MACOM Reports Fiscal First Quarter 2025 Financial Results

LOWELL, Mass.--(BUSINESS WIRE)--MACOM Technology Solutions Holdings, Inc. (“MACOM”) (Nasdaq: MTSI), a leading supplier of semiconductor products, today announced its financial results for its fiscal first quarter ended January 3, 2025. First Quarter Fiscal Year 2025 GAAP Results Revenue was $218.1 million, an increase of 38.8%, compared to $157.1 million in the previous year fiscal first quarter and an increase of 8.7% compared to $200.7 million in the prior fiscal quarter; Gross margin was 53.7%, compared to 55.6% in the previous year fiscal first quarter and 54.7% in the prior fiscal quarter; Income from operations was $17.5 million, or 8.0% of revenue, compared to income from operations of $11.0 million, or 7.0% of revenue, in the previous year fiscal first quarter and income from operations of $27.5 million, or 13.7% of revenue, in the prior fiscal quarter; and Net loss, which includes a one-time, primarily non-cash, charge of $193.1 million loss on extinguishment of debt related to the previously-announced refinancing of a portion of the Company’s 0.25% convertible senior notes due 2026, was $167.5 million, or $2.30 loss per diluted share, compared to net income of $12.5 million, or $0.17 per diluted share, in the previous year fiscal first quarter and net income of $29.4 million, or $0.39 per diluted share, in the prior fiscal quarter. First Quarter Fiscal Year 2025 Adjusted Non-GAAP Results Adjusted gross margin was 57.5%, compared to 59.2% in the previous year fiscal first quarter and 58.1% in the prior fiscal quarter; Adjusted income from operations was $55.4 million, or 25.4% of revenue, compared to adjusted income from operations of $38.6 million, or 24.5% of revenue, in the previous year fiscal first quarter and adjusted income from operations of $50.7 million, or 25.2% of revenue, in the prior fiscal quarter; and Adjusted net income was $59.5 million, or $0.79 per diluted share, compared to adjusted net income of $41.8 million, or $0.58 per diluted share, in the previous year fiscal first quarter and adjusted net income of $54.2 million, or $0.73 per diluted share, in the prior fiscal quarter. Management Commentary “Q1 was a good start to our fiscal 2025,” said Stephen G. Daly, President and Chief Executive Officer, MACOM. “We remain focused on serving our customers and building a stronger, broader and more competitive product portfolio.” Business Outlook For the fiscal second quarter ending April 4, 2025, MACOM expects revenue to be in the range of $227 million to $233 million. Adjusted gross margin is expected to be between 57% and 58%, and adjusted earnings per diluted share is expected to be between $0.82 and $0.86 utilizing an anticipated non-GAAP income tax rate of 3% and 76.0 million fully diluted shares outstanding. Conference Call MACOM will host a conference call on Thursday, February 6, 2025, at 8:30 a.m. Eastern Time to discuss its fiscal first quarter 2025 financial results and business outlook. Investors and analysts may visit MACOM's Investor Relations website at https://ir.macom.com/events-webcasts to register for a user-specific access code for the live call or to access the live webcast. A replay of the call will be available within 24 hours and remain accessible by all interested parties for approximately 90 days. About MACOM MACOM designs and manufactures high-performance semiconductor products for the Industrial and Defense, Data Center and Telecommunications industries. MACOM services over 6,000 customers annually with a broad product portfolio that incorporates RF, Microwave, Analog and Mixed Signal and Optical semiconductor technologies. MACOM has achieved certification to the IATF16949 automotive standard, the AS9100D aerospace standard, the ISO9001 international quality standard and the ISO14001 environmental management standard. MACOM operates facilities across the United States, Europe, Asia and is headquartered in Lowell, Massachusetts. Special Note Regarding Forward-Looking Statements This press release and the associated earnings call contains forward-looking statements. These forward-looking statements include, among others, statements about MACOM’s strategic plans, priorities