MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) Q2 2022 Results Conference Call April 28, 2022 8:30 AM ET Company Participants Steve Ferranti - VP, Strategic Initiatives and IR Steve Daly - President and CEO Jack Kober - CFO Conference Call Participants Quinn Bolton - Needham & Company Harsh Kumar - Piper Sandler Jeremy Kwan - Stifel Tom O'Malley - Barclays Vivek Arya - Bank of America Harlan Sur - JP Morgan David Williams - Benchmark C.J. Muse - Evercore Richard Shannon - Craig-Hallum Ruben Roy - W ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 1, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-35451 MACOM Technology Solutions Holdings, Inc. (Exact name of registrant as specified in its charter) Delaware 27-0306875 (Stat ...

Financial Performance - Revenue increased by $11.1 million, or 7.5%, to $159.6 million for the three months ended December 31, 2021, compared to $148.5 million for the same period in the previous year[106] - Gross profit for the three months ended December 31, 2021, was $94.1 million, representing a gross margin of 59.0%, up from 54.0% in the prior year[105] - Income from operations rose to $27.1 million for the three months ended December 31, 2021, compared to $12.1 million for the same period in the previous year[103] - Net income for the three months ended December 31, 2021, was $138.8 million, a significant increase from a net loss of $9.0 million in the prior year[103] - Other income increased significantly to $114.9 million, or 72.0% of revenue, primarily due to a gain on the sale of an equity method investment[115] Market Performance - Telecom market revenue increased by $4.3 million, or 8.3%, to $55.8 million for the three months ended December 31, 2021, driven by RF and microwave products[107] - Industrial & Defense market revenue rose by $11.5 million, or 18.7%, to $73.1 million, attributed to new program wins and expansion of product lines[108] - Data Center market revenue decreased by $4.7 million, or 13.3%, to $30.7 million, primarily due to supply constraints affecting high-performance analog products[109] Expenses - Research and development expenses were $35.5 million for the three months ended December 31, 2021, slightly down from $36.9 million in the previous year[103] - Research and development expenses decreased by $1.5 million, or 4.0%, to $35.5 million, representing 22.2% of revenue[111] - Selling, general and administrative expenses increased by $0.4 million, or 1.1%, to $31.6 million, accounting for 19.8% of revenue[112] Cash Flow and Financial Position - Cash and cash equivalents at the end of the period were $273.4 million, up from $156.5 million at the beginning of the period[118] - Cash flow from operating activities was $34.1 million, consisting of a net income of $138.8 million after adjustments[119] - The company plans to use remaining cash and short-term investments for general corporate purposes and potential acquisitions[126] Future Outlook - The company expects revenue growth in the Telecom market driven by 5G deployments and upgrades in communications equipment[95] - Future revenue in the I&D market is anticipated to grow due to an expanding product portfolio for applications such as satellite communications and radar[96] - The Data Center market is expected to see revenue growth from the adoption of cloud-based services and upgrades to higher-speed interconnects[97] COVID-19 Impact - The impact of COVID-19 on operations has been minimal through the three months ended December 31, 2021, but future impacts remain uncertain[90] - The company has over 6,000 end customers across its primary markets: Telecom, Industrial and Defense, and Data Center[89]

MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) Q1 2022 Earnings Conference Call January 27, 2022 8:30 AM ET Company Participants Steve Ferranti - Vice President-Strategic Initiatives and Investor Relations Steve Daly - President and Chief Executive Officer Jack Kober - Chief Financial Officer Conference Call Participants Tom O???Malley - Barclays Tore Svanberg - Stifel Harsh Kumar - Piper Sandler Chris Caso - Raymond James David Williams - Benchmark Karl Ackerman - Cowen Quinn Bolton - Needham Oper ...

