Microchip Technology Incorporated · NASDAQ:MCHP

Microchip Technology — Bank of America Merrill Lynch 2018 Global Technology Conference

25 slides from Microchip Technology's conference presentation, June 2018

  1. Slide 1: Bank of America Merrill Lynch 2018 Global Technology Conference

    Bank of America Merrill Lynch 2018 Global Technology Conference Eric Bjornholt, Vice President and CFO ©June 2018

  2. Slide 2: Forward Looking Statement Safe Harbor

    Forward Looking Statement Safe Harbor: During the course of this presentation, we will make projections or other forward-looking statements regarding the future financial performance of the company or future events, including our strategy, growth drivers, industry outlook, industry trends, market si

  3. Slide 3: Q1FY19 Business Update

    Q1FY19 Business Update  June quarter net sales guidance excluding Microsemi is growth of 1% to 6%, and non-GAAP EPS of $1.39 to $1.49  We closed the Microsemi acquisition on May 29th; Aggregate borrowing was $8.45B at a blended interest rate of just over 4%  Expect net leverage of ~4.7X on 6/30/2

  4. Slide 4: Corporate Overview

    Corporate Overview  Leading Total Systems Solutions provider: • High-performance standard and specialized Microcontrollers, Digital Signal Controllers and Microprocessors • Mixed-Signal, Analog, Interface and Security solutions • Clock and Timing solutions • Wireless and Wired Connectivity solution

  5. Slide 5: Microchip 2.0: Be The Very Best Embedded Control Solutions Company Ever

    Microchip 2.0 Be The Very Best Embedded Control Solutions Company Ever ©June 2018 5

  6. Slide 6: Microchip 1.0

    Microchip 1.0 1. Consistent growth 2. Perennial market share gains 3. High margin business model 4. Shareholder friendly with consistently increasing dividends and free cash flow 5. Successful M&A strategy ©June 2018 6

  7. Slide 7: Annual Net Sales Growth

    Annual Net Sales Growth 110 consecutive quarters of profitability! $ Million ©June 2018 7

  8. Slide 8: Worldwide Microcontroller Market Share

    Worldwide Microcontroller Market Share 2003 2008 2009 2010 2012 2014 2016 2017 No. Rank Rank Rank Rank Rank Rank Rank Rank 1 Renesas Renesas Renesas Renesas Renesas Renesas Renesas Renesas 2 Motorola NEC NEC Freescale Freescale Freescale NXP NXP 3 NEC Freescale Freescale Samsung Infineon ST-Micro Mi

  9. Slide 9: Total MCU (8/16/32) Market Share %

    Total MCU (8/16/32) Market Share % % ©June 2018 9

  10. Slide 10: Analog Yearly Revenue

    Analog Yearly Revenue $ Million ©June 2018 10

  11. Slide 11: Annual Non-GAAP Net Sales

    Annual Non-GAAP Net Sales $4,000 $3,500 17.9% CAGR $3,000 Millions of Dollars $2,500 $2,000 $1,500 $1,000 $500 $0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 ©June 2018 11

  12. Slide 12: Annual Non-GAAP Gross Profit

    Annual Non-GAAP Gross Profit $2,500 $2,000 Millions of Dollars 18.6% CAGR $1,500 $1,000 $500 $0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18E ©June 2018 12

  13. Slide 13: EBITDA

    EBITDA $1,750 $1,500 Millions of Dollars $1,250 18.3% CAGR $1,000 $750 $500 $250 $0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 *FY18E * FY18 represents Q1 – Q3 FY18 actual results plus Q4 estimate based on midpoint of financial guidance ©June 2018 13

  14. Slide 14: Free Cash Flow as a % of Revenue

    Free Cash Flow as a % of Revenue $1,400,000 42.0% $1,300,000 39.0% $1,200,000 36.0% $1,100,000 33.0% $1,000,000 30.0% $900,000 27.0% $800,000 24.0% $700,000 21.0% $600,000 18.0% $500,000 15.0% $400,000 12.0% $300,000 9.0% $200,000 6.0% $100,000 3.0% $0 0.0% FY12 FY13 FY14 FY15 FY16 FY17 FY18 Free Ca

  15. Slide 15: ~$5B Returned to Shareholders

    ~$5B Billion Returned to Shareholders $400 $1.50 ~ $3.5B in dividends and ~$1.4B in share buy-backs! $350 $1.48 $300 $1.45 Millions of Dollars $250 $1.43 $200 $1.40 $150 $1.38 $100 $1.35 $50 $1.33 $0 $1.30 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Annual Dividends Paid Annual Dividends $ Per

  16. Slide 16: Expanding Our Solutions Through Acquisitions

    Expanding Our Solutions Through Acquisitions HI-TECH Supertex Roving Networks High-Voltage Analog & Development Tools Bluetooth® & Mixed-Signal Products Compiler Advanced Silicon Embedded Wi-Fi® Motor Drive Products ZeroG Micrel Microsemi Hampshire Low-Power LSS Novocell Analog, mixed-signal, Microc

  17. Slide 17: Microsemi – A Strategically and Financially Compelling Transaction

    Microsemi – A Strategically and Financially Compelling Transaction  Strengthens Microchip’s presence in Defense, Aerospace, Data Center and Communications markets  Expands our Ethernet portfolio to serve Industrial IoT, Enterprise and Carrier markets  Adds specialized Microcontrollers to serve th

  18. Slide 18: Microsemi Synergy and Accretion Expectations

    Microsemi Synergy and Accretion Expectations  Transaction is expected to be immediately accretive to our non GAAP earnings per share  Short term: Targeting 18% growth in non-GAAP EPS from FY18 to FY19 with accretion from Microsemi (assumes June 2018 close)  Microsemi adds ~75 cents of non-GAAP EP

  19. Slide 19: Microchip 2.0: Be The Very Best Embedded Control Solutions Company Ever

    Microchip 2.0 Be The Very Best Embedded Control Solutions Company Ever ©June 2018 19

  20. Slide 20: Microchip 2.0

    Microchip 2.0 1. Total System Solution in Embedded Control 2. Leading customer preference to design with our MCUs 3. Multiple growth drivers 4. Record gross margin target with multiple drivers 5. Record low opex 6. End market mix skewed to Industrial and Automotive 7. New LT model with industry lead

  21. Slide 21: Total System Solution Results

    Total System Solution Results Parts/Project in Design Growing at 20%+ year over year FQ2017_3 FQ2017_4 FQ2018_1 FQ2018_2 FQ2018_3 FQ2018_4 ©June 2018 21

  22. Slide 22: Revenue by End Market

    Revenue by End Market Communi- Defense & cation Aerospace 5% 2% Computing 9% Industrial 35% Consumer 24% Automotive 25% ©June 2018 22

  23. Slide 23: Highly Profitable Financial Model

    Highly Profitable Financial Model * Microchip Microsemi Microchip + Long Term Microsemi Model Revenue ($M) $3,977 $1,875 $5,852 Gross Margin (%) 61.4% 63.2% 62.0% 63% R&D (%) 12.1% 18.5% 14.2% 13% SG&A (%) 9.9% 12.5% 10.7% 9.5% Op Income ($M) $1,567 $603 $2,170 Op Income (%) 39.4% 32.2% 37.1% 40.5%

  24. Slide 24: Summary

    Summary  A consistent revenue grower and market share gainer with multiple growth drivers  High margin business model and shareholder friendly  June quarter non-GAAP revenue guided to sequential growth of between 17% and 24%.  Premium long-term non-GAAP financial model (Microchip + Microsemi) of

  25. Slide 25: Thank You!

    MICROCHIP Thank You! CS

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