Good afternoon, and welcome to M/A-COM Technology Solutions’ Fiscal Fourth Quarter 2014 Financial Results Conference Call. At this time all participants are in a listen-only mode. At the conclusion of today’s conference call, instructions will be given for the question-and-answer session. As a reminder, this conference call is being recorded today, Tuesday, November 18, 2014. I would now like to turn the call to Leanne Sievers of Shelton Group, the Investor Relations agency for MACOM. Leanne, please go ahead.

Good afternoon, and welcome to M/A-COM Technology Solutions fourth quarter 2014 earnings conference call. I’m Leanne Sievers, Executive Vice President of Shelton Group, MACOM’s Investor Relations firm. With us today are MACOM’s President and Chief Executive Officer, John Croteau; and Senior Vice President and Chief Financial Officer, Bob McMullan. If you’ve not yet received a copy of the press release, you can obtain a copy on MACOM’s website at www.macom.com under the Investor Relations section. Before I turn the call over to Mr. Croteau, I’d like to remind our listeners that management’s prepared remarks and answers to your questions contain forward-looking statements which are subject to risks and uncertainties. Because actual results may differ materially from those discussed today MACOM claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and refers you to a more detailed discussion of risks and uncertainties that could result in those differences in MACOM’s filings with the Securities and Exchange Commission, including its Form 8-K filed today and its quarterly report on Form 10-Q filed on August 1, 2014. Any projections as to the company’s future performance represent management’s estimates as of today, November 18, 2014 and MACOM assumes no obligation to update these projections in the future. The company’s press release and management’s statements during this conference call will include discussions of certain non-GAAP measures and financial information. These financial measures and a reconciliation of GAAP to non-GAAP results are provided in the company’s press release and related current report on Form 8-K, which was filed with the SEC today and can be found at the Investor Relations section of MACOM’s website. For those of you unable to listen to the entire call at this time, a recording will be available via webcast for 30 days in the Investors Relations section of MACOM’s website. And now, I’d like turn the call over to MACOM’s President and CEO, John Croteau. John, please go ahead.

Thank you, Leanne. Welcome everyone and thanks for joining us today. I’ll begin today’s call with an overview of our fourth quarter results and then turn the call over to Bob McMullan, our CFO, who will review our financial performance in further detail. I’ll then conclude today’s prepared comments by providing an overview of our execution during the quarter, followed by guidance for the fiscal first quarter of 2015. Diving straight into the results, revenue for the fourth quarter was $114.3 million. Non-GAAP gross margin was 54.1% with non-GAAP net income of $17.2 million or $0.35 earnings per diluted share. During the quarter gross margin and earnings per share beat the top-end of our guidance. Non-GAAP gross margin improved 240 basis points from the prior quarter and 870 basis points from the prior year quarter due to a favorable mix, with our new high margin networks products exceeding all expectations. Looking at our results for the quarter, excluding the impact of $5 million of Q3 revenue, which we sold to Freescale during the previous fiscal quarter, revenue growth was strong sequentially and broadly distributed across end markets. Networks grew 12% quarter-on-quarter driven by major customer wins and share gains in the optical space. Multi-market was up 7% due to continued growth in our catalog business and automotive was up 9% within the normal range of fluctuations we expect from Ford. This growth was slightly offset by aerospace and defense, which was down 5% due to timing of certain radar programs. And let me now turn it over to Bob to review our fiscal fourth quarter financials in more detail.

