Microchip Technology forecast third-quarter net sales below Wall Street estimates on Thursday, indicating tepid demand for its chips as customers in the automotive and industrial markets continue to c... ...

Financial Performance - GAAP Revenue for Fiscal Second Quarter 2026 was $1,140.4 million, up 6.0% QoQ and down 2.0% YoY[17] - Gross Margin for Fiscal Second Quarter 2026 was 56.7%, increased by 236 basis points QoQ[17] - Operating Margin for Fiscal Second Quarter 2026 was 24.3%, increased by 364 basis points QoQ[17] - Diluted Earnings Per Share for Fiscal Second Quarter 2026 was $0.35, increased by 29.6% QoQ[17] - Adjusted Trailing Twelve Months (TTM) EBITDA was $1,102.9 million, representing 26.2% of TTM sales[17] - Adjusted Free Cash Flow was $38.3 million, representing 3.4% of net sales[17] Capital Allocation - The company paid $245.8 million in common dividends[17] - The company announced a common stock dividend of 45.5 cents per share for Q3FY26[17] - The company has reduced debt 24 out of the last 29 quarters[46] - The company has paid dividends for 92 consecutive quarters[46]

Financial Performance - Net sales for the three months ended September 30, 2025, were $1,140.4 million, a decrease of 2.0% compared to $1,163.8 million in the same period of 2024[111]. - For the six months ended September 30, 2025, net sales were $2,215.9 million, down 7.9% from $2,405.1 million in the same period of 2024[111]. - Gross profit margin for the three months ended September 30, 2025, was 55.9%, down from 57.4% in 2024, while for the six months it was 54.8%, down from 58.4% in 2024[109]. - Operating income for the three months ended September 30, 2025, was 7.8%, a decline from 12.6% in 2024, and for the six months, it was 5.5%, down from 15.2% in 2024[109]. - Gross profit for Q3 2025 was $637.9 million, or 55.9% of net sales, compared to $668.5 million, or 57.4% in Q3 2024[130]. - The company reported a total net loss of $132.0 million for the six months ended September 30, 2025[182]. Cost and Expenses - Cost of sales as a percentage of net sales increased to 44.1% for the three months ended September 30, 2025, compared to 42.6% in 2024[109]. - Research and development expenses as a percentage of net sales rose to 23.0% for the three months ended September 30, 2025, from 20.7% in 2024[109]. - R&D expenses for Q3 2025 were $262.3 million, or 23.0% of net sales, up from $240.7 million, or 20.7% in Q3 2024[138]. - R&D expenses for the first half of 2025 increased by $35.4 million, or 7.3%, totaling $517.8 million, or 23.4% of net sales[139]. - Selling, general and administrative expenses for Q3 2025 were $172.3 million, or 15.1% of net sales, compared to $157.0 million, or 13.5% in Q3 2024[141]. - Selling, general and administrative expenses for the first half of 2025 increased by $24.1 million, or 7.8%, totaling $331.6 million, or 15.0% of net sales[142]. - Special charges for Q3 2025 were $6.3 million, compared to $1.5 million in Q3 2024, primarily related to restructuring expenses[146]. Inventory and Sales Channels - Overall inventory levels decreased to $1.10 billion at September 30, 2025, from $1.29 billion at March 31, 2025, with inventory days dropping from 251 to 199[132]. - Distributors accounted for approximately 45% of net sales in Q3 2025, with Arrow Electronics being the largest distributor at 11% of net sales[125]. - Sales to foreign customers represented approximately 75% of total net sales in Q3 2025, up from 74% in Q3 2024[129]. Capital and Cash Flow - Net cash provided by operating activities for the first half of 2025 was $363.7 million, down from $420.7 million in the same period of 2024[165]. - Net cash used in investing activities was $98.9 million in the first half of 2025, compared to $189.7 million in the same period of 2024[166]. - Cash and cash equivalents decreased to $236.8 million as of September 30, 2025, down by $534.9 million from March 31, 2025[163]. - Net cash used in financing activities was $799.7 million for the six months ended September 30, 2025, compared to $264.6 million in the same period of 2024[168]. - The company paid cash dividends of $491.3 million to common stockholders in the first six months of fiscal 2026, compared to $486.3 million in the same period of fiscal 2025[169]. Debt and Financing - As of September 30, 2025, the principal amount of outstanding Commercial Paper was $1.12 billion, an increase from $175.0 million at March 31, 2025[172]. - As of September 30, 2025, the company's total current and long-term debt amounted to $5.41 billion, all of which is fixed rate[183]. - The company plans to refinance certain existing notes as they mature and may seek additional financing depending on market conditions and operational needs[178]. - The company plans to finance the repayment of its fixed rate debt maturing within the next 12 months using available borrowings under its Revolving Credit Facility or Commercial Paper program[183]. - Changes in interest rates will significantly impact the company's interest expense if it refinances fixed rate debt with variable rate debt[183]. Strategic Initiatives - The company plans to continue investments in new and enhanced products, focusing on mixed-signal microcontrollers, digital signal controllers, and other technologies[105]. - The company is executing a recovery plan initiated in March 2025, which includes reducing inventory levels and pausing factory expansion activities[100]. - The closure of the Tempe, Arizona wafer fabrication facility (Fab 2) was completed in May 2025, with production being transferred to Oregon and Colorado facilities[102]. - The company anticipates fluctuations in gross margins driven by capacity utilization levels and product mix[137]. - Approximately 66% of net sales in Q3 2025 came from products produced at outside wafer foundries, consistent with the previous year[136]. - The company expects to receive $162 million in CHIPS Act grants for two U.S. wafer fabrication facilities, pending final approval[167]. Market Conditions - Inflation has not materially affected the company's operating results in recent periods[184]. - The company may struggle to offset higher costs due to inflation through price increases, which could adversely impact operating results[184]. - Interest income for Q3 2025 was $3.6 million, up from $2.0 million in Q3 2024[147]. - Capital expenditures for the six months ended September 30, 2025, were $54.4 million, down from $93.7 million in the same period of 2024, with plans to keep investments at or below $100.0 million over the next 12 months[167].

