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M/A-COM Technology Solutions Holdings, Inc. Reports Second Quarter Fiscal Year 2013 Financial Results

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LOWELL, Mass., April 30, 2013 (GLOBE NEWSWIRE) -- M/A-COM Technology Solutions Holdings, Inc. (Nasdaq:MTSI) ("M/A-COM"), a leading supplier of high performance analog semiconductor solutions, today reported its financial results for the quarter ended March 29, 2013.

Second Quarter Fiscal Year 2013 GAAP Results

  • Revenue was $77.8 million, compared to $75.0 million in the prior quarter;
  • Gross margin was 43.5 percent, compared to 43.0 percent in the prior quarter;
  • Operating margin was 14.7 percent, compared to 15.7 percent in the prior quarter;
  • Net income was $8.1 million, or $0.17 per diluted share, compared to a net income of $6.1 million, or $0.13 per diluted share, in the prior quarter; and
  • Cash and cash equivalents totaled $103.3 million.

Second Quarter Fiscal Year 2013 Non-GAAP Results

  • Gross margin was 44.5 percent, compared to 44.0 percent in the prior quarter;
  • Operating margin was 19.1 percent, compared to 18.4 percent in the prior quarter; and
  • Net income was $11.7 million, or $0.24 per diluted share, compared to net income of $9.7 million, or $0.20 per diluted share, in the prior quarter.

Net income per diluted share for the second quarter of fiscal 2013 included a one-time benefit from the reinstatement of the U.S. federal R&D tax credit, which enabled M/A-COM to recognize its related tax credits arising from calendar year 2012 in the second quarter of fiscal year 2013, increasing reported diluted earnings per share by $0.02 on both a GAAP and non-GAAP basis.

John Croteau, Chief Executive Officer of M/A-COM, stated, "I am pleased to report that we achieved sequential revenue growth in our second fiscal quarter with improved margins and earnings per share. Our four primary end markets performed as expected, with our new optoelectronics products driving the growth in the quarter as we successfully delivered on our backlog."

Mr. Croteau noted, "Additionally, our standard catalog products continue to demonstrate firm demand, which we expect to drive broad-based growth in the third fiscal quarter. Overall, we believe we are successfully executing on our refined strategy and remain focused on generating growth across all our primary end markets, allocating investments to higher margin opportunities and implementing operational efficiencies across our business."

Business Outlook

M/A-COM currently expects third quarter of fiscal 2013 revenue to range between $78 million and $82 million, non-GAAP gross margin between 44 and 46 percent, and non-GAAP earnings per diluted share between $0.22 and $0.24, based on 48.1 million shares outstanding.

Conference Call

M/A-COM will host a conference call on Tuesday, April 30, 2013 at 5:00 p.m. Eastern Time to discuss its second fiscal quarter financial results and business outlook. Investors and analysts may join the conference call by dialing 1-877-837-3908 and providing the confirmation code 30827731. International callers may join the teleconference by dialing +1-973-872-3000 and entering the same confirmation code at the prompt. A telephone replay of the call will be made available beginning two hours after the call and will remain available for 3 business days. The replay number is 1-855-859-2056 with a pass code of 30827731. International callers should dial +1-404-537-3406 and enter the same pass code at the prompt.

Additionally, this conference call will be broadcast live over the Internet and can be accessed by all interested parties in the Investors section of M/A-COM's website at http://www.macomtech.com. To listen to the live call, please go to the Investors section of M/A-COM's website and click on the conference call link at least fifteen minutes prior to the start of the conference call. For those unable to participate during the live broadcast, a replay will be available shortly after the call and will remain available for approximately 30 days.

About M/A-COM Technology Solutions Holdings, Inc.

M/A-COM (www.macomtech.com) is a leading supplier of high performance analog semiconductor solutions for use in radio frequency (RF), microwave, and millimeter wave applications. Recognized for its broad portfolio of products, M/A-COM serves diverse markets including CATV, wireless infrastructure, optical communications, aerospace and defense, automotive, industrial, medical, and mobile devices. M/A-COM builds on more than 60 years of experience designing and manufacturing innovative product solutions for customers worldwide.

