Microchip Technology Incorporated · NASDAQ:MCHP
Microchip Technology — Stifel 2022 Cross Sector Insight Conference
19 slides from Microchip Technology's conference presentation, June 2022
Slide 1: Investor Presentation
Investor Presentation StifelConnected A Leading Provider of Smart, 2022 Cross SectorEmbedded and Secure Insight Solutions Conference Steve Sanghi and Sajid Daudi June 2022 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 $7,000 126 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: Fiscal 1st Quarter 2023 Guidance (non-GAAP)
Fiscal 1st Quarter 2023 Guidance (non-GAAP)* Q4 FY22 Q1 FY23 Guide Long Term Actual @ mid-point Model $1,844.2 $1,955.0 FY22 – 26 CAGR Revenue ($ Million) 4.9% QoQ 6% QoQ of 10% to 15% 25.7% YoY 24.6% YoY Gross Margins 66.6% 67.0% 67.5% to 68.5% Operating Expenses 21.9% 21.8% 22.5% to 23.5% Operatin
Slide 7: 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 8: Semi Industry Sales YoY Growth Through Cycles
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 8
Slide 9: Strong Cash Generation Through Cycles
Strong Cash Generation Through Cycles 35% $2,800 30% $2,300 25% $1,800 Microchip Free Cash Flow* 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 2021 2022 MCHP FCF Semi
Slide 10: Resilient Profitability Through Cycles
Resilient Profitability Through Cycles 35% 70% 30% MCHP LT Gross Margin Target* 68% 25% 65.7% 66% Microchip 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% -5% 54% -10%
Slide 11: Improving Efficiency Through Cycles
Improving Efficiency Through Cycles 35% 50% 30% MCHP LT Operating Margin Target* 45% 25% 43.5% 38.7% 40% Microchip Operating Margin % 37.1% 36.2% 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% -5% -10% 15
Slide 12: 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 13: 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 14: 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 14 Microchip Proprietary and Confidential
Slide 15: 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 ‒ 15 consecutive quarters of Free Cash Flow $5 Billion debt paydown ‒ Current leverage ratio of 2.3x Generation FY2019 to FY2022 Dividends Paid ‒ 79 consecutive quarte
Slide 16: 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 EBITDA Margin target of Diversified end-market mix Invest
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 Free Cash Flow operating margins Our best is still ahe
Slide 18: Compelling Valuation NTM Forward P/E Multiple
Compelling Valuation Microchip Trades At A Significant Discount Forward Price to Earnings Multiple 50x SLAB 45x 42.8x 40x MPWR NTM Forward P/E Multiple 37.5x 35x 30x 25x TXN 19.6x ADI PHLX 20x 16.6x 16.7x 15x MCHP 10x 13.2x 5x 0x Strong combination of growth, business durability, increasing profitab
Slide 19: Thank You
Thank You 19 swat | CONNECTED | SECURE AS\ Micracuip
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