Microchip Technology Incorporated (MCHP) has reported a 47.74 percent plunge in profit for the quarter ended Sep. 30, 2016. The company has earned $33.92 million, or $0.14 a share in the quarter, compared with $64.90 million, or $0.30 a share for the same period last year. On the other hand, adjusted net income from continuing operations for the quarter stood at $219.61 million, or $0.94 a share compared with $142.91 million or $0.66 a share, a year ago.
Revenue during the quarter surged 60.95 percent to $871.36 million from $541.39 million in the previous year period. Gross margin for the quarter contracted 846 basis points over the previous year period to 47.12 percent. Total expenses were 92.80 percent of quarterly revenues, up from 86.16 percent for the same period last year. That has resulted in a contraction of 664 basis points in operating margin to 7.20 percent.
Operating income for the quarter was $62.76 million, compared with $74.95 million in the previous year period.
However, the adjusted operating income for the quarter stood at $266.34 million compared to $170.08 million in the prior year period. At the same time, adjusted operating margin contracted 85 basis points in the quarter to 30.57 percent from 31.41 percent in the last year period.
"Our September quarter results were outstanding, setting many new records for Microchip. Non-GAAP net sales, gross margin percentage, operating profit percentage, and earnings per share were all above the high end of our updated guidance provided on September 6, 2016," said Steve Sanghi, chairman and chief executive officer. "Our non-GAAP earnings per share were 7 cents per share better than the mid-point of our guidance, up 11.6% sequentially from the June quarter, and up 42.6% from the September quarter a year ago, due to improving sales, gross margin and operating expense leverage, as well as accretion from our acquisition activities. We achieved excellent results both from our core business at Microchip as well as from the Atmel business."
For the third-quarter, Microchip Technology Incorporated expects adjusted revenue to be in the range of $821.40 million to $873.80 million. The company projects adjusted net income to be in the range of $199.30 million to $224.50 million. It expects adjusted operating income to grow in the range of 29.60 percent to 30.70 percent.
Working capital drops significantly
Microchip Technology Incorporated has witnessed a decline in the working capital over the last year. It stood at $911.93 million as at Sep. 30, 2016, down 62.12 percent or $1,495.18 million from $2,407.11 million on Sep. 30, 2015. Current ratio was at 2.58 as on Sep. 30, 2016, down from 7.47 on Sep. 30, 2015.
Days sales outstanding went down to 38 days for the quarter compared with 47 days for the same period last year.
Days inventory outstanding has decreased to 42 days for the quarter compared with 128 days for the previous year period.
Debt moves up
Microchip Technology Incorporated has witnessed an increase in total debt over the last one year. It stood at $3,105.43 million as on Sep. 30, 2016, up 15.53 percent or $417.56 million from $2,687.87 million on Sep. 30, 2015. Microchip Technology has witnessed an increase in long-term debt over the last one year. It stood at $3,105.43 million as on Sep. 30, 2016, up 15.53 percent or $417.56 million from $2,687.87 million on Sep. 30, 2015. Total debt was 43.90 percent of total assets as on Sep. 30, 2016, compared with 46.45 percent on Sep. 30, 2015. Debt to equity ratio was at 1.23 as on Sep. 30, 2016, down from 1.26 as on Sep. 30, 2015.
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