(NASDAQ: MCHP) - Microchip Technology
Incorporated, a leading provider of smart, connected, and secure
embedded control solutions, today reported results for the three
months and fiscal year ended March 31, 2024, as summarized in
the table below.
|
Three Months Ended March 31,
2024(1) |
Twelve Months Ended March 31,
2024(1) |
Net sales |
$1,325.8 |
|
|
|
$7,634.4 |
|
|
|
|
GAAP |
% |
Non-GAAP(2) |
% |
GAAP |
% |
Non-GAAP(2) |
% |
Gross profit |
$789.9 |
59.6% |
$799.6 |
60.3% |
$4,995.7 |
65.4% |
$5,025.6 |
65.8% |
Operating income |
$253.5 |
19.1% |
$436.0 |
32.9% |
$2,571.0 |
33.7% |
$3,349.2 |
43.9% |
Other expense |
$(53.8) |
|
$(53.8) |
|
$(205.1) |
|
$(192.9) |
|
Income tax provision |
$45.0 |
|
$71.9 |
|
$459.0 |
|
$458.7 |
|
Net income |
$154.7 |
11.7% |
$310.3 |
23.4% |
$1,906.9 |
25.0% |
$2,697.6 |
35.3% |
Net income per diluted share |
$0.28 |
|
$0.57 |
|
$3.48 |
|
$4.92 |
|
(1) In millions, except per share amounts and percentages of net
sales.(2) See the "Use of Non-GAAP Financial Measures" section of
this release.
Net sales for the fourth quarter of fiscal 2024 were $1.326
billion, down 40.6% from net sales of $2.233 billion in the prior
year's fourth fiscal quarter.
GAAP net income for the fourth quarter of fiscal 2024 was $154.7
million, or $0.28 per diluted share, down from GAAP net income of
$604.0 million, or $1.09 per diluted share, in the prior year's
fourth fiscal quarter. For the fourth quarters of fiscal 2024 and
fiscal 2023, GAAP net income was adversely impacted by amortization
of acquired intangible assets associated with our previous
acquisitions.
Non-GAAP net income for the fourth quarter of fiscal 2024 was
$310.3 million, or $0.57 per diluted share, down from non-GAAP net
income of $907.8 million, or $1.64 per diluted share, in the prior
year's fourth fiscal quarter. For the fourth quarters of fiscal
2024 and fiscal 2023, our non-GAAP results exclude the effect of
share-based compensation, other manufacturing adjustments, expenses
related to our acquisition activities (including intangible asset
amortization, severance, and other restructuring costs, and legal
and other general and administrative expenses associated with
acquisitions including legal fees and expenses for litigation and
investigations related to our Microsemi acquisition), professional
services associated with certain legal matters, and losses on the
settlement of debt. For the fourth quarters of fiscal 2024 and
fiscal 2023, our non-GAAP income tax expense is presented based on
projected cash taxes for the applicable fiscal year, excluding
transition tax payments under the Tax Cuts and Jobs Act. A
reconciliation of our non-GAAP and GAAP results is included in this
press release.
Net sales for the fiscal year ended March 31, 2024 were
$7.634 billion, a decrease of 9.5% from net sales of $8.439 billion
in the prior fiscal year.
GAAP net income for the fiscal year ended March 31, 2024
was $1.907 billion, or $3.48 per diluted share, a decrease of 14.8%
from net income of $2.238 billion, or $4.02 per diluted share in
the prior fiscal year. Fiscal 2024 and fiscal 2023, GAAP net income
was significantly adversely impacted by amortization of acquired
intangible assets associated with our previous acquisitions and
loss on debt settlement associated with our debt refinancing
activities.
Non-GAAP net income for the fiscal year ended March 31,
2024 was $2.698 billion, a decrease of 19.5% from net income of
$3.353 billion in the prior fiscal year. Non-GAAP earnings per
diluted share for the fiscal year ended March 31, 2024 were
$4.92, a decrease of 18.3% from the $6.02 per diluted share in the
prior fiscal year. See the "Use of Non-GAAP Financial Measures"
section of this release.
Microchip announced today that its Board of Directors declared a
record quarterly cash dividend on its common stock of 45.2 cents
per share, up 18.0% from the year ago quarter. The quarterly
dividend is payable on June 5, 2024 to stockholders of record
on May 22, 2024.
"We experienced a major inventory correction in fiscal 2024,
leading to a 9.5% decline in revenue to $7.6 billion. Despite this,
our resilient operating model and rapid adjustment to the adverse
business environment enabled us to navigate these challenges to
achieve a non-GAAP operating margin of 43.9%," said Ganesh Moorthy,
President and Chief Executive Officer. "We remained committed to
our capital return program, returning $1.89 billion through
dividends and share buybacks during fiscal 2024, up 15.4% from the
prior year, and we are tracking towards achieving our goal of
returning 100% of adjusted free cash flow to shareholders by the
current fiscal year-end."
Mr. Moorthy added, "We believe we are under shipping to end
market demand, as customers and channel partners continued to
reduce inventory. This situation has required us to implement
ongoing austerity measures, including taking actions to reduce
factory utilization, that will persist into the June quarter.
