Non-GAAP net sales for the second quarter of fiscal 2015 were $546.2 million, up 2.8% sequentially from non-GAAP net sales of $531.3 million in the immediately preceding quarter, and up 10.9% from non-GAAP net sales of $492.7 million in the prior year’s second fiscal quarter. Non-GAAP net income for the second quarter of fiscal 2015 was $150.2 million, or 67 cents per diluted share, down 0.9% from non-GAAP net income of $151.6 million, or 68 cents per diluted share, in the immediately preceding quarter, and up 10.2% from non-GAAP net income of $136.4 million, or 63 cents per diluted share, in the prior year's second fiscal quarter. For the second quarters of fiscal 2015 and fiscal 2014, our non-GAAP results exclude the effect of share-based compensation, expenses related to our acquisition activities (including intangible asset amortization, inventory valuation costs, severance costs, and legal and other general and administrative expenses associated with acquisitions), non-cash interest expense on our convertible debentures, and non-recurring tax events. A reconciliation of our non-GAAP and GAAP results is included in this press release.
Microchip also announced today that its Board of Directors declared a quarterly cash dividend on its common stock of 35.65 cents per share. The quarterly dividend is payable on December 5, 2014 to stockholders of record on November 21, 2014.
"We were disappointed with the level of business activity in the September quarter. The September quarter is usually a back-end weighted quarter because of a traditional weak August due to holidays in various parts of the world," said Steve Sanghi, President and CEO. "The month of September is usually a strong month for our revenue after the summer holiday period. This time, the September sales did not materialize to our expectations leading us to pre-announce our net sales for the quarter on October 9, 2014."
Mr. Sanghi added, "Our net sales, excluding ISSC, were down 0.4% sequentially compared to net sales in the June 2014 quarter. Including the ISSC results for the portion of the time we owned the majority of their outstanding shares added another $16.9 million to revenue pushing the September quarter revenue to an all time record."
"Including revenue from ISSC which will be reported as part of our microcontroller revenue, our overall microcontroller revenue grew 5.2% sequentially in the September quarter and was up 12.7% versus the year ago quarter, achieving a new revenue record," said Ganesh Moorthy, Chief Operating Officer. "Excluding ISSC revenue, microcontroller revenue grew 0.3% sequentially in the September quarter, was up 7.4% from the year ago quarter, and also achieved a new revenue record. Microcontroller revenue represented 66.2% of Microchip's overall revenue in the September quarter."
Mr. Moorthy added, "Excluding revenue from ISSC, our 16-bit microcontroller business was up 8.3% sequentially in the September quarter, also achieving a new record for revenue. 16-bit microcontroller revenue was up 23.3% versus the year ago quarter. This business continues to be an important engine of ongoing growth for us, as we continue to find and serve new customers and new applications with our expanding product portfolio. Excluding any revenue from ISSC, our 32-bit microcontroller business was up 7.6% sequentially in the September quarter, also achieving a new record for revenue. 32-bit microcontroller revenue was also up 38.6% versus the year ago quarter. We are continuing to rapidly expand our new product portfolio, win new designs and expand our presence in new applications to enable further growth in revenue and market share. Our 16-bit and 32-bit businesses are now at a size and growth rate where they are making a meaningful contribution to our overall growth."
Eric Bjornholt, Microchip's Chief Financial Officer, said, "Our net cash generation in the September quarter excluding our acquisition of ISSC, our dividend payment, and our reduction in borrowings was $156.2 million. As of September 30, 2014, our consolidated cash and total investment position was approximately $2.124 billion. The dividend that we announced today marks the 43rd occasion that we have increased our dividend payment, and cumulative dividends paid are $2.37 billion."
Mr. Sanghi concluded, "Having seen most of the market correction in the September quarter, we expect December quarter revenue to be only slightly below typical seasonal levels. We expect our non-GAAP revenue to be down 2% to 7% sequentially in the December quarter."
Microchip's Highlights for the Quarter Ended September 30, 2014:
- Version 1.0 of Microchip's award-winning MPLAB® Harmony Firmware Development Framework was released. It supports development with all 32-bit PIC32 MCUs, and demonstrates that Microchip stands alone in offering embedded designers the production-ready software they need to help ensure that their products ship on time and at top quality. Harmony integrates Microchip and third-party middleware, drivers, peripheral libraries and RTOSs, while accelerating and simplifying the code-development process.
- Microchip demonstrated its continuing 8-bit innovation leadership, with its latest family of low-cost PIC ® microcontrollers. The PIC16LF1554/9 MCUs combine low power and dual ADCs with hardware support for advanced touch-sensing and general-purpose sensor applications.
- The Company also expanded its Human Interface Input Sensing Solutions portfolio with the introduction of its 3DTouchPad, which is both a PC-peripheral reference design and the world's first development platform for 2D multi-touch and 3D air gestures. It provides robust and innovative 3D gesture recognition utilizing Microchip's GestIC ® technology, which offers a detection range of up to 10 cm for touchless air gestures, along with Microchip's highly responsive projected-capacitive 2D multi-touch solution supporting up to 10 touch points and multi-finger surface gestures.
- Microchip continued to enable the rapid growth of embedded wireless connectivity and the Internet of Things, with two new offerings. The PIC32 Bluetooth ® Starter Kit eases the development of Bluetooth enabled products using Microchip's 32-bit microcontrollers, such as thermostats, gaming controllers, barcode scanners and diagnostic systems. Microchip also announced its latest 2.4 GHz 256-QAM RF high-power amplifier-the SST12CP21-which helps Wi-Fi ® access-point, router and set-top-box system designers achieve the maximum data rate and longest range while minimizing current consumption.
- The Company's first Mobile App Developer Specialist, WillowTree Apps, is the latest company to join Microchip's world-class Design Partner Network. WillowTree is an award-winning and experienced iOS, Android™ and Mobile-Web app developer that enables Microchip's customers to focus on the core of their Internet of Things designs and expedite development cycles, while ensuring an excellent mobile-interface experience for their users.
- Microchip continued to expand its comprehensive analog and interface portfolio with two new product families. The zero-drift MCP6N16 grew its instrumentation amplifier product line, and is ideal for applications that require a combination of high performance and precision, low power consumption, and low-voltage operation. The MCP8025/6 three-phase BLDC motor gate drivers grew Microchip's complete motor system solutions, and serve a broad range of automotive and industrial applications.
- In the automotive arena, Microchip introduced its MOST ® ToGo Reference Designs in order to make it easy for designers to learn and implement the proven MOST technology in their infotainment systems. They enable designers to leverage Microchip's extensive experience and focus on their application software development, rather than studying the vast MOST specifications.
- Microchip recently won three prestigious corporate awards. Electronic Design Magazine ranked Microchip #3 in its 2013 list of the "Top 50 Employers in Electronic Design." Selling Power Magazine named Microchip to its annual "50 Best Companies to Sell For" for the second time - remaining the only semiconductor company on the list. Finally, Microchip won the Alfred P. Sloan Award for Excellence in Workplace Effectiveness and Flexibility for the eighth straight year.