Lowell, Massachusetts, June 18, 2019– MACOM Technology Solutions Holdings, Inc. (“MACOM” or the “Company”) (NASDAQ: MTSI), a leading supplier of semiconductor solutions, today announced it has implemented a restructuring plan that will provide an expected annual expense savings of approximately $50 million dollars once fully implemented.
The Restructuring Plan Includes:
The Company also announced it will no longer invest in the design and development of optical modules and subsystems for Data Center applications. Going forward, MACOM will be a merchant supplier of semiconductor integrated circuits (ICs) and photonic devices and will support optical module manufacturers at the semiconductor component level.
“We do not make these decisions lightly, however, these actions are necessary in order to strengthen our strategic plan,” said Stephen Daly, President and Chief Executive Officer.
The Company expects approximately $14 million in restructuring charges including $7 million for employee severance obligations, a majority of which are expected to be incurred during the third fiscal quarter of 2019. In addition, the Company is performing a recoverability assessment for its long-lived assets, most specifically its intangible assets that may be impacted by the restructuring plan. As of March 29, 2019, MACOM’s intangible assets had a carrying value of $472 million. To date, the Company has identified approximately $15 million of non-cash impairment charges in addition to the restructuring charges discussed above, associated with these restructuring actions.
Updated Third Quarter Fiscal Year 2019 Guidance:
MACOM designs and manufactures semiconductor products for Data Center, Telecommunication and Industrial and Defense applications. Headquartered in Lowell, Massachusetts, MACOM has design centers and sales offices throughout North America, Europe and Asia. MACOM is certified to the ISO9001 international quality standard and ISO14001 environmental management standard.
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. These forward-looking statements include, among others, statements about MACOM’s strategic plans, the expected impact of the proposed restructuring plan, the estimated financial results for our fiscal third quarter and the stated business outlook and future results of operations.
These forward-looking statements 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. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements, including those factors described in "Risk Factors" in MACOM's filings with the Securities and Exchange Commission (“SEC”), including its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and other filings with the SEC. These forward-looking statements speak only as of the date of this press release, and MACOM undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Discussion Regarding the Use of Historical and Forward-Looking Non-GAAP Financial Measures
This press release includes financial measures that have not been calculated in accordance with GAAP. This forward-looking non-GAAP information cannot be reconciled to the most comparable GAAP measures without unreasonable effort because we do not have and cannot reliably estimate certain key inputs required to calculate the most comparable GAAP financial data. For further information regarding our use of non-GAAP financial information, please see our earnings releases previously furnished to the SEC.
MACOM Technology Solutions Holdings, Inc.
Vice President of Investor Relations