Despite these challenges, our commitment to maintaining our
competitive edge and positioning ourselves for future revenue
growth remains steadfast. We continue to focus on innovation, as
demonstrated by the significant product announcements and two
tactical acquisitions we made during the June quarter. These
initiatives aim to expand our product portfolio and reinforce our
leadership across the diverse end markets we serve, helping to
ensure that we are well-prepared to capitalize on opportunities
when market conditions improve."
Eric Bjornholt, Microchip's Chief Financial Officer, said, "Our
fourth quarter performance reflects our commitment to operational
efficiency and disciplined execution, allowing us to deliver
in-line results in a challenging environment. We continued to work
on optimizing our capital structure by issuing $1 billion in senior
notes due in 2029 at an interest rate of 5.05%. During fiscal year
2024, we reduced gross debt by $447.4 million while at the same
time significantly increasing our capital returns to our
shareholders. We remain committed to further enhancing our capital
structure in fiscal 2025 as additional portions of our outstanding
debt mature."
Mr. Moorthy concluded, "As we enter fiscal 2025, we see early
signs of demand stabilization but are experiencing low business
visibility due to our short lead times and the continued macro
uncertainty. We anticipate June quarter net sales between $1.22
billion and $1.26 billion. We believe that the June 2024 quarter
marks the bottom of the cycle for Microchip and that our business
will return to sequential revenue growth in the September 2024
quarter. Despite near-term challenges, we believe our solutions
remain the engine of innovation for our target markets, and our
focus on Total System Solutions and key megatrends continues to
drive strong design win momentum. We remain committed to executing
our Microchip 3.0 strategic imperatives, which we believe will
deliver sustained growth and provide substantial shareholder
value."
Microchip's Highlights for the Quarter Ended
March 31, 2024:
- Earned certification in ISO/SAE 21434 road
vehicle—cybersecurity engineering standard from UL Solutions. Such
certified security products can help Tier 1s and OEMs prove
cybersecurity risk management compliance.
- Introduced a Silicon Carbide (SiC) 3.3 kV XIFM plug-and-play
mSiC™ gate driver to accelerate the adoption of high-voltage SiC
power modules. The highly integrated digital gate driver is
designed to work out-of-the-box with high-voltage SiC-based power
modules to simplify and speed system integration.
- Unveiled our low-cost PolarFire® SoC Discovery Kit to make
RISC-V and FPGA design more accessible for a wider range of
embedded engineers. The cost-sensitive development platform helps
students, beginners and seasoned designers work with emerging
technologies.
- Launched 10 multi-channel remote temperature sensors with the
MCP998x family representing one of the largest automotive-grade
remote temperature sensor portfolios available from a single
vendor.
- Unveiled our next-generation family of Ethernet switches
featuring Time Sensitive Networking (TSN) and scalable port
bandwidths from 46 to 102 Gbps. The LAN9694, LAN9696 and LAN9698
devices are integrated with High-availability Seamless Redundancy
(HSR) and Parallel Redundancy Protocol (PRP) for ease of
design.
- Expanded our serial SRAM portfolio to larger densities and
increased speeds offering a lower-cost alternative to parallel SRAM
with up to 4 Mb density and 143 MHz SPI/SQI™ communications.
- Increased our TrustFLEX family with CEC1736 real-time platform
root of trust devices. The TrustFLEX devices along with the Trust
Platform Design Suite tool can simplify the enablement of root of
trust from concept to production in a wide range of
applications.
- Released a Qi® v2.0 standards-compliant dsPIC33-based reference
design, a wireless dual-pad charging design that supports both
extended power profile and magnetic power profile with a single
controller.
- Announced our next generation of easily configurable enterprise
storage backplane management processors for data center and storage
applications. The updated family of EEC1005-UB2 Universal Backplane
Management devices complies with latest SFF-TA-1005 V. 1.4
specifications.
- Launched our new dsPIC® DSC-based integrated motor drivers that
bring controllers, gate drivers and communications to a single
device. A corresponding ecosystem of support tools are designed to
help simplify motor control system development and accelerate time
to market.
- Extended our IEEE®-1588 grandmaster portfolio with the
TimeProvider® 4500 series grandmaster—the industry’s first
grandmaster to provide high-speed network interfaces up to 25 Gbps.
It also enables precise time accuracy to less than one
nanosecond.
- Released the next evolutionary step in customizable logic
through the introduction of the PIC16F13145 family of MCUs. The new
Configurable Logic Block (CLB) module offers tailored hardware
solutions and helps eliminate the need for external logic
components.
First Quarter Fiscal Year 2025 Outlook:
The following statements are based on current expectations.
