Non-GAAP Financial Measures
In addition to GAAP reporting, MACOM provides investors with adjusted non-GAAP financial information. Adjusted items include revenue, gross profit, gross margin, operating margin, operating income, net income, earnings per share, Adjusted EBITDA and other data calculated on a non-GAAP basis. This non-GAAP information excludes discontinued operations, the impact of fair value accounting in merger and acquisitions (M&A) of businesses, M&A costs, including acquisition and related integration costs, certain cost savings from synergies expected from M&A activities, income and expenses from transition services related to M&A activities, expected amortization of acquisition-related intangibles, share-based and other non-cash compensation expense, certain cash compensation, restructuring charges, litigation settlement and costs, changes in the carrying values of assets and liabilities measured at fair value, contingent consideration, amortization of debt discounts and issuance costs, debt settlement costs, other non-cash expenses, earn-out costs, restructuring costs and certain income tax items. Management does not believe that the adjusted items are reflective of MACOM's underlying performance. The adjustment of these and other similar items from MACOM's non-GAAP presentation should not be interpreted as implying that these items are non-recurring, infrequent or unusual. These and other similar items are also excluded from Adjusted EBITDA, which is non-GAAP earnings before interest, income taxes, depreciation and amortization. MACOM believes this adjusted non-GAAP financial information provides additional insight into these items and MACOM's performance and has, therefore, chosen to provide this information to investors for a consistent basis of comparison and to help them evaluate the results of MACOM's operations and enable more meaningful period to period comparisons. These adjusted non-GAAP measures may be different than similar measures used by other companies and should be considered in addition to, not as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. A reconciliation between GAAP and adjusted non-GAAP financial data used in this earnings release is included in the supplemental financial data attached to this press release.
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M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited and in thousands, except per share data) |
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| Three Months Ended | ||||||||||||||||
| January 1, | October 2, | January 2, | ||||||||||||||
| 2016 | 2015 | 2015 | ||||||||||||||
| Revenue | $ | 115,774 | $ | 112,564 | $ | 96,556 | ||||||||||
| Cost of revenue | 55,456 | 55,603 | 49,137 | |||||||||||||
| Gross profit | 60,318 | 56,961 | 47,419 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 25,322 | 22,002 | 18,782 | |||||||||||||
| Selling, general and administrative | 34,686 | 29,964 | 25,228 | |||||||||||||
| Restructuring charges | 157 | 308 | — | |||||||||||||
| Total operating expenses | 60,165 | 52,274 | 44,010 | |||||||||||||
| Income from operations | 153 | 4,687 | 3,409 | |||||||||||||
| Other income (expense): | ||||||||||||||||
| Warrant liability gain (expense) | (14,878 | ) | 9,651 | (10,608 | ) | |||||||||||
| Interest expense, net | (4,346 | ) | (4,425 | ) | (4,723 | ) | ||||||||||
| Other income, net | 100 | 131 | 375 | |||||||||||||
| Total other income (expense) | (19,124 | ) | 5,357 | (14,956 | ) | |||||||||||
| Income (loss) before income taxes | (18,971 | ) | 10,044 | (11,547 | ) | |||||||||||
