Microchip Technology Incorporated (MCHP), a leading provider of microcontroller, mixed signal, analog and Flash-IP solutions, today reported results for the three months ended September 30, 2013.
GAAP net sales for the second quarter of fiscal 2014 were $492.7 million, up 6.5% sequentially from net sales of $462.8 million in the immediately preceding quarter, and up 28.5% from GAAP net sales of $383.3 million in the prior year’s second fiscal quarter. GAAP net income for the second quarter of fiscal 2014 was $99.8 million, or 46 cents per diluted share, up 27.0% from GAAP net income of $78.6 million, or 37 cents per diluted share, in the immediately preceding quarter, and up from a GAAP net loss of $21.2 million, or a loss of 11 cents per diluted share, in the prior year’s second fiscal quarter. In the second quarter of fiscal 2014, GAAP net income included amortization of acquired intangibles of $23.7 million.
Non-GAAP net sales for the second quarter of fiscal 2014 were $492.7 million, up 6.5% sequentially from non-GAAP net sales of $462.8 million in the immediately preceding quarter, and up 20.8% from non-GAAP net sales of $407.8 million in the prior year’s second fiscal quarter. Non-GAAP net income for the second quarter of fiscal 2014 was a record $136.4 million, or 63 cents per diluted share, up 13.3% from non-GAAP net income of $120.4 million, or 57 cents per diluted share, in the immediately preceding quarter, and up 39.5% from non-GAAP net income of $97.7 million, or 48 cents per diluted share, in the prior year’s second fiscal quarter. For the second quarters of fiscal 2014 and fiscal 2013, our non-GAAP results exclude the effect of share-based compensation, expenses related to our acquisition activities (including intangible asset amortization, inventory valuation costs, severance costs, earn out adjustments and legal and other general and administrative expenses associated with acquisitions), and non-cash interest expense on our convertible debentures. A reconciliation of our non-GAAP and GAAP results is included in this press release.
Microchip also announced today that its Board of Directors declared a quarterly cash dividend on its common stock of 35.45 cents per share. The quarterly dividend is payable on December 5, 2013 to stockholders of record on November 21, 2013.
“We were very pleased with our execution in the September quarter. Looking at the September quarter compared to the year ago quarter, microcontrollers grew 22.9%, analog grew 25.2% and licensing grew 23.4%, all achieving new revenue records,” said Steve Sanghi, President and CEO. “Our net sales, non-GAAP gross margin percentage and non-GAAP EPS all exceeded the high end of our guidance.”
Mr. Sanghi added, “The revenue growth and the leverage we have achieved in gross margins and operating expenses have been outstanding and enabled us to achieve non-GAAP operating profit of 31.8% in the quarter ended September 30, 2013. Based on three factors: improving gross margins and operating margins in our microcontroller and analog businesses, achieving a substantially better business model from our SMSC acquisition, and our growing licensing business, we have revised our long-term model upwards to be between 34% and 36% non-GAAP operating profit.”
“As we anticipated in our July earnings conference call, our 8-bit microcontrollers did set a new revenue record in the September quarter, as did our 16-bit and 32-bit microcontroller businesses. Our overall microcontroller net sales grew a strong 6.9% sequentially in the September quarter to achieve an all time record of $321 million,” said Ganesh Moorthy, Chief Operating Officer. “Our 16-bit microcontroller net sales were up 10.9% sequentially in the September quarter, achieving a new record for net sales. 16-bit microcontroller net sales was also up 48.1% over the year ago quarter. Our 32-bit microcontroller net sales were up 24% sequentially in the September quarter, registering another strong quarter of growth to also set a new record. 32-bit microcontroller net sales were also up 53.4% over the year ago quarter.”
Rich Simoncic, Vice President, Analog and Interface Products Division, said, “Our analog net sales grew 5.1% sequentially in the September quarter, the 8th consecutive quarter of sequential growth, to also achieve a new record, and continues to perform exceptionally well. Analog net sales were also up 25.2% from the year ago quarter. Analog net sales represented 22% of Microchip’s overall net sales in the September quarter and it remains one of the best performing Analog franchises in the industry.”
Eric Bjornholt, Microchip’s Chief Financial Officer, said, “We had strong free cash flow generation in the September quarter of $126.4 million prior to our dividend payment. The dividend that we announced today marks the thirty-ninth occasion that we have increased our dividend payment, and our cumulative dividends paid have reached almost $2.1 billion."
Mr. Sanghi concluded, “I want to thank all of the employees of Microchip for their contribution in making the financial results for the September 2013 quarter outstanding in every respect. Looking at our year-over-year results, our September quarter non-GAAP net sales were up 20.5%, far exceeding the growth of the industry and our competitors. The December quarter is typically Microchip’s weakest quarter of the year due to the various holidays. Taking the global economic picture and these factors into consideration we expect Microchip’s total net sales in the December quarter to be flat to down 6% sequentially.”