- Record net sales of
$1.964 billion , up 6.5% sequentially and up 25.1% from the year ago quarter. The midpoint of our guidance provided onMay 9, 2022 was net sales of$1.955 billion . - On a GAAP basis: record gross margin of 66.7%; record operating income of
$701.3 million and 35.7% of net sales; record net income of$507.2 million ; and record EPS of$0.90 per diluted share. Our guidance provided onMay 9, 2022 was for GAAP EPS of$0.85 to$0.86 per diluted share. - On a Non-GAAP basis: record gross margin of 67.1%; record operating income of
$894.9 million and a record 45.6% of net sales; record net income of$767.2 million and record EPS of$1.37 per diluted share. Our guidance provided onMay 9, 2022 was for Non-GAAP EPS of$1.32 to$1.36 per diluted share. - Record cash flow from operations of
$840.4 million . - Paid down
$233.6 million of debt in theJune 2022 quarter. Cumulatively paid down$5.21 billion of debt over the last 16 quarters. - Record quarterly dividend declared of
30.1 cents per share, an increase of 9.1% sequentially and 37.8% from the year ago quarter. - Repurchased approximately
$195.2 million , or 2.9 million shares of our common stock, at an average price of$66.85 per share during theJune 2022 quarter under our previously announced$4.0 billion stock buyback program. Cumulatively repurchased approximately$620.8 million , or 8.5 million shares, over the last three quarters.
Three Months Ended | ||||||||||
Net sales | $ | 1,963.6 | ||||||||
GAAP | % | Non-GAAP(2) | % | |||||||
Gross margin | $ | 1,309.9 | 66.7 | % | $ | 1,317.6 | 67.1 | % | ||
Operating income | $ | 701.3 | 35.7 | % | $ | 894.9 | 45.6 | % | ||
Other expense | $ | (54.7 | ) | $ | (48.4 | ) | ||||
Income tax provision | $ | 139.4 | $ | 79.3 | ||||||
Net income | $ | 507.2 | 25.8 | % | $ | 767.2 | 39.1 | % | ||
Net income per diluted share | $ | 0.90 | $ | 1.37 |
(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 2023 were a record
GAAP net income for the first quarter of fiscal 2023 was
Non-GAAP net income for the first quarter of fiscal 2023 was a record at
Microchip announced today that its Board of Directors declared a record quarterly cash dividend on its common stock of
"We kicked off our fiscal 2023 on a strong note, delivering record revenue of
Microchip's Highlights for the Quarter Ended
- Grew our commitment to the 8-bit PIC® and AVR® microcontrollers (MCUs) by releasing five new product families and over 60 new devices. PIC and AVR MCUs anchor the majority of embedded designs today.
- Announced new resilient, redundant source of secure network timing and synchronization for power operators. Microchip’s GridTime™ 3000 GNSS Time Server meets rugged international environmental standards for power plants and substations.
- Introduced the industry’s first MCU that is integrated with Microchip’s robust secure subsystem and Arm® TrustZone® technology. Microchip released an Arm Cortex®-M23-based MCU supported with secure key provisioning solutions.
- Released a fully integrated Precise Time Scale System enabling nations to operate an independent time scale back-up to GNSS to protect critical infrastructure.
- Unveiled the first RISC-V-based System-on-Chip (SoC) FPGA to enter mass production. Microchip’s Mi-V ecosystem enables customers to ramp products based on PolarFire® devices more quickly, from prototypes to production.
- Introduced the fully configurable microcontroller-based CEC1736 Trust Shield family, a real-time platform to provide an entire chain of trust for system platforms. The family provides an end-to-end solution for protecting data center, telecommunication and networking systems against rapidly evolving security threats.
- Added to the industry’s largest family of inductive position sensors with the LX34070 IC that includes ISO 26262-compliance for EV motor control applications. The device can help accelerate the global move away from expensive and less accurate magnet-based solutions for safety-critical EV motor position monitoring.
- Released the maXTouch® Knob-on-Display™ (KoD™) touch controller family, which disrupts traditional touchscreen designs. The maXTouch KoD controller enables innovative Human-Machine Interface (HMI) solutions by combining mechanical knobs with existing multi-touch displays.