and long-term growth drivers, our ability to execute our long-term strategy, strengthen our position and drive market share gains and growth, our ability to develop new products, achieve market acceptance of those products and better address certain markets, expand our capabilities and extend our product offerings, including through the acquisitions of ENGIN-IC, Inc., Linearizer Communications Group and the radio frequency (RF) business of Wolfspeed, Inc. and through the establishment and growth of our European Semiconductor Center and potential collaboration and sales opportunities with private and public sector partners resulting therefrom, and the teams’ capabilities and technologies and expansion thereof and any potential financial benefits derived by and financial impact to MACOM therefrom, strength and competitiveness of new product introductions and technology portfolio expansion, including the anticipated rate of new product introductions, anticipated demand for our products, MACOM’s profitability, revenue targets, prospects and growth opportunities in our three primary markets, the potential impact to our business of an economic downturn or recession, anticipated financial and business performance improvements, MACOM’s strategic investment plan, including negotiation and finalization of a definitive agreement with, and receipt of, funding from the Federal and State governments, the estimated financial results for our 2025 fiscal second quarter and the stated business outlook and future results of operations. These forward-looking statements reflect MACOM’s current views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause those events or our actual activities or results to differ materially from those indicated by the forward-looking statements, including our ability to develop new products and achieve market acceptance of those products; component shortages or other disruptions in our supply chain, including as a result of geopolitical unrest or otherwise; inflationary pressures; any failure to accurately anticipate demand for our products and effectively manage our inventory; our dependence on a limited number of customers; risks related to any weakening of economic conditions; our ability to compete effectively; and those other factors described in “Risk Factors” in MACOM’s filings with the Securities and Exchange Commission (“SEC”), including its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and other filings with the SEC. These forward-looking statements speak only as of the date of this press release, and MACOM undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Discussion Regarding the Use of Historical and Forward-Looking Non-GAAP Financial Measures In addition to United States Generally Accepted Accounting Principles (“GAAP”) reporting, MACOM provides investors with financial measures that have not been calculated in accordance with GAAP, such as: non-GAAP gross profit and gross margin, non-GAAP operating expenses, non-GAAP income from operations and operating margin, non-GAAP EBITDA, non-GAAP net income, non-GAAP diluted earnings per share, non-GAAP income tax rate and non-GAAP interest income. In this release or elsewhere, we may alternatively refer to such non-GAAP measures as “adjusted” measures. This non-GAAP information excludes the effect, where applicable, of intangible amortization expense, share-based compensation expense, non-cash interest, net, acquisition and integration related costs, loss on debt extinguishment and the tax effect of each non-GAAP adjustment. Management believes these excluded items are not reflective of our underlying performance and uses these non-GAAP financial measures to: evaluate our ongoing operating performance and compare it against prior periods, make operating decisions, forecast future periods, evaluate potential acquisitions, compare our operating performance against peer companies and assess certain compensation programs. We believe this non-GAAP financial information provides additional insight into our ongoing performance and have therefore chosen to provide this information to investors to help them evaluate the results of our ongoing 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. We have