(NASDAQ: MCHP) - Microchip Technology
Incorporated, a leading provider of smart, connected, and secure
embedded control solutions, today reported results for the three
months ended June 30, 2024, as summarized in the table below.
|
Three Months Ended June 30,
2024(1) |
Net sales |
$1,241.3 |
|
|
|
|
GAAP |
% |
Non-GAAP(2) |
% |
Gross profit |
$736.9 |
59.4% |
$743.5 |
59.9% |
Operating income |
$219.1 |
17.7% |
$390.5 |
31.5% |
Other expense |
$(57.3) |
|
$(57.3) |
|
Income tax provision |
$32.5 |
|
$43.3 |
|
Net income |
$129.3 |
10.4% |
$289.9 |
23.4% |
Net income per diluted share |
$0.24 |
|
$0.53 |
|
(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 first quarter of fiscal 2025 were $1.241
billion, down 45.8% from net sales of $2.289 billion in the prior
year's first fiscal quarter.
GAAP net income for the first quarter of fiscal 2025 was $129.3
million, or $0.24 per diluted share, down from GAAP net income of
$666.4 million, or $1.21 per diluted share, in the prior year's
first fiscal quarter. For the first quarters of fiscal 2025 and
fiscal 2024, GAAP net income was adversely impacted by amortization
of acquired intangible assets associated with our previous
acquisitions.
Non-GAAP net income for the first quarter of fiscal 2025 was
$289.9 million, or $0.53 per diluted share, down from non-GAAP net
income of $905.3 million, or $1.64 per diluted share, in the prior
year's first fiscal quarter. For the first quarters of fiscal 2025
and fiscal 2024, 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 first quarters of fiscal 2025 and
fiscal 2024, 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 45.4 cents
per share, up 10.7% from the year ago quarter. The quarterly
dividend is payable on September 5, 2024 to stockholders of
record on August 22, 2024.
"We delivered June 2024 quarterly results in line with our
guidance as we continued to navigate a challenging macro
environment in combination with our customers focusing on reducing
their inventory positions based on short lead times for our
products," said Ganesh Moorthy, President and Chief Executive
Officer. "Our strategic cost management actions have helped
maintain financial resilience and operational efficiency in the
face of a 6.4% sequential revenue decline this quarter."
Mr. Moorthy added, "While the 'green shoots' we observed last
quarter have continued, they have not developed as robustly as
anticipated. The macro environment particularly for industrial and
automotive markets, especially in Europe and the Americas,
continues to be weaker than expected, resulting in an extended
period over which the inventory correction is playing out. Despite
customers’ short-term focus on reducing inventory, we believe that
our expanded portfolio, now spanning 8 to 64-bit processors
including FPGAs as well as our analog portfolio, positions us well
for sustainable, above-market growth across a diverse set of
applications."
Eric Bjornholt, Microchip's Chief Financial Officer, said,
"Despite market challenges, we have maintained our financial health
through proactive cost and balance sheet management. While
inventory levels exceeded our target range, which is reflective of
broader challenging market conditions, we are confident that this
inventory positions us well to service customers with short lead
times. We believe that our inventory level along with our
investment in capacity will allow us to cost-effectively respond
when business conditions improve. Our strategy is designed to
balance near-term challenges with long-term growth
opportunities."
Mr. Moorthy concluded, "Despite the green shoots we observed
last quarter developing slower than expected, we do see additional
positive business signals, like an uptick in our Data Center
business. While in-quarter orders remain crucial for meeting
guidance, as is typical in this high-turns environment, uncertain
market conditions add complexity to forecasting. As a result, we
anticipate September quarter net sales between $1.12 billion and
$1.18 billion. We are navigating these unusual market conditions
with a balance of prudence and readiness to be well-positioned to
capitalize on upside opportunities. Despite near-term inventory and
macro challenges, our design-in pipeline and momentum remains
strong across markets, driven by our customers' innovation focus.
This design momentum, amplified by our focus on Total System
Solutions and key Megatrends, is our engine for long-term
growth."
Microchip's Highlights for the Quarter Ended
June 30, 2024:
- Acquired Neuronix AI Labs to expand our capabilities for
power-efficient, AI-enabled edge solutions deployed on field
programmable gate arrays (FPGAs).
- Acquired VSI Co. Ltd. to extend automotive networking portfolio
with ASA Motion Link technology to enable next-generation
software-defined vehicles.
- Expanded our partnership with TSMC to build resiliency in our
supply chain; this initiative will focus on specialized 40nm
manufacturing capacity for Microchip at Japan Advanced
Semiconductor Manufacturing, Inc. (JASM), TSMC’s majority-owned
manufacturing subsidiary.