Thank you, John and good afternoon everyone. During the course of my comments, as well as those made by John, all income statement amounts and percentages will be discussed on a non-GAAP basis and are provided to enhance the understanding of our core operating performance. A reconciliation of each figure to the most comparable GAAP measure is included in today’s earnings press release. As this is both our fiscal fourth quarter and fiscal year-end, my comments will be first on the quarterly results followed by the fiscal year. Revenue was $114.3 million representing a sequential increase of 1.7% compared to the reported revenues of $112.4 million in the prior quarter and an increase of 37% compared to $83.7 million in the fiscal fourth quarter of 2013. Adjusting for the $5 million sale of the business to Freescale in May, sequential revenue growth was actually 6.8%. Revenue by end markets for network $55.9 million and 49%, AD was $21 million and 18%, automotive was $20.5 million and 18%, and multi-market was $16.9 million and 15%. Gross profit in the fiscal fourth quarter was $61.9 million or 54.1% of revenue compared to $58.1 million or 51.7% of revenues in the prior quarter and $38 million or 45.4% in the fiscal fourth quarter of 2013. Continued [gross] [ph] margin expansion benefited from selling higher gross margin products. In terms of operating expenses for the fiscal fourth quarter, total operating expenses were $35.2 million compared to $34.2 million in the prior quarter and $21 million in the prior year quarter. Research and development expense for the fiscal fourth quarter was $18.7 million. This compares to R&D expense of $18.8 million in the prior quarter and $10.1 million in the fiscal fourth quarter of 2013. R&D as a percentage of revenue represented 16.3% in the…

Thanks Bob. I’d like to begin by underscoring that we believe we’re extremely well positioned to benefit from a new infrastructure build out as global video production and broadcast transitions from high-def to ultra high-def 4K video resolutions. Market research firm, Strategy Analytics expects 4K television sales to increase ten-fold by 2020. We believe this trend will be a strong secular growth driver for MACOM in the coming years and that we hold the preeminent position in high performance SDI in crosspoint switch solutions for 4K video. Two weeks ago, Bob and I have the honor to join our high performance analog team in LA to receive the 2014 award for engineering excellence from the Hollywood Coast Production Alliance. Our 12 gig SDI chipset was recognized as the industry’s first to enable 4K video production. Our award winning portfolio uniquely supports 4K video resolutions at 60 frames per second on a single coaxial, cable or optical fiber. This award is a wonderful endorsement of our gross strategy and action. We’ve established an unrivaled technology and product portfolio and a preeminent market position in the space that will see strong secular growth for many years to come. Moving on mass quarter, we completed refinancing of our bank facility within institutional term B loan and $100,000 revolving credit agreement, which provided us capital to pursue further acquisitions. M&A remains a central element of our growth strategy serving us an accelerated success in our target markets. I’m proud to say that since our last earnings call, we pulled the trigger on three acquisitions that will expand and accelerate MACOM’s success in the optical space. Starting with the most tactical first, we acquired RF Micro, [ph] a specialized build of print house based Nashville and Hampshire. The primary purpose of this transaction is to…

[Operator Instructions]. The first question comes from Quinn Bolton from Needham & Company. Quinn Bolton - Needham & Company: Hi guys, congratulations on nice results. John, I wanted to start off with a little bit more information if you could on BinOptics. Can you give us a sense sort of where they play? You also mentioned some capacity constraints in the industry. Is that affecting BinOptics? And if so, you’re going to have to spend CapEx to increase the production of their lasers.

Yes. Thanks by the way Quinn, great question, very insightful. So, we’ve been tracking BinOptics for the better part of the last year or so. We were aware of the market -- industry dynamics, I should say, in the laser space. They’re one of three primary semiconductor laser suppliers in the world, the others being Mitsubishi and CyOptics which was recently acquired by Avago. And what’s been evolving is the acquisition of CyOptics was really an integration play for Avago. And Mitsubishi really has --let’s just say that this application market space is not of strategic interest to Mitsubishi. I suspect it’s rather old technology, not very profitable for them. In any case, what’s evolved is BinOptics really stepped in with the latest, most modern technology, superior cost structure, great products, great performance and we had noticed that they had been taking an inordinate share of reference design wins as well as customer selections and design wins to the point where they have been posting, actually I think close to 100% growth and with sustainable models that could sustain as much as 50% growth over the next couple of years, very nice profitability models in terms of gross margin and operating margins consistent with our aspirations so accretive to our current model. And then the opportunity came where they needed to dramatically expand capacity, they were a VC funded startup by background, so it naturally came a time for a company like MACOM to acquire and scale the operational capability of the company. And that’s what we plan to do. Quinn Bolton - Needham & Company: Are they capacity constrained currently or…?

Yes. Quinn Bolton - Needham & Company: Okay.