Headquartered in Lowell, Massachusetts, M/A-COM is certified to the ISO9001 international quality standard and ISO14001 environmental management standard. M/A-COM has design centers and sales offices throughout North America, Europe, Asia and Australia.

Special Note Regarding Forward-Looking Statements

This press release contains forward-looking statements based on M/A-COM management's beliefs and assumptions and on information currently available to our management. Forward-looking statements include, among others, information concerning our stated business outlook and future results of operations, the demand for our standard catalog products, our expectations for broad-based growth in the third fiscal quarter and as to the drivers of that expected growth, execution of our business strategy, growth across our primary end markets, allocating investments to higher margin opportunities and implementing operational efficiencies across our business, and any statements regarding future trends, business strategies, competitive position, industry conditions and market opportunities. Forward-looking statements include all statements that are not historical facts and generally may be identified by terms such as "anticipates," "believes," "could," "estimates," "expects," "intends," "may," "plans," "potential," "predicts," "projects," "seeks," "should," "will," "would" or similar expressions and the negatives of those terms.

Forward-looking statements contained in this press release reflect M/A-COM's current views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause those events or our actual activities or results to differ materially from those expressed in any forward-looking statement. Although M/A-COM believes that the expectations reflected in the forward-looking statements are reasonable, it cannot and does not guarantee future events, results, actions, levels of activity, performance or achievements. Readers are cautioned not to place undue reliance on these forward-looking statements. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements, including, among others, the potential for continued weakness in our Networks market, lower than expected demand in any or all of our four primary end markets or from any of our large OEM customers based on macro-economic weakness or otherwise, the potential for defense spending cuts, program delays, cancellations or sequestration, lower than expected utilization and absorption in our manufacturing facilities, lack of success or slower than expected success in our new product development efforts, loss of business due to competitive factors, product or technology obsolescence, customer program shifts or otherwise, lower than anticipated or slower than expected customer acceptance of our new product introductions, the potential for a shift in the mix of products sold in any period toward lower-margin products or a shift in the geographical mix of our revenues, the potential for increased pricing pressure based on competitive factors, technology shifts or otherwise, the impact of any acquisition, divestiture or restructuring activity, the impact of supply shortages or other disruptions in our internal or outsourced supply chain, the relative success of our cost-savings initiatives, the potential for inventory obsolescence and related write-offs, the expense, business disruption or other impact of any current or future investigations, administrative actions, litigation or enforcement proceedings we may be involved in, and the impact of any claims of intellectual property infringement or misappropriation, which could require us to pay substantial damages for infringement, expend significant resources in prosecuting or defending such matters or developing non-infringing technology, incur material liability for royalty or license payments, or prevent us from selling certain of our products, as well as those factors described in "Risk Factors" in M/A-COM's filings with the Securities and Exchange Commission (SEC), including its Quarterly Report on Form 10-Q for the quarter ended December 28, 2012 as filed with the SEC on February 1, 2013. M/A-COM undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