PART I [Business](index=4&type=section&id=ITEM%201%3A%20BUSINESS.) MACOM designs and manufactures high-performance analog semiconductors for Telecom, I&D, and Data Center markets, leveraging a hybrid manufacturing model [Overview](index=4&type=section&id=Overview) MACOM, with 70+ years of expertise, designs semiconductors for Telecom, I&D, and Data Center markets using a hybrid manufacturing model - MACOM serves **over 6,000 customers** across Telecom, Industrial & Defense, and Data Center markets[15](index=15&type=chunk) - The company utilizes a **hybrid manufacturing model**, combining internal U.S. facilities with external foundry partners[17](index=17&type=chunk)[18](index=18&type=chunk) - MACOM's **U.S. Department of Defense accredited "Trusted Foundry" status** is a key differentiator for I&D military applications[17](index=17&type=chunk)[31](index=31&type=chunk) [Markets and Products](index=5&type=section&id=Markets%20and%20Products) MACOM targets growth in Telecom (5G), I&D (radar, satellite), and Data Center (high-speed interconnects) with a broad product portfolio - **Telecom market growth** is driven by increased bandwidth demand for cellular infrastructure and fiber optic networks[27](index=27&type=chunk) - The **I&D market** demands high-performance GaAs and GaN semiconductors for military applications like radar and electronic countermeasures[30](index=30&type=chunk) - **Data Center market growth** is fueled by cloud adoption and upgrades to 100G-800G interconnects, supported by MACOM's comprehensive product portfolio[26](index=26&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) [Sales, Marketing, and Customers](index=7&type=section&id=Sales%2C%20Marketing%2C%20and%20Customers) MACOM employs a global multi-channel sales strategy, with distributors accounting for **35.0% of fiscal 2021 revenue**, and one distributor exceeding **10.7%** of revenue Sales to Distributors as a Percentage of Revenue | Fiscal Year | Percentage of Revenue | | :--- | :--- | | 2021 | 35.0% | | 2020 | 45.3% | | 2019 | 33.3% | - **Richardson RFPD, Inc.** accounted for **10.7% of revenue in fiscal 2021**, a decrease from prior years[43](index=43&type=chunk) - In fiscal 2020, **Gateway Tech Company Limited** and **Pangaea (H.K.) Limited** each contributed **11.5% of revenue**, but not in other years[43](index=43&type=chunk) [Competition](index=7&type=section&id=Competition) MACOM competes in the highly competitive semiconductor market based on product performance, breadth, and supply reliability, facing rivals like NXP and Analog Devices - Key competitive factors include **engineering talent, product performance, price, breadth of offerings, and supply reliability**[45](index=45&type=chunk)[53](index=53&type=chunk) - Major competitors in **Telecom and Data Center markets** include NXP, Marvell, Maxlinear, Broadcom, and Semtech[47](index=47&type=chunk) - Key competitors in the **Industrial & Defense market** are Analog Devices, Wolfspeed, Microchip, Qorvo, and Skyworks[47](index=47&type=chunk) [Human Capital](index=10&type=section&id=Human%20Capital) As of October 1, 2021, MACOM employed **1,100 individuals globally**, with **71% in North America**, and a **9% voluntary attrition rate** in fiscal 2021 - As of October 1, 2021, MACOM had approximately **1,100 employees**, with **380 in R&D**, and **71% located in North America**[64](index=64&type=chunk) - The workforce is approximately **70% male and 30% female**, with females holding **10% of senior management** and **15% of engineering roles**[65](index=65&type=chunk) - The **voluntary employee attrition rate** was approximately **9%** during fiscal year 2021[67](index=67&type=chunk) [History and Recent Developments](index=11&type=section&id=History%20and%20Recent%20Developments) MACOM, incorporated in 2009, has a 70-year operational history, marked by strategic acquisitions and a 2019 restructuring plan completed in fiscal 2020 - In January 2017, MACOM acquired **Applied Micro Circuits Corporation** to expand into enterprise and Cloud Data Center applications[76](index=76&type=chunk) - A significant **restructuring plan** initiated in fiscal 2019, involving **~250 employee reductions** and facility exits, was completed in fiscal 2020[79](index=79&type=chunk) [Risk Factors](index=12&type=section&id=ITEM%201A%3A%20RISK%20FACTORS.) MACOM