Microchip Technology (MCHP - Free Report) reported third-quarter fiscal 2024 non-GAAP earnings of $1.08 per share, which beat the Zacks Consensus Estimate by 1.89% but declined 30.8% on a year-over-year basis.
Net sales of $1.77 billion decreased 14.8% year over year and lagged the Zacks Consensus Estimate by 1.41%.
Quarter in Detail
In terms of product line, mixed-signal microcontroller sales declined 18.5% year over year and 22.3% sequentially. Analog net sales decreased 30.9% sequentially and 29% year over year.
Sales from mixed signal microcontroller, analog and other accounted for 56.4%, 24.4% and 19.3% of net sales, respectively.
Geographically, revenues from the Americas, Europe and Asia contributed 28.9%, 23.5% and 47.6% to net sales, respectively.
Non-GAAP gross margin contracted 750 basis points (bps) on a year-over-year basis to 63.8%.
Non-GAAP research & development expenses, as a percentage of net sales, increased 110 bps year over year to 13.7%. Non-GAAP selling, general & administrative expenses, as a percentage of net sales, declined 20 bps to 8.9%.
Non-GAAP operating expenses, as a percentage of net sales, increased 90 bps year over year to 22.5%.
Consequently, the non-GAAP operating margin contracted 840 bps on a year-over-year basis to 41.2%.
Balance Sheet & Cash Flow
As of Dec 31, 2023, cash and short-term investments totaled $281 million compared with $256.6 million as of Sep 30, 2023.
As of Dec 31, 2023, total debt (long-term plus current portion) was $5.7 billion compared with $6.08 billion as of Sep 30.
For the fiscal third quarter, cash flow from operating activities was $853.3 million compared with $616.2 million in the previous quarter.
Free cash flow was $793.8 million compared with $541.8 million in the previous quarter.
Microchip returned roughly $352 million to shareholders in the fiscal third quarter through dividends of $237.4 million and share repurchases of approximately $114.6 million.
The company announced a quarterly dividend of 45 cents per share, up 25.7% from the year-ago quarter.
Guidance
Microchip expects net sales to be $1.225-$1.425 billion for the fourth quarter of fiscal 2024.
Non-GAAP earnings are anticipated between 46 cents per share and 68 cents per share.
Non-GAAP gross margin is anticipated between 59% and 61.6%.
Non-GAAP operating expenses are projected to be 26.9-30.7%.
Non-GAAP operating margin is anticipated to be 28.3-34.7%.
Zacks Rank & Stocks to Consider
Microchip currently carries a Zacks Rank #5 (Strong Sell).
MCHP shares have lost 5.1% compared with the Zacks Computer and Technology sector’s rise of 13.9% in the past six-month period.
Shopify (SHOP - Free Report) , Pinterest (PINS - Free Report) and AvidXchange (AVDX - Free Report) are some better-ranked stocks that investors can consider in the broader sector, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shopify shares have gained 22.9% in the past six-month period. SHOP is set to report its fourth-quarter 2023 results on Feb 13.
Pinterest shares have gained 34.9% in the past six-month period. PINS is set to report its fourth-quarter 2023 results on Feb 8.
AvidXchange shares have gained 0.8% in the past six-month period. AVDX is set to report its fourth-quarter 2023 results on Feb 28.
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Microchip Technology (MCHP - Free Report) reported third-quarter fiscal 2024 non-GAAP earnings of $1.08 per share, which beat the Zacks Consensus Estimate by 1.89% but declined 30.8% on a year-over-year basis.
Net sales of $1.77 billion decreased 14.8% year over year and lagged the Zacks Consensus Estimate by 1.41%.
Quarter in Detail
In terms of product line, mixed-signal microcontroller sales declined 18.5% year over year and 22.3% sequentially. Analog net sales decreased 30.9% sequentially and 29% year over year.
Sales from mixed signal microcontroller, analog and other accounted for 56.4%, 24.4% and 19.3% of net sales, respectively.
Geographically, revenues from the Americas, Europe and Asia contributed 28.9%, 23.5% and 47.6% to net sales, respectively.
Non-GAAP gross margin contracted 750 basis points (bps) on a year-over-year basis to 63.8%.
Non-GAAP research & development expenses, as a percentage of net sales, increased 110 bps year over year to 13.7%. Non-GAAP selling, general & administrative expenses, as a percentage of net sales, declined 20 bps to 8.9%.
Non-GAAP operating expenses, as a percentage of net sales, increased 90 bps year over year to 22.5%.
Consequently, the non-GAAP operating margin contracted 840 bps on a year-over-year basis to 41.2%.
Balance Sheet & Cash Flow
As of Dec 31, 2023, cash and short-term investments totaled $281 million compared with $256.6 million as of Sep 30, 2023.
As of Dec 31, 2023, total debt (long-term plus current portion) was $5.7 billion compared with $6.08 billion as of Sep 30.
For the fiscal third quarter, cash flow from operating activities was $853.3 million compared with $616.2 million in the previous quarter.
Free cash flow was $793.8 million compared with $541.8 million in the previous quarter.
Microchip returned roughly $352 million to shareholders in the fiscal third quarter through dividends of $237.4 million and share repurchases of approximately $114.6 million.
The company announced a quarterly dividend of 45 cents per share, up 25.7% from the year-ago quarter.
Guidance
Microchip expects net sales to be $1.225-$1.425 billion for the fourth quarter of fiscal 2024.
Non-GAAP earnings are anticipated between 46 cents per share and 68 cents per share.
Non-GAAP gross margin is anticipated between 59% and 61.6%.
Non-GAAP operating expenses are projected to be 26.9-30.7%.
Non-GAAP operating margin is anticipated to be 28.3-34.7%.
Zacks Rank & Stocks to Consider
Microchip currently carries a Zacks Rank #5 (Strong Sell).
MCHP shares have lost 5.1% compared with the Zacks Computer and Technology sector’s rise of 13.9% in the past six-month period.
Shopify (SHOP - Free Report) , Pinterest (PINS - Free Report) and AvidXchange (AVDX - Free Report) are some better-ranked stocks that investors can consider in the broader sector, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shopify shares have gained 22.9% in the past six-month period. SHOP is set to report its fourth-quarter 2023 results on Feb 13.
Pinterest shares have gained 34.9% in the past six-month period. PINS is set to report its fourth-quarter 2023 results on Feb 8.
AvidXchange shares have gained 0.8% in the past six-month period. AVDX is set to report its fourth-quarter 2023 results on Feb 28.
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Hurry – you can still get in early on our 10 top tickers for 2024. Hand-picked by Zacks Director of Research, Sheraz Mian, this portfolio has been stunningly and consistently successful. From inception in 2012 through November, 2023, the Zacks Top 10 Stocks gained +974.1%, nearly TRIPLING the S&P 500’s +340.1%. Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2024. You can still be among the first to see these just-released stocks with enormous potential.
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