- Earnings call transcript Q4 2022

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Operator

Welcome to MACOM's Fourth Fiscal Quarter 2022 Conference Call. This call is being recorded today, Thursday, November 3, 2022. [Operator Instructions] I will now turn the call to Mr. Steve Ferranti, MACOM's Vice President of 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 fourth

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

I then we adjusted solid per Jack Thank QX will our fiscal and you, morning. happy for earnings for our was begin that, financial will million quarter be guidance call XXXX, Chief the will share. and will $XXX.X a results for and Revenue revenue our and take year fiscal was performance. provide and a diluted full Jack general in-depth We $X.XX some first to After with finished, update. Financial year finished EPS questions. of When I with Officer, review more is provide company quarter a today's of good Kober, fourth XXXX. fiscal

year-over-year XX, in and For share. XX% per the adjusted our growth full in model. was share. These the represents EPS year million strength adjusted leverage $X.XX demonstrate and results and per This XX% diluted over September growth revenue earnings XXXX, revenue year-over-year $XXX ending was business fiscal

past increase improved the and X on development. sheet. our an incrementally team of FY and quarters, designers nearly XXX new balance believe strong million fiscal improved products, gains enable we and for products packaging R&D projects resulting support share margins long-term short-term IC have flow. in excitement approximately unique our because MACOM XX% new finished cash our $XXX we the growth of product was gross a and of profits, near- of year with is world-class also year-over-year. cash There our with many new We Over have We market targets. high many in teams investments growing manufacturing and a these and level at launching underway, a operating will 'XX year capabilities.

QX, X.X:X year total revenue. In We will continue and to our these in and build competitive advantages business upon turns approximately book-to-bill was XXXX. ratio our was fiscal expand XX% of

For our book-to-bill full year, fiscal the was X.X:X.

backlog years, our strong To at backlog remains the gains share levels this additional last upcoming X.Xx, provide entering a record goals growth XX% some context, due Our a X the over reflective for as XXXX, is our as us to position adoption. with timeframe achieve up backlog We MACOM's providing year. to translating market believe the product to fiscal our over near new CAGR. market of is well strength growth

recession our clear, slowdown. will business a However, immune market to be believe or global be we from do not

at our of as and high-performance ratio seen could strategic semiconductor we microwave believe flow. we this be to our directly customers are supplier a more softness and a our product MACOM In or More cautious solutions, is beyond. book-to-bill have believe portfolio. this and attributable and And XXXX we year fact, RF, optimistic recently, quarter. fiscal analog, Despite for viewing as Lightwave about X we below being are this, order result, are and in prospects strengthening

serviceable $X see to Additionally, or to $X addressable our continuing our tremendous a address billion better opportunity we SAM, market, lines portfolio. expand by product billion and to

maintain we a is strength consumer we no base with diverse to business the a which exposure, a revenue As little and for advantage reminder, believe company. a

X% spans diversification customers customers of no FY end revenue. and markets. total XX no product top full Our In revenue. of lines, single than end year, total We the XX% of revenue. had more XX% for 'XX, customers represented generated And product direct our our than our greater

at $XX our Center Industrial fiscal end expected, Defense revenue QX and million. million, generally markets. to with million at was as Turning $XX.X Telecom $XX.X Data and at

year Telecom and I&D For was XXXX, fiscal the Center flat, was up XX%. X% Data full was up

performed Looking full the market details Industrial and end year. the and QX well Defense our for for at each fiscal during market, end

Our technologies opportunities filter transistors goal and CAPS the our KV wide of variety I&D ship-based our business power mimics, And modules, ground, all optical and of continue is leverage find and large to sales to across technologies and to and markets. capabilities, airborne RF development subsystems GaN sell teams a into programs. our

levels. high ICs. because limits transmit extreme RF been competencies. As U.S. Defense requirements multiyear building has technologies and performance Defense to U.S. the core microwave awarded these of with our with In fiscal fab requirements government. an high at XXXX, semiconductor will data frequencies, recently rates they're custom one contract tactical customer of align to the large example, radios MACOM's and perfectly manufacture support power program or unique a challenging customers and systems production our our push often this low and deliver

radars medical, test strategy Our to to into these automation, the and further same technologies measurement, automotive is leverage support opportunities. commercial new and markets industrial

in end flat market was revenue QX. Our Telecom

segment. largely in by quarter, the offset strength was the XG in broadband softness During access

XX% data Satcom XG into MACOM's connections PON, networks FY year, a hybrid strong performance, fiber wireless, The for in like very haul, faster microwave Telecom had coax, the growth growing metro/long For and higher plays across subsegments and 'XX. drive strengths. rates directly

by share and driven was Our these and telecom in strong market new introductions with in broad-based coupled end exceptional gains. market growth dynamics, 'XX product FY

up market was but end Center FY revenue overall flat in 'XX. QX, Data Our for

solutions these majority a and the XXG for for by coherent product In orders DFB offerings, for lasers. impacted NRZ TIAs drive that have portfolio equalizers, in and includes transimpedance for including our As ZR many a these strong and and mappers and framers product products, XXG PAMX, Crosspoint cases, FY place CW linear solutions we in switch noting (sic) constraints products. 'XX. addition supplier for amplifiers TIAs sole were Today, supply Data the of source our backlog switch reminder, are we or Crosspoint our products OTN [RZ], or high-performance new to analog and HPA OTN direct and Center our legacy and drivers drivers

course drivers FY to for Over of Center be new we growth. the products expect 'XX, the Data primary

lasers For for and CW example, just our beginning. new XXG XXG our efforts sales DFB lasers is and marketing

copper linear including started data Our active backplane high have and of rate FY products during 'XX ramping and Equalizer support applications, in continue will year cable. this

are of We the see also low-cost to coherent beginning XXXG the solutions. in optics proliferation with access tunable market

