Microchip Technology Incorporated · NASDAQ:MCHP
Microchip Technology — Morgan Stanley TMT Conference 2023
18 slides from Microchip Technology's conference presentation, Mar 7, 2023
Slide 1: Morgan Stanley TMT Conference
Morgan Stanley TMT Conference A Leading Provider of Smart, Connected and Secure Embedded Solutions Ganesh Moorthy President & CEO March 7, 2023
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 • FPGA solutions Microcontroller, Digital Signal Controller and • Clock and Timing solutions Microprocessor solutions $6.8 • Non-volatile EEPROM and Flash Memory • Mixed-Signal, Analog, Interface
Slide 4: Fiscal 4th Quarter 2023 Guidance (non-GAAP)
Fiscal 4th Quarter 2023 Guidance (non-GAAP)* Q3 FY23 Q4 FY23 Guide Long Term Actual @ mid-point Model $2,169.2 $2,223.5 FY22 – 26 CAGR Revenue ($ Million) 4.6% QoQ 2.5% QoQ of 10% to 15% 23.4% YoY 20.6% YoY Gross Margins 68.1% 68.2% 67.5% to 68.5% Operating Expenses 20.6% 20.7% 22.5% to 23.5% Operat
Slide 5: Fiscal 1st Quarter 2024 Expectation
Fiscal 1st Quarter 2024 Expectation We now expect that our June 2023 quarter sequential revenue growth will be similar in magnitude to our March 2023 quarter guidance 5
Slide 6: 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 much greater than 100% of quarterly supported backlog ‒ Ac
Slide 7: 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 8: Resilient Profitability Through Cycles
Resilient Profitability Through Cycles 35% 70% 30% MCHP LT Non-GAAP Gross Margin Target* 68% 67.8% 25% 66% Semi Industry Sales Y/Y Growth Rates 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 9: Improving Efficiency Through Cycles
Improving Efficiency Through Cycles 35% 50% 46.9% 30% MCHP LT Non-GAAP Operating Margin Target* 45% 25% Trough Non-GAAP Operating Margin Semi Industry Sales Y/Y Growth Rates 40% Microchip NG Operating Margin % 20% 36.1% 35.9% 39.6% 38.7% 35% 15% 34.9% 32.3% 31.8% 36.2% 31.0% 37.1% 10% 32.4% 31.6% 30
Slide 10: Strong Cash Generation Through Cycles
Strong Cash Generation Through Cycles 35% $3,500 30% 23.4% $3,000 10-Year 25% ADJ. FCF* $2,500 Semi Industry Sales Y/Y Growth Rates Adj. Microchip Free Cash Flow* 20% CAGR $2,000 15% $1,500 ($ in millions) 10% $1,000 5% $500 0% $0 -5% -$500 -10% -$1,000 -15% -$1,500 2007 2008 2009 2010 2011 2012 201
Slide 11: Microchip 3.0 – 16 Months Later
Microchip 3.0 – 16 Months Later 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-
Slide 12: Microchip 3.0 – 16 Months Later
Microchip 3.0 – 16 Months Later 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-
Slide 13: Microchip 3.0 – 16 Months Later
Microchip 3.0 – 16 Months Later 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-
Slide 14: Microchip 3.0 – 16 Months Later
Microchip 3.0 – 16 Months Later 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-
Slide 15: 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 ‒ 18 consecutive quarters of debt paydown Adjusted Free Cash $6.2 Billion ‒ Current leverage ratio of 1.56x Flow (FCF)* ‒ 82 consecutive quarters of Generation Dividen
Slide 16: Microchip 3.0 – 16 Months Later
Microchip 3.0 – 16 Months Later 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-
Slide 17: 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 18: Thank You
THANK YOU A Leading Provider of Smart, Connected and Secure Embedded Control Solutions
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