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8-K - FORM 8-K - MACOM Technology Solutions Holdings, Inc.d178367d8k.htm
EX-99.2 - EX-99.2 - MACOM Technology Solutions Holdings, Inc.d178367dex992.htm

Exhibit 99.1

 

LOGO

 

 

MACOM Reports Revenue of $133.6 Million, Adjusted Gross Margin of 58.1% and

Adjusted EPS of $0.46 (non-GAAP) for Fiscal Second Quarter

LOWELL, MA, April 26, 2016—M/A-COM Technology Solutions Holdings, Inc. (NASDAQ: MTSI) (“MACOM”), a leading supplier of high-performance analog RF, microwave, millimeterwave and photonic semiconductor products, today announced its financial results for its fiscal second quarter ended April 1, 2016.

Second Quarter Fiscal Year 2016 GAAP Results

 

  Revenue was $133.6 million, an increase of 15.4 percent compared to $115.8 million in the prior fiscal quarter and an increase of 30.4 percent compared to $102.4 million in the previous year fiscal second quarter;

 

  Gross profit was $65.5 million, an increase of 8.6 percent compared to $60.3 million in the prior fiscal quarter and an increase of 40.3 percentage compared to $46.7 million in the previous year fiscal second quarter;

 

  Gross margin was 49.1 percent, compared to 52.1 percent in the prior fiscal quarter and 45.6 percent in the previous year fiscal second quarter;

 

  Operating loss was $7.2 million, compared to income of $0.2 million in the prior fiscal quarter and an operating loss of $2.4 million in the previous year fiscal second quarter; and

 

  Net loss from continuing operations was $12.0 million, resulting in $0.23 loss per diluted share, compared to net loss from continuing operations of $16.8 million, or $0.32 loss per diluted share, in the prior fiscal quarter and net loss from continuing operations of $11.2 million, or $0.22 loss per diluted share, in the previous year fiscal second quarter.

Second Quarter Fiscal Year 2016 Adjusted Non-GAAP Results

 

  Adjusted gross margin was 58.1 percent, compared to 58.7 percent in the prior fiscal quarter and 57.6 percent in the previous year fiscal second quarter;

 

  Adjusted operating income was $32.4 million, or 24.3 percent of revenue, compared to $27.7 million, or 23.9 percent of revenue, in the prior fiscal quarter and $23.7 million, or 23.2 percent of revenue, in the previous year fiscal second quarter;

 

  Adjusted net income was $25.7 million, or $0.46 per diluted share, compared to adjusted net income of $21.8 million, or $0.40 per diluted share, in the prior fiscal quarter and adjusted net income of $16.5 million, or $0.31 per diluted share, in the previous year fiscal second quarter; and

 

  Adjusted EBITDA was $39.0 million, compared to $33.5 million for the prior fiscal quarter and $27.4 million for the previous year fiscal second quarter.

Management Commentary

John Croteau, MACOM’s President and Chief Executive Officer, stated, “I am pleased to announce another quarter of solid execution and sequential growth. Strong demand across our end markets enabled us to beat the top end of guidance on revenue and earnings per share.

“Our Network markets once again delivered solid growth across all optical markets fueled by modulator drivers in long/haul metro as well as lasers in access, backhaul and datacenter applications. We also continued to advance our GaN vision and remain on track with our process qualifications. We are rapidly converging on program wins with Tier-1 customers addressing mainstream LTE deployments.”

Mr. Croteau concluded, “As we move into the fiscal second half of the year, we remain focused on executing on our three secular growth drivers – Optical, GaN and Active Antennas – as highlighted at our recent Analyst Day.”


Business Outlook

For the fiscal third quarter ending July 1, 2016, MACOM expects revenue to be in the range of $138.0 million to $142.0 million. Adjusted gross margin is expected to be between 57 and 59 percent, and adjusted earnings per share between $0.49 and $0.52 on an anticipated 56.5 million diluted shares outstanding.

Conference Call

MACOM will host a conference call on Tuesday, April 26, 2016 at 5:00 p.m. Eastern Time to discuss its second fiscal quarter financial results and business outlook. Investors and analysts may join the conference call by dialing 1-877-837-3908 and providing the confirmation code 84787504.

International callers may join the teleconference by dialing +1-973-872-3000 and entering the same confirmation code at the prompt. A telephone replay of the call will be made available beginning two hours after the call and will remain available for 5 business days. The replay number is 1-855-859-2056 with a passcode of 84787504. International callers should dial +1-404-537-3406 and enter the same pass code at the prompt.

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

About MACOM

MACOM Technology Solutions Holdings, Inc. (www.macom.com) supplies key enabling technologies for the Cloud Connected Apps Economy and Modern Networked Battlefield. Recognized for its broad catalog portfolio of technologies and products, MACOM provides high-performance analog RF, microwave, millimeterwave and photonic semiconductor products for diverse applications ranging from high speed optical, satellite, wired and wireless networks to military and civil radar systems. A pillar of the semiconductor industry, we thrive on more than 60 years of solving our customers’ most complex problems as their trusted partner for solutions ranging from RF to Light.

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

MACOM, M/A-COM, M/A-COM Technology Solutions, M/A-COM Tech, Partners in RF & Microwave, The First Name in Microwave and related logos are trademarks of MACOM. All other trademarks are the property of their respective owners.


Special Note Regarding Forward-Looking Statements

This press release contains forward-looking statements based on MACOM management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include, among others, information concerning our stated business outlook and future results of operations, our expectations for execution on our three growth drivers in fiscal year 2016, on our GaN vision and qualification, and on program wins with Tier-1 customers addressing mainstream LTE deployments and any other statements regarding future trends, business strategies, competitive position, industry conditions, acquisitions and market opportunities. Forward-looking statements include all statements that are not historical facts and generally may be identified by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “seeks,” “should,” “will,” “would” or similar expressions and the negatives of those terms.

Forward-looking statements contained in this press release reflect MACOM’s current views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause those events or our actual activities or results to differ materially from those expressed in any forward-looking statement. Although MACOM believes that the expectations reflected in the forward-looking statements are reasonable, it cannot and does not guarantee future events, results, actions, levels of activity, performance or achievements. Readers are cautioned not to place undue reliance on these forward-looking statements. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements, including the potential that the expected rollout of fiber-to-the-home network technology or other new optical or other network technology deployments in China, Japan and other geographies fails to occur, occurs more slowly than we expect or does not result in the amount or type of new business we anticipate, lower than expected demand in the optical network infrastructure market or any or all of our primary end markets or from Huawei or any or all of our large OEM customers based on seasonal effects, macro-economic weakness or otherwise, the potential for increased pricing pressure and ASP erosion based on competitive factors, technology shifts or otherwise, the potential for inventory obsolescence and related write-offs, the expense, business disruption or other impact of any current or future investigations, administrative actions, litigation or enforcement proceedings we may be involved in, the potential loss of access to any in-licensed intellectual property or inability to license technology we may require on reasonable terms, the impact of any claims of intellectual property infringement or misappropriation, which could require us to pay substantial damages for infringement, expend significant resources in prosecuting or defending such matters or developing non-infringing technology, incur material liability for royalty or license payments, or prevent us from selling certain of our products, greater than expected dilutive effect on earnings of our equity issuances, outstanding indebtedness and related interest expense and other costs, our failure to realize the expected economies of scale, lowered production cost and other anticipated benefits of our previously announced GaN intellectual property licensing program or InP laser production capacity expansion program, the potential for defense spending cuts, program delays, cancellations or sequestration, failures or delays by any customer in winning business or to make purchases from us in support of such business, lack of adoption or delayed adoption by customers and industries we serve of Active Antennas, GaN, InP lasers or other solutions offered by us, failures or delays in porting and qualifying GaN or InP process technology to our Lowell fabrication facility or third party facilities, lower than expected utilization and absorption in our manufacturing facilities, lack of success or slower than expected success in our new product development efforts, failure of any announced transaction to close in accordance with its terms, failure to successfully integrate acquired companies, technologies or products or realize synergies associated with acquisitions, the potential that we will experience difficulties in managing the personnel and operations associated with our acquisitions, loss of business due to competitive factors, product or technology obsolescence, customer program shifts or otherwise, lower than anticipated or slower than expected customer acceptance of our new product introductions, the potential for a shift in the mix of products sold in any period toward lower-margin products or a shift in the geographical mix of our revenues, the impact of any executed or


abandoned acquisition, divestiture, joint venture, financing or restructuring activity, the impact of supply shortages or other disruptions in our internal or outsourced supply chain, the impact of changes in export, environmental or other laws applicable to us, the relative success of our cost-savings initiatives, as well as those factors described in “Risk Factors” in MACOM’s filings with the Securities and Exchange Commission (SEC), including its Quarterly Report on Form 10-Q for the fiscal quarter ended January 1, 2016, as filed with the SEC on January 27, 2016 and its Annual Report on Form 10-K for the fiscal year ended October 2, 2015 as filed with the SEC on November 24, 2015. MACOM undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