MACOM's All represent growth drivers of of products business. these incremental

have including today, advantage focusing we ICs selectively portfolio semiconductors we discussed such and as photodetectors. calls, we competitive in leverage lasers technology the and market, As engage prior high-performance within analog can MACOM's in where optical on data areas center

the into supplier broad-based Data Center but small a are market. We

same will on engineering and targeted had increasingly, We design attractive the and strategy we new will finding fiscal XXXX, many a to We and design of in continue and engagement located to Massachusetts resources with focus them pursue opened leveraging outside and Data X today. these few industry-leading We Korea opportunities recap like accomplishments talent. would in centers Seoul, new I Western staffed this technologies. these Center,

at Our beginning on to the be [.XX] GaN silicon of to released mimic quarter. next is process production on carbide schedule qualified and

and for of achieve remarkable introductions. results, the fab first customers wave work teams product device and and schedule waiting Our these know meet we have are our engineering done to to

each DRIVE This connection HPA this comprising and Our in PURE linear equalization transimpedance it single support XXXG amplifiers same chipset DSP broad path innovative to in specialized server Working leading-edge while ranges, eliminate disruptive designed component such certain can links as a the together, PAMX the be believe is been data to of need and latency amplification the product switch can applications. target direct and enable that team cost ASICs. linear support has these drivers We MACOM's at enable dynamic architectures. functionality and low can launched linear and mode multimode time, noise to that for line for technology minimized. throughput power,

completed Diodes qualification Our an teams for automotive customer. important a key product

XXXX We in expect more XXXXX automotive design roll wins from TS this now certified. that and is automotive fab other customers our

We semiconductor in in include performance and improved the continue applications. radar power RF carbide the level management. our power by systems. high-power portfolio high-voltage believe to with power is The electronic ideal to amplifier We including the high-voltage MACOM circuits we expanded amplifier, is aerospace highest which extremely product and a product applications, pure of novel X-kilowatt boundaries part for thermal high industry. X-kilowatt compound was defense [E&P], and packaging power advanced This high achieved materials for combining [apologies] power warfare push

transitioned Our lasers. and several to team production both customers qualification photodetectors XXG status from on Lightwave status

and IND steady looks measured EML module we for notably, And subsystems capabilities products, applications. our engineering market but expanded slow results have design RF on penetration. Lightwave We first our our teams compelling. XXXG last, And

Here, we proprietary leverage MACOM's unique solutions our subsystem to will with engineering provide customers on expertise semiconductors. based

competitive dozens for position high-performance American broadband on we gain PON coherent based and introducing business; other IT fiber-to-the-home priorities analog amplifier on on new market assembly and markets, diversifying business, to our Continuing share advantage provide these years We Many and federal, CHIPS optimizing in market as for inherent to servicing mimics, in and results. development our share fiscal thousands Data with our financial expand authorities an to include revenue applications products silicon will securing of and of the leadership Telecom win diversity broad cycles flow solutions improve cash gallium and in have funding, the develop a cycles. produce range can upgrade now and industry-leading life for careers proprietary content access stable our Strengthening well a is to introduced. of and Jack capture business, semiconductor more taking provide base. our products our summary, in with in focus of different and long European after strength review and and GaN and helping technology, grow solutions subsystems processes, products continuing production end XXG, as the continuing today, and our for on share. markets programs. and quickly more Center MACOM entire XGS radar working year organization by move module theme they attracting employees' local spanning XXXX, awarded market efficiency year microwave company, talent. to our arsenide fiscal on with central profitability 'XX to maintaining of IC lines, as further of wide products capabilities As state operations market Act A recently so microwave has product North that a of grow our and to carbide MACOM's executing enhance been of company, capabilities our this In and they've revenues detailed and customers. RF view

Jack Kober

everyone. Steve, and you, Thank morning, good

Before results, with few would getting details associated of summarize year into quarterly our I to a financials. items our fiscal the like XXXX

by than grew year XXXX, backlog revenue the prior and XX% during order more XXXX our than our more full fiscal grew fiscal year. over XX% by First,

fiscal our fiscal up XXXX in year went adjusted This gross continue fiscal year with margin our XXXX. is margin we Second, gross our full since XXXX. full XX.X% points XXX has basis in the public that from to for expand XX% the MACOM XX%, exceeded at first margins

adjusted our excess fiscal addition, of were XXXX year in operating for In margins XX%.

fiscal business adjusted EPS was XXXX Third, $X.XX $XXX our year million in income finally, XX% year performance an compared remain employees in move XXXX, the $XXX to into fiscal from as fiscal executing focused to MACOM's we more perspective, of net the year our on was fiscal than compared adjusted team strategy and improvement. $X.XX to And And continue XXXX. XXXX. million improving outstanding XXXX a operational of

I&D and $XXX.X for X.X% million, results. was from sequentially data based growth quarterly Revenue up on the to fiscal the quarter markets. on our modest center Now

sequentially. of revenue growth with represented at $XXX a million, $XXX double-digit geographic QX our up domestic fiscal of revenue in customers another completed for XX% basis, On approximately Our XXXX from million XXXX. fiscal both from fiscal year year XXXX. U.S. MACOM XX% XX fiscal year was XXXX QX XX% QX gross fiscal QX points of for Adjusted in results or XX.X% from revenue, million XXXX, and $XXX.X for and fiscal profit year up basis up fiscal

on Over past many resulting the gross executed yields, we times and these fiscal improvements reduce annual to initiatives year, margin. optimize cycle to improve our in pricing,

