San Francisco, NFAPost: Microchip Technology Incorporated, a leading provider of smart, connected, and secure embedded control solutions, reported results for the three months ended December 31, 2021, as summarized in the table below.
Three Months Ended December 31, 2021(1)Net sales$1,757.5
GAAP%Non-GAAP(2)%
Gross margin$1,153.365.6%$1,161.766.1%
Operating income$515.029.3%$784.544.6%
Other expense$(73.5) $(53.7)
Income tax provision$88.7 $49.1
Net income$352.820.1%$681.738.8%
Net income per diluted share$0.62 $1.20
(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 third quarter of fiscal 2022 were a record $1.758 billion, up 30.0% from net sales of $1.352 billion in the prior year’s third fiscal quarter.
GAAP net income for the third quarter of fiscal 2022 was $352.8 million, or $0.62 per diluted share, up from GAAP net income of $36.2 million, or $0.07 per diluted share, in the prior year’s third fiscal quarter.
For the third quarters of fiscal 2022 and fiscal 2021, GAAP net income was significantly adversely impacted by purchase accounting adjustments associated with our acquisitions.
Non-GAAP net income for the third quarter of fiscal 2022 was a record at $681.7 million, or $1.20 per diluted share, up from non-GAAP net income of $444.9 million, or $0.81 per diluted share, in the prior year’s third fiscal quarter.
For the third quarters of fiscal 2022 and fiscal 2021, the company’s 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, IT security remediation costs, non-cash interest expense on our convertible debentures, losses on the settlement of debt, and gains related to equity investments.
For the third quarter of fiscal 2022 and fiscal 2021, Microchip Technology’s 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 its non-GAAP and GAAP results is included in this press release.
Microchip announced that its Board of Directors declared a record quarterly cash dividend on its common stock of 25.3 cents per share, up 9.1% from the cash dividend paid last quarter and up 29.7% from the year ago quarter. The quarterly dividend is payable on March 8, 2022 to stockholders of record on February 22, 2022.
Microchip Technology Incorporated President and Chief Executive Officer Ganesh Moorthy said the company’s December quarter results continued to be strong, with revenue growing 6.5% sequentially and 30.0% year-over-year despite ongoing manufacturing capacity constraints.
“December quarter revenue, non-GAAP gross margin, non-GAAP operating margin, and non-GAAP EPS were all records. Our December 2021 quarter operating margin of 44.6% was up 210 basis points from 42.5% in the September 2021 quarter and was well above the high end of our guidance,” said Microchip Technology Incorporated President and Chief Executive Officer Ganesh Moorthy.
Microchip Technology Incorporated President and Chief Executive Officer Ganesh Moorthy added that overall business conditions remained very strong in the December quarter with high levels of bookings and record backlog for product to be shipped over multiple quarters, accentuated by its Preferred Supply Program which continues to be greater than 50% of aggregate backlog and 100% of backlog in the most constrained capacity areas.
“Similar to the September quarter, in the December quarter demand outpaced the capacity improvements we implemented, resulting in our unsupported backlog continuing to climb and our lead times stretching out,” said Microchip Technology Incorporated President and Chief Executive Officer Ganesh Moorthy.
Microchip’s Executive Chair Steve Sanghi said Microchip’s Board of Directors approved a sequential increase in its dividend of 9.1%, to a record 25.3 cents per share, up from our November dividend of 23.2 cents per share.
“The dividend announced today also represents a 29.7% year-over-year increase. Our Board of Directors is now targeting to increase our dividend at least 9% sequentially, which is up from the 7% sequential increases communicated at our Investor and Analyst Day on November 8, 2021,” said Microchip’s Executive Chair Steve Sanghi.
Eric Bjornholt, Microchip’s Chief Financial Officer, said the company continued to aggressively pay down its debt with another $362.7 million of payments during the December quarter, reflecting a cumulative debt pay down of $4.77 billion over the past 14 quarters, as Microchip has actively managed the working capital requirements for the business.
“We also refinanced our revolving line of credit to be in line with our investment grade rating and decreased the size of the facility from $3.6 billion to $2.75 billion. We remain focused on continuing to enhance our capital structure in the future,” said Microchip’s Chief Financial Officer Eric Bhornholt.
Microchip Technology Incorporated President and Chief Executive Officer Ganesh Moorthy concluded that the company’s backlog for the March quarter is very strong.
“We also have considerable backlog requested by customers in the March quarter that currently cannot be fulfilled until later quarters despite us growing capacity from last quarter. Additionally, our supply in the March quarter is expected to be adversely impacted by the Covid-19 Omicron variant which has increased the level of factory workforce absentees,” said Microchip Technology Incorporated President and Chief Executive Officer Ganesh Moorthy.
Given this backdrop, Microchip Technology Incorporated President and Chief Executive Officer Ganesh Moorthy expects its net sales in the March quarter to be up between 2% and 5% sequentially. “At the mid-point of our guidance for the March quarter, net sales will be 24% higher than the year ago quarter,” said Ganesh Moorthy.
Microchip’s Highlights for the Quarter Ended December 31, 2021:
Unveiled its new ISO 26262 functional safety packages simplifying design of ASIL B and ASIL C safety applications using dsPIC®, PIC18 and AVR® microcontrollers, accelerating development and certification of automotive safety applications.
Announced the expansion of its Gallium Nitride (GaN) Radio Frequency (RF) power device portfolio with new Monolithic Microwave Integrated Circuits (MMICs) and discrete devices that deliver performance levels required in 5G, satellite communication and defense applications.
Introduced a new maXTouch® touchscreen controller that allows automotive designers to satisfy various and unique aspect ratios for touch displays in cars, an offering that includes additional functional safety support requested by OEMs.
Announced its collaboration with Acacia, part of Cisco, to enable market transition to 400G pluggable coherent optics for data center routing, switching and Metro Optical Transport Network (OTN) platforms.
Unveiled the second development tool offering in our Smart Embedded Vision initiative for designers using its PolarFire® RISC-V System on Chip (SoC) Field Programmable Gate Array (FPGA), for embedded vision applications at the edge.
Unveiled the release of a high-precision voltage reference (Vref) IC that provides very-low drift for extended temperature automotive applications, completing Microchip’s family of Vref products providing increased reliability and AEC-Q100 qualification.
Expanded our functional-safety-certified family of capacitive maXTouch® touchscreen controllers, adding two new IEC/UL 60730 Class B certified touchscreen controllers, the MXT448UD-HA and MXT640UD-HA, for the home appliance market.
Announced our collaboration with Mersen on their 150 kilovolt-ampere (kVA) three-phase silicon carbide Power Stack Reference Design, providing Microchip’s Silicon Carbide MOSFETs and Digital Gate Drivers.
Introduced the TimeProvider® 4100 Release 2.3 precision timing grandmaster for communication networks, meeting the industry’s latest IEEE® 1588 v2.1 2019 security standard for protection of timing systems while providing an increased level of deployment flexibility and scalability.
Fourth Quarter Fiscal Year 2022 Outlook:
The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. Microchip Consolidated GuidanceNet Sales$1.793 to $1.845 billion
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.
The Company’s solutions serve more than 122,000 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.
