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 ...

MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) Q1 2021 Earnings Conference Call January 28, 2021 8:30 AM ET Company Participants Steve Ferranti - Vice President, Investor Relations Steve Daly - President & Chief Executive Officer Jack Kober - Chief Financial Officer Conference Call Participants Harsh Kumar - Piper Sandler Tom O'Malley - Barclays Karl Ackerman - Cowen Tore Svanberg - Stifel Quinn Bolton - Needham & Company Ruben Roy - Benchmark Kevin Feeney - Evercore ISI Harlan Sur - J.P. Morgan Ri ...

PART I—FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) MACOM reported a significant year-over-year revenue increase to $148.5 million, turning an operating loss into an income of $12.1 million, with net loss narrowing substantially to $9.0 million [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly increased to $1.154 billion, driven by short-term investments and accounts receivable, while total liabilities decreased to $824.2 million due to warrant liability settlement Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | Jan 1, 2021 | Oct 2, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $128,728 | $129,441 | | Short-term investments | $226,044 | $203,711 | | Total current assets | $509,215 | $481,519 | | Total Assets | $1,153,682 | $1,146,428 | | Total current liabilities | $98,156 | $94,950 | | Long-term debt, less current portion | $650,931 | $652,172 | | Total Liabilities | $824,232 | $846,282 | | Total Stockholders' Equity | $329,450 | $300,146 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Revenue increased by 24.7% year-over-year to $148.5 million, resulting in an operating income of $12.1 million and a significantly narrowed net loss of $9.0 million Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 FY2021 (ended Jan 1, 2021) | Q1 FY2020 (ended Jan 3, 2020) | | :--- | :--- | :--- | | Revenue | $148,504 | $119,097 | | Gross Profit | $80,262 | $58,204 | | Income (loss) from operations | $12,074 | $(10,528) | | Net loss | $(8,968) | $(28,362) | | Loss per share - Diluted | $(0.13) | $(0.43) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities was $34.8 million, while investing activities used $24.8 million, primarily for short-term investments, and financing activities used $11.5 million Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 FY2021 (ended Jan 1, 2021) | Q1 FY2020 (ended Jan 3, 2020) | | :--- | :--- | :--- | | Net cash provided by operating activities | $34,780 | $37,658 | | Net cash used in investing activities | $(24,769) | $(4,541) | | Net cash used in financing activities | $(11,479) | $(592) | | **Net Change in Cash and Cash Equivalents** | **$(713)** | **$32,665** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, a 24.7% YoY revenue growth driven by all markets, $664.4 million in term loan debt, and the exercise of all outstanding common stock warrants Revenue by Market (in thousands) | Market | Q1 FY2021 | Q1 FY2020 | | :--- | :--- | :--- | | Telecommunications | $51,532 | $45,602 | | Industrial & Defense | $61,618 | $50,482 | | Data Center | $35,354 | $23,013 | | **Total** | **$148,504** | **$119,097** | - As of January 1, 2021, the company had **$664.4 million** in principal outstanding on its Term Loans, with an effective interest rate of **2.40%**[52](index=52&type=chunk) - During the quarter, all outstanding warrants to purchase **1,281,358 shares** of common stock were exercised on a cashless basis, resulting in the issuance of **857,631 shares**[59](index=59&type=chunk)[115](index=115&type=chunk) - One customer (Customer A) represented **14% of revenue** for the quarter and **24% of accounts receivable** at period end, with the top ten customers accounting for **55% of total revenue**[82](index=82&type=chunk)[83](index=83&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 24.7% year-over-year revenue growth to strong performance across all key markets, improved gross margin, and robust operating cash flow [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Revenue increased by $29.4 million (24.7%) YoY, driven by strong demand in all three primary markets, and gross margin expanded to 54.0% due to higher sales and favorable product mix Revenue Growth by Market (YoY) | Market | % Change YoY | | :--- | :--- | | Data Center | +53.6% | | Industrial & Defense | +22.1% | | Telecom | +13.0% | | **Total** | **+24.7%** | - Gross margin improved to **54.0%** for the quarter, up from **48.9%** in the prior-year period, primarily due to increased sales, favorable product mix, production efficiencies, and the recognition of licensing revenue[111](index=111&type=chunk) - Selling, general and administrative (SG&A) expenses decreased by **3.4%** to **$31.3 million**, primarily due to lower payroll-related costs and professional fees, partially offset by higher share-based compensation[113](index=113&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) The company ended the quarter with