MTSI - Earnings call transcript Q1 2022 | MACOM Technology Solutions Holdings, Inc.

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Operator

Welcome to MACOM’s First Fiscal Quarter 2022 Conference Call. This call is being recorded today, Thursday, January 27, 2022. At this time, all participants are in a listen-only mode. I will now turn the call to Mr. Steve Ferranti, MACOM’s Vice President of Strategic Initiatives and Investor Relations. Mr. ahead. go please Ferranti,

Steve Ferranti

our Good financial welcome fiscal for to Litigation Harbor Reform differ XXXX. results results would everyone XXXX. Olivia. statements are Act statements, contain to the quarter our subject discuss as I that materially in remind the to MACOM’s may for like today morning. you, will to forward-looking discussed risks And of call of discussion certain which contained Thank the today. from uncertainties in and defined Safe forward-looking Securities those Private Actual first

a risks differences, to could Steve President information. adjusted A was X-K, For certain Form results that, more I’ll the MACOM’s non-GAAP Management’s and uncertainties detailed in you will turn SEC refer With are this of the which discussion release filings press the those of today. Daly, and of also over reconciliation and in to GAAP CEO company’s during non-GAAP the MACOM. discussion SEC. related of statements adjusted result filed the financial with to provided with that we call include call

Steve Daly

we fiscal year. above share. margins Jack Thank and will our was will you, morning. the progress take questions. EPS and begin that, We will gross good for some call to Chief QX Revenue XX%. to will achieving a and earnings margins incremental happy has our was revenue a profitability, made be and diluted above provide QX general results. and operating $XXX.X was quarter After per then update. Financial $X.XX adjusted XX% million start fiscal I with Officer When QX and review company I our today’s Jack good Kober, finished, for guidance

that Our financial the performance business. the aspects of improvements we're making all numerous across reflects

projects years, team management the have numerous hard worked on of employees continuous last the and have that couple improvement spanned Over our company.

requests, improving new Overall and to would their our improving or products like our for to focused been internal delivery thank meeting it increasing. operational processes involves work. I business for products, execution MACOM customer whether We few. developing hard demand development efficiency, and all on launching are a name has dedication continued employees

believe the quarter ratio ratio than book-to-bill backlog for activity is reflects due X.X:X we the and a Today's of QX quarters, placed are lead long which times. of to as representing QX extended ahead dates cycle book-to-bill required prior well our was near consecutive bookings gain X. share being industry market a quarter orders fifth combination helpful beyond. greater we plan ship Similar of Our that and/or record being to

was of Our turns revenue line the business was expectations. approximately quarter, during which in total XX% our with

Telecom million. market these XX% by line and and our and $XX.X center sequentially expectations. were data $XX.X was Industrial goals. and was for The down million. follows. QX was as Defense $XX.X center sequentially. was breakdown X.X% Industrial excellent with chain end in and was offshore key planning term teams from our limitations to our managing of meet allowed supply within base. day the to and assembly challenges variety to shortages do job day logistics interruptions team revenue of whether outperform has operations, near which continue us supply continues or to was sequentially. up was X.X% million, All temporary components, down test Telecom revenue data Our Defense an capacity The figures production

down quarters growth of strong in market Our was slightly sequential Industrial following and several Defense QX.

them is focus test we the I'll for trending years. our is opportunity Defense future over there are differentiate to share MACOM segments believe is further itself scope I and plans markets. backlog highlight leading market pipeline this introducing for a relationships strengthen defense supported meaningful in mostly like standard products. technology. of believe to market next this is capabilities would working in MACOM's are in growing to is we the highlight measurement of MACOM and the current and major a We the to work also to how Today, by defense growth we full strong The few to Our significant expand primes, investors and opportunities. up, with well-positioned market. that a aerospace to

We will at frequency power power high multi offer levels. but amplifier kilowatt low extremely solutions, typically

radar and technology GaN We will applications mimic support advanced high frequency our solutions. using

We package transmitter which are microwave assemblies our the engineering will proven value capabilities our believe rate design lastly, and we which solutions, combine advanced receiver advanced optical semiconductors high improving semiconductor microwave technology. competitiveness enhance will we data system our introduce maximize of with And to our with content.

increased Our telecom QX. end in revenue market

a telecom video. and architectures backhaul, for television fiber-to-the-home, market optical systems very wireless network MACOM broadband spanning backbone and broad a topologies. numerous broadcast satellite is deployments, reminder, cable wireless long-haul As and diverse XG include infrastructure, metro networks, wireless, These end

a We experienced market. this portfolio During our we only expanding these fraction QX, on telecom Today, for broad we various anticipate fully are potential strength delivering applications. believe to our more of we address across markets. further