These statements are forward-looking, and actual results may differ
materially.
|
Microchip Consolidated Guidance |
Net Sales |
$1.22 to $1.26 billion |
|
|
|
GAAP |
Non-GAAP Adjustments(1) |
Non-GAAP(1) |
Gross Profit |
58.5% to 60.5% |
$5.9 to $6.9 million |
59.0% to 61.0% |
Operating Expenses(2) |
42.0% to 42.7 % |
$169.6 to $173.6 million |
28.25% to 28.75% |
Operating Income |
15.9% to 18.4% |
$175.5 to $180.5 million |
30.25% to 32.75% |
Other Expense, net |
$64.8 to $65.2 million |
($0.2) to $0.2 million |
$65 million |
Income Tax Provision |
$25.8 to $38.4 million(3) |
$5.1 to $15.2 million |
$41.0 to $43.5 million(4) |
Net Income |
$103.0 to $128.6 million |
$160.0 to $175.6 million |
$263.0 to $304.2 million |
Diluted Common Shares Outstanding |
Approximately 542.0 to 543.0 million shares |
|
Approximately 542.0 to 543.0 million shares |
Earnings per Diluted Share |
$0.19 to $0.24 |
$0.29 to $0.32 |
$0.48 to $0.56 |
(1) See the "Use of Non-GAAP Financial Measures" section of this
release for information regarding our non-GAAP guidance.(2) We are
not able to estimate the amount of certain Special Charges and
Other, net that may be incurred during the quarter ending June 30,
2024. Therefore, our estimate of GAAP operating expenses excludes
certain amounts that may be recognized as Special Charges and
Other, net in the quarter ending June 30, 2024.(3) The forecast for
GAAP tax expense excludes any unexpected tax events that may occur
during the quarter, as these amounts cannot be forecasted.(4)
Represents the expected cash tax rate for fiscal 2025, excluding
any transition tax payments associated with the Tax Cuts and Jobs
Act.
Capital expenditures for the quarter ending June 30, 2024 are
expected to be between $60 million and $70 million. Capital
expenditures for all of fiscal 2025 are expected to be about $175
million. We are selectively adding capital equipment to maintain,
grow and operate our internal manufacturing capabilities to support
the expected growth of our business.
Under the GAAP revenue recognition standard, we are required to
recognize revenue when control of the product changes from us to a
customer or distributor. We focus our sales and marketing efforts
on creating demand for our products in the end markets we serve and
not on moving inventory into our distribution network. We also
manage our manufacturing and supply chain operations, including our
distributor relationships, towards the goal of having our products
available at the time and location the end customer desires.
Use of Non-GAAP Financial Measures: Our
non-GAAP adjustments, where applicable, include the effect of
share-based compensation, other manufacturing adjustments, expenses
related to our acquisition activities (including intangible asset
amortization, severance, and other restructuring costs, and legal
and other general and administrative expenses associated with
acquisitions including legal fees and expenses for litigation and
investigations related to our Microsemi acquisition), professional
services associated with certain legal matters, and losses on the
settlement of debt. For the fourth quarters of fiscal 2024 and
fiscal 2023, our non-GAAP income tax expense is presented based on
projected cash taxes for the fiscal year, excluding transition tax
payments under the Tax Cuts and Jobs Act.
We are required to estimate the cost of certain forms of
share-based compensation, including employee stock options,
restricted stock units, and our employee stock purchase plan, and
to record a commensurate expense in our income statement.
Share-based compensation expense is a non-cash expense that varies
in amount from period to period and is affected by the price of our
stock at the date of grant. The price of our stock is affected by
market forces that are difficult to predict and are not within the
control of management. Our other non-GAAP adjustments are either
non-cash expenses, unusual or infrequent items, or other expenses
related to transactions. Management excludes all of these items
from its internal operating forecasts and models.
We are using non-GAAP operating expenses in dollars, including
non-GAAP research and development expenses and non-GAAP selling,
general and administrative expenses, non-GAAP other expense, net,
and non-GAAP income tax rate, which exclude the items noted above,
as applicable, to permit additional analysis of our
performance.
Management believes these non-GAAP measures are useful to
investors because they enhance the understanding of our historical
financial performance and comparability between periods. Many of
our investors have requested that we disclose this non-GAAP
information because they believe it is useful in understanding our
performance as it excludes non-cash and other charges that many
investors feel may obscure our underlying operating results.
Management uses non-GAAP measures to manage and assess the
profitability of our business and for compensation purposes. We
also use our non-GAAP results when developing and monitoring our
budgets and spending. Our determination of these non-GAAP measures
might not be the same as similarly titled measures used by other
companies, and it should not be construed as a substitute for
amounts determined in accordance with GAAP. There are limitations
associated with using these non-GAAP measures, including that they
exclude financial information that some may consider important in
evaluating our performance. Management compensates for this by
presenting information on both a GAAP and non-GAAP basis for
investors and providing reconciliations of the GAAP and non-GAAP
results.
Generally, gross profit fluctuates over time, driven primarily
by the mix of products sold and licensing revenue; variances in
manufacturing yields; fixed cost absorption; wafer fab loading
levels; costs of wafers from foundries; inventory reserves; pricing
pressures in our non-proprietary product lines; and competitive and
economic conditions. Operating expenses fluctuate over time,
primarily due to net sales and profit levels.
Diluted Common Shares Outstanding can vary for, among other
things, the trading price of our common stock, the exercise of
options or vesting of restricted stock units, the potential for
incremental dilutive shares from our convertible debentures
(additional information regarding our share count is available in
the investor relations section of our website under the heading
"Supplemental Financial Information"), and repurchases or issuances
of shares of our common stock. The diluted common shares
outstanding presented in the guidance table above assumes an
average Microchip stock price in the June 2024 quarter between $85
and $95 per share (however, we make no prediction as to what our
actual share price will be for such period or any other period and
we cannot estimate what our stock option exercise activity will be
during the quarter).
