MACOM Reports Revised GAAP Loss Per Share of $0.15 for its Fiscal Second Quarter; Non-GAAP EPS of $0.41 Unchanged

Non-GAAP Financial Measures

In addition to GAAP reporting, MACOM provides investors with non-GAAP financial information, including revenue, gross margin, operating margin, operating income, net income, earnings per share, EBITDA and other data calculated on a non-GAAP basis. This non-GAAP information excludes the operations of Nitronex prior to the date of acquisition, discontinued operations, the impact of fair value accounting in merger and acquisitions (M&A) of businesses, M&A costs, including acquisition and related integration costs, certain cost savings from synergies expected from M&A activities, income and expenses from transition services related to M&A activities, expected amortization of acquisition-related intangibles, share-based and other non-cash compensation expense, certain cash compensation, restructuring charges, litigation settlement and costs, changes in the carrying values of assets and liabilities measured at fair value, contingent consideration, amortization of debt discounts and issuance costs, other non-cash expenses, earn-out costs, exited leased facility costs and certain income tax items. Management does not believe that the excluded items are reflective of MACOM's underlying performance. The exclusion of these and other similar items from MACOM's non-GAAP presentation should not be interpreted as implying that these items are non-recurring, infrequent or unusual. These and other similar items are also excluded from EBITDA, which is non-GAAP earnings before interest, income taxes, depreciation and amortization. MACOM believes this non-GAAP financial information provides additional insight into MACOM's on-going performance and has, therefore, chosen to provide this information to investors for a consistent basis of comparison and to help them evaluate the results of MACOM's on-going 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.

 
 
 

M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited and in thousands, except per share data)

           
Three Months Ended Six Months Ended

April 3,

2015

      January 2,
2015
      April 4,
2014
April 3,
2015
      April 4,
2014
(Revised)     (Revised)  
 
Revenue $ 124,885 $ 114,864 $ 107,827 $ 239,749 $ 191,981
Cost of revenue 70,878   60,663   80,964   131,541  

129,396

 
Gross profit 54,007   54,201   26,863   108,208   62,585  
Operating expenses:
Research and development 21,061 19,474 20,347 40,535 32,777
Selling, general and administrative 29,227 25,599 24,504 54,826 43,887
Restructuring charges 413     2,635   413   15,725  
Total operating expenses 50,701   45,073   47,486   95,774   92,389  
Income (loss) from operations 3,306   9,128   (20,623 ) 12,434   (29,804 )
Other income (expense):
Warrant liability expense (5,609 ) (10,608 ) (4,066 ) (16,217 ) (2,784 )
Interest expense (4,723 ) (4,723 ) (1,622 ) (9,446 ) (2,208 )
Other income (expense) (1,376 ) 375   1,009   (1,001 ) 1,087  
Total other expense (11,708 ) (14,956 ) (4,679 ) (26,664 ) (3,905 )
 
Loss before income taxes (8,402 ) (5,828 ) (25,302 ) (14,230 ) (33,709 )
Income tax provision (benefit) (865 ) 478   (5,680 ) (387 ) (7,271 )
Loss from continuing operations (7,537 ) (6,306 ) (19,622 ) (13,843 ) (26,438 )
Loss from discontinued operations     (2,500 )   (4,605 )
Net loss $ (7,537 ) $ (6,306 ) $ (22,122 ) $ (13,843 ) $ (31,043 )
 
Net loss per share:
Basic:
Loss from continuing operations $ (0.15 ) $ (0.13 ) $ (0.42 ) $ (0.28 ) $ (0.57 )
Loss from discontinued operations     (0.05 )   (0.10 )
Loss per share - basic $ (0.15 ) $ (0.13 ) $ (0.47 ) $ (0.28 ) $ (0.67 )
 
Diluted:
Loss from continuing operations $ (0.15 ) $ (0.13 ) $ (0.42 ) $ (0.28 ) $ (0.57 )
Loss from discontinued operations     (0.05 )   (0.10 )
Loss per share - diluted $ (0.15 ) $ (0.13 ) $ (0.47 ) $ (0.28 ) $ (0.67 )
 