a strong liquidity position, holding $128.7 million in cash and $226.0 million in short-term investments, and generated $34.8 million in cash from operations - As of January 1, 2021, the company held **$128.7 million** of cash and cash equivalents and **$226.0 million** of liquid short-term investments[126](index=126&type=chunk) - The company has **$160.0 million** in borrowing capacity under its Revolving Facility, of which up to **$50.0 million** can be borrowed without being subject to certain financial covenants[126](index=126&type=chunk) - Cash flow from operating activities was **$34.8 million** for the quarter, driven by non-cash charges like depreciation (**$18.2 million**), share-based compensation (**$10.1 million**), and warrant liability expense (**$11.1 million**), which offset the net loss[120](index=120&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rate fluctuations affecting its $664.4 million variable-rate debt and foreign currency exchange rates, though the latter is considered limited - The company is exposed to interest rate risk on its **$664.4 million** of outstanding variable-rate debt, where a **1% change** in the applicable annual interest rate would result in a **$6.6 million change** in annual interest expense[133](index=133&type=chunk) - Foreign currency risk is limited as most international customer agreements are denominated in U.S. dollars, with a **10% change** in foreign currency exchange rates not expected to have a material impact[134](index=134&type=chunk) - As of January 1, 2021, no common stock warrants remain outstanding, eliminating the market risk associated with the warrant liability's fair value fluctuations[131](index=131&type=chunk) [Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that the company's disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of January 1, 2021[135](index=135&type=chunk) - No changes occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[136](index=136&type=chunk) PART II—OTHER INFORMATION [Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) The company was not involved in any material pending legal proceedings during the fiscal quarter ended January 1, 2021 - The company was not involved in any material pending legal proceedings during the fiscal quarter ended January 1, 2021[62](index=62&type=chunk)[140](index=140&type=chunk) [Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended October 2, 2020 - As of the date of this Quarterly Report, there have been no material changes in any of the risk factors described in the company's 2020 Annual Report on Form 10-K[141](index=141&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the quarter, the company withheld 297,447 shares for tax obligations and issued 857,631 shares from cashless warrant exercises, an unregistered sale exempt under Section 4(a)(2) - The company withheld **297,447 shares** of its common stock to cover tax withholding obligations related to the vesting of employee equity awards[143](index=143&type=chunk) - The company issued **857,631 shares** of common stock from the cashless exercise of warrants for **1,281,358 shares**, which was considered an unregistered sale of equity securities[144](index=144&type=chunk) [Exhibits](index=29&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications required under Sarbanes-Oxley Act and financial statements in Inline XBRL - Exhibits filed include CEO and CFO certifications (**31.1, 31.2, 32.1**) and financial data in Inline XBRL format (**101**)[146](index=146&type=chunk)

[PART I](index=4&type=section&id=PART%20I) This section details the company's business, associated risks, legal status, properties, and regulatory compliance [ITEM 1. BUSINESS](index=4&type=section&id=ITEM%201.%20BUSINESS) MACOM Technology Solutions Holdings, Inc. designs and manufactures semiconductor products for Telecommunications, Industrial and Defense, and Data Center applications. The company leverages over 70 years of expertise, operating fabrication, manufacturing, assembly, and test facilities globally. Its strategy focuses on developing high-performance products, strengthening customer relationships, and increasing market share in its primary markets, supported by both internal and external manufacturing capabilities and continuous R&D investment - MACOM designs and manufactures semiconductor products for three primary markets: Telecommunications (Telecom), Industrial and Defense (I&D), and Data Center applications[16](index=16&type=chunk) - The company has over 70 years of application expertise with silicon, gallium arsenide (GaAs), and indium phosphide (InP) fabrication, manufacturing, assembly, and test facilities across North America, Europe, and Asia[16](index=16&type=chunk) - MACOM's growth strategy is centered on strengthening customer relationships, securing more design wins, and expanding market share by growing its product portfolio and technology base[17](index=17&type=chunk) [Overview](index=4&type=section&id=Overview) Provides