MICROCHIP TECHNOLOGY INCORPORATED AND
SUBSIDIARIESCONSOLIDATED
STATEMENTS OF INCOME(in millions, except per share
amounts) |
|
|
Three Months Ended March 31, |
|
Twelve Months Ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Net sales |
$ |
1,325.8 |
|
|
$ |
2,232.7 |
|
|
$ |
7,634.4 |
|
|
$ |
8,438.7 |
|
Cost of sales |
|
535.9 |
|
|
|
713.4 |
|
|
|
2,638.7 |
|
|
|
2,740.8 |
|
Gross profit |
|
789.9 |
|
|
|
1,519.3 |
|
|
|
4,995.7 |
|
|
|
5,697.9 |
|
|
|
|
|
|
|
|
|
Research and development |
|
240.3 |
|
|
|
298.3 |
|
|
|
1,097.4 |
|
|
|
1,118.3 |
|
Selling, general and
administrative |
|
161.8 |
|
|
|
203.5 |
|
|
|
734.2 |
|
|
|
797.7 |
|
Amortization of acquired
intangible assets |
|
151.2 |
|
|
|
167.4 |
|
|
|
605.4 |
|
|
|
669.9 |
|
Special (income) charges and
other, net |
|
(16.9 |
) |
|
|
2.1 |
|
|
|
(12.3 |
) |
|
|
(4.0 |
) |
Operating expenses |
|
536.4 |
|
|
|
671.3 |
|
|
|
2,424.7 |
|
|
|
2,581.9 |
|
|
|
|
|
|
|
|
|
Operating income |
|
253.5 |
|
|
|
848.0 |
|
|
|
2,571.0 |
|
|
|
3,116.0 |
|
|
|
|
|
|
|
|
|
Other expense, net |
|
(53.8 |
) |
|
|
(46.2 |
) |
|
|
(205.1 |
) |
|
|
(206.3 |
) |
Income before income
taxes |
|
199.7 |
|
|
|
801.8 |
|
|
|
2,365.9 |
|
|
|
2,909.7 |
|
Income tax provision |
|
45.0 |
|
|
|
197.8 |
|
|
|
459.0 |
|
|
|
672.0 |
|
Net income |
$ |
154.7 |
|
|
$ |
604.0 |
|
|
$ |
1,906.9 |
|
|
$ |
2,237.7 |
|
|
|
|
|
|
|
|
|
Basic net income per common
share |
$ |
0.29 |
|
|
$ |
1.10 |
|
|
$ |
3.52 |
|
|
$ |
4.07 |
|
Diluted net income per common
share |
$ |
0.28 |
|
|
$ |
1.09 |
|
|
$ |
3.48 |
|
|
$ |
4.02 |
|
|
|
|
|
|
|
|
|
Basic common shares
outstanding |
|
538.9 |
|
|
|
546.9 |
|
|
|
542.0 |
|
|
|
550.4 |
|
Diluted common shares
outstanding |
|
544.8 |
|
|
|
553.9 |
|
|
|
548.0 |
|
|
|
557.3 |
|
MICROCHIP TECHNOLOGY INCORPORATED AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS(in millions) |
|
ASSETS |
|
March 31, |
|
March 31, |
|
2024 |
|
2023 |
Cash and short-term investments |
$ |
319.7 |
|
$ |
234.0 |
Accounts receivable, net |
|
1,143.7 |
|
|
1,305.3 |
Inventories |
|
1,316.0 |
|
|
1,324.9 |
Other current assets |
|
233.6 |
|
|
205.1 |
Total current assets |
|
3,013.0 |
|
|
3,069.3 |
|
|
|
|
Property, plant and equipment, net |
|
1,194.6 |
|
|
1,177.9 |
Other assets |
|
11,665.6 |
|
|
12,123.1 |
Total assets |
$ |
15,873.2 |
|
$ |
16,370.3 |
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
Accounts payable and accrued liabilities |
$ |
1,520.0 |
|
$ |
1,720.4 |
Current portion of long-term debt |
|
999.4 |
|
|
1,398.2 |
Total current liabilities |
|
2,519.4 |
|
|
3,118.6 |
|
|
|
|
Long-term debt |
|
5,000.4 |
|
|
5,041.7 |
Long-term income tax payable |
|
649.2 |
|
|
705.7 |
Long-term deferred tax liability |
|
28.8 |
|
|
42.7 |
Other long-term liabilities |
|
1,017.6 |
|
|
948.0 |
|
|
|
|
Stockholders' equity |
|
6,657.8 |
|
|
6,513.6 |
Total liabilities and stockholders' equity |
$ |
15,873.2 |
|
$ |
16,370.3 |
MICROCHIP TECHNOLOGY INCORPORATED AND
SUBSIDIARIESRECONCILIATION OF GAAP TO NON-GAAP
MEASURES(in millions, except per share amounts and
percentages; unaudited) |
|
RECONCILIATION OF GAAP GROSS PROFIT TO NON-GAAP GROSS
PROFIT |
|
|
Three Months Ended March 31, |
|
Twelve Months Ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Gross profit, as reported |
$ |
789.9 |
|
|
$ |
1,519.3 |
|
|
$ |
4,995.7 |
|
|
$ |
5,697.9 |
|
Share-based compensation
expense |
|
5.4 |
|
|
|
6.1 |
|
|
|
25.6 |
|
|
|
27.2 |
|
Other manufacturing
adjustments |
|
4.3 |
|
|
|
— |
|
|
|
4.3 |
|
|
|
— |
|
Non-GAAP gross profit |
$ |
