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Dec 31, 2023
Microchip Q3 2024 Earnings Report
Microchip's performance fell short of guidance due to weaker business conditions, with revenue declining sequentially.
Key Takeaways
Microchip Technology Incorporated reported a decrease in net sales and earnings per share (EPS) for the third quarter of fiscal year 2024, as compared to both the previous quarter and the same quarter last year. The company's performance was impacted by weaker demand, leading to customer shipment cuts and extended shutdowns to manage inventory.
Net sales were $1.766 billion, a decrease of 21.7% sequentially and 18.6% year-over-year.
GAAP EPS was $0.77 per diluted share, while Non-GAAP EPS was $1.08 per diluted share.
The company returned approximately $352.0 million to shareholders through dividends and stock repurchases.
A record quarterly dividend of 45.0 cents per share was declared for the March quarter, a 25.7% increase year-over-year.
Microchip
Microchip
Forward Guidance
Microchip anticipates net sales in the March quarter to be between $1.225 billion and $1.425 billion.
Positive Outlook
- Solutions remain the engine of innovation for the applications and end markets served.
- Focus on Total System Solutions and key market megatrends continue to fuel strong design win momentum.
- Commitment to executing MCHP 3.0 strategic imperatives prioritizes striking a balance between fostering sustainable long-term growth and delivering substantial value to shareholders.
- Highly skilled engineering workforce will allow it to expand rapidly and develop new solutions for a wide range of markets.
- Selectively adding capital equipment to maintain, grow and operate internal manufacturing capabilities to support the expected growth of business.
Challenges Ahead
- Customers may continue to reduce inventory levels in the short-term as they adjust operations and seek to match demand in an increasingly dynamic market.
- Taking steps to limit discretionary spending and tightly manage inventory levels during this downcycle.
- Intend to have two-week shutdowns in large wafer fabrication facilities in each of the March and June quarters and reduced activity in many other factories, resulting in underutilization charges.
- Cautious about demand in the near term given the weak macro environment and customers' ongoing actions to reduce inventory.
- Any continued uncertainty, fluctuations or weakness in the U.S. and world economies