a general introduction to the company's operations and strategic focus [Research and Development](index=5&type=section&id=Research%20and%20Development) Details the company's investment and activities in research and development [Our Markets and Products](index=5&type=section&id=Our%20Markets%20and%20Products) Describes the company's target markets and product offerings [Sales and Marketing](index=7&type=section&id=Sales%20and%20Marketing) Outlines the company's strategies for sales and marketing [Customers](index=7&type=section&id=Customers) Identifies key customer relationships and segments [Competition](index=8&type=section&id=Competition) Analyzes the competitive landscape and market positioning [Backlog and Inventory](index=8&type=section&id=Backlog%20and%20Inventory) Discusses the company's order backlog and inventory management [Intellectual Property](index=8&type=section&id=Intellectual%20Property) Covers the company's intellectual property assets and protection strategies [Manufacturing, Sources of Supply and Raw Materials](index=10&type=section&id=Manufacturing%2C%20Sources%20of%20Supply%20and%20Raw%20Materials) Describes manufacturing processes, supply chain, and raw material sourcing [Quality Assurance](index=10&type=section&id=Quality%20Assurance) Details the company's quality control and assurance processes [Environmental Regulation](index=10&type=section&id=Environmental%20Regulation) Addresses compliance with environmental laws and regulations [Export Regulations](index=11&type=section&id=Export%20Regulations) Explains adherence to export control regulations [Employees](index=11&type=section&id=Employees) Provides information on the company's workforce [History and Recent Developments](index=11&type=section&id=History%20and%20Recent%20Developments) Summarizes the company's historical background and recent operational changes [COVID-19 Impact](index=11&type=section&id=COVID-19%20Impact) Assesses the impact of the COVID-19 pandemic on business operations [Available Information](index=13&type=section&id=Available%20Information) Indicates where additional company information can be accessed [ITEM 1A. RISK FACTORS](index=13&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces significant risks across its operations, including dependence on new product development for revenue growth, potential gross margin reductions due to underutilization or price competition, and fluctuating operating results. Key risks also involve declining demand in primary markets, reliance on a limited number of customers, and uncertainties in order and shipment forecasting. The COVID-19 pandemic has introduced substantial economic uncertainty, impacting operations, supply chains, and customer demand. Production risks include manufacturing and supply chain disruptions, limited component sources, and potential catastrophic losses at facilities. Intellectual property and new technology risks involve unsuccessful R&D investments and infringement claims. International operations expose the company to regulatory, geopolitical, and currency risks, while government regulations, including export controls and environmental laws, pose compliance and financial challenges. Strategic and personnel risks include intense competition, loss of key personnel, and difficulties in managing growth or integrating acquisitions - Revenue growth and gross margin are highly dependent on the successful and timely development and release of new products that meet customer expectations and offset price erosion[73](index=73&type=chunk) - The company's operating results are subject to significant period-to-period fluctuations due to factors like economic conditions, customer order changes, manufacturing issues, and competitive pressures[76](index=76&type=chunk) - The COVID-19 pandemic has created significant economic uncertainty and volatility, impacting operations, supply chains, customer demand, and potentially leading to increased credit risks, asset impairments, and adverse effects on capital resources[69](index=69&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk) [Risks Relating to General Business Conditions](index=13&type=section&id=Risks%20Relating%20to%20General%20Business%20Conditions) Discusses risks associated with economic conditions and operational fluctuations [Risks Relating to Production Operations](index=19&type=section&id=Risks%20Relating%20to%20Production%20Operations) Covers risks related to manufacturing, supply chain, and facility operations [Risks Relating to Research and Development, Intellectual Property and New Technologies](index=23&type=section&id=Risks%20Relating%20to%20Research%20and%20Development%2C%20Intellectual%20Property%20and%20New%20Technologies) Addresses risks in R&D, intellectual property, and new technology adoption [Risks Relating to International Operations](index=24&type=section&id=Risks%20Relating%20to%20International%20Operations) Examines risks from global operations, including