799.6 |
|
|
$ |
1,525.4 |
|
|
$ |
5,025.6 |
|
|
$ |
5,725.1 |
|
GAAP gross profit
percentage |
|
59.6 |
% |
|
|
68.0 |
% |
|
|
65.4 |
% |
|
|
67.5 |
% |
Non-GAAP gross profit
percentage |
|
60.3 |
% |
|
|
68.3 |
% |
|
|
65.8 |
% |
|
|
67.8 |
% |
RECONCILIATION OF GAAP RESEARCH AND DEVELOPMENT EXPENSES
TO NON-GAAP RESEARCH AND DEVELOPMENT EXPENSES
|
Three Months Ended March 31, |
|
Twelve Months Ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Research and development
expenses, as reported |
$ |
240.3 |
|
|
$ |
298.3 |
|
|
$ |
1,097.4 |
|
|
$ |
1,118.3 |
|
Share-based compensation
expense |
|
(23.3 |
) |
|
|
(22.0 |
) |
|
|
(94.3 |
) |
|
|
(83.1 |
) |
Other adjustments |
|
— |
|
|
|
(0.2 |
) |
|
|
(0.5 |
) |
|
|
(0.8 |
) |
Non-GAAP research and
development expenses |
$ |
217.0 |
|
|
$ |
276.1 |
|
|
$ |
1,002.6 |
|
|
$ |
1,034.4 |
|
GAAP research and development
expenses as a percentage of net sales |
|
18.1 |
% |
|
|
13.4 |
% |
|
|
14.4 |
% |
|
|
13.3 |
% |
Non-GAAP research and
development expenses as a percentage of net sales |
|
16.4 |
% |
|
|
12.4 |
% |
|
|
13.1 |
% |
|
|
12.3 |
% |
RECONCILIATION OF GAAP SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES TO NON-GAAP SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES
|
Three Months Ended March 31, |
|
Twelve Months Ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Selling, general and
administrative expenses, as reported |
$ |
161.8 |
|
|
$ |
203.5 |
|
|
$ |
734.2 |
|
|
$ |
797.7 |
|
Share-based compensation
expense |
|
(14.1 |
) |
|
|
(15.8 |
) |
|
|
(57.6 |
) |
|
|
(60.1 |
) |
Other adjustments |
|
(0.8 |
) |
|
|
(0.6 |
) |
|
|
(1.3 |
) |
|
|
(2.0 |
) |
Professional services
associated with certain legal matters |
|
(0.3 |
) |
|
|
(1.5 |
) |
|
|
(1.5 |
) |
|
|
(4.7 |
) |
Non-GAAP selling, general and
administrative expenses |
$ |
146.6 |
|
|
$ |
185.6 |
|
|
$ |
673.8 |
|
|
$ |
730.9 |
|
GAAP selling, general and
administrative expenses as a percentage of net sales |
|
12.2 |
% |
|
|
9.1 |
% |
|
|
9.6 |
% |
|
|
9.5 |
% |
Non-GAAP selling, general and
administrative expenses as a percentage of net sales |
|
11.1 |
% |
|
|
8.3 |
% |
|
|
8.8 |
% |
|
|
8.7 |
% |
RECONCILIATION OF GAAP OPERATING EXPENSES TO NON-GAAP
OPERATING EXPENSES
|
Three Months Ended March 31, |
|
Twelve Months Ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Operating expenses, as
reported |
$ |
536.4 |
|
|
$ |
671.3 |
|
|
$ |
2,424.7 |
|
|
$ |
2,581.9 |
|
Share-based compensation
expense |
|
(37.4 |
) |
|
|
(37.8 |
) |
|
|
(151.9 |
) |
|
|
(143.2 |
) |
Other adjustments |
|
(0.8 |
) |
|
|
(0.8 |
) |
|
|
(1.8 |
) |
|
|
(2.8 |
) |
Professional services
associated with certain legal matters |
|
(0.3 |
) |
|
|
(1.5 |
) |
|
|
(1.5 |
) |
|
|
(4.7 |
) |
Amortization of acquired
intangible assets (1) |
|
(151.2 |
) |
|
|
(167.4 |
) |
|
|
(605.4 |
) |
|
|
(669.9 |
) |
Special (income) charges and
other, net |
|
16.9 |
|
|
|
(2.1 |
) |
|
|
12.3 |
|
|
|
4.0 |
|
Non-GAAP operating
expenses |
$ |
363.6 |
|
|
$ |
461.7 |
|
|
$ |
1,676.4 |
|
|
$ |
1,765.3 |
|
GAAP operating expenses as a
percentage of net sales |
|
40.5 |
% |
|
|
30.1 |
% |
|
|
31.8 |
% |
|
|
30.6 |
% |
Non-GAAP operating expenses as
a percentage of net sales |
|
27.4 |
% |
|
|
20.7 |
% |
|
|
22.0 |
% |
|
|
20.9 |
% |
(1) Amortization of acquired intangible assets consists of core
and developed technology and customer-related acquired intangible
assets in connection with business combinations. Such charges are
excluded for purposes of calculating certain non-GAAP measures.