- Announced a new 8-bit MCU development board that connects to 5G LTE-M narrowband-IoT networks.
The AVR-IoT Cellular Mini Development Board is the latest to join Microchip’s AVR MCU family, providing developers an easy blueprint for building IoT devices. - Simplified automotive designs with ISO 26262-compliant, AUTOSAR-ready devices and ecosystem. The new dsPIC33C Digital Signal Controllers (DSCs) add support for AUTOSAR, OS, MCAL drivers and functional safety, enabling robust and secure automotive solutions.
- Introduced the industry’s first single-core Microproccessing Unit (MPU) with a MIPI™ CSI-2 camera interface and advanced audio features. The new 1 GHz SAMA7G54 is based on Arm® Cortex®-A7 processor and combines high performance with low power consumption.
- Revealed a serial 64-Mbit SuperFlash® memory IC that extends options for designing space systems using Radiation-Tolerant (RT) Commercial-Off-The-Shelf (COTS)-based devices. The SST26LF064RT memory device is Microchip’s second SuperFlash technology-based offering to be space qualified.
Second Quarter Fiscal Year 2023 Outlook:
The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.
Microchip Consolidated Guidance | |||
GAAP | Non-GAAP Adjustments | Non-GAAP(1) | |
Gross Margin | 66.9% to 67.3% | 67.3% to 67.7% | |
Operating Expenses(2) | 31.6% to 32.2% | 21.3% to 21.7% | |
Operating Income | 34.7% to 35.7% | 45.6% to 46.4% | |
Other Expense, net | ( | ||
Income Tax Provision | |||
Net Income | |||
Diluted Common Shares Outstanding | Approximately 560.1 to 560.7 million shares | Approximately 560.1 to 560.7 million shares | |
Earnings per Diluted Share |
(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
(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 2023, excluding any transition tax payments associated with the Tax Cuts and Jobs Act.
- Microchip's inventory days in the
September 2022 quarter are expected to be in the range of 127 to 132 days, compared to 127 days onJune 30, 2022 . Our actual inventory level will depend on the inventory that our distributors decide to hold to support their customers, overall demand for our products, and our production levels. - Capital expenditures for the quarter ending
September 30, 2022 are expected to be between$130 million and$150 million . Capital expenditures for all of fiscal 2023 are expected to be between$500 million and$550 million . We continue to add 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, which we adopted on
Use of Non-GAAP Financial Measures: Our non-GAAP adjustments, where applicable, include 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
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 margin 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
MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts)
Three Months Ended | |||||||
2022 | 2021 | ||||||
Net sales | $ | 1,963.6 | $ | 1,569.4 | |||
Cost of sales | 653.7 | 561.8 | |||||
Gross profit | 1,309.9 | 1,007.6 | |||||
Research and development | 269.0 | 238.4 | |||||
Selling, general and administrative | 188.9 | 174.3 | |||||
Amortization of acquired intangible assets | 167.6 | 215.6 | |||||
Special (income) charges and other, net | (16.9 | ) | 10.5 | ||||
Operating expenses | 608.6 | 638.8 | |||||
Operating income | 701.3 | 368.8 | |||||
Other expense, net | (54.7 | ) | (71.8 | ) | |||
Income before income taxes | 646.6 | 297.0 | |||||
Income tax provision | 139.4 | 44.2 | |||||
Net income | $ | 507.2 | $ | 252.8 | |||
Basic net income per common share | $ | 0.92 | $ | 0.46 | |||
Diluted net income per common share | $ | 0.90 | $ | 0.45 | |||
