MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) Q1 2023 Earnings Conference Call February 2, 2023 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 Quinn Bolton ??? Needham Tom O???Malley ??? Barclays Blake Friedman ??? Bank of America Harsh Kumar ??? Piper Sandler David Williams ??? Benchmark Tore Svanberg ??? Stifel Se ...

Part I [Item 1: Business](index=4&type=section&id=ITEM%201%3A%20BUSINESS%2E) MACOM designs and manufactures high-performance analog semiconductor products for Telecom, Industrial & Defense, and Data Center markets - MACOM's business is centered on designing and manufacturing semiconductor products for three primary markets: Telecom, Industrial & Defense (I&D), and Data Center[15](index=15&type=chunk) - The company operates a hybrid manufacturing model, utilizing both internal semiconductor fabrication facilities in the U.S. (including a "Trusted Foundry" for defense contracts) and external foundry partners, providing control over proprietary processes and supply, while also offering flexibility and access to additional capacity[17](index=17&type=chunk)[18](index=18&type=chunk)[19](index=19&type=chunk) - Growth drivers are expected to come from 5G deployments in Telecom, expansion of the product portfolio for military and industrial applications in I&D, and the upgrade of data center architectures to higher speeds (100G to 800G)[25](index=25&type=chunk) - As of September 30, 2022, the company employed approximately 1,200 people, with 71% in North America, and the voluntary attrition rate for fiscal year 2022 was about 11%[60](index=60&type=chunk)[63](index=63&type=chunk) - Sales through distributors accounted for **30.9% of revenue in fiscal 2022**, a decrease from 35.0% in 2021 and 45.3% in 2020[39](index=39&type=chunk) [Item 1A: Risk Factors](index=11&type=section&id=ITEM%201A%3A%20RISK%20FACTORS%2E) The company faces risks from industry cyclicality, customer concentration, supply chain vulnerabilities, international operations, and intense competition - The semiconductor industry is highly cyclical, subject to significant downturns, rapid technological change, and price erosion, which has impacted the company's revenue and profitability in the past[79](index=79&type=chunk) - A significant portion of revenue comes from a limited number of customers, with the top 10 direct and distribution customers accounting for **48.2% of revenue** in fiscal 2022, where the loss of a major customer could materially harm revenue[92](index=92&type=chunk) - International sales represent a major part of the business, accounting for **53.3% of revenue in fiscal 2022**, exposing the company to geopolitical risks, trade disputes, and regulatory changes, particularly concerning China, which accounted for **26% of total sales**[107](index=107&type=chunk) - The company faces intense competition from large, established semiconductor firms such as ADI, Broadcom, Qorvo, and Skyworks, which may have greater financial and technical resources[140](index=140&type=chunk)[142](index=142&type=chunk) - The company's debt, including a term loan of **$120.8 million** and convertible notes, is secured by company assets and includes restrictive covenants that could limit operational flexibility[100](index=100&type=chunk)[101](index=101&type=chunk) [Item 1B: Unresolved Staff Comments](index=26&type=section&id=ITEM%201B%3A%20UNRESOLVED%20STAFF%20COMMENTS%2E) The company reports that it has no unresolved staff comments from the SEC - None[160](index=160&type=chunk) [Item 2: Properties](index=26&type=section&id=ITEM%202%3A%20PROPERTIES%2E) The company's principal executive offices and primary manufacturing facilities are in Lowell, Massachusetts, with other key leased facilities globally Principal Leased Facilities | 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 | 57,412 | December 2029 | | Ann Arbor, Michigan | P&F, R&D and T&A, RT | 50,335 | May 2026 | | Nashua, New Hampshire | R&D, T&A, P&F and RT | 33,750 | December 2024 | | Hsinchu, Taiwan | P&F, T&A and RT | 24,282 | December 2022 | [Item 3: Legal Proceedings](index=27&type=section&id=ITEM%203%3A%20LEGAL%20PROCEEDINGS%2E) The company is not involved in any material pending legal proceedings as of the filing date - The company is not involved in any material pending legal proceedings as of the filing date of the report[164](index=164&type=chunk) [Item 4: Mine Safety Disclosures](index=27&type=section&id=ITEM%204%3A%20MINE%20SAFETY%20DISCLOSURES%2E) This item is not applicable to the company - Not applicable[166](index=166&type=chunk) Part II [Item 5: 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%27S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES%2E) MACOM's common stock is listed on Nasdaq, with a performance graph and details on minor share purchases for employee tax obligations - The company's common stock trades on the Nasdaq Global Select Market under the symbol "MTSI"[167](index=167&type=chunk) - A stock performance graph shows the cumulative total return of the company's stock compared to the NASDAQ Composite Index and the PHLX Semiconductor Index for the five years ending September 30, 2022[168](index=168&type=chunk)[170](index=170&type=chunk) - During the fourth quarter of fiscal 2022, the company withheld 1,215 shares of common stock from employees to cover tax obligations related to the vesting of restricted stock awards, which