Name: Microchip Technology Inc. (NASDAQ:MCHP) | Income Statement
Creator: Stock Analysis on Net

Income Statement

The income statement presents information on the financial results of a company business activities over a period of time. The income statement communicates how much revenue the company generated during a period and what cost it incurred in connection with generating that revenue.

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Microchip Technology Inc., consolidated income statement

US$ in thousands

12 months ended:	Mar 31, 2022	Mar 31, 2021	Mar 31, 2020	Mar 31, 2019	Mar 31, 2018	Mar 31, 2017
Net sales	6,820,900)	5,438,400)	5,274,200)	5,349,500)	3,980,800)	3,407,807)
Cost of sales	(2,371,300)	(2,059,600)	(2,032,100)	(2,418,200)	(1,560,100)	(1,650,611)
Gross profit	4,449,600)	3,378,800)	3,242,100)	2,931,300)	2,420,700)	1,757,196)
Research and development	(989,100)	(836,400)	(877,800)	(826,300)	(529,300)	(545,293)
Selling, general and administrative	(718,900)	(610,300)	(676,600)	(682,900)	(452,100)	(499,811)
Amortization of acquired intangible assets	(862,500)	(932,300)	(993,900)	(674,100)	(485,500)	(337,667)
Employee separation costs	(600)	1,300)	(6,000)	(65,300)	(1,200)	(39,183)
Gain on sale of assets	7,900)	5,800)	1,500)	—)	4,400)	—)
Impairment charges	—)	—)	(700)	(3,600)	—)	(12,579)
Contract exit costs	(5,000)	1,600)	(5,200)	4,700)	(700)	(44,040)
Wafer fabrication restructuring	(21,100)	(15,000)	(18,000)	—)	—)	—)
Other	300)	(100)	(2,600)	300)	—)	(2,806)
Restructuring	(18,500)	(6,400)	(31,000)	(63,900)	2,500)	(98,608)
Legal contingencies	(12,500)	(200)	(15,700)	30,200)	—)	—)
Contingent consideration revaluation	1,500)	4,900)	—)	—)	—)	—)
Non-restructuring contract exit costs and other	—)	—)	—)	—)	(20,000)	—)
Special charges and other, net	(29,500)	(1,700)	(46,700)	(33,700)	(17,500)	(98,608)
Operating expenses	(2,600,000)	(2,380,700)	(2,595,000)	(2,217,000)	(1,484,400)	(1,481,379)
Operating income	1,849,600)	998,100)	647,100)	714,300)	936,300)	275,817)
Losses on equity method investments	—)	—)	—)	(200)	(200)	(222)
Interest income	500)	1,700)	2,800)	8,100)	22,000)	3,079)
Interest expense	(257,000)	(356,900)	(497,300)	(502,900)	(199,000)	(146,346)
Loss on settlement of debt	(113,400)	(299,600)	(5,400)	(12,600)	(16,000)	(43,879)
Other income (expense)	(369,900)	(654,800)	(499,900)	(507,400)	(193,000)	(187,146)
Other income (loss), net	2,800)	(3,800)	3,200)	(2,200)	(5,800)	1,338)
Income before income taxes	1,482,500)	339,500)	150,400)	204,500)	737,300)	89,787)
Income tax (provision) benefit	(197,000)	9,900)	420,200)	151,400)	(481,900)	80,805)
Net income from continuing operations	1,285,500)	349,400)	570,600)	355,900)	255,400)	170,592)
Net loss from discontinued operations	—)	—)	—)	—)	—)	(5,953)
Net income	1,285,500)	349,400)	570,600)	355,900)	255,400)	164,639)

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).

Revenue and profitability exhibit a strong upward trajectory over the analyzed six-year period, characterized by substantial top-line growth and expanding margins. Net sales doubled from 3.4 billion US dollars in 2017 to 6.8 billion US dollars in 2022, with the most significant acceleration occurring between 2021 and 2022.

Gross Margin Expansion: Gross profit increased from 1.76 billion US dollars in 2017 to 4.45 billion US dollars in 2022. The rate of gross profit growth exceeded the rate of revenue growth, indicating an improvement in production efficiency or a shift toward higher-margin products. The cost of sales remained relatively stable between 2019 and 2021 despite revenue fluctuations, further contributing to margin expansion.
Operating Expense Trends: Research and development expenses showed a general upward trend, rising from 545 million US dollars in 2017 to 989 million US dollars in 2022, reflecting sustained investment in innovation. Selling, general, and administrative expenses remained more contained, fluctuating between 452 million and 719 million US dollars. Amortization of acquired intangible assets peaked in 2020 at 994 million US dollars before gradually declining, suggesting a lifecycle phase of previous acquisitions.
Operating Income Performance: Operating income grew from 276 million US dollars in 2017 to 1.85 billion US dollars in 2022. This growth indicates strong operating leverage, as the increase in operating income significantly outpaced the increase in operating expenses. The sharp rise in 2022 reflects a substantial improvement in the company's ability to convert sales into operating profit.
Non-Operating Impacts and Financial Costs: The financial results were periodically impacted by high interest expenses and losses on the settlement of debt, which peaked in 2021 with a debt settlement loss of 300 million US dollars. Interest expenses remained high from 2019 through 2021, peaking at 503 million US dollars in 2019, before declining to 257 million US dollars by 2022, suggesting a reduction in debt burden or refinancing activities.
Net Income Volatility: Net income demonstrated volatility due to non-operating charges and fluctuating tax provisions. Despite these fluctuations, a clear long-term growth pattern is evident, with net income rising from 165 million US dollars in 2017 to 1.29 billion US dollars in 2022. The 2022 result represents a significant breakthrough in bottom-line profitability, driven by record operating income and reduced financial expenses.

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