XXXX, consisting improvement to expense the our development initiatives revenue million, operating was R&D by for leverage fiscal $XXX year. expense operating we our ahead. and capabilities million, selling, sequentially, was grow The fiscal from OpEx of investments which fiscal was a will million. income million expense fiscal Adjusted to months and in course $X.X new to We primarily fiscal compared us deliver QX Adjusted as fiscal QX. continue commence Fiscal of higher for $XX.X continue in and margin million resources of $XX.X research $XXX R&D year our fiscal to we and new approximately to in as gross of to increase to administrative sequential QX. staff margin the in operating highlighting expense million year representing compared increase. income $X.X will to increased QX making continue continued technologies XX for million was the was operating higher was plan additional Adjusted a $XX.X leading-edge million the basis Total the overall contribute XX% technology last and costs. million. in the R&D operating customers XX% XX% $XX.X are our reaching business. $XXX.X $XX.X was year XXXX. and in solutions to course our and we QX expect as years driven $XX.X XX our adjusted Going $XX.X points representing year-over-year We fiscal expenses XXXX, year, help in forward, for XXXX of over EBITDA EBITDA trend adjusted increase, mix. up million million over operating of Trailing adjusted general year-over-year million adjusted products $XXX million expansion modestly semiconductor the believe employee-related to Depreciation and in invest

net repayment and in as expense partial interest had of driven $XX million, was expense increase from short-term income XXXX. adjusted less $XXX,XXX on prior QX, The income approximately fiscal in million from year $XXX,XXX and expense fiscal net year adjusted compared fiscal XXXX interest fiscal than in net as QX. XXXX, in associated was we Fiscal the $X.X year interest for For of net to XXXX decrease loan investment well term refinancing higher cash our interest by interest our primarily our down balances.

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

and approximately for Our $XXX,XXX net cash tax for payments million fiscal were year quarter the XXXX. fourth $X.X

income adjusted We tax remain expect year to X% for fiscal at rate our XXXX.

the as fourth as loss statement. on our financials income asset. substantially our million improving GAAP our benefit our balance financials. deferred carryforwards tax earnings for our asset our benefits and income. could a a for utilize on an $XXX income, not our result QX of us in income to potentially Primarily have be like our these to XXXX future tax potential and recording benefit quarter. Next, have statements recorded recorded here tax carryforwards on tax I This included on rules historical GAAP accounting million would used non-GAAP Due history to benefit to permit our losses our approximately a statement quarter to discuss recorded future accumulated This of Historically, did GAAP during GAAP sheet a a tax not GAAP in $XXX limited us million of carryforwards noncash offset of in financial to the that had historically offset loss the updated all statements the operating these to and was credit adjustment we noncash MACOM R&D as recorded adjusted net resulted of tax fourth financial in quarter. $XXX loss fiscal these face of profitability, now had GAAP the losses reflect

is of net XX, As carryforwards our million, balance deferred $XXX tax our September XXXX, loss million. and approximately $XXX operating are asset

As and a going of GAAP income I more considerations on we adjustment one positive was basis continue earlier, generate the income this accounting forward. noted have to generated for to GAAP that consistently recently, expect primary

year the XXXX, XXXX September and was equity GAAP just the our in ended (sic) reference, benefit million $XXX prior I the an million of income For tax a inclusive with associated noted our our and from for fiscal gain fiscal net sale interest. adjustment [$XXX] million $XX QX $XXX of $XXX million year

QX income per share million fiscal QX. earnings utilizing fiscal $X.XX in Adjusted QX. shares adjusted to compared per fully $XX.X million net For of share $XX.X earnings in was of $X.XX, was count share adjusted fiscal to million diluted a XX.X compared

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

Our balance QX million $XXX.X $XXX.X quarter. accounts mostly QX, due to receivable during fiscal million, in linearity down was improved the from slightly

compared days result, million prior XX the $XXX quarter from outstanding sequentially sales were days a at XX Inventories end, $XXX.X in were up to quarter. As days million.

to metals X.Xx, year strategic have customer to During sequentially. cash and substrates, orders. $XX.X investments the manufacturing stocks critical items, in we prior in flow wafer sequentially million, were XXXX, fiscal precious in down goods quarter. inventory from approximately QX up consumables, well QX as including our as X.Xx make from turns million Inventory was Fiscal continued various operations finished support $XX

to increase is timing working due quarterly the This of capital primarily payments.

up result, $X.X moderate fiscal to R&D this expect million from upcoming Capital totaled fiscal a we from be in expenditures of $XX.X fab fiscal our As in XXXX attributable flow QX. CapEx for spending. high XXXX, our QX operations quarter of below $XX Fiscal to and level. and first million million cash was XXXX,

fiscal continue locations our to CapEx at facilities. as be capacity manufacturing our domestic to approximately capabilities we expect process XXXX expand We $XX and million R&D and

is generation $XXX QX. in trailing EBITDA, million and XX-month sheet in the other million down items. $XXX.X up or prior from our cash equivalents short-term fourth X.X million, Cash, XX% same leverage investments sequentially With from up fourth continued and the moving quarter were fiscal quarter increase for Next, cash quarter to on $XX.X and gross our year. X.Xx, the the in balance

$XX our Our business X, our our cash continues earnings debt perform well. remains net healthy. remains million. below In net to is continues less than improve, our summary, leverage and and flow of to now quality The

macroeconomic industry. of are the uncertainty aware We currently the semiconductor impacting

