Microchip Technology Announces Financial Results For Second Quarter of Fiscal Year 2024
-- Net sales of $2.254 billion, down 1.5% sequentially and up 8.7% from the year ago quarter. The midpoint of our guidance provided on August 3, 2023 was net sales of $2.266 billion. -- On a GAAP basis: gross profit of 67.8%; operating income of $885.0 million and 39.3% of net sales; record net income of $666.6 million; and record EPS of $1.21 per diluted share. Our guidance provided on August 3, 2023 was for GAAP EPS of $1.18 to $1.21 per diluted share. -- On a Non-GAAP basis: gross profit of 68.1%; operating income of $1.085 billion and 48.1% of net sales; net income of $889.3 million and EPS of $1.62 per diluted share. Our guidance provided on August 3, 2023 was for Non-GAAP EPS of $1.60 to $1.64 per diluted share. -- Returned approximately $562.5 million to shareholders in the September quarter through dividends of $222.7 million and the repurchase of approximately $339.8 million, or 4.2 million shares of our common stock, at an average price of $80.78 per share under our previously announced $4.0 billion stock buyback program. Cumulatively repurchased approximately $1.852 billion, or 24.5 million shares, over the last eight quarters. -- Record quarterly dividend declared today for the December quarter of 43.9 cents per share, an increase of 33.8% from the year ago quarter.
CHANDLER, Ariz., Nov. 02, 2023 (GLOBE NEWSWIRE) — (NASDAQ: MCHP) – Microchip Technology Incorporated, a leading provider of smart, connected, and secure embedded control solutions, today reported results for the three months ended September 30, 2023, as summarized in the table below.
Three Months Ended September 30, 2023(1) ----------------- ------------------------------------------------------- Net sales $2,254.3 ----------------- ----------- ----------- ----------- GAAP % Non-GAAP(2)% ----------------- ---------------- ----------- ----------- ---------- Gross profit $1,527.4 67.8% $1,534.8 68.1% ----------------- ---------------- ----------- ----------- ----------- Operating income $885.0 39.3% $1,084.7 48.1% ----------------- ---------------- ----------- ----------- ----------- Other expense $(51.4) $(48.3) ----------------- ---------------- ----------- ----------- ----------- Income tax provision $167.0 $147.1 ----------------- ---------------- ----------- ----------- ----------- Net income $666.6 29.6% $889.3 39.4% ----------------- ---------------- ----------- ----------- ----------- Net income per diluted share $1.21 $1.62 ----------------- ---------------- ----------- ----------- -----------
(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 second quarter of fiscal 2024 were $2.254 billion, up 8.7% from net sales of $2.073 billion in the prior year’s second fiscal quarter.
GAAP net income for the second quarter of fiscal 2024 was $666.6 million, or $1.21 per diluted share, up from GAAP net income of $546.2 million, or $0.98 per diluted share, in the prior year’s second fiscal quarter. For the second 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 second quarter of fiscal 2024 was $889.3 million, or $1.62 per diluted share, up from non-GAAP net income of $814.4 million, or $1.46 per diluted share, in the prior year’s second fiscal quarter. For the second quarters of fiscal 2024 and fiscal 2023, our non-GAAP results exclude the effect of share-based compensation, 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 second 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.
Microchip announced today that its Board of Directors declared a record quarterly cash dividend on its common stock of 43.9 cents per share, up 33.8% from the year ago quarter. The quarterly dividend is payable on December 6, 2023 to stockholders of record on November 22, 2023.
“Amid a turbulent macro environment, we delivered fiscal second-quarter results that were in line with our guidance,” said Ganesh Moorthy, President and Chief Executive Officer. “Revenue declined 1.5% sequentially, as all regions of the world and most end markets experienced varying degrees of weakness. This marks a turning point for an extraordinary three-year growth period for Microchip. Throughout this period, we successfully addressed supply chain challenges, invested well over a billion dollars in expanding our capacity, and boosted our investments for high-growth markets and applications, demonstrating our disciplined commitment to supply resilience and product innovation, in the pursuit of above-average long-term growth.”
Mr. Moorthy added, “As our customers adjust to their evolving demand patterns, we have continued to accommodate customer pushout requests where possible. We have also made considerable progress in further decreasing average lead times and ended the September quarter at roughly 13 weeks. The reduction in lead times is resulting in lower bookings and reduced near-term visibility. The actions we are taking to reduce lead times are designed to enable our customers and us to navigate this uncertain environment with agility and effectiveness.”
Eric Bjornholt, Microchip’s Chief Financial Officer, said, “During the September quarter, we took measures to refinance some of our maturing debt. In light of the unpredictable interest-rate climate, we strategically utilized a blend of a new $750 million Term Loan A and our credit line to retire our $1 billion bond which matured in September 2023. We also issued $1 billion in commercial paper, which resulted in about a 90 basis point lower interest rate than the rate under our line of credit. We also retired $18.2 million of principal amount of our convertible bonds due in 2027 with a total cash payment of $42.7 million, effectively mitigating potential share count dilution. We remain focused on continuing to enhance our capital structure in the future.”
Mr. Moorthy concluded, “Given the broader economic landscape characterized by decelerating economic activity and escalating business ambiguity, along with our proactive measures to assist clients in managing their inventory positions and backlog, we anticipate net sales in the December quarter to be down 15% to down 20% sequentially. Notwithstanding any near-term macro weakness, we are confident that semiconductors remain the engine of innovation for the applications and markets we serve. Our focus on Total System Solutions and key market megatrends is fueling strong design-win momentum that we expect will drive above-market long-term growth.”