In addition to GAAP reporting, MACOM provides investors with adjusted non-GAAP financial information. Adjusted items include revenue, gross profit, gross margin, operating margin, operating income, net income, earnings per share, Adjusted EBITDA and other data calculated on a non-GAAP basis. This non-GAAP information excludes non-consulting agreement related discontinued operations, the impact of fair value accounting in merger and acquisitions (M&A) of businesses, M&A costs, including acquisition and related integration costs, certain cost savings from synergies expected from M&A activities, income and expenses from transition services related to M&A activities, expected amortization of acquisition-related intangibles, share-based and other non-cash compensation expense, certain cash compensation, restructuring charges, impairment charges, litigation settlement and costs, changes in the carrying values of assets and liabilities measured at fair value, contingent consideration, amortization of debt discounts and issuance costs, debt settlement costs, other non-cash expenses, earn-out costs, restructuring costs and certain income tax items. The non-GAAP information includes consulting agreement related revenue associated with the Automotive business divestiture. Management does not believe that the adjusted items are reflective of MACOM’s underlying performance. The adjustment of these and other similar items from MACOM’s non-GAAP presentation should not be interpreted as implying that these items are non-recurring, infrequent or unusual. These and other similar items are also excluded from Adjusted EBITDA, which is non-GAAP earnings before interest, income taxes, depreciation and amortization. MACOM believes this adjusted non-GAAP financial information provides additional insight into these items and MACOM’s performance and has, therefore, chosen to provide this information to investors for a consistent basis of comparison and to help them evaluate the results of MACOM’s operations and enable more meaningful period to period comparisons. These adjusted non-GAAP measures may be different than similar measures used by other companies and should be considered in addition to, not as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. A reconciliation between GAAP and adjusted non-GAAP financial data used in this earnings release is included in the supplemental financial data attached to this press release.

*  *  *

Company Contact:

M/A-COM Technology Solutions Holdings, Inc.

Robert J. McMullan

Senior Vice President and Chief Financial Officer

P: 978-656-2753

E: bob.mcmullan@macom.com

Investor Relations Contact:

Shelton Group


Leanne K. Sievers

EVP, Investor Relations

P: 949-224-3874

E: lsievers@sheltongroup.com


M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited and in thousands, except per share data)

 

 

 

     Three Months Ended     Six Months Ended  
     April 1,
2016
    January 1,
2016
    April 3,
2015
    April 1,
2016
    April 3,
2015
 

Revenue

   $ 133,579      $ 115,774      $ 102,431      $ 249,353      $ 198,987   

Cost of revenue

     68,054        55,456        55,717        123,510        104,854   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     65,525        60,318        46,714        125,843        94,133   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

          

Research and development

     26,203        25,322        20,439        51,525        39,221   

Selling, general and administrative

     34,617        34,686        28,247        69,303        53,475   

Impairment charges

     11,005        —          —          11,005        —     

Restructuring charges

     851        157        413        1,008        413   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     72,676        60,165        49,099        132,841        93,109   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations

     (7,151     153        (2,385     (6,998     1,024   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense):

          

Warrant liability expense

     (4,201     (14,878     (5,609     (19,079     (16,217

Interest expense, net

     (4,408     (4,346     (4,723     (8,754     (9,446

Other income (expense), net

     (81     100        (1,376     19        (1,001
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other income (expense)

     (8,690     (19,124     (11,708     (27,814     (26,664
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (15,841     (18,971     (14,093     (34,812     (25,640

Income tax benefit

     (3,796     (2,201     (2,917     (5,997     (4,500
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss from continuing operations

     (12,045     (16,770     (11,176     (28,815     (21,140

Income from discontinued operations

     1,396        1,199        3,639        2,595        7,297   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (10,649   $ (15,571   $ (7,537   $ (26,220   $ (13,843
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) per share:

          

Basic:

          

Loss from continuing operations

   $ (0.23   $ (0.32   $ (0.22   $ (0.54   $ (0.43

Income from discontinued operations

     0.03        0.02        0.07        0.05        0.15   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss per share—basic

   $ (0.20   $ (0.29   $ (0.15   $ (0.49   $ (0.28
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted:

          

Loss from continuing operations

   $ (0.23   $ (0.32   $ (0.22   $ (0.54   $ (0.43

Income from discontinued operations

     0.03        0.02        0.07        0.05        0.15   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss per share—diluted

   $ (0.20   $ (0.29   $ (0.15   $ (0.49   $ (0.28
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Shares—Basic

     53,228        53,015        50,593        53,122        49,100   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Shares—Diluted

     53,228        53,015        50,593        53,122        49,100   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited and in thousands)

 

 

 

     April 1,
2016
     October 2,
2015
 

ASSETS

     

Current assets:

     

Cash and cash equivalents

   $ 58,187       $ 122,312   

Short term investments

     23,632         39,557   

Accounts receivable, net

     91,604         83,950   

Inventories

     106,972         79,943   

Deferred income taxes (1)

     —           31,431   

Income tax receivable

     16,077         15,854   

Prepaids and other current assets

     11,553         11,172   
  

 

 

    

 

 

 

Total current assets

     308,025         384,219   

Property and equipment, net

     99,637         83,759   

Goodwill and intangible assets, net

     397,370         337,012   

Deferred income taxes

     83,909         48,239   

Other long-term assets

     11,457         13,022   
  

 

 

    

 

 

 

TOTAL ASSETS

   $ 900,398       $ 866,251   
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Current portion of debt obligations

   $ 4,499       $ 4,058   

Accounts payable, accrued liabilities and other

     78,335         67,418   

Total current liabilities

     82,834         71,476   

Long-term debt obligations, less current portion

     341,396         340,504   

Common stock warrant liability

     40,901         21,822   

Deferred income taxes

     13,920         —     

Long-term liabilities and other

     7,339         7,916   
  

 

 

    

 

 

 

Total liabilities

     486,390         441,718   

Stockholders’ equity

     414,008         424,533   
  

 

 

    

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 900,398       $ 866,251   
  

 

 

    

 

 

 

(1) During the second quarter of fiscal 2016, we early-adopted Accounting Standards Update (ASU) No. 2015-17, Balance Sheet Classification of Deferred Taxes, and applied ASU 2015-17 on a prospective basis. This standard requires that all deferred tax assets and liabilities, and any related valuation allowance, be classified as noncurrent on the balance sheet. As of the second quarter of fiscal 2016, we included $31.4 million of current deferred income tax assets with our noncurrent deferred income tax assets; no adjustments were made to deferred tax liabilities.


M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited and in thousands)

 

 

 

     Six Months Ended  
     April 1,
2016
    April 3,
2015
 

CASH FLOWS FROM OPERATING ACTIVITIES:

    

Net loss

   $ (26,220   $ (13,843

Adjustments to reconcile net loss to net operating cash

     77,452        61,947   

Change in operating assets and liabilities

     (16,134     (46,672
  

 

 

   

 

 

 

Net cash from operating activities

     35,098        1,432   
  

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

    

Acquisition of businesses, net

     (85,516     (208,369

Purchases, sales and maturities of investments

     15,596        —     

Gain on disposition of business

     3,750        —     

Strategic investments

     —          (250

Purchases of property and equipment

     (16,962     (14,036

Acquisition of intellectual property

     (777     (1,587
  

 

 

   

 

 

 

Net cash used in investing activities

     (83,909     (224,242
  

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

    

Payments of notes payable

     (1,750     (1,750

Proceeds from stock offering

     —          127,959   

Payment of assumed debt

     (9,120     (1,232

Proceeds from stock option exercises and employee stock purchases

     3,071        2,871   

Repurchase of common stock

     (6,152     (4,924

Borrowings on revolving facility

     —          100,000   

Payments on revolving facility

     —          (100,000

Other adjustments

     (1,195     (39
  

 

 

   

 

 

 

Net cash from financing activities

     (15,146     122,885   
  

 

