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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.
Microchip Technology Incorporated Price, Consensus and EPS Surprise
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.
Image: Bigstock
Microchip (MCHP) Q3 Earnings Beat Estimates, Sales Decline Y/Y
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.
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 28.9%, 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.