59.5 million, or $0.79 per diluted share, compared to adjusted net income of $41.8 million, or $0.58 per diluted share, in the previous year fiscal first quarter and adjusted net income of $54.2 million, or $0.73 per diluted share, in the prior fiscal quarter.

Management Commentary

“Q1 was a good start to our fiscal 2025,” said Stephen G. Daly, President and Chief Executive Officer, MACOM. “We remain focused on serving our customers and building a stronger, broader and more competitive product portfolio.”

Business Outlook

For the fiscal second quarter ending April 4, 2025, MACOM expects revenue to be in the range of $227 million to $233 million. Adjusted gross margin is expected to be between 57% and 58%, and adjusted earnings per diluted share is expected to be between $0.82 and $0.86 utilizing an anticipated non-GAAP income tax rate of 3% and 76.0 million fully diluted shares outstanding.

Conference Call

MACOM will host a conference call on Thursday, February 6, 2025, at 8:30 a.m. Eastern Time to discuss its fiscal first quarter 2025 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 Industrial and Defense, Data Center and Telecommunications 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. 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 develop new products, achieve market acceptance of those products and better address certain markets, expand our capabilities and extend our product offerings, including through the acquisitions of ENGIN-IC, Inc., Linearizer Communications Group and the radio frequency (RF) business of Wolfspeed, Inc. and through the establishment and growth of our European Semiconductor Center and potential collaboration and sales opportunities with private and public sector partners resulting therefrom, 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 performance improvements, MACOM’s strategic investment plan, including negotiation and finalization of a definitive agreement with, and receipt of, funding from the Federal and State governments, the estimated financial results for our 2025 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, loss on debt extinguishment 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 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.

Loss on Debt Extinguishment – includes the loss on exchange of our convertible notes. This loss is primarily non-cash and we do not believe this amount is reflective of 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 2025 and for fiscal year 2024. 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.

Incremental Shares – is the number of potential shares of common stock issuable upon the exercise of stock options, restricted stock, restricted stock units and conversion of convertible debt 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

 

January 3, 2025

 

September 27, 2024

 

December 29, 2023

 

 

 

Revenue

$

218,122

 

 

$

200,710

 

 

$

157,148

 

Cost of revenue

 

101,013

 

 

 

90,868

 

 

 

69,838

 

Gross profit

 

117,109

 

 

 

109,842

 

 

 

87,310

 

Operating expenses:

 

 

 

 

 

Research and development

 

60,369

 

 

 

49,592

 

 

 

39,413

 

Selling, general and administrative

 

39,213

 

 

 

32,716

 

 

 

36,887

 

Total operating expenses

 

99,582

 

 

 

82,308

 

 

 

76,300

 

Income from operations

 

17,527

 

 

 

27,534

 

 

 

11,010

 

Other (expense) income:

 

 

 

 

 

Interest income

 

7,000

 

 

 

6,244

 

 

 

5,556

 

Interest expense

 

(1,366

)

 

 

(1,274

)

 

 

(1,290

)

Loss on extinguishment of debt

 

(193,098

)

 

 

—

 

 

 

—

 

Other income, net

 

—

 

 

 

10

 

 

 

—

 

Total other (expense) income

 

(187,464

)

 

 

4,980

 

 

 

4,266

 

(Loss) income before income taxes

 

(169,937

)

 

 

32,514

 

 

 

15,276

 

Income tax (benefit) expense

 

(2,407

)

 

 

3,100

 

 

 

2,750

 

Net (loss) income

$

(167,530

)

 

$

29,414

 

 

$

12,526

 

 

 

 

 

 

 

Net (loss) income per share:

 

 

 

 

 

(Loss) income per share - Basic

$

(2.30

)

 

$

0.41

 

 

$

0.18

 

(Loss) income per share - Diluted

$

(2.30

)

 

$

0.39

 

 

$

0.17

 

Weighted average common shares:

 

 

 

 

 

Shares - Basic

 

72,780

 

 

 

72,192

 

 

 

71,425

 

Shares - Diluted

 

72,780

 

 

 

74,524

 

 

 

72,286

 

MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited and in thousands)

 

January 3, 2025

 

September 27, 2024

 

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

232,699

 

$

146,806

Short-term investments

 

423,820

 

 

435,082

Accounts receivable, net

 

91,752

 

 

105,700

Inventories

 

198,382

 

 

194,490

Prepaid and other current assets

 

35,782

 

 

21,000

Total current assets

 

982,435

 

 

903,078

Property and equipment, net

 

174,110

 

 

176,017

Goodwill and intangible assets, net

 

424,849

 

 

408,289

Deferred income taxes

 

216,950

 

 

212,495

Other long-term assets

 

