Microchip Technology Inc. (NASDAQ: MCHP) stock rose over 8.5% on Feb 6th, 2019 (As of 10:29 am GMT-5; Source: Google finance) after the company posted better than expected results for the third quarter of FY 19. MCHP has reported the Non-GAAP net income for the third quarter of fiscal 2019 of $405.6 million, up 18.9% from non-GAAP net income of $341.2 million, in the prior year’s third fiscal quarter.
Furthermore, the cash flow from operating activities was $481.5 million in the December quarter. As of December 31, the consolidated cash and total investment position was $436.2 million. MCHP paid down $377.5 million of total debt in the December quarter and the net debt on the balance sheet reduced by $349.4 million. At December 31, the debt outstanding includes $2.743 billion of borrowings under the line of credit, $2.713 billion of term loan B, $2 billion on high grade bonds and $4.481 billion of convertible debt
MCHP in the third quarter of FY 19 has reported the adjusted earnings per share of $1.66, beating the analysts’ estimates for the adjusted earnings per share of $1.57. The company had reported the adjusted revenue growth of 38 percent to $1.42 billion in the third quarter of FY 19, beating the analysts’ estimates for revenue of $1.4 billion. End-market demand in the December quarter was $1.416 billion, above the midpoint of the guidance, which was $1.4 billion, and down 6.4% sequentially from end-market demand of $1.513 billion in the immediately preceding quarter. On a non-GAAP basis, gross margins were a record 62.2%, operating expenses were 24.8% of end-market demand and operating income was $530 million and 37.4% of end-market demand. The inventory balance at December 31, 2018 was $702.5 million.
The non-GAAP cash tax rate was 3.5% in the December quarter and MCHP expect a similar rate for all of fiscal year 2019. The company expects the non-GAAP cash tax rate for fiscal ’20 and fiscal ’21 to be 5% or less, exclusive of the transition tax, any potential tax associated with the restructuring of the Microsemi operations into the Microchip global structure and any tax audit settlements related to taxes accrued in prior fiscal years.
MCHP has declared a quarterly cash dividend on its common stock of 36.50 cents per share. The dividend is payable on March 7, 2019 to stockholders of record on February 21, 2019.
For the fourth quarter ending in March, Microchip Tech expects its per-share earnings to range from $1.26 to $1.53. Analysts surveyed by Zacks had forecast adjusted earnings per share of $1.57.
The company expects revenue to be in the range of $1.25 billion to $1.4 billion for the fiscal fourth quarter. Analysts surveyed by Zacks had expected revenue of $1.39 billion.