CDR QX Our XXXG drivers. AOC shipments CWDM by with short and market and data include revenue applications market data down to driven XXXG was remained platforms vectors intact TIAs and for supporting module long pluggable XXXG low solutions, growth leading note center I rate primarily end will term in analog applications. reduced to our XXG reach

expanding are end we product drive with linear our compete detectors our certain Technology expansion photo now which solutions, drivers development to key growing architectures. the interconnect and data applications in growth for offerings seeing equalizers, MACOM. also better are Additionally, MACOM's DSPs in markets include among address And will we're three portfolio lasers. interest and and center to lastly,

solve based that class built end MACOM. complex opportunities. and result technical is strategy offering growth proprietary to important compelling solutions challenges analog our will semiconductor which expand strategy on is our the technologies, leverage our An advanced to our upon technologies process packaging strategy to is use driving element the and of for We while innovative help customers unique that long for growth envision subsystem semiconductor customers innovative our signal new creation solutions of term which our silicon unique highly offering and designs, processes profitable Our mixed semiconductor products utilize designs. customers this market world of

we opportunity For market around XXX high million. for be gain estimate and to MACOM the frequency mimics example,

on X.XX the silicon mimic our enter months. micron enable expect within We will XX process GaN next market carbide us to this

we for Additionally, capacitors voltage be XXX to estimate our opportunity high million. around

market our market we lastly, past compelling time. new We over only customers technology FB and DFB phosphide recently significant are products a line. . half XXG to And laser growth our expect indium KV progress a entered product early share provides and MACOM our and in two have that years, opportunity advantages lifecycle CAPS over have believe we to us. represent made the large for and the they We our grow CAPS bringing These their KV to with

recent XXXX an excited key Our developing the update Nashua, equalizer center roadmap. line facilities laser are New team and backplane aerospace very management data high short for month, and AS use and release This been applications of demonstrates This laser response has in require an job quality provide distances. performance Arbor, would announced and North for product is on paths our I we technology our defense a certification processes system Last recognized production in continued some the Carolina. improving and Hampshire, linear for internationally space Michigan, Morrisville, quality D received we activities. semiconductor organizations. commitment management in now quarter, that execute MACOM's high Lowell, for customers. has we done an speed Massachusetts. to our or new great to system over aviation, standards certification in QMS our of ensuring highest to positive. Customer standard data aerospace operations level like very

can at and These and XXX products low include gigabits XXXG existing equalizers, passive cables PAMX extremely a the of in double reach low reach running power latency. products and and four XX consume XXXG respectively. per Our channel linear short initial MACOM have applications. XXXG, very two channel lane equalizers

put, process we I and power achieved silicon goal carbide GaN report excellent at watts fab to X expand performance competitive volts X.XX our XX performance of to simply to more that pleased will will micron competition. size earlier capable transmitting Smaller believe with can density in frequencies. We make amplifiers millimeter on wafer Our and driving teams at because be push continues chip month, this higher our this smaller us than a designers provide power power per engineering density mimic mimic our our am our size of advantage frequencies. means progress. also

atomic Our equipment well layer deposition new backside as capability. as or ALD to plan is install process

Our goal of market to is in XXXX. calendar late enter the

GaN. engaged already of who Although have select adopters be with I'm to may early want pleased our customers we

applications. believe this supporting provide low lower mixed PAMX analog has highlighting power PAMX analog chipset We and conference. MACOM chip Our planning at signal OFC portfolio based reach will to include of we applications. reach power lower XXXG optical the to or cost, that can comparable latency solutions DSP examples March. is to high conference XXXG during performance short optical our for and speed team fiber lower a broad solutions the multimode Demo solution be and attend in short

more applications. be demoing on plan will have and forward conference. demos announcing we and than amplifiers details to these laser XX demonstrations drivers We to XXXG and supporting prior look product also OFC industry at to the We XXXG our leading more transimpedance

new sales with all applications We hires talented teams of levels our organization. and engineering continue to strengthen and operations the that very

MACOM is workforce in for to critical employees inclusive meet and global skills, R&D helps a diverse revenue backgrounds us skilled to which and makes experiences with future objectives. highly growth create different Our adding Further, our workforce, stronger. further

to Before turning like final make remarks. Jack, I few it would a over to

Our both product utilize strategy and will wafer continue external to foundries. internal

lasers design CDRs, product and internal to mimics to on products advantage. and speed rely provide product our technology our circuit capabilities Other differentiate. like solely lines switches competitive our lines industry a of high leading like analog on mixed diodes, signal Some and crosspoint process network rely

semiconductor best in now a SAM chip X design of range opportunity capability believe billion, to analog class Our our aggregate, within with markets. In combined stockholder wide signal create target which us allows a applications we our value. to internal mix today and provides exceeds significant address processes with us

term $X billion is goal XXXX. in year long in our reach revenue to Our fiscal

drive we will growth. add in our of excellence leverage now financial market a I've discussed, segments we to forward, only have maximize to not the opportunities to see provide new engineering Going we results. will review MACOM's more our detailed will market Jack the but also revenue will ability where segments