| Income tax benefit | (2,201 | ) | (3,797 | ) | (1,584 | ) | ||||||||||
| Income (loss) from continuing operations | (16,770 | ) | 13,841 | (9,963 | ) | |||||||||||
| Income from discontinued operations | 1,199 | 40,564 | 3,657 | |||||||||||||
| Net income (loss) | $ | (15,571 | ) | $ | 54,405 | $ | (6,306 | ) | ||||||||
| Net income (loss) per share: | ||||||||||||||||
| Basic: | ||||||||||||||||
| Income (loss) from continuing operations | $ | (0.32 | ) | $ | 0.26 | $ | (0.21 | ) | ||||||||
| Income from discontinued operations | 0.02 | 0.76 | 0.08 | |||||||||||||
| Income (loss) per share - basic | $ | (0.29 | ) | $ | 1.02 | $ | (0.13 | ) | ||||||||
| Diluted: | ||||||||||||||||
| Income (loss) from continuing operations | $ | (0.32 | ) | $ | 0.08 | $ | (0.21 | ) | ||||||||
| Income from discontinued operations | 0.02 | 0.74 | 0.08 | |||||||||||||
| Income (loss) per share - diluted | $ | (0.29 | ) | $ | 0.81 | $ | (0.13 | ) | ||||||||
| Shares - Basic | 53,015 | 53,287 | 47,606 | |||||||||||||
| Shares - Diluted | 53,015 | 54,991 | 47,606 | |||||||||||||
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M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited and in thousands) |
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| January 1, | October 2, | |||||||||
| 2016 | 2015 | |||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 47,808 | $ | 122,312 | ||||||
| Short term investments | 29,754 | 39,557 | ||||||||
| Accounts receivable, net | 92,524 | 83,950 | ||||||||
| Inventories | 100,999 | 79,943 | ||||||||
| Deferred income taxes | 31,431 | 31,431 | ||||||||
| Prepaids and other current assets | 26,890 | 27,026 | ||||||||
| Total current assets | 329,406 | 384,219 | ||||||||
| Property and equipment, net | 94,439 | 83,759 | ||||||||
| Goodwill and intangible assets, net | 412,583 | 337,012 | ||||||||
| Deferred income taxes | 49,619 | 48,239 | ||||||||
| Other long-term assets | 12,402 | 13,022 | ||||||||
| TOTAL ASSETS | $ | 898,449 | $ | 866,251 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Current portion of debt obligations | $ | 4,486 | $ | 4,058 | ||||||
| Accounts payable, accrued liabilities and other | 76,283 | 67,418 | ||||||||
| Total current liabilities | 80,769 | 71,476 | ||||||||
| Long-term debt obligations, less current portion | 342,151 | 340,504 | ||||||||
| Common stock warrant liability | 36,700 | 21,822 | ||||||||
| Deferred income taxes | 12,780 | — | ||||||||
| Long-term liabilities and other | 7,397 | 7,916 | ||||||||
| Total liabilities | 479,797 | 441,718 | ||||||||
| Stockholders' equity | 418,652 | 424,533 | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 898,449 | $ | 866,251 | ||||||
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M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited and in thousands) |
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| Three Months Ended | |||||||||||
| January 1, | January 2, | ||||||||||
| 2016 | 2015 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net income (loss) | $ | (15,571 | ) | $ | (6,306 | ) | |||||
| Non-cash adjustments | 39,334 | 26,354 | |||||||||
| Change in operating assets and liabilities | (8,249 | ) | (32,568 | ) | |||||||
| Net cash from operating activities | 15,514 | (12,520 | ) | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Acquisition of businesses, net | (85,517 | ) | (208,467 | ) | |||||||
| Purchases and sales of investment securities | 9,543 | — | |||||||||
| Purchases of property and equipment | (6,230 | ) | (2,956 | ) | |||||||