Yes. So they have been capacity constrained; the whole industry has been capacity constrained to the point where there has really been supply limitations in the access part of the market, but they also service big data sectors. So high growth potential at the end market level, again with suppliers that have been fading away, so they’ve got somewhat of an open playing field to give you the sense of what we plan to do with them, our internal goals which we’re working to underpin or we can think about integer multiples increases in capacity, so doubling in six months, quadrupling in a year. It was kind of exponential growth potential. And our sense for the customer diligence process is that could all just -- the revenues could scale accordingly. So, it’s a great upside possibility, even beyond their own internal aspirations. Quinn Bolton - Needham & Company: Great. Just two more questions on BinOptics and then I’ll hand it over to the next caller. But BinOptics, are these lasers mostly going into things like PON, is it more long haul, 40, 100 gig networks and can you talk a little bit about the synergies with the existing MACOM optical product portfolio and then for Bob. Bob, is there any financial data you can share about BinOptics and how it comes into the models as we start to think about our fiscal ‘15 and fiscal ‘16 models, some kind of revenue metric, gross margin target, anything you could provide would be helpful. Thanks.

Yes. So they’re coming from the more access space that’s been historically where the bulk of their revenue was. So 2.5 gig 10 gig type PON applications. And again, very nice profitability in that more cost driven space. But absolutely moved up now to 100 gig, a lot of fabulous design wins in the datacenter space. Actually a lot of the growth this year was driven by wireless backhaul the build out over in China, so fabulous position with the Who’s Who list over there. And then on the datacenter side, fabulous customer list in terms of the guys who are going to be building out the big datacenter, so really teed up for success. In terms of synergy with our portfolio it was striking when we went out to do a customer diligence for their five top customers, we ended up already with strategic, very personal relationships with executives, at all five customers. Literally you can look at our designs for those customers and the laser sitting right next to our TIAs and modulator drivers. So, it’s same customers, same applications, but literally doubling the available content for us.

Quinn, we’re looking to close the transaction probably towards the end of the calendar year here in our fiscal first quarter. We plan to update everybody with more specifics around the model at that time. But obviously, it’s very positive and it will deliver us above the double-digit growth as John said in his remarks, both on the revenue top line as well as EPS. Quinn Bolton - Needham & Company: Got it. Thank you.

You’re welcome.

The next question comes from Tore Svanberg from Stifel.

Yes. Hi, this is Erik calling in for Tore. Yes, nice results and great gross margin. I wanted to just one question on BinOptics and then kind of move on, but and then just some of the acquisitions in general. But are we talking about in terms of revenue for them, are we in kind of the - just get a sense of just overall scale of the business, so we’re kind of the millions of dollars type of business or is it something a little bit smaller than that? And it sounds like even you see aspirational is that towards your 60% - 30% gross and operating margin target model?

Exactly, good interpretation on the latter part of the question. I would say think about the revenue levels in the tens of millions - scaling through the tens of millions over the next year or two.

Okay. And that’s annually correct?

Yes, annually.

Okay, great. Okay. And on the optical side, obviously most of the growth has been on the longhaul, but what do you hear from your customers with regards to kind of metro and timing of this market and it sounds like a lot of the growth in the quarter was driven by your networks business?

There is no question our optical business is off to the races. And this BinOptics move and the two other tuck-ins that we talked about are all process of doubling down. One of the things I firmly believe is when you see the breakout you pored on and that’s exactly what we’re doing in the space. I mean the customer wins, mega customer wins and all the right guys, for all the right products, with all the right profitability models are -- it’s all strong up into the right with I’d suspect to say no losses, we’re betting a 1,000 with against our traditional competitors. So, doubling down is a logical thing to do, broadening our footprint is a logical thing to do and I can tell you I happen to be in China last week as our team was out doing the customer diligence on BinOptics and there is no question that this elevates us to yet another degree of strategic value to them. Solving the supply chain issues for this critical component is a big, big, big deal and doing it with a high performance, high quality product is what it’s all about.

Great. And then just on the other two acquisitions, it sounded like those are more for kind of COGS or reduction in, but were there any -- or is there any kind of revenue contribution baked into your outlook for the December quarter?

