© alexan24 dreamstime.com Components | November 12, 2012
Microchip with record net sales
Microchip Technology Incorporated (NASDAQ: MCHP), a leading provider of microcontroller, mixed-signal, analog and Flash-IP solutions, today reported results for the three months ended September 30, 2012 as summarized in the following table:
Consolidated non-GAAP net sales for the second quarter of fiscal 2013 were a record $407.8 million, up 15.7% sequentially from non-GAAP net sales of $352.4 million in the immediately preceding quarter, and up 19.7% from non-GAAP net sales of $340.6 million in the prior year’s second fiscal quarter. Non-GAAP net sales in the second quarter of fiscal 2013 were $24.5 million higher than GAAP net sales due to the sell-through of inventory held by distributors of SMSC and Roving Networks at the date we acquired these companies not being included in our GAAP results. Consolidated non-GAAP net income for the second quarter of fiscal 2013 was $97.7 million, or 48 cents per diluted share, up 0.9% from non-GAAP net income of $96.9 million, or 48 cents per diluted share, in the immediately preceding quarter, and up 5.6% from non-GAAP net income of $92.6 million, or 46 cents per diluted share, in the prior year’s second fiscal quarter. For the second quarters of fiscal 2013 and fiscal 2012, our non-GAAP results exclude the effect of share-based compensation, expenses related to our acquisition activities (including intangible asset amortization, inventory valuation costs, restructuring costs, earn out adjustments and legal and other general and administrative expenses associated with acquisitions), the settlement of certain legal matters of Silicon Storage Technology, Inc. (which we acquired in April 2010), and non-cash interest expense on our convertible debentures. A reconciliation of our non-GAAP and GAAP results is included in this press release. “Our September quarter results were slightly lower than what we had guided during our last earnings call and were consistent with the preliminary results we announced on October 15th,” said Steve Sanghi, President and CEO. “The macro environment continued to be very weak during the quarter. The negative effects of the European markets and weaker economic activity in the U.S. and China led us to finish the quarter slightly lower than we expected.” Mr. Sanghi added, “Our consolidated results including SMSC had several major highlights. First, our overall business achieved an all time record in non-GAAP net sales of $407.8 million. Second, our overall microcontroller revenue achieved a new record. Last but not least, our overall analog business also achieved a record, and at 21.2% of our revenue was the highest it has ever been.” “Our 16-bit microcontroller business (excluding SMSC) was up 28.8% from the year ago quarter, although it was down 7.8% sequentially,” said Ganesh Moorthy, Chief Operating Officer. “Coming on the heels of several strong growth quarters, and the achievement of record revenue in the June quarter, we believe the softness seen last quarter is reflective of the weak macro environment. Combining the 16-bit microcontroller revenue from SMSC with Microchip’s 16-bit microcontroller revenue, this business achieved an all-time record for net sales.” Mr. Moorthy continued, “Our 32-bit microcontroller business (excluding SMSC) was up 97% from the year ago quarter and down only 0.5% sequentially, demonstrating continuing strong share gains for the business. Combining the 32-bit microcontroller revenue from SMSC with Microchip’s 32-bit MCU revenue, this business also achieved an all time record for revenue.” Mr. Moorthy concluded, “Our analog business (excluding SMSC) bucked the trend and grew 1.9% sequentially to achieve a new record, and performed exceptionally well in the current environment. Our analog business was also up 13.7% compared to the year-ago quarter.” Eric Bjornholt, Microchip’s Chief Financial Officer, said, “We have cut the wafer starts in our fabrication facilities to help curb the growth of excess inventory related to the adverse business environment. The reduction in wafer starts will have a negative impact on our gross margin in the December quarter and is reflected in our guidance provided today. Our inventory at September 30, 2012 was $289.5 million, representing 140 days of inventory. The inventory balance includes $26.2 million of fair value write-up as required for GAAP accounting purposes related to the SMSC acquisition. Inventory at our distributors is at record low levels of about 31 days.” Mr. Sanghi concluded, “We are continuing to see a very weak global macroeconomic environment. We believe that the worldwide GDP growth is decelerating. We are seeing weakness in our SMSC business as well as Microchip’s microcontroller, analog and memory businesses based on the economic and business environments. However, in the December quarter, we will have three months of SMSC business versus two months last quarter, which is expected to take our net sales to a new record high at the midpoint of our guidance. Taking these factors into consideration, we expect Microchip’s total net sales including SMSC to be $396 million to $426 million.”
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