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Microchip (MCHP) Q3 Earnings Top Estimates, Revenues Rise Y/Y
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Microchip Technology (MCHP - Free Report) reported third-quarter fiscal 2022 non-GAAP earnings of $1.20 per share, which beat the Zacks Consensus Estimate by 2.6% and surged 48.1% on a year-over-year basis.
Net sales of $1.76 billion increased 30% year over year and surpassed the Zacks Consensus Estimate by 0.6%.
Quarter in Detail
In terms of product line, microcontroller sales grew 33.9% year over year and 8.7% sequentially to $972.2 million, accounting for 55.3% of revenues. All microcontroller product lines, 8-bit, 16-bit and 32-bit, reported more than 30% year-over-year growth in sales.
Analog net sales of $500.5 million increased 1.9% sequentially and 34.3% year over year. Analog contributed 28.5% to total revenues.
Other revenues of $284.8 million accounted for 16.2% of revenues.
Microchip Technology Incorporated Price, Consensus and EPS Surprise
Geographically, revenues from Americas, Europe and Asia contributed 25%, 20.5% and 54.5% to net sales, respectively.
Non-GAAP gross margin expanded 310 basis points (bps) on a year-over-year basis to 66.1%, primarily benefiting from favorable product mix.
Non-GAAP research & development expenses, as a percentage of net sales, declined 110 bps year over year to 12.6%. Non-GAAP selling, general & administrative (SG&A) expenses, as a percentage of net sales, declined 70 bps to 8.8%.
Non-GAAP operating expenses, as a percentage of net sales, declined 180 bps year over year to 21.5%.
Consequently, non-GAAP operating margin expanded 480 bps on a year-over-year basis to 44.6%.
Balance Sheet & Cash Flow
As of Dec 31, 2021, cash and short-term investments totaled $315.5 million compared with $255.3 million as of Sep 30, 2021.
As of Dec 31, 2021, total debt (long-term plus current portion) amounted to $7.9 billion compared with $8.2 billion as of Sep 30, 2021. The company paid $362.7 million of debt in the fiscal third quarter.
Microchip refinanced its revolving line of credit during the reported quarter and slashed the size of the facility from $3.6 billion to $2.75 billion.
In the fiscal third quarter, cash flow from operating activities was $853.4 million compared with $611.7 million reported in the prior quarter.
Microchip declared a quarterly dividend of 25.3 cents per share, up 9.1% sequentially and 29.7% from the year-ago quarter. The quarterly dividend is payable on Mar 8, 2022, to stockholders of record on Feb 22, 2022.
Guidance
Microchip forecasts fourth-quarter fiscal 2022 net sales of $1.793-$1.845 billion, indicating 2-5% sequential growth. At the mid-point of this guidance, net sales are expected to grow 24% year over year.
Microchip is witnessing supply chain constraints due to the COVID-19 Omicron variant, which has increased factory workforce absentees.
Non-GAAP earnings are anticipated in the range of $1.22-$1.28 per share.
Non-GAAP gross margin is anticipated to be 66.2-66.6%.
Non-GAAP operating expenses are projected in the band of 21.8-22.2%.
Non-GAAP operating margin is anticipated in the range of 44-44.8%.
Capital expenditures for fiscal fourth quarter are expected between $135 million and $145 million. Capital expenditures for fiscal 2022 are estimated between $390 million and $400 million.
Zacks Rank & Stocks to Consider
Microchip currently carries a Zacks Rank #3 (Hold).
Microchip’s shares have underperformed the Zacks Computer & Technology sector in the past year. MCHP’s shares are up 7.4% compared with the sector’s rise of 8.6%.
Airbnb (ABNB - Free Report) , Mandiant and Analog Devices (ADI - Free Report) are some better-ranked stocks that investors can consider from the broader sector. While both Airbnb and Mandiant sport a Zacks Rank #1 (Strong Buy), Analog Devices carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Airbnb’s shares have underperformed the sector in the past year, declining 17.4%.
Airbnb is set to report fourth-quarter 2021 results on Feb 15.
Mandiant’s shares have underperformed the Zacks Computer & Technology sector in the past year, declining 27.9%.
MNDT is set to report fourth-quarter 2021 on Feb 8.
Analog Devices’ shares have outperformed the Zacks Computer & Technology sector in the past year, rising 10.3%.
ADI is set to report first-quarter fiscal 2022 results on Feb 16.