I would say to the first approximation, no. The context of the IKE Micro acquisition was it is a spectacular build-to-print in-house, great technology; great people right up the street here in Nashville and New Hampshire and ended up with our breakout in auto. We could pay back on the acquisition within a year, year and half in less than a year just on the back of bringing that build-to-print capability in-house just for that business. Never mind all the technology and the capability that can out service kind of advanced develop and advanced business for us not just in optical, but in aerospace and defense as well, as kind of the pre-cursor and then as things scale into production we can move them over to our Asian subs. So, it has a lot of tangible value to us, but it’s not in the form of big revenue from other customers at least not yet, but a strategic enabler for growth. The other one Photonic Controls, there is a lot of hype around silicon photonics out there in the industry. Photonic Controls is one of the companies, it’s really design house, this isn’t about buying IP and investing in own proprietary silicon photonics capabilities building upon the big guys who now have that under their belt and really bringing that to bare within our optical portfolio. And again with the transceiver type devices, the pick devices that we’re talking about on the transmit receive chains it’s just again doubling down and piling in the content in that space we’re already addressing.

Okay. Thank you very much. I’ll jump back in.

Okay, no problem.

Thanks.

[Operator Instructions]. The next question comes from Mark Lipacis from Jefferies.

Great. Thanks for taking my questions. The first one is for John. What’s driving the breakout in the optical business? Is it lower cost, is it -- systems coming down to lower costs or is it just a demand for the bandwidth continuous to grow?

Well, the breakouts are really two-fold. One is prior to the Mindspeed acquisition last year, we had developed a great position in longhaul modulator drivers, these are [indiscernible] and Indium Phosphide-based modulator drivers. We had great customer footprint developing even prior to Mindspeed. Once the Mindspeed team came in HPA portfolio, came in with transient amplifiers and clock and data recovery devices and crosspoint switches, which are coming more from the access market and into big data centers and then kind of both converge on the metro. So it’s really all fronts breaking out simultaneously. In the prepared remarks, I talked about the 4K video SDI chipsets. It’s one example but on the enterprise side, the CDRs that we have are doing a great job in terms of new customers, entirely new growth areas for that business for both, obviously for MACOM but also from the previous Mindspeed business. So it’s really breakouts simultaneously; I think the common denominator in a lot of cases, are the large telecommunications customers. And I think in fact I know we’re now front and center where MACOM was relatively unknown a couple of years ago, we’re now viewed as a strategic asset that’s delivering various flavors of strategically important components, high value. So, this is for the most part especially when you move beyond the access base, big iron, so big ASPs; high profitability; high value; very sticky long life cycles and so on, so exactly the kind of stuff that we aspire to. And again to the extent that we feel doubling down with more acquisitions is a very logical thing to do.

That’s helpful. Thank you. And then perhaps for Bob. Could you just review kind of like the use of cash going forward? It sounds like you have some -- you’re going to be with BinOptics, you’ll be signing up for some CapEx and to the extent that you can quantify that that will be helpful. And then do you have like a target leverage ratio or something like this like how should we think about your balance sheet going forward? Should we expect you guys do have a view of paying down the debt with the new cash or maybe continue to lever up with more acquisitions? How should we think about that? Thank you.

Mark, to the last question first. We target a comfortable leverage ratio of four times net cash and we’re well within that with the acquisition of BinOptics here. Notwithstanding the overall discussion of expanding capacity here, we’re still going to be in the general range of 4% of revenues on our overall CapEx for 2015. I would emphasize that our CapEx primarily is going to support expansion of again capabilities here in role as well as now in the Indium Phosphide in role as well as in Ithaca. So, it’s all within our general financial model, our framework for the reinvestment in the business. Short-term from a cash perspective, the balance sheet, we have growing EBITDA with the acquisition of BinOptics and obviously we will continue to look these acquisitions as the core element, one of the core elements of growing MACOM. And so there are different opportunities to refinance what we have. And I think we’ll continue to pursue those as, when the markets are available.

