Microsemi Reports First Quarter 2018 Results

- Net Sales of $468.7 Million, up 7.6 Percent from Prior Year

ALISO VIEJO, Calif., Jan. 25, 2018 — (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 2018 ended Dec. 31, 2017.

Microsemi Corporation. (PRNewsFoto/Microsemi Corporation)

Net sales for Microsemi's first quarter of fiscal year 2018 were $468.7 million, up 7.6 percent from the $435.5 million reported in the first quarter of 2017.

GAAP gross margin for the first quarter of 2018 was 61.6 percent, inclusive of the effect of non-cash purchase accounting charges related to profit from acquired inventory of $5.2 million and $2.4 million in inventory charges related to the closure of a non-strategic operation. GAAP gross margin was 63.5 percent in the first quarter of 2017 and 64.0 percent in the fourth quarter of 2017.

Non-GAAP gross margin for the first quarter of 2018 was 63.2 percent, inclusive of the high-performance timing business of Vectron International, which Microsemi acquired in November 2017. Non-GAAP gross margin was 63.5 percent in the first quarter of 2017 and 64.4 percent in the fourth quarter of 2017.

GAAP operating income and net income for the first quarter of 2018 were $59.5 million and $47.9 million, respectively, and included restructuring, facility closure and other related charges of $6.4 million and acquisition-related costs of $1.4 million. Also included in net income were amortization of intangible assets of $50.3 million, stock-based compensation of $25.6 million, and debt extinguishment and other non-cash financing charges of $4.3 million. GAAP operating margin for the first quarter of 2018 was 12.7 percent compared to 12.8 percent for the first quarter of 2017 and 15.9 percent in the fourth quarter of 2017. GAAP net income was $47.9 million or $0.40 per diluted share for the first quarter of 2018 compared to $19.5 million or $0.17 per diluted share for the first quarter of 2017.

Non-GAAP operating income for the first quarter of 2018 was $150.8 million, up 13.6 percent from the $132.7 million reported in the first quarter of 2017. Non-GAAP operating margin for the first quarter of 2018 was 32.2 percent, up 170 basis points from 30.5 percent in the first quarter of 2017. Non-GAAP net income for the first quarter of 2018 was $120.1 million or $1.01 per diluted share compared to $99.8 million or $0.86 per diluted share for the first quarter of 2017.

Operating and free cash flows for the first quarter of 2018 were at $65.3 million and $55.4 million, respectively. Cash and cash equivalents at the end of the first quarter of 2018 were $166.6 million.

"We kicked off the first quarter of fiscal 2018 with 8 percent year-over-year sales growth and 17 percent EPS growth," said James J. Peterson, Microsemi's chairman and CEO. "We are on a clear path to exceed our long-term 35 percent operating margin target as we leverage customer engagements, share gains and revenue growth into industry-leading profitability."

Business Outlook

Microsemi currently expects net sales in the second quarter of fiscal year 2018 of between $477 million and $502 million, and expects non-GAAP diluted earnings per share of between $0.93 and $1.07.

Guidance on diluted earnings per share is provided only on a non-GAAP basis due to the inherent difficulty of forecasting the timing or amount of certain items that have been excluded from the forward-looking non-GAAP measures, and a reconciliation to the comparable GAAP guidance has not been provided because certain factors that are materially significant to Microsemi's ability to estimate the excluded items are not accessible or estimable on a forward-looking basis without unreasonable effort.

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 2018 Earnings Conference Call and Webcast

Date:

Thursday, Jan. 25, 2018



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: 5678358.

About Microsemi

Microsemi Corporation (Nasdaq: MSCC) offers a comprehensive portfolio of semiconductor and system solutions for aerospace & defense, communications, data center 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, California , and has approximately 4,800 employees globally. Learn more at www.microsemi.com .

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