| Acquisition of intellectual property | (476 | ) | (1,056 | ) | |||||||
| Net cash used in investing activities | (82,680 | ) | (212,479 | ) | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Payments of debt | (875 | ) | (875 | ) | |||||||
| Payment of assumed debt | (8,731 | ) | (1,081 | ) | |||||||
| Proceeds from stock option exercises and employee stock purchases | 2,817 | 1,732 | |||||||||
| Repurchase of common stock | (339 | ) | (337 | ) | |||||||
| Borrowings on revolving facility | — | 100,000 | |||||||||
| Net cash from financing activities | (7,128 | ) | 99,439 | ||||||||
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EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
|
(210 | ) | — | ||||||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | (74,504 | ) | (125,560 | ) | |||||||
| CASH AND CASH EQUIVALENTS — Beginning of period | 122,312 | 173,895 | |||||||||
| CASH AND CASH EQUIVALENTS — End of period | $ | 47,808 | $ | 48,335 | |||||||
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M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC. RECONCILIATION OF GAAP TO NON-GAAP RESULTS (unaudited and in thousands, except per share data) |
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| Three Months Ended | Three Months Ended | |||||||||||||||||||||||||
| January 1, 2016 | October 2, 2015 | January 2, 2015 | ||||||||||||||||||||||||
| Amount | Amount | |||||||||||||||||||||||||
| Revenue - GAAP | $ | 115,774 | $ | 112,564 | $ | 96,556 | ||||||||||||||||||||
| Amount | % Revenue | Amount | % Revenue | Amount | % Revenue | |||||||||||||||||||||
| Gross Profit - GAAP | $ | 60,318 | 52.1 | $ | 56,961 | 50.6 | $ | 47,419 | 49.1 | |||||||||||||||||
| Intangible amortization expense | 7,167 | 6.2 | 7,647 | 6.8 | 5,359 | 5.6 | ||||||||||||||||||||
| Non-cash compensation expense | 491 | 0.4 | 607 | 0.5 | 342 | 0.4 | ||||||||||||||||||||
| Equity-based compensation | 51 | — | (21 | ) | — | 58 | 0.1 | |||||||||||||||||||
| Acquisition FMV step-up expense (inventory/fixed assets) | (226 | ) | (0.2 | ) | (631 | ) | (0.6 | ) | 835 | 0.9 | ||||||||||||||||
| Third-party engineering costs | — | — | — | — | 924 | 1.0 | ||||||||||||||||||||
| Integration costs and synergy savings | 158 | 0.1 | 41 | — | (4 | ) | — | |||||||||||||||||||
| Adjusted Gross Profit (NonGAAP) | $ | 67,959 | 58.7 | $ | 64,604 | 57.4 | $ | 54,933 | 56.8 | |||||||||||||||||
| Research and Development - GAAP | $ | 25,322 | 21.9 | $ | 22,002 | 19.5 | $ | 18,782 | 19.5 | |||||||||||||||||
| Non-cash compensation expense | (2,142 | ) | (1.9 | ) | (2,380 | ) | (2.1 | ) | (1,005 | ) | (1.0 | ) | ||||||||||||||
| Equity-based compensation | (894 | ) | (0.8 | ) | 27 | — | (519 | ) | (0.5 | ) | ||||||||||||||||
| Acquisition FMV step-up expense (inventory/fixed assets) | (204 | ) | (0.2 | ) | (204 | ) | (0.2 | ) | (204 | ) | (0.2 | ) | ||||||||||||||
| Integration costs and synergy savings | (597 | ) | (0.5 | ) | (149 | ) | (0.1 | ) | (171 | ) | (0.2 | ) | ||||||||||||||
| Third-party engineering costs | — | — | — | — | 924 | 1.0 | ||||||||||||||||||||
| Adjusted Research and Development (NonGAAP) | $ | 21,485 | 18.6 | $ | 19,296 | 17.1 | $ | 17,807 | 18.4 | |||||||||||||||||
| Selling, General and Administrative - GAAP | $ | 34,686 | 30.0 | $ | 29,964 | 26.6 | $ | 25,228 | 26.1 | |||||||||||||||||
| Earn-out costs | 196 | 0.2 | (330 | ) | (0.3 | ) | — | — | ||||||||||||||||||
| Intangible amortization expense | (4,423 | ) | (3.8 | ) | (4,345 | ) | (3.9 | ) | (1,053 | ) | (1.1 | ) | ||||||||||||||
