Microchip Announces Record Net Sales for Q1 2014 up 31% from Last Year

Microchip Technology, Inc. reported GAAP net sales for the first quarter of fiscal 2014 June 30, 2013 were $462.8 million, up 7.6% sequentially from net sales of $430.1 million in the immediately preceding quarter, and up 31.4% from net sales of $352.1 million in the prior year’s first fiscal quarter. GAAP net income for the first quarter of fiscal 2014 was $78.6 million, or 37 cents per diluted share, up 31.7% from GAAP net income of $59.7 million, or 28 cents per diluted share, in the immediately preceding quarter, and down 0.2% from GAAP net income of $78.7 million, or 39 cents per diluted share, in the prior year’s first fiscal quarter. In the first quarter of fiscal 2014, GAAP net income included amortization of acquired intangibles of $27.7 million and special charges of $1.7 million.

“We are very pleased with our execution in the June quarter. Our actual net sales exceeded the high end of our upwardly revised guidance we provided on June 3, 2013,” said Steve Sanghi, President and CEO. “We also significantly exceeded the high end of our upwardly revised gross margin guidance and improved our gross margin percentage by 163 basis points sequentially.”

Mr. Sanghi added, “Our non-GAAP operating profit reached 30.5% in the June quarter and we are making good progress towards our long-term goal of 32.5%. Our non-GAAP earnings per share exceeded the mid-point of our original guidance given on May 2, 2013 by 5 cents per share.”

Non-GAAP net income for the first quarter of fiscal 2014 was $120.4 million, or 57 cents per diluted share, up 10.1% from non-GAAP net income of $109.3 million, or 52 cents per diluted share, in the immediately preceding quarter, and up 24.3% from non-GAAP net income of $96.9 million, or 48 cents per diluted share, in the prior year’s first fiscal quarter. For the first quarters of fiscal 2014 and fiscal 2013, 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.

“Our microcontroller net sales grew a strong 8.9% sequentially in the June quarter to achieve an all-time record of $300.3 million,” said Ganesh Moorthy, Chief Operating Officer. “All three microcontroller categories grew revenue significantly with 8-bit getting close to an all-time high. Net sales of our 16-bit products were up 10.1% sequentially to set a new record. Net sales of our 32-bit products were up 26.3% sequentially, also setting a new record.”

Mr. Moorthy added, “Our analog business grew revenue 6.2% sequentially in the June quarter to achieve a new record and continues to perform exceptionally well. Analog revenue represented 22.3% of Microchip’s overall net sales and, at a $413 million annualized sales run rate, has quietly become one of the larger analog franchises in the industry.”

Eric Bjornholt, Microchip’s Chief Financial Officer, said, “We ended the June quarter with $256.1 million in inventory, which represents 119 days. Inventory is within our target model and we have increased manufacturing activities in our factories to support the anticipated growth of our business. Inventory at our distributors was at 32 days at the end of June and remains at very low levels compared to where it has been historically.”

Mr. Sanghi concluded, “The book-to-bill ratio in the June quarter was very strong. We have continued to see very strong bookings and expedite requests in our business driven by strong demand and our design win pipeline, which has provided us with good visibility for the September quarter. We expect Microchip’s total net sales in the September quarter to be up between 2 and 6 percent sequentially.”

Microchip also announced today that its Board of Directors declared a quarterly cash dividend on its common stock of 35.4 cents per share. The quarterly dividend is payable on September 4, 2013 to stockholders of record on August 21, 2013.