Microchip Technology Inc. reported results for the three months ended December 31, 2016 including GAAP net sales for the third quarter of fiscal 2017 of $834.4 million, up 54.4% from GAAP net sales of $540.3 million in the prior year's third fiscal quarter. GAAP net income from continuing operations for the third quarter of fiscal 2017 was $107.3 million, or 46 cents per diluted share, up from GAAP net income of $61.2 million, or 28 cents per diluted share, in the prior year's third fiscal quarter.
"Our December quarter financial results were extremely strong," said Steve Sanghi, Chief Executive Officer. "Our non-GAAP net sales, gross margin percentage, operating profit percentage and diluted earnings per share all exceeded the high end of our updated guidance provided on November 29, 2016. We were not able to provide GAAP guidance for the December quarter due to our acquisition of Atmel."
Mr. Sanghi added, “As a result of the ‘go live’ of our business system integration for Atmel on January 1, 2017, several of our customers requested early shipment of their product that was originally requested to be delivered in the early part of January. We believe the impact from these customer requests added approximately one percent to our December quarter revenue. Ordinarily we attempt to schedule these business system integrations in the middle of a quarter to minimize the impact on our quarterly revenue results. As a result, investors should view the true end market demand for our products in the fiscal third quarter to be about one percent lower than our reported GAAP and non-GAAP net sales and our fiscal fourth quarter 2017 true end market demand to be about two percent higher than the midpoint of our GAAP and non-GAAP net sales guidance.â€
Mr. Sanghi further added, "Non-GAAP earnings per share was an all-time record and was 14.5 cents per share better than the mid-point of our guidance given on November 29, and up 64.9% from the December quarter of a year ago due to improving sales, gross margin percentage, operating expense leverage and the successful execution of our core business as well as accretion from our acquisitions. GAAP earnings per share was up 62.4% from the December quarter of a year ago."
"Microcontroller revenue was outstanding in the December quarter and represented 63.1% of Microchip’s overall revenue," said Ganesh Moorthy, President and Chief Operating Officer. "We remain pleased with the performance and competitiveness of our 8-bit, 16-bit and 32-bit microcontroller portfolio. We continue to gain market share, and we believe we have the new product momentum and customer engagement to continue to gain even more share, as we further build the best performing microcontroller franchise in the industry."
Mr. Moorthy added, "Our analog business performance was also outstanding and represented 25.9% of Microchip’s overall revenue in the December quarter. We continue to develop and introduce a wide range of innovative and proprietary new linear, mixed-signal, power, interface, timing and security products to fuel the future growth of our analog business."
Eric Bjornholt, Microchip's Chief Financial Officer, said, "The cash flow from operations in the December quarter was a record $290.8 million. As of December 31, 2016, the consolidated cash and total investment position on our balance sheet was $699.7 million."
Mr. Sanghi concluded, "We expect total net sales to be between $872 million and $908 million in the March 2017 quarter. Having achieved non-GAAP operating profit of 32.8% in the December quarter which is very close to our long term target of 33% non-GAAP operating profit, we are revising our long-term operating model. Our long-term non-GAAP operating model used to be 59% gross margin, 26% operating expenses and 33% operating profit. Today we are revising it upwards to 60% non-GAAP gross margin, 24% non-GAAP operating expenses and 36% non-GAAP operating profit. Microchip does not utilize a GAAP long-term operating model.â€
