| (1)
| In millions, except per share amounts and percentages of net sales. |
| (2)
| See the "Use of Non-GAAP Financial Measures" section of this release. |
Net sales for the first quarter of fiscal 2025 were $1.241 billion, down 45.8% from net sales of $2.289 billion in the prior year's first fiscal quarter.
GAAP net income for the first quarter of fiscal 2025 was $129.3 million, or $0.24 per diluted share, down from GAAP net income of $666.4 million, or $1.21 per diluted share, in the prior year's first fiscal quarter. For the first quarters of fiscal 2025 and fiscal 2024, GAAP net income was adversely impacted by amortization of acquired intangible assets associated with our previous acquisitions.
Non-GAAP net income for the first quarter of fiscal 2025 was $289.9 million, or $0.53 per diluted share, down from non-GAAP net income of $905.3 million, or $1.64 per diluted share, in the prior year's first fiscal quarter. For the first quarters of fiscal 2025 and fiscal 2024, our non-GAAP results exclude the effect of share-based compensation, other manufacturing adjustments, 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, and losses on the settlement of debt. For the first quarters of fiscal 2025 and fiscal 2024, 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.
Microchip announced today that its Board of Directors declared a record quarterly cash dividend on its common stock of 45.4 cents per share, up 10.7% from the year ago quarter. The quarterly dividend is payable on September 5, 2024 to stockholders of record on August 22, 2024.
"We delivered June 2024 quarterly results in line with our guidance as we continued to navigate a challenging macro environment in combination with our customers focusing on reducing their inventory positions based on short lead times for our products," said Ganesh Moorthy, President and Chief Executive Officer. "Our strategic cost management actions have helped maintain financial resilience and operational efficiency in the face of a 6.4% sequential revenue decline this quarter."
Mr. Moorthy added, "While the 'green shoots' we observed last quarter have continued, they have not developed as robustly as anticipated. The macro environment particularly for industrial and automotive markets, especially in Europe and the Americas, continues to be weaker than expected, resulting in an extended period over which the inventory correction is playing out. Despite customers’ short-term focus on reducing inventory, we believe that our expanded portfolio, now spanning 8 to 64-bit processors including FPGAs as well as our analog portfolio, positions us well for sustainable, above-market growth across a diverse set of applications."
Eric Bjornholt, Microchip's Chief Financial Officer, said, "Despite market challenges, we have maintained our financial health through proactive cost and balance sheet management. While inventory levels exceeded our target range, which is reflective of broader challenging market conditions, we are confident that this inventory positions us well to service customers with short lead times. We believe that our inventory level along with our investment in capacity will allow us to cost-effectively respond when business conditions improve. Our strategy is designed to balance near-term challenges with long-term growth opportunities."
Mr. Moorthy concluded, "Despite the green shoots we observed last quarter developing slower than expected, we do see additional positive business signals, like an uptick in our Data Center business. While in-quarter orders remain crucial for meeting guidance, as is typical in this high-turns environment, uncertain market conditions add complexity to forecasting. As a result, we anticipate September quarter net sales between $1.12 billion and $1.18 billion. We are navigating these unusual market conditions with a balance of prudence and readiness to be well-positioned to capitalize on upside opportunities. Despite near-term inventory and macro challenges, our design-in pipeline and momentum remains strong across markets, driven by our customers' innovation focus. This design momentum, amplified by our focus on Total System Solutions and key Megatrends, is our engine for long-term growth."
Microchip's Highlights for the Quarter Ended June 30, 2024:
- Acquired Neuronix AI Labs to expand our capabilities for power-efficient, AI-enabled edge solutions deployed on field programmable gate arrays (FPGAs).
- Acquired VSI Co. Ltd. to extend automotive networking portfolio with ASA Motion Link technology to enable next-generation software-defined vehicles.
- Expanded our partnership with TSMC to build resiliency in our supply chain; this initiative will focus on specialized 40nm manufacturing capacity for Microchip at Japan Advanced Semiconductor Manufacturing, Inc. (JASM), TSMC’s majority-owned manufacturing subsidiary.
- Announced that Microchip released its 2023 Sustainability Report highlighting our environmental stewardship and social impact.
- Announced Microchip’s 24th Annual Worldwide MASTERs Conference in Scottsdale, Arizona taking place from August 12–14. MASTERs offers over 60 technical sessions and features a keynote by Microchip’s President and CEO Ganesh Moorthy.
- Introduced ECC608 TrustMANAGER with Kudelski IoT keySTREAM to offer cloud-based software as a service and leverage secure authentication ICs to enable self-service custom PKI, streamlined in-field provisioning and lifecycle management for IoT devices.
- Authorized as a CVE Numbering Authority (CNA) by the Common Vulnerabilities and Exposures (CVE®) Program. Approved CNA partners help identify, define, catalog and publicly disclose cybersecurity vulnerabilities to better protect systems against attacks.
- Launched Integrated Actuation Power Solution consisting of a configurable family of companion driver boards using our Hybrid Power Drive modules available in silicon carbide (SiC) or silicon (Si) technology. The solution aims to simplify the aviation industry’s transition to More Electric Aircraft (MEA).
- Announced the addition of 12 products to our wireless portfolio including Bluetooth® Low Energy modules, system-on-chip (SoC) products and plug-and-play options.
- Released the AVR® DU family of 8-bit microcontrollers with integrated USB connectivity, enhanced security features and higher power delivery than previous iterations.
- Released an early access version of MPLAB® Extensions for VS Code® to provide embedded designers with tools to import projects from MPLAB X Integrated Development Environment (IDE) to VS Code while still accessing Microchip’s debugging and programming support.
- Expanded our maXTouch® technology with the ATMXT2952TD 2.0 family of touchscreen controllers to offer additional security features like cryptographic authentication and data encryption for touchscreen payment systems.
- Introduced a new family of PIC32CK 32-bit microcontrollers with an integrated Hardware Security Module (HSM) and TrustZone® technology to provide designers with a higher level of security and flexibility.
- Released a radiation-tolerant PolarFire® system-on-chip (SoC) FPGA that offers low-power, zero configuration upsets and RISC-V® architecture for space applications.
- Launched radiation-tolerant DC-DC 50-watt power converters to provide high-reliability solution for new space applications. The LE50-28 power converters are available in nine variants with single- and triple-outputs for optimal design configurability.
- Expanded our radiation-tolerant microcontroller portfolio with the 32-bit SAMD21RT Arm® Cortex®-M0+ Based MCU for the aerospace and defense market.
- Released version 2.4 of the TimeProvider® 4100 grandmaster firmware with an embedded BlueSky™ firewall to detect security threats and validate GNSS before using the signal as a time reference.
- Introduced the TimeProvider® XT Extension System for migrating to a modern synchronization and timing systems architecture. Deployed as an accessory device to Microchip’s TimeProvider 4100 grandmaster, the XT scales up to 200 fully redundant T1, E1 or CC synchronization outputs.
- Announced an On-Board Charger Solution (OBC) to help designers speed time to market for their OBC application by supplying the key technologies from Microchip including the control, gate drive and power stage, as well as the connectivity, timing, sensors, memory and security solutions.
- Announced our portfolio of JAN transistors is now tested and qualified to Military-Standard Enhanced Low Dose Radiation Sensitivity (ELDRS) to ensure high reliability for critical applications.