Jack Kober

you, everyone. And Steve. morning Thank good

prior gross revenue, Adjusted profit fiscal results. a represented was approximately further XX% XX per basis market. first strength million, began quarter-over-quarter. sequential was basis points earnings QX up our Our fiscal improvement improvements year periods, million $XXX.X in sequentially. margin, XX.X% driven our by domestic in margin customers with operating gross telecom the X.X% $XX end of with On revenue, consistent share. geographic up The for or was Revenue of and XXXX quarter

of beyond, fiscal his During of periods. at noted albeit XXXX result numerous prepared that Total margin to gross we and largely further the remarks, in operational improvement, as prior slower expect compared rate adjusted a Steve improvements a consisting expense of were operating operating fiscal expense $XX.X million $XXX,XXX R&D $XX.X R&D XXXX million, up SG&A was anticipated million. and by in from Total $XX increases QX driven expense of by staffing. sequentially expenses

we fiscal implemented disciplined few be opportunities assess for growth million, sequentially Adjusted continue Over new going and will income with are QX the appropriate we would for stockholders our QX from carefully fiscal with Adjusted also our like these $XX.X operating in processes processes returns margin $XX.X years, have year returns. for maximizing and to I XX.X% continue the feel note we up operating up help million R&D in operating ensure We overall investment with rigor to related was product to that XXXX associated fiscal to XX.X% discretionary spending QX. QX. was investments forward. new our initiatives. expenses in fiscal will balancing from past

of for a operating $X.X fiscal and spending gross line down enable XXXX. fiscal improvements was and opportunities margin Adjusted top incremental XXXX. million improvements from million. $XXX million, adjusted approximately EBITDA will was XX interest to We Trailing expense leverage modest QX million $XXX,XXX Depreciation $XX for compared QX. growth, combination was $X.X for adjusted fiscal in QX expect million was for EBITDA $XXX.X disciplined net fiscal expense fiscal months as

Our $X.X QX fiscal made adjusted X% approximately and rate in an of was at tax expense million. in resulted

highlight I QX, that the fiscal unchanged during reporting, were we as our completing payments of tax was December adjusted $XXX,XXX count XX, XXXX, to per from fiscal like fiscal QX, first beginning update shares $XX.X now to adjusted at to QX. tax for and income to more XXXX. net and $XX.X fiscal it quarter, forward. our Fiscal our compared in of also is After have year appropriate updating QX, analysis in going $XX.X share in was end a cash diluted million fiscal $XXX would utilizing than income rate our tax QX adjusted feel fiscal our net X% operating $X.XX available share that we we QX. million, estimate compared losses. earnings million of earnings million fully Adjusted of $X.XX share per Our U.S.

operational flow on and to cash moving sheet balance Now items.

$XX.X accounts QX Our million million QX. in balance receivable from was up fiscal $XX.X

As a day sales outstanding result, XX days. were

the sequential timing were by over X.X quarter. balance were end quarter the million from slightly accounts times X.X at of prior Our receivable Inventory prior the shipments reflects occurring in in million increase quarter. due QX in on later times an a at up Inventories sequentially. down periods basis turns primarily $X.X $X.X

focused As XXXX, reduced cash our you we few by support QX and since from the flow XX%. approximately required over while inventory balance past than future have million. QX on very $XX.X our may more by have Fiscal approximately growing These was to levels are operations management quarterly been September revenue know, fiscal growth. inventory years higher XX% inventory we

our As over fab comparable production R&D is for cash income expenditures on investments we well QX previously expectation that of net as as internal will fiscal a at million made our non-GAAP Capital operations $X.X totaled from capabilities flow noted, have we as time. equipped. run and amount

be as $XX due fiscal continue of mostly million sequentially, that the quarter was capital year the to We invest and in in we CapEx $XX million noted. we as down strategically to will expect as cash for to us increase capital Free support $XX flow range increases previously grow. to in working $X.X the in million XXXX fiscal million