- Announced that Microchip released its 2023 Sustainability
Report highlighting our environmental stewardship and social
impact.
- Announced Microchip’s 24th Annual Worldwide MASTERs Conference
in Scottsdale, Arizona taking place from August 12–14. MASTERs
offers over 60 technical sessions and features a keynote by
Microchip’s President and CEO Ganesh Moorthy.
- Introduced ECC608 TrustMANAGER with Kudelski IoT keySTREAM to
offer cloud-based software as a service and leverage secure
authentication ICs to enable self-service custom PKI, streamlined
in-field provisioning and lifecycle management for IoT
devices.
- Authorized as a CVE Numbering Authority (CNA) by the Common
Vulnerabilities and Exposures (CVE®) Program. Approved CNA partners
help identify, define, catalog and publicly disclose cybersecurity
vulnerabilities to better protect systems against attacks.
- Launched Integrated Actuation Power Solution consisting of a
configurable family of companion driver boards using our Hybrid
Power Drive modules available in silicon carbide (SiC) or silicon
(Si) technology. The solution aims to simplify the aviation
industry’s transition to More Electric Aircraft (MEA).
- Announced the addition of 12 products to our wireless portfolio
including Bluetooth® Low Energy modules, system-on-chip (SoC)
products and plug-and-play options.
- Released the AVR® DU family of 8-bit microcontrollers with
integrated USB connectivity, enhanced security features and higher
power delivery than previous iterations.
- Released an early access version of MPLAB® Extensions for VS
Code® to provide embedded designers with tools to import projects
from MPLAB X Integrated Development Environment (IDE) to VS Code
while still accessing Microchip’s debugging and programming
support.
- Expanded our maXTouch® technology with the ATMXT2952TD 2.0
family of touchscreen controllers to offer additional security
features like cryptographic authentication and data encryption for
touchscreen payment systems.
- Introduced a new family of PIC32CK 32-bit microcontrollers with
an integrated Hardware Security Module (HSM) and TrustZone®
technology to provide designers with a higher level of security and
flexibility.
- Released a radiation-tolerant PolarFire® system-on-chip (SoC)
FPGA that offers low-power, zero configuration upsets and RISC-V®
architecture for space applications.
- Launched radiation-tolerant DC-DC 50-watt power converters to
provide high-reliability solution for new space applications. The
LE50-28 power converters are available in nine variants with
single- and triple-outputs for optimal design configurability.
- Expanded our radiation-tolerant microcontroller portfolio with
the 32-bit SAMD21RT Arm® Cortex®-M0+ Based MCU for the aerospace
and defense market.
- Released version 2.4 of the TimeProvider® 4100 grandmaster
firmware with an embedded BlueSky™ firewall to detect security
threats and validate GNSS before using the signal as a time
reference.
- Introduced the TimeProvider® XT Extension System for migrating
to a modern synchronization and timing systems architecture.
Deployed as an accessory device to Microchip’s TimeProvider 4100
grandmaster, the XT scales up to 200 fully redundant T1, E1 or CC
synchronization outputs.
- Announced an On-Board Charger Solution (OBC) to help designers
speed time to market for their OBC application by supplying the key
technologies from Microchip including the control, gate drive and
power stage, as well as the connectivity, timing, sensors, memory
and security solutions.
- Announced our portfolio of JAN transistors is now tested and
qualified to Military-Standard Enhanced Low Dose Radiation
Sensitivity (ELDRS) to ensure high reliability for critical
applications.
