Microchip Technology Announces Financial Results For Fourth Quarter and Fiscal Year 2025

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MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(in millions, except per share amounts)     Three Months Ended March 31, Twelve Months Ended March 31,  2025   2024   2025   2024 Net sales$                    970.5  $                 1,325.8  $                 4,401.6  $                 7,634.4 Cost of sales                        469.4                          535.9                      1,933.7                      2,638.7 Gross profit                        501.1                          789.9                      2,467.9                      4,995.7         Research and development                        255.2                          240.3                          983.8                      1,097.4 Selling, general and administrative                        152.0                          161.8                          617.7                          734.2 Amortization of acquired intangible assets                        122.6                          151.2                          490.9                          605.4 Special charges (income) and other, net                          71.6                          (16.9)                           79.2                          (12.3)Operating expenses                        601.4                          536.4                      2,171.6                      2,424.7         Operating (loss) income                      (100.3)                         253.5                          296.3                      2,571.0         Other expense, net                        (68.0)                         (53.8)                       (257.4)                       (205.1)(Loss) income before income taxes                      (168.3)                         199.7                            38.9                      2,365.9 Income tax (benefit) provision                        (13.7)                           45.0                            39.4                          459.0 Net (loss) income                      (154.6)                         154.7                            (0.5)                     1,906.9 Dividends on preferred stock                          (2.2)                               —                            (2.2)                               — Net (loss) income attributable to common stockholders$                   (156.8) $                    154.7  $                       (2.7) $                 1,906.9         Basic net (loss) income per common share$                     (0.29) $                       0.29  $                     (0.01) $                       3.52 Diluted net (loss) income per common share$                     (0.29) $                       0.28  $                     (0.01) $                       3.48         Basic common shares outstanding                        538.2                          538.9                          537.3                          542.0 Diluted common shares outstanding                        538.2                          544.8                          537.3                          548.0                  MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(in millions) ASSETS March 31, March 31,  2025  2024Cash and short-term investments$                      771.7 $                      319.7Accounts receivable, net                          689.7                       1,143.7Inventories                      1,293.5                       1,316.0Other current assets                          236.4                           233.6Total current assets                      2,991.3                       3,013.0    Property, plant and equipment, net                      1,183.7                       1,194.6Other assets                    11,199.6                     11,665.6Total assets$                 15,374.6 $                 15,873.2    LIABILITIES AND STOCKHOLDERS' EQUITY    Accounts payable and accrued liabilities$                   1,155.1 $                   1,520.0Current portion of long-term debt                                —                           999.4Total current liabilities                      1,155.1                       2,519.4    Long-term debt                      5,630.4                       5,000.4Long-term income tax payable                          633.4                           649.2Long-term deferred tax liability                            33.8                             28.8Other long-term liabilities                          843.6                       1,017.6    Stockholders' equity                      7,078.3                       6,657.8Total liabilities and stockholders' equity$                 15,374.6 $                 15,873.2       MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIESRECONCILIATION OF GAAP TO NON-GAAP MEASURES(in millions, except per share amounts and percentages; unaudited) RECONCILIATION OF GAAP GROSS PROFIT TO NON-GAAP GROSS PROFIT  Three Months Ended March 31, Twelve Months Ended March 31,  2025   2024   2025   2024 Gross profit, as reported$501.1  $789.9  $2,467.9  $4,995.7 Share-based compensation expense 3.5   5.4   21.8   25.6 Cybersecurity incident expenses —   —   20.1   — Other manufacturing adjustments —   4.3   —   4.3 Non-GAAP gross profit$504.6  $799.6  $2,509.8  $5,025.6 GAAP gross profit percentage 51.6%  59.6%  56.1%  65.4%Non-GAAP gross profit percentage 52.0%  60.3%  57.0%  65.8%                 RECONCILIATION OF GAAP RESEARCH AND DEVELOPMENT EXPENSES TO NON-GAAP RESEARCH AND DEVELOPMENT EXPENSES  Three Months Ended March 31, Twelve Months Ended March 31,  2025   2024   2025   2024 Research and development expenses, as reported$255.2  $240.3  $983.8  $1,097.4 Share-based compensation expense (25.6)  (23.3)  (104.6)  (94.3)Other adjustments —   —   —   (0.5)Non-GAAP research and development expenses$229.6  $217.0  $879.2  $1,002.6 GAAP research and development expenses as a percentage of net sales 26.3%  18.1%  22.4%  14.4%Non-GAAP research and development expenses as a percentage of net sales 23.7%  16.4%  20.0%  13.1%                 RECONCILIATION OF GAAP SELLING, GENERAL AND ADMINISTRATIVE EXPENSES TO NON-GAAP SELLING, GENERAL AND ADMINISTRATIVE EXPENSES  Three Months Ended March 31, Twelve Months Ended March 31,  2025   2024   2025   2024 Selling, general and administrative expenses, as reported$152.0  $161.8  $617.7  $734.2 Share-based compensation expense (11.6)  (14.1)  (54.0)  (57.6)Cybersecurity incident expenses —   —   (1.3)  — Other adjustments —   (0.8)  (7.3)  (1.3)Professional services associated with certain legal matters (1.4)  (0.3)  (2.5)  (1.5)Non-GAAP selling, general and administrative expenses$139.0  $146.6  $552.6  $673.8 GAAP selling, general and administrative expenses as a percentage of net sales 15.7%  12.2%  14.0%  9.6%Non-GAAP selling, general and administrative expenses as a percentage of net sales 14.3%  11.1%  12.6%  8.8%                 RECONCILIATION OF GAAP OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES  Three Months Ended March 31, Twelve Months Ended March 31,  2025   2024   2025   2024 Operating expenses, as reported$601.4  $536.4  $2,171.6  $2,424.7 Share-based compensation expense (37.2)  (37.4)  (158.6)  (151.9)Cybersecurity incident expenses —   —   (1.3)  — Other adjustments —   (0.8)  (7.3)  (1.8)Professional services associated with certain legal matters (1.4)  (0.3)  (2.5)  (1.5)Amortization of acquired intangible assets (1) (122.6)  (151.2)  (490.9)  (605.4)Special charges (income) and other, net (71.6)  16.9   (79.2)  12.3 Non-GAAP operating expenses$368.6  $363.6  $1,431.8  $1,676.4 GAAP operating expenses as a percentage of net sales 62.0%  40.5%  49.3%  31.8%Non-GAAP operating expenses as a percentage of net sales 38.0%  27.4%  32.5%  22.0%                 (1) Amortization of acquired intangible assets consists of core and developed technology and customer-related acquired intangible assets in connection with business combinations.