Computing information equity of December a like XX% $XXX.X XXXX interest Holdings less provide than some additional Ampere sale I'd regarding to Next, the million. our in

compute interest a equity applied limited divested microcircuit Our Ampere had was ARM-based rights. we was with not MACOM back Ampere, operations its in corporations investor in passive established in in involved XXXX MACOM business. and

other One also established of consideration million call The back limited cash XXXX. $XXX.X was Ampere's amount in established option, liability XXXX. exercised members its which was in

carrying income. $XXX.X reflect There able This the to of value XXXX QX, proceeds substantially represents fiscal the net recorded $XXX.X million our This offset a the impact million as Our utilize gain gain financials game. $X.X difference losses GAAP investment. no million was the further of to other between and were strengthens as operating position. approximate tax we transaction MACOM's financial

on short fiscal moving to up and balance other $XXX.X from sheet were cash Next, million Cash, for XXXX. QX, investments quarter equivalents fiscal term million, items. $XXX.X

debt require loans notes $XXX consists due of remaining Our and XXXX. maturity. in of of in convertible payments term term principal million arrangements million long these XXXX $XXX due any on our until Neither the currently

to overall new during from believe Another the equity term long balance accounting highlight of notes associated a QX, of impact to financial with standard adoption calculations. sheet adjusted We or new non-GAAP our We item more standard, that of to accounting provides on have upon expect is do reclassified net representation based $XX.X million debt. expense we accounting standard convertible the any this our the debt. not adoption leverage accurate a interest

the QX. the improvement past along in from XX%. and XX debt in times, the gross first quarter, X.X a respectively we X.X $XXX with and leverage reduction decrease ratio net around decreased million this month During times with a X.X to net fiscal $XXX roughly EBITDA, X.X down With of net of debt, from million, trailing in of leverage exit our quarter

statement like and back and or stakeholders that of to other business, related additional company ESG the disclosures. Earlier MACOM the towards out Steve. reach heard discuss Before as month, to how meaningful to to our continued process these I'd the includes governance will during another summary social as to back step our stockholders filed turn a and corporate has highlight responded. what team over have now proxy as including we information of our and our to turning program, improving some discussion to our of environmental, We it Steve, well do this stockholders have we we ESGIs. which engagements this practices I from annual

Steve Ferranti

Jack. compared be n when we on summary, in margin to in slightly dollar a expects in multibillion approximately QX expected up to be you to In In be and the of by Adjusted $XXX technology Thank MACOM grow between revenue SAM we shares. is of of $X.XX a and based diluted $XX.X with industrial to range unique front be and defense center QX, $XXX is QX expect fully per million. to the range XX% gross X%. and data telecom million revenue to and in to adjusted to earnings flat XX% million stand to expected $X.XX for portfolio. share

Our diverse end cycles. our markets. term be our executing business perspective to a and customers to profitable will manage strategy strategy on is portfolio business throughout to a work and We further establish we long maintain of products, all

confident We in questions. take to ahead. are now we market continue our ask financials months share to and and years improve operator take the I any like can the to would

Operator

the Now, line Thank from sir. coming [Operator Instructions] of Tom question you first Barclays. from O’Malley

open. line Your is

Tom O’Malley

And Hey, business question talked heading to question year digits. of high a center kind March into that and laid well. of here grow color would you’ve you good my low double guys thanks major taking appreciate this the the digits shape I about as morning, is for guess into the guys. out when data year, the single

September? and implied on analog shipments half. for addition you business What's drive acceleration, the which that there? the flat in up any Are Just this Is back portfolio? color that of kind seeing acceleration is up June to in going back laser the slightly. datacenter guiding of half increased to You're the slightly, the

Steve Daly

Sure Good Tom. morning.

you expectations talk can thank center. the year the bit of the what full question. in a we a sort and for take do for step data I'll I'll first the talk So Maybe about then is about back and total little

still we certainly the date could today, for to that we hit least are on up at company. for say growth So year-over-year to everybody XX% plan

excited very we're about So that.

range. outlook just which and last really end had largest that Defense sort our there's is On our market. would in our we call changes signaled no I market that to Second, for highlight of Industrial data that has for outlook outlook XX% comfortable an slightly. growth our our has third, year-over-year And center X% last since increased to call. our with We're rate. And decreased slightly telecom

And we the year, data of be so, as be slightly or we in better into the look to the rest in likely will center telecom's think going think and we mid-teens the more year-over-year. of some driving our few and these these we last low-to-mid per And call some highlighted and single that of is what's continue. factors quarter trends a digits growth that different the on

We XXXG CWDMX are seeing softness a a in pluggables.

expecting the the also continue remain in our of to of current slightly either back to reach we're decrease levels short Some half or volumes year. at the

have data And some for new those so will of our And then data XXXG then many related, the that's DRX work say and strong of are I'll in on would and different soft short some some year. the QX. balance by that products areas our the of I for some highlight products our be will center, And FRX of and including expectation and PAM-X only which the most applications offset applications, reach we're our thing of are that, are data acceleration that within other and the center. of within top center of existing XXXG, risers for the growth the areas

supply is is of related. and of that timing some Some of that ramps back-end chain

the we they outlook also we demand markets the sort there the and see I'll highlight of of of I just So on is are And are changes helpful, from of as changes and XX,XXX and view year. every constant constantly these hope that our say point balance customers. that's quarter going for what that's changes changing mix

the that we can. information to try and blend we together best so, provide And

reach traction development Of starting including products, course, for about us. that especially exciting applications data to lasers with see for long our the we still different and of so within the have are excited lot we're that's we activities center

Tom O’Malley

cautionary the seeing of cost, it you the describe can Thank lot you're highlight broader group, guess what supply protect those really demand you your you, where of it you're the question freight improving, did increased looking helpful. and then that's the just you to I just against you're et cetera. and second measures on guidance a seeing supply about is in pressure, I about environment. to highlight build supply What When terms just people guess. is environment is can and talking areas importance, in demand risks worsening

Steve Daly

Sure.