Second 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 |
$1.12 to $1.18 billion |
|
|
|
GAAP |
Non-GAAP Adjustments(1) |
Non-GAAP(1) |
Gross Profit |
57.8% to 58.7% |
$8.1 to $9.1 million |
58.5% to 59.5 % |
Operating Expenses(2) |
45.1% to 46.6% |
$174.2 to $178.2 million |
30.0% to 31.0% |
Operating Income |
11.2% to 13.6% |
$182.3 to $187.3 million |
27.5% to 29.5% |
Other Expense, net |
$57.8 to $58.2 million |
($0.2) to $0.2 million |
$58.0 million |
Income Tax Provision |
$13.6 to $23.6 million(3) |
$14.1 to $18.9 million |
$32.5 to $37.7 million(4) |
Net Income |
$54.3 to $79.0 million |
$163.2 to $173.4 million |
$217.5 to $252.4 million |
Diluted Common Shares Outstanding |
Approximately 542.0 to 542.6 million shares |
|
Approximately 542.0 to 542.6 million shares |
Earnings per Diluted Share |
$0.10 to $0.14 |
$0.30 to $0.32 |
$0.40 to $0.46 |
(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
September 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 September 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 September 30, 2024
are expected to be between $35 million and $40 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 first quarters of fiscal 2025 and
fiscal 2024, 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 September 2024 quarter between
$80 and $90 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
SUBSIDIARIESCONDENSED CONSOLIDATED
STATEMENTS OF INCOME(in millions, except per share
amounts; unaudited) |
|
|
Three Months Ended June 30, |
|
|
2024 |
|
|
|
2023 |
|
Net sales |
$ |
1,241.3 |
|
|
$ |
2,288.6 |
|
Cost of sales |
|
504.4 |
|
|
|
730.2 |
|
Gross profit |
|
736.9 |
|
|
|
1,558.4 |
|
|
|
|
|
Research and development |
|
241.7 |
|
|
|
298.5 |
|
Selling, general and
administrative |
|
150.5 |
|
|
|
203.6 |
|
Amortization of acquired
intangible assets |
|
123.0 |
|
|
|
151.5 |
|
Special charges and other,
net |
|
2.6 |
|
|
|
1.7 |
|
Operating expenses |
|
517.8 |
|
|
|
655.3 |
|
|
|
|
|
Operating income |
|
219.1 |
|
|
|
903.1 |
|
|
|
|
|
Other expense, net |
|
(57.3 |
) |
|
|
(54.8 |
) |
Income before income
taxes |
|
161.8 |
|
|
|
848.3 |
|
Income tax provision |
|
32.5 |
|
|
|
181.9 |
|
Net income |
$ |
129.3 |
|
|
$ |
666.4 |
|
|
|
|
|
Basic net income per common
share |
$ |
0.24 |
|
|
$ |
1.22 |
|
Diluted net income per common
share |
$ |
0.24 |
|
|
$ |
1.21 |
|
|
|
|
|
Basic common shares
outstanding |
|
536.7 |
|
|
|
545.1 |
|
Diluted common shares
outstanding |
|
542.8 |
|
|
|
551.4 |
|
|
MICROCHIP TECHNOLOGY INCORPORATED AND
SUBSIDIARIESCONDENSED CONSOLIDATED
BALANCE SHEETS(in millions; unaudited) |
|
ASSETS |
|
June 30, |
|
March 31, |
|
|
2024 |
|
|
|
2024 |
|
Cash and short-term investments |
$ |
315.1 |
|
|
$ |
319.7 |
|
Accounts receivable, net |
|
1,095.8 |
|
|
|
1,143.7 |
|
Inventories |
|
1,308.0 |
|
|
|
1,316.0 |
|
Other current assets |
|
229.4 |
|
|
|
233.6 |
|
Total current assets |
|
2,948.3 |
|
|
|
3,013.0 |
|
|
|
|
|
Property, plant and equipment, net |
|
1,196.2 |
|
|
|
1,194.6 |
|
Other assets |
|
11,695.2 |
|
|
|
11,665.6 |
|
Total assets |
$ |
15,839.7 |
|
|
$ |
15,873.2 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
Accounts payable and accrued liabilities |
$ |
1,520.3 |
|
|
$ |
1,520.0 |
|
Current portion of long-term debt |
|
— |
|
|
|
999.4 |
|
Total current liabilities |
|
1,520.3 |
|
|
|
2,519.4 |
|
|
|
|
|
Long-term debt |
|
6,167.9 |
|
|
|
5,000.4 |
|
Long-term income tax payable |
|
655.6 |
|
|
|
649.2 |
|
Long-term deferred tax liability |
|
32.2 |
|
|
|
28.8 |
|
Other long-term liabilities |
|
1,057.7 |
|
|
|
1,017.6 |
|
|
|
|
|
Stockholders' equity |
|
6,406.0 |
|
|
|
6,657.8 |
|
Total liabilities and stockholders' equity |
$ |
15,839.7 |
|
|
$ |
15,873.2 |
|
|
|
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 June 30, |
|
2024 |
|
2023 |
Gross profit, as reported |
$ |
736.9 |
|
|
$ |
1,558.4 |
|
Share-based compensation
expense |
|
6.6 |
|
|
|
6.8 |
|
Non-GAAP gross profit |
$ |
743.5 |
|
|
$ |
1,565.2 |
|
GAAP gross profit
percentage |
|
59.4 |
% |
|
|
68.1 |
% |
Non-GAAP gross profit
percentage |
|
59.9 |
% |
|
|
68.4 |
% |