 

   

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

     (168     —     

NET CHANGE IN CASH AND CASH EQUIVALENTS

     (64,125     (99,925

CASH AND CASH EQUIVALENTS—Beginning of period

     122,312        173,895   
  

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS—End of period

   $ 58,187      $ 73,970   
  

 

 

   

 

 

 


M/A-COM TECHNOLOGY SOLUTIONS HOLDINGS, INC.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(unaudited and in thousands, except per share data)

 

 

 

    Three Months Ended     Six Months Ended  
    April 1, 2016     January 1, 2016     April 3, 2015     April 1, 2016     April 3, 2015  
    Amount           Amount           Amount           Amount           Amount        

Revenue—GAAP

  $ 133,579        $ 115,774        $ 102,431        $ 249,353        $ 198,987     
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

Adjusted Revenue (NonGAAP)

  $ 133,579        $ 115,774        $ 102,431        $ 249,353        $ 198,987     
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   
    Amount     % Revenue     Amount     % Revenue     Amount     % Revenue     Amount     % Revenue     Amount     % Revenue  

Gross Profit—GAAP

  $ 65,525        49.1      $ 60,318        52.1      $ 46,714        45.6      $ 125,843        50.5      $ 94,133        47.3   

Intangible amortization expense

    6,642        5.0        7,167        6.2        7,347        7.2        13,809        5.5        12,706        6.4   

Non-cash compensation expense

    500        0.4        491        0.4        577        0.6        991        0.4        919        0.5   

Equity-based compensation

    191        0.1        51        —          179        0.2        242        0.1        237        0.1   

Impairment charges

    1,950        1.5        —          —          —          —          1,950        0.8        —          —     

Acquisition FMV step-up expense (inventory/fixed assets)

    2,646        2.0        (226     (0.2     3,538        3.5        2,420        1.0        4,373        2.2   

Third-party engineering costs

    —          —          —          —          305        0.3        —          —          1,229        0.6   

Integration costs and synergy savings

    102        0.1        158        0.1        356        0.3        260        0.1        352        0.2   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Gross Profit (NonGAAP)

  $ 77,556        58.1      $ 67,959        58.7      $ 59,016        57.6      $ 145,515        58.4      $ 113,949        57.3   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Research and Development—GAAP

  $ 26,203        19.6      $ 25,322        21.9      $ 20,439        20.0      $ 51,525        20.7      $ 39,221        19.7   

Non-cash compensation expense

    (1,742     (1.3     (2,142     (1.9     (1,563     (1.5     (3,884     (1.6     (2,568     (1.3

Equity-based compensation

    (1,061     (0.8     (894     (0.8     (669     (0.7     (1,955     (0.8     (1,188     (0.6

Acquisition FMV step-up expense (inventory/fixed assets)

    (204     (0.2     (204     (0.2     (204     (0.2     (408     (0.2     (408     (0.2

Integration costs and synergy savings

    (133     (0.1     (597     (0.5     (137     (0.1     (730     (0.3     (308     (0.2

Third-party engineering costs

    —          —          —          —          305        0.3        —          —          1,229        0.6   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Research and Development (NonGAAP)

  $ 23,063        17.3      $ 21,485        18.6      $ 18,171        17.7      $ 44,548        17.9      $ 35,978        18.1   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Selling, General and Administrative—GAAP

  $ 34,617        25.9      $ 34,686        30.0      $ 28,247        27.6      $ 69,303        27.8      $ 53,475        26.9   

Earn-out costs

    (26     —          196        0.2        —          —          170        0.1        —          —     

Intangible amortization expense

    (6,304     (4.7     (4,423     (3.8     (3,096     (3.0     (10,727     (4.3     (4,149     (2.1

Non-cash compensation expense

    (4,210     (3.2     (7,383     (6.4     (7,558     (7.4     (11,592     (4.6     (9,953     (5.0

Equity-based compensation

    (705     (0.5     (462     (0.4     (501     (0.5     (1,167     (0.5     (818     (0.4

Acquisition FMV step-up expense (inventory/fixed assets)

    (28     —          (28     —          (28     —          (56     —          (56     —     

Litigation related costs

    (232     (0.2     (108     (0.1     (206     (0.2     (340     (0.1     (766     (0.4

