Slide 1: Investor Presentation Fiscal Fourth Quarter and Full Year 2023
Investor Presentation Fiscal Fourth Quarter and Full Year 2023 A Leading Provider of Smart, Connected and Secure Embedded Solutions
Slide 2: Safe Harbor
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 (including our guidance) or future events, including our strategy, growth drivers, industr
Slide 3: Corporate Overview
Corporate Overview Leading Total Systems Solutions Provider • High-performance standard and specialized • Wireless and Wired Connectivity solutions Mixed Signal Microcontroller, Digital Signal • FPGA solutions Controller and Microprocessor solutions • Non-volatile EEPROM and Flash Memory • Mixed-Sig
Slide 4: Revenue By End Market
Revenue By End Market FY22 Durable End Markets FY23 14% 12% 11% 11% 40% 41% 17% 17% 18% 19% Industrial Data Center & Computing Automotive Communication Consumer Appliance
Slide 5: Net Sales Growth
Net Sales Growth 9,000 130 Consecutive Quarters of Non-GAAP Profitability! 8,000 7,000 $ Million 6,000 16.4% CAGR 5,000 4,000 3,000 2,000 1,000 0 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Slide 6: Fourth Quarter FY2023 Revenue Mix
Fourth Quarter FY2023 Revenue Mix Net Sales by Product Line Net Sales by Geography Net Sales by Channel Other Europe 24% Direct 14% 51% Mixed Americas Analog Signal 26% 28% MCUs Asia Distribution 58% 50% 49% ➢ Sustained growth from organic efforts focused on TSS and Megatrends ➢ Synergistic product
Slide 7: Record Fiscal 4th Quarter 2023 Results (non-GAAP)
Record Fiscal 4th Quarter 2023 Results (non-GAAP) ➢ Record revenue of $2.23 billion; grew 2.9% QoQ and 21.1% YoY ‒ 10 consecutive quarters of revenue growth ➢ Record gross margin of 68.3%; increased 171 basis points YoY ➢ Record operating margin of 47.6%; increased ~292 basis points YoY ➢ Record ear
Slide 8: Record Fiscal Year 2023 Results (non-GAAP)
Record Fiscal Year 2023 Results (non-GAAP) ➢ Record revenue of $8.44 billion; grew 23.7% YoY ‒ Mixed Signal MCU’s grew 24.7%, Analog grew 22.6%, and FPGA’s grew 31% ➢ Record gross margin of 67.8%; increased 210 basis points YoY ➢ Record operating margin of 46.9%; increased 340 basis points YoY ➢ Rec
Slide 9: Fiscal 1st Quarter 2024 Guidance (non-GAAP)
Fiscal 1st Quarter 2024 Guidance (non-GAAP)* Q4 FY23 Q1 FY24 Guide Long Term Actual @ mid-point Model $2,232.7 $2,288.5 FY22 – 26 CAGR Revenue ($ Million) 2.9% QoQ 2.5% QoQ of 10% to 15% 21.1% YoY 16.5% YoY Gross Margins 68.3% 68.4% 67.5% to 68.5% Operating Expenses 20.7% 20.3% 22.5% to 23.5% Operat
Slide 10: Navigating a Soft Landing
Navigating a Soft Landing ➢ Strong PSP (≥ 12 months NCNR) backlog that is >>50% of our total backlog ➢ Growing base of multi-year supply agreements with several large customers ➢ Significant cushion from near term unsupported backlog that is greater than 100% of quarterly supported backlog ‒ Activel
Slide 11: Semi Industry Sales YoY Growth Through Cycles
Semi Industry Sales YoY Growth Through Cycles 35% 30% 25% Semi Industry Sales Y/Y 20% Growth Rates 15% 10% 5% 0% -5% -10% -15% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Semi Sales Y/Y % Chg. Semi Sales Y/Y Growth is sourced from SIA CY2022 est. annual global sal
Slide 12: Strong Cash Generation Through Cycles