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Microchip (MCHP) Q3 Earnings Top Estimates, Revenues Rise Y/Y
Microchip Technology (MCHP - Free Report) reported third-quarter fiscal 2022 non-GAAP earnings of $1.20 per share, which beat the Zacks Consensus Estimate by 2.6% and surged 48.1% on a year-over-year basis.
Net sales of $1.76 billion increased 30% year over year and surpassed the Zacks Consensus Estimate by 0.6%.
Quarter in Detail
In terms of product line, microcontroller sales grew 33.9% year over year and 8.7% sequentially to $972.2 million, accounting for 55.3% of revenues. All microcontroller product lines, 8-bit, 16-bit and 32-bit, reported more than 30% year-over-year growth in sales.
Analog net sales of $500.5 million increased 1.9% sequentially and 34.3% year over year. Analog contributed 28.5% to total revenues.
Other revenues of $284.8 million accounted for 16.2% of revenues.
Microchip Technology Incorporated Price, Consensus and EPS Surprise
Microchip Technology Incorporated price-consensus-eps-surprise-chart | Microchip Technology Incorporated Quote
Geographically, revenues from Americas, Europe and Asia contributed 25%, 20.5% and 54.5% to net sales, respectively.
Non-GAAP gross margin expanded 310 basis points (bps) on a year-over-year basis to 66.1%, primarily benefiting from favorable product mix.
Non-GAAP research & development expenses, as a percentage of net sales, declined 110 bps year over year to 12.6%. Non-GAAP selling, general & administrative (SG&A) expenses, as a percentage of net sales, declined 70 bps to 8.8%.
Non-GAAP operating expenses, as a percentage of net sales, declined 180 bps year over year to 21.5%.
Consequently, non-GAAP operating margin expanded 480 bps on a year-over-year basis to 44.6%.
Balance Sheet & Cash Flow
As of Dec 31, 2021, cash and short-term investments totaled $315.5 million compared with $255.3 million as of Sep 30, 2021.
As of Dec 31, 2021, total debt (long-term plus current portion) amounted to $7.9 billion compared with $8.2 billion as of Sep 30, 2021. The company paid $362.7 million of debt in the fiscal third quarter.
Microchip refinanced its revolving line of credit during the reported quarter and slashed the size of the facility from $3.6 billion to $2.75 billion.
In the fiscal third quarter, cash flow from operating activities was $853.4 million compared with $611.7 million reported in the prior quarter.
Microchip declared a quarterly dividend of 25.3 cents per share, up 9.1% sequentially and 29.7% from the year-ago quarter. The quarterly dividend is payable on Mar 8, 2022, to stockholders of record on Feb 22, 2022.
Guidance
Microchip forecasts fourth-quarter fiscal 2022 net sales of $1.793-$1.845 billion, indicating 2-5% sequential growth. At the mid-point of this guidance, net sales are expected to grow 24% year over year.
Microchip is witnessing supply chain constraints due to the COVID-19 Omicron variant, which has increased factory workforce absentees.
Non-GAAP earnings are anticipated in the range of $1.22-$1.28 per share.
Non-GAAP gross margin is anticipated to be 66.2-66.6%.
Non-GAAP operating expenses are projected in the band of 21.8-22.2%.
Non-GAAP operating margin is anticipated in the range of 44-44.8%.
Capital expenditures for fiscal fourth quarter are expected between $135 million and $145 million. Capital expenditures for fiscal 2022 are estimated between $390 million and $400 million.
Zacks Rank & Stocks to Consider
Microchip currently carries a Zacks Rank #3 (Hold).
Microchip’s shares have underperformed the Zacks Computer & Technology sector in the past year. MCHP’s shares are up 7.4% compared with the sector’s rise of 8.6%.
Airbnb (ABNB - Free Report) , Mandiant and Analog Devices (ADI - Free Report) are some better-ranked stocks that investors can consider from the broader sector. While both Airbnb and Mandiant sport a Zacks Rank #1 (Strong Buy), Analog Devices carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Airbnb’s shares have underperformed the sector in the past year, declining 17.4%.
Airbnb is set to report fourth-quarter 2021 results on Feb 15.
Mandiant’s shares have underperformed the Zacks Computer & Technology sector in the past year, declining 27.9%.
MNDT is set to report fourth-quarter 2021 on Feb 8.
Analog Devices’ shares have outperformed the Zacks Computer & Technology sector in the past year, rising 10.3%.
ADI is set to report first-quarter fiscal 2022 results on Feb 16.