faces significant risks including new product development, supply chain vulnerabilities, industry cyclicality, operational challenges, international trade policies, and financial volatility [Risks Relating to General Business Conditions](index=12&type=section&id=Risks%20Relating%20to%20General%20Business%20Conditions) General business risks include new product dependency, supply chain interruptions, demand forecasting challenges, customer concentration, industry cyclicality, and potential product defects - **Revenue growth** relies heavily on the timely development of new products to counteract price erosion[86](index=86&type=chunk) - The company relies on **limited sources for components** creates vulnerability to supply interruptions, delays, or cost increases, worsened by COVID-19[88](index=88&type=chunk) - **Sales to the top 10 customers** represented **48.9% of fiscal 2021 revenue**, highlighting customer concentration risk[98](index=98&type=chunk) [Risks Relating to International Operations](index=16&type=section&id=Risks%20Relating%20to%20International%20Operations) International operations, accounting for **54.2% of fiscal 2021 revenue**, expose MACOM to currency, trade, and geopolitical risks, particularly in China and Asia Pacific - **International sales** constituted **54.2% of fiscal 2021 revenue**, with a significant portion from China and Asia Pacific[114](index=114&type=chunk) - **U.S.-China trade policies** and China's domestic semiconductor initiatives pose risks, including customer restrictions like the BIS Entity List[114](index=114&type=chunk) [Risks Relating to Production Operations](index=17&type=section&id=Risks%20Relating%20to%20Production%20Operations) Production risks include manufacturing yield losses from complex processes, higher costs and adoption challenges for compound semiconductors, and regulatory compliance for U.S. government contracts - **Complex manufacturing processes** risk significant yield loss or production halts from minor deviations, impacting gross margin[119](index=119&type=chunk)[120](index=120&type=chunk) - **Compound semiconductor materials** (GaAs, InP, GaN) are more difficult and expensive to manufacture than silicon, potentially limiting adoption[121](index=121&type=chunk) [Risks Relating to Government Regulations](index=20&type=section&id=Risks%20Relating%20to%20Government%20Regulations) Government regulations, including trade policies, export controls, tax laws, environmental compliance, and data privacy, pose significant operational and financial risks - Products are subject to **U.S. Export Administration Regulations (EAR)** and **International Traffic in Arms Regulations (ITAR)**, with non-compliance risking substantial fines[133](index=133&type=chunk) - As of October 1, 2021, the company held **$855.8 million in federal NOL carryforwards**, but their realization is uncertain due to a full valuation allowance[136](index=136&type=chunk)[409](index=409&type=chunk) - **Compliance with complex supply chain regulations**, including "conflict minerals" rules, may increase costs and reputational risk[141](index=141&type=chunk) [Properties](index=26&type=section&id=ITEM%202%3A%20PROPERTIES.) MACOM's main operations are in a leased **281,700 sq ft facility in Lowell, MA**, with other key R&D, sales, and manufacturing sites globally Major Leased Facilities | Site | Major Activity | Square Footage | Lease Expiration | | :--- | :--- | :--- | :--- | | Lowell, MA | Admin, R&D, Production, Sales, Test | 281,700 | October 2038 | | Santa Clara, CA | R&D, Sales | 46,270 | October 2024 | | Newport Beach, CA | R&D, Sales | 57,412 | December 2029 | | Ann Arbor, MI | Production, R&D, Test | 50,335 | May 2026 | | Nashua, NH | R&D, Test, Production | 33,750 | December 2024 | | Cork, Ireland | Admin, R&D, Sales | 21,422 | August 2026 | [Legal Proceedings](index=27&type=section&id=ITEM%203%3A%20LEGAL%20PROCEEDINGS.) As of the filing date, MACOM was not involved in any pending legal proceedings expected to have a material adverse effect on its business or financials - The company reported no pending legal proceedings with a **material adverse effect** as of the filing date[169](index=169&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=27&type=section&id=ITEM%205%3A%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES.) MACOM's