Strong Cash Generation Through Cycles 35% 30% 23.4% $3,150 10-Year $2,650 25% ADJ. FCF* Semi Industry Sales Y/Y Growth Rates $2,150 Adj. Microchip Free Cash Flow* 20% CAGR $1,650 15% $1,150 ($ in millions) 10% $650 5% $150 0% -5% -$350 -10% -$850 -15% -$1,350 2007 2008 2009 2010 2011 2012 2013 2014
Slide 13: Resilient Profitability Through Cycles
Resilient Profitability Through Cycles 35% 70% MCHP LT Non-GAAP Gross Margin Target* 30% 68% 67.8% Semi Industry Sales Y/Y Growth Rates 25% 66% Microchip NG Gross Margin % 20% 64% 62.0% 62.8% 15% 60.4% 60.9% 62% 60.1% 58.8% 61.1% 61.9% 10% 60% 57.4% 58.1% 5% 57.9% 58.8% 58% 58.2% 57.2% 57.6% 0% 56%
Slide 14: Improving Efficiency Through Cycles
Improving Efficiency Through Cycles 35% 50% 46.9% 30% MCHP LT Non-GAAP Operating Margin Target* 45% Trough Non-GAAP Operating Margin Semi Industry Sales Y/Y Growth Rates 25% Microchip NG Operating Margin % 40% 20% 36.1% 35.9% 39.6% 38.7% 35% 15% 32.3% 36.2% 34.9% 31.8% 31.0% 37.1% 10% 32.4% 31.6% 30
Slide 15: Microchip Organic Growth Strategy
Microchip Organic Growth Strategy ➢ Focus on Total System Solutions (TSS) ‒ Diversified portfolio of Smart, Connected and Secure Solutions ‒ Software, firmware, reference designs to speed customer’s time to market ➢ Provide solutions in Megatrend growth areas ‒ Drives growth ≥ 2X corporate growth Em
Slide 16: Empowering Innovation In Diverse, Durable Markets
Empowering Innovation In Diverse, Durable Markets Consumer Industrial Space Sustainability Automotive Medical Data Center Defense Communication Infrastructure Aviation 16
Slide 17: Providing Total System Solutions
Providing Total System Solutions Portfolio of Hardware, Software and Services Power Management RFICs MMICs DC-DC Converters Encryption Supervisors & Ref. & High Voltage Precision LDOs, Battery Mgt. Digital Security I/Os Voltage Discretes & Modules Potentiometer Reference Motor Sensors Drivers Amplif
Slide 18: Market Megatrends
Market Megatrends Industrial 5G IoT/Edge Computing Computing Data Centers Automotive E-Mobility Communications Sustainability Consumer ADAS/Autonomous Driving 18
Slide 19: Consistent, Disciplined and Balanced Capital Return Strategy
Consistent, Disciplined and Balanced Capital Return Strategy ‒ Actively reducing debt after increasing leverage for M&A Debt Paydown ‒ 19 consecutive quarters of debt paydown Adjusted Free Cash $6.3 Billion ‒ Current leverage ratio of 1.45x Flow (FCF)* ‒ 83 consecutive quarters of Generation Dividen
Slide 20: Microchip 3.0
Microchip 3.0 Elite long-term non-GAAP Sustained growth from 5-year Organic Revenue business model of organic efforts focused on CAGR of 10% - 15% using 67.5% - 68.5% Gross Margin TSS and Megatrends FY21 as baseline 44% - 46% Operating Margin Adjusted EBITDA Margin Diversified end-market mix Investm
Slide 21: Microchip's Winning Formula
Microchip’s Winning Formula Grow revenue Generate significant ~10% - 15% Extend our strong cash and increase organically while foundation built on capital returned to significantly culture and owners to 100% of expanding gross and sustainability Adj. Free Cash Flow operating margins Delivering Diffe
Slide 22: Thank You
THANK YOU A Leading Provider of Smart, Connected and Secure Embedded Control Solutions