EXHIBIT 99.1 INVESTOR RELATIONS CONTACT: Sajid Daudi -- Head of Investor Relations..... (480) 792-7385 MICROCHIP TECHNOLOGY ANNOUNCES FINANCIAL RESULTS FOR SECOND QUARTER OF FISCAL YEAR 2026 CHANDLER, Arizona - November 6, 2025 - (NASDAQ: MCHP) - Microchip Technology Incorporated, a leading provider of smart, connected, and secure embedded control solutions, today reported results for the three months ended September 30, 2025. Steve Sanghi, Microchip's CEO and President commented that "Our second quarter re ...

Net sales of $1.140 billion, increased 6.0% sequentially and declined 2.0% from the year ago quarter. The midpoint of our guidance provided on August 7, 2025 was net sales of $1.130 billion.On a GAAP basis: gross profit of 55.9%; operating income of $88.9 million and 7.8% of net sales; net income attributable to common stockholders of $13.9 million; and EPS of $0.03 per diluted share. Our guidance provided on August 7, 2025 was for GAAP EPS loss per diluted share of $0.04 to $0.01.On a Non-GAAP basis: gross ...

Core Insights - Microchip Technology has launched the Model Context Protocol (MCP) Server, an AI interface designed to connect with compatible AI tools and large language models (LLMs) to provide context for answering queries [1][3] - The MCP Server allows users to retrieve verified and up-to-date Microchip public data, including product specifications, datasheets, inventory, pricing, and lead times through simple conversational queries [1][2] Group 1 - The MCP Server is built on MCP streamable HTTP standards, delivering context-aware and JSON-encoded responses optimized for AI clients such as Copilots, AI chatbots, LLM-based IDEs, and enterprise AI agents [2] - This platform supports a wide range of applications and integrates Microchip public data directly into development environments and intelligent assistants [2] Group 2 - The launch of the MCP Server reflects Microchip's commitment to advancing digital transformation and AI enablement across enterprise ecosystems [4] - The MCP Server is publicly available at no cost to users, facilitating instant access to verified product information within AI platforms [4]