In addition to GAAP reporting, M/A-COM provides investors with non-GAAP financial information, including gross margin, operating margin, net income, earnings per share and other data calculated on a non-GAAP basis. This non-GAAP information excludes amortization of acquisition-related intangibles, share-based and other non-cash compensation expense, restructuring charges, Optomai litigation costs, changes in the carrying values of liabilities measured at fair value, other non-cash expenses, exited leased facility costs and certain income tax items. Management does not believe that the excluded items are reflective of M/A-COM's underlying performance. The exclusion of these and other similar items from M/A-COM's non-GAAP presentation should not be interpreted as implying that these items are non-recurring, infrequent or unusual. M/A-COM believes this non-GAAP financial information provides additional insight into M/A-COM's on-going performance and has therefore chosen to provide this information to investors for a more consistent basis of comparison and to help them evaluate the results of M/A-COM's on-going operations and enable more meaningful period to period comparisons. These non-GAAP measures are provided in addition to, and not as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. A reconciliation between GAAP and non-GAAP financial data is included in the supplemental financial data attached to this press release.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in thousands, except per share data)
Three Months Ended Six Months Ended
March 29, December 28, March 30, March 29, March 30,
2013 2012 2012 2013 2012
Revenue $77,824 $75,014 $77,480 $152,838 $150,515
Cost of revenue 43,963 42,749 40,931 86,712 82,551
Gross profit 33,861 32,265 36,549 66,126 67,964
Operating expenses:
Research and development 10,150 9,823 8,773 19,973 18,664
Selling, general and administrative 12,705 10,867 11,040 23,572 22,318
Accretion of contingent consideration (405) (172) (1,247) (577) (1,078)
Restructuring charges 1,586
Total operating expenses 22,450 20,518 18,566 42,968 41,490
Income from operations 11,411 11,747 17,983 23,158 26,474
Other income (expense):
Accretion of common stock warrant liability (1,069) (2,026) (7,447) (3,095) (5,989)
Accretion of Class B conversion liability (57,739) (44,119)
Interest expense (200) (226) (203) (426) (384)
Other income - related party 86 84 170
Total other income (expense) (1,183) (2,168) (65,389) (3,351) (50,492)
Income (loss) before income taxes 10,228 9,579 (47,406) 19,807 (24,018)
Income tax provision 2,142 3,471 6,155 5,613 7,501
Net income (loss) 8,086 6,108 (53,561) 14,194 (31,519)
Accretion of redeemable preferred stock and participating stock dividends (1,201) (2,616)
Net income (loss) attributable to common stockholders $8,086 $6,108 $(54,762) $14,194 $(34,135)
Net income (loss) per share:
Basic $0.18 $0.13 $(8.02) $0.31 $(7.93)
Diluted $0.17 $0.13 $(8.02) $0.30 $(7.93)
Shares used to compute net income (loss) per share:
Basic 45,789 45,511 6,829 45,649 4,306
Diluted 47,168 46,870 6,829 46,986 4,306
M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(unaudited and in thousands, except per share data)
Three Months Ended
March 29, 2013 December 28, 2012 March 30, 2012
Amount % Revenue Amount % Revenue Amount % Revenue
Gross profit - GAAP $33,861 43.5% $32,265 43.0% $36,549 47.2%
Amortization expense 474 0.6 474 0.6 382 0.5
Non-cash compensation expense 292 0.4 288 0.4 42 0.1
Gross profit - non-GAAP $34,627 44.5% $33,027 44.0% $36,973 47.7%
Research and Development - GAAP $10,150 13.0% $9,823 13.1% $8,773 11.3%
Non-cash compensation expense (484) (0.6) (321) (0.4) (118) (0.2)
Research and Development - non-GAAP $9,666 12.4% $9,502 12.7% $8,655 11.2%
Selling, General and Administrative - GAAP $12,705 16.3% $10,867 14.5% $11,040 14.2%
Amortization expense (315) (0.4) (315) (0.4) (257) (0.3)
Non-cash compensation expense (907) (1.2) (654) (0.9) (303) (0.4)
Optomai litigation costs (156) (0.2) (195) (0.3)
Exited leased facility costs (1,267) (1.6)
Selling, General and Administrative - non-GAAP $10,060 12.9% $9,703 12.9% $10,480 13.5%
Total operating expenses - GAAP $22,450 28.8% $20,518 27.4% $18,566 24.0%
Amortization expense (315) (0.4) (315) (0.4) (257) (0.3)
Non-cash compensation expense (1,391) (1.8) (975) (1.3) (421) (0.5)
Optomai litigation costs (156) (0.2) (195) (0.3)
Exited leased facility costs (1,267) (1.6)
Accretion of contingent consideration 405 0.5 172 0.2 1,247 1.6
Total operating expenses - non-GAAP $19,726 25.3% $19,205 25.6% $19,135 24.7%
Income from operations - GAAP $11,411 14.7% $11,747 15.7% $17,983 23.2%
Amortization expense 789 1.0 789 1.1 639 0.8
Non-cash compensation expense 1,683 2.2 1,263 1.7 463 0.6
Optomai litigation costs 156 0.2 195 0.3
Exited leased facility costs 1,267 1.6
Accretion of contingent consideration (405) (0.5) (172) (0.2) (1,247) (1.6)
Restructuring charges
