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MACOM Reports Strong Growth

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Q4 margins and earnings exceed top end of guidance

MACOM Technology Solutions Holdings has reported financial results for its fiscal fourth quarter and also the year ended October 3, 2014.

"Gross margin and earnings per share for the quarter exceeded the top end of our guidance, with non-GAAP gross margin improving 240 basis points from the prior quarter and 870 basis points from the prior year quarter due to a more favorable mix of our high-margin products for the Networks market, " said John Croteau, CEO of MACOM.

GAAP revenue was $114.3 million for Q4, compared to $112.4 million in the prior fiscal quarter and $84.7 million in the previous year's Q4. Gross margin was 49.2 percent, compared to 44.7 percent in the prior fiscal quarter and 43.2 percent in the previous year's fiscal fourth quarter.

Operating income was $16.8 million, compared to $7.3 million in Q3 and operating income of $4.8 million in the previous year's fiscal fourth quarter; and net income was $14.5 million, or $0.30 earnings per diluted share, compared to $1.2 million, or $0.02 earnings per diluted share, in Q3 and net income of $1.7 million, or $0.04 earnings per diluted share, in the previous year's fiscal fourth quarter.

Non-GAAP Q4 results featured a gross margin of 54.1 percent, compared to 51.7 percent in the Q3 and 45.4 percent in the previous year's fiscal fourth quarter. Operating income was $26.7 million, or 23.3 percent of revenue, compared to $23.9 million, or 21.3 percent of revenue, in Q3 and $17.0 million, or 20.3 percent of revenue, in the previous year's fiscal fourth quarter.

According to the company, Q4 results reflected major customer wins and share gains for optical products in networks, combined with continued gains in multi-market catalogue business as well as an increase in automotive, which was within the normal range of fluctuations from Ford. This broad-based growth was partially offset by aerospace and defence timing of certain radar programs.

Fiscal year 2014 revenue was $418.7 million, compared to $323.1 million in fiscal year 2013. GAAP net income was a $15.3 million loss, or $0.33 per diluted share net loss, in fiscal year 2014, compared to net income of $18.2 million, or $0.39 per diluted share in fiscal year 2013. Non-GAAP net income was $60.4 million, or $1.25 per diluted share, in fiscal year 2014, compared to $44.9 million, or $0.93 per diluted share in fiscal year 2013.

Croteau added: "After the close of trading today we announced a definitive agreement to acquire BinOptics Corporation, based in Ithaca, New York. With this move, we anchor our new photonic portfolio with InP lasers. This plays to MACOM's long-term strength in manufacturing compound semiconductors in large volume, with high quality and at low cost. As part of MACOM, we plan to scale laser production capacity and drive market share gains in what has been a supply constrained part of our customers' supply chain."

"Looking forward to fiscal 2015, we believe MACOM is poised to once again deliver double digit revenue growth, gross margin expansion and higher earnings per share."

Outlook

For the fiscal first quarter ending January 2, 2015, MACOM expects another quarter of solid performance with revenue expected to be in the range of $112 to $115 million. Non-GAAP gross margin is expected to be between 51 percent and 53 percent, and non-GAAP earnings per diluted share between $0.33 and $0.36 on an anticipated 50 million shares outstanding.



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