not provided a reconciliation with respect to any forward-looking non-GAAP financial data presented because we do not have and cannot reliably estimate certain key inputs required to calculate the most comparable GAAP financial data, such as future acquisition costs, the possibility and impact of any litigation costs, changes in our GAAP effective tax rate and impairment charges. We believe these unknown inputs are likely to have a significant impact on any estimate of the comparable GAAP financial data. Investors are cautioned against placing undue reliance on non-GAAP financial measures and are urged to review and consider carefully the adjustments made by management to the most directly comparable GAAP financial measures. Non-GAAP financial measures may have limited value as analytical tools because they may exclude certain expenses that some investors consider important in evaluating our operating performance or ongoing business performance. Further, non-GAAP financial measures may have limited value for purposes of drawing comparisons between companies because different companies may calculate similarly titled non-GAAP financial measures in different ways because non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Additional information and management’s assessment regarding why certain items are excluded from our non-GAAP measures are summarized below: Amortization Expense – is related to acquired intangible assets which are based upon valuation methodologies and are generally amortized over the expected life of the intangible asset at the time of acquisition, which may result in amortization amounts that vary over time. This non-cash expense is not considered by management in making operating decisions. Share-Based Compensation Expense – includes share-based compensation expense for awards that are equity and liability classified on our balance sheet and the related employer tax expense at vesting. Share-based compensation expense is partially outside of our control due to factors such as stock price volatility and interest rates, which may be unrelated to our operating performance during the period in which the expense is incurred. It is an expense based upon valuation methodologies and assumptions that vary over time, and the amount of the expense can vary significantly between companies. Share-based compensation expense amounts are not considered by management in making operating decisions. Non-cash Interest, Net – includes amounts associated with the amortization of certain fees associated with the establishment or amendment of our convertible notes that are being amortized over the life of the agreements. We believe these amounts are non-cash in nature, are not correlated to future business operations and do not reflect our ongoing operations. Acquisition and Integration Related Costs – includes items such as professional fees, employee severance and other costs incurred in connection with acquisitions and integration specific activities which are not expected to have a continuing contribution to operations and the amortization of the fair market step-up value of acquired inventory and fixed assets. We believe the exclusion of these items is useful in providing management a basis to evaluate ongoing operating activities and strategic decision making. Loss on Debt Extinguishment – includes the loss on exchange of our convertible notes. This loss is primarily non-cash and we do not believe this amount is reflective of our ongoing operations. Tax Effect of Non-GAAP Adjustments – includes adjustments to arrive at an estimate of our non-GAAP income tax rate associated with our non-GAAP income over a period of time. We determine our non-GAAP income tax rate using applicable rates in taxing jurisdictions and assessing certain factors including our historical and forecast earnings by jurisdiction, discrete items, cash taxes paid in relation to our non-GAAP net income before income taxes and our ability to realize tax assets. We generally assess this non-GAAP income tax rate quarterly and have utilized 3% for our first fiscal quarter of fiscal year 2025 and for fiscal year 2024. Our historical effective income tax rate under GAAP has varied significantly from our non-GAAP