were not part of a publicly announced repurchase program[171](index=171&type=chunk)[172](index=172&type=chunk) [Item 6: [Reserved]](index=28&type=section&id=ITEM%206%3A%20%5BReserved%5D) This item is reserved and contains no information [Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=ITEM%207%3A%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS%2E) Fiscal 2022 revenue increased, gross margin improved, and net income surged due to a tax benefit and investment gain Fiscal Year Revenue by Market (in thousands) | Market | FY 2022 | FY 2021 | % Change | | :--- | :--- | :--- | :--- | | Telecom | $242,702 | $188,391 | 28.8% | | Industrial & Defense | $294,341 | $280,221 | 5.0% | | Data Center | $138,127 | $138,308 | (0.1)% | | **Total** | **$675,170** | **$606,920** | **11.3%** | Key Financial Results (in thousands) | Metric | FY 2022 | FY 2021 | FY 2020 | | :--- | :--- | :--- | :--- | | Revenue | $675,170 | $606,920 | $530,037 | | Gross Profit | $406,181 | $341,855 | $270,166 | | Gross Margin | 60.2% | 56.3% | 51.0% | | Income from Operations | $132,674 | $81,002 | $3,388 | | Net Income (Loss) | $439,955 | $37,973 | $(46,078) | - The significant increase in net income for FY 2022 was primarily driven by a non-cash income tax benefit of **$202.8 million** from the partial release of a valuation allowance and a gain of **$118.2 million** on the sale of an equity method investment[196](index=196&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk) - Net cash provided by operating activities was **$177.0 million** in fiscal 2022, an increase from **$148.4 million** in fiscal 2021[219](index=219&type=chunk)[220](index=220&type=chunk) - As of September 30, 2022, the company had **$120.0 million** in cash and cash equivalents and **$466.6 million** in short-term investments[226](index=226&type=chunk) [Item 7A: Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=ITEM%207A%3A%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK%2E) The company's primary market risks are interest rate and foreign currency, with limited foreign currency exposure due to USD-denominated sales - The company is exposed to interest rate risk on its cash, short-term investments, and variable-rate debt, where a **1% change** in interest rates on its **$120.8 million** of outstanding variable-rate debt would result in a **$1.2 million** change in annual interest expense as of September 30, 2022[232](index=232&type=chunk)[234](index=234&type=chunk) - Foreign currency risk is limited as most international customer agreements are denominated in U.S. dollars, and the company believes a **10% change** in foreign currency exchange rates would not have a material impact[235](index=235&type=chunk) [Item 8: Financial Statements and Supplementary Data](index=37&type=section&id=ITEM%208%3A%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA%2E) This section presents audited consolidated financial statements and the auditor's unqualified opinion on financial statements and internal controls Consolidated Balance Sheet Highlights (in thousands) | | Sep 30, 2022 | Oct 1, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$1,571,817** | **$1,134,145** | | Total Current Assets | $813,083 | $521,536 | | **Total Liabilities** | **$729,069** | **$662,409** | | Long-term Debt | $565,920 | $492,097 | | **Total Stockholders' Equity** | **$842,748** | **$471,736** | Consolidated Statement of Operations Highlights (in thousands) | | FY 2022 | FY 2021 | | :--- | :--- | :--- | | Revenue | $675,170 | $606,920 | | Gross Profit | $406,181 | $341,855 | | Income from Operations | $132,674 | $81,002 | | Net Income | $439,955 | $37,973 | Consolidated Statement of Cash Flows Highlights (in thousands) | | FY 2022 | FY 2021 | | :--- | :--- | :--- | | Net cash from operating activities | $176,982 | $148,412 | | Net cash used in investing activities | $(182,861) | $(2,583) | | Net cash used in financing activities | $(28,908) | $(119,095) | | Net change in cash | $(36,585) | $27,096 | - The independent auditor, Deloitte & Touche LLP, identified the reserve for excess and obsolete inventory as a critical audit matter due to the significant management estimates and judgments involved[246](index=246&type=chunk)[247](index=247&type=chunk) [Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=67&type=section&id=ITEM%209%3A%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE%2E) The company reports no changes in or disagreements with its accountants on accounting or financial disclosure matters - None[411](index=411&type=chunk) [Item 9A: Controls and Procedures](index=68&type=section&id=ITEM%209A%3A%20CONTROLS%20AND%20PROCEDURES%2E) Management concluded disclosure controls and internal control over financial reporting were effective, with an unqualified auditor's opinion - Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2022[413](index=413&type=chunk) - Management assessed internal control over financial reporting using the COSO 2013 framework and concluded it was effective as of September 30, 2022[416](index=416&type=chunk) - The independent auditor, Deloitte & Touche LLP, issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting[417](index=417&type=chunk)[421](index=421&type=chunk) - There were no material changes in the company's internal control over financial reporting during the fourth fiscal quarter of 2022[418](index=418&type=chunk) [Item 9B: Other