RECONCILIATION OF GAAP OPERATING INCOME TO NON-GAAP
OPERATING INCOME
|
Three Months Ended March 31, |
|
Twelve Months Ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Operating income, as
reported |
$ |
253.5 |
|
|
$ |
848.0 |
|
|
$ |
2,571.0 |
|
|
$ |
3,116.0 |
|
Share-based compensation
expense |
|
42.8 |
|
|
|
43.9 |
|
|
|
177.5 |
|
|
|
170.4 |
|
Other manufacturing
adjustments |
|
4.3 |
|
|
|
— |
|
|
|
4.3 |
|
|
|
— |
|
Other adjustments |
|
0.8 |
|
|
|
0.8 |
|
|
|
1.8 |
|
|
|
2.8 |
|
Professional services
associated with certain legal matters |
|
0.3 |
|
|
|
1.5 |
|
|
|
1.5 |
|
|
|
4.7 |
|
Amortization of acquired
intangible assets (1) |
|
151.2 |
|
|
|
167.4 |
|
|
|
605.4 |
|
|
|
669.9 |
|
Special (income) charges and
other, net |
|
(16.9 |
) |
|
|
2.1 |
|
|
|
(12.3 |
) |
|
|
(4.0 |
) |
Non-GAAP operating income |
$ |
436.0 |
|
|
$ |
1,063.7 |
|
|
$ |
3,349.2 |
|
|
$ |
3,959.8 |
|
GAAP operating income as a
percentage of net sales |
|
19.1 |
% |
|
|
38.0 |
% |
|
|
33.7 |
% |
|
|
36.9 |
% |
Non-GAAP operating income as a
percentage of net sales |
|
32.9 |
% |
|
|
47.6 |
% |
|
|
43.9 |
% |
|
|
46.9 |
% |
(1) Amortization of acquired intangible assets consists of core
and developed technology and customer-related acquired intangible
assets in connection with business combinations. Such charges are
excluded for purposes of calculating certain non-GAAP measures. The
use of acquired intangible assets contributed to our revenues
earned during the periods presented.
RECONCILIATION OF GAAP OTHER EXPENSE, NET TO NON-GAAP
OTHER EXPENSE, NET
|
Three Months Ended March 31, |
|
Twelve Months Ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Other expense, net, as
reported |
$ |
(53.8 |
) |
|
$ |
(46.2 |
) |
|
$ |
(205.1 |
) |
|
$ |
(206.3 |
) |
Loss on settlement of
debt |
|
— |
|
|
|
— |
|
|
|
12.2 |
|
|
|
8.3 |
|
Non-cash other expense,
net |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.1 |
|
Non-GAAP other expense,
net |
$ |
(53.8 |
) |
|
$ |
(46.2 |
) |
|
$ |
(192.9 |
) |
|
$ |
(197.9 |
) |
GAAP other expense, net, as a
percentage of net sales |
|
(4.1 |
)% |
|
|
(2.1 |
)% |
|
|
(2.7 |
)% |
|
|
(2.4 |
)% |
Non-GAAP other expense, net,
as a percentage of net sales |
|
(4.1 |
)% |
|
|
(2.1 |
)% |
|
|
(2.5 |
)% |
|
|
(2.3 |
)% |
RECONCILIATION OF GAAP INCOME TAX PROVISION TO NON-GAAP
INCOME TAX PROVISION
|
Three Months Ended March 31, |
|
Twelve Months Ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Income tax provision as
reported |
$ |
45.0 |
|
|
$ |
197.8 |
|
|
$ |
459.0 |
|
|
$ |
672.0 |
|
Income tax rate, as
reported |
|
22.5 |
% |
|
|
24.7 |
% |
|
|
19.4 |
% |
|
|
23.1 |
% |
Other non-GAAP tax
adjustment |
|
26.9 |
|
|
|
(88.1 |
) |
|
|
(0.3 |
) |
|
|
(263.2 |
) |
Non-GAAP income tax
provision |
$ |
71.9 |
|
|
$ |
109.7 |
|
|
$ |
458.7 |
|
|
$ |
408.8 |
|
Non-GAAP income tax rate |
|
18.8 |
% |
|
|
10.8 |
% |
|
|
14.5 |
% |
|
|
10.9 |
% |
RECONCILIATION OF GAAP NET INCOME AND GAAP DILUTED NET
INCOME PER COMMON SHARE TO NON-GAAP NET INCOME AND NON-GAAP DILUTED
NET INCOME PER COMMON SHARE
|
Three Months Ended March 31, |
|
Twelve Months Ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Net income, as reported |
$ |
154.7 |
|
|
$ |
604.0 |
|
|
$ |
1,906.9 |
|
|
$ |
2,237.7 |
|
Share-based compensation
expense |
|
42.8 |
|
|
|
43.9 |
|
|
|
177.5 |
|
|
|
170.4 |
|
Other manufacturing
adjustments |
|
4.3 |
|
|
|
— |
|
|
|
4.3 |
|
|
|
— |
|
Other adjustments |
|
0.8 |
|
|
|
0.8 |
|
|
|
1.8 |
|
|
|
2.8 |
|
Professional services
associated with certain legal matters |
|
0.3 |
|
|
|
1.5 |
|
|
|
1.5 |
|
|
|
4.7 |
|
Amortization of acquired
intangible assets |
|
151.2 |
|
|
|
167.4 |
|
|
|
605.4 |
|
|
|
669.9 |
|
Special (income) charges and
other, net |
|
(16.9 |
) |
|
|
2.1 |
|
|
|
(12.3 |
) |
|
|
(4.0 |
) |
Loss on settlement of
debt |
|
— |
|
|
|
— |
|
|
|
12.2 |
|
|
|
8.3 |
|
Non-cash other expense,
net |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.1 |
|
Other non-GAAP tax
adjustment |
|
(26.9 |
) |
|
|
88.1 |
|
|
|
0.3 |
|
|
|
263.2 |
|
Non-GAAP net income |
$ |
310.3 |
|
|
$ |
907.8 |
|
|
$ |
2,697.6 |
|
|
$ |
3,353.1 |
|
GAAP net income as a
percentage of net sales |
|
11.7 |
% |
|
|
27.1 |
% |
|
|
25.0 |
% |
|
|
26.5 |
% |
Non-GAAP net income as a
percentage of net sales |
|
23.4 |
% |
|
|
40.7 |
% |
|
|
35.3 |
% |
|
|
39.7 |
% |
Diluted net income per common
share, as reported |
$ |
0.28 |
|
|
$ |
1.09 |
|
|
$ |
3.48 |
|
|
