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Dec 31, 2020
Microchip Q3 2021 Earnings Report
Reported a shift of the business cycle back to growth with sequential revenue increase and record non-GAAP gross and operating margins.
Key Takeaways
Microchip Technology Incorporated reported a 3.3% sequential growth in revenue, reaching $1.35 billion. The company achieved a record non-GAAP gross margin of 63% and a record non-GAAP operating margin of 39.8%. Non-GAAP EPS was $1.62, exceeding the midpoint of guidance. The board declared a record quarterly dividend of 39 cents per share.
Net sales reached $1.35 billion, a 3.3% sequential increase and a 5.0% increase year-over-year.
GAAP gross margin was 62.6%, with an operating income of $245.6 million and EPS of $0.13 per diluted share.
Non-GAAP gross margin reached a record 63.0%, with an operating income of $538.1 million and EPS of $1.62 per diluted share.
A record quarterly dividend of 39 cents per share was declared, representing a 5.8% increase from the prior quarter.
Microchip
Microchip
Forward Guidance
Microchip expects net sales in the March quarter to be up between 5% and 10% sequentially and anticipates significant revenue growth in calendar year 2021. The company is guiding to a much stronger than seasonal March quarter.
Positive Outlook
- Net sales are expected to be between $1.420 to $1.487 billion.
- GAAP gross margin is projected to be 62.8% to 63.2%.
- Non-GAAP gross margin is expected to be 63.3% to 63.7%.
- Non-GAAP operating income is projected to be 39.7% to 40.5%.
- Non-GAAP earnings per diluted share are expected to be $1.67 to $1.79.
Challenges Ahead
- GAAP operating expenses are projected to be 43.0% to 44.1% of net sales.
- GAAP other expense, net, is expected to be $88.0 to $90.0 million.
- GAAP income tax provision is projected to be $32.1 to $47.2 million.
- GAAP net income is expected to be $146.2 to $162.9 million.
- Microchip's inventory days in the March 2021 quarter are expected to be in the range of 111 to 119 days.