Microchip Technology Incorporated · NASDAQ:MCHP

Microchip Technology — Susquehanna Technology, Media and Telecom Conference 2016

23 slides from Microchip Technology's conference presentation, March 2016

  1. Slide 1: Susquehanna Technology, Media and Telecom Conference

    Susquehanna Technology, Media and Telecom Conference Eric Bjornholt, Vice President and CFO ©March 2016

  2. Slide 2: Today's Agenda

    Today’s Agenda  Microchip’s business characteristics 1. Consistent growth 2. Perennial market share gains 3. High margin business model 4. Shareholder friendly with consistently increasing dividends and free cash flow  Microchip’s acquisition strategy has been a success  Breaking out organic vers

  3. Slide 3: Annual Net Sales Growth

    Annual Net Sales Growth 2500 2400 2300 2200 • 101 consecutive quarters of profitability! 2100 2000 1900 MCU Memory Analog Licensing Other 1800 1700 $ Million 1600 1500 1400 1300 1200 1100 1000 900 800 700 600 500 400 300 200 100 0 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06

  4. Slide 4: Total MCU (8/16/32) Market Share %

    Total MCU (8/16/32) Market Share % % ©March 2016 4

  5. Slide 5: Analog Yearly Revenue

    Analog Yearly Revenue (k$) $700,000 $650,000 $600,000 $550,000 $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 FY16 RR FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 ©March 2016 5

  6. Slide 6: Gross Margin % (Non-GAAP)

    Gross Margin % (Non-GAAP*) Higher Utilization Richer Product Mix 64 61.5% Long-term Record GM goal 62 (pre-Atmel) 60 59% Long-term 58 GM goal (post-Atmel) 56 SST 54 Acquisition (%) 52 50 48 Fab 4 Production start Business 46 Worldwide Downturn 44 Financial 42 Crisis 40 Q1FY02 Q2FY02 Q3FY02 Q4FY02 Q1

  7. Slide 7: Dividends and Share Buy-backs: Over $4B Returned to Shareholders

    $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 ©March 2016 Q1FY07 Q2FY07 Q3FY07 Q4FY07 Q1FY08 Q2FY08 Q3FY08 Q4FY08 Q1FY09 Q2FY09 Q3FY09 Q4FY09 Q1FY10 Q2FY10 Q3FY10 Q4FY10 Total Dividend Q1FY11 Q2FY11 Q3FY11 **Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q

  8. Slide 8: Expanding Microchip Solutions Through Acquisitions

    Expanding Microchip Solutions Through Acquisitions Bluetooth® & Embedded Wi-Fi® High-Voltage Analog & Development Tools Motor Drive Mixed-Signal Products Compiler Products Hampshire LSS Low-Power Analog & mixed-signal, Touch Screen Embedded High-Speed Non-volatile Controllers ADCs Memory IP timing,

  9. Slide 9: 6 Yr CAGR Comparison of Net Sales

    6 Yr CAGR Comparison of Net Sales *  Microchip Technology (Total) 17.3%  Microchip Technology (Organic) 8.3%  Linear Technology 8.1%  Analog Devices 8.1%  Semiconductor Industry 6.8%  Silicon Labs 6.5%  Maxim 5.1%  Freescale 4.1%  Texas Instruments 3.7%  Atmel - 0.6% ©March 2016 * See Expl

  10. Slide 10: 5 Yr CAGR Comparison of Net Sales

    5 Yr CAGR Comparison of Net Sales *  Microchip Technology (Total) 9.6%  Silicon Labs 5.5%  Analog Devices 3.4%  Semiconductor Industry 2.4%  Microchip Technology (Organic) 2.1%  Freescale 0.0%  Linear Technology -0.1%  Maxim -0.7%  Texas Instruments -1.4%  Atmel - 6.5% ©March 2016 * See Ex

  11. Slide 11: Explanatory Notes

    Explanatory Notes  Non GAAP Financial Measures: We are using non-GAAP net sales and non-GAAP diluted earnings per share which exclude the items noted below, as applicable, to permit additional analysis of our performance. Our non-GAAP adjustments, where applicable, include the effect of share-based