income tax rate due primarily to income taxed in foreign jurisdictions at generally lower tax rates, research and development tax credits and acquisition expenses. We believe it is beneficial for management to review our non-GAAP income tax rate on a consistent basis over periods of time. Items such as those noted above may have a significant impact on our GAAP income tax expense and associated effective tax rate over time. Adjusted EBITDA – is a calculation that adds depreciation expense to our adjusted income from operations. Management reviews and utilizes this measure for operational analysis purposes. We believe competitors and others in the financial industry also utilize this measure for analysis purposes. Incremental Shares – is the number of potential shares of common stock issuable upon the exercise of stock options, restricted stock, restricted stock units and conversion of convertible debt which were not included in the calculation of our GAAP diluted shares. We believe competitors and others in the financial industry utilize this non-GAAP measure for analysis purposes. MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited and in thousands, except per share data) Three Months Ended January 3, 2025 September 27, 2024 December 29, 2023 Revenue $ 218,122 $ 200,710 $ 157,148 Cost of revenue 101,013 90,868 69,838 Gross profit 117,109 109,842 87,310 Operating expenses: Research and development 60,369 49,592 39,413 Selling, general and administrative 39,213 32,716 36,887 Total operating expenses 99,582 82,308 76,300 Income from operations 17,527 27,534 11,010 Other (expense) income: Interest income 7,000 6,244 5,556 Interest expense (1,366 ) (1,274 ) (1,290 ) Loss on extinguishment of debt (193,098 ) — — Other income, net — 10 — Total other (expense) income (187,464 ) 4,980 4,266 (Loss) income before income taxes (169,937 ) 32,514 15,276 Income tax (benefit) expense (2,407 ) 3,100 2,750 Net (loss) income $ (167,530 ) $ 29,414 $ 12,526 Net (loss) income per share: (Loss) income per share - Basic $ (2.30 ) $ 0.41 $ 0.18 (Loss) income per share - Diluted $ (2.30 ) $ 0.39 $ 0.17 Weighted average common shares: Shares - Basic 72,780 72,192 71,425 Shares - Diluted 72,780 74,524 72,286 MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited and in thousands) January 3, 2025 September 27, 2024 ASSETS Current assets: Cash and cash equivalents $ 232,699 $ 146,806 Short-term investments 423,820 435,082 Accounts receivable, net 91,752 105,700 Inventories 198,382 194,490 Prepaid and other current assets 35,782 21,000 Total current assets 982,435 903,078 Property and equipment, net 174,110 176,017 Goodwill and intangible assets, net 424,849 408,289 Deferred income taxes 216,950 212,495 Other long-term assets 45,286 55,761 Total assets $ 1,843,630 $ 1,755,640 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Short-term debt 160,639 — Accounts payable 44,631 43,202 Accrued liabilities 66,493 64,336 Current portion of finance lease obligations 644 646 Total current liabilities 272,407 108,184 Finance lease obligations, less current portion 30,980 31,130 Financing obligation 8,918 9,006 Long-term debt obligations 338,755 448,281 Other long-term liabilities 41,681 32,696 Total liabilities 692,741 629,297 Stockholders’ equity 1,150,889 1,126,343 Total liabilities and stockholders’ equity $ 1,843,630 $ 1,755,640 MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited and in thousands) Three Months Ended January 3, 2025 December 29, 2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $ (167,530 ) $ 12,526 Depreciation and intangible asset amortization 15,995 14,289 Share-based compensation 25,520 8,657 Deferred income taxes (6,266 ) 294 Loss on extinguishment of debt 193,098 — Other adjustments, net (3,029 ) (1,755 ) Accounts receivable 14,946 (12,180 ) Inventories (4,610 ) 1,555 Accrued and other liabilities (5,033 ) 6,612 Change in other operating assets and liabilities 3,568 3,101 Net cash provided by operating activities 66,659 33,099 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of business, net (12,474 ) (75,000 ) Sales, purchases and maturities of investments 10,987 44,878 Purchases of property and equipment (5,340 ) (4,652 ) Other investing (3,400 ) — Net cash