Microsemi Reports Record First Quarter 2016 Results

First Quarter Results Include:

(PRNewswire) —  Microsemi Corporation (Nasdaq: MSCC), a leading provider of semiconductor solutions differentiated by power, security, reliability and performance, today reported unaudited results for its first quarter of fiscal year 2016 ended Jan. 3, 2016.

Microsemi Corporation.

Net sales for Microsemi's first quarter of fiscal year 2016 were a record $329.2 million, up 8.5 percent from $303.6 million in the first quarter of 2015 and above the high end of guidance provided in the prior quarter.

GAAP gross margin for the first quarter of 2016 was 57.1 percent, up 390 basis points from the 53.2 percent reported in the fourth quarter of 2015 and up 170 basis points from the 55.4 percent reported in the first quarter of 2015. GAAP operating income for the first quarter of 2016 was a record $36.6 million, up 13.5 percent from the $32.3 million reported in the fourth quarter of 2015 and up 23.2 percent from the $29.7 million reported in the first quarter of 2015. GAAP operating margin for the first quarter of 2016 was 11.1 percent, up 130 basis points from the 9.8 percent reported in both the fourth and first quarters of 2015. GAAP net income for the first quarter of 2016 was $23.7 million or $0.25 per diluted share compared to $25.3 million or $0.26 per diluted share for the fourth quarter of 2015 and compared to $19.7 million or $0.21 per diluted share for the first quarter of 2015.

Non-GAAP gross margin was 57.1 percent for the first quarter of 2016, up 60 basis points from the 56.5 percent reported in the fourth quarter of 2015 and up 90 basis points from the 56.2 percent reported in the first quarter of 2015. Non-GAAP operating income for the first quarter of 2016 was $83.8 million, up 13.0 percent from the $74.2 million reported in the first quarter of 2015. Non-GAAP operating margin for the first quarter of 2016 was 25.5 percent, up 110 basis points from 24.4 percent reported in the first quarter of 2015. Non-GAAP net income for the first quarter of 2016 was $69.3 million or $0.72 per diluted share compared to $61.9 million or $0.65 per diluted share for the first quarter of 2015.

Operating and free cash flow for the first quarter of 2016, which included payments for restructuring and transaction costs of $5.5 million, were both at records of $82.9 million and $72.4 million, respectively. Operating cash flow increased 6.5 percent from the $77.9 million reported in the fourth quarter of 2015 and increased 23.9 percent from the $66.9 million reported in the first quarter of 2015. Free cash flow increased 5.3 percent from the $68.7 million reported in the fourth quarter of 2015 and increased 34.5 percent from the $53.8 million reported in the first quarter of 2015.

"Delivering an impressive first quarter is only the start of what we expect to be a great year for Microsemi," said James J. Peterson, chairman and CEO of Microsemi. "Our team continues to achieve significant milestones, with record revenue and GAAP operating income, as well as record operating and free cash flow. As we look to integrate our recently completed acquisition of PMC-Sierra we will continue to focus on long-term growth and cash flow to deliver the enhanced profitability necessary to yield strong shareholder returns."

Business Outlook

Microsemi currently expects net sales in the second quarter of fiscal year 2016 of between $435 million and $455 million, and expects non-GAAP diluted earnings per share of between $0.62 and $0.68, reflecting the transitional quarter of the PMC-Sierra acquisition.

Microsemi regularly announces a quarterly outlook in the form of issuing a news release and does not undertake to update any of this information between such public announcements to reflect subsequent events or circumstances. Please refer to the "SAFE HARBOR" STATEMENT below for risks that may affect future actual results.

Non-GAAP Financial Measures

For further information regarding Microsemi's non-GAAP financial measures, please refer to "Notes on Non-GAAP Financial Measures" below. Non-GAAP financial measures are reconciled to comparable GAAP financial measures in the accompanying financial tables and notes.

Information for First Quarter 2016 Earnings Conference Call and Webcast

Date:    Thursday, Jan. 28, 2016

Time:    4:45 p.m. EST (1:45 p.m. PST)

To access the webcast, log on to www.microsemi.com, go to the Investors section, and then to IR Events and Presentations. To listen to the live webcast, visit this website approximately 15 minutes prior to the start of the call to register, download and install any necessary audio software. For those unable to participate during the live webcast, a replay will be available shortly after the call on the Microsemi website for 90 days.

To participate in the conference call by telephone, call 877-264-1110 at approximately 4:30 p.m. EST (1:30 p.m. PST). International callers can call 706-634-1357. Please provide the following ID number: 20181968.