RECONCILIATION OF GAAP RESEARCH AND DEVELOPMENT EXPENSES
TO NON-GAAP RESEARCH AND DEVELOPMENT EXPENSES
|
Three Months Ended June 30, |
|
2024 |
|
2023 |
Research and development expenses, as reported |
$ |
241.7 |
|
|
$ |
298.5 |
|
Share-based compensation
expense |
|
(23.3 |
) |
|
|
(22.9 |
) |
Other adjustments |
|
— |
|
|
|
(0.2 |
) |
Non-GAAP research and
development expenses |
$ |
218.4 |
|
|
$ |
275.4 |
|
GAAP research and development
expenses as a percentage of net sales |
|
19.5 |
% |
|
|
13.0 |
% |
Non-GAAP research and
development expenses as a percentage of net sales |
|
17.6 |
% |
|
|
12.0 |
% |
RECONCILIATION OF GAAP SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES TO NON-GAAP SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES
|
Three Months Ended June 30, |
|
2024 |
|
2023 |
Selling, general and administrative expenses, as reported |
$ |
150.5 |
|
|
$ |
203.6 |
|
Share-based compensation
expense |
|
(14.1 |
) |
|
|
(14.8 |
) |
Other adjustments |
|
(1.3 |
) |
|
|
1.1 |
|
Professional services
associated with certain legal matters |
|
(0.5 |
) |
|
|
(0.5 |
) |
Non-GAAP selling, general and
administrative expenses |
$ |
134.6 |
|
|
$ |
189.4 |
|
GAAP selling, general and
administrative expenses as a percentage of net sales |
|
12.1 |
% |
|
|
8.9 |
% |
Non-GAAP selling, general and
administrative expenses as a percentage of net sales |
|
10.8 |
% |
|
|
8.3 |
% |
RECONCILIATION OF GAAP OPERATING EXPENSES TO NON-GAAP
OPERATING EXPENSES
|
Three Months Ended June 30, |
|
2024 |
|
2023 |
Operating expenses, as reported |
$ |
517.8 |
|
|
$ |
655.3 |
|
Share-based compensation
expense |
|
(37.4 |
) |
|
|
(37.7 |
) |
Other adjustments |
|
(1.3 |
) |
|
|
0.9 |
|
Professional services
associated with certain legal matters |
|
(0.5 |
) |
|
|
(0.5 |
) |
Amortization of acquired
intangible assets (1) |
|
(123.0 |
) |
|
|
(151.5 |
) |
Special charges and other,
net |
|
(2.6 |
) |
|
|
(1.7 |
) |
Non-GAAP operating
expenses |
$ |
353.0 |
|
|
$ |
464.8 |
|
GAAP operating expenses as a
percentage of net sales |
|
41.7 |
% |
|
|
28.6 |
% |
Non-GAAP operating expenses as
a percentage of net sales |
|
28.4 |
% |
|
|
20.3 |
% |
(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 June 30, |
|
2024 |
|
2023 |
Operating income, as reported |
$ |
219.1 |
|
|
$ |
903.1 |
|
Share-based compensation
expense |
|
44.0 |
|
|
|
44.5 |
|
Other adjustments |
|
1.3 |
|
|
|
(0.9 |
) |
Professional services
associated with certain legal matters |
|
0.5 |
|
|
|
0.5 |
|
Amortization of acquired
intangible assets (1) |
|
123.0 |
|
|
|
151.5 |
|
Special charges and other,
net |
|
2.6 |
|
|
|
1.7 |
|
Non-GAAP operating income |
$ |
390.5 |
|
|
$ |
1,100.4 |
|
GAAP operating income as a
percentage of net sales |
|
17.7 |
% |
|
|
39.5 |
% |
Non-GAAP operating income as a
percentage of net sales |
|
31.5 |
% |
|
|
48.1 |
% |
(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 June 30, |
|
2024 |
|
2023 |
Other expense, net, as reported |
$ |
(57.3 |
) |
|
$ |
(54.8 |
) |
Loss on settlement of
debt |
|
— |
|
|
|
9.1 |
|
Non-GAAP other expense,
net |
$ |
(57.3 |
) |
|
$ |
(45.7 |
) |
GAAP other expense, net, as a
percentage of net sales |
|
(4.6 |
)% |
|
|
(2.4 |
)% |
Non-GAAP other expense, net,
as a percentage of net sales |
|
(4.6 |
)% |
|
|
(2.0 |
)% |
RECONCILIATION OF GAAP INCOME TAX PROVISION TO NON-GAAP
INCOME TAX PROVISION
|
Three Months Ended June 30, |
|
2024 |
|
2023 |
Income tax provision as reported |
$ |
32.5 |
|
|
$ |
181.9 |
|
Income tax rate, as
reported |
|
20.1 |
% |
|
|
21.4 |
% |
Other non-GAAP tax
adjustment |
|
10.8 |
|
|
|
(32.5 |
) |
Non-GAAP income tax
provision |
$ |
43.3 |
|
|
$ |
149.4 |
|
Non-GAAP income tax rate |
|
13.0 |
% |
|
|
14.2 |
% |
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 June 30, |
|
2024 |
|
2023 |
Net income, as reported |
$ |
129.3 |
|
|
$ |
666.4 |
|
Share-based compensation
expense |
|
44.0 |
|
|
|
44.5 |
|
Other adjustments |
|
1.3 |
|
|
|
(0.9 |
) |
Professional services
associated with certain legal matters |
|
0.5 |
|
|
|
0.5 |
|
Amortization of acquired
intangible assets |
|
123.0 |
|
|
|
151.5 |
|