MACOM. We So risk, about for the the quarter are talked area our is approach our in of the supplying to sort course. a factor like of an what course supply in times providing you've of outlook little components of problems has not for guidance having changed. which that impact general potential even bit all an will for delay, including some year the has shortages components, of It's to things is they or tried production wildcard companies that chain often customers builds, our do their of

to three So has the of environment in. we would in not things say factor for speaking, months. try the MACOM changed generally last I really all those

utilization or capacity. rates are where areas or We running a near have at high very we

few impacted capacity being related or constraints lines package product product high let's a directly mostly data have lines say We center that and density technology. network [indiscernible] by are

second to And COVID, sort a speaking, in data of in that's open months. But And is abating. The is really would why QX. of we and now up a Tom, I run up say that so, last rates not will generally reasons seeing there plateauing bring the has mid-year the right environment three the impact significant changed think sources. doing center work the to of we're one amount you're of

nice and logistic is of around side, product lots now job issues our challenges. it there course world does those moving right a I it team of Of the is the on managing think

Operator

the from Stifel. The Tore Svanberg with lineup, next question coming

open. now is line Your

Tore Svanberg

here. but And year. the thought maybe I to you. was ramp would execution maybe will probably it's you could there my laser thinking I specifically delays, little qualification thank there, start ramp just on business the great. that'd perception us changes are laser congratulations quicker be continuous some Any a business bit Yes, or if on Steve, update the this

Steve Daly

Yes.

the So half think And at our data a laser in and telecom significant. five the laser growth factor is expectation we our for the center second for to growth half of first by revenues in least grow revenue both in half. and second compared will

share, from around a has winning design customer's So individual qualification, nothing market changed there. ramp. It's timing really a

We XXG are we're starting from very -- a in effectively the base, from technology, starting case of small zero.

we Diamond Clear be But will remember, line believe of this from market. you product As June our signals launched getting We share we winning are the positive year. in we market XXXX.

so, business with associated in don’t any laser or issues the I see yellow red general. And

Tore Svanberg

for at analog mean Great. are Does has this a on transformers that a time call. penetrating while this inflection on you, Thank an year? more little I seeing opportunity more analog we been but that. of market and potentially know for an And it materially spent for bit point you the

Steve Daly

approaching Three and make-up our XX% and related. being think data can I our talk four years NRZ of our business about revenue center today of our from business all perspective I revenue. of was the ago, maybe PAMX we're

PAMX. And of where So applications short the a contribution it's movement movement primarily absolutely XXXG XXXG, platforms. reach see XXXG, towards we we analog is our there support

Operator

of with Sandler. the line Harsh from coming Piper Our Kumar next question

is now line Your open.

Harsh Kumar

guys. hey Yes,

solid grand I much. very First of appreciate guide, that solid all, congratulations,

the a story. been leverage And historically had MACOM were growth margin. Steve, gross So on you showing

the in any And constraint and us little And are wanted out question the you implying XX indicating either more. up. I December other for I Can parts than leverage that margin guidance think working my the the because March. the piece telecom the this you months, in follow is a the margin faster behind piece growth gross revenues which a to things that was next understand table you're off or on bit But in have leverage look move point I as of you call on leave did might others? to the supply intact.

Steve Daly

the Sure, had of history MACOM was question. prior Maybe thanks. to XXXX step Thank the back XXXX, for execution. talked words from past least goal. we've is when about up a billion as recent big calls, of goal XXXX on of revenue there And to we in our XXXX end double do CAGR or a $X couple that the years And at about from is fiscal that, taking at a approximately about our we you, from X.X%. a fiscal XXXX. that a And in to our year

that So goal. our is

had of and 'XX a everybody year strong very knows fiscal course we Now, as 'XX.

