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Microchip Technology (MCHP - Free Report) reported first-quarter fiscal 2025 non-GAAP earnings of 53 cents per share, which beat the Zacks Consensus Estimate by 1.92% but declined 67.7% on a year-over-year basis.
Net sales of $1.24 billion decreased 45.8% year over year and lagged the Zacks Consensus Estimate by 0.03%.
Quarter in Detail
Sales from mixed signal microcontroller, analog and other accounted for 51.9%, 26.6% and 21.4% of net sales, respectively.
Geographically, revenues from the Americas, Europe and Asia contributed 30.1%, 21.9% and 47.9% to net sales, respectively.
Microchip Technology Incorporated Price, Consensus and EPS Surprise
Non-GAAP gross margin contracted 850 basis points (bps) on a year-over-year basis to 59.9%.
Non-GAAP research & development expenses, as a percentage of net sales, increased 560 bps year over year to 17.6%. Non-GAAP selling, general & administrative expenses, as a percentage of net sales, jumped 260 bps to 10.8%.
Non-GAAP operating expenses, as a percentage of net sales, increased 810 bps year over year to 22.5%.
Consequently, the non-GAAP operating margin declined to 31.5% compared with 48.1% reported in the year-ago quarter.
Balance Sheet & Cash Flow
As of Jun 30, 2024, cash and short-term investments totaled $315.1 million compared with $319.7 million as of Mar 31, 2024.
As of Jun 30, 2024, total debt (long-term plus current portion) was $6.17 billion compared with $5.99 billion as of Mar 31, 2024.
For the fiscal first quarter, cash flow from operating activities was $377.1 million compared with $430 million in the previous quarter.
Free cash flow was $304.2 million compared with $389.9 million in the previous quarter.
Microchip returned roughly $315.3 million to shareholders in the fiscal first quarter, through dividends of $242.6 million and share repurchases of approximately $72.7 million.
The company announced a quarterly dividend of 45.4 cents per share, up 10.7% from the year-ago quarter.
Guidance
Microchip expects net sales to be $1.12-$1.18 billion for the second quarter of fiscal 2025.
Non-GAAP earnings are anticipated between 40 cents per share and 46 cents per share.
Non-GAAP gross margin is anticipated between 58.5% and 59.5%.
Non-GAAP operating expenses are projected to be 30-31%.
Non-GAAP operating margin is anticipated to be 27.5-29.5%.
Zacks Rank & Stocks to Consider
Microchip currently carries a Zacks Rank #4 (Sell).
MCHP shares have declined 6.6% compared with the Zacks Computer and Technology sector’s rise of 28.1% in the year-to-date period.
Image: Bigstock
Microchip (MCHP) Q1 Earnings Beat Estimates, Sales Decline Y/Y
Microchip Technology (MCHP - Free Report) reported first-quarter fiscal 2025 non-GAAP earnings of 53 cents per share, which beat the Zacks Consensus Estimate by 1.92% but declined 67.7% on a year-over-year basis.
Net sales of $1.24 billion decreased 45.8% year over year and lagged the Zacks Consensus Estimate by 0.03%.
Quarter in Detail
Sales from mixed signal microcontroller, analog and other accounted for 51.9%, 26.6% and 21.4% of net sales, respectively.
Geographically, revenues from the Americas, Europe and Asia contributed 30.1%, 21.9% and 47.9% to net sales, respectively.
Microchip Technology Incorporated Price, Consensus and EPS Surprise
Microchip Technology Incorporated price-consensus-eps-surprise-chart | Microchip Technology Incorporated Quote
Non-GAAP gross margin contracted 850 basis points (bps) on a year-over-year basis to 59.9%.
Non-GAAP research & development expenses, as a percentage of net sales, increased 560 bps year over year to 17.6%. Non-GAAP selling, general & administrative expenses, as a percentage of net sales, jumped 260 bps to 10.8%.
Non-GAAP operating expenses, as a percentage of net sales, increased 810 bps year over year to 22.5%.
Consequently, the non-GAAP operating margin declined to 31.5% compared with 48.1% reported in the year-ago quarter.
Balance Sheet & Cash Flow
As of Jun 30, 2024, cash and short-term investments totaled $315.1 million compared with $319.7 million as of Mar 31, 2024.
As of Jun 30, 2024, total debt (long-term plus current portion) was $6.17 billion compared with $5.99 billion as of Mar 31, 2024.
For the fiscal first quarter, cash flow from operating activities was $377.1 million compared with $430 million in the previous quarter.
Free cash flow was $304.2 million compared with $389.9 million in the previous quarter.
Microchip returned roughly $315.3 million to shareholders in the fiscal first quarter, through dividends of $242.6 million and share repurchases of approximately $72.7 million.
The company announced a quarterly dividend of 45.4 cents per share, up 10.7% from the year-ago quarter.
Guidance
Microchip expects net sales to be $1.12-$1.18 billion for the second quarter of fiscal 2025.
Non-GAAP earnings are anticipated between 40 cents per share and 46 cents per share.
Non-GAAP gross margin is anticipated between 58.5% and 59.5%.
Non-GAAP operating expenses are projected to be 30-31%.
Non-GAAP operating margin is anticipated to be 27.5-29.5%.
Zacks Rank & Stocks to Consider
Microchip currently carries a Zacks Rank #4 (Sell).
MCHP shares have declined 6.6% compared with the Zacks Computer and Technology sector’s rise of 28.1% in the year-to-date period.
Shopify (SHOP - Free Report) , CACI International (CACI - Free Report) and Dell Technologies (DELL - 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.
Shopify shares have declined 25.4% year to date. SHOP is set to report second-quarter 2024 results on Aug 7.
CACI International shares have gained 43.2% year to date. CACI is set to report fourth-quarter fiscal 2024 results on Aug 8.
Dell Technologies shares have gained 41.7% year to date. DELL is set to report second-quarter fiscal 2025 results on Aug 29.