Shares:
Basic 50,593   47,606   46,808   49,100   46,656  
Diluted 50,593   47,606   46,808   49,100   46,656  
 
 
 

M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(unaudited and in thousands, except per share data)

 
      Three Months Ended
April 3, 2015       January 2, 2015       April 4, 2014
(Revised)    
                 
Amount Amount Amount
Revenue - GAAP $124,885 $ 114,864 $ 107,827
Nitronex prior to acquisition     (362 )
Revenue - Non-GAAP $124,885 $ 114,864   $ 107,465  
 
Amount

%
Revenue

Amount

%
Revenue

Amount

%
Revenue

 
Gross Profit - GAAP $ 54,007 43.2 % $ 54,201 47.2 % $ 26,863 24.9 %
Nitronex prior to acquisition 16 0.1
Amortization expense 7,347 5.9 5,359 4.7 6,262 5.8
Non-cash compensation expense 599 0.5 354 0.3 426 0.4
Equity-based compensation 179 0.1 58 0.1 30
Acquisition FMV step-up 3,538 2.8 835 0.7 18,003 16.8
Third-party engineering costs 305 0.2 924 0.8 570 0.5
Integration costs and synergy savings 356   0.3   (4 )   822   0.8  
Gross Profit - non-GAAP $ 66,331   53.1   % $ 61,727   53.7   % $ 52,992   49.3   %
 
Research and Development - GAAP $ 21,061 16.9 % $ 19,474 17.0 % $ 20,347 18.9 %
Nitronex prior to acquisition (438 ) (0.5 )
Non-cash compensation expense (1,620 ) (1.3 ) (1,038 ) (0.9 ) (728 ) (0.7 )
Equity-based compensation (669 ) (0.5 ) (519 ) (0.5 ) (137 ) (0.1 )
Acquisition FMV step-up (204 ) (0.2 ) (204 ) (0.2 ) (183 ) (0.2 )
Integration costs and synergy savings (137 ) (0.1 ) (171 ) (0.1 ) (2,414 ) (2.2 )
Third-party engineering costs 305   0.2   924   0.8   570   0.5  
Research and Development - non-GAAP $ 18,736   15.0   % $ 18,466   16.1   % $ 17,017   15.8   %
 
Selling, General and Administrative - GAAP $ 29,227 23.4 % $ 25,599 22.3 % $ 24,504 22.7 %
Nitronex prior to acquisition (191 ) (0.4 )
Amortization expense (3,096 ) (2.5 ) (1,053 ) (0.9 ) (476 ) (0.4 )
Non-cash compensation expense (7,578 ) (6.1 ) (2,405 ) (2.1 ) (2,136 ) (2.0 )
Equity-based compensation (501 ) (0.4 ) (317 ) (0.3 ) (214 ) (0.2 )
Acquisition FMV step-up (28 ) (28 ) (21 )
Litigation costs (971 ) (0.8 ) (717 ) (0.6 ) (440 ) (0.4 )
Transaction expenses 530 0.4 (4,636 ) (4.0 ) (250 ) (0.2 )
Integration costs and synergy savings (282 ) (0.2 ) (296 ) (0.3 ) (6,178 ) (5.4 )
Selling, General and Administrative - non-GAAP $ 17,301   13.9   % $ 16,147   14.1   % $ 14,598   13.6   %
 
Total operating expenses - GAAP $ 50,701 40.6 % $ 45,073 39.2 % $ 47,486 44.0 %
Nitronex prior to acquisition (629 ) (0.6 )
Amortization expense (3,096 ) (2.5 ) (1,053 ) (0.9 ) (476 ) (0.4 )
Non-cash compensation expense (9,198 ) (7.4 ) (3,443 ) (3.0 ) (2,864 ) (2.7 )
Equity-based compensation (1,170 ) (0.9 ) (836 ) (0.7 ) (351 ) (0.3 )
Acquisition FMV step-up (232 ) (0.2 ) (232 ) (0.2 ) (204 ) (0.2 )
Restructuring charges (413 ) (0.3 ) (2,635 ) (2.5 )
Integration costs and synergy savings (419 ) (0.3 ) (467 ) (0.4 ) (8,592 ) (8.0 )
Litigation costs (971 ) (0.8 ) (717 ) (0.6 ) (440 ) (0.4 )
Transaction expenses 530 0.4 (4,636 ) (4.0 ) (250 ) (0.2 )