common stock (MTSI) trades on Nasdaq, with **75 stockholders of record** as of November 11, 2021, and limited share repurchases for tax obligations - The company's common stock, **MTSI**, is traded on the Nasdaq Global Select Market[172](index=172&type=chunk) - In fiscal 2021 Q4, **534 shares** were repurchased via "withhold to cover" for employee tax obligations, not a public buyback[177](index=177&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=ITEM%207%3A%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS.) Fiscal 2021 saw **revenue grow 14.5% to $606.9 million**, **gross margin improve to 56.3%**, and a **net income of $38.0 million**, a significant turnaround from the prior year's loss [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Fiscal 2021 revenue increased **14.5% to $606.9 million**, driven by **44.1% I&D growth**, leading to a **56.3% gross margin** and **$38.0 million net income** Fiscal Year 2021 vs. 2020 Financial Highlights (in thousands) | Metric | FY 2021 | FY 2020 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $606,920 | $530,037 | 14.5% | | Gross Profit | $341,855 | $270,166 | 26.5% | | Gross Margin | 56.3% | 51.0% | +530 bps | | Income from Operations | $81,002 | $3,388 | 2291.1% | | Net Income (Loss) | $37,973 | $(46,078) | N/A | Revenue by Market (FY 2021 vs. FY 2020, in thousands) | Market | FY 2021 | FY 2020 | % Change | | :--- | :--- | :--- | :--- | | Telecom | $188,391 | $209,477 | (10.1)% | | Industrial & Defense | $280,221 | $194,506 | 44.1% | | Data Center | $138,308 | $126,054 | 9.8% | - The **gross margin increase in FY2021** resulted from higher sales, favorable revenue mix, production efficiencies, and reduced depreciation and amortization[207](index=207&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) As of October 1, 2021, MACOM held **$156.5 million in cash** and **$188.4 million in short-term investments**, with **$148.4 million in operating cash flow** for fiscal 2021 Cash Flow Summary (in thousands) | Cash Flow Activity | FY 2021 | FY 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $148,412 | $171,397 | | Net cash used in investing activities | $(2,583) | $(107,195) | | Net cash used in financing activities | $(119,095) | $(10,716) | - In fiscal 2021, MACOM issued **$450.0 million in 2026 Convertible Notes** and used proceeds to prepay **$543.6 million in Term Loans**[235](index=235&type=chunk)[369](index=369&type=chunk) - As of October 1, 2021, the company reported **$156.5 million in cash** and **$188.4 million in short-term investments**[237](index=237&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=ITEM%207A%3A%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK.) MACOM faces **interest rate risk** on **$120.8 million in variable debt**, with limited **foreign currency risk** due to USD-denominated international sales - **Interest rate risk** on **$120.8 million variable rate debt** means a **1% rate change** impacts annual interest expense by **~$1.2 million**[245](index=245&type=chunk) - **Foreign currency risk is limited** as most international customer agreements are denominated in U.S. dollars[246](index=246&type=chunk) [Financial Statements and Supplementary Data](index=38&type=section&id=ITEM%208%3A%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA.) This section presents MACOM's audited consolidated financial statements for fiscal 2021, with an unqualified opinion from Deloitte & Touche LLP on financials and internal controls Key Balance Sheet Data (as of Oct 1, 2021 vs Oct 2, 2020, in thousands) | Account | Oct 1, 2021 | Oct 2, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $156,537 | $129,441 | | Total Current Assets | $521,536 | $481,519 | | Total Assets | $1,134,145 | $1,146,428 | | Long-term debt, less current portion | $492,097 | $652,172 | | Total Liabilities | $662,409 | $846,282 | | Total Stockholders' Equity | $471,736 | $300,146 | Key Income Statement Data (FY 2021 vs FY 2020, in thousands) | Account | FY 2021 | FY 2020 | | :--- | :--- | :--- | | Revenue | $606,920 | $530,037 | | Gross Profit | $341,855 | $270,166 | | Income from Operations | $81,002 | $3,388 | | Net Income (Loss) | $37,973 | $(46,078) | | Diluted EPS | $0.54 | $(0.69) | [Controls and Procedures](index=72&type=section&id=ITEM%209A%3A%20CONTROLS%20AND%20PROCEDURES.) Management