Core Insights - Microchip Technology Incorporated is a significant player in the semiconductor industry, focusing on microcontroller, mixed-signal, analog, and Flash-IP solutions [1] - The company is set to release its quarterly earnings on November 6, 2025, with analysts closely monitoring its performance metrics [1] Earnings Projections - Wall Street analysts project an earnings per share (EPS) of $0.33, representing a year-over-year decline of 28.3% [2][6] - The company has guided for EPS to range between $0.34 and $0.37, indicating potential variance from analyst expectations [2] Revenue Expectations - Revenue projections for the quarter are approximately $1.13 billion, reflecting a 2.7% year-over-year decline [3][6] - Microchip anticipates net sales to range between $1.11 billion and $1.15 billion, suggesting a sequential growth of 5.1% [3] Growth Drivers - The anticipated growth is driven by improving inventory levels, increased direct shipments, and strong design wins in sectors such as industrial, aerospace, and AI [3] Financial Metrics - The price-to-sales ratio is about 7.75, indicating investors are willing to pay $7.75 for every dollar of sales [4] - The enterprise value to sales ratio stands at approximately 8.91, reflecting the company's valuation in relation to its sales [4] - The debt-to-equity ratio is about 0.80, suggesting a balanced approach to leveraging debt for growth [5] - The current ratio of approximately 2.31 indicates a strong ability to cover short-term liabilities with short-term assets [5]

Core Insights - Microchip Technology (MCHP) is scheduled to report its second-quarter fiscal 2026 results on November 6, with expected net sales between $1.110 billion and $1.150 billion, indicating a sequential growth of approximately 5.1% [1][7] - The Zacks Consensus Estimate for revenues in the second quarter is $1.13 billion, reflecting a year-over-year decline of 2.74% [1][2] - Anticipated non-GAAP earnings per share (EPS) are projected to be between 30 and 36 cents, with the consensus mark for earnings also at 33 cents, representing a year-over-year decline of 28.26% [1][2] Financial Performance Expectations - Microchip's earnings have historically beaten the Zacks Consensus Estimate in three of the last four quarters, with an average surprise of 0.23% [2] - The company has been facing macroeconomic challenges but is expected to show improved inventory levels, which have decreased from 214 days in the first quarter to an anticipated range of 195 to 200 days by the end of the second quarter [2][3] Revenue and Margin Drivers - Improved inventory levels are expected to positively impact gross margins in the upcoming quarter, with revenues benefiting from inventory corrections at distributors and increased direct customer shipments [3][7] - The company has secured strong design wins in high-growth sectors such as industrial, aerospace, and automotive, which are likely to contribute to revenue growth in the reported quarter [4][7] Earnings Outlook - According to the Zacks model, Microchip has an Earnings ESP of 0.00% and a Zacks Rank of 3, indicating a neutral outlook for earnings performance [5]

Microchip’s new transceivers are offered at speeds up to 25 Gbps to process more dataCHANDLER, Ariz., Oct. 30, 2025 (GLOBE NEWSWIRE) -- The rise of smart factories, remote monitoring and connected infrastructure are increasing the demand for advanced networking systems that can operate over long distances and in challenging environments. To address the need for reliable and secure connectivity solutions, Microchip Technology (Nasdaq: MCHP) today announces its new portfolio of Optical Ethernet PHY transceive ...

Core Insights - Microchip Technology has launched the TimeProvider® 4500 v3 grandmaster clock, which provides a terrestrial alternative to GNSS for critical infrastructure services, enhancing resilience and reliability [1][2] Product Features - The TP4500 delivers sub-nanosecond accuracy for time distribution over long distances, specifically achieving 5 nanoseconds (ns) time delay over 800 kilometers [3][8] - It supports time reference from UTC(k) provided by national labs and is the first grandmaster to offer High Accuracy Time Transfer (HA-TT) capabilities, setting a new industry benchmark [3][5] - The system can be configured in multiple operation modes to create a virtual PRTC (vPRTC) architecture, ensuring PRTC accuracy over long-distance optical networks [4][5] Market Positioning - The TP4500 is optimized for various sectors including telecom, utilities, transportation, government, and defense, providing a scalable solution for secure and reliable time distribution [7][8] - It integrates seamlessly with existing Ethernet and optical deployments, making it a versatile choice for critical infrastructure operators [8] Strategic Importance - This innovation reflects Microchip's commitment to delivering advanced timing solutions, supporting the ITU-T G.8272.2 standard for coherent network reference time clocks [5][6] - The TP4500 is positioned as a cost-effective alternative to other PNT solutions that are still dependent on GNSS, addressing the industry's need for resilient synchronization mechanisms [2][4]