Transaction expenses

    (102     (0.1     (3,111     (2.7     530        0.5        (3,213     (1.3     (4,106     (2.1

Integration costs and synergy savings

    (919     (0.7     (571     (0.5     (282     (0.3     (1,491     (0.6     (578     (0.3
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Selling, General and Administrative (NonGAAP)

  $ 22,091        16.5      $ 18,796        16.2      $ 17,106        16.7      $ 40,887        16.4      $ 33,049        16.6   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    Amount     % Revenue     Amount     % Revenue     Amount     % Revenue     Amount     % Revenue     Amount     % Revenue  

Total operating expenses—GAAP

  $   72,676            54.4      $   60,165            52.0      $   49,099          47.9      $ 132,841          53.3      $   93,109          46.8   

Intangible amortization expense

    (6,304     (4.7     (4,423     (3.8     (3,096     (3.0     (10,727     (4.3     (4,149     (2.1

Non-cash compensation expense

    (5,951     (4.5     (9,525     (8.2     (9,121     (8.9     (15,477     (6.2     (12,521     (6.3


Equity-based compensation

    (1,766     (1.3     (1,356     (1.2     (1,170     (1.1     (3,122     (1.3     (2,006     (1.0

Acquisition FMV step-up expense (inventory/fixed assets)

    (232     (0.2     (232     (0.2     (232     (0.2     (464     (0.2     (464     (0.2

Contingent consideration and earn-out costs

    (26     —          196        0.2        —          —          170        0.1        —          —     

Impairment charges

    (11,005     (8.2     —          —          —          —          (11,005     (4.4     —          —     

Restructuring charges

    (851     (0.6     (157     (0.1     (413     (0.4     (1,008     (0.4     (413     (0.2

Integration costs and synergy savings

    (1,053     (0.8     (1,168     (1.0     (419     (0.4     (2,221     (0.9     (886     (0.4

Litigation related costs

    (232     (0.2     (108     (0.1     (206     (0.2     (340     (0.1     (766     (0.4

Transaction expenses

    (102     (0.1     (3,111     (2.7     530        0.5        (3,213     (1.3     (4,106     (2.1

Third-party engineering

    —          —          —          —          305        0.3        —          —          1,229        0.6   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Total Operating Expenses (NonGAAP)

  $   45,154          33.8      $   40,281          34.8      $   35,277          34.4      $   85,434          34.3      $   69,027          34.7   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations—GAAP

  $ (7,151     (5.4   $ 153        0.1      $ (2,385     (2.3   $ (6,998     (2.8   $ 1,024        0.5   

Intangible amortization expense

    12,946        9.7        11,590        10.0        10,446        10.2        24,536        9.8        16,858        8.5   

Non-cash compensation expense

    6,452        4.8        10,016        8.7        9,698        9.5        16,468        6.6        13,440        6.8   

Equity-based compensation

    1,957        1.5        1,407        1.2        1,349        1.3        3,364        1.3        2,243        1.1   

Contingent consideration and earn-out costs

    26        —          (196     (0.2     —          —          (170     (0.1     —          —     

Impairment charges

    12,955        9.7        —          —          —          —          12,955        5.2        —          —     

Restructuring charges

    851        0.6        157        0.1        413        0.4        1,008        0.4        413        0.2   

Acquisition FMV step-up expense (inventory/fixed assets)

    2,878        2.2        6        —          3,770        3.7        2,884        1.2        4,837        2.4   

Litigation related costs

    232        0.2        108        0.1        206        0.2        340        0.1        766        0.6   

Transaction expenses

    102        0.1        3,111        2.7        (530     (0.5     3,213        1.3        4,106        0.4   

Integration costs and synergy savings

    1,154        0.9        1,326        1.1        772        0.8        2,480        1.0        1,235        2.1   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

     

 

 

 

Adjusted Income (Loss) from Operations (NonGAAP)

  $ 32,402        24.3      $ 27,678        23.9      $ 23,739        23.2      $ 60,080        24.1      $ 44,922        22.6   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Depreciation expense

    4,840        3.6        3,903        3.4        3,702        3.6        8,743        3.5        7,089        3.6   

Other income, net

    1,792        1.3        1,954        1.7        —          —          3,746        1.5        —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 39,034        29.2      $ 33,535        29.0      $ 27,441        26.8      $ 72,569        29.1      $ 52,011        26.1   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest expense- GAAP