Yes. And I can add a little more color too. One of the things that I failed to make clear is in Ithaca, New York, the BinOptics folks have a great factory, currently producing the Indium Phosphide lasers. The first stage of capacity expansion has to do with adding a few tools, improving the operational efficiencies, using what I would suspect would be a little more mature operational management approaches to maximizing yields, maximizing throughput and so on. And the belief is generally that we could as much double the laser capacity within six months just through those very few million dollars of CapEx. The second thing that was very interesting that we found was our tool set here in [indiscernible] for our production facility is 100% compatible with producing the lasers. There is again just a couple of additional tools, couple of million dollars needed and we can replicate everything that will be Ithaca doubling yet again capacity and producing yielding a dual source copy exacts for these lasers, which is a big, big deal to the telecommunications industry. As you would imagine, we don’t get earthquakes here, but fires have been known to happen in factories and blizzards and what have you in having uninterrupted supply with multiple factories copy exact is a big selling point. So that synergy with our core confidence in compound semiconductor manufacturing and very sophisticated staff, I mean this isn’t just Indium Phosphide, but this is black art laser production is right in our strong suite.

That’s very helpful. Thanks for the color John and Bob.

Thanks.

The next question comes from Blayne Curtis from Barclays.

Hey guys, can you hear me?

Yes. How are you doing?

Hey, thanks. I am doing all right, busy week there, so great quarter. I apologize since that’s earlier, John, but I just was curious the applications in Indium Phosphide as far as other products and the synergies there?

So, the synergies and leverage with our side of the portfolio with BinOptics…

Would you have other semiconductor applications for Indium Phosphide?

Beyond the optical laser stuff, yes, there is some very, very interesting things that BinOptics as a privately held company could not pursue fairly explosive stuff like reading heads would be one of them. But they have actually GaN-based lighting drivers for automotive and other applications, as well as Indium Phosphide based similar type things. So, it is not just in optical communications technology. They also talk a lot about silicon photonics, with the silicon photonics they are on the other side. And I describe it more as connectivity, so photonic connectivity. So, if you read about what Intel’s interested in and SD Micro is interested in with silicon photonics, they basically needing to get the point of using photonics for connectivity between chips and the ex-passive [ph] technology that they have is ideal to service that application for various reasons. So, this has upside potential that is just geometrically exciting, very, very exciting. And I think we have to bear with all to really bring to that fruition where as a private company they could not.

Excellent. And then just second question and once again I apologize, this is already asked. But on the GaN side in terms of next milestones clearly your competitor doing GaN on carbide, laid out some applications in cable and base stations. Where are you in terms of ramping your supply partners and bring in products to market?

Yes. So, we’ve got the material supply under our belt with IQE, that’s big, big deal, because material costs is actually the dominant factor when you talk about GaN on silicon versus GaN on silicon carbide, because it’s substrate material that cost so much. From a wafer processing standpoint, we’ve got the four inch production already under our belt. We’ve got six inch, eight inch partners with wafers and process. And I’m hopeful that in the coming months or few months, we’ll be able to come public with those. We’re really aligning that supply chain with the key application requirements. You mentioned base stations with GaN on silicon carbide, especially as you look forward as a replacement for more mainstream LD mass and as you start getting into 4G, LTE moving to 4.5 and 5G, it really plays into an economic model that really requires the GaN on silicon cost structure. So, one of the things given my background in that space I wanted to make sure is that I’ve got a supply chain that can scale properly. You’re probably aware of the supply constraints in the base station this year. So, you can understand why customers consider supply chain flexibility paramount. So that has to be done properly and the groundwork has to be laid with the right people, with the right economic incentives to have the capacity in place to service that upside. So it just takes time to get those partners lined up with lines proving, yielding wafers appropriately. And we don’t want to publicize something before it’s ready. But lots of progress behind the scenes both on the customer front, as well as supply chain partner front.

Thanks. That’s all I have. Thanks guys.

Super, thanks Blayne.

And I am showing no further questions. I would now like to turn the call back over to John Croteau.

Very good. A couple of final notes to close today’s call. We’ll be attending the Barclay’s conference in San Francisco on Tuesday, December 9th. And we’d like to welcome the opportunity to meet with any investors that are planning to attend. Additionally, we also plan to host investor meetings in Los Angeles and San Diego areas in the early December. Please feel free to send us an email at ir@macom.com if you are interested in attending any of these meetings. Thanks again for joining us for today’s call. And I look forward to reporting our fiscal first quarter results in early 2015. Operator, you may now disconnect the call.

Ladies and gentlemen that does conclude the conference for today. Again, thank you for your participation. You may all disconnect. Have a good day.