Steve. margins a of strong back support carefully cycles. balance discretionary sheet to expect will cash We I cash flow the maintain the we help strategic spending ample over remain However, goals. course to manage healthy business our to and with these conversation our positive fund turn over now and

Steve Daly

QX $XXX $XXX to XX.X%. be Jack. between And In you, fiscal to to Adjusted based estimate range XX.X% $X.XX $X.XX on fiscal the fully QX, is expects in Thank million margin flat diluted to adjusted million. markets. gross expected be of across in expected the revenue the earnings MACOM be per we XXXX, December of share or ending range modest growth is in XX, end shares. X XX.X and million to

we perspective a As maintain I've on executing noted, strategy. long-term our

in share We are to take improve our and years and confident we can market months ahead. the that financials continue

Our ago, that product portfolio targets. a year this exceed and meet was stronger reason, is we our we for than it confident can are or

I in power, highest semiconductor and like would MACOM take highest trends, system-level highest our manufacturing support bandwidth, will all semiconductor rate packaging the which higher long the the the now drive frequencies our operator subsystem in potential bring growth. suppliers, MACOM's to with designs, data compound power term, levels the data of processing these ask including more will and frequency semiconductor requirements and and means to questions. is we innovative materials higher believe solutions customers faster solutions market. performance speeds, require together analog unique higher in Over analog from to any towards specialized to strong better and provide know-how. These levels trends

Operator

Kumar from Harsh Piper Sandler. first Our coming with Instructions] [Operator line of question the

Harsh Kumar

apart We're season. seeing Yes, guys, earning companies semiconductor all, first just this fall of execution. in solid

appreciate steady-eddy a we guide. So [printing] very

growth? perceive economic how goal to then you teens of, Is that, some us cognizant long-term you're mark did are think in activity still orders. that first with seeing softness your seeing to So orders? very, that do you activity, stock a b, call the where wanted about? now there's say I very And softness aware are understand, the valid even it, all, recessionary low for we or you a, Steve, that of in

Steve Daly

for you, the Thank Harsh, questions.

on segment as that bookings So being new necessarily as are one wins about that some automotive the sort particular script highlight of is we the second Jack in call we supporting as your the goals. fiscal softness any allows quite to ourselves terms which the where still I well consecutive us talked leads our highlight defense for is which the of as other. really market of out 'XX, part to I'll said, than X our design strong I holding greater up strong set bookings. fairly was, overall the business eighth wouldn't of a a growth in weaker also are just in question, the broad-based. have And long-term the book-to-bill of that had quarter than and which really to this overall

annual generally And time. X give so give you a We as know, we guidance. don't quarter at

due growth, in in fiscal XX% a beginning we year. 'XX, At as of we feel same 'XX, the last we happy XX%, At of about we're set of also to primarily a 'XX, position the I XX% addressable at doing the As beginning were we by we've during have delivered think the like which driven threshold work we've set of we're product launching, lines target this at to mentioned script, that our we about been new year in so year-over-year XX%, we that. of forward delivered the the fiscal we than year, growth. And greater really expand and than stronger the least we taking start fiscal talked philosophy we're want XX%. to about SAM the primarily markets, that many the course at my of were we

more which our in important, back Asia, long-term have can of macroeconomic revenue goals, of some the certainly, say, seeing of do fiscal I we and we're those China, $X still terms geopolitical more would And given provide, you take is do 'XX. that in of conditions, we a I if our you understand targets look think specifically billion risks, of the fiscal softness at to items all math quite However, in in achieve uncertainty big the is 'XX. the believe our simple. step But terms

you take -- guide to get and double-digit sorry, low our and that rate low an billion average $X just of growth quickly. annualize If quite you growth apply QX single for rates,

right we're from an think of all doing we And the tell products ultimate amount we this the doubled things. starts of basis. driver our on the XXXX, new increasing I It So by number And we're XXXX to you launching annual can have products. of growth. will be the

Harsh Kumar

I activity. Steve, all maybe then optimistic end you've Can I'll kind follow-up at get and a seeing you -- product of any new off pressures And your Are got feel where any the areas of the which very helpful. about us had growth? for ASP podium. strong a markets markets? strong in X you with products very new of you the very highlight feel for you then

Steve Daly

and seeing pressures. is as know, industry, price constantly we're semiconductor competitive, very the you So

something handling. is the try solutions I think optimize customers. quite of to the that of so to And is We capable our that team value

that portfolio stronger us the business and are operational to programs We command terms differentiated, X a seen gross and getting are last at up. of But we've try and to stronger and is yield allows the chasing that really X you've And pricing. differentiate as fact lower improvements to as our introduced it enhancement to more in management chain whatnot. over supply due yes, We price years, which ourselves. products, And also not the speaks prices. more in of going margins is some more to that leader

trends those as expect highlighted continue, to we in so script. And Jack his

on that or we'll things GaN] turning many most technology markets I and on. introducing a with But or to me different really that because say new going silicon carbide referred In will corner about? products [NPI] market any New terms be sort hard the for It's one we which out our after are of area, the to of we we segments or call right are process, you what products Year's. have excited particular so [.XX

X of be about lot that share. so major will the we're go And there. out for the the know market it a and pleased market a take our the company, We next to is event performance market's over and X years, the process. into And fun of very to

the think I really about whole So is team excited that.