fiscal QX the growth had year half and high that of In it’s between was very for the the the fact, of and of X% we than X% fiscal a in growth, X%. 'XX, look then year-over-year around back year, at year expect we 'XX our if year year XX.X% sequential during we're run which because meant at the 'XX north back exited we sequential and rate growth fiscal sequential what And X%. greater you QX forecasting half today and growth in

back believe of of from, well where to half strategy. it of the year due talked some you in some to we our we will be there slight the about. reasons really the when growth is acceleration ask growth So speaks coming And our

components. record talked call look Tier is them. contract market line contractor We're trade past for supports our our their This we or quarter into base this on technology within military at major we've bringing I them. with strategy a we doing doing. growth our in which major benchmarking hadn’t new RF actually had optical had re-org'd promoted tell strategy This for did architecture of on to certainly manufacturer within three high-speed past of our defense that an platforms. some idea -- many those be We're new to in what to winning we share the announced our launch with X design with validates some our work station organization, applications And we volume our our and we things that that markets. can first market. get one into study power. our this the past the today, on over development of markets. of where there quarter of worked carbide we Fiber some of win with also with the lines systems course, also I -- on other focus we China China we SAM emphasize on November, present make you to you We a And to Our as is to recently back won we're we pure and executives business have bookings about accomplishments expand senior connectivity product components them the to RF

is our will come coming and adding by our new from coming just than So It growth Industrial from new more products. expanding technologies SAM telecom, Defense. and its from

attributes than of And So markets you those I ask wireless a would focus PON, about course, talked XG that markets. it's SATCOM. the say variety that common on sub we rather let's of those applications,

We attracted basis. outgrow Industrial the So markets. we very absolute are data center over Very will Defense. various an time, those to telecom two the the believe and attracted growth to really much markets on

this of lot attributes that will we're So growth have different a that of support happy very portfolio our we target.

Harsh Kumar

gross then, one maybe to very to or go And want Hey you back for I Jack, helpful. Steve, margin.

that margin understand years quick as margin Is gross business to help So products or a let's maybe that that gross from products My because is perhaps the for threshold and on initial say. there new driving gross likely you're cuttings. some it is three quick the of have cost next that really was come greater up? Can in the to margin business look and gross the I'll degree you tweaks growth, from me the to in came getting you for new were margin into. very you tweaks outs turn a

Steve Daly

for question. thanks add the make it. Tore, to Jack And I'll few and comments a maybe, can then also

that So, to and done lot continues. margins the the -- we've done of gross correct, improve you're the work of teams work a portfolio the

now turning to we'll As the we and dependency the think products contribution towards their about on the a of margin gross future, new start improvement. more

there time. are improve that have to on we new can to but higher business number driving the the other a projects that then definitely over higher. gross to going within things my point, have margins will on improvements the continue that terms we margins. internal we're will two I to have Harsh, time. years, making build that SAM differentiated do continue analyzing and of projects And as And to we your we also from focused mentioned, R&D margins so, value expansion forward. product in There's is gross improve revenue over from price we're there go as say higher the prepared as as well majority expand launches had an Steve over that, and have margins. initiatives technology margin come every had working we additional remarks, that we robust will that more product make in the process to sure they're points perspective our And that higher can coming and next Not let's achieve sure more a three where to our those provide to that And mentioned that as additional fairly with of the of just out

Tore. calling on you Harsh, speaking, Just

Operator

line Our Chris the Caso with of next Raymond coming from questions James.

Your now line open. is

Chris Caso

of get of a mid-teens expectations slightly the of would And XX% the down in you Yes, in what then telecom year. a commentary. through up on just data go you've as basis morning. the would provided based on you. the what be up wanted second center to half Based pretty trends the question, I&D it a consistent Is second on quarterly would thank you both as the basis fiscal overall then, it rest segment of expectations the the be the would half the strongly it half and that fiscal I of and a driving year? your seem be that second that year on year. go different said, of on the those of color would you kind of half the Good see quarterly to some for fiscal bit kind color fiscal of the said second into of revenue the maybe up with and growth kind But first to

Jack Kober

mentioned, continue markets that perfect we not be to point. the do get is the -- had you're had the this isn’t describing, be answer, would a our good evolve change math Steve also things Jack. Yes, will Chris, to that us as But but Yes it you're on view that and described. that to based

our to look book-to-bill also strong over in our We projections is formulate time. form out some on our we backlog of going these

work way the So some through those our the to as that year. hit backlog strength of us gives we numbers

Chris Caso

great. Okay,

backlog backend presume strong could talked half on maybe that a go backlog year. the data about follow-up, of projections, the you that just about about that the based some that a And the in half to to second backlog you've as growth right is risk year. really now? about go I is is we getting that as and of what's depended in supply that factor you there, talk part As center constraints main those constraint capacity or and the getting on of the on kind that of of to talked you second numbers And

Steve Daly

I'll on help that maybe the answer And question. with

we that backlog. So been correct you're building have

I think of talked has to areas a package highlighted, consecutive technologies. growing backlog product are some center as I quarters five one I and book-to-bill data in constrained the related about greater different had we've been we

making markets. we backlog of QX that make a important we as there's we these so quarter talked have things support But as about want. data And products. different a not Certainly two on we as again we or the strong us from dynamics is see our an of each would speaking, for place to forecast have for we three into is generally sure quarter that play scientific center demand lot at as to fall the but also do