Third-party engineering

305   0.2   924   0.8   570   0.5  
Total operating expenses - non-GAAP $ 36,037   28.9   % $ 34,613   30.1   % $ 31,615   29.4   %
 
Income (loss) from operations - GAAP $ 3,306 2.6 % $ 9,128 7.9 % $ (20,623 ) (19.1 ) %
Nitronex prior to acquisition 645 0.8
Amortization expense 10,446 8.4 6,412 5.6 6,738 6.3
Non-cash compensation expense 9,797 7.8 3,797 3.3 3,290 3.1
Equity-based compensation 1,349 1.1 894 0.8 381 0.4
Restructuring charges 413 0.3 2,635 2.5
Acquisition FMV step-up 3,770 3.0 1,067 0.8 18,207 16.9
Litigation costs 971 0.8 717 0.6 440 0.4
Transaction expenses (530 ) (0.4 ) 4,636 4.0 250 0.2
Integration costs and synergy savings 772   0.6   463   0.6   9,414   8.8  
Income from operations - non-GAAP $ 30,294   24.3   % $ 27,114   23.6   % $ 21,377   19.9   %
 
Net loss - GAAP $ (7,537 ) (6.0 ) % $ (6,306 ) (5.5 ) % $ (22,122 ) (20.5 ) %
Nitronex prior to acquisition 645 0.6
Amortization expense 8,566 6.9 5,258 4.6 5,155 4.8
Non-cash compensation expense 8,309 6.7 3,113 2.7 2,517 2.3
Equity-based compensation 1,107 0.9 733 0.6 291 0.3
Impairment of minority investment 2,230 1.8
Contingent consideration (1,640 ) (1.3 )
Restructuring charges 339 0.3 2,016 1.9
Warrant liability expense 5,609 4.5 10,608 9.2 4,066 3.8
Non-cash interest expense 330 0.3 360 0.3 91 0.1
Acquisition FMV step-up 3,092 2.5 875 0.8 13,061 12.2
Litigation costs 797 0.6 588 0.5 337 0.3
Integration costs and synergy savings 633 0.5 380 0.3 7,201 6.7
Transaction expenses (435 ) (0.3 ) 3,420 3.0 191 0.2
Transition services for divested business (102 ) (0.1 ) (308 ) (0.3 ) (741 ) (0.7 )
Discontinued operations         2,500   2.3  
Net income - non-GAAP $ 21,298   17.1   % $ 18,721   16.3   % $ 15,208   14.2   %
 
Income from operations - non-GAAP $ 30,294 $ 27,114 $ 21,377
Depreciation expense 3,759 3,453 3,367
Other income, net     40  
EBITDA $ 34,053   $ 30,567   $ 24,784  
 
Interest expense- GAAP $ 4,723 $ 4,723 $ 1,622
Non-cash interest expense (403 ) (439 ) (119 )
Interest expense- non-GAAP $ 4,320   $ 4,284   $ 1,503  
 
 
Three Months Ended
April 3, 2015 January 2, 2015 April 4, 2014
(Revised)          
Amount

Income
(loss) per
diluted
share

Amount

Income
(loss) per
diluted
share

Amount

Income
(loss) per
diluted
share

 
Net loss - GAAP $ (7,537 ) $ (0.15 ) $ (6,306 ) $ (0.13 ) $ (22,122 ) $ (0.47 )
 
Net income - non-GAAP $ 21,298   $ 0.41   $ 18,721   $ 0.38   $ 15,208   $ 0.32  
 
Diluted shares - GAAP 50,593 47,606 46,808

Incremental stock options, warrants,
restricted stock and units

1,908   1,599   1,406  
Diluted shares - non-GAAP 52,501   49,206   48,214  
 
 
     