About Microsemi

Microsemi Corporation (Nasdaq: MSCC) offers a comprehensive portfolio of semiconductor and system solutions for communications, defense & security, aerospace and industrial markets. Products include high-performance and radiation-hardened analog mixed-signal integrated circuits, FPGAs, SoCs and ASICs; power management products; timing and synchronization devices and precise time solutions, setting the world's standard for time; voice processing devices; RF solutions; discrete components; enterprise storage and communication solutions; security technologies and scalable anti-tamper products; Ethernet solutions; Power-over-Ethernet ICs and midspans; as well as custom design capabilities and services. Microsemi is headquartered in Aliso Viejo, Calif., and has approximately 4,800 employees globally. Learn more at www.microsemi.com.

PLEASE READ THE FOLLOWING FACTORS THAT CAN MATERIALLY AFFECT MICROSEMI'S FUTURE RESULTS.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Any statements set forth in the news release that are not entirely historical and factual in nature are forward-looking statements, including without limitation statements concerning Microsemi's net sales and earnings guidance, our potential for long-term growth and enhanced profitability necessary to yield strong shareholder returns and any other statements or beliefs regarding the company's plans or expectations. These forward-looking statements are based on Microsemi's current expectations and are inherently subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. The potential risks and uncertainties include, but are not limited to, such factors as continued negative or worsening worldwide economic conditions or market instability; downturns in the highly cyclical semiconductor industry; our ability to successfully implement our acquisitions strategy or integrate acquired companies; uncertainty as to the future profitability of acquired businesses, and delays in the realization of, or the failure to realize, any accretion from acquisition transactions; acquiring, managing and integrating new operations, businesses or assets, and the associated diversion of management attention or other related costs or difficulties; Microsemi's reliance on government contracts for a significant portion of its sales, including impacts of any termination or renegotiation of such contracts, uncertainties of governmental appropriations and national defense policies and priorities and effects of any past or future government shutdowns; risks related to the company's international operations and sales, including political instability, trade restrictions and sanctions, restrictions in the transfer or repatriation of funds, currency fluctuations and availability of transportation services; potential non-realization of expected orders or non-realization of backlog; failure to make sales indicated by the company's book-to-bill ratio; intense competition in the semiconductor industry and resultant downward price pressure; the effect of events such as natural disasters and related disruptions on our operations; the concentration of the factories that service the semiconductor industry; delays in beginning production, implementing production techniques, resolving problems associated with technical equipment malfunctions, or issues related to government or customer qualification of facilities; our dependence on third parties for key functions; increases in the costs of credit and the availability of credit or additional capital only under more restrictive conditions or not at all; changes to laws or regulations; unanticipated changes in Microsemi's tax obligations, results of tax examinations or exposure to additional income tax liabilities; changes in generally accepted accounting principles; principal, liquidity and counterparty risks related to Microsemi's holdings in securities; inability to develop new technologies and products to satisfy changes in customer demand or the development by the company's competitors of products that decrease the demand for Microsemi's products; unfavorable or declining conditions in end markets; inability of Microsemi's compound semiconductor products to compete successfully with silicon-based products; production delays related to new compound semiconductors; variability of the company's manufacturing yields; potential effects of system outages; inability by Microsemi to fulfill customer demand and resulting loss of customers; variations in customer order preferences; difficulties foreseeing future demand; rises in inventory levels and inventory obsolescence; environmental or other regulatory matters or litigation, or any matters involving contingent liabilities or other claims; the uncertainty of litigation, the costs and expenses of litigation, the potential material adverse effect litigation could have on Microsemi's business and results of operations if an adverse determination in litigation is made, and the time and attention required of management to attend to litigation; difficulties in determining the scope of, and procuring and maintaining, adequate insurance coverage; difficulties and costs of protecting patents and other proprietary rights; difficulties in the hiring and retention of qualified personnel in a competitive labor market; any circumstances that adversely impact the end markets of acquired businesses; and difficulties in closing or disposing of operations or assets or transferring work, assets or inventory from one plant to another. In addition to these factors and any other factors mentioned elsewhere in this news release, the reader should refer as well to the factors, uncertainties or risks identified in Microsemi's most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q reports filed by Microsemi with the SEC. Additional risk factors may be identified from time to time in Microsemi's future filings. The forward-looking statements included in this release speak only as of the date hereof, and Microsemi does not undertake any obligation to update these forward-looking statements to reflect subsequent events or circumstances. Amounts reported in this release are preliminary and subject to finalization prior to the filing of our next Quarterly Report on Form 10-Q.

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