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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
Quarterly Data

Microchip Technology Inc., common-size consolidated income statement (quarterly data)

Microsoft Excel
3 months ended: Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019 Dec 31, 2018 Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec 31, 2016 Sep 30, 2016 Jun 30, 2016
Net sales 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
Cost of sales -32.20 -32.57 -33.29 -33.82 -34.38 -35.25 -35.80 -36.83 -37.45 -38.30 -39.05 -38.64 -38.99 -38.14 -38.36 -38.31 -43.29 -51.88 -47.05 -38.63 -38.94 -39.33 -39.88 -40.97 -44.24 -52.88 -56.41
Gross profit 67.80% 67.43% 66.71% 66.18% 65.62% 64.75% 64.20% 63.17% 62.55% 61.70% 60.95% 61.36% 61.01% 61.86% 61.64% 61.69% 56.71% 48.12% 52.95% 61.37% 61.06% 60.67% 60.12% 59.03% 55.76% 47.12% 43.59%
Research and development -13.02 -12.96 -13.70 -14.05 -13.96 -14.92 -15.19 -15.57 -15.54 -15.26 -15.12 -16.72 -16.86 -16.43 -16.57 -16.15 -15.84 -15.49 -14.18 -13.33 -13.23 -13.20 -13.42 -14.09 -15.87 -15.81 -18.50
Selling, general and administrative -9.35 -9.76 -9.62 -10.15 -10.10 -10.90 -11.11 -11.25 -11.40 -11.05 -11.17 -12.49 -13.26 -12.88 -12.69 -12.60 -12.72 -12.33 -13.53 -11.42 -10.97 -11.29 -11.75 -12.31 -13.31 -13.79 -19.70
Amortization of acquired intangible assets -7.72 -8.08 -8.54 -11.69 -12.27 -13.07 -13.74 -15.84 -17.13 -17.79 -17.97 -18.73 -19.32 -18.55 -18.79 -13.30 -14.09 -11.86 -11.03 -12.25 -12.17 -11.95 -12.43 -10.45 -9.92 -9.23 -10.03
Special income (charges) and other, net -0.30 -0.21 0.86 -0.49 0.02 -0.62 -0.67 0.49 -0.32 -0.33 -0.02 -1.30 -1.38 -0.27 -0.61 1.75 0.09 -1.27 -3.31 -0.02 -0.02 -1.96 0.28 -5.11 -2.51 -1.10 -2.76
Operating expenses -30.39% -31.01% -30.99% -36.38% -36.32% -39.52% -40.70% -42.18% -44.39% -44.42% -44.28% -49.25% -50.82% -48.13% -48.66% -40.29% -42.55% -40.95% -42.04% -37.02% -36.39% -38.40% -37.32% -41.96% -41.61% -39.92% -50.99%
Operating income (loss) 37.41% 36.42% 35.72% 29.80% 29.30% 25.23% 23.50% 20.99% 18.16% 17.27% 16.67% 12.12% 10.19% 13.72% 12.97% 21.40% 14.16% 7.17% 10.91% 24.35% 24.67% 22.27% 22.79% 17.07% 14.15% 7.20% -7.39%
Losses on equity method investments 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.01 -0.01 -0.01 -0.01 0.00 -0.01 -0.01 -0.01 -0.01 -0.01 -0.01 -0.01
Interest income 0.04 0.01 0.01 0.00 0.01 0.01 0.02 0.06 0.01 0.02 0.02 0.04 0.05 0.07 0.05 0.06 0.05 0.06 0.47 0.75 0.63 0.46 0.36 0.15 0.06 0.05 0.10
Interest expense -2.43 -2.57 -2.56 -3.13 -3.53 -3.93 -4.61 -5.32 -6.40 -7.12 -7.57 -8.70 -9.30 -9.69 -10.03 -10.25 -10.01 -9.68 -7.46 -5.02 -5.00 -4.89 -5.09 -4.62 -4.21 -4.03 -4.31
Loss on settlement of debt 0.00 -0.10 -0.32 -0.64 -0.92 -5.16 -0.02 -5.83 -10.51 -3.44 -2.05 -0.26 0.00 -0.01 -0.14 -0.62 -0.01 -0.29 0.00 0.00 -0.22 0.00 -1.42 -4.86 0.00 0.00 0.00
Other income (expense) -2.40% -2.66% -2.87% -3.77% -4.44% -9.09% -4.61% -11.09% -16.89% -10.55% -9.59% -8.92% -9.25% -9.62% -10.12% -10.81% -9.97% -9.90% -6.99% -4.27% -4.58% -4.43% -6.15% -9.33% -4.15% -3.98% -4.20%
Other income (loss), net 0.12 -0.04 0.09 -0.04 0.26 -0.10 0.03 -0.06 -0.03 0.05 -0.24 0.26 -0.12 -0.10 0.20 0.77 -0.18 -0.01 -0.81 -1.30 -0.30 0.57 0.46 0.22 0.01 -0.32 0.25
Income (loss) before income taxes 35.14% 33.72% 32.93% 25.98% 25.12% 16.05% 18.92% 9.84% 1.24% 6.78% 6.83% 3.45% 0.82% 4.00% 3.06% 11.37% 4.00% -2.75% 3.11% 18.78% 19.78% 18.40% 17.10% 7.95% 10.01% 2.90% -11.35%
Income tax (provision) benefit -8.39 -7.38 -7.10 -2.24 -5.05 -1.38 -2.82 -1.94 1.43 -1.16 2.60 4.08 23.34 4.14 0.77 1.77 -0.42 9.47 -0.16 -4.14 -45.03 0.29 0.45 7.21 2.86 1.19 -2.31
Net income (loss) from continuing operations 26.75% 26.35% 25.83% 23.74% 20.07% 14.67% 16.11% 7.91% 2.68% 5.62% 9.44% 7.53% 24.16% 8.14% 3.83% 13.14% 3.58% 6.72% 2.94% 14.64% -25.25% 18.69% 17.55% 15.17% 12.86% 4.08% -13.66%
Net loss from discontinued operations 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -0.02 -0.19 -0.52
Net income (loss) 26.75% 26.35% 25.83% 23.74% 20.07% 14.67% 16.11% 7.91% 2.68% 5.62% 9.44% 7.53% 24.16% 8.14% 3.83% 13.14% 3.58% 6.72% 2.94% 14.64% -25.25% 18.69% 17.55% 15.17% 12.85% 3.89% -14.18%