Operator

question. next Our

America. from question of coming with the Vivek of line Arya Next Bank

Vivek Arya

Steve, about the you double I I was go back could us the made digits to grow the potential to hoping opportunity perhaps this wanted just and to comment year. you give some segment? think segments help think with or line by can grow grow color X Which faster and opportunity? would growth you you rate? that all do you Or in that segments below

Steve Daly

to difficult markets, think will achieve we'll our very to of where it's terms think growth us year in I of our communicate So high achieve for can I of end we sort be growth. able goal. ultimately will single-digit markets mix think and with the fidelity we If which drive double-digit low the across

item to don't getting I soft XG is that market. right and defense want call fairly knows one strong now. Certainly, or any necessarily We know So everybody that out particular end is stronger.

quite product doing introductions. well Our telecom business driven is primarily by

that line. As expanded also EML think but portfolio. portfolio we is addresses lasers, to working we SOI lasers, again, also We're amplifiers only products, of infrastructure a and that on cable establishing very getting the more laser product Data Telecom, when access about projects Center of during course broadband And we're side, not we in functions sensors. and of the about and filters. with more which on, our our the year, variety we and additive control interesting involved I mentioned optical mentioned including a think really

underway lasing. and And in interesting of so around a lot we projects have

excited we're about for this so that And year. coming

our any highlight interesting wouldn't necessarily I growth. will a So projects. of lot one that drive

that. I I'll So guess it at leave

Vivek Arya

in wanted in And is compares The was asked rates grew get of Defense. Obviously, 'XX. the fiscal last relative question growth. on a disparity XX%, the X% right. to I reason growth so really I is year, perspective big X segments the you one and All different in your that there Industrial growth is The Defense X% and in the to? do tougher. that to other correlate we Industrial put your and where of sales model peers. are this and Like a how I'm analog Industrial we context what struggling growth this to across saw industrial growth XX% in XX%, But of number Defense how

Steve Daly

I that of was a the Defense And $XX lack in sort of of that our context investment, and due the put to many for the it's in million million and lack strategy $XX years quarter things business. really And range. to of Sure. range-bound think Industrial focus business to was important

we decision and went a in through actually we for $XX.X Defense fast QX million. the priority. our I&D at to of level of And And then so record a when to XXXX, now made revenue update QX, company was strategy make our the back forwarding Industrial

And this that So we're on and was into that. growth we record also expecting a modest quarter. either QX, or going flat --

And business. solid in broken to so doing the pleased and continuing to by all we I&D, we of to think Telecom and our $X performance of the achieve we're as billion right sort terms about have with things actually well as see continue But quite have reasonable term, our to going we we're out growth. business we're think long I&D

it I think I leave at would that. So

Operator

of line our And from with O'Malley question the Barclays. coming Thomas next

Thomas O’Malley

recently X ago there those prior comment you were an any saw might and and on the to of the unable also, Is I optical some weakness future? on, go companies Chinese Could you seeing, taken out color back earlier weakness we you unverified at in large were well-known weakness you're from in the two, just think, a And to list. one, I a China. of that now? the way quarters that if come until list what the company-specific contextualize about you question wanted to a look that list then the that made, amount any you've actually to think customers ship impact if be was just give could there

Steve Daly

Sure. few things Well, a China. about

First of the everybody very all, important semiconductor is China market a industry. as for knows,

China XX% China. we of about Today, in think of $XXX our billion semiconductor I products. MACOM's XXXX, ship into overall business, business imported

look trending back $XXX XXXX, that's If $XXX down. about were In you actually and now below that's trending go trend, and million. X-year the towards we last million, been just at

China. and for team of us. actually a market year, diverse a restructuring This markets range that will recognize It's of And expansion China, us. including bit what that energy a and there's electric of we did for past of forward, we did growth about market very rebuilding semiconductor. require and interesting important new an MACOM our some it's think inside wide is in as So our markets we going vehicles

part So some to that today. of address try large our is those we're not addressing of markets go-forward strategy currently to certainly

thing just overall second terms of control. in add The export I'll

take or we entity seriously very updates parties to there's So denied lists. that whenever

and those of immediately very we Of course, all address react changes. would we are active, and

that so entity result, and in revenues And we where the instances see take list. gone has do there past have dip companies And to the impact down. our an been on have we as a

Of now a million course, Huawei about were to year back that's in $XX and XXXX, X. we trending

would how impact what So I regulations any particular hard guess, than regulations. we and us I Tom, the change business regulations. updated, to here follow It's make as would the follow for the and adjust our about is the as today comments sit other say we are

Thomas O’Malley

Got think guys it. follow-up have the helpful. you just Industrial. XX% And breakout I the a business. I&D on Historically, of Defense, given Really then XX%

Is breakdown expect moving we go a as those be the X quarters? the would stronger bit With pieces those the the sizing you of couple over have Or you last pieces, -- relative change seen Defense still forward. of XX-XX? that would

Steve Daly

is ratio that think correct. I about

ratio think I reasonable ratio a [Technical to use. it's Difficulty]

Defense that big long might expect actually with I the XX-XX think over with would grow some involved Defense, programs term getting we're beyond in the of ratio. I

Operator

coming line The the of Tore Stifel. next question with from Svanberg

Tore Svanberg

gross margin milestone. That's And congratulations the XX% a good full year. for the on

didn't $X I you a $X First remarks, about SAM prepared billion. billion I of in past, this, $X were the think I quite you question, said maybe you've to your know doing billion. when but Steve, catch talked

So but is is that additional I wondering from you -- your segment. it's Is X auto segments, was obviously And a said now just X $X billion? becoming coming it to coming why X? obviously, also

out of sort separating just on if it's to that was I as So going SAM. start wondering you're

Steve Daly

can working you So in range our numbers to be you are -- expand correct you can include SAM what that depending SAM. the and on are don't. we hard SAM what

our number product coming the lines from generally lines. over growth new years, a we've say little we I you on as the of What technologies. So know, new and be last is SAMs. to conservative is whole ranging a try new product will few And of launched

is OTDR optical as expansion year next SAM the It's talked that of call, on. to we and so goes about GaN coming the some list the products from the coming we're looking including carbide. silicon And from last well products, the on lasers introduce -- EML that

a we're our every and sure strategic real to is SAM that $X functionality So that number. of is make target new our adding portfolio. billion the plan Part year, expansion to

that you grow. to so number expect to should continue And

Tore Svanberg

did. mean, while business, And good. as of Very for any you been Data a bit I growth your follow-up, Center there, others does lasers have contrite, right? (sic) MACOM And didn't lot a think year, the this the so sound has a my see I products lasers, of especially and next forth. [DFB] coming the so new that on it you FP year, and margin lot in DFP at

you were next if market still Center So weak Data to I'm just wondering, your based today, segment be year, on products? on the could even see new based grow what that you

Steve Daly

So think in there growth Data at to fiscal 'XX yes, remind actually digit. And business we be think, $XX we that just that the of beginning had achieve we drop Center million about everybody, forecasted legacy within the a and would market. double could

to would think million lot when -- with you this XX% of that replaced about a about the add we our if growth. today of at if see we you look some involved in we're definitely XXXG ramping into products. of year, being we about So platforms actually XXXG NRZ our think But we right revenue, were we some of We the that platform. coming $XXX have -- dynamics now, back

very long an reach, is short where So area reach strong. we're

PAMX to active copper provide our cable you at when some move you line look that know, product to the really the us growth. as our Those shines is our launched we As at now will data even this more incremental our generally, And 'XX. products higher where year. in world rates, ramp and will last lasers. starts more drivers, our And and TIAs

Operator

next of coming our Matt the Cowen. from And with Ramsay line question

Matt Ramsay

-- ask you the -- of the some to guys kind seeing, just quarter. wanted I patterns above book-to-bill with below a we in you a coming above it for the order on while maybe started of but and mention now. did have think call that X been I X question Steve, you're go would

to rate? X? in I orders the backlog is revenue sort clarification are less have orders seeing relative is or So you the just than it of wanted a bit of book-to-bill in, pushouts in length backlog? run the don't on I currently actual And know, within to just new maybe the a delays Or of

Steve Daly

Okay.

a for were what in We've So being seen we that a some and high-volume they're production within very backlog have I of customer specific seen orders our a extend little high-quality programs. market we're have -- some pull-ins. we've our we that segments. backlog, sure it we're cancel things doing. in seen, certain in for pushouts, seen of becomes amount We've larger example, typically We bit We've on say that are don't our of of terms time. lead that the a on generally, customers constantly seen that everything. placed cancellations programs year making margins. major will But recently, of beyond placing very reasonable put

bit manageable. those book than even -- roll quarter, or yes, when of we we we we out stage, At seeing X so we a numbers And book-to-bill. greater still came of a that. are And the little with this X during it's think a all

about we're that. So happy

seeing definitely also the side, terms we're inventory in bookings maybe on Jack pressure to and and comments whatnot. the can and channel of trends So add

Jack Kober

the Matt, our with been course fingers and different that to overall we what's book-to-bill spend sales have make period. and time all at of of end couple we It's on each a in serve. our the sure inflow Yes, terms we we an happening rigorous fairly have got our our that order of operations from Steve. we've past and over standpoint. team process of the markets of fortunate X order And Thanks, across when the backlog we here look pulse backlog over the very years

been we've of orders X So of X terms markets. an then of it's more that out been different when end the strength than fairly top from diversified of And backlog, at no we our across generally year. look well it's receiving in terms view in point that, going on those

all in say of year So is our I'd under terms substantially stage. bound, existing it being this X of time backlog at

Matt Ramsay

or last mentioned the contrast kind that look really we XX -- and wanted then. same, Jack, And And were wanted compare was you mean the so added, to as -- you things the downturn going to up like then. I trying have XXXX, and impacted they as no one before Huawei you what, of the That's just there guess, points of semiconductor headwind just I I of guess, kind last in through the guys as I CEO, from of well but that margin I'm just similarities. I since guess, -- well, back mean business gross there. is have Steve, detail helpful. came took in to I over right, kind I and Steve, the and back All all

flipped basically just -- was XX% margin you margin 'XX and in you sort just the cash at now You're positive. X. net op finished op And year the of

that capital if thoughts now the big Really then very, just any allocation on and the place in in past. different than different you So is new the contrast any it there. appreciate balance the very have can sheet past? thoughts or that now was the maybe a the I picture versus And might in company in downturn that wonder company the compare position is felt

Steve Daly

Yes.

