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 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended October 1, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________to__________ (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No. ...

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)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended October 2, 2020 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. Lowell, MA 01851 (Address of principal executive offices and zip code) (978) ...