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MACOM (MTSI) Q2 Earnings & Revenues Beat Estimates, Rise Y/Y

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MACOM Technology Solutions Holdings, Inc. MTSI reported second-quarter fiscal 2021 non-GAAP earnings of 51 cents per share, beating the Zacks Consensus Estimate by 8.5%. Further, the bottom line improved 10.9% sequentially. Also, the figure jumped significantly from 17 cents per share in the year-ago quarter.

Revenues of $150.6 million surpassed the Zacks Consensus Estimate of $150 million. Moreover, the top line rose 1.4% sequentially and 19%from the year-ago quarter.

The company’s solid momentum across data center, and industrial and defense markets drove the top line in the reported quarter.

Further, the strong performance delivered by MACOM across regions like the United States, the AsiaPacific, excluding China, and other countries contributed well.

However, sluggish performance in the telecommunications market and China in the reported quarter remained concerning.

Strengthening 5G network deployments, the rapid adoption of cloud-based services and robust product offerings in the industrial and defense markets remain positives.

MACOM Technology Solutions Holdings, Inc. Price, Consensus and EPS Surprise

MACOM Technology Solutions Holdings, Inc. Price, Consensus and EPS Surprise
MACOM Technology Solutions Holdings, Inc. Price, Consensus and EPS Surprise

MACOM Technology Solutions Holdings, Inc. price-consensus-eps-surprise-chart | MACOM Technology Solutions Holdings, Inc. Quote

Top Line in Detail

Telecom Market: The company generated revenues of $42.3 million (28.1% of total revenues) from the market, down 18.2% from the year-ago quarter.

Data Center Market: The market generated revenues worth $36.2 million (24% of total revenues), which rose 35.6% from the prior-year quarter.

Industrial & Defense Market: MACOM generated revenues of $72.1 million (47.9% of total revenues), which grew 49.9% year over year.

Operating Details

In second-quarter fiscal 2021, non-GAAP gross margin was 59.2%, which expanded 470 basis points (bps) year over year.

In the reported quarter, non-GAAP operating expenses were $47.3 million, which declined 4% year over year. As a percentage of revenues, the figure contracted 760 bps to 31.4%.

Consequently, the company’s non-GAAP operating margin was 27.8%, which significantly expanded from 15.5% in the prior-year quarter.

Balance Sheet & Cash Flow

As of Apr 2, 2021, cash equivalents and short-term investments were $268.1 million, down from $354.8 million as of Jan 1, 2021. Inventories were $84.5 million, down from $89 million in the last reported quarter.

Long-term debt obligations, excluding the current portion, were $492.2 million in the fiscal second quarter compared with $650.9million in the previous quarter.

Cash generated from operations was $27.9 million, down from $34.8 million in the last quarter.

Further, the company’s free cash flow in the reported quarter was $23.5 million compared with $31.9 million in the prior quarter.

Guidance

For third-quarter fiscal 2021, MACOM expects revenues between $150 million and $154 million. The Zacks Consensus Estimate for the metric is pegged at $152.8 million.

Further, the company’s adjusted earnings per share are anticipated to be 52-56 cents. The Zacks Consensus Estimate for the same is pegged at 49 cents per share.

Moreover, non-GAAP gross margin is anticipated to be 58-60%.

Zacks Rank & Other Stocks to Consider

Currently, MACOM carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader technology sector are KLA Corporation KLAC, Vishay Intertechnology, Inc. VSH and Waters Corporation WAT. All three companies currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term earnings growth rates of KLA, Vishay and Waters are pegged at 14.03%, 20.26% and 8.85%, respectively.

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MACOM Technology Solutions Holdings, Inc. (MTSI) : Free Stock Analysis Report

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