Microchip Technology Inc. (MCHP) is a leading provider of smart, connected, and secure embedded control solutions with easy-to-use development tools and a comprehensive product portfolio that helps customers reduce costs and speed time to market.
The company generated the majority (98%) of its revenue from semiconductor products with the remainder coming from technology licensing during the quarter ended December 31, 2020. In terms of its product lines, the company generated revenue from microcontrollers (54%), analog (28%), LMO (11%), and FPGA (7%), with contracts evenly split between direct customers’ relationships and third-party distributors that buy and resell products.
Profitability Soars in Fiscal Q3
Microchip Technology reported third quarter revenue that rose 4.7% to $1.35 billion, which was in line with consensus estimates, and non-GAAP earnings of $1.62 per share, which beat consensus estimates by four cents per share. Adjusted gross margins of 63% and operating margins of 39.8% both hit record highs during the quarter.
The company also reported $509.7 million in cash flow and continued to pay down its debt during the quarter. Over the past 10 quarters, the company has reduced its debt burden by $3.24 billion, helping to free up cash flow over the long run.
The company raised its quarterly dividend by 5.8% to $0.39 per share, which represents a 1% forward yield. The dividend is payable on March 8, 2021 to shareholders on record as of February 22, 2021.
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