Microchip Technology Incorporated · NASDAQ:MCHP

Microchip Technology — Stifel 2016 Technology, Internet & Media Conference

18 slides from Microchip Technology's conference presentation, June 2016

  1. Slide 1: Stifel 2016 Technology, Internet & Media Conference

    Stifel 2016 Technology, Internet & Media Conference Eric Bjornholt, Vice President & Chief Financial Officer ©June 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  Atmel acquisition  Oppor

  3. Slide 3: Annual Net Sales Growth

    Annual Net Sales Growth 2500 2400 2300 2200 • 102 consecutive quarters of profitability! 2100 2000 1900 MCU Analog Memory Licensing MMO 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 F

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

    Total MCU (8/16/32) Market Share % % ©June 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 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 ©June 2016 5

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

    (%) ©June 2016 30 35 40 45 50 55 60 65 Q1FY02 Q2FY02 Q3FY02 www.microchip.com. Q4FY02 Q1FY03 Q2FY03 Q3FY03 Q4FY03 Q1FY04 Q2FY04 Higher Utilization Q3FY04 Richer Product Mix Q4FY04 Q1FY05 Q2FY05 Q3FY05 Q4FY05 Q1FY06 Fab 4 Production start Q2FY06 Q3FY06 Q4FY06 Q1FY07 Q2FY07 Q3FY07 Q4FY07 Q1FY08 Q2FY08

  7. Slide 7: Dividends and Share Buy-backs

    ©June 2016 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 Q1FY07 $80,000 Q2FY07 Q3FY07 Q4FY07 Q1FY08 Q2FY08 Q3FY08 Q4FY08 Q1FY09 Q2FY09 Q3FY09 Q4FY09 Q1FY10 Q2FY10 Q3FY10 Q4FY10 Q1FY11 Total Dividend Q2FY11 Q3FY11 **Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2

  8. Slide 8: Expanding Microchip Solutions Through Acquisitions

    Expanding Microchip Solutions Through Acquisitions Bluetooth® & High-Voltage Analog & Development Tools Embedded Wi-Fi® 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: 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%

  10. Slide 10: 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

  11. Slide 11: Highly Profitable Financial Model

    Highly Profitable Financial Model * Long Term Microchip Atmel Microchip + Atmel Model Revenue ($M) $585.5 $235.0 $820.5 Gross Margin (%) 58.4% 46.5% 55.0% 59% Operating Expense (%) 26.45% 37.0% 29.5% 26% Operating Income ($M) $187.1 $22.5 $209.6 Operating Income (%) 31.95% 9.5% 25.5% 33% * Represent

  12. Slide 12: Synergy and Accretion Expectations

    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 FY16 to FY17 with accretion from Micrel and Atmel.  Atmel adds ~25 cents in FY 2017  Long term: 3rd year after close (

  13. Slide 13: Transaction Summary and Financing

    Transaction Summary And Financing  Transaction closed on April 4, 2016  Transaction equity value of $3.47B representing $8.15/share  $3.43B net of Atmel’s cash, investments and debt  Atmel stockholders received $7.00/share in cash and $1.15/share in Microchip stock  Transaction was being funded

  14. Slide 14: Microchip's Projected Net Debt/EBITDA Ratio

    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 Debt/EBITDA Senior Debt/EBITDA *Includes projected cash and investments on Microchip’s balance sheet and assumes stock issued

  15. Slide 15: 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

  16. Slide 16: Atmel Acquisition Summary

    Atmel Acquisition 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’

  17. Slide 17: MCHP Financial Information Consolidated

    MCHP Financial Information Consolidated Actual Guidance Q1FY17 Long-Term Actual Guidance Model With Mar. 31, 2016 Jun. 30, 2016 Atmel Net Sales ($MM Non-GAAP) $568.4 $799.1 – 841.9 Gross Margin* 58.4% 54.8% - 55.2% ~ 59% Operating Expenses* (% of Sales) 27.0% 29.1% - 29.8% ~ 26% Operating Profit 31.

  18. Slide 18: Thank You!

    MICROCHIP Thank You!

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