Microchip Technology (MCHP) Q4 FY2024 Earnings Miss Revenue Estimates
Summary:
Analog chipmaker Microchip Technology (NASDAQ: MCHP) underperformed Wall Street's revenue expectations for Q4 FY2024, with year-over-year sales declining significantly. The company's guidance for the next quarter also came in below analyst estimates.
Key Highlights:
* Revenue: $1.03 billion (vs. $1.07 billion expected)
* Adjusted EPS: $0.20 (vs. $0.28 expected)
* Revenue guidance (Q1 FY2025): $960 million (vs. $1.06 billion expected)
* Operating margin: 3% (down from 30% last year)
* Free cash flow margin: 24.7% (down from 45% last year)
* Inventory days outstanding: 266 (up from 246 last quarter)
Company Overview:
Microchip Technology provides microcontrollers and integrated circuits primarily for the automotive industry, particularly electric vehicles and charging devices. Analog chip demand is linked to overall economic growth as they are essential components of most electronic devices.
Sales Growth:
Microchip's demand has been weak in the past, with sales declining by an annual rate of 2.1% over the past five years. This performance falls short of industry standards. Recent history shows revenue declines of 23.1% annually over the last two years.
Q4 FY2024 Results:
* Missed revenue estimates by 41.9%
* Reported a year-over-year revenue decline of 27.6% for the next quarter
* Sell-side analysts project flat revenue growth for the next 12 months
Inventory:
Microchip's inventory days outstanding reached 266, significantly higher than its five-year average of 157. This indicates a potential demand slowdown.
Key Takeaways:
* Significant revenue miss and guidance shortfall for the next quarter
* Disappointing results overall
* Stock price declined 4.9% post-earnings
* Longer-term business quality and valuation should also be considered before making investment decisions