Leading semiconductor manufacturer
Microchip Technology Inc.
) reported stellar fourth quarter and full fiscal 2013 results
with record revenues, driven by broad-based growth across all
product lines. The company reported GAAP net income of $59.7
million or 28 cents per share in the fourth quarter of fiscal
2013 compared to $80.6 million or 39 cents per share in the
year-ago quarter. Excluding non-recurring items, adjusted net
income for the reported quarter was $109.3 million or 52 cents
per share, up 15.9% year over year from $94.3 million or 46 cents
per share in the year-earlier quarter. The quarterly adjusted
earnings surpassed the Zacks Consensus Estimate by 10 cents.
For full fiscal 2013, Microchip reported GAAP net income of
$127.4 million or 62 cents per share versus $336.7 million or
$1.65 per share in fiscal 2012. Excluding non-recurring items,
adjusted net income for the reported fiscal was $388.5 million or
$1.89 per share compared to $383.7 million or $1.89 per share in
the prior fiscal.
Microchip generated net revenue of $430.1 million in fourth
quarter fiscal 2013, up 26.9% year over year, aided by a healthy
microcontroller business. The quarterly revenues were well above
the Zacks Consensus Estimate of $423 million. For full fiscal
2013, the company reported net sales of $1.6 billion compared to
$1.4 billion in fiscal 2012, representing a year-over-year
increase of 14.4%.
In terms of product mix, revenue from microcontroller products
accounted for 64.1% of the total revenue in the quarter, while
analog revenue, memory chip and licensing business represented
22.6%, 7.6% and 5.1% of total revenue, respectively. Net sales of
microcontroller products were up 20.5% year over year in the
reported quarter to a record high of $275.8 million, driven by
robust sales of16-bit and 32-bit microcontrollers. While 16-bit
microcontroller business climbed 93% year over year, 32-bit
microcontroller revenues were up a staggering 527% in the
reported quarter compared to the year-ago quarter, driven by new
design wins and applications.
Analog revenues increased 124.4% year over year to achieve record
sales of $97.2 million in the reported quarter. Revenues from
memory business totaled $32.8 million, while licensing revenues
were $22.1 million in fourth quarter fiscal 2013.
Gross margin for the reported quarter was 55.6% versus 57.7% in
the prior-year period, while operating income for fourth quarter
fiscal 2013 was $56.7 million versus $93.9 million in the
With a diligent focus on right-sizing the various components of
inventory holdings, Microchip was able to reduce its inventory
during the quarter to $242.3 million or 116 days. However,
management noted that although inventory purchased from foundries
was significantly low, internally produced inventory was
The company hiked its quarterly cash dividend from 35.30 cents to
35.35 cents per share, representing the 37th dividend increase
since its inception. Cash and investments at fiscal-end 2013 were
$1.84 billion, with $620 million debt under its revolving line of
credit. Free cash flow at quarter-end was $123.3 million prior to
a dividend payment of $69.2 million.
Concurrent with the fourth quarter earnings release, management
provided guidance for the first quarter of fiscal 2014.
Management expects GAAP net sales between $438.7 million and
$456.0 million, while gross margin is expected to be in the range
of 56.0% to 56.5%. GAAP net income is anticipated to be in the
range of $64.2 million to $71.5 million, with earnings per share
of 30 to 34 cents.
Microchip expects to generate net cash of approximately $100
million to $120 million in the first quarter prior to dividend
payment. The company expects to incur $35 million in capital
expenditure in the next quarter, bringing its tally to about $80
million for fiscal 2014.
With better-than-expected bookings and expedite requests in its
business driven by strong demand and robust product designs,
Microchip anticipates to continue its bull run in the coming
quarters. We also remain encouraged by the strong results of the
company and its bullish guidance.
Microchip presently has a Zacks Rank #3 (Hold). Other players in
the industry that are worth mentioning include
Monolithic Power Systems Inc.
ON Semiconductor Corp.
), each carrying Zacks Rank #2 (Buy).
MICROCHIP TECH (MCHP): Free Stock Analysis
MONOLITHIC PWR (MPWR): Free Stock Analysis
ON SEMICON CORP (ONNN): Free Stock Analysis
SEMTECH CORP (SMTC): Free Stock Analysis
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