$ |
4.02 |
|
Non-GAAP diluted net income
per common share |
$ |
0.57 |
|
|
$ |
1.64 |
|
|
$ |
4.92 |
|
|
$ |
6.02 |
|
Diluted common shares
outstanding, as reported |
|
544.8 |
|
|
|
553.9 |
|
|
|
548.0 |
|
|
|
557.3 |
|
Diluted common shares
outstanding non-GAAP |
|
544.8 |
|
|
|
553.9 |
|
|
|
548.0 |
|
|
|
557.3 |
|
RECONCILIATION OF GAAP CASH FLOW FROM OPERATIONS TO FREE
CASH FLOW
|
Three Months Ended March 31, |
|
Twelve Months Ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
GAAP cash flow from
operations, as reported |
$ |
430.0 |
|
|
$ |
709.5 |
|
|
$ |
2,892.7 |
|
|
$ |
3,621.0 |
|
Capital expenditures |
|
(40.1 |
) |
|
|
(112.7 |
) |
|
|
(285.1 |
) |
|
|
(486.2 |
) |
Free cash flow |
$ |
389.9 |
|
|
$ |
596.8 |
|
|
$ |
2,607.6 |
|
|
$ |
3,134.8 |
|
GAAP cash flow from operations
as a percentage of net sales |
|
32.4 |
% |
|
|
31.8 |
% |
|
|
37.9 |
% |
|
|
42.9 |
% |
Free cash flow as a percentage
of net sales |
|
29.4 |
% |
|
|
26.7 |
% |
|
|
34.2 |
% |
|
|
37.1 |
% |
Microchip will host a conference call today, May 6, 2024 at 5:00
p.m. (Eastern Time) to discuss this release. This call will be
simulcast over the Internet at www.microchip.com. The webcast will
be available for replay until May 20, 2024.
A telephonic replay of the conference call will be available at
approximately 8:00 p.m. (Eastern Time) on May 6, 2024 and will
remain available until 5:00 p.m. (Eastern Time) on May 20, 2024.
Interested parties may listen to the replay by dialing
201-612-7415/877-660-6853 and entering access code 13744734.
Cautionary Statement:
The statements in this release relating to our resilient
operating model and rapid adjustment to the adverse business
environment, that we remain committed to our capital return
program, that we are tracking towards achieving our goal of
returning 100% of adjusted free cash flow to shareholders by the
current fiscal year-end, that we believe we are under shipping to
end market demand, as customers and channel partners continued to
reduce inventory, our austerity measures, including taking actions
to reduce factory utilization, that will persist into the June
quarter, that our commitment to maintaining our competitive edge
and positioning ourselves for future revenue growth remains
steadfast, that we continue to focus on innovation, that these
initiatives aim to expand our product portfolio and reinforce our
leadership across the diverse end markets we serve, helping to
ensure that we are well-prepared to capitalize on opportunities
when market conditions improve, our commitment to operational
efficiency and disciplined execution, continuing to work on
optimizing our capital structure, that remain committed to further
enhancing our capital structure in fiscal 2025 as additional
portions of our outstanding debt mature, that we see early signs of
demand stabilization but are experiencing low business visibility
due to our short lead times and the continued macro uncertainty,
that we anticipate June quarter net sales between $1.22 billion and
$1.26 billion, our belief that the June 2024 quarter marks the
bottom of the cycle for Microchip and that our business will return
to sequential revenue growth in the September 2024 quarter, that we
believe our solutions remain the engine of innovation for our
target markets, and our focus on Total System Solutions and key
megatrends continues to drive strong design win momentum, that we
remain committed to executing our Microchip 3.0 strategic
imperatives, which we believe will deliver sustained growth and
provide substantial shareholder value our first quarter fiscal 2025
guidance for net sales and GAAP and non-GAAP gross profit,
operating expenses, operating income, other expense, net, income
tax provision, net income, diluted common shares outstanding,
earnings per diluted share, capital expenditures for the June 2024
quarter and for all of fiscal 2025, selectively adding capital
equipment to maintain, grow and operate our internal manufacturing
capabilities to support the expected growth of our business, our
belief that non-GAAP measures are useful to investors and our
assumed average stock price in the June 2024 quarter are
forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
These statements involve risks and uncertainties that could cause
our actual results to differ materially, including, but not limited
to: any continued uncertainty, fluctuations or weakness in the U.S.
