Slide 1: Investor Presentation First Quarter Fiscal Year 2023
Investor Presentation First Quarter Fiscal Year 2023 A Leading Provider of Smart, Connected and Secure Embedded Solutions Leading Provider of Smart, Connected, and Secure Embedded Control 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 Microcontroller, Digital Signal Controller and • FPGA solutions Microprocessor solutions $6.8 • Non-volatile EEPROM and Flash Memory • Mixed-Signal, An
Slide 4: Fiscal Year 2022 Revenue By End Market
Fiscal Year 2022 Revenue By End Market Durable End Markets 14% Industrial 11% 40% Data Center & Computing Automotive Communication Consumer Appliance 17% 18% 4 Microchip Proprietary and Confidential
Slide 5: Consistent Revenue Growth
Consistent Revenue Growth $7,000 127 consecutive quarters of Non-GAAP profitability! $6,000 $5,000 MCHP Yearly Sales ($ in million) $4,000 CAGR 16.2% $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 F
Slide 6: First Quarter FY2023 Revenue Mix
First Quarter FY2023 Revenue Mix Net Sales by Product Line Net Sales by Geography Net Sales by Channel Other Europe 20% Direct 16% 53% Americas Analog MCU 25% 54% Asia Distribution 30% 55% 47% ➢ Sustained growth from organic efforts focused on TSS and Megatrends ➢ Synergistic product portfolio empow
Slide 7: Record Fiscal 1st Quarter 2023 Results (non-GAAP)
Record Fiscal 1st Quarter 2023 Results (non-GAAP)* ➢ Record revenue of $1.964 billion; grew 6.5% QoQ and 25.1% YoY ‒ 7 consecutive quarters of record revenue ➢ Record gross margin of 67.1%; increased 230 basis points YoY ➢ Record operating margin of 45.6%; increased 390 basis points YoY ➢ Record ear
Slide 8: Fiscal 2nd Quarter 2023 Guidance (non-GAAP)
Fiscal 2nd Quarter 2023 Guidance (non-GAAP)* Q1 FY23 Q2 FY23 Guide Long Term Actual @ mid-point Model $1,963.6 $2,062.0 FY22 – 26 CAGR Revenue ($ Million) 6.5% QoQ 5.0% QoQ of 10% to 15% 25.1% YoY 25.0% YoY Gross Margins 67.1% 67.5% 67.5% to 68.5% Operating Expenses 21.5% 21.5% 22.5% to 23.5% Operat
Slide 9: Managing A Soft Landing
Managing A Soft Landing ➢We recognize that macro conditions are weakening, although we do not see any weakness in our business ‒ We expect to be supply constrained throughout 2022 and into 2023 ➢If or when macro weakness catches up to our business, we believe we can achieve a soft landing because: ‒
Slide 10: Semi Industry Sales Y/Y Growth Rates
Semi Industry Sales YoY Growth Through Cycles 35% 30% 25% 20% Semi Industry Sales Y/Y Growth Rates 15% 10% 5% 0% -5% -10% -15% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Semi Sales Y/Y % Chg. Semi Sales Y/Y Growth is sourced BOA Global Research, IMF, and SIA 10
Slide 11: Microchip Free Cash Flow
Strong Cash Generation Through Cycles 35% $2,800 30% 21.6% 10-Year $2,300 25% FCF CAGR Microchip Free Cash Flow* $1,800 20% Semi Industry Sales Y/Y Growth Rates 15% $1,300 10% $800 5% $300 0% $0 -$200 -5% -10% -$700 -15% -$1,200 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2
Slide 12: Resilient Profitability Through Cycles
Resilient Profitability Through Cycles 35% 70% 30% MCHP LT Non-GAAP Gross Margin Target* 68% 25% 65.7% 66% Microchip NG Gross Margin % 20% 64% Semi Industry Sales Y/Y Growth Rates 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 13: Improving Efficiency Through Cycles
Improving Efficiency Through Cycles 35% 50% 30% MCHP LT Non-GAAP Operating Margin Target* 45% 25% 43.5% 38.7% Microchip NG Operating Margin % 37.1% 36.2% 40% 20% 36.1% 35.9% 39.6% Semi Industry Sales Y/Y Growth Rates 15% 32.3% 35% 34.9% 31.8% 31.0% 10% 32.4% 31.6% 30% 30.2% 30.3% 28.6% 5% 25% 0% 20%
Slide 14: 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 15: 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 16: Market Megatrends
Market Megatrends Industrial 5G Data Center & Computing IoT/Edge Computing Data Automotive Centers Communications Electric Aerospace Vehicle & Defense AI/Machine Learning Consumer ADAS/Autonomous Driving 16 Microchip Proprietary and Confidential
Slide 17: Consistent, Disciplined and Balanced Capital Return Strategy
Consistent, Disciplined and Balanced Capital Return Strategy ‒ Actively reducing debt after Debt Paydown increasing leverage for M&A ‒ 16 consecutive quarters of Free Cash Flow $5.2 Billion debt paydown ‒ Current leverage ratio of 2.05x Generation Since FY2019 Dividends Paid ‒ 80 consecutive quarter
Slide 18: 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 19: 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 Free Cash Flow operating margins Our best is still ahe
Slide 20: Thank You
Thank You 20 SMART | CONNECTED | SECURE AS\ Micracuip