used in investing activities (10,227 ) (34,774 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from convertible notes 86,629 — Payments for fee on convertible note exchange and debt issuance costs (22,905 ) — Payments on finance leases and other (228 ) (349 ) Proceeds from stock option exercises and employee stock purchases 4,537 2,848 Common stock withheld for taxes on employee equity awards (37,908 ) (11,552 ) Net cash provided by (used in) financing activities 30,125 (9,053 ) Foreign currency effect on cash (664 ) 362 NET CHANGE IN CASH AND CASH EQUIVALENTS 85,893 (10,366 ) CASH AND CASH EQUIVALENTS — Beginning of period 146,806 173,952 CASH AND CASH EQUIVALENTS — End of period $ 232,699 $ 163,586 Supplemental disclosure of non-cash activities Issuance of common stock in connection with the acquisition of the RF business of Wolfspeed, Inc. $ — $ 60,772 MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC. RECONCILIATIONS OF GAAP TO NON-GAAP RESULTS (unaudited and in thousands, except per share data) Three Months Ended January 3, 2025 September 27, 2024 December 29, 2023 Amount % Revenue Amount % Revenue Amount % Revenue Gross profit - GAAP $ 117,109 53.7 $ 109,842 54.7 $ 87,310 55.6 Amortization expense 3,332 1.5 4,305 2.1 1,942 1.2 Share-based compensation expense 3,498 1.6 1,703 0.8 1,550 1.0 Acquisition and integration related costs 1,394 0.6 744 0.4 2,289 1.5 Adjusted gross profit (Non-GAAP) $ 125,333 57.5 $ 116,594 58.1 $ 93,091 59.2 Three Months Ended January 3, 2025 September 27, 2024 December 29, 2023 Amount % Revenue Amount % Revenue Amount % Revenue Operating expenses - GAAP $ 99,582 45.7 $ 82,308 41.0 $ 76,300 48.6 Amortization expense (3,177 ) (1.5 ) (4,351 ) (2.2 ) (4,798 ) (3.1 ) Share-based compensation expense (25,889 ) (11.9 ) (10,800 ) (5.4 ) (8,319 ) (5.3 ) Acquisition and integration related costs (605 ) (0.3 ) (1,221 ) (0.6 ) (8,644 ) (5.5 ) Adjusted operating expenses (Non-GAAP) $ 69,911 32.1 $ 65,936 32.9 $ 54,539 34.7 Three Months Ended January 3, 2025 September 27, 2024 December 29, 2023 Amount % Revenue Amount % Revenue Amount % Revenue Income from operations - GAAP $ 17,527 8.0 $ 27,534 13.7 $ 11,010 7.0 Amortization expense 6,509 3.0 8,656 4.3 6,740 4.3 Share-based compensation expense 29,387 13.5 12,503 6.2 9,869 6.3 Acquisition and integration related costs 1,999 0.9 1,965 1.0 10,933 7.0 Adjusted income from operations (Non-GAAP) $ 55,422 25.4 $ 50,658 25.2 $ 38,552 24.5 Depreciation expense 6,740 3.1 7,257 3.6 6,254 4.0 Adjusted EBITDA (Non-GAAP) $ 62,162 28.5 $ 57,915 28.9 $ 44,806 28.5 Three Months Ended January 3, 2025 September 27, 2024 December 29, 2023 Amount % Revenue Amount % Revenue Amount % Revenue Net (loss) income - GAAP $ (167,530 ) (76.8 ) $ 29,414 14.7 $ 12,526 8.0 Amortization expense 6,509 3.0 8,656 4.3 6,740 4.3 Share-based compensation expense 29,387 13.5 12,502 6.2 9,869 6.3 Non-cash interest, net 307 0.1 286 0.1 287 0.2 Acquisition and integration related costs 1,999 0.9 1,965 1.0 10,933 7.0 Loss on debt extinguishment 193,098 88.5 — — — — Tax effect of non-GAAP adjustments (4,247 ) (1.9 ) 1,422 0.7 1,457 0.9 Adjusted net income (Non-GAAP) $ 59,523 27.3 $ 54,245 27.0 $ 41,812 26.6 Three Months Ended January 3, 2025 September 27, 2024 December 29, 2023 Net income Income per diluted share Net income Income per diluted share Net income Income per diluted share Net (loss) income - GAAP diluted $ (167,530 ) $ (2.30 ) $ 29,414 $ 0.39 $ 12,526 $ 0.17 Adjusted net income (Non-GAAP) $ 59,523 $ 0.79 $ 54,245 $ 0.73 $ 41,812 $ 0.58 Three Months Ended January 3, 2025 September 27, 2024 December 29, 2023 Shares Shares Shares Diluted shares - GAAP 72,780 74,524 72,286 Incremental shares 2,835 — — Adjusted diluted shares (Non-GAAP) 75,615 74,524 72,286 Three Months Ended January 3, 2025 September 27, 2024 December 29, 2023 Amount % Revenue Amount % Revenue Amount % Revenue Interest income - GAAP $ 7,000 3.2 $ 6,244 3.1 $ 5,556 3.5 Interest expense - GAAP (1,366 ) (0.6 ) (1,274 ) (0.6 ) (1,290 ) (0.8 ) Non-cash interest expense 307 0.1 286 0.1 287 0.2 Adjusted interest income (Non-GAAP) $ 5,941 2.7 $ 5,256 2.6 $ 4,553 2.9

MACOM Reports Fiscal First Quarter 2025 Financial Results

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