MACOM Reports Fiscal Third Quarter 2018 Financial Results

LOWELL, Mass. — (BUSINESS WIRE) — July 31, 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 third quarter ended June 29, 2018.

Third Quarter Fiscal Year 2018 GAAP Results

Revenue was $137.9 million, a decrease of 29.1% compared to $194.6 million in the previous year fiscal third quarter and a decrease of 8.3% compared to $150.4 million in the prior fiscal quarter;
Fiscal third quarter revenue included $0.4 million compared to $12.4 million in the fiscal second quarter from the LR4 subassembly business divested on May 10, 2018;
Gross profit was $48.2 million, a decrease of 48.0% compared to $92.6 million in the previous year fiscal third quarter and a decrease of 26.6% compared to $65.6 million in the prior fiscal quarter;
Gross margin was 34.9%, compared to 47.6% in the previous year fiscal third quarter and 43.6% in the prior fiscal quarter;
Operating loss was $42.6 million, compared to operating income of $6.6 million in the previous year fiscal third quarter and operating loss of $23.4 million in the prior fiscal quarter; and
Net loss from continuing operations was $85.2 million, or $1.31 loss per diluted share, compared to net loss from continuing operations of $14.0 million, or $0.22 loss per diluted share, in the previous year fiscal third quarter and net loss from continuing operations of $15.5 million, or $0.50 loss per diluted share, in the prior fiscal quarter.

Third Quarter Fiscal Year 2018 Adjusted Non-GAAP Results

Adjusted revenue, which includes $7.0 million of deferred revenue, was $144.9 million, a decrease of 25.5% compared to $194.6 million in the previous year fiscal third quarter and a decrease of 3.7% compared to $150.4 million in the prior fiscal quarter.
Adjusted gross margin was 56.0%, compared to 58.5% in the previous year fiscal third quarter and 51.6% in the prior fiscal quarter;
Adjusted operating income was $16.5 million, or 11.4% of revenue, compared to $52.9 million, or 27.2% of revenue, in the previous year fiscal third quarter and $15.7 million, or 10.5% of revenue, in the prior fiscal quarter;
Adjusted net income was $8.6 million, or $0.13 per diluted share, compared to $43.9 million, or $0.67 per diluted share, in the previous year fiscal third quarter and $8.5 million, or $0.13 per diluted share, in the prior fiscal quarter; and
Adjusted EBITDA was $24.1 million, compared to $61.6 million for the previous year fiscal third quarter and $23.4 million for the prior fiscal quarter.

Management Commentary

“Overall the quarter played out largely as expected," commented John Croteau, President and CEO of MACOM. "We made tangible progress in yield improvements for our 25G lasers and are now starting to execute a controlled ramp, scaling into high volume production. Based on our expected higher production volumes of 25G lasers, we added a new white-box transceiver customer, thereby launching our Data Center solutions business model. This business model provides dedicated transceiver manufacturing capacity and a ready-made supply chain to the end markets, and for MACOM, a dedicated customer which we anticipate will consume our Data Center semiconductor components as we scale production in the second half of calendar 2018.”

Mr. Croteau concluded, “With increasing availability of our lasers, we believe that we are well positioned to step and repeat, scaling our solutions business model by enabling multiple, high-volume manufacturing customers to begin production ramps to meet industry demand over the course of the coming quarters.”

Business Outlook

For the fiscal fourth quarter ending September 28, 2018, MACOM expects adjusted revenue to be in the range of $149 million to $155 million. Adjusted gross margin is expected to be between 55% and 57%, and adjusted earnings per share between $0.15 and $0.17 on an anticipated 66.5 million fully diluted shares outstanding.

Conference Call

MACOM will host a conference call on Tuesday, July 31, 2018 at 5:00 p.m. Eastern Time to discuss its fiscal third 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 3978874.

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