Information](index=70&type=section&id=ITEM%209B%3A%20OTHER%20INFORMATION%2E) The company reports no other information for this item - None[428](index=428&type=chunk) [Item 9C: Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=70&type=section&id=ITEM%209C%3A%20DISCLOSURE%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTIONS%2E) This item is not applicable to the company - Not applicable[429](index=429&type=chunk) Part III [Item 10: Directors, Executive Officers and Corporate Governance](index=70&type=section&id=ITEM%2010%3A%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE%2E) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2023 proxy statement - The required information is incorporated by reference from the definitive proxy statement for the 2023 Annual Meeting of Stockholders[431](index=431&type=chunk) - The company has a written code of business conduct and ethics available on its website, www.macom.com[432](index=432&type=chunk) [Item 11: Executive Compensation](index=70&type=section&id=ITEM%2011%3A%20EXECUTIVE%20COMPENSATION%2E) Information regarding executive compensation is incorporated by reference from the 2023 proxy statement - The required information is incorporated by reference from the definitive proxy statement for the 2023 Annual Meeting of Stockholders[433](index=433&type=chunk) [Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=70&type=section&id=ITEM%2012%3A%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS%2E) Security ownership information is incorporated by reference, with details on equity compensation plan securities available for issuance - Certain required information is incorporated by reference from the definitive proxy statement for the 2023 Annual Meeting of Stockholders[434](index=434&type=chunk) Equity Compensation Plan Information as of September 30, 2022 | Plan Category | Securities to be issued upon exercise (a) | Weighted-average exercise price (b) | Securities available for future issuance (c) | | :--- | :--- | :--- | :--- | | Equity Compensation Plans Approved by Security Holders | 15,000 | $16.06 | 6,702,343 | [Item 13: Certain Relationships and Related Transactions, and Director Independence](index=70&type=section&id=ITEM%2013%3A%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE%2E) Information on certain relationships, related transactions, and director independence is incorporated by reference - The required information is incorporated by reference from the definitive proxy statement for the 2023 Annual Meeting of Stockholders[437](index=437&type=chunk) [Item 14: Principal Accounting Fees and Services](index=71&type=section&id=ITEM%2014%3A%20PRINCIPAL%20ACCOUNTING%20FEES%20AND%20SERVICES%2E) Information regarding principal accounting fees and services is incorporated by reference - The required information is incorporated by reference from the definitive proxy statement for the 2023 Annual Meeting of Stockholders[438](index=438&type=chunk) Part IV [Item 15: Exhibits, Financial Statement Schedules](index=72&type=section&id=ITEM%2015%3A%20EXHIBITS%2C%20FINANCIAL%20STATEMENT%20SCHEDULES%2E) This section lists financial statements from Item 8 and provides a comprehensive list of exhibits, including corporate governance and debt agreements - Lists the financial statements filed with the report, which are located in Item 8[440](index=440&type=chunk) - Provides a detailed list of all exhibits filed, including the company's certificate of incorporation, bylaws, debt agreements (Credit Agreement and Indenture for Convertible Notes), and various equity incentive plan documents[442](index=442&type=chunk)[443](index=443&type=chunk)[444](index=444&type=chunk) - Includes required certifications from the Principal Executive Officer and Principal Financial Officer under Sarbanes-Oxley Act Sections 302 and 906[444](index=444&type=chunk) [Item 16: Form 10-K Summary](index=75&type=section&id=ITEM%2016%3A%20FORM%2010-K%20SUMMARY) The company reports no Form 10-K summary for this item - None[445](index=445&type=chunk)

MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) Q4 2022 Results Conference Call November 3, 2022 8:30 AM ET Company Participants Steve Ferranti - VP, Initiatives and IR Steve Daly - President and CEO Jack Kober - CFO Conference Call Participants Harsh Kumar - Piper Sandler Vivek Arya - Bank of America Thomas O'Malley - Barclays Tore Svanberg - Stifel Matt Ramsay - Cowen Quinn Bolton - Needham Harlan Sur - JPMorgan C.J. Muse - Evercore Melissa Fairbanks - Raymond James Richard Shannon - Craig-Hallum ...

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

MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) Q3 2022 Earnings Conference Call July 28, 2022 8:30 AM ET Company Participants Steve Ferranti ??? Vice President-Strategic Initiatives and Investor Relations Steve Daly ??? President and Chief Executive Officer and Director Jack Kober ??? Senior Vice President and Chief Financial Officer Conference Call Participants Tom O???Malley ??? Barclays C.J. Muse ??? Evercore ISI Quinn Bolton ??? Needham Tore Svanberg ??? Stifel Nicolaus Matt Ramsay ??? Cowen Ma ...

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

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

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

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

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