So interesting question.

guess. the are I right, So same, downturns you're no X

feel talk can like than most forward. So we're about I we do is better we to going what guess why going

domestic business. greater I our XX% diversity an important that's part no really international, very of between almost comes and think A down few. of are to And the question. evenly your it than split customers

and the on XXX X% have years, one wide a of new over lines. particular introduced any in revenue And product. last we've whole We product products range of X

And are potentially down in with best have and as can go defenses so the dealing future. we think these revenues the might that we recessions about

and careful save teams, is together sales, waste. our and organization. that run Jack job working discretionary add as to very keep a logistics operations, script, thing company -- in money. finance, on planning our teams, we eye and all last very his spending We the I'll out the And our a And we shipping so pointed mean lean our do a phenomenal

want that business. the so in for best things cash And the think We investing invest in to right our us we place is the allows to invest now in.

and will here a We capital Lowell basis as more highlighted, as that of in year-over-year as lot allocating, be of Arbor. fab spend Ann more into Jack well going a on be our will

we think position. a So we solid have

less we'll products customers our course, accommodate have if of and or our that. start strategy an have impact to and adjust will canceling programs, producing Now

from where that almost about So X I think Jack -- is a even stood where X, today the if script, go and into were I flow highlighted at ago, positive. his the think in a profitable of if we stand downturn, versus end we And where years years as X we remain MACOM we will major difference day, ago. cash

Operator

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

Quinn Bolton

cycles. you've kind wondering, outlook. of I'm through Congratulations And better Steve, guess just of results been number X X had and I quarters a than you've on book-to-bill. guess, of I nice the

of of suggest flat and mentioned next sort would that quarters adjustments You year. continue in of some kind order softness, can but I'm put you up of growth to book-to-bill sequential backlog through kind just to wondering, guys X positive

revenue order how see continues? trend you this orders Could of start quarters? quarter weakness should you be my would to impact you question revenue is, period of to a weaker How absorb or this on what long absorb be of thinking if mean, can think I might have we before period quarterly So to might last weakness? start X down? the of a than more quarterly order you couple about

Steve Daly

X you're it long, too with Yes, the answer. trending below or X line. probably for is book-to-bills X your mean top quarters impacts when I short

a So and X we're very X strong I -- probably also backlog, a as good now quarters we position. would we say in very, talked about, to as have Jack

So -- X X of in probably the range quarters. to it's but

Quinn Bolton

that XXX mentioned you you obviously, then target big new a and same for 'XX? XXXX. be expect Great. level? to And products, it a you Do on have Will grow new fiscal about it in potentially 'XX? focus Do about products in

Steve Daly

we have targets. So do

sort internal the number be year. that for our organization targets ready put new of new that tell I out next have can revolves not to We're around expectation should more there. entire and We product products you introductions.

and in For Lowell, facility launch different it through has all Massachusetts, the there's monitors example, here you product actual basically walk rooms this in when to releases and cafeteria, conference and schedules quarterly in performance goals.

door. It's the the products. just organization that need that R&D technicians prototypes. the logistics, on people in so it's And out needs moving entire is building not And labs products It's to it's focused support to test the that.

in for not products we suffice So increasing sake These years quality. to keep from we portfolio. have also of fact products products of number to today our hold ourselves say about more, that our launching interesting and have launched an expectation eye were will on the products but of revenue ago. just that's standard is that And better comes the be one than our to. X XX% competitors, we be an We're that less than there the

speaks compelling that share. launch doing to work the are that that to is the market So team products taking

Operator

next Our JPMorgan. coming with up question line Harlan the from Sur

Harlan Sur

been has and obviously, driver new for a big products, Innovation the team.

programs. a custom just the us a of revenues? look your examples us rough programs custom I How by of of sense Your customer some key into 'XX? complemented, heading of few the percent give just total pipeline if standard a the Can mix as of product you key are believe, you pretty offerings can and maybe some fiscal give does

Steve Daly

Yes.

And encourage custom into enter so developments. our to chip we organizations all engineering of

devices doing And so our areas. with analog we're the the it at we're different signal it diode We're level. doing the across level, mimic at that doing mixed all

are customers or development to out you develop a fund highly specific to that's that to We we break getting of haven't type of so sized dollars we're that particularly And engagements really their we the programs. solution amount now those value don't because willing our business.

And that don't X different of organizations But all out between going generally speaking, really you I that anywhere today. is engineering our X probably break So to custom an developments on. and it important tell piece. want here we have can

those are right the them done accounts. of of for but of Some strategic them because some are they're customer funded. Most reasons are,

a custom ever response So probably absolutely, probably busier in terms than work. development in of short

Harlan Sur

like you of within especially to RAC about then this it connectivity, XX And runs your cable you this XX And I attach chip in point, have terabits cable, Data architecture, you about Great. gig direct to per more XXX in how electrical guys CDR with guys vendors early kind and so 'XX. supplying copper big here many Center, RAC just roughly hearing market as and are of know are active you the also well? second. you we how the targeting guys the keep Can remind active XXX-gig, equalizers. some talked steam, right, moves Feels switching right? And contributing qualified with? me, between more at out as fiscal growth is linear or cable And opportunity?

Steve Daly

there's think lot I So a around copper of cable. active hype

don't portfolio. with or to the we just fire. fuel look linear opportunity that want at as a equalizers product our And our we so ACC on in But put

signal and form short over in higher that keep reach basically for run do customers want use use so that optics. not rates to there's the an want And to copper. data They -- electrical

work equalizers that in XX the up elegant some have we so linear get to done really some And that job cases, meters.

retimed. These support per PAMX we're well. developing do XXXG chips lane chips now they're can not XXXG CDRs, these as have so And lane, and per not

how in But fast equalization a we're and solutions. these dealing with. we strength market. have type that many position very We we signal the given integrity go-to cable believe manufacturers supplier unique with are the we can't for So have do necessarily of disclose the becoming we

Now that done competitors latency, get DSPs some of our job solutions current, are low low chips our low-cost are or for that the dumbed reach. solutions down not are These having. short

Operator

line from next of C.J. question the our Muse coming And with Evercore.