regulatory and geopolitical factors [Risks Relating to Government Regulations](index=25&type=section&id=Risks%20Relating%20to%20Government%20Regulations) Details risks associated with compliance to government and environmental regulations [Risks Relating to Business Strategies and Personnel](index=28&type=section&id=Risks%20Relating%20to%20Business%20Strategies%20and%20Personnel) Covers risks related to competition, key personnel, and growth management [Risks Relating to Ownership of our Common Stock](index=32&type=section&id=Risks%20Relating%20to%20Ownership%20of%20our%20Common%20Stock) Discusses risks pertinent to the ownership and trading of common stock [ITEM 1B. UNRESOLVED STAFF COMMENTS.](index=33&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS.) The company reported no unresolved staff comments from the SEC - No unresolved staff comments were reported[150](index=150&type=chunk) [ITEM 2. PROPERTIES.](index=33&type=section&id=ITEM%202.%20PROPERTIES.) The company's principal executive offices are in a leased facility in Lowell, Massachusetts, which also serves as a major site for administration, production, fabrication, test, and assembly. Other significant leased facilities are located in Newport Beach, Santa Clara, Ann Arbor, Cork (Ireland), Ithaca, and Nashua, supporting R&D, production, sales, and engineering functions - The principal executive offices are in a leased facility in Lowell, Massachusetts, which is also a major site for Production and Fabrication (P&F), Test and Assembly (T&A), and Research and Development (R&D)[151](index=151&type=chunk)[152](index=152&type=chunk) Major Leased Facilities and Activities (as of October 2, 2020) | Site | Major Activity | Square Footage | Lease Expiration | | :-------------------- | :----------------------------- | :------------- | :--------------- | | Lowell, Massachusetts | A, P&F, T&A, AE, S&M and RT | 281,700 | October 2038 | | Newport Beach, California | R&D, AE and S&M | 68,435 | December 2029 | | Santa Clara, California | R&D, AE | 59,625 | October 2024 | | Ann Arbor, Michigan | P&F, R&D and T&A, RT | 50,335 | May 2021 | | Cork, Ireland | A, R&D, S&M, AE and RT | 21,422 | August 2026 | | Ithaca, New York | R&D | 20,600 | December 2025 | | Nashua, New Hampshire | R&D, T&A, P&F, RT | 17,000 | December 2021 | [ITEM 3. LEGAL PROCEEDINGS.](index=35&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS.) The company is subject to various commercial and employment disputes, as well as intellectual property infringement claims, which could lead to litigation and significant costs. As of the filing date, no pending legal proceedings were deemed to have a material adverse effect on the business, operating results, financial condition, or cash flows, beyond those discussed in the consolidated financial statements - The company is subject to commercial and employment disputes, and intellectual property infringement claims[154](index=154&type=chunk) - As of the filing date, no pending legal proceedings were believed to have a material adverse effect on the business, operating results, financial condition, or cash flows[154](index=154&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES.](index=35&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES.) This item is not applicable to the company - Mine Safety Disclosures are not applicable to MACOM Technology Solutions Holdings, Inc[156](index=156&type=chunk) [PART II](index=35&type=section&id=PART%20II) This section covers market information, selected financial data, management's discussion, and market risk disclosures [ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.](index=35&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES.) The company's common stock is listed on the Nasdaq Global Select Market under the symbol "MTSI." As of November 12, 2020, there were approximately 11 stockholders of record. The stock price performance graph shows the cumulative return of MACOM's common stock compared to the NASDAQ Composite Index and the PHLX Semiconductor Index from October 2, 2015, to October 2, 2020. The company also reported limited issuer purchases of equity securities, primarily for tax withholdings on employee restricted stock awards - MACOM's common stock is listed on the Nasdaq Global Select Market under the symbol "MTSI" since March 15, 2012[157](index=157&type=chunk) - As of November 12, 2020, there were approximately **11 stockholders of record**[157](index=157&type=chunk) [Stock Price Performance Graph](index=35&type=section&id=Stock%20Price%20Performance%20Graph) Illustrates the company's stock performance against market indices [Issuer Purchases of Equity Securities](index=36&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) Details the company's repurchases of its own equity securities Issuer Purchases of Equity Securities (Fiscal Year 2020) | Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs | | :--------------------------- | :----------------------------------- | :--------------------------- | :---------------------------------------------------------------------------------------- | :-------------------------------------------------------------------------------------------------------------------- | | July 4, 2020—July 31, 2020 | 662 | $36.75 | — | — | | August 1, 2020—August 28, 2020 | 3,313 | $38.39 | — | — | | August 29, 2020—October 2, 2020 | — | — | — | — | | Total | 3,975 | $38.12 | — | — | [ITEM 6. SELECTED FINANCIAL DATA.](index=36&type=section&id=ITEM%206.