Microchip Q3 2020 Earnings Report
Key Takeaways
Microchip Technology Incorporated reported a decrease in net sales compared to the previous quarter and year-ago quarter. However, the company's net sales were near the high end of the updated guidance. The company experienced strong bookings activity and successfully reduced its debt by $257.0 million during the quarter.
Net sales were $1.287 billion, down 3.8% sequentially and 6.4% year-over-year.
GAAP EPS was $1.20 per diluted share, while non-GAAP EPS was $1.32 per diluted share.
End-market demand exceeded net sales by $36.1 million.
A record quarterly dividend of 36.70 cents per share was declared.
Microchip
Microchip
Forward Guidance
Microchip expects net sales to increase sequentially by 2% to 9% in the next quarter. The wider than normal guidance range is to help account for the uncertainty associated with the evolving Coronavirus situation.
Positive Outlook
- Net sales are expected to be between $1.313 billion and $1.403 billion.
- Gross margin is expected to be between 61.1% and 61.5%.
- Operating expenses are expected to be between 46.9% and 49.3% of net sales.
- Operating income is expected to be between 11.8% and 14.6% of net sales.
- Earnings per diluted share are expected to be between $0.14 and $0.25.
Challenges Ahead
- Uncertainty associated with the evolving Coronavirus situation.
- The company is not able to estimate the amount of certain Special Charges and Other, net that may be incurred during the quarter ending March 31, 2020.
- The forecast for GAAP tax expense excludes any unexpected tax events that may occur during the quarter.
- Microchip's inventory days in the March 2020 quarter are expected to be in the range of 115 to 129 days.
- The wider than normal guidance range is to help account for the uncertainty associated with the evolving Coronavirus situation.