Basic common shares outstanding | 553.8 | 547.5 | |||||
Diluted common shares outstanding | 561.5 | 565.1 |
MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
ASSETS | |||||
2022 | 2022 | ||||
(Unaudited) | |||||
Cash and short-term investments | $ | 379.1 | $ | 319.4 | |
Accounts receivable, net | 1,145.0 | 1,072.6 | |||
Inventories | 911.8 | 854.4 | |||
Other current assets | 207.3 | 206.2 | |||
Total current assets | 2,643.2 | 2,452.6 | |||
Property, plant and equipment, net | 994.9 | 967.9 | |||
Other assets | 12,570.3 | 12,779.0 | |||
Total assets | $ | 16,208.4 | $ | 16,199.5 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
Accounts payable and accrued liabilities | $ | 1,485.4 | $ | 1,399.0 | |
Total current liabilities | 1,485.4 | 1,399.0 | |||
Long-term debt | 7,563.9 | 7,687.4 | |||
Long-term income tax payable | 706.3 | 704.6 | |||
Long-term deferred tax liability | 40.7 | 39.8 | |||
Other long-term liabilities | 434.2 | 473.9 | |||
Stockholders' equity | 5,977.9 | 5,894.8 | |||
Total liabilities and stockholders' equity | $ | 16,208.4 | $ | 16,199.5 |
MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
RECONCILIATION 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 | |||||||
2022 | 2021 | ||||||
Gross profit, as reported | $ | 1,309.9 | $ | 1,007.6 | |||
Share-based compensation expense | 7.7 | 8.8 | |||||
Non-GAAP gross profit | $ | 1,317.6 | $ | 1,016.4 | |||
Non-GAAP gross profit percentage | 67.1 | % | 64.8 | % |
RECONCILIATION OF GAAP RESEARCH AND DEVELOPMENT EXPENSES TO NON-GAAP RESEARCH AND DEVELOPMENT EXPENSES
Three Months Ended | |||||||
2022 | 2021 | ||||||
Research and development expenses, as reported | $ | 269.0 | $ | 238.4 | |||
Share-based compensation expense | (20.1 | ) | (26.6 | ) | |||
Acquisition-related | (0.2 | ) | (0.2 | ) | |||
Non-GAAP research and development expenses | $ | 248.7 | $ | 211.6 | |||
Non-GAAP research and development expenses as a percentage of net sales | 12.7 | % | 13.5 | % |
RECONCILIATION OF GAAP SELLING, GENERAL AND ADMINISTRATIVE EXPENSES TO NON-GAAP SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Three Months Ended | |||||||
2022 | 2021 | ||||||
Selling, general and administrative expenses, as reported | $ | 188.9 | $ | 174.3 | |||
Share-based compensation expense | (13.4 | ) | (21.2 | ) | |||
Acquisition-related | (0.6 | ) | (1.3 | ) | |||
Professional services associated with certain legal matters | (0.9 | ) | (2.1 | ) | |||
Non-GAAP selling, general and administrative expenses | $ | 174.0 | $ | 149.7 | |||
Non-GAAP selling, general and administrative expenses as a percentage of net sales | 8.9 | % | 9.5 | % |
RECONCILIATION OF GAAP OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
Three Months Ended | |||||||
2022 | 2021 | ||||||
Operating expenses, as reported | $ | 608.6 | $ | 638.8 | |||
Share-based compensation expense | (33.5 | ) | (47.8 | ) | |||
Acquisition-related | (0.8 | ) | (1.5 | ) | |||
Professional services associated with certain legal matters | (0.9 | ) | (2.1 | ) | |||
Amortization of acquired intangible assets | (167.6 | ) | (215.6 | ) | |||
Special income (charges) and other, net | 16.9 | (10.5 | ) | ||||
Non-GAAP operating expenses | $ | 422.7 | $ | 361.3 | |||
Non-GAAP operating expenses as a percentage of net sales | 21.5 | % | 23.1 | % |
RECONCILIATION OF GAAP OPERATING INCOME TO NON-GAAP OPERATING INCOME
Three Months Ended | |||||||
2022 | 2021 | ||||||
Operating income, as reported | $ | 701.3 | $ | 368.8 | |||
Share-based compensation expense | 41.2 | 56.6 | |||||
Acquisition-related | 0.8 | 1.5 | |||||
Professional services associated with certain legal matters | 0.9 | 2.1 | |||||
