Microchip Technology Incorporated · NASDAQ:MCHP
Microchip Technology — Jefferies 2018 Global Technology Conference
23 slides from Microchip Technology's conference presentation, May 2018
Slide 1: Jefferies 2018 Global Technology Conference
Jefferies 2018 Global Technology Conference Ganesh Moorthy, President and COO ©May 2018
Slide 2: Forward Looking Statement 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 or future events, including our strategy, growth drivers, industry outlook, industry trends, market si
Slide 3: Q1FY18 Business Update
Q1FY18 Business Update June quarter net sales guidance of growth of 1% to 6% We continue to navigate through a soft landing Bookings have continued to be very strong and backlog is at record high levels. Inventory is in a good position at 112 days compared to our long- term target of 115 to
Slide 4: Microchip 1.0
Microchip 1.0 1. Consistent growth 2. Perennial market share gains 3. High margin business model 4. Shareholder friendly with consistently increasing dividends and free cash flow 5. Successful M&A strategy ©May 2018 4
Slide 5: Annual Net Sales Growth
Annual Net Sales Growth 110 consecutive quarters of profitability! $ Million ©May 2018 5
Slide 6: Worldwide Microcontroller Market Share
Worldwide Microcontroller Market Share 2003 2008 2009 2010 2012 2014 2016 2017 No. Rank Rank Rank Rank Rank Rank Rank Rank 1 Renesas Renesas Renesas Renesas Renesas Renesas Renesas Renesas 2 Motorola NEC NEC Freescale Freescale Freescale NXP NXP 3 NEC Freescale Freescale Samsung Infineon ST-Micro Mi
Slide 7: Total MCU (8/16/32) Market Share %
Total MCU (8/16/32) Market Share % % ©May 2018 7
Slide 8: Analog Yearly Revenue
Analog Yearly Revenue $ Million ©May 2018 8
Slide 9: Annual Non-GAAP Net Sales
Annual Non-GAAP Net Sales $4,000 $3,500 17.9% CAGR $3,000 Millions of Dollars $2,500 $2,000 $1,500 $1,000 $500 $0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 ©May 2018 9
Slide 10: Annual Non-GAAP Gross Profit
Annual Non-GAAP Gross Profit $2,500 $2,000 Millions of Dollars 18.6% CAGR $1,500 $1,000 $500 $0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18E ©May 2018 10
Slide 11: EBITDA
EBITDA $1,750 $1,500 Millions of Dollars $1,250 18.3% CAGR $1,000 $750 $500 $250 $0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 *FY18E * FY18 represents Q1 – Q3 FY18 actual results plus Q4 estimate based on midpoint of financial guidance ©May 2018 11
Slide 12: Free Cash Flow as a % of Revenue
Free Cash Flow as a % of Revenue $1,400,000 42.0% $1,300,000 39.0% $1,200,000 36.0% $1,100,000 33.0% $1,000,000 30.0% $900,000 27.0% $800,000 24.0% $700,000 21.0% $600,000 18.0% $500,000 15.0% $400,000 12.0% $300,000 9.0% $200,000 6.0% $100,000 3.0% $0 0.0% FY12 FY13 FY14 FY15 FY16 FY17 FY18 Free Ca
Slide 13: ~$5B Returned to Shareholders
~$5B Billion Returned to Shareholders $400 $1.50 ~ $3.5B in dividends and ~$1.4B in share buy-backs! $350 $1.48 $300 $1.45 Millions of Dollars $250 $1.43 $200 $1.40 $150 $1.38 $100 $1.35 $50 $1.33 $0 $1.30 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Annual Dividends Paid Annual Dividends $ Per
Slide 14: Expanding Microchip Solutions Through Acquisitions
Expanding Microchip Solutions Through Acquisitions Bluetooth® & High-Voltage Analog & Development Tools Embedded Wi-Fi® Motor Drive Mixed-Signal Products Compiler Products Hampshire LSS Low-Power Analog & mixed-signal, Touch Screen Embedded High-Speed Non-volatile Controllers ADCs Memory IP timing,
Slide 15: Microsemi – A Strategically and Financially Compelling Transaction
Microsemi – A Strategically and Financially Compelling Transaction Strengthens Microchip’s presence in Defense, Aerospace, Data Center and Communications markets Expands our Ethernet portfolio to serve Industrial IoT, Enterprise and Carrier markets Adds specialized Microcontrollers to serve th
Slide 16: Microsemi Synergy and Accretion Expectations
Microsemi Synergy and Accretion Expectations Transaction is expected to be immediately accretive to our non GAAP earnings per share Short term: Targeting 18% growth in non-GAAP EPS from FY18 to FY19 with accretion from Microsemi (assumes June 2018 close) Microsemi adds ~75 cents of non-GAAP EP
Slide 17: Microchip 2.0
Microchip 2.0 Be The Very Best Embedded Control Solutions Company Ever ©May 2018 17
Slide 18: Microchip 2.0
Microchip 2.0 1. Total System Solution in Embedded Control 2. Leading customer preference to design with our MCUs 3. Multiple growth drivers 4. Record gross margin target with multiple drivers 5. Record low opex 6. End market mix skewed to Industrial and Automotive 7. New LT model with industry lead
Slide 19: Total System Solution Results
Total System Solution Results Parts/Project in Design Growing at 20%+ year over year FQ2017_3 FQ2017_4 FQ2018_1 FQ2018_2 FQ2018_3 FQ2018_4 ©May 2018 19
Slide 20: Revenue by End Market
Revenue by End Market Communi- Defense & cation Aerospace 5% 2% Computing 9% Industrial 35% Consumer 24% Automotive 25% ©May 2018 20
Slide 21: Highly Profitable Financial Model
Highly Profitable Financial Model * Microchip Microsemi Microchip + Long Term Microsemi Model Revenue ($M) $3,977 $1,875 $5,852 Gross Margin (%) 61.4% 63.2% 62.0% 63% R&D (%) 12.1% 18.5% 14.2% 13% SG&A (%) 9.9% 12.5% 10.7% 9.5% Op Income ($M) $1,567 $603 $2,170 Op Income (%) 39.4% 32.2% 37.1% 40.5%
Slide 22: Summary
Summary A consistent revenue grower and market share gainer with multiple growth drivers High margin business model and shareholder friendly June quarter non-GAAP revenue guided to sequential growth of between 1% and 6%. Premium long-term non-GAAP financial model (Microchip + Microsemi) of 6
Slide 23: Thank You!
MICROCHIP Thank You! CS
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