Microchip Technology Announces Financial Results For Fourth Quarter and Fiscal Year 2024
Microchip Technology reported a decrease in net sales for the fourth quarter and fiscal year 2024, with GAAP net income and EPS also declining. The company returned a record amount to shareholders through dividends and share repurchases. Despite challenges, Microchip remains focused on innovation and capital return programs. The company anticipates stabilization in demand for fiscal year 2025, with a focus on achieving sequential revenue growth by the September 2024 quarter.
Record quarterly dividend declared for the June quarter, up 18.0% from the previous year.
Returned a record $629.9 million to shareholders in the March quarter through dividends and share repurchases.
Focus on innovation with significant product announcements and two tactical acquisitions during the June quarter.
Net sales for fiscal year 2024 decreased by 9.5% compared to the prior year.
GAAP net income for fiscal year 2024 decreased by 14.8% due to amortization of acquired intangible assets and debt settlement losses.
Non-GAAP net income for fiscal year 2024 decreased by 19.5% compared to the prior fiscal year.
Insights
The recent announcement from Microchip Technology reflects a significant downturn in net sales for Q4, displaying a 40.6% drop year-over-year and a 9.5% decline for the fiscal year. These figures are noteworthy as they represent a substantial deviation from the previous year's performance. The provided guidance was fairly accurate, with actual net sales and GAAP EPS falling within the predicted range.
The company's operational efficiency is highlighted by the relatively high non-GAAP operating margin of 43.9%, indicating strong cost management amid revenue declines. Moreover, the aggressive capital return program, culminating in a record $629.9 million returned to shareholders, reflects a commitment to shareholder value. This is coupled with a debt reduction of $447.4 million, balancing shareholder returns with financial prudence.
Although the EPS has decreased both on a GAAP and non-GAAP basis, the company's strategy to return 100% of adjusted free cash flow to shareholders and the upward adjustment of the quarterly dividend by 18.0% may be perceived favorably by investors looking for income. However, the substantial decrease in sales may raise concerns about future profitability and market position.
The semiconductor industry is known for its cyclical nature and the reported inventory correction by Microchip suggests a broader sectoral downturn. Reductions in factory utilization and austerity measures indicate the company is preparing for continued short-term challenges. This is further emphasized by the mention of 'low business visibility', a sign that the market should brace for potential volatility in the near future.
Despite the current downturn, Microchip's focus on innovation, including new product launches and tactical acquisitions, points to a strong foundation conducive to long-term growth. The strategic emphasis on Total System Solutions and key megatrends like cybersecurity in automotive and the development of Silicon Carbide (SiC) technologies positions Microchip to benefit as market conditions improve.
The projected bottoming out of the business cycle in the June 2024 quarter, followed by a return to sequential revenue growth, offers a potentially optimistic future outlook for the company, contingent on market recovery.
Microchip's capital structure optimization, including the issuance of $1 billion in senior notes at an interest rate of 5.05%, is a strategic maneuver to manage debt effectively. The reduction of gross debt while increasing capital returns is indicative of a balanced approach to leveraging and shareholder value.
Importantly, the company's actions suggest a focus on debt maturity management and interest rate exposure. As portions of Microchip's outstanding debt mature in fiscal 2025, investors should monitor the company's refinancing activities and their effects on the overall financial stability.
For the quarter ended March 31, 2024
- Net sales of
$1.32 6 billion, down24.9% sequentially and down40.6% from the year ago quarter. Our guidance provided on February 1, 2024 was for net sales to be down25% sequentially. - On a GAAP basis: gross profit of
59.6% ; operating income of$253.5 million and19.1% of net sales; net income of$154.7 million ; and EPS of$0.28 per diluted share. Our guidance provided on February 1, 2024 was for GAAP EPS of $0.13 to $0.32 per diluted share. - On a Non-GAAP basis: gross profit of
60.3% ; operating income of$436.0 million and32.9% of net sales; net income of$310.3 million and EPS of$0.57 per diluted share. Our guidance provided on February 1, 2024 was for Non-GAAP EPS of $0.46 to $0.68 per diluted share. - Returned a record
$629.9 million to shareholders in the March quarter through dividends of$242.5 million and the repurchase of$387.4 million , or 4.5 million shares of our common stock, at an average price of$85.38 per share under our previously announced$4.0 billion stock buyback program. Cumulatively repurchased$2.35 4 billion, or 30.4 million shares, over the last ten quarters. - Record quarterly dividend declared today for the June quarter of 45.2 cents per share, an increase of 18.0% from the year ago quarter.
For fiscal year 2024
- Net sales of
$7.63 4 billion decreased9.5% over the prior year. - On a GAAP basis: gross profit of
65.4% ; operating income of$2.57 1 billion; net income of$1.90 7 billion, adversely impacted by purchase accounting adjustments associated with our previous acquisitions and a$12.2 million loss on debt settlement associated with our debt refinancing activities; and EPS of$3.48 per diluted share. - On a Non-GAAP basis: gross profit of
65.8% ; operating income of$3.34 9 billion and43.9% of net sales; net income of$2.69 8 billion and EPS of$4.92 per diluted share. - Paid down
$447.4 million of total debt and returned$1.89 billion to shareholders through dividends and share repurchases.
CHANDLER, Ariz., May 06, 2024 (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 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 | ||||||||||||
| GAAP | % | Non-GAAP(2) | % | GAAP | % | Non-GAAP(2) | % | |||||
| Gross profit | ||||||||||||
| Operating income | ||||||||||||
| Other expense | ||||||||||||
| Income tax provision | ||||||||||||
| Net income | ||||||||||||
| Net income per diluted share | ||||||||||||
(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
GAAP net income for the fourth quarter of fiscal 2024 was
Non-GAAP net income for the fourth quarter of fiscal 2024 was
Net sales for the fiscal year ended March 31, 2024 were
GAAP net income for the fiscal year ended March 31, 2024 was
Non-GAAP net income for the fiscal year ended March 31, 2024 was
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
"We experienced a major inventory correction in fiscal 2024, leading to a
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
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
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 | |||
| GAAP | Non-GAAP Adjustments(1) | Non-GAAP(1) | |
| Gross Profit | |||
| Operating Expenses(2) | |||
| Operating Income | |||
| Other Expense, net | ( | ||
| Income Tax Provision | |||
| Net Income | |||
| Diluted Common Shares Outstanding | Approximately 542.0 to 543.0 million shares | Approximately 542.0 to 543.0 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 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
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
| MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES CONSOLIDATED 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 SUBSIDIARIES CONSOLIDATED 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 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 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
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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