MACOM Technology Solutions Holdings, Inc. (MTSI - Free Report) reported fiscal third-quarter 2019 non-GAAP loss of 42 cents per share, which came in line with the Zacks Consensus Estimate. Notably, the company reported earnings of 13 cents per share in the year-ago quarter. Further, the reported loss is wider than the loss of 18 cents per share in the previous quarter.
Adjusted revenues decreased 25.2% year over year and 10.8% on a sequential basis to $108.31 million, which missed the Zacks Consensus Estimate of $110 million.
The top-line decline can be attributed to weak performance of the company across all the end-markets, especially in the data center market. Further, the suspension of shipments to Huawei, which resulted in reduction in MACOM’s sales to not only Huawei but also its affiliates, remained a major concern during the reported quarter.
Additionally, lower shipments into the company’s distribution channel affected revenues.
Coming to the price performance, shares of MACOM have lost 11.8% over a year against the industry’s growth of 3.6%.
End-Market in Details
Telecom Market: The company generated $43.9 million revenues (39% of total revenues) from this market, which were down 13.2% year over year.
Data Center Market: This market yielded $17.6 million revenues (19% of total revenues), which declined 54.8% year over year.
Industrial & Defense Market: MACOM generated $46.8 million revenues (42% of total revenues), which decreased 3.3% from the prior-year quarter.
Operating Details
In the fiscal third-quarter 2019, non-GAAP gross margin came in 39.4%, which contracted significantly from 56% in the year-ago quarter.
Non-GAAP operating expenses came in 59.9% as a percentage of revenues, which jumped up from 44.6% in the prior-year quarter.
The company reported adjusted operating loss of $22.3 million in the fiscal third quarter against the year-ago quarter’s income of $16.5 million.
Adjusted EBITDA was ($15) million against $24.1 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Jun 28, 2019, cash equivalents and short-term investments were $185.8 million compared with $192.4 million as of Mar 29, 2019. Inventories were $110.5 million, down from $119.9 million a year ago.
Long-term debt obligations, excluding current portion, were $656.05 million in the fiscal third quarter compared with $656.8 million in the previous quarter.
Cash flow from operations was $1.4 million, down from $23.9 million in the last quarter.
Further, the company’s free cash flow in the reported quarter came in ($7.9) million compared with $12.9 million in the previous quarter.
Guidance
For fiscal fourth-quarter 2019, MACOM expects revenues between $108 million and $112 million. The Zacks Consensus Estimate for revenues is pegged at $113.44 million.
Further, the company’s adjusted loss per share is anticipated to lie in a range of $0.00-$0.04. The Zacks Consensus Estimate is pegged at a loss of 9 cents per share.
Moreover, non-GAAP gross margin is anticipated to lie within the range of 52-54%.
Zacks Rank & Key Picks
MACOM currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Rosetta Stone , Oracle (ORCL - Free Report) and CACI International (CACI - Free Report) . While Rosetta Stone sports a Zacks Rank #1 (Strong Buy), Oracle and CACI carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Rosetta Stone, Oracle and CACI is currently projected to be 12.5%, 9.8% and 10%, respectively.
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MACOM Technology Solutions Holdings, Inc. (MTSI - Free Report) reported fiscal third-quarter 2019 non-GAAP loss of 42 cents per share, which came in line with the Zacks Consensus Estimate. Notably, the company reported earnings of 13 cents per share in the year-ago quarter. Further, the reported loss is wider than the loss of 18 cents per share in the previous quarter.
Adjusted revenues decreased 25.2% year over year and 10.8% on a sequential basis to $108.31 million, which missed the Zacks Consensus Estimate of $110 million.
The top-line decline can be attributed to weak performance of the company across all the end-markets, especially in the data center market. Further, the suspension of shipments to Huawei, which resulted in reduction in MACOM’s sales to not only Huawei but also its affiliates, remained a major concern during the reported quarter.
Additionally, lower shipments into the company’s distribution channel affected revenues.
Coming to the price performance, shares of MACOM have lost 11.8% over a year against the industry’s growth of 3.6%.
End-Market in Details
Telecom Market: The company generated $43.9 million revenues (39% of total revenues) from this market, which were down 13.2% year over year.
Data Center Market: This market yielded $17.6 million revenues (19% of total revenues), which declined 54.8% year over year.
Industrial & Defense Market: MACOM generated $46.8 million revenues (42% of total revenues), which decreased 3.3% from the prior-year quarter.
Operating Details
In the fiscal third-quarter 2019, non-GAAP gross margin came in 39.4%, which contracted significantly from 56% in the year-ago quarter.
Non-GAAP operating expenses came in 59.9% as a percentage of revenues, which jumped up from 44.6% in the prior-year quarter.
The company reported adjusted operating loss of $22.3 million in the fiscal third quarter against the year-ago quarter’s income of $16.5 million.
Adjusted EBITDA was ($15) million against $24.1 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Jun 28, 2019, cash equivalents and short-term investments were $185.8 million compared with $192.4 million as of Mar 29, 2019. Inventories were $110.5 million, down from $119.9 million a year ago.
Long-term debt obligations, excluding current portion, were $656.05 million in the fiscal third quarter compared with $656.8 million in the previous quarter.
Cash flow from operations was $1.4 million, down from $23.9 million in the last quarter.
Further, the company’s free cash flow in the reported quarter came in ($7.9) million compared with $12.9 million in the previous quarter.
Guidance
For fiscal fourth-quarter 2019, MACOM expects revenues between $108 million and $112 million. The Zacks Consensus Estimate for revenues is pegged at $113.44 million.
Further, the company’s adjusted loss per share is anticipated to lie in a range of $0.00-$0.04. The Zacks Consensus Estimate is pegged at a loss of 9 cents per share.
Moreover, non-GAAP gross margin is anticipated to lie within the range of 52-54%.
Zacks Rank & Key Picks
MACOM currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Rosetta Stone , Oracle (ORCL - Free Report) and CACI International (CACI - Free Report) . While Rosetta Stone sports a Zacks Rank #1 (Strong Buy), Oracle and CACI carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Rosetta Stone, Oracle and CACI is currently projected to be 12.5%, 9.8% and 10%, respectively.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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