concluded that disclosure controls and internal control over financial reporting were **effective as of October 1, 2021**, confirmed by Deloitte & Touche LLP's unqualified opinion - Management concluded that **disclosure controls and procedures were effective** as of October 1, 2021[429](index=429&type=chunk) - Internal control over financial reporting was deemed **effective** by management under **COSO 2013** and confirmed by Deloitte & Touche LLP[432](index=432&type=chunk)[433](index=433&type=chunk)[437](index=437&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=74&type=section&id=ITEM%2010%3A%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE.) Information on directors, executive officers, and corporate governance is incorporated by reference from the forthcoming 2022 Annual Meeting proxy statement - Detailed information for this item is **incorporated by reference** from the forthcoming 2022 Annual Meeting proxy statement[447](index=447&type=chunk) [Executive Compensation](index=74&type=section&id=ITEM%2011%3A%20EXECUTIVE%20COMPENSATION.) Executive compensation details are incorporated by reference from the company's definitive proxy statement for the 2022 Annual Meeting of Stockholders - Detailed information for this item is **incorporated by reference** from the forthcoming 2022 Annual Meeting proxy statement[449](index=449&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=74&type=section&id=ITEM%2012%3A%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS.) Security ownership information is incorporated by reference from the 2022 proxy statement, with **7,448,729 securities** available for future issuance under equity plans Equity Compensation Plan Information (as of Oct 1, 2021) | Plan Category | Securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price | Securities remaining available for future issuance | | :--- | :--- | :--- | :--- | | Equity Compensation Plans Approved by Security Holders | 205,000 | $14.29 | 7,448,729 | [Certain Relationships and Related Transactions, and Director Independence](index=74&type=section&id=ITEM%2013%3A%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE.) Information on related party transactions and director independence is incorporated by reference from the 2022 Annual Meeting proxy statement - Detailed information for this item is **incorporated by reference** from the forthcoming 2022 Annual Meeting proxy statement[453](index=453&type=chunk) [Principal Accounting Fees and Services](index=75&type=section&id=ITEM%2014%3A%20PRINCIPAL%20ACCOUNTING%20FEES%20AND%20SERVICES.) Principal accounting fees and services information is incorporated by reference from the company's definitive proxy statement for the 2022 Annual Meeting - Detailed information for this item is **incorporated by reference** from the forthcoming 2022 Annual Meeting proxy statement[454](index=454&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=76&type=section&id=ITEM%2015%3A%20EXHIBITS%2C%20FINANCIAL%20STATEMENT%20SCHEDULES.) This section lists financial statements from Item 8 and all exhibits filed or incorporated by reference into the Form 10-K, including governance documents and material contracts - This section provides a list of all **financial statements and exhibits** filed with the annual report, including material contracts and certifications[456](index=456&type=chunk)[457](index=457&type=chunk)

Financial Data and Key Metrics Changes - Revenue for Q4 2021 was $155.2 million, with adjusted EPS of $0.61 per diluted share, marking a 1.7% increase quarter-over-quarter [7][35] - For the full fiscal year 2021, revenue was $607 million, representing a 14.5% year-over-year growth, and adjusted EPS was $2.15, up from $0.98 in fiscal year 2020 [8][41] - Adjusted operating margin exceeded 30% for the first time since going public, with adjusted operating income for Q4 at $46.8 million, up from $43.9 million in Q3 [10][39] Business Line Data and Key Metrics Changes - Revenue by end market for Q4 included Industrial and Defense (I&D) at $75.1 million, Telecom at $46.6 million, and Data Center at $33.5 million [13] - For fiscal year 2021, I&D revenue increased by 44%, Data Center by 10%, while Telecom revenue decreased by 10% [13] - The company reported a book-to-bill ratio of 1.2:1 for