 

M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(unaudited and in thousands, except per share data)

Six Months Ended
April 3, 2015       April 4, 2014
(Revised)  
           
Amount Amount
Revenue - GAAP $ 239,749 $ 191,981
Nitronex prior to acquisition   (1,048 )  
Revenue - non-GAAP $ 239,749   $ 190,933  
 
Amount

%
Revenue

Amount

%
Revenue

 
 
Gross Profit - GAAP $ 108,208 45.1 % $ 62,585 32.6 %
Nitronex prior to acquisition 959 0.5
Amortization expense 12,706 5.3 7,509 3.9
Non-cash compensation expense 953 0.4 709 0.4
Equity-based compensation 237 0.1 30
Acquisition FMV step-up 4,373 1.8 18,539 9.7
Integration costs and synergy savings 352 0.1 961 0.5
Third-party engineering costs 1,229 0.5   570 0.3  
Gross Profit - non-GAAP $128,058   53.4   % $91,862   48.1   %
 
Research and Development - GAAP $40,535 16.9 % $32,777 17.1 %
Nitronex prior to acquisition (1,423 ) (0.8 )
Non-cash compensation expense (2,658 ) (1.1 ) (1,212 ) (0.6 )
Equity-based compensation (1,188 ) (0.5 ) (137 ) (0.1 )
Acquisition FMV step-up (408 ) (0.2 ) (255 ) (0.1 )
Integration costs and synergy savings (308 ) (0.1 ) (2,450 ) (1.3 )
Third-party engineering costs 1,229 0.5   570 0.3  
Research and Development - non-GAAP $ 37,202   15.5   % $27,870   14.6   %
 
Selling, General and Administrative - GAAP $54,826 22.9 % $43,887 22.9 %
Nitronex prior to acquisition (685 ) (0.5 )
Amortization expense (4,149 ) (1.7 ) (842 ) (0.4 )
Non-cash compensation expense (9,983 ) (4.2 ) (3,214 ) (1.7 )
Equity-based compensation (818 ) (0.3 ) (214 ) (0.1 )
Acquisition FMV step-up (56 ) (32 )
Integration costs and synergy savings (578 ) (0.2 ) (6,593 ) (3.5 )
Litigation costs (1,688 ) (0.7 ) (1,404 ) (0.7 )
Transaction expenses (4,106 )   (1.7 ) (4,472 )   (2.3 )  
Selling, General and Administrative - non-GAAP $33,448   14.0   % $26,431   13.8   %
 
Total operating expenses - GAAP $95,774 39.9 % $92,389 48.1 %
Nitronex prior to acquisition (2,108 ) (1.2 )
Amortization expense (4,149 ) (1.7 ) (842 ) (0.4 )
Non-cash compensation expense (12,641 ) (5.3 ) (4,426 ) (2.3 )
Equity-based compensation (2,006 ) (0.8 ) (351 ) (0.2 )
Acquisition FMV step-up (464 ) (0.2 ) (287 ) (0.2 )
Contingent consideration and earn-out costs
Restructuring charges (413 ) (0.2 ) (15,725 ) (8.2 )
Integration costs and synergy savings (886 ) (0.4 ) (9,043 ) (4.7 )
Litigation costs (1,688 ) (0.7 ) (1,404 ) (0.7 )
Transaction expenses (4,106 ) (1.7 ) (4,472 ) (2.3 )
Third-party engineering 1,229 0.5   570 0.3  
Total operating expenses - non-GAAP $70,650   29.5   % $54,301   28.4   %
 
Income (loss) from operations - GAAP $12,434 5.2 % (29,804 ) (15.5 ) %
Nitronex prior to Acquisition 3,067 1.8
Amortization expense 16,858 7.0 8,351 4.4
Non-cash compensation expense 13,594 5.7 5,135 2.7
Equity-based compensation 2,243 0.9 381 0.2
Contingent consideration and earn-out costs
Restructuring charges 413 0.2 15,725 8.2
Acquisition FMV step-up 4,837 2.0 18,826 9.9
Integration costs and synergy savings 1,235 0.5 10,004 5.2
Litigation costs 1,688 0.7 1,404 0.7
Transaction expenses 4,106   1.7   4,472   2.3  
Income from operations - non-GAAP $57,408   23.9   % $37,561   19.7   %
 