  $ 4,478        3.4      $ 4,475        3.9      $ 4,723        4.6      $ 8,953        3.6      $ 9,446        4.7   

Non-cash interest expense

    (425     (0.3     (398     (0.3     (403     (0.4     (823     (0.3     (842     (0.4
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Interest Expense (NonGAAP)

  $ 4,053        3.0      $ 4,077        3.5      $ 4,320        4.2      $ 8,130        3.3      $ 8,604        4.3   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)—GAAP

  $ (10,649     (8.0   $ (15,571     (13.4   $ (7,537     (7.4   $ (26,220     (10.5   $ (13,843     (7.0

Discontinued operations

    (1,396     (1.0     (1,199     (1.0     (3,639     (3.6     (2,595     (1.0     (7,297     (3.7

Intangible amortization expense

    12,946        9.7        11,590        10.0        10,446        10.2        24,536        9.8        16,858        8.5   

Non-cash compensation expense

    6,452        4.8        10,016        8.7        9,698        9.5        16,468        6.6        13,440        6.8   

Equity-based compensation

    1,957        1.5        1,407        1.2        1,349        1.3        3,364        1.3        2,243        1.1   

Impairment of minority investment

    —          —          —          —          3,500        3.4        —          —          3,500        1.8   

Contingent consideration

    26        —          (196     (0.2     (2,000     (2.0     (170     (0.1     (2,000     (1.0

Consulting agreement

    1,875        1.4        1,875        1.6        —          —          3,750        1.5        —          —     

Impairment charges

    12,955        9.7        —          —          —          —          12,955        5.2        —          —     

Restructuring charges

    851        0.6        157        0.1        413        0.4        1,008        0.4        413        0.2   

Warrant liability (gain) expense

    4,201        3.1        14,879        12.9        5,609        5.5        19,080        7.7        16,217        8.1   

Non-cash interest expense

    425        0.3        398        0.3        403        0.4        823        0.3        842        0.4   

Acquisition FMV step-up expense (inventory/fixed assets)

    2,878        2.2        6        —          3,770        3.7        2,884        1.2        4,837        2.4   

Litigation related costs

    232        0.2        108        0.1        206        0.2        340        1.0        766        0.6   

Integration costs and synergy savings

    1,152        0.9        1,306        1.1        772        0.8        2,457        0.1        1,235        0.4   

Transaction expenses

    102        0.1        3,111        2.7        (530     (0.5     3,213        1.3        4,106        2.1   

Tax effect of non-GAAP adjustments

    (8,327     (6.2     (6,054     (5.2     (5,830     (5.7     (14,381     (5.8     (9,948     (5.0

Transition services for divested business and other

    —          —          —          —          (124     (0.1     —          —          (499     (0.3
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Net Income (NonGAAP)

  $     25,680            19.2      $     21,833        18.9      $     16,506            16.1      $     47,512            19.1      $     30,870            15.5   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


    Three Months Ended     Six Months Ended  
    April 1, 2016     January 1, 2016     April 3, 2015     April 1, 2016     April 3, 2015  
    Net Income
(Loss)
    Income (loss)
per diluted
share
    Net Income
(Loss)
    Income (loss)
per diluted
share
    Net Income
(Loss)
    Income (loss)
per diluted
share
    Net Income
(Loss)
    Income
(loss) per

diluted
share
    Net Income
(Loss)
    Income
(loss) per

diluted
share
 

GAAP

  $ (10,649   $ (0.20   $ (15,571   $ (0.29   $ (7,537   $ (0.15   $ (26,220   $ (0.49   $ (13,843   $ (0.28
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted (NonGAAP)

  $ 25,680      $ 0.46      $ 21,833      $ 0.40      $ 16,506      $ 0.31      $ 47,512      $ 0.86      $ 30,870      $ 0.61   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    Shares           Shares           Shares           Shares           Shares        

Diluted Shares—GAAP

    53,228          53,015          50,593          53,122          49,100     

Incremental stock options, warrants, restricted stock and units

    2,139          1,996          1,908          2,081          1,815     
 

 

 

     

 

 

     

 

 

     

 

 

     

 

 

   

Adjusted Diluted Shares (NonGAAP)

    55,367          55,011          52,501          55,203          50,915