Income from operations - non-GAAP $14,901 19.1% $13,822 18.4% $17,838 23.0%
Net income (loss) - GAAP $8,086 10.4% $6,108 8.1% $(53,561) (69.1)%
Amortization expense 435 0.6 553 0.7 436 0.6
Non-cash compensation expense 1,397 1.8 885 1.2 316 0.4
Optomai litigation costs 83 0.1 137 0.2
Exited leased facility costs 793 1.0
Accretion of contingent consideration (241) (0.3) (120) (0.2) (852) (1.1)
Accretion of common stock warrant liability 1,069 1.4 2,026 2.7 7,447 9.6
Accretion of Class B conversion liability 57,739 74.5
Non-cash interest expense 39 0.1 69 0.1 50 0.1
Non-recurring tax items 520 0.7
Net income - non-GAAP $11,661 15.0% $9,658 12.9% $12,095 15.6%
Amount Per Share Amount Per Share Amount Per Share
Net income (loss) - GAAP:
Net income (loss) $8,086 $0.17 $6,108 $0.13 $(53,561) $(7.84)
Accretion of redeemable preferred stock and participating stock dividends (1,201) (0.18)
Net income (loss) attributable to common stockholders $8,086 $0.17 $6,108 $0.13 $(54,762) $(8.02)
Net income - non-GAAP $11,661 $0.24 $9,658 $0.20 $12,095 $0.28
Diluted shares - GAAP 47,168 46,870 6,829
Convertible preferred stock 33,591
Incremental stock options, warrants, restricted stock and units 823 776 2,342
Diluted shares - non-GAAP 47,991 47,646 42,762
M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(unaudited and in thousands, except per share data)
Six Months Ended
March 29, 2013 March 30, 2012
Amount % Revenue Amount % Revenue
Gross profit - GAAP $ 66,126 43.3% $ 67,964 45.2%
Amortization expense 948 0.6 764 0.5
Non-cash compensation expense 580 0.4 78 0.1
Gross profit - non-GAAP $ 67,654 44.3% $ 68,806 45.7%
Research and Development - GAAP $ 19,973 13.1% $ 18,664 12.4%
Non-cash compensation expense (805) (0.5) (224) (0.1)
Research and Development - non-GAAP $ 19,168 12.5% $ 18,440 12.3%
Selling, General and Administrative - GAAP $ 23,572 15.4% $ 22,318 14.8%
Amortization expense (630) (0.4) (515) (0.3)
Non-cash compensation expense (1,561) (1.0) (694) (0.5)
Optomai litigation costs (351) (0.2)
Exited leased facility costs (1,267) (0.8)
Selling, General and Administrative - non-GAAP $ 19,763 12.9% $ 21,109 14.0%
Total operating expenses - GAAP $ 42,968 28.1% $ 41,490 27.6%
Amortization expense (630) (0.4) (515) (0.3)
Non-cash compensation expense (2,366) (1.5) (918) (0.6)
Optomai litigation costs (351) (0.2)
Exited leased facility costs (1,267) (0.8)
Accretion of contingent consideration 577 0.4 1,078 0.7
Restructuring charges (1,586) (1.1)
Total operating expenses - non-GAAP $ 38,931 25.5% $ 39,549 26.3%
Income from operations - GAAP $ 23,158 15.2% $ 26,474 17.6%
Amortization expense 1,578 1.0 1,279 0.8
Non-cash compensation expense 2,946 1.9 996 0.7
Optomai litigation costs 351 0.2
Exited leased facility costs 1,267 0.8
Accretion of contingent consideration (577) (0.4) (1,078) (0.7)
Restructuring charges 1,586 1.1
Income from operations - non-GAAP $ 28,723 18.8% $ 29,257 19.4%
Net income (loss)- GAAP $ 14,194 9.3% $ (31,519) (20.9)%
Amortization expense 988 0.6 873 0.6
Non-cash compensation expense 2,282 1.5 680 0.5
Optomai litigation costs 220 0.1
Exited leased facility costs 793 0.5
Accretion of contingent consideration (361) (0.2) (737) (0.5)
Restructuring charges 1,083 0.7
Accretion of common stock warrant liability 3,095 2.0 5,989 4.0
Accretion of Class B conversion liability 44,119 29.3
Non-cash interest expense 108 0.1 90 0.1
Non-recurring tax items (767) (0.5)
Net income - non-GAAP $ 21,319 13.9% $ 19,811 13.2%
Amount Per Share Amount Per Share
Net income (loss) - GAAP:
Net income (loss) $ 14,194 $ 0.30 $ (31,519) $ (7.32)
Accretion of redeemable preferred stock and participating stock dividends (2,616) (0.61)
Net income (loss) attributable to common stockholders $ 14,194 $ 0.30 $ (34,135) $ (7.93)
Net income - non-GAAP $ 21,319 $ 0.45 $ 19,811 $ 0.47
Diluted shares - GAAP 46,986 4,306
Convertible preferred stock 35,657
Incremental stock options, warrants, restricted stock and units 769 2,337
Diluted shares - non-GAAP 47,755 42,300
M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited and in thousands)
March 29, September 28,
2013 2012
ASSETS
Current assets:
Cash and cash equivalents $103,329 $84,528
Accounts receivable, net 49,646 54,184
Inventories 57,202 57,459
Deferred income taxes and other current assets 17,090 16,863
Total current assets 227,267 213,034
Property and equipment, net 29,539 30,209
Goodwill and intangible assets, net 21,188 22,766
Other assets 1,738 2,064
TOTAL ASSETS $279,732 $268,073
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued liabilities and other $37,879 $41,155
Deferred revenue 7,574 7,992
Current portion of contingent consideration 6,580
Total current liabilities 45,453 55,727
Common stock warrant liability 10,656 7,561
Deferred income taxes and other long-term liabilities 4,891 5,327
Total liabilities 61,000 68,615
Commitments and contingencies
Stockholders' equity 218,732 199,458
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $279,732 $268,073