Special charges and other,
net |
|
2.6 |
|
|
|
1.7 |
|
Loss on settlement of
debt |
|
— |
|
|
|
9.1 |
|
Other non-GAAP tax
adjustment |
|
(10.8 |
) |
|
|
32.5 |
|
Non-GAAP net income |
$ |
289.9 |
|
|
$ |
905.3 |
|
GAAP net income as a
percentage of net sales |
|
10.4 |
% |
|
|
29.1 |
% |
Non-GAAP net income as a
percentage of net sales |
|
23.4 |
% |
|
|
39.6 |
% |
Diluted net income per common
share, as reported |
$ |
0.24 |
|
|
$ |
1.21 |
|
Non-GAAP diluted net income
per common share |
$ |
0.53 |
|
|
$ |
1.64 |
|
Diluted common shares
outstanding, as reported |
|
542.8 |
|
|
|
551.4 |
|
Diluted common shares
outstanding non-GAAP |
|
542.8 |
|
|
|
551.4 |
|
RECONCILIATION OF GAAP CASH FLOW FROM OPERATIONS TO FREE
CASH FLOW
|
Three Months Ended June 30, |
|
2024 |
|
2023 |
GAAP cash flow from operations, as reported |
$ |
377.1 |
|
|
$ |
993.2 |
|
Capital expenditures |
|
(72.9 |
) |
|
|
(111.1 |
) |
Free cash flow |
$ |
304.2 |
|
|
$ |
882.1 |
|
GAAP cash flow from operations
as a percentage of net sales |
|
30.4 |
% |
|
|
43.4 |
% |
Free cash flow as a percentage
of net sales |
|
24.5 |
% |
|
|
38.5 |
% |
Microchip will host a conference call today, August 1, 2024 at
4:30 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 August 15, 2024.
A telephonic replay of the conference call will be available at
approximately 8:00 p.m. (Eastern Time) on August 1, 2024 and will
remain available until 5:00 p.m. (Eastern Time) on August 15, 2024.
Interested parties may listen to the replay by dialing
201-612-7415/877-660-6853 and entering access code 13747161.
Cautionary Statement:
The statements in this release relating to continuing to
navigate a challenging macro environment in combination with our
customers focusing on reducing their inventory positions, that our
strategic cost management actions have helped maintain financial
resilience and operational efficiency, that the 'green shoots' we
observed last quarter have continued but have not developed as
robustly as anticipated, that the macro environment continues to be
weaker than expected resulting in an extended period over which the
inventory correction is playing out, that we believe that our
expanded portfolio positions us well for sustainable, above-market
growth across a diverse set of applications, that we have
maintained our financial health through proactive cost and balance
sheet management, broader challenging market conditions, that we
are confident that this inventory positions us well to service
customers with short lead times, that we believe that our inventory
level along with our investment in capacity will allow us to
cost-effectively respond when business conditions improve, that our
strategy is designed to balance near-term challenges with long-term
growth opportunities, green shoots developing slower than expected,
that we see additional positive business signals, that uncertain
market conditions add complexity to forecasting, that we anticipate
September quarter net sales between $1.12 billion and $1.18
billion, that we are navigating these unusual market conditions
with a balance of prudence and readiness to be well positioned to
capitalize on upside opportunities, that our design-in pipeline and
momentum remains strong across markets, that this design momentum,
amplified by our focus on Total System Solutions and key
Megatrends, is our engine for long-term growth, our second 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 September 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 September 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
respond to any increases or decreases 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 our production levels to meet any increases or
decreases 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
August 1, 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 120,000 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, AVR, maXTouch, PolarFire and MPLAB 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. BlueSky 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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