%20SELECTED%20FINANCIAL%20DATA.) This section provides a summary of selected financial data for MACOM Technology Solutions Holdings, Inc. for the fiscal years 2016 through 2020, including statements of operations data and consolidated balance sheet data. The fiscal year 2020 included 53 weeks, while other presented fiscal years had 52 weeks. The historical results are not necessarily indicative of future performance Statements of Operations Data (in thousands, except per share data) | Fiscal Years | 2020 | 2019 | 2018 | 2017 | 2016 | | :-------------------------------- | :---------- | :---------- | :---------- | :---------- | :---------- | | Revenue | $ 530,037 | $ 499,708 | $ 570,398 | $ 698,772 | $ 544,338 | | Gross profit | 270,166 | 220,708 | 245,706 | 326,884 | 281,609 | | Income (loss) from operations | 3,388 | (380,376) | (106,520) | (16,084) | 13,248 | | Loss before income taxes | (41,562) | (423,153) | (155,235) | (49,505) | (21,571) | | Income tax expense (benefit) | 4,516 | (39,355) | (21,473) | 100,911 | (17,983) | | Loss from continuing operations | (46,078) | (383,798) | (133,762) | (150,416) | (3,588) | | Net (loss) income attributable to common stockholders | $ (46,078) | $ (383,798) | $ (139,977) | $ (169,493) | $ 1,434 | | Basic (loss) income per common share: Net (loss) income - basic | $ (0.69) | $ (5.84) | $ (2.16) | $ (2.79) | $ 0.03 | | Diluted (loss) income per common share: Net (loss) income - diluted | $ (0.69) | $ (5.84) | $ (2.57) | $ (2.79) | $ 0.03 | Consolidated Balance Sheet Data (in thousands) | As of | October 2, 2020 | September 27, 2019 | September 28, 2018 | September 29, 2017 | September 30, 2016 | | :-------------------------------- | :-------------- | :----------------- | :----------------- | :----------------- | :----------------- | | Cash and cash equivalents | $ 129,441 | $ 75,519 | $ 94,676 | $ 130,104 | $ 332,977 | | Short-term investments | 203,711 | 101,226 | 98,221 | 84,121 | 23,776 | | Working capital | 386,569 | 323,746 | 351,856 | 445,778 | 520,794 | | Total assets | 1,146,428 | 1,105,574 | 1,482,495 | 1,637,123 | 1,188,551 | | Long-term debt and finance lease obligations and other, less current portion | 681,166 | 684,778 | 687,395 | 678,746 | 576,345 | | Stockholders' equity | $ 300,146 | $ 313,896 | $ 668,675 | $ 777,374 | $ 462,784 | - Fiscal year 2020 included **53 weeks**, while all other fiscal years presented included **52 weeks**[164](index=164&type=chunk) [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.](index=37&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS.) This section provides a detailed analysis of MACOM's financial condition and results of operations, highlighting revenue trends across its primary markets (Telecom, I&D, Data Center), changes in gross profit and operating expenses, and the impact of restructuring activities. It also covers critical accounting policies, liquidity, capital resources, and contractual obligations. The company experienced revenue growth in fiscal year 2020, driven by Telecom and Data Center, while I&D revenue decreased. Significant restructuring efforts in 2019 led to reduced operating expenses in 2020. The company maintains a strong liquidity position with cash, short-term investments, and available credit - MACOM designs and manufactures semiconductor products for Telecommunications, Industrial and Defense, and Data Center applications[167](index=167&type=chunk)[168](index=168&type=chunk) - The company's core strategy is to develop and innovate high-performance products addressing technical challenges in its primary markets[173](index=173&type=chunk) - Future revenue growth is expected to be driven by **5G deployments** in Telecom, expanding product portfolio in I&D, and adoption of cloud-based services and data center architecture upgrades (**100G, 200G, 400G, 800G interconnects**) in Data Center[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk) [OVERVIEW](index=37&type=section&id=OVERVIEW) Provides a high-level summary of the company's financial performance and strategic direction [Basis of Presentation](index=38&type=section&id=Basis%20of%20Presentation) Explains the accounting principles and methods used in financial reporting [Description of Our Revenue](index=38&type=section&id=Description%20of%20Our%20Revenue) Details the sources and recognition policies for the company's revenue [COVID-19 Impact](index=38&type=section&id=COVID-19%20Impact) Assesses the impact of the COVID-19 pandemic on financial