Based on: 10-Q (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-K (reporting date: 2022-03-31), 10-Q (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-K (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-K (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-K (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-K (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-K (reporting date: 2017-03-31), 10-Q (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30).

A comprehensive analysis of the common-size income statement reveals a significant expansion in profitability margins and operational efficiency from mid-2016 through the end of 2022. The most prominent trend is the consistent reduction in the cost of sales, which decreased from 56.41% of net sales in June 2016 to 32.20% by December 2022. This contraction in direct costs resulted in a substantial increase in gross profit margins, which climbed from 43.59% to 67.80% over the analyzed period.

Operating Expense Management
Selling, general, and administrative expenses exhibited a steady downward trend, falling from 19.70% of net sales in June 2016 to 9.35% by December 2022, indicating improved scale efficiencies. Research and development costs remained relatively stable, generally fluctuating between 13% and 18% of net sales. Amortization of acquired intangible assets, which peaked at 19.32% in December 2019, declined to 7.72% by the end of 2022, contributing to the overall reduction in operating expenses.
Operating Income Performance
Operating income showed significant volatility in the earlier years, including a dip to 7.17% in September 2018, before entering a period of sustained growth. By the final quarter of 2022, operating income reached 37.41% of net sales, the highest level in the provided sequence. This growth is attributed to the combined effect of widening gross margins and disciplined control of operating expenses.
Non-Operating Costs and Debt Obligations
Interest expenses were a notable burden during the 2018-2020 period, peaking at 10.25% of net sales in March 2019. However, these costs declined steadily to 2.43% by December 2022. Periodic losses on the settlement of debt occurred, most notably a sharp spike to 10.51% in December 2020, which temporarily suppressed income before taxes.
Net Income Volatility and Trends
Net income as a percentage of sales experienced extreme fluctuations, particularly in December 2017, where a net loss of 25.25% was recorded, largely driven by a significant income tax provision of 45.03%. Despite these anomalies, a strong recovery trend is evident from 2021 onward, with net income margins rising from 7.91% in March 2021 to 26.75% in December 2022.

Overall, the financial trajectory indicates a transition from a period of high cost structures and debt-related pressures toward a high-margin operational model. The convergence of decreasing cost of sales, lower interest burdens, and reduced administrative overhead has led to a marked increase in the conversion of net sales into net income.

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