45,286

 

 

55,761

Total assets

$

1,843,630

 

$

1,755,640

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Short-term debt

 

160,639

 

 

—

Accounts payable

 

44,631

 

 

43,202

Accrued liabilities

 

66,493

 

 

64,336

Current portion of finance lease obligations

 

644

 

 

646

Total current liabilities

 

272,407

 

 

108,184

Finance lease obligations, less current portion

 

30,980

 

 

31,130

Financing obligation

 

8,918

 

 

9,006

Long-term debt obligations

 

338,755

 

 

448,281

Other long-term liabilities

 

41,681

 

 

32,696

Total liabilities

 

692,741

 

 

629,297

Stockholders’ equity

 

1,150,889

 

 

1,126,343

Total liabilities and stockholders’ equity

$

1,843,630

 

$

1,755,640

 

MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited and in thousands)

 

Three Months Ended

 

January 3, 2025

 

December 29, 2023

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net (loss) income

$

(167,530

)

 

$

12,526

 

Depreciation and intangible asset amortization

 

15,995

 

 

 

14,289

 

Share-based compensation

 

25,520

 

 

 

8,657

 

Deferred income taxes

 

(6,266

)

 

 

294

 

Loss on extinguishment of debt

 

193,098

 

 

 

—

 

Other adjustments, net

 

(3,029

)

 

 

(1,755

)

Accounts receivable

 

14,946

 

 

 

(12,180

)

Inventories

 

(4,610

)

 

 

1,555

 

Accrued and other liabilities

 

(5,033

)

 

 

6,612

 

Change in other operating assets and liabilities

 

3,568

 

 

 

3,101

 

Net cash provided by operating activities

 

66,659

 

 

 

33,099

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Acquisition of business, net

 

(12,474

)

 

 

(75,000

)

Sales, purchases and maturities of investments

 

10,987

 

 

 

44,878

 

Purchases of property and equipment

 

(5,340

)

 

 

(4,652

)

Other investing

 

(3,400

)

 

 

—

 

Net cash used in investing activities

 

(10,227

)

 

 

(34,774

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Proceeds from convertible notes

 

86,629

 

 

 

—

 

Payments for fee on convertible note exchange and debt issuance costs

 

(22,905

)

 

 

—

 

Payments on finance leases and other

 

(228

)

 

 

(349

)

Proceeds from stock option exercises and employee stock purchases

 

4,537

 

 

 

2,848

 

Common stock withheld for taxes on employee equity awards

 

(37,908

)

 

 

(11,552

)

Net cash provided by (used in) financing activities

 

30,125

 

 

 

(9,053

)

Foreign currency effect on cash

 

(664

)

 

 

362

 

NET CHANGE IN CASH AND CASH EQUIVALENTS

 

85,893

 

 

 

(10,366

)

CASH AND CASH EQUIVALENTS — Beginning of period

 

146,806

 

 

 

173,952

 

CASH AND CASH EQUIVALENTS — End of period

$

232,699

 

 

$

163,586

 

 

 

 

 

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

 

January 3, 2025

September 27, 2024

December 29, 2023

 

Amount

% Revenue

Amount

% Revenue

Amount

% Revenue

Gross profit - GAAP

$

117,109

 

 

53.7

 

$

109,842

 

 

54.7

 

$

87,310

 

 

55.6

 

Amortization expense

 

3,332

 

 

1.5

 

 

4,305

 

 

2.1

 

 

1,942

 

 

1.2

 

Share-based compensation expense

 

3,498

 

 

1.6

 

 

1,703

 

 

0.8

 

 

1,550

 

 

1.0

 

Acquisition and integration related costs

 

1,394

 

 

0.6

 

 

744

 

 

0.4

 

 

2,289

 

 

1.5

 

Adjusted gross profit (Non-GAAP)

$

125,333

 

 

57.5

 

$

116,594

 

 

58.1

 

$

93,091

 

 

59.2

 

 

 

Three Months Ended

 

January 3, 2025

September 27, 2024

December 29, 2023

 

Amount

% Revenue

Amount

% Revenue

Amount

% Revenue

Operating expenses - GAAP

$

99,582

 

 

45.7

 

$

82,308

 

 

41.0

 

$

76,300

 

 

48.6

 

Amortization expense

 

(3,177

)

 

(1.5

)

 

(4,351

)

 

(2.2

)

 

(4,798

)

 

(3.1

)

Share-based compensation expense

 

(25,889

)

 

(11.9

)

 

(10,800

)

 

(5.4

)

 

(8,319

)

 

(5.3

)

Acquisition and integration related costs

 

(605

)

 

(0.3

)

 

(1,221

)

 

(0.6

)