| Non-cash compensation expense | (7,383 | ) | (6.4 | ) | (5,589 | ) | (5.0 | ) | (2,395 | ) | (2.5 | ) | ||||||||||||||
| Equity-based compensation | (462 | ) | (0.4 | ) | 173 | 0.2 | (317 | ) | (0.3 | ) | ||||||||||||||||
| Acquisition FMV step-up expense (inventory/fixed assets) | (28 | ) | — | (28 | ) | — | (28 | ) | — | |||||||||||||||||
| Litigation related costs | (108 | ) | (0.1 | ) | (188 | ) | (0.2 | ) | (560 | ) | (0.6 | ) | ||||||||||||||
| Transaction expenses | (3,111 | ) | (2.7 | ) | (193 | ) | (0.2 | ) | (4,636 | ) | (4.8 | ) | ||||||||||||||
| Integration costs and synergy savings | (571 | ) | (0.5 | ) | (315 | ) | (0.3 | ) | (296 | ) | (0.5 | ) | ||||||||||||||
| Adjusted Selling, General and Administrative (NonGAAP) | $ | 18,796 | 16.2 | $ | 19,149 | 17.0 | $ | 15,943 | 16.5 | |||||||||||||||||
| Amount | % Revenue | Amount | % Revenue | Amount | % Revenue | |||||||||||||||||||||
| Total operating expenses - GAAP | $ | 60,165 | 52.0 | $ | 52,274 | 46.4 | $ | 44,010 | 45.6 | |||||||||||||||||
| Intangible amortization expense | (4,423 | ) | (3.8 | ) | (4,345 | ) | (3.9 | ) | (1,053 | ) | (1.1 | ) | ||||||||||||||
| Non-cash compensation expense | (9,525 | ) | (8.2 | ) | (7,968 | ) | (7.1 | ) | (3,400 | ) | (3.5 | ) | ||||||||||||||
| Equity-based compensation | (1,356 | ) | (1.2 | ) | 199 | 0.2 | (836 | ) | (0.9 | ) | ||||||||||||||||
| Acquisition FMV step-up expense (inventory/fixed assets) | (232 | ) | (0.2 | ) | (232 | ) | (0.2 | ) | (232 | ) | (0.2 | ) | ||||||||||||||
| Contingent consideration and earn-out costs | 196 | 0.2 | (330 | ) | (0.3 | ) | — | — | ||||||||||||||||||
| Restructuring charges | (157 | ) | (0.1 | ) | (309 | ) | (0.3 | ) | — | — | ||||||||||||||||
| Integration costs and synergy savings | (1,168 | ) | (1.0 | ) | (464 | ) | (0.4 | ) | (467 | ) | (0.5 | ) | ||||||||||||||
| Litigation related costs | (108 | ) | (0.1 | ) | (188 | ) | (0.2 | ) | (560 | ) | (0.6 | ) | ||||||||||||||
| Transaction expenses | (3,111 | ) | (2.7 | ) | (192 | ) | (0.2 | ) | (4,636 | ) | (4.8 | ) | ||||||||||||||
| Third-party engineering | — | — | — | — | 924 | 1.0 | ||||||||||||||||||||
| Adjusted Total Operating Expenses (NonGAAP) | $ | 40,281 | 34.8 | $ | 38,445 | 34.2 | $ | 33,750 | 35.0 | |||||||||||||||||
| Income (loss) from operations - GAAP | $ | 153 | 0.1 | $ | 4,687 | 4.2 | $ | 3,409 | 3.5 | |||||||||||||||||
| Intangible amortization expense | 11,590 | 10.0 | 11,992 | 10.7 | 6,412 | 6.6 | ||||||||||||||||||||
| Non-cash compensation expense | 10,016 | 8.7 | 8,575 | 7.6 | 3,742 | 3.9 | ||||||||||||||||||||
| Equity-based compensation | 1,407 | 1.2 | (221 | ) | (0.2 | ) | 894 | 0.9 | ||||||||||||||||||
| Contingent consideration and earn-out costs | (196 | ) | (0.2 | ) | 330 | 0.3 | — | — | ||||||||||||||||||
| Restructuring charges | 157 | 0.1 | 308 | 0.3 | — | — | ||||||||||||||||||||
| Acquisition FMV step-up expense (inventory/fixed assets) | 6 | — | (399 | ) | (0.4 | ) | 1,067 | 1.1 | ||||||||||||||||||
| Litigation related costs | 108 | 0.1 | 188 | 0.2 | 560 | 0.6 | ||||||||||||||||||||
| Transaction expenses | 3,111 | 2.7 | 192 | 0.2 | 4,636 | 4.8 | ||||||||||||||||||||
| Integration costs and synergy savings | 1,326 | 1.1 | 505 | 0.4 | 463 | 0.5 | ||||||||||||||||||||
| Adjusted Income (Loss) from Operations (NonGAAP) | $ | 27,678 | 23.9 | $ | 26,157 | 23.3 | $ | 21,183 | 21.9 | |||||||||||||||||
| Depreciation expense | 3,903 | 3.4 | 3,786 | 3.4 | 3,387 | 3.5 | ||||||||||||||||||||
| Other income, net | 1,954 | 1.7 | — | — | — | — | ||||||||||||||||||||
