(2) See the "Use of Non-GAAP Financial Measures" section of this release.
Net sales for the fourth quarter of fiscal 2023 were a record $2.233 billion, up 21.1% from net sales of $1.844 billion in the prior year's fourth fiscal quarter.
GAAP net income for the fourth quarter of fiscal 2023 was $604.0 million, or $1.09 per diluted share, up from GAAP net income of $437.9 million, or $0.77 per diluted share, in the prior year's fourth fiscal quarter. For the fourth quarters of fiscal 2023 and fiscal 2022, GAAP net income was adversely impacted by amortization of acquired intangible assets associated with our previous acquisitions.
Non-GAAP net income for the fourth quarter of fiscal 2023 was a record at $907.8 million, or $1.64 per diluted share, up from non-GAAP net income of $764.6 million, or $1.35 per diluted share, in the prior year's fourth fiscal quarter. For the fourth quarters of fiscal 2023 and fiscal 2022, our non-GAAP results exclude the effect of share-based compensation, expenses related to our acquisition activities (including intangible asset amortization, severance, and other restructuring costs, and legal and other general and administrative expenses associated with acquisitions including legal fees and expenses for litigation and investigations related to our Microsemi acquisition), professional services associated with certain legal matters, non-cash interest expense on our convertible debentures and losses on the settlement of debt. For the fourth quarters of fiscal 2023 and fiscal 2022, our non-GAAP income tax expense is presented based on projected cash taxes for the applicable fiscal year, excluding transition tax payments under the Tax Cuts and Jobs Act. A reconciliation of our non-GAAP and GAAP results is included in this press release.
Net sales for the fiscal year ended March 31, 2023 were a record $8.439 billion, an increase of 23.7% from net sales of $6.821 billion in the prior fiscal year.
GAAP net income for the fiscal year ended March 31, 2023 was $2.238 billion, or $4.02 per diluted share, an increase of 74.1% from net income of $1.286 billion, or $2.27 per diluted share in the prior fiscal year. Fiscal 2023 and fiscal 2022 GAAP net income were significantly adversely impacted by amortization of acquired intangible assets associated with our previous acquisitions and loss on debt settlement associated with our debt refinancing activities.
Non-GAAP net income for the fiscal year ended March 31, 2023 was a record $3.353 billion, an increase of 28.4% from net income of $2.611 billion in the prior fiscal year. Non-GAAP earnings per diluted share for the fiscal year ended March 31, 2023 were $6.02, an increase of 30.6% from the $4.61 per diluted share in the prior fiscal year. See the "Use of Non-GAAP Financial Measures" section of this release.
Microchip announced today that its Board of Directors declared a record quarterly cash dividend on its common stock of 38.3 cents per share, up 38.8% from the year ago quarter. The quarterly dividend is payable on June 5, 2023 to stockholders of record on May 22, 2023.
"We are very pleased with our strong financial and operational performance throughout fiscal 2023 as we continued to deliver on our Microchip 3.0 strategy," said Ganesh Moorthy, President and Chief Executive Officer. "We grew revenue by 23.7% year-over-year to a record $8.4 billion, achieved new records across key non-GAAP operating metrics delivering full-year non-GAAP EPS of $6.02, and increased our capital returned to shareholders through dividends and share repurchases by 76.6% during the fiscal year. The March quarter marked our 10th consecutive quarter of growth and higher profitability."
Mr. Moorthy added, "During the March quarter, we took further actions to position ourselves for a soft landing as lead times continue to improve for many of our products. At the request of customers, we were able to reschedule significant amounts of backlog to later quarters to help customers with their inventory positions, which resulted in building inventory on our balance sheet. Given our very long product life cycles, we see very little obsolescence risk with the higher inventory balances and we believe we are well-positioned to respond to growth when the macro environment strengthens. Longer-term, our total systems solutions strategy combined with our focus on key market megatrends is driving a robust pipeline of new-design opportunities, and we plan to introduce an exciting lineup of innovative new products throughout fiscal 2024 to address the growing demand for our solutions."
