Microchip Technology Beats On Q4 Earnings Stemming From Strong Demand, Raises Quarterly Dividend

Microchip Technology Inc MCHP reported fourth-quarter FY21 net sales growth of $10.6% year-on-year to $1.467 billion, beating the analyst consensus of $1.46 billion.
Non-GAAP gross margin expanded 210 basis points to 64.1%, and Non-GAAP operating margin expanded 410 basis points to 40.7%.
The non-GAAP operating income rose 22.9% Y/Y to $596.9 million.
Non-GAAP net income rose 38.9% Y/Y to $521.4 million, with the adjusted EPS of $1.85 beating the analyst consensus of $1.75.
The company generated $449.2 million in operating cash flow and held $282 million in cash and equivalents.
The company raised the quarterly dividend by 5.9% quarter-on-quarter to $0.413, payable on June 4, 2021.
Guidance: Microchip sees a Q1 FY22 net sales outlook of $1.519 billion - $1.577 billion, above the analyst consensus of $1.51 billion. The adjusted EPS outlook of $1.85 - $1.95 came above the consensus of $1.82.
Business conditions remained exceptionally strong through the March quarter with record bookings and backlog for products to be shipped over multiple quarters, CEO Ganesh Moorthy said.
The company continued to reduce debt with another $369.2 million of payments during the March quarter, reflecting a cumulative debt reduction of $3.61 billion over the past 11 quarters, CFO Eric Bjornholt said.
Microchip exchanged $359.2 million of convertible subordinated notes for cash and shares in the March quarter, Bjornholt said.
Rosenblatt analyst Hans Mosesmann maintains Microchip Technology with a 'Buy' rating and raises the price target from $165 to $180.
Price action: MCHP shares traded higher by 1.56% at $148.79 on the last check Friday.

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