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Net sales of $1.65 billion increased 26% year over year and surpassed the Zacks Consensus Estimate by 0.1%.
Quarter in Detail
In terms of product line, microcontroller revenues were $894 million, accounting for 54.2% of revenues. Analog net sales of $490.9 million contributed 29.8% of total revenues.
Geographically, revenues from Americas, Europe and Asia contributed 25.4%, 19.7% and 54.9% to net sales, respectively.
Microchip Technology Incorporated Price, Consensus and EPS Surprise
Non-GAAP gross margin expanded 320 basis points (bps) on a year-over-year basis to 65.3%.
Non-GAAP research & development expenses, as a percentage of net sales, declined 10 bps year over year to 13.3%. Non-GAAP selling, general & administrative (SG&A) expenses, as a percentage of net sales, stayed at 9.5%.
Non-GAAP operating expenses, as a percentage of net sales, declined 10 bps year over year to 22.8%.
Consequently, non-GAAP operating margin expanded 320 bps on a year-over-year basis to 42.5%.
Balance Sheet & Cash Flow
As of Sep 30, 2021, cash and short-term investments totaled $255.3 million compared with $279.7 million as of Jun 30, 2021.
As of Sep 30, 2021, total debt (long-term plus current portion) amounted to $8.2 billion compared with $8.5 billion as of Jun 30, 2021. The company paid down $415.6 million of debt in the fiscal second quarter.
Cash flow from operating activities was $611.7 million compared with $629.9 million reported in the prior quarter.
Microchip declared a quarterly dividend of 23.2 cents per share, up 6.2% sequentially and 25.9% from the year ago quarter. The quarterly dividend is payable on Dec 3, 2021 to stockholders of record on Nov 19, 2021.
The company completed a two-for-one stock split on Oct 12, 2021 effective for stockholders of record on Oct 4, 2021.
Guidance
Microchip forecasts third-quarter fiscal 2022 net sales to be $1.716-$1.782 billion, indicating 4-8% sequential growth.
Non-GAAP earnings are anticipated in the range of $1.14-$1.20 per share.
Non-GAAP gross margin is anticipated to be 65.8-66.2%. Non-GAAP operating margin is anticipated in the range of 43.1-43.9%.
Zacks Rank & Stocks to Consider
Microchip currently carries a Zacks Rank #3 (Hold).
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Microchip (MCHP) Q2 Earnings & Revenues Top Estimates, Up Y/Y
Microchip Technology (MCHP - Free Report) reported second-quarter fiscal 2022 non-GAAP earnings of $1.07 per share, which beat the Zacks Consensus Estimate by 0.9% and increased 37.2% on a year-over-year basis.
Net sales of $1.65 billion increased 26% year over year and surpassed the Zacks Consensus Estimate by 0.1%.
Quarter in Detail
In terms of product line, microcontroller revenues were $894 million, accounting for 54.2% of revenues. Analog net sales of $490.9 million contributed 29.8% of total revenues.
Geographically, revenues from Americas, Europe and Asia contributed 25.4%, 19.7% and 54.9% 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 expanded 320 basis points (bps) on a year-over-year basis to 65.3%.
Non-GAAP research & development expenses, as a percentage of net sales, declined 10 bps year over year to 13.3%. Non-GAAP selling, general & administrative (SG&A) expenses, as a percentage of net sales, stayed at 9.5%.
Non-GAAP operating expenses, as a percentage of net sales, declined 10 bps year over year to 22.8%.
Consequently, non-GAAP operating margin expanded 320 bps on a year-over-year basis to 42.5%.
Balance Sheet & Cash Flow
As of Sep 30, 2021, cash and short-term investments totaled $255.3 million compared with $279.7 million as of Jun 30, 2021.
As of Sep 30, 2021, total debt (long-term plus current portion) amounted to $8.2 billion compared with $8.5 billion as of Jun 30, 2021. The company paid down $415.6 million of debt in the fiscal second quarter.
Cash flow from operating activities was $611.7 million compared with $629.9 million reported in the prior quarter.
Microchip declared a quarterly dividend of 23.2 cents per share, up 6.2% sequentially and 25.9% from the year ago quarter. The quarterly dividend is payable on Dec 3, 2021 to stockholders of record on Nov 19, 2021.
The company completed a two-for-one stock split on Oct 12, 2021 effective for stockholders of record on Oct 4, 2021.
Guidance
Microchip forecasts third-quarter fiscal 2022 net sales to be $1.716-$1.782 billion, indicating 4-8% sequential growth.
Non-GAAP earnings are anticipated in the range of $1.14-$1.20 per share.
Non-GAAP gross margin is anticipated to be 65.8-66.2%. Non-GAAP operating margin is anticipated in the range of 43.1-43.9%.
Zacks Rank & Stocks to Consider
Microchip currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the broader technology sector include Applied Materials (AMAT - Free Report) , Cisco Systems (CSCO - Free Report) and Clearfield (CLFD - Free Report) . While Clearfield sports a Zacks Rank #1 (Strong Buy), both Applied Materials and Cisco carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Clearfield and Cisco are set to report their earnings results on Nov 4 and 17, respectively. Applied Material is likely to report the same on Nov 11.