condition and operations [CRITICAL ACCOUNTING POLICIES AND ESTIMATES](index=38&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) Outlines key accounting policies and significant management estimates [RESULTS OF OPERATIONS](index=42&type=section&id=RESULTS%20OF%20OPERATIONS) Analyzes the company's financial performance over the reporting period [LIQUIDITY AND CAPITAL RESOURCES](index=46&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Discusses the company's cash flow, funding, and financial flexibility [OFF-BALANCE SHEET ARRANGEMENTS](index=47&type=section&id=OFF-BALANCE%20SHEET%20ARRANGEMENTS) Describes financial arrangements not recorded on the balance sheet [CONTRACTUAL OBLIGATIONS](index=47&type=section&id=CONTRACTUAL%20OBLIGATIONS) Details the company's future payment commitments under various contracts [OTHER MATTERS](index=48&type=section&id=OTHER%20MATTERS) Covers additional relevant financial and operational information [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.](index=48&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK.) The company is exposed to market risks primarily from interest rate fluctuations on its cash, short-term investments, and variable-rate debt, as well as foreign exchange rate risk. A 1% change in interest rates would impact annual interest expense by $6.7 million. While most international customer agreements are in U.S. dollars, currency fluctuations can affect product competitiveness and manufacturing costs. The warrant liability's value is also subject to common stock price changes, though most warrants were exercised post-fiscal year end - The company is exposed to interest rate risk on its cash, short-term investments, and variable-rate debt, and foreign exchange rate risk[234](index=234&type=chunk)[235](index=235&type=chunk)[236](index=236&type=chunk)[237](index=237&type=chunk) - A **1% increase or decrease** in the annual interest rate on outstanding debt would change annual interest expense by **$6.7 million**[236](index=236&type=chunk) - The value of the warrant liability is based on the underlying common stock price, and changes could significantly impact warrant liability expense. Most warrants were exercised on November 11, 2020[234](index=234&type=chunk) [Interest rate risk](index=48&type=section&id=Interest%20rate%20risk) Analyzes the company's exposure to fluctuations in interest rates [Foreign currency risk](index=48&type=section&id=Foreign%20currency%20risk) Assesses the impact of foreign exchange rate movements on financial results [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.](index=49&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA.) This section presents the audited consolidated financial statements for MACOM Technology Solutions Holdings, Inc., including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows for the fiscal years ended October 2, 2020, September 27, 2019, and September 28, 2018. It also includes the Report of Independent Registered Public Accounting Firm, critical audit matters, and detailed notes to the financial statements covering significant accounting policies, revenue disaggregation, investments, fair value measurements, inventories, property and equipment, debt, leases, employee benefits, accrued liabilities, commitments, restructurings, product warranties, impairments, intangible assets, income taxes, share-based compensation, stockholders' equity, related-party transactions, divested businesses, earnings per share, supplemental cash flow information, and geographic/customer information - The financial statements include Consolidated Balance Sheets, Statements of Operations, Comprehensive Loss, Stockholders' Equity, and Cash Flows for the fiscal years ended October 2, 2020, September 27, 2019, and September 28, 2018[239](index=239&type=chunk) - Deloitte & Touche LLP issued an unqualified opinion on the financial statements and the effectiveness of internal control over financial reporting as of October 2, 2020[243](index=243&type=chunk)[244](index=244&type=chunk) - A critical audit matter identified was the reserve for excess quantities and obsolete inventory due to significant estimates and assumptions regarding expected demand, especially given the cyclical nature of the semiconductor industry[249](index=249&type=chunk)[250](index=250&type=chunk) [Report of Independent Registered Public Accounting Firm](index=50&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Presents the auditor's opinion on the financial statements and internal controls [MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS](index=53&type=section&id=MACOM%20TECHNOLOGY%20SOLUTIONS%20HOLDINGS%2C%20INC.%20CONSOLIDATED%20BALANCE%20SHEETS) Provides a snapshot of the company's assets, liabilities, and equity at specific dates [MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS](index=54&type=section&id=MACOM%20TECHNOLOGY%20SOLUTIONS%20HOLDINGS%2C%20INC.