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Microchip Technology (MCHP - Free Report) reported first-quarter fiscal 2024 non-GAAP earnings of $1.64 per share, which were in line with the Zacks Consensus Estimate and rose 19.7% on a year-over-year basis.
Net sales of $2.29 billion increased 16.6% year over year and were in line with the Zacks Consensus Estimate.
Microchip witnessed weakness in China, as well as sluggishness in the automotive and industrial segments, reflecting the impact of high inflation and high interest rates driving more cautious spending. Moreover, MCHP also suffered from a slowdown in Europe.
Quarter in Detail
In terms of product line, mixed signal microcontroller sales grew 22.5% year over year and 0.8% sequentially. Analog net sales increased 2.5% sequentially and 9.2% year over year.
Sales from mixed signal microcontroller, analog and other accounted for 57%, 28% and 15% of net sales, respectively.
Microchip Technology Incorporated Price, Consensus and EPS Surprise
Geographically, revenues from the Americas, Europe and Asia contributed 28%, 24% and 48% to net sales, respectively.
The non-GAAP gross margin expanded 130 basis points (bps) on a year-over-year basis to 68.4%.
Non-GAAP research & development expenses, as a percentage of net sales, declined 60 bps year over year to 12%. Non-GAAP selling, general & administrative expenses, as a percentage of net sales, declined 60 bps to 8.3%.
Non-GAAP operating expenses, as a percentage of net sales, declined 120 bps year over year to 20.3%.
Consequently, the non-GAAP operating margin expanded 250 bps on a year-over-year basis to 48.1%.
Balance Sheet & Cash Flow
As of Jun 30, 2023, cash and short-term investments totaled $271.2 million compared with $234 million as of Mar 31, 2023.
As of Jun 30, 2023, total debt (long-term plus current portion) was $6.03 billion compared with $6.44 billion as of Mar 31. The company paid down $413 million of debt in the reported quarter.
For the fiscal first quarter, cash flow from operating activities was $993.2 million compared with $709.58 million in the previous quarter.
Free cash flow was $882.1 million compared with $596.8 million in the previous quarter.
Microchip returned roughly $349.2 million to shareholders in the fiscal first quarter through dividends of $208.9 million and share repurchases of approximately $140.3 million.
The company announced a quarterly dividend of 41 cents per share, up 36.2% from the year-ago quarter.
Guidance
Microchip expects net sales to be $2.22-$2.312 billion for the second quarter of fiscal 2024. Non-GAAP earnings are anticipated between $1.60 per share and $1.64 per share.
Non-GAAP gross margin is anticipated between 68.3% and 68.5%.
Non-GAAP operating expenses are projected to be 20.1-20.5%.
Non-GAAP operating margin is anticipated to be 47.8-48.4%.
Capital expenditure for the fiscal second quarter is expected between $90 million and $100 million. Capital expenditure for fiscal 2024 is estimated between $300 million and $400 million.
Zacks Rank & Stocks to Consider
Microchip currently carries a Zacks Rank #3 (Hold).
Image: Bigstock
Microchip (MCHP) Q1 Earnings Meet Estimates, Sales Rise Y/Y
Microchip Technology (MCHP - Free Report) reported first-quarter fiscal 2024 non-GAAP earnings of $1.64 per share, which were in line with the Zacks Consensus Estimate and rose 19.7% on a year-over-year basis.
Net sales of $2.29 billion increased 16.6% year over year and were in line with the Zacks Consensus Estimate.
Microchip witnessed weakness in China, as well as sluggishness in the automotive and industrial segments, reflecting the impact of high inflation and high interest rates driving more cautious spending. Moreover, MCHP also suffered from a slowdown in Europe.
Quarter in Detail
In terms of product line, mixed signal microcontroller sales grew 22.5% year over year and 0.8% sequentially. Analog net sales increased 2.5% sequentially and 9.2% year over year.
Sales from mixed signal microcontroller, analog and other accounted for 57%, 28% and 15% of net sales, respectively.
Microchip Technology Incorporated Price, Consensus and EPS Surprise
Microchip Technology Incorporated price-consensus-eps-surprise-chart | Microchip Technology Incorporated Quote
Geographically, revenues from the Americas, Europe and Asia contributed 28%, 24% and 48% to net sales, respectively.
The non-GAAP gross margin expanded 130 basis points (bps) on a year-over-year basis to 68.4%.
Non-GAAP research & development expenses, as a percentage of net sales, declined 60 bps year over year to 12%. Non-GAAP selling, general & administrative expenses, as a percentage of net sales, declined 60 bps to 8.3%.
Non-GAAP operating expenses, as a percentage of net sales, declined 120 bps year over year to 20.3%.
Consequently, the non-GAAP operating margin expanded 250 bps on a year-over-year basis to 48.1%.
Balance Sheet & Cash Flow
As of Jun 30, 2023, cash and short-term investments totaled $271.2 million compared with $234 million as of Mar 31, 2023.
As of Jun 30, 2023, total debt (long-term plus current portion) was $6.03 billion compared with $6.44 billion as of Mar 31. The company paid down $413 million of debt in the reported quarter.
For the fiscal first quarter, cash flow from operating activities was $993.2 million compared with $709.58 million in the previous quarter.
Free cash flow was $882.1 million compared with $596.8 million in the previous quarter.
Microchip returned roughly $349.2 million to shareholders in the fiscal first quarter through dividends of $208.9 million and share repurchases of approximately $140.3 million.
The company announced a quarterly dividend of 41 cents per share, up 36.2% from the year-ago quarter.
Guidance
Microchip expects net sales to be $2.22-$2.312 billion for the second quarter of fiscal 2024. Non-GAAP earnings are anticipated between $1.60 per share and $1.64 per share.
Non-GAAP gross margin is anticipated between 68.3% and 68.5%.
Non-GAAP operating expenses are projected to be 20.1-20.5%.
Non-GAAP operating margin is anticipated to be 47.8-48.4%.
Capital expenditure for the fiscal second quarter is expected between $90 million and $100 million. Capital expenditure for fiscal 2024 is estimated between $300 million and $400 million.
Zacks Rank & Stocks to Consider
Microchip currently carries a Zacks Rank #3 (Hold).
BILL Holdings (BILL - Free Report) , CACI International (CACI - Free Report) and Cisco Systems (CSCO - Free Report) are some better-ranked stocks that investors can consider in the broader sector, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
BILL Holdings shares have gained 7.8% year to date. BILL is set to report its fourth-quarter fiscal 2023 results on Aug 17.
CACI International shares have gained 18% year to date. CACI is set to report its fourth-quarter fiscal 2023 results on Aug 9.
Cisco Systems shares have returned 10.4% year to date. CSCO is set to report its fourth-quarter fiscal 2023 results on Aug 16.