 

(8,644

)

 

(5.5

)

Adjusted operating expenses (Non-GAAP)

$

69,911

 

 

32.1

 

$

65,936

 

 

32.9

 

$

54,539

 

 

34.7

 

 

 

Three Months Ended

 

January 3, 2025

September 27, 2024

December 29, 2023

 

Amount

% Revenue

Amount

% Revenue

Amount

% Revenue

Income from operations - GAAP

$

17,527

 

 

8.0

 

$

27,534

 

 

13.7

 

$

11,010

 

 

7.0

 

Amortization expense

 

6,509

 

 

3.0

 

 

8,656

 

 

4.3

 

 

6,740

 

 

4.3

 

Share-based compensation expense

 

29,387

 

 

13.5

 

 

12,503

 

 

6.2

 

 

9,869

 

 

6.3

 

Acquisition and integration related costs

 

1,999

 

 

0.9

 

 

1,965

 

 

1.0

 

 

10,933

 

 

7.0

 

Adjusted income from operations (Non-GAAP)

$

55,422

 

 

25.4

 

$

50,658

 

 

25.2

 

$

38,552

 

 

24.5

 

 

 

 

 

 

 

 

Depreciation expense

 

6,740

 

 

3.1

 

 

7,257

 

 

3.6

 

 

6,254

 

 

4.0

 

Adjusted EBITDA (Non-GAAP)

$

62,162

 

 

28.5

 

$

57,915

 

 

28.9

 

$

44,806

 

 

28.5

 

 

 

Three Months Ended

 

January 3, 2025

September 27, 2024

December 29, 2023

 

Amount

% Revenue

Amount

% Revenue

Amount

% Revenue

Net (loss) income - GAAP

$

(167,530

)

 

(76.8

)

$

29,414

 

 

14.7

 

$

12,526

 

 

8.0

 

Amortization expense

 

6,509

 

 

3.0

 

 

8,656

 

 

4.3

 

 

6,740

 

 

4.3

 

Share-based compensation expense

 

29,387

 

 

13.5

 

 

12,502

 

 

6.2

 

 

9,869

 

 

6.3

 

Non-cash interest, net

 

307

 

 

0.1

 

 

286

 

 

0.1

 

 

287

 

 

0.2

 

Acquisition and integration related costs

 

1,999

 

 

0.9

 

 

1,965

 

 

1.0

 

 

10,933

 

 

7.0

 

Loss on debt extinguishment

 

193,098

 

 

88.5

 

 

—

 

 

—

 

 

—

 

 

—

 

Tax effect of non-GAAP adjustments

 

(4,247

)

 

(1.9

)

 

1,422

 

 

0.7

 

 

1,457

 

 

0.9

 

Adjusted net income (Non-GAAP)

$

59,523

 

 

27.3

 

$

54,245

 

 

27.0

 

$

41,812

 

 

26.6

 

 

 

Three Months Ended

 

January 3, 2025

September 27, 2024

December 29, 2023

 

Net income

Income per diluted share

Net income

Income per diluted share

Net income

Income per diluted share

Net (loss) income - GAAP diluted

$

(167,530

)

$

(2.30

)

$

29,414

 

$

0.39

 

$

12,526

 

$

0.17

 

 

 

 

 

 

 

 

Adjusted net income (Non-GAAP)

$

59,523

 

$

0.79

 

$

54,245

 

$

0.73

 

$

41,812

 

$

0.58

 

 

 

Three Months Ended

 

January 3, 2025

September 27, 2024

December 29, 2023

 

Shares

 

Shares

 

Shares

 

Diluted shares - GAAP

 

72,780

 

 

 

74,524

 

 

 

72,286

 

 

Incremental shares

 

2,835

 

 

 

—

 

 

 

—

 

 

Adjusted diluted shares (Non-GAAP)

 

75,615

 

 

 

74,524

 

 

 

72,286

 

 

 

 

Three Months Ended

 

January 3, 2025

September 27, 2024

December 29, 2023

 

Amount

% Revenue

Amount

% Revenue

Amount

% Revenue

Interest income - GAAP

$

7,000

 

 

3.2

 

$

6,244

 

 

3.1

 

$

5,556

 

 

3.5

 

Interest expense - GAAP

 

(1,366

)

 

(0.6

)

 

(1,274

)

 

(0.6

)

 

(1,290

)

 

(0.8

)

Non-cash interest expense

 

307

 

 

0.1

 

 

286

 

 

0.1

 

 

287

 

 

0.2

 

Adjusted interest income (Non-GAAP)

$

5,941

 

 

2.7

 

$

5,256

 

 

2.6

 

$

4,553

 

 

2.9

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20250206395027/en/

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