Cautionary Statement: The statements in this release relating to our belief that this marks the bottom of this prolonged industry down cycle for Microchip, that the decisive actions we have taken are enhancing our operational capabilities through more efficient manufacturing, improving inventory management, and a renewed strategic focus, that we believe Microchip is better positioned to capitalize on growth opportunities as market conditions evolve, that we expect even more substantial inventory reduction in the June quarter as our manufacturing optimization actions are near completion, that our financing actions are helping to maintain our investment grade rating, that we believe these strategic financial moves, alongside our disciplined cost management initiatives, position us well to navigate current market challenges while maintaining financial flexibility for future growth, that our strategic initiatives continue to deliver value across markets, our commitment to innovation, that  we believe we are well-positioned to address emerging opportunities in automotive, industrial, and e-mobility markets while accelerating our customers' development cycles, that we have clearly reached an inflection point, that we expect our net sales in the June 2025 quarter to be between $1.020 billion and $1.070 billion, that our focus is on translating the momentum we are seeing on our business into enhanced shareholder value while maintaining our dividend commitment as we return to growth, our first quarter fiscal 2026 guidance for net sales and GAAP and non-GAAP gross profit, operating expenses, operating income, other expense, net, income tax (benefit) provision, net (loss) income, dividends on preferred stock, net (loss) income attributable to common stockholders, diluted common shares outstanding, diluted net (loss) per common share, capital expenditures for the June 2025 quarter and for all of fiscal 2026, adding capital equipment to selectively expand our production capacity and add research and development equipment, our belief that non-GAAP measures are useful to investors and our assumed average stock price in the June 2025 quarter are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