Q4 and a diversified customer base with top 10 customers representing 26.5% of total revenue [10][13] Market Data and Key Metrics Changes - Domestic customers accounted for approximately 46% of revenue in both Q4 and fiscal year 2021, an increase from 36% and 41% in the previous year [36] - The company noted supply chain challenges affecting production capacity, particularly in semiconductor and packaging technologies [12][60] Company Strategy and Development Direction - The company aims to achieve at least 10% year-over-year revenue growth in FY 2022, supported by new product introductions and market share gains [51] - MACOM is focusing on diversifying its technology portfolio and customer base, with significant investments in R&D and production capabilities [28][30] - The company is also expanding its presence in the automotive sector, leveraging its technologies for applications like sensors and autonomous driving [30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged supply chain constraints but emphasized that these are viewed as short-term issues that will not hinder long-term growth [60] - The company is optimistic about its backlog and new product introductions, which are expected to drive future revenue growth [55][56] Other Important Information - The company achieved a net leverage ratio of around 1.7x and gross leverage of 3.1x, down from 3.4x and 5.5x in fiscal 2020 [45] - Standard & Poor's upgraded MACOM's credit rating from B to B+, reflecting operational and financial improvements [46] Q&A Session Summary Question: Growth trajectory towards $1 billion in sales by 2025 - Management remains confident in achieving long-term goals, starting the year with a near-record backlog and a strong product pipeline [54][55] Question: Supply chain bottlenecks - Constraints exist in semiconductor technology and assembly capacity, but these are considered tactical issues manageable by the operations team [60] Question: Data Center business outlook - The Data Center segment is expected to grow 8% to 10% in FY 2022, with strong growth anticipated in 100G and 400G applications despite some legacy business decline [66][70] Question: Telecom segment growth - Telecom is expected to see growth in cable infrastructure and PON, with steady demand for 5G front haul products [77] Question: Revenue left behind due to supply issues - Management does not quantify potential lost revenue but emphasizes that forecasts consider customer schedules and material availability [81][82] Question: Margin structure at $1 billion revenue run rate - While difficult to project, management aims to launch products with above-average margins to drive profitability [90][91] Question: New product introductions and gross margins - The company successfully met its new product introduction targets and expects to accelerate this in FY 2022, focusing on profitability improvements [96][97]

Financial Performance - Revenue for the three months ended July 2, 2021, was $152.622 million, a 11.2% increase from $137.267 million for the same period in 2020[119] - Gross profit for the three months ended July 2, 2021, was $87.269 million, compared to $70.876 million for the same period in 2020, reflecting a gross margin improvement[119] - Net income for the three months ended July 2, 2021, was $15.005 million, a significant recovery from a net loss of $24.982 million in the same period of 2020[119] - Operating expenses for the three months ended July 2, 2021, totaled $63.595 million, slightly down from $64.376 million in the same period of 2020[119] - Revenue increased by $15.4 million, or 11.2%, to $152.6 million for the three months ended July 2, 2021, and increased by $68.9 million, or 18.0%, to $451.7 million for the nine months ended July 2, 2021[124] - Gross profit was $87.3 million for the three months ended July 2, 2021, compared to $70.9 million for the same period in 2020, and $251.6 million for the nine months ended July 2, 2021, compared to $192.5 million for the same period in 2020[129] - Gross margin improved to 57.2% for the three months ended July 2, 2021, compared to 51.6% for the same period in 2020, and 55.7% for the nine months ended July 2, 2021, compared to 50.3% for the same period in 2020[129] - Net income was 9.8% for the three months ended July 2, 2021, compared to a net