QX, about center, in market most revenue of the small our which market. Our is is XX% volatile data

move So, the of ramp the ramp on cycle. both around well on side that quickly on the us as can up as down and

we we if the we at to have out the look speaking, to year a telecom that But is we set hit data 'XX. digit, we up then and generally in sure going put for And make going cases hedge the ourselves those can year. mid-single very publicly. this we full our if good center hit I highlighted plan targets with there that can extreme as that fiscal have mid-teens and So, is very growth, way year for for we'll be the year, be to I&D pleased the the

Operator

question line coming from And of the next David Williams with Benchmark.

line open. is You're

David Williams

just of Hey, how have for areas you're ask terms terms I in those good of trends? morning I me book-to-bills seeing letting But touch guess track, good. the questions obviously the are base and there seeing a you're just maybe trends order behavior thanks want maybe in been come few that changes to order and here. are in particular customer

Steve Daly

no. Generally,

industry. I times think of in the our aware customers that high constraints. run are the and run with risks cycle associated they the understand well potential volume in platforms extended main They supply

force secure our sales demands to to can so, that been our sure best orders customers make and the we way working that understand supply planning. closely our And we so the tell their and we has customers very place is to instigate

a is this just I'll Jack that script been inventory. mentioned we that thing and bit in highlight his have other building The of

QX revenue of have quarter and Our some that the we and allow will that inventory also went us QX. for up to projections this hit

we attenuating some run getting and not I an on production have all seen, effect will have We the that they're plans. they to been and messaged our by customers has need say components

now. probably And new at of so, sort dynamics play we that's -- I right would say the only that’s

think on that based setting supply. We are resetting and information production hearing what execute their from I good in schedules now they about can level customers

I trickledown job been engineering has setting has to issues, year doing we're this us. product up for so, they're a manageable think ourselves the development. think long-term, and success. And with highlight I'll these again I great But that are effect short-term over team that a

than to We year. products track least on more XX% year last we this at still did are launch

are We And are major our and latest in OFC June. introduce to we also in up conferences coming like products. March where these in to IMS best

pretty getting also we're at So and about OFC IMS. excited some announcements

David Williams

feel trying of kind as visibility some to of the and you normalized. helpful. feel as we into maybe problems helped about that normalize. well-positioned in think business your just of when the a need Great, you're the kind like maybe that then, replenishment How get will the supply to there that team you your happen avert get how and the behaviors you to I’m will just you. begins of Thank Do some you isolate think that's that we to do will supply to see. supply period is of just we team terms of very fairly closer normalization. maybe think customer And act team that typically a thinking begin oversupply can of

Steve Daly

So market. the end depends on it

production very We have of empty some they do the we then low is in end markets inventory very, and where or have markets a medium job channel are other customers low the planning. where and and or very volume good

our customers expect And MACOM visibility rates. with unforeseen highlight have of any so, of and expect we wouldn’t we their deal run that most sort plans. directly into good that falloff their major on I'll

there's as than if allow our we some like you months. so, for longer cycle plan that comfort in that be times are manufacturing the us going gives And because six that future, know can -- to in instances changes

to And close high have so, we volume to customers. stay our very

Operator

with of Ackerman from Cowen. Our line next question coming Karl the

Your line is open. now

Karl Ackerman

may. just if I Two Good growth. I capacity us, on guess questions, thank Yes, you. for morning.

the You and call customers Hampshire, telling in would in And even need you this into customers be unless your when there there's you areas XXXX? indicated wasn’t you capacity. is ago. capacity XX they be now. capacity But markets [probably] you Hampshire would manufacturing loading New Clearly expanding your really in Are order expanding beyond serve XXXX days so much running. New which you these visibility team you up maybe that giving commentary half growing and which should discussed the back overall several where on facility expanding are and more of be

Steve Daly

questions. the for you Thank

very in million $XXX record our a if in And yes. past some we quarters have of that roll XXXX, have areas backlog ship, back we've backlog and on good And we one in of half over compare highlighted so we a the book-to-bill, backlog. than actually had five last quarters. over we visibility actually shows as generated script So even we greater -- the map five the to where we what we you the through it

there. the is so, demand And

so the in that's different You the units, in and I course site one We're we're would business there all parts and design logistics, mentioned the that just of an we our of that expanding expanding. Hampshire business New highlight planning, of the have including manufacturing engineering, space, of doubling example area production. operations,

we and plans. And Obviously this more more support so, the out last growth. requires year aggressive that year have talked growth about more products to we than very and coming XX% people facility