M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)
Six Months Ended
March 29, March 30,
2013 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $14,194 $(31,519)
Non-cash adjustments 12,258 53,779
Payment of contingent consideration (5,328)
Change in operating assets and liabilities 913 (4,102)
Net cash from operating activities 22,037 18,158
CASH FLOWS FROM INVESTING ACTIVITIES --
Purchases of property and equipment (4,697) (9,665)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of contingent consideration (675) (15,000)
Financing activities 2,136 35,582
Net cash from financing activities 1,461 20,582
NET CHANGE IN CASH AND CASH EQUIVALENTS 18,801 29,075
CASH AND CASH EQUIVALENTS — Beginning of period 84,528 45,668
CASH AND CASH EQUIVALENTS — End of period $103,329 $74,743
Non-GAAP Reconciliation:
Net cash from operating activities - GAAP $22,037
Contingent consideration payment 5,328
Net cash from operating activities - non-GAAP $27,365

CONTACT: Company Contact: M/A-COM Technology Solutions Holdings, Inc. Conrad Gagnon Chief Financial Officer P: 978-656-2550 E: Conrad.Gagnon@macomtech.com Investor Relations Contact: Shelton Group Leanne K. Sievers EVP, Investor Relations P: 949-224-3874 E: lsievers@sheltongroup.com

Source:M/A-COM Technology Solutions Inc.

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