Microchip Technology Incorporated (MCHP) has reported a 75.09 percent jump in profit for the quarter ended Dec. 31, 2016. The company has earned $107.18 million, or $0.46 a share in the quarter, compared with $61.21 million, or $0.28 a share for the same period last year. On the other hand, adjusted net income from continuing operations for the quarter stood at $246.55 million, or $1.05 a share compared with $138.44 million or $0.64 a share, a year ago.
Revenue during the quarter surged 54.41 percent to $834.37 million from $540.34 million in the previous year period. Gross margin for the quarter expanded 159 basis points over the previous year period to 55.76 percent. Total expenses were 85.85 percent of quarterly revenues, down from 85.91 percent for the same period last year. This has led to an improvement of 6 basis points in operating margin to 14.15 percent.
Operating income for the quarter was $118.07 million, compared with $76.13 million in the previous year period.
However, the adjusted operating income for the quarter stood at $289.09 million compared to $162.60 million in the prior year period. At the same time, adjusted operating margin improved 455 basis points in the quarter to 34.65 percent from 30.09 percent in the last year period.
"Our December quarter financial results were extremely strong," said Steve Sanghi, chief executive officer. "Our non-GAAP net sales, gross margin percentage, operating profit percentage and diluted earnings per share all exceeded the high end of our updated guidance provided on November 29, 2016. We were not able to provide GAAP guidance for the December quarter due to our acquisition of Atmel." Mr. Sanghi added, "As a result of the "go live" of our business system integration for Atmel on January 1, 2017, several of our customers requested early shipment of their product that was originally requested to be delivered in the early part of January. Ordinarily we attempt to schedule these business system integrations in the middle of a quarter to minimize the impact on our quarterly revenue results. As a result, investors should view the true end market demand for our products in the fiscal third quarter to be about one percent lower than our reported GAAP and non-GAAP net sales and our fiscal fourth quarter 2017 true end market demand to be about two percent higher than the midpoint of our GAAP and non-GAAP net sales guidance."
For the fourth-quarter 2017, Microchip Technology Incorporated expects revenue to be in the range of $872 million to $908 million and expects adjusted revenue to be in the range of $872 million to $908 million. The company forecasts net income to be in the range of $170.10 million to $194.40 million and projects adjusted net income to be in the range of $241 million to $266.40 million. The company expects operating income to grow in the range of 20 percent to 21.60 percent and expects adjusted operating income to grow in the range of 33 percent to 34.40 percent. It projects diluted earnings per share to be in the range of $0.71 to $0.81. On an adjusted basis, the company projects diluted earnings per share to be in the range of $1.01 to $1.11.
Working capital declines
Microchip Technology Incorporated has witnessed a decline in the working capital over the last year. It stood at $1,025.20 million as at Dec. 31, 2016, down 20.45 percent or $263.61 million from $1,288.81 million on Dec. 31, 2015. Current ratio was at 2.57 as on Dec. 31, 2016, down from 4.75 on Dec. 31, 2015.
Days sales outstanding went down to 42 days for the quarter compared with 45 days for the same period last year.
Days inventory outstanding has decreased to 52 days for the quarter compared with 127 days for the previous year period.
Debt increases substantially
Microchip Technology Incorporated has witnessed an increase in total debt over the last one year. It stood at $3,123.99 million as on Dec. 31, 2016, up 29.82 percent or $717.52 million from $2,406.47 million on Dec. 31, 2015. Microchip Technology Incorporated has witnessed an increase in long-term debt over the last one year. It stood at $3,123.99 million as on Dec. 31, 2016, up 29.82 percent or $717.52 million from $2,406.47 million on Dec. 31, 2015. Total debt was 43.73 percent of total assets as on Dec. 31, 2016, compared with 44.18 percent on Dec. 31, 2015. Debt to equity ratio was at 1.22 as on Dec. 31, 2016, up from 1.13 as on Dec. 31, 2015.
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