Now we significant our production our business where we business said, quickly have operation. people's fabs. that like of And through a we fab-less to we provides a tremendous cost run the leverage that no other with portion and our adding that model ramp with little or can

of of So we growth markets. expectations products in facility sense runs leverage where still on a of based that. We're have makes think Hampshire for we to in expanding range New model. a it wide The wide the areas range do

growth. sort based expansion an or it's And into support so, I that particular of read indicator to wouldn’t program customer broad broad of one activity. It's as any

Karl Ackerman

higher I'll them also one. telecom, in is The projection lasers is mainly coming Fronthaul or may, this I clarifications have you into from Two growth if quick tie this appreciate PON. that. I

of inflow Second, Thank the from Jack, plans and when they I proceeds cash appear? guess, you. might finalize you when deploy the

Steve Daly

take one Thank I'll and maybe first Jack the the the take question. you, for second. can

want coming a not the would us as course broadband but to investors the growth. on side RF important but side. for and telecom various of our PON. growth diversified or exclusively that is XG Certainly we an I optical as is from on PON wireline think to or is well market only applications So Fronthaul service also XG It

on in about. talked based growth the second? Jack, good our two just do to you take that news not based, the is telecom is want you items So broad the

Jack Kober

with as here position Ampere to still we're net call. And there. any outcome we debt the as regards pleased the we're don’t ourselves a cash, transaction And then of Yes. view with excess in having today, we sit kind

appropriate of needs terms cash we immediately. Don’t sit there's that we're we feel today. like in to any So think deploy where

internally remarks CapEx making had been we've the in in mentioned mentioned, plan we've year continue investment. my prepared and also I investments to past the I As some doing that. know business over

be generating to utilization will we returns sure of the that for appropriate forward. So go the for make as we're cash our some business

Operator

line the Needham. Our Quinn from next Bolton with of coming question

open. now is line Your

Quinn Bolton

Hey quick guys, a just questions from couple of me.

should the Just one product either higher down XX we you're costs the be seeing from a issues, points of in aware related that quarter midpoint guide, input margin cost gross XX headwinds current shift basis sequentially. on of? COVID particular Any mix or

Jack Kober

out Short answer look we a to as margins, that point and It gross to work the into line. does continually on goes happen as things to is go improve. but time get more don’t straight future, we no. challenging our through as bit goal in always is a

over and grab range XX% there as make those that we the last was said the put continually we quarter the plans out are to within improvements number. Our guide I effectively

XX%. So the I had was to think XX% that we guide

with nothing out there. notable really to guide So that point

Quinn Bolton

that Perfect. Jack. I data questions of center. And like Steve, clarification, a then the guess for couple on Thanks

point a those think speed businesses business lower a or into declining you at legacy PAM towards in of to shifts some the move could sort do see now was You those of in mentioned year. peak of past AOCs think CWDMX be in soft in the you mode as applications? a those going the Should the of and sort we their half business second as XX gig resurgence

Steve Daly

to we're ourselves look customers. That's our a a with question very question as and and we also work that's asking good

It's be general But have looking the rates. expectation. we're in but steady higher data Our to And they'll relevant demand future. programs then, in that's to still and certainly XXXG down migrating it's trend that very line not very my continue addresses are And in these at that. on remarks really exciting they'll areas that product things is moment PAMX about our let's continue think the spend towards say highlight and sense possible two in equalizers. And the data the certainly are this applications technology especially we I I a different talked see to the linear this that is I'll prepared that important new really maybe CWDMX center.

to a to as have the the companies we're an they stand The connections then and opposed of use up end their optical where high that on to working make the with of electrical you're components first want an you're to adjustments drive infrastructure backplane second is signal. very And copper computers. of and signal And to the is optical where the signal. say and all necessary computers the [AX] let's short reach inside center cable data application electrical moving

say solutions with [AX]. remove to brought functionality module that so some from we're working into have to effectively customers the pluggable develop function, let's and the DSP the And key

adopted And programs exciting doing we're And the dam successful that we're break us. inside that And if broader the more for so center. for applications here -- technology that's will XXXG. we're moving as a data entering on at

So we're that have focused on as unique a very technology. very we where company

We words direct applications. in have with there's but certain to the effectively close are be can relationships at eliminate direct looking major for drive, some companies different it that the goal would DSP it, detector, you call

platforms reason things migrate newer when so our to and those or technologies like XXG, are involved mentioned will AOCs, this we those. in I the And legacy we some why that's talked of XXXG about SRX

engaged that we're portfolio So platforms. sure making with management, it's next generation about

Operator

turn to for to And over showing call Daly I'm Mr. now any would remarks. not closing like this further questions at any back I the time.

Steve Daly

continued nice suppliers, our business have you and you. Thank day. for Thank thank we'd customers, partners their to like In closing, support. employees and a

Operator

conference our that you your for and for today. Ladies gentlemen does Thank conclude participation.

may disconnect. You now

MACOM Technology Solutions (MTSI) 27 Jan 222022 Q1 Earnings call transcript