%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Details the company's revenues, expenses, and net income or loss over a period [MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS](index=55&type=section&id=MACOM%20TECHNOLOGY%20SOLUTIONS%20HOLDINGS%2C%20INC.%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20LOSS) Reports all changes in equity during a period, except those from transactions with owners [MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY](index=56&type=section&id=MACOM%20TECHNOLOGY%20SOLUTIONS%20HOLDINGS%2C%20INC.%20CONSOLIDATED%20STATEMENTS%20OF%20STOCKHOLDERS%27%20EQUITY) Shows changes in the equity section of the balance sheet over a period [MACOM TECHNOLOGY SOLUTIONS HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS](index=57&type=section&id=MACOM%20TECHNOLOGY%20SOLUTIONS%20HOLDINGS%2C%20INC.%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Summarizes cash inflows and outflows from operating, investing, and financing activities [NOTES TO CONSOLIDATED FINANCIAL STATEMENTS](index=58&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Provides detailed explanations and additional information for items in the financial statements [ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.](index=88&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE.) The company reported no changes in or disagreements with accountants on accounting and financial disclosure - No changes in or disagreements with accountants on accounting and financial disclosure were reported[433](index=433&type=chunk) [ITEM 9A. CONTROLS AND PROCEDURES.](index=89&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES.) Management concluded that the company's disclosure controls and procedures were effective as of October 2, 2020. The internal control over financial reporting was also assessed as effective based on the COSO framework. Deloitte & Touche LLP audited and provided an unqualified opinion on the effectiveness of internal control over financial reporting. No material changes in internal control over financial reporting occurred during the fiscal quarter - Management concluded that disclosure controls and procedures were effective as of October 2, 2020[435](index=435&type=chunk) - Internal control over financial reporting was assessed as effective based on the COSO 2013 Framework[438](index=438&type=chunk) - Deloitte & Touche LLP issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting[439](index=439&type=chunk)[444](index=444&type=chunk) [Evaluation of Disclosure Controls and Procedures](index=89&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Assesses the effectiveness of controls ensuring timely and accurate public disclosures [Management's Annual Report on Internal Control over Financial Reporting](index=89&type=section&id=Management%27s%20Annual%20Report%20on%20Internal%20Control%20over%20Financial%20Reporting) Management's assessment of the effectiveness of internal controls over financial reporting [Changes in Internal Control over Financial Reporting](index=89&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) Reports any material changes in the company's internal control over financial reporting [Report of Independent Registered Public Accounting Firm](index=90&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Presents the auditor's opinion on the effectiveness of internal control over financial reporting [ITEM 9B. OTHER INFORMATION.](index=92&type=section&id=ITEM%209B.%20OTHER%20INFORMATION.) The company reported no other information required by this item - No other information was reported[451](index=451&type=chunk) [PART III](index=92&type=section&id=PART%20III) This section covers corporate governance, executive compensation, security ownership, and accounting fees [ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.](index=92&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE.) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's definitive proxy statement for the 2021 Annual Meeting of Stockholders. The company maintains a written code of business conduct and ethics applicable to all directors, officers, and employees, available on its website - Information on directors, executive officers, and corporate governance is incorporated by reference from the 2021 Annual Meeting of Stockholders proxy statement[453](index=453&type=chunk) - The company has a written code of business conduct and ethics for directors, officers, and employees, available on its website[454](index=454&type=chunk) [ITEM 11. EXECUTIVE COMPENSATION.](index=92&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION.) Information regarding executive compensation is incorporated by reference from the company's definitive proxy statement for the 2021 Annual Meeting of Stockholders - Executive compensation information is incorporated by reference from the 2021 Annual Meeting of Stockholders proxy statement[455](index=455&type=chunk) [ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.](index=92&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS.) Information