(2) See the "Use of Non-GAAP Financial Measures" section of this release.
Net sales for the fourth quarter of fiscal 2022 were a record $1.844 billion, up 25.7% from net sales of $1.467 billion in the prior year's fourth fiscal quarter.
GAAP net income for the fourth quarter of fiscal 2022 was $437.9 million, or $0.77 per diluted share, up from GAAP net income of $116.0 million, or $0.21 per diluted share, in the prior year's fourth fiscal quarter. For the fourth quarters of fiscal 2022 and 2021, GAAP net income was adversely impacted by amortization of acquired intangible assets associated with our previous acquisitions and loss on debt settlement associated with our debt refinancing activities.
Non-GAAP net income for the fourth quarter of fiscal 2022 was a record at $764.6 million, or $1.35 per diluted share, up from non-GAAP net income of $521.4 million, or $0.93 per diluted share, in the prior year's fourth fiscal quarter. For the fourth quarters of fiscal 2022 and fiscal 2021, our non-GAAP results exclude the effect of share-based compensation, manufacturing excursion, expenses related to our acquisition activities (including intangible asset amortization, severance, and other restructuring costs, and legal and other general and administrative expenses associated with acquisitions including legal fees and expenses for litigation and investigations related to our Microsemi acquisition), professional services associated with certain legal matters, IT security remediation costs, non-cash interest expense on our convertible debentures, losses on the settlement of debt, and gains related to equity investments. For the fourth quarters of fiscal 2022 and fiscal 2021, our non-GAAP income tax expense is presented based on projected cash taxes for the applicable fiscal year, excluding transition tax payments under the Tax Cuts and Jobs Act. A reconciliation of our non-GAAP and GAAP results is included in this press release.
Net sales for the fiscal year ended March 31, 2022 were a record $6.821 billion, an increase of 25.4% from net sales of $5.438 billion in the prior fiscal year.
GAAP net income for the fiscal year ended March 31, 2022 was $1.286 billion, or $2.27 per diluted share, an increase of 267.9% from net income of $349.4 million, or $0.65 per diluted share in the prior fiscal year. Fiscal 2022 and fiscal 2021 GAAP net income were significantly adversely impacted by amortization of acquired intangible assets associated with our previous acquisitions and loss on debt settlement associated with our debt refinancing activities.
Non-GAAP net income for the fiscal year ended March 31, 2022 was a record $2.611 billion, or $4.61 per diluted share, an increase of 46.3% from net income of $1.785 billion, or $3.30 per diluted share, in the prior fiscal year. See the "Use of Non-GAAP Financial Measures" section of this release.
Microchip announced today that its Board of Directors declared a record quarterly cash dividend on its common stock of 27.6 cents per share, up 9.1% from the cash dividend paid last quarter and up 33.7% from the year ago quarter. The quarterly dividend is payable on June 3, 2022 to stockholders of record on May 20, 2022.
"We delivered yet another quarter of strong growth and profitability during the March quarter and closed out a record fiscal year 2022 with outstanding revenue growth of 25.7% compared to the prior year's fourth fiscal quarter. Our March quarter results came in near the high end of our guidance range, and we achieved new records across key operating non-GAAP metrics," said Ganesh Moorthy, President and Chief Executive Officer. "These impressive results are a testament to the resilience of our model and the strength of our team as we continue to navigate through a challenging supply environment. We believe our focus on operational excellence positions us well to achieve our long-term non-GAAP gross margin target of 68%, non-GAAP operating margin target of 45%, and free cash flow target of 38% through industry cycles."
Mr. Moorthy added, "Overall business conditions remained very strong in the March quarter with high levels of bookings and record backlog for product to be shipped over multiple quarters, accentuated by our Preferred Supply Program, which continues to be greater than 50% of our aggregate backlog and more than 100% of our backlog in the most constrained capacity areas. As it has been throughout fiscal 2022, in the March quarter demand outpaced the capacity improvements we implemented, resulting in our unsupported backlog continuing to climb and our lead times remaining stretched. Based on the magnitude of the demand-supply imbalance, the size of our non-cancellable backlog, the rate at which new backlog continues to come in, and the pace at which we can bring new capacity online, we expect to remain supply-constrained throughout 2022 and into 2023."
Steve Sanghi, Microchip's Executive Chair, said, "Based on our record revenue growth and profitability and significant reduction of our net leverage during fiscal year 2022, we commenced a more active capital return strategy during the year, which was further enhanced during the second half of the fiscal year with the addition of a programmatic stock buyback program. I am pleased to report that Microchip's Board of Directors approved a sequential increase in our dividend of 9.1%, to a record 27.6 cents per share, representing a 33.7% year-over-year increase. Given our strong cash flow generation during the March quarter, we are targeting $348.2 million return to shareholders in the June quarter via dividends and share repurchases."
Eric Bjornholt, Microchip's Chief Financial Officer, said, "We continued to aggressively pay down our debt with another $205.9 million of payments during the March quarter, reflecting a cumulative debt pay down of $4.98 billion over the past 15 quarters, as we have actively managed the working capital requirements for the business. As part of the debt pay down in the March quarter we exchanged $64.9 million of dilutive convertible debentures for cash and shares of our common stock. We believe that these transactions will benefit stockholders by significantly reducing share count dilution to the extent our stock price appreciates over time. In addition, we purchased $259.6 million of our stock as we executed our programmatic stock buyback program, and we anticipate purchasing an additional $194.6 million of shares during the June quarter. We remain focused on continuing to enhance our capital structure in the future."
Mr. Moorthy concluded, "Our backlog for the June quarter is very strong. Demand continues to outpace supply, and we also have considerable backlog requested by customers in the June quarter that currently cannot be fulfilled until later quarters, despite growing capacity from last quarter. Our Total Systems Solutions strategy, combined with our focus on key market megatrends, is driving stronger customer engagements resulting in share gains in the end markets we serve. Given this backdrop, and comprehending the anticipated effects of the lockdowns in China, we expect our net sales in the June quarter to be up between 4% and 8% sequentially. At the mid-point of our guidance for the June quarter, net sales will be 24.6% higher than the year ago quarter."
Microchip's Highlights for the Quarter Ended March 31, 2022:
- Announced the industry’s first automotive-qualified Gen 4 PCIe® switches that enable the autonomous driving ecosystem. Switchtec™ Gen 4 PCIe switches provide low-latency, low-power and high-performance connectivity required for Advanced Driver Assistance System (ADAS) designs.
- Introduced the industry’s highest-performance 16-Channel PCIe® Gen 5 Enterprise NVMe® SSD Controller. Microchip’s Flashtec® NVMe 4016 controller enables unparalleled performance and a rich "cloud-ready" feature set including industry-leading security features needed for high-reliability, high-performance Solid-State Drives (SSDs) in data centers.
- Unveiled industry-leading 3.3 kV Silicon Carbide (SiC) power devices enabling new levels of efficiency and reliability in high-voltage power electronics. 3.3 kV SiC MOSFETs and Schottky Barrier Diodes (SBDs) extend designers’ options for power in transportation, energy and industrial systems.
- Introduced the industry’s only family of standard non-hybrid space-grade power converters including a 28 Volt (V)-input radiation-tolerant options. Microchip’s alternatives to inflexible hybrid-style converters improve design flexibility while reducing system size, cost and development time in aerospace and defense applications.
- Announced through subsidiary Silicon Storage Technology® (SST) that customer WITINMEN introduced a System on Chip (SoC) that utilizes SST’s analog embedded SuperFlash® memBrain™ memory technology to solve speech processing challenges that demand neