MACOM Reports Fiscal First Quarter 2018 Financial Results

LOWELL, Mass. — (BUSINESS WIRE) — February 6, 2018 — MACOM Technology Solutions Holdings, Inc. (Nasdaq: MTSI) (“MACOM”), a leading supplier of high-performance RF, microwave, millimeterwave and lightwave semiconductor products, today announced its financial results for its fiscal first quarter ended December 29, 2017.

First Quarter Fiscal Year 2018 GAAP Results

  • Revenue was $130.9 million, a decrease of 13.7%, compared to $151.8 million in the previous year fiscal first quarter and a decrease of 21.3% compared to $166.4 million in the prior fiscal quarter;
  • Gross profit was $61.0 million, a decrease of 22.3% compared to $78.5 million in the previous year fiscal first quarter, and a decrease of 29.9% compared to $86.9 million in the prior fiscal quarter;
  • Gross margin was 46.6%, compared to 51.7% in the previous year fiscal first quarter and 52.2% in the prior fiscal quarter;
  • Operating loss was $23.0 million, compared to operating income of $10.5 million in the previous year fiscal first quarter and operating income of $0.3 million in the prior fiscal quarter; and
  • Net loss from continuing operations was $17.0 million, or $0.49 loss per diluted share, compared to net loss from continuing operations of $2.2 million, or $0.04 loss per diluted share, in the previous year fiscal first quarter and net loss from continuing operations of $1,000, or $0.21 loss per diluted share, in the prior fiscal quarter.

First Quarter Fiscal Year 2018 Adjusted Non-GAAP Results

  • Adjusted gross margin was 53.7%, compared to 57.2% in the previous year fiscal first quarter and 58.1% in the prior fiscal quarter;
  • Adjusted operating income was $13.4 million, or 10.3% of revenue, compared to $41.0 million, or 27.0% of revenue, in the previous year fiscal first quarter and $38.0 million, or 22.8% of revenue, in the prior fiscal quarter;
  • Adjusted net income was $6.6 million, or $0.10 per diluted share, compared to $31.8 million, or $0.57 per diluted share, in the previous year fiscal first quarter and $30.3 million, or $0.46 per diluted share, in the prior fiscal quarter; and
  • Adjusted EBITDA was $20.9 million, compared to $48.4 million for the previous year fiscal first quarter and $47.3 million for the prior fiscal quarter.

Management Commentary

“As expected, the first quarter was challenging across the board, as we dealt with the full impact of the geopolitical downturn in China,” remarked John Croteau, President and CEO of MACOM. "While it is still too early to call the exact slope of the recovery, we continue to believe that December was the bottom of the cycle for MACOM, and we expect demand will progressively strengthen through the remainder of the year.

“We expect 2018 will be a transitional year in our served markets, as the technology landscape shifts in anticipation of the next major wave of infrastructure investments in Cloud Data Centers and 5G Telecom. Although these shifts will likely moderate the pace of recovery, we believe they will ultimately lead to multiple breakout opportunities that play directly to our strengths."

Business Outlook

For the fiscal second quarter ending March 30, 2018, revenue is expected to be in the range of $142 million to $150 million. Adjusted gross margin is expected to be between 50% and 54%, and adjusted earnings per share between $0.10 and $0.16 on an anticipated 66 million fully diluted shares outstanding.

Mr. Croteau concluded, "In the December quarter, we believe we saw the low-point in terms of market demand and revenue. Entering the March quarter, we expect our fiscal second quarter will represent the bottom for adjusted gross margin as we anticipate a progressive recovery in product mix and growth in the higher margin parts of our portfolio over the course of 2018. Longer term, we are still committed to our target of delivering 60 percent adjusted gross margin."

Conference Call

MACOM will host a conference call on Tuesday, February 6, 2018 at 5:00 p.m. Eastern Time to discuss its fiscal first quarter 2018 financial results and business outlook. Investors and analysts may join the conference call by dialing 1-877-837-3908 and providing the passcode 1258889.

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 1258889. International callers should dial +1-404-537-3406 and enter the same passcode at the prompt.

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