| Adjusted EBITDA | $ | 33,535 | 29.0 | $ | 29,943 | 26.6 | $ | 24,570 | 25.4 | |||||||||||||||||
| Interest expense- GAAP | $ | 4,475 | 3.9 | $ | 4,425 | 3.9 | $ | 4,723 | 4.9 | |||||||||||||||||
| Non-cash interest expense | (405 | ) | (0.3 | ) | (405 | ) | (0.4 | ) | (439 | ) | (0.5 | ) | ||||||||||||||
| Adjusted Interest Expense (NonGAAP) | $ | 4,070 | 3.5 | $ | 4,020 | 3.6 | $ | 4,284 | 4.4 | |||||||||||||||||
| Net income (loss) - GAAP | $ | (15,571 | ) | (13.4 | ) | $ | 54,405 | 48.3 | $ | (6,306 | ) | (6.5 | ) | |||||||||||||
| Discontinued operations | — | — | (40,564 | ) | (36.0 | ) | (3,657 | ) | (3.8 | ) | ||||||||||||||||
| Intangible amortization expense | 11,590 | 10.0 | 11,992 | 10.7 | 6,412 | 6.6 | ||||||||||||||||||||
| Non-cash compensation expense | 10,016 | 8.7 | 8,576 | 7.6 | 3,742 | 3.9 | ||||||||||||||||||||
| Equity-based compensation | 1,407 | 1.2 | (221 | ) | (0.2 | ) | 894 | 0.9 | ||||||||||||||||||
| Contingent consideration | (196 | ) | (0.2 | ) | 330 | 0.3 | — | — | ||||||||||||||||||
| Restructuring charges | 157 | 0.1 | 308 | 0.3 | — | — | ||||||||||||||||||||
| Warrant liability (gain) expense | 14,879 | 12.9 | (9,651 | ) | (8.6 | ) | 10,608 | 11.0 | ||||||||||||||||||
| Non-cash interest expense | 405 | 0.3 | 405 | 0.4 | 439 | 0.5 | ||||||||||||||||||||
| Acquisition FMV step-up expense (inventory/fixed assets) | 6 | — | (399 | ) | (0.4 | ) | 1,067 | 1.1 | ||||||||||||||||||
| Litigation related costs | 108 | 0.1 | 188 | 0.2 | 560 | 0.6 | ||||||||||||||||||||
| Integration costs and synergy savings | 1,299 | 1.1 | 505 | 0.4 | 463 | 0.5 | ||||||||||||||||||||
| Transaction expenses | 3,111 | 2.7 | 192 | 0.2 | 4,636 | 4.8 | ||||||||||||||||||||
| Tax effect of non-GAAP adjustments | (5,378 | ) | (4.6 | ) | (7,117 | ) | (6.3 | ) | (4,119 | ) | (4.3 | ) | ||||||||||||||
| Transition services for divested business and other | — | — | (130 | ) | (0.1 | ) | (375 | ) | (0.4 | ) | ||||||||||||||||
| Adjusted Net Income (NonGAAP) | $ | 21,833 | 18.9 | $ | 18,819 | 16.7 | $ | 14,364 | 14.9 | |||||||||||||||||
| Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||||||||||||||||
| January 1, 2016 | October 2, 2015 | January 2, 2015 | ||||||||||||||||||||||||
|
Net Income
|
Income (loss)
|
Net Income
|
Income (loss)
|
Net Income
|
Income (loss)
|
|||||||||||||||||||||
| GAAP | $ | (15,571 | ) | $ | (0.29 | ) | $ | 54,405 | $ | 0.81 | $ | (6,306 | ) | $ | (0.13 | ) | ||||||||||
| Adjusted (NonGAAP) | $ | 21,833 | $ | 0.40 | $ | 18,819 | $ | 0.34 | $ | 14,364 | $ | 0.29 | ||||||||||||||
| Shares | Shares | Shares | ||||||||||||||||||||||||
| Diluted Shares - GAAP | 53,015 | 54,991 | 47,606 | |||||||||||||||||||||||
| Incremental stock options, warrants, restricted stock and units | 1,997 | — | 1,599 | |||||||||||||||||||||||
| Adjusted Diluted Shares (NonGAAP) | 55,012 | 54,991 | 49,206 | |||||||||||||||||||||||
| Three Months Ended | |||||
| January 1, 2016 | |||||
| Revenue - GAAP | $ | 115,774 | |||
| FiBest and Aeroflex/Metelics revenue | 4,577 | ||||
| Adjusted Revenue - excluding acquisitions (NonGAAP) | $ | 111,197 | |||
| Adjusted Gross Profit (Non-GAAP) | $ | 67,959 | |||
| FiBest and Aeroflex/Metelics gross profit | 1,234 | ||||
| Adjusted Gross Profit - excluding acquisitions (NonGAAP) | $ | 66,725 | |||
| Adjusted Gross Margin (NonGAAP) | 60.0 |
% |
|||
| Adjusted Net income (NonGAAP) | $ | 21,833 | |||
| FiBest and Aeroflex/Metelics net income | 501 | ||||
| Adjusted Net Income - excluding acquisitions (NonGAAP) | $ | 21,332 | |||
| Adjusted income per diluted share (NonGAAP) | $ | 0.39 | |||
