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Microchip (MCHP) Q4 Earnings Top Estimates, Sales Rise Y/Y
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Microchip Technology (MCHP - Free Report) reported fourth-quarter fiscal 2023 non-GAAP earnings of $1.64 per share, which beat the Zacks Consensus Estimate by 1.23% and rose 21.5% on a year-over-year basis.
Net sales of $2.23 billion increased 21.1% year over year and surpassed the Zacks Consensus Estimate by 0.53%.
Quarter in Detail
In terms of product line, mixed signal microcontroller sales grew 23.5% year over year and 5.8% sequentially. Analog net sales increased 1.9% sequentially and 19.9% year over year.
Sales from mixed-signal microcontroller, analog and other accounted for 58%, 28% and 14% of net sales, respectively.
Microchip Technology Incorporated Price, Consensus and EPS Surprise
Geographically, revenues from the Americas, Europe and Asia contributed 26%, 24% and 50% to net sales, respectively.
The non-GAAP gross margin expanded 170 basis points (bps) on a year-over-year basis to 68.3%.
Non-GAAP research and development expenses, as a percentage of net sales, declined 50 bps year over year to 12.4%. Non-GAAP selling, general and administrative expenses, as a percentage of net sales, declined 70 bps to 8.3%.
Non-GAAP operating expenses, as a percentage of net sales, declined 120 bps year over year to 20.7%.
Consequently, the non-GAAP operating margin expanded 290 bps on a year-over-year basis to 47.6%.
Balance Sheet & Cash Flow
As of Mar 31, 2023, cash and short-term investments totaled $234 million compared with $288.9 million as of Dec 31, 2022.
As of Mar 31, 2023, total debt (long-term plus current portion) was $6.44 billion. The company paid down $153 million of debt in the reported quarter.
For the fiscal fourth quarter, cash flow from operating activities was $709.58 million compared with $1.28 billion in the previous quarter.
The free cash flow was $596.8 million compared with $1.14 billion in the previous quarter.
Microchip returned $469.8 million to shareholders in the fiscal fourth quarter through dividends of $195.9 million and share repurchases of $273.9 million.
The company announced a quarterly dividend of 38.3 cents per share, up 38.8% from the year-ago quarter.
Guidance
Microchip expects net sales of $2.255-$2.322 billion for first-quarter fiscal 2024. Non-GAAP earnings are anticipated between $1.63 per share and $1.65 per share.
The non-GAAP gross margin is anticipated between 68.3% and 68.5%.
Non-GAAP operating expenses are projected to be 20.1-20.5%.
The non-GAAP operating margin is anticipated to be 47.8-48.4%.
Capital expenditure for the fiscal first quarter is expected between $100 million and $120 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 #4 (Sell).
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Microchip (MCHP) Q4 Earnings Top Estimates, Sales Rise Y/Y
Microchip Technology (MCHP - Free Report) reported fourth-quarter fiscal 2023 non-GAAP earnings of $1.64 per share, which beat the Zacks Consensus Estimate by 1.23% and rose 21.5% on a year-over-year basis.
Net sales of $2.23 billion increased 21.1% year over year and surpassed the Zacks Consensus Estimate by 0.53%.
Quarter in Detail
In terms of product line, mixed signal microcontroller sales grew 23.5% year over year and 5.8% sequentially. Analog net sales increased 1.9% sequentially and 19.9% year over year.
Sales from mixed-signal microcontroller, analog and other accounted for 58%, 28% and 14% 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 26%, 24% and 50% to net sales, respectively.
The non-GAAP gross margin expanded 170 basis points (bps) on a year-over-year basis to 68.3%.
Non-GAAP research and development expenses, as a percentage of net sales, declined 50 bps year over year to 12.4%. Non-GAAP selling, general and administrative expenses, as a percentage of net sales, declined 70 bps to 8.3%.
Non-GAAP operating expenses, as a percentage of net sales, declined 120 bps year over year to 20.7%.
Consequently, the non-GAAP operating margin expanded 290 bps on a year-over-year basis to 47.6%.
Balance Sheet & Cash Flow
As of Mar 31, 2023, cash and short-term investments totaled $234 million compared with $288.9 million as of Dec 31, 2022.
As of Mar 31, 2023, total debt (long-term plus current portion) was $6.44 billion. The company paid down $153 million of debt in the reported quarter.
For the fiscal fourth quarter, cash flow from operating activities was $709.58 million compared with $1.28 billion in the previous quarter.
The free cash flow was $596.8 million compared with $1.14 billion in the previous quarter.
Microchip returned $469.8 million to shareholders in the fiscal fourth quarter through dividends of $195.9 million and share repurchases of $273.9 million.
The company announced a quarterly dividend of 38.3 cents per share, up 38.8% from the year-ago quarter.
Guidance
Microchip expects net sales of $2.255-$2.322 billion for first-quarter fiscal 2024. Non-GAAP earnings are anticipated between $1.63 per share and $1.65 per share.
The non-GAAP gross margin is anticipated between 68.3% and 68.5%.
Non-GAAP operating expenses are projected to be 20.1-20.5%.
The non-GAAP operating margin is anticipated to be 47.8-48.4%.
Capital expenditure for the fiscal first quarter is expected between $100 million and $120 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 #4 (Sell).
Blink Charging (BLNK - Free Report) , Enfusion (ENFN - Free Report) and DigitalOcean (DOCN - Free Report) are some better-ranked stocks that investors can consider in the Zacks Computer & Technology sector. Enfusion sports a Zacks Rank #1 (Strong Buy), and Blink and DigitalOcean carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Blink Charging shares have declined 35% year to date. BLNK is set to report its first-quarter 2023 results on May 9.
Enfusion shares have declined 9.5% year to date. ENFN is set to report its first-quarter 2023 results on May 9.
DigitalOcean shares have gained 28% year to date. DOCN is set to report its first-quarter 2023 results on May 9.