Amortization of acquired intangible assets | 167.6 | 215.6 | |||||
Special (income) charges and other, net | (16.9 | ) | 10.5 | ||||
Non-GAAP operating income | $ | 894.9 | $ | 655.1 | |||
Non-GAAP operating income as a percentage of net sales | 45.6 | % | 41.7 | % |
RECONCILIATION OF GAAP OTHER EXPENSE, NET TO NON-GAAP OTHER EXPENSE, NET
Three Months Ended | |||||||
2022 | 2021 | ||||||
Other expense, net, as reported | $ | (54.7 | ) | $ | (71.8 | ) | |
Loss on settlement of debt | 6.2 | 0.3 | |||||
Non-cash other expense, net | 0.1 | 10.9 | |||||
Non-GAAP other expense, net | $ | (48.4 | ) | $ | (60.6 | ) | |
Non-GAAP other expense, net, as a percentage of net sales | (2.5) % | (3.9) % |
RECONCILIATION OF GAAP INCOME TAX PROVISION TO NON-GAAP INCOME TAX PROVISION
Three Months Ended | |||||||
2022 | 2021 | ||||||
Income tax provision as reported | $ | 139.4 | $ | 44.2 | |||
Income tax rate, as reported | 21.6 | % | 14.9 | % | |||
Other non-GAAP tax adjustment | (60.1 | ) | (8.5 | ) | |||
Non-GAAP income tax provision | $ | 79.3 | $ | 35.7 | |||
Non-GAAP income tax rate | 9.4 | % | 6.0 | % |
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 | |||||||
2022 | 2021 | ||||||
Net income, as reported | $ | 507.2 | $ | 252.8 | |||
Share-based compensation expense | 41.2 | 56.6 | |||||
Acquisition-related | 0.8 | 1.5 | |||||
Professional services associated with certain legal matters | 0.9 | 2.1 | |||||
Amortization of acquired intangible assets | 167.6 | 215.6 | |||||
Special (income) charges and other, net | (16.9 | ) | 10.5 | ||||
Loss on settlement of debt | 6.2 | 0.3 | |||||
Non-cash other expense, net | 0.1 | 10.9 | |||||
Other non-GAAP tax adjustment | 60.1 | 8.5 | |||||
Non-GAAP net income | $ | 767.2 | $ | 558.8 | |||
Non-GAAP net income as a percentage of net sales | 39.1 | % | 35.6 | % | |||
GAAP net income as a percentage of net sales | 25.8 | % | 16.1 | % | |||
Diluted net income per common share, as reported | $ | 0.90 | $ | 0.45 | |||
Non-GAAP diluted net income per common share | $ | 1.37 | $ | 0.99 | |||
Diluted common shares outstanding, as reported | 561.5 | 565.1 | |||||
Diluted common shares outstanding non-GAAP | 561.5 | 565.1 |
RECONCILIATION OF GAAP CASH FLOW FROM OPERATIONS TO FREE CASH FLOW
Three Months Ended | |||||||
2022 | 2021 | ||||||
GAAP cash flow from operations, as reported | $ | 840.4 | $ | 629.9 | |||
Capital expenditures | (121.9 | ) | (86.3 | ) | |||
Free cash flow | $ | 718.5 | $ | 543.6 | |||
Free cash flow as a percentage of net sales | 36.6 | % | 34.6 | % |
Microchip will host a conference call today,
A telephonic replay of the conference call will be available at approximately
Cautionary Statement:
The statements in this release relating to progressing well toward our long-term profitability targets, our belief that we are well positioned to continue to drive incremental revenue growth and profitability, our belief that even if the macro environment were to have a more pronounced impact on us our business has a number of attributes within our control that should enable us to navigate a “soft landing” with continued strong free cash flow generation and operating margins, remaining committed to an increasing cash return strategy, targeting to return
For a detailed discussion of these and other risk factors, please refer to Microchip's filings on Forms 10-K and 10-
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
About Microchip:
Note: The Microchip name and logo, the Microchip logo, AVR, maXTouch, PIC, PolarFire and SuperFlash are registered trademarks of
INVESTOR RELATIONS CONTACT:
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