  12. Slide 12: Cautionary Statement

     Cautionary Statement: Statements about the expected timing, financial impact and effects of the proposed transaction, and other statements in this presentation that are not historical facts, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litiga

  13. Slide 13: Atmel Overview

    Atmel Overview  Synergistic Embedded Control franchise with attractive broad-based product portfolio spanning Microcontroller, Wireless, Touch, Automotive, Security and Memory solutions  Diversified global customer base with over 80% of revenue from Asia and Europe  Diversified channels with ~60%

  14. Slide 14: Strategically and Financially Compelling Transaction

    Strategically and Financially Compelling Transaction  Creates a Microcontroller powerhouse with #3 market share position worldwide  Creates a market leader in IoT by adding to Microchip’s strong IoT solutions more products in wireless including WiFi, Bluetooth, BLE and other RF protocols  Expands

  15. Slide 15: Highly Profitable Financial Model

    Highly Profitable Financial Model * Microchip Atmel Microchip + Long Term Atmel Model Revenue ($M) $2,208 $1,046 $3,254 Gross Margin (%) 57.9% 47.5% 54.6% 59% R&D (%) 16.2% 19.5% 17.3% 14.5% SG&A (%) 12.3% 18.4% 14.3% 11.5% Op Income ($M) $649 $100 $750 Op Income (%) 29.4% 9.6% 23.0% 33% * In millio

  16. Slide 16: Synergy and Accretion Expectations

    Synergy and Accretion Expectations  Transaction is expected to be immediately accretive to our non GAAP earnings per share  Microchip expects to buyback all the shares issued in the transaction subject to market conditions, but will not buy back shares immediately, based on investor concerns on le

  17. Slide 17: Transaction Summary and Financing

    Transaction Summary And Financing  Transaction value of $3.56B representing $8.15/share  $3.4B net of Atmel’s cash, investments and debt at 12/31/2015  Atmel stockholders will receive $7.00/share in cash and $1.15/share in Microchip stock  Transaction is being funded through a combination of: 

  18. Slide 18: Projected Net Debt/EBITDA Ratio With Stock Buyback

    Microchip’s Projected Net Debt/EBITDA Ratio* With Stock Buyback 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 At transaction close End of FY17 End of FY18 End of FY19 Total Net Debt/EBITDA Senior Net Debt/EBITDA *Includes projected cash and investments on Microchip’s balance sheet and assumes stock is

  19. Slide 19: Projected Net Debt/EBITDA Ratio Without Stock Buyback

    Microchip’s Projected Net Debt/EBITDA Ratio* Without Stock Buyback 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 At transaction close End of FY17 End of FY18 End of FY19 Total Net Debt/EBITDA Senior Net Debt/EBITDA *Includes projected cash and investments on Microchip’s balance sheet and assumes stock

  20. Slide 20: Microchip Vision and Growth Strategy

    Microchip Vision and Growth Strategy Our Vision Be The Very Best Embedded Control Solutions Company Ever Our Strategy • Enable the growing market for Smart, Connected and Secure solutions for Automotive, Industrial, Office Automation, Consumer and Telecom markets • Be a powerhouse solutions provider

  21. Slide 21: Summary

    Summary  Atmel acquisition is a strong strategic fit aligned with our vision and strategy  Adds operational and customer scale in a consolidating industry  Creates significant stockholder value from strong non GAAP EPS accretion  Atmel acquisition is the next step in Microchip’s track record of

  22. Slide 22: MCHP Financial Information Consolidated

    MCHP Financial Information Consolidated Actual Guidance Q4FY16 Long-Term Actual Guidance Model With Dec. 31, 2015 Mar. 31, 2016 Atmel Net Sales ($MM Non-GAAP) $552.0 $552.0 – 568.5 Gross Margin* 57.9% 57.9% - 58.1% ~ 59% Operating Expenses* (% of Sales) 28.4% 27.3% - 27.9% ~ 26% Operating Profit 29.

  23. Slide 23: Thank You!

    MICROCHIP Thank You!

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