C.J. Muse

question another your 'XX. on for outlook revenue guess I fiscal

to same the you're macro single kind immune weakness You've clearly goals highlighted the aspirational talked of you double low that about not digits. digits, seeing. we're of But that high time, at

cyclical And environment? that So a XX% your in secular? guys down of calendar kind 'XX, portfolio threw kind what would versus do parse to of is world type is kind that of to if X% you revenue in there out a way I of semi of

Steve Daly

for difficult question here. that's sure you that answer. something So give us a very be not I'm we could meaningful to would

more is So believe all more that market products. so is on. we we're I share to a great of the business, -- what priority We taking as we're to working highlight launching the that's can sort a and way for trend, speak, and buck

a not quite of industry. is bellwether the So small. MACOM semiconductor We're

the won't in things of if customer goes due working necessarily to the one priority. that same base way our a the up as nature portfolio, industry we our semiconductor we're direction the down, or just go So on and

that with meaningful, answer to we'd it difficult question very it's get So something wrong. probably

C.J. Muse

terms timeframe. of CHIPS it will be kind you it. focus, Curious helping Appreciate maybe business? of time, as there or guess of your clarity in Act, February that R&D in regarding helpful. I like related would how follow-up the see kind That's and over your and my sounds CapEx the greater

Steve Daly

capacity months. various modernization down wafer very categories. funding, government we're to last our In as and with So really X of you X active had a a will, X to can One CHIP and efforts fabs to nutshell, multiple agencies expansion over Act's the win engagements break with ask, we've priority. our you overall is different if

whether would processes, higher power higher second or be funding for frequency next-generation it's working on or The whatnot. process development and advanced

to the really an capability element packaged and to offshore, would and The talent universities funds bringing establish are to that some want support third we is element engagements test. assembly is with want onshore to more winning technologies where for develop and stronger we currently and then last in company. purchased enhancement workforce And being an the

flow with are pillars methodology aligns Act. now, those the scale of X the little as the the know, down. ultimately CHIPS believe that and the you of intent timing which So it's on, and focused unclear And that will sort right the a the we're we

being of So things out. a are those worked lot

continue fiscal suspect that let's 'XX, beyond expect to it's I in half something on update we the timeline. 'XX. first but think everybody funding, we'll it's of We that say, in don't

Operator

Our the next of question James. coming Raymond line with Melissa from Fairbanks

Melissa Fairbanks

many -- of of are CHIPS of of on customers CapEx is I I wondering will by approaching much list a activities up of accordingly. my with know I business there. some already just some on-shoring following trim just was Maybe how defense your terms near-shoring you your investments? the future in of is how the Act, or lot investment your definition,

requirements pretty wondering for if domestically. You sensing chain? in a supply you're have a customers' robust But just chain supply shift that your

Steve Daly

Yes.

As in multiple you markets. know, we're

I think care customers others deeply don't. the some about and topic

So it's hard for some you built and being and care -- us quantify to for whatnot. yes, break that customers U.S. out to and things chain but deeply that point, of and there's your where processed supply defense about sort are

their want extent we to at overlay we'll CHIP look So we would to But a to the this support anyways. that do things Act with that that. opportunity as can funding, we general do concerns accelerate

long-term through, business and just and you a -- have whatever and expanding to still profitable focus or that so be in. good once CHIP comes business of have money in grow the to the a investing our you be has Act invested strategy rolls And around has because plan

driving we but put a what's really there that other is a And a we'll have there's carries and our by win asks the believe risk. no dollar. we that candidate, candidate, caveat out that's a the I'll process, CHIPS Act. around are so way, the We decision and the it thinking certainly strong guarantee it's single And regarding

Operator

Craig-Hallum. the last question with our line of coming Shannon Richard And from

Richard Shannon

here. your does silicon a in micron silicon you pipeline I'll next ramp broadly expect, GaN how about early if with carbide Maybe it's even And on fiscal ask one the about you should early think, well? year. revenues just the talk this What as introducing Steve, or then customer in the it having compare we if talk opportunity about and to I X.XX appropriate products engagement here. ready with here, talked could 'XX? any,

Steve Daly

you. Thank Yes.

completing not high-temperature careful and technology all HTL to falling the just life our we and So been looks and or we're promote qualified, have the point data fully good into play. getting testing well things -- successfully we're to are the completing before it's where

kits the really on the of during we're fiscal to well just designs strategic as and So process. starting PDKs design course as want as running our the use a to foundry that just experience design our wide process range gain to really, to customers release team of 'XX whole a was

beginning things where as launch bands expect major well those defense 'XX. come calendar of compelling with together hitting all products. as have a of will at We to the so SATCOM do And have devices. we'll the high-power We'll bands frequency all reasonable be

to revenue expectations 'XX, for anything So terms don't in of I out. want break necessarily

it be I slow think will ramp. a

products, pure programs in with how but So enter you market, opportunity need to targeting point very compare lower frequency frequency. which we'll higher and the frequency we tremendous process, our frequency pure power carbide? low gains I modest and -- sockets X the carbide our win and should customers. And mean, are revenue, I ramp power expect and incremental success only do in generally with our X.XX exciting. think higher then are they're having with and terms we this those be with of equally -- our targeting we now to high lower

So very different equally exciting. technologies,

Operator

like questions remarks. Mr. now showing the I'm any further Daly Steve And at over time. turn to back no would for this closing I call to

Steve Daly

hard day. and work employees Thank to nice all Have I'd our of you that very possible. make Thank like a these the results of you. much. In acknowledge closing, dedication

Operator

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

You may now Good disconnect. day.

MACOM Technology Solutions (MTSI) 4 Nov 222022 Q4 Earnings call transcript