loss of (18.2)% for the same period in 2020, and net income was 4.6% for the nine months ended July 2, 2021, compared to a net loss of (16.6)% for the same period in 2020[123] Expenses and Costs - Research and development expenses for the three months ended July 2, 2021, were $33.610 million, compared to $34.948 million in the same period of 2020[119] - Research and development expenses decreased by $1.3 million, or 3.8%, to $33.6 million for the three months ended July 2, 2021, and decreased by $0.8 million, or 0.7%, to $105.2 million for the nine months ended July 2, 2021[130] - Selling, general and administrative expenses were $30.0 million for the three months ended July 2, 2021, unchanged from the same period in 2020, and decreased by $2.6 million, or 2.7%, to $91.8 million for the nine months ended July 2, 2021[131] - Interest expense decreased to $5.5 million, or 3.6% of revenue, for the three months ended July 2, 2021, compared to $5.8 million, or 4.3% of revenue, for the same period in 2020[134] Cash Flow and Liquidity - Cash and cash equivalents at the end of the period were $144.1 million as of July 2, 2021, compared to $131.9 million as of July 3, 2020[138] - Cash flow from operating activities for the nine months ended July 2, 2021, was $107.6 million, consisting of a net income of $20.8 million and adjustments totaling $104.4 million, offset by cash used in operating assets and liabilities of $17.6 million[139] - Cash flow from investing activities for the nine months ended July 2, 2021, included proceeds of $191.3 million from the sale and maturity of short-term investments, offset by purchases of $152.3 million of short-term investments and capital expenditures of $12.9 million[141] - Cash used in financing activities for the nine months ended July 2, 2021, was $119.7 million, primarily related to $545.3 million of payments on Term Loans, partially offset by proceeds from the 2026 Convertible Notes of $444.2 million[143] - As of July 2, 2021, the company held $144.1 million in cash and cash equivalents and $164.8 million in liquid short-term investments, with $160.0 million in borrowing capacity under its Revolving Facility[145] - The company plans to use available cash and short-term investments for general corporate purposes, including working capital and potential acquisitions of complementary technologies and businesses[146] - Cash flow from operating activities for the nine months ended July 3, 2020, was $97.0 million, consisting of a net loss of $63.6 million and adjustments totaling $123.1 million[140] Market Outlook - The company expects revenue growth in the Telecom market driven by 5G deployments and upgrades in communications equipment[110] - Revenue in the I&D market is anticipated to grow due to an expanding product portfolio servicing applications like satellite communications and radar[111] - The Data Center market revenue is expected to increase with the adoption of cloud-based services and upgrades to higher-speed interconnects[112] Risk Management - The impact of COVID-19 on operations has been managed without material effects on consolidated operating results for the periods presented[105] - The company experienced a decrease in Telecom market revenue by $8.8 million, or 15.5%, for the three months ended July 2, 2021, primarily due to a decrease in carrier-based optical semiconductor products[125] - The company has limited exposure to foreign currency exchange rates, as most international customer agreements are denominated in U.S. dollars[153] - The company believes that a 10% change in interest rates or foreign currency exchange rates would not have a material impact on its financial position or results of operations[151][153] - The company did not have any off-balance sheet arrangements as of July 2, 2021[149]

MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) Q3 2021 Earnings Conference Call July 29, 2021 8:30 AM ET Company Participants Steve Ferranti ??? Vice President-Strategic Initiatives and Investor Relations Steve Daly ??? President and Chief Executive Officer Jack Kober ??? Chief Financial Officer Conference Call Participants Tom O???Malley ??? Barclays Harsh Kumar ??? Piper Sandler Quinn Bolton ??? Needham & Company Harlan Sur ??? JPMorgan Chris Caso ??? Raymond James Vivek Arya ??? Bank of America ...

