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Microchip (MCHP) Q1 Earnings & Revenues Top Estimates, Up Y/Y

Microchip Technology MCHP reported first-quarter fiscal 2022 non-GAAP earnings of $1.98 per share, which beat the Zacks Consensus Estimate by 6.3% and increased 27% on a year-over-year basis.

Net sales of $1.57 billion increased 19.8% year over year and surpassed the Zacks Consensus Estimate by 0.9%.

Quarter in Detail

In terms of product line, microcontroller revenues were $902.5 million, accounting for 57.5% of revenues. Analog net sales of $432.1 million contributed 27.5% of total revenues.

Geographically, revenues from Americas, Europe and Asia contributed 23.8%, 19.7% and 56.5% to net sales, respectively.

Microchip Technology Incorporated Price, Consensus and EPS Surprise

Microchip Technology Incorporated Price, Consensus and EPS Surprise
Microchip Technology Incorporated Price, Consensus and EPS Surprise

Microchip Technology Incorporated price-consensus-eps-surprise-chart | Microchip Technology Incorporated Quote

Non-GAAP gross margin expanded 310 basis points (bps) on a year-over-year basis to 64.8%.

Non-GAAP research & development expenses, as a percentage of net sales, declined 10 bps year over year to 13.5%. Non-GAAP selling, general & administrative (SG&A) expenses, as a percentage of net sales, stayed at 9.5%.

Non-GAAP operating expenses, as a percentage of net sales, declined 10 bps year over year to 23%.

Consequently, non-GAAP operating margin expanded 320 bps on a year-over-year basis to 41.7%.

Balance Sheet & Cash Flow

As of Jun 30, 2021, cash and short-term investments totaled $279.7 million compared with $282 million as of Mar 31, 2021.

As of Jun 30, 2021, total debt (long-term plus current portion) amounted to $8.5 billion compared with $8.9 billion as of Mar 31, 2021.

Cash flow from operating activities was $629.9 million compared with $449.2 million reported in the prior quarter. The company paid down $388 million of debt in the fiscal first quarter.

Guidance

Microchip forecasts second-quarter fiscal 2022 net sales of $1.616-$1.679 billion. Non-GAAP earnings are anticipated in the range of $2.05-$2.17 per share.

Non-GAAP gross margin is anticipated to be 64.8-65.2%. Non-GAAP operating margin is anticipated in the range of 41.6-42.4%.

Zacks Rank & Stocks to Consider

Microchip currently carries a Zacks Rank #2 (Buy).

Similarly-ranked stocks in the broader technology sector are CyberArk Software CYBR and Arrow Electronics ARW.

A better-ranked stock in the same sector is Avnet AVT, which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Arrow, Avnet and CyberArk are set to report their earnings results on Aug 5, 11 and 12, respectively.


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