and world economies (including China) due to changes in interest
rates, high inflation or the impact of the COVID-19 pandemic
(including lock-downs in China), actions taken or which may be
taken by the Biden administration or the U.S. Congress, monetary
policy, political, geopolitical, trade or other issues in the U.S.
or internationally (including the military conflicts in
Ukraine-Russia and the Middle East), further changes in demand or
market acceptance of our products and the products of our customers
and our ability to meet any increases in market demand or customer
requests to reschedule or cancel orders; the mix of inventory we
hold, our ability to satisfy any short-term orders from our
inventory and our ability to effectively manage our inventory
levels; the impact that the CHIPS Act will have on increasing
manufacturing capacity in our industry by providing incentives for
us, our competitors and foundries to build new wafer manufacturing
facilities or expand existing facilities; the amount and timing of
any incentives we may receive under the CHIPS Act, the impact of
current and future changes in U.S. corporate tax laws (including
the Inflation Reduction Act of 2022 and the Tax Cuts and Jobs Act
of 2017), foreign currency effects on our business; changes in
utilization of our manufacturing capacity and our ability to
effectively manage and expand our production levels to meet any
increases in market demand or any customer requests to reschedule
or cancel orders; the impact of inflation on our business;
competitive developments including pricing pressures; the level of
orders that are received and can be shipped in a quarter; our
ability to realize the expected benefits of our long-term supply
assurance program; changes or fluctuations in customer order
patterns and seasonality; our ability to effectively manage our
supply of wafers from third party wafer foundries to meet any
decreases or increases in our needs and the cost of such wafers,
our ability to obtain additional capacity from our suppliers to
increase production to meet any future increases in market demand;
our ability to successfully integrate the operations and employees,
retain key employees and customers and otherwise realize the
expected synergies and benefits of our acquisitions; the impact of
any future significant acquisitions or strategic transactions we
may make; the costs and outcome of any current or future litigation
or other matters involving our acquisitions (including the acquired
business, intellectual property, customers, or other issues); the
costs and outcome of any current or future tax audit or
investigation regarding our business or our acquired businesses;
fluctuations in our stock price and trading volume which could
impact the number of shares we acquire under our share repurchase
program and the timing of such repurchases; disruptions in our
business or the businesses of our customers or suppliers due to
natural disasters (including any floods in Thailand), terrorist
activity, armed conflict, war, worldwide oil prices and supply,
public health concerns or disruptions in the transportation system;
and general economic, industry or political conditions in the
United States or internationally.
For a detailed discussion of these and other risk factors,
please refer to Microchip's filings on Forms 10-K and 10-Q. You can
obtain copies of Forms 10-K and 10-Q and other relevant documents
for free at Microchip's website (www.microchip.com) or the SEC's
website (www.sec.gov) or from commercial document retrieval
services.
Stockholders of Microchip are cautioned not to place undue
reliance on our forward-looking statements, which speak only as of
the date such statements are made. Microchip does not undertake any
obligation to publicly update any forward-looking statements to
reflect events, circumstances or new information after this
May 6, 2024 press release, or to reflect the occurrence of
unanticipated events.
About Microchip:
Microchip Technology Incorporated is a leading provider of
smart, connected and secure embedded control solutions. Its
easy-to-use development tools and comprehensive product portfolio
enable customers to create optimal designs, which reduce risk while
lowering total system cost and time to market. Our solutions serve
approximately 123,000 customers across the industrial, automotive,
consumer, aerospace and defense, communications and computing
markets. Headquartered in Chandler, Arizona, Microchip offers
outstanding technical support along with dependable delivery and
quality. For more information, visit the Microchip website at
www.microchip.com.
Note: The Microchip name and logo, the Microchip
logo, dsPIC, and PolarFire are registered trademarks of Microchip
Technology Incorporated in the U.S.A. and other countries.
TimeProvider is a registered trademark of Microchip Technology
Incorporated in the U.S.A. mSiC is a trademark of Microchip
Technology Incorporated in the U.S.A. and other countries. All
other trademarks mentioned herein are the property of their
respective companies.
INVESTOR RELATIONS CONTACT:Sajid Daudi -- Head of Investor
Relations..... (480) 792-7385
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