Eric Bjornholt, Microchip's Chief Financial Officer, said, "We continued to pay down our debt with another $153.0 million of payments during the March quarter, reflecting a cumulative debt pay down of over $6.3 billion over the past 19 quarters, as we have actively managed the working capital requirements for the business. Our net debt to adjusted EBITDA was 1.45x at the end of the March quarter. We have targeted actions in motion to reduce inventory on our balance sheet by 5 to 10 days in the June quarter, with further reductions planned in fiscal 2024. Our operating model has been, and remains, a strong cash generator and continues to demonstrate significant operating leverage as we execute our Microchip 3.0 strategy."
Steve Sanghi, Microchip's Executive Chair, said, "Microchip’s board of directors approved a record dividend of 38.3 cents per share, which represents a 38.8% year-over-year increase. Given our cash flow generation during the March quarter, we are targeting to return $349.2 million to our shareholders in the June quarter through dividends and share repurchases. Our board remains committed to increasing cash returns to shareholders with the goal of returning 100% of our adjusted free cash flow to shareholders by the March 2025 quarter."
Mr. Moorthy concluded, "Our backlog for the June quarter is strong with more supply becoming available. However, we are also taking active steps to help customers with inventory positions to push out some of their backlog. Considering these factors and the economic backdrop, we expect net sales in the June quarter to be up between 1% and 4% sequentially. At the mid-point of our guidance for the June quarter, net sales would be 16.5% higher than the year-ago quarter."
Microchip's Highlights for the Quarter Ended March 31, 2023:
- Announced an $800 million, multi-year initiative aiming to triple semiconductor production at our Oregon facility. The increased staffing and capital equipment investments are on track to meet expanded production goals.
- Revealed plans to invest $880 million to expand our Silicon Carbide (SiC) and Silicon (Si) capacity in our Colorado facility. Ramping up production at the Colorado Springs fabrication campus will enable us to respond to growing semiconductor demand across a wide swath of industries.
- Introduced a new MPLAB® SiC power simulator that allows customers to test our SiC power solutions in their design phase. The PLECS-based tool quickly evaluates solutions across power-switching topologies before committing design to hardware.
- Announced an all-in-one hybrid power drive module designed for electric aviation applications to reduce development time and weight. The highly integrated and configurable three-phase power module is the first variant of the new family and can be customized using silicon carbide or silicon, reducing power solution size and weight for electric aircraft.
- Expanded our secure authentication IC portfolio with six new security-focused products for accessories and disposables aimed to optimize and scale embedded security across a wide range of industries including IoT, consumer, industrial and automotive.
- Announced an integrated development kit to speed up design of FPGA-based satellite systems. Developers can prototype with the same low-power, high-throughput Radiation-Tolerant (RT) FPGA that will be used in spaceflight.
- Released a radiation-tolerant power management device targeting Low-Earth Orbit (LEO) space applications. Space system developers can quickly develop prototypes and final designs for their power management system with a radiation-tolerant device based on a familiar plastic commercial-off-the-shelf (COTS) device.
- Launched Single Pair Ethernet (SPE) 10BASE-T1S and 100BASE-T1 devices to transform IIoT at the edge and in higher-speed applications. This SPE offering can reduce cost and complexity of IIoT edge devices while supporting higher-speed Ethernet-everywhere architectures and applications.
- Introduced a Power over Ethernet (PoE) switch that adds advanced network and security features for outdoor applications. The PDS-204GCO is the next-generation solution of the popular PDS-104GO and also offers easy installation and environmental protection.
- Partnered with the University of New Hampshire InterOperability Laboratory (UNH-IOL) to expand 1000BASE-T1 PCS and PHY-C automotive compliance testing. We created a development test platform that is compatible with OPEN Alliance Test Plans for 1000BASE-T1 conformance testing to move the automotive industry closer to having complete compliance for chip manufacturers. UNH-IOL is an independent provider of broad-based testing and standards conformance services for the networking industry.