Financial Performance - Revenue for the three months ended April 2, 2021, was $150.583 million, a 19.1% increase from $126.424 million for the same period in 2020[123]. - Gross profit for the three months ended April 2, 2021, was $84.113 million, compared to $63.370 million for the same period in 2020, reflecting a gross margin improvement[123]. - Net income for the three months ended April 2, 2021, was $14.807 million, a significant recovery from a net loss of $10.226 million in the same period of 2020[123]. - Revenue increased by $24.2 million, or 19.1%, to $150.6 million for the three months ended April 2, 2021, and by $53.6 million, or 21.8%, to $299.1 million for the six months ended April 2, 2021[128]. - Gross profit was $84.1 million for the three months ended April 2, 2021, compared to $63.4 million for the same period in 2020, resulting in a gross margin of 55.9%[133]. - Net income for the three months ended April 2, 2021, was 9.8%, compared to a net loss of (8.1)% for the same period in 2020[127]. Expenses - Research and development expenses for the three months ended April 2, 2021, were $34.619 million, slightly down from $35.830 million in the same period of 2020[123]. - Total operating expenses for the three months ended April 2, 2021, were $65.141 million, a decrease from $68.639 million in the same period of 2020[123]. - Research and development expenses decreased by $1.2 million, or 3.4%, to $34.6 million for the three months ended April 2, 2021, representing 23.0% of revenue[134]. - Selling, general and administrative expenses decreased by $1.5 million, or 4.6%, to $30.5 million for the three months ended April 2, 2021, representing 20.3% of revenue[135]. Market Outlook - The company expects revenue growth in the Telecom market driven by 5G deployments and upgrades in communication equipment[114]. - Revenue in the I&D market is anticipated to grow due to an expanding product portfolio servicing applications like satellite communications and radar[115]. - The Data Center market revenue is projected to increase with the adoption of cloud-based services and upgrades to higher-speed interconnects[116]. - The Telecom market revenue decreased by $9.4 million, or 18.2%, for the three months ended April 2, 2021, primarily due to a decrease in carrier-based optical semiconductor products[129]. Cash Flow and Liquidity - Cash and cash equivalents at the end of the period were $105.5 million, down from $120.7 million at the end of the six months ended April 3, 2020[140]. - Cash flow from operating activities for the six months ended April 2, 2021 was $62.7 million, consisting of a net income of $5.8 million and adjustments totaling $70.6 million[141]. - Cash used in financing activities for the six months ended April 2, 2021, was $121.1 million, primarily due to $394.9 million from 2026 Convertible Notes and $496.0 million in Term Loan payments[145]. - As of April 2, 2021, the company held $105.5 million in cash and cash equivalents and $162.6 million in liquid short-term investments, with $23.4 million held by indefinitely reinvested foreign subsidiaries[147]. - The company has $160.0 million in borrowing capacity under its Revolving Facility, allowing up to $50.0 million to be borrowed without certain financial covenants[147]. - The company plans to utilize available cash, short-term investments, and borrowing capacity for general corporate purposes and potential acquisitions[148]. - As of April 2, 2021, the company had $170.1 million in outstanding borrowings under the Credit Agreement, with a 1% change in interest rates affecting annual interest expense by $1.7 million[154]. - The company believes its current liquidity will be sufficient to meet working capital requirements for at least the next twelve months[148]. Risk Factors - The impact of COVID-19 on operations has been managed without material effects on consolidated operating results for the periods presented[109]. - The company has limited exposure to foreign currency risk, as most international agreements are denominated in U.S. dollars[155]. - A 10% change in interest rates is not expected to materially impact the company's financial position or results of operations[153]. - The company did not have any off-balance sheet arrangements as of April 2, 2021[151]. - The company may need to raise additional capital through equity or debt securities, with no assurance of favorable terms[148]. - The effective income tax rate for the three months ended April 2, 2021 was 12.9%, compared to an effective tax rate of (18.3)% for the same period in 2020[138]. - The company reported a loss on extinguishment of debt of $3.8 million for the three months ended April 2, 2021[125].

MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) Q2 2021 Earnings Conference Call April 29, 2021 8:30 AM ET Company Participants Steve Ferranti ??? Vice President-Strategic Initiatives and Investor Relations Steve Daly ??? President and Chief Executive Officer Jack Kober ??? Chief Financial Officer Conference Call Participants Vivek Arya ??? Bank of America Tom O???Malley ??? Barclays Harsh Kumar ??? Sandler Quinn Bolton ??? Needham & Company C.J. Muse ??? Evercore Tore Svanberg ??? Stifel Karl Acker ...