on security ownership of beneficial owners and management, along with related stockholder matters, is incorporated by reference from the company's definitive proxy statement for the 2021 Annual Meeting of Stockholders. The company's equity compensation plans (2012 Omnibus Incentive Plan and 2012 Employee Stock Purchase Plan) have shares authorized for future issuance, with evergreen provisions allowing for annual increases - Security ownership information is incorporated by reference from the 2021 Annual Meeting of Stockholders proxy statement[456](index=456&type=chunk) [Equity Compensation Plan Information](index=92&type=section&id=Equity%20Compensation%20Plan%20Information) Details the company's equity-based compensation plans and share availability Equity Compensation Plan Information (as of October 2, 2020) | Plan Category | (a) Number of securities to be issued upon exercise of outstanding options, warrants and rights(1) | (b) Weighted-average exercise price of outstanding options, warrants and rights(1) | (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))(2)(3) | | :------------------------------------------------ | :----------------------------------------------------------------------------------------------- | :--------------------------------------------------------------------------------- | :---------------------------------------------------------------------------------------------------------------------------------------------------- | | Equity Compensation Plans Approved by Security Holders | 1,606,356 | $14.27 | 20,677,326 | | Equity Compensation Plans Not Approved by Security Holders | — | — | — | | Total | 1,606,356 | $14.27 | 20,677,326 | - The 2012 Plan and ESPP include 'evergreen' provisions, allowing for annual increases in available shares for issuance[459](index=459&type=chunk)[460](index=460&type=chunk) [ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.](index=92&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE.) Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the company's definitive proxy statement for the 2021 Annual Meeting of Stockholders - Information on related party transactions and director independence is incorporated by reference from the 2021 Annual Meeting of Stockholders proxy statement[461](index=461&type=chunk) [ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.](index=93&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTING%20FEES%20AND%20SERVICES.) Information regarding principal accounting fees and services is incorporated by reference from the company's definitive proxy statement for the 2021 Annual Meeting of Stockholders - Information on principal accounting fees and services is incorporated by reference from the 2021 Annual Meeting of Stockholders proxy statement[462](index=462&type=chunk) [PART IV](index=94&type=section&id=PART%20IV) This section includes exhibits, financial statement schedules, and signatures [ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.](index=94&type=section&id=ITEM%2015.%20EXHIBITS%2C%20FINANCIAL%20STATEMENT%20SCHEDULES.) This section lists the financial statements included in Item 8 and provides a comprehensive list of exhibits filed with the Annual Report on Form 10-K. These exhibits include various agreements, corporate documents, and certifications, many of which are incorporated by reference from previous SEC filings - Financial statements are included in Item 8 of this Annual Report[464](index=464&type=chunk) - A comprehensive list of exhibits, including various agreements, corporate documents, and certifications, is filed herewith and incorporated by reference[465](index=465&type=chunk)[466](index=466&type=chunk)[467](index=467&type=chunk)[468](index=468&type=chunk) [ITEM 16. FORM 10-K SUMMARY.](index=97&type=section&id=ITEM%2016.%20FORM%2010-K%20SUMMARY.) The company reported no Form 10-K summary - No Form 10-K summary was provided[469](index=469&type=chunk) [SIGNATURES](index=98&type=section&id=SIGNATURES) The Annual Report was duly signed on behalf of MACOM Technology Solutions Holdings, Inc. by its President and Chief Executive Officer, Stephen G. Daly, and other authorized persons, including the Chief Financial Officer and members of the Board of Directors, on November 18, 2020 - The Annual Report was signed by Stephen G. Daly, President and Chief Executive Officer, and other authorized persons on November 18, 2020[472](index=472&type=chunk)[473](index=473&type=chunk)

MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) Q4 2020 Earnings Conference Call November 5, 2020 5:00 PM ET Company Participants Steve Ferranti - Vice President, Investor Relations Steve Daly - President & Chief Executive Officer Jack Kober - Chief Financial Officer Conference Call Participants Harsh Kumar - Piper Sandler Tore Svanberg - Stifel Tom O'Malley - Barclays Karl Ackerman - Cowen C.J. Muse - Evercore Ruben Roy - Benchmark Quinn Bolton - Needham & Company Operator Good afternoon and welcom ...