Stock Analysis on Net
Stock Analysis on Net

Microchip Technology Inc. (NASDAQ:MCHP)

This company has been moved to the archive! The financial data has not been updated since February 2, 2023.

Common-Size Income Statement 

Microchip Technology Inc., common-size consolidated income statement

Microsoft Excel
12 months ended: Mar 31, 2022 Mar 31, 2021 Mar 31, 2020 Mar 31, 2019 Mar 31, 2018 Mar 31, 2017
Net sales 100.00 100.00 100.00 100.00 100.00 100.00
Cost of sales -34.77 -37.87 -38.53 -45.20 -39.19 -48.44
Gross profit 65.23% 62.13% 61.47% 54.80% 60.81% 51.56%
Research and development -14.50 -15.38 -16.64 -15.45 -13.30 -16.00
Selling, general and administrative -10.54 -11.22 -12.83 -12.77 -11.36 -14.67
Amortization of acquired intangible assets -12.64 -17.14 -18.84 -12.60 -12.20 -9.91
Employee separation costs -0.01 0.02 -0.11 -1.22 -0.03 -1.15
Gain on sale of assets 0.12 0.11 0.03 0.00 0.11 0.00
Impairment charges 0.00 0.00 -0.01 -0.07 0.00 -0.37
Contract exit costs -0.07 0.03 -0.10 0.09 -0.02 -1.29
Wafer fabrication restructuring -0.31 -0.28 -0.34 0.00 0.00 0.00
Other 0.00 0.00 -0.05 0.01 0.00 -0.08
Restructuring -0.27% -0.12% -0.59% -1.19% 0.06% -2.89%
Legal contingencies -0.18 0.00 -0.30 0.56 0.00 0.00
Contingent consideration revaluation 0.02 0.09 0.00 0.00 0.00 0.00
Non-restructuring contract exit costs and other 0.00 0.00 0.00 0.00 -0.50 0.00
Special charges and other, net -0.43% -0.03% -0.89% -0.63% -0.44% -2.89%
Operating expenses -38.12% -43.78% -49.20% -41.44% -37.29% -43.47%
Operating income 27.12% 18.35% 12.27% 13.35% 23.52% 8.09%
Losses on equity method investments 0.00 0.00 0.00 0.00 -0.01 -0.01
Interest income 0.01 0.03 0.05 0.15 0.55 0.09
Interest expense -3.77 -6.56 -9.43 -9.40 -5.00 -4.29
Loss on settlement of debt -1.66 -5.51 -0.10 -0.24 -0.40 -1.29
Other income (expense) -5.42% -12.04% -9.48% -9.48% -4.85% -5.49%
Other income (loss), net 0.04 -0.07 0.06 -0.04 -0.15 0.04
Income before income taxes 21.73% 6.24% 2.85% 3.82% 18.52% 2.63%
Income tax (provision) benefit -2.89 0.18 7.97 2.83 -12.11 2.37
Net income from continuing operations 18.85% 6.42% 10.82% 6.65% 6.42% 5.01%
Net loss from discontinued operations 0.00 0.00 0.00 0.00 0.00 -0.17
Net income 18.85% 6.42% 10.82% 6.65% 6.42% 4.83%

Based on: 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31), 10-K (reporting date: 2017-03-31).

Gross Profit Trends
Gross profit as a percentage of net sales showed an overall increasing trend, rising from 51.56% in 2017 to 65.23% in 2022. This indicates a progressive improvement in profitability at the gross margin level, reflecting effective cost management of sales or favorable pricing dynamics.
Cost of Sales
The cost of sales steadily declined as a percentage of net sales, dropping from -48.44% in 2017 to -34.77% in 2022. This reduction aligns with the rising gross profit margin and suggests improved efficiency in production or procurement processes.
Operating Expenses
Operating expenses as a percentage of net sales displayed some variability, initially decreasing from -43.47% in 2017 to a low of -37.29% in 2018, then increasing sharply to -49.20% in 2020, followed by a decline to -38.12% in 2022. This fluctuation reflects changes in various expenditure components, including research and development, selling, general and administrative expenses, and special charges.
Research and Development (R&D)
R&D expenses remained relatively stable, fluctuating modestly between -16.0% and -13.3%, then settling at -14.5% in 2022. This consistent investment indicates an ongoing commitment to innovation without significant cost spikes or reductions.
Selling, General and Administrative Expenses (SG&A)
SG&A expenses steadily decreased from -14.67% in 2017 to -10.54% in 2022, indicating improved operational efficiency and cost control in these areas.
Amortization of Acquired Intangible Assets
Amortization charges peaked at -18.84% in 2020 but decreased to -12.64% by 2022. This suggests a decline in intangible asset amortization expense likely due to the amortization of significant acquisitions tapering off over time.
Special Charges and Other
Special charges showed variability but generally remained a small negative contributor, moving from -2.89% in 2017 to -0.43% in 2022, indicating reduced impact from one-time expenses or restructuring costs.
Operating Income
Operating income as a percentage of net sales showed substantial improvement over the period. It increased from 8.09% in 2017 to 27.12% in 2022, demonstrating enhanced profitability from core operations. Notably, there was a dip in 2019 and 2020, but a strong recovery followed.
Interest and Other Income/Expenses
Interest expense peaked in 2019 and 2020 at around -9.4% but then declined significantly to -3.77% in 2022, reflecting reduced debt costs or improved capital structure. Interest income was consistently low but positive. Other income (expense) was negative throughout, with the most significant detriment occurring between 2019 and 2021, then improving in 2022.
Income Before Taxes and Tax Provision
Income before income taxes had a volatile path, from a low 2.63% in 2017 to a high of 21.73% in 2022. Income tax provisions were negative in some years, indicating tax benefits or credits, with a marked negative tax provision in 2018 (-12.11%) and positive provisions in other years, reflecting fluctuating tax strategies or rates.
Net Income
Net income from continuing operations exhibited solid growth, rising from 5.01% in 2017 to 18.85% in 2022. The ratio peaked at 10.82% in 2020, dipped in 2021, and significantly increased in 2022, indicating improved overall profitability. There were minor losses from discontinued operations in 2017 but none subsequently.
Summary
The data reveals a company improving its profitability through tighter cost controls and enhanced operational efficiency, as indicated by increasing gross and operating margins. The reduction in cost of sales and SG&A expenses supports this trend. Although amortization costs and special charges occasionally impacted operating expenses, their influence diminished over time. Interest expenses have decreased, contributing positively to net income growth. Volatilities in tax provisions suggest dynamic tax management. The overall trajectory shows strengthening financial performance and resilience across the analyzed periods.