RECONCILIATION OF GAAP OTHER EXPENSE, NET TO NON-GAAP OTHER EXPENSE, NET  Three Months Ended March 31, Twelve Months Ended March 31,  2025   2024   2025   2024 Other expense, net, as reported$(68.0) $(53.8) $(257.4) $(205.1)Loss on settlement of debt 1.4   —   1.7   12.2 Loss on available-for-sale investments 1.7   —   3.5   — Non-GAAP other expense, net$(64.9) $(53.8) $(252.2) $(192.9)GAAP other expense, net, as a percentage of net sales(7.0) % (4.1) % (5.8) % (2.7) %Non-GAAP other expense, net, as a percentage of net sales(6.7) % (4.1) % (5.7) % (2.5) %         RECONCILIATION OF GAAP INCOME TAX (BENEFIT) PROVISION TO NON-GAAP INCOME TAX PROVISION  Three Months Ended March 31, Twelve Months Ended March 31,  2025   2024   2025   2024 Income tax (benefit) provision as reported$(13.7) $45.0  $39.4  $459.0 Income tax rate, as reported 8.1%  22.5%  101.3%  19.4%Other non-GAAP tax adjustment 23.4   26.9   77.6   (0.3)Non-GAAP income tax provision$9.7  $71.9  $117.0  $458.7 Non-GAAP income tax rate 13.6%  18.8%  14.2%  14.5%                 RECONCILIATION OF GAAP NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS AND GAAP DILUTED NET (LOSS) INCOME PER COMMON SHARE TO NON-GAAP NET INCOME AND NON-GAAP DILUTED NET INCOME PER COMMON SHARE  Three Months Ended March 31, Twelve Months Ended March 31,  2025   2024   2025   2024 Net (loss) income attributable to common stockholders, as reported$(156.8) $154.7  $(2.7) $1,906.9 Dividends on preferred stock 2.2   —   2.2   — Share-based compensation expense 40.7   42.8   180.4   177.5 Cybersecurity incident expenses —   —   21.4   — Other adjustments —   0.8   7.3   1.8 Professional services associated with certain legal matters 1.4   0.3   2.5   1.5 Other manufacturing adjustments —   4.3   —   4.3 Amortization of acquired intangible assets 122.6   151.2   490.9   605.4 Special charges (income) and other, net 71.6   (16.9)  79.2   (12.3)Loss on settlement of debt 1.4   —   1.7   12.2 Loss on available-for-sale investments 1.7   —   3.5   — Other non-GAAP tax adjustment (23.4)  (26.9)  (77.6)  0.3 Non-GAAP net income$61.4  $310.3  $708.8  $2,697.6 GAAP net (loss) income attributable to common stockholders as a percentage of net sales(16.2)%  11.7% (0.1)%  25.0%Non-GAAP net income as a percentage of net sales 6.3%  23.4%  16.1%  35.3%Diluted net (loss) income per common share, as reported$(0.29) $0.28  $(0.01) $3.48 Non-GAAP diluted net income per common share$0.11  $0.57  $1.31  $4.92 Diluted common shares outstanding, as reported 538.2   544.8   537.3   548.0 Diluted common shares outstanding non-GAAP 543.5   544.8   542.5   548.0                  RECONCILIATION OF GAAP DILUTED COMMON SHARES OUTSTANDING TO NON-GAAP DILUTED COMMON SHARES OUTSTANDING  Three Months Ended March 31, Twelve Months Ended March 31, 2025 2024 2025 2024Diluted common shares outstanding, as reported                       538.2                        544.8                        537.3                        548.0Dilutive effect of RSUs(1)                           2.7                              —                            4.0                              —Dilutive effect of 2015 Senior Convertible Debt(1)                             —                              —                            0.1                              —Dilutive effect of 2017 Senior Convertible Debt(1)                           0.3                              —                            0.5                              —Dilutive effect of preferred stock(1)                           2.3                              —                            0.6                              —Diluted common shares outstanding non-GAAP                       543.5                        544.8                        542.5                        548.0         (1)The non-GAAP adjustment includes the impact that is anti-dilutive on a GAAP basis for the fiscal quarter ended March 31, 2025 and fiscal year ended March 31, 2025 as the Company generated a GAAP net loss in the respective periods.

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Author / Journalist: Microchip Technology Inc.

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Published On: 2025-05-08 @ 20:15:00 (11 hours ago)

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