Benzinga | May 7, 2021 02:34PM EDT

Microchip Technology Beats On Q4 Earnings Stemming From Strong Demand, Raises Quarterly Dividend

* Microchip Technology Inc (NASDAQ: MCHP) reported fourth-quarter FY21 net sales growth of $10.6% year-on-year to $1.467 billion, beating the analyst consensus of $1.46 billion.

* Non-GAAP gross margin expanded 210 basis points to 64.1%, and Non-GAAP operating margin expanded 410 basis points to 40.7%.

* The non-GAAP operating income rose 22.9% Y/Y to $596.9 million.

* Non-GAAP net income rose 38.9% Y/Y to $521.4 million, with the adjusted EPS of $1.85 beating the analyst consensus of $1.75.

* The company generated $449.2 million in operating cash flow and held $282 million in cash and equivalents.

* The company raised the quarterly dividend by 5.9% quarter-on-quarter to $0.413, payable on June 4, 2021.

* Guidance: Microchip sees a Q1 FY22 net sales outlook of $1.519 billion - $1.577 billion, above the analyst consensus of $1.51 billion. The adjusted EPS outlook of $1.85 - $1.95 came above the consensus of $1.82.

* Business conditions remained exceptionally strong through the March quarter with record bookings and backlog for products to be shipped over multiple quarters, CEO Ganesh Moorthy said.

* The company continued to reduce debt with another $369.2 million of payments during the March quarter, reflecting a cumulative debt reduction of $3.61 billion over the past 11 quarters, CFO Eric Bjornholt said.

* Microchip exchanged $359.2 million of convertible subordinated notes for cash and shares in the March quarter, Bjornholt said.

* Rosenblatt analyst Hans Mosesmann maintains Microchip Technology with a 'Buy' rating and raises the price target from $165 to $180.

* Price action: MCHP shares traded higher by 1.56% at $148.79 on the last check Friday.