Q1 2025 Microchip Technology Inc Earnings Call Transcript
Key Points
- Microchip Technology Inc (MCHP) reported non-GAAP earnings per diluted share of $0.53, which was $0.01 ahead of the midpoint of their guidance.
- The company continues to generate solid cash flow, with $377.1 million from operating activities and adjusted free cash flow of $301.3 million in the June quarter.
- Microchip Technology Inc (MCHP) announced an increase in their dividend by 10.7% from the year-ago quarter to a record $0.454 per share.
- The company has a strong design-in pipeline across all end markets, mega trends, and key customers, which is expected to drive above-market long-term growth.
- Microchip Technology Inc (MCHP) entered the 64-bit embedded microprocessor market, expanding their product portfolio and addressing high-performance embedded processing applications, including AI-enabled edge solutions.
- Net sales in the June quarter were $1.241 billion, down 6.4% sequentially, reflecting a major inventory correction.
- Non-GAAP gross margins were just below the midpoint of guidance at 59.9%, impacted by capacity underutilization charges of $36 million.
- The company's net debt increased by $183.6 million in the June quarter, with total debt rising by $179 million.
- Microchip Technology Inc (MCHP) expects net sales for the September quarter to be between $1.12 billion and $1.18 billion, indicating continued challenges in the business environment.
- The company is operating with very low backlog visibility and requires a significant amount of turns orders within the quarter to meet guidance, reflecting uncertainty in customer demand.
Greetings and welcome to the Microchip first-quarter fiscal year 2025 financial results conference call. (Operator Instructions). As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Eric Bjornholt, CFO. Please go ahead.
Good afternoon, everyone. During the course of this conference call, we will be making projections and other forward-looking statements regarding future events or the future financial performance of the company.
We wish to caution you that such statements are predictions, and that actual events or results may differ materially. We refer you to our press releases of today as well as our recent filings with the SEC that identify important risk factors that may impact Microchip's business and results of operations.
In attendance with me today are Ganesh Moorthy, Microchip's President and CEO; Steve Sanghi, Microchip's Executive Chair; Rich Simoncic, Microchip's COO; and Sajid Daudi, Microchip's Head of
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