Net loss - GAAP $(13,843 ) (5.8 ) % $(31,043 ) (16.2 ) %
Nitronex prior to acquisition 3,067 1.2
Amortization expense 13,824 5.8 6,389 3.3
Non-cash compensation expense 11,148 4.6 3,928 2.1
Equity-based compensation 1,840 0.8 291 0.2
Impairment of minority investment 2,230 0.9
Contingent consideration (1,640 ) (0.7 )
Restructuring charges 339 0.1 12,030 6.3
Warrant liability expense 16,217 6.8 2,784 1.5
Non-cash interest expense 689 0.3 182 0.1
Acquisition FMV step-up 3,966 1.7 13,535 7.1
Integration costs and synergy savings 1,012 0.4 7,652 4.0
Litigation costs 1,385 0.6 1,074 0.6
Transaction expenses 3,261 1.4 3,537 1.9
Transition services for divested business (409 ) (0.2 ) (741 ) (0.4 )
Discontinued operations   4,605 2.4  
Net income - non-GAAP $40,019   16.7   % $27,290   14.3   %
 
 
 
Amount

Income
(loss) per
diluted
share

Amount

Income
per
diluted
share

Net loss - GAAP $ (13,843 )   $ (0.28 ) $(31,043 ) $(0.67 )
 
Net income - non-GAAP $40,019   $0.79 $27,290   $0.57  
 
Diluted shares - GAAP 49,100 46,656

Incremental stock options, warrants, restricted
stock and units

1,814   1,412  
Diluted shares - non-GAAP 50,914   48,068  
 
 
           
 

M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited and in thousands)

 
April 3, October 3,
2015 2014
(Revised)  
ASSETS
Current assets:
Cash and cash equivalents $ 73,970 $ 173,895
Accounts receivable, net 89,350 75,156
Inventories 84,077 73,572
Deferred income taxes and other 61,343   50,726
Total current assets 308,740 373,349
Property and equipment, net 65,352 50,357
Goodwill and intangible assets, net 357,900 153,417
Deferred income taxes and other 68,257   105,111
TOTAL ASSETS $ 800,249   $ 682,234
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 4,062 $ 3,478
Accounts payable, accrued liabilities and other 63,844 64,910
Deferred revenue 267   17,258
Total current liabilities 68,173 85,646
Long-term debt, less current portion 342,335 343,178
Common stock warrant liability 32,018 15,801
Deferred income taxes and other 8,028   9,042
Total liabilities 450,554 453,667
Commitments and contingencies
Stockholders' equity 349,695   228,567
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 800,249   $ 682,234
 
 
 
 

M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited and in thousands)

 
      Six Months Ended
April 3,       April 4,
2015 2014
(Revised)  
 
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (13,843 ) $ (31,043 )
Non-cash adjustments 57,481 43,029
Change in operating assets and liabilities (27,620 ) (16,270 )
Net cash from operating activities 16,018   (4,284 )
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of businesses, net (222,955 ) (258,108 )
Sale of a business 8,627
Strategic investments (250 )
Purchases of property and equipment (14,036 ) (5,994 )
Acquisition of intellectual property (1,587 ) (4,096 )
Net cash used in investing activities (238,828 ) (259,571 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of term notes payable 245,000
Payment of debt (2,982 ) (34,952 )
Capital contributions 3,200
Proceeds from stock offering, net 127,959
Proceeds from revolving credit facility 100,000
Payments on revolving credit facility (100,000 )
Financing activities (2,092 ) 3,258  
Net cash from financing activities 122,885   216,506  
NET CHANGE IN CASH AND CASH EQUIVALENTS (99,925 ) (47,349 )
CASH AND CASH EQUIVALENTS — Beginning of period 173,895   110,488  
CASH AND CASH EQUIVALENTS — End of period $ 73,970   $ 63,139  
 
 




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