Why Microchip Technology Shares Are Diving Today

Microchip Technology Inc (NASDAQ: MCHP) shares are trading lower by around 6% after the company reported Q1 FY24 results yesterday.

The company reported adjusted EPS of $1.64, in line with the consensus.

Sales of $2.29 billion, up 16.6% Y/Y, also came in line with the consensus.

Adjusted gross profit rose to $1.57 billion from $1.32 billion a year ago, with margin expanded to 68.4% from 67.1% the prior year. 

Adjusted operating margin stood at 48.1%, up from 45.6% a year ago. 

Operating cash flow stood at $993.2 million vs. $840.4 million a year ago.

As of June 30, 2023, cash and short-term investments stood at $271.2 million.

In Q1, the company returned around $349.2 million to shareholders through dividends of $208.9 million and the repurchase of about $140.3 million. 

Dividend: The company's Board of Directors raised the quarterly dividend per share by 36.2% Y/Y to $0.41, payable on September 5, 2023, to stockholders of record as of August 22, 2023.

Outlook: For Q2 FY24, the company expects net sales of $2.220 billion-$2.312 billion (consensus: $2.28 billion) and adjusted EPS of $1.60-$1.64 vs. consensus of $1.63.

"Considering the macro environment we face of slowing economic activity and increasing business uncertainty, combined with the active steps we are taking to help customers with inventory positions to push out some of their backlog, we expect net sales in the September quarter to be up 1% to down 3% sequentially. At the mid-point of our guidance for the September quarter, net sales would be 9.3% higher than the year-ago quarter. Notwithstanding any near-term macro weakness, we are confident that semiconductors remain the engine of innovation for the applications and markets we serve. Our focus on Total System Solutions and key market megatrends is fueling strong design-win momentum that we expect will drive above-market long-term growth," said Ganesh Moorthy, President and Chief Executive Officer.

Also Read: Microchip Expands Its Presence In India With $300M Multi-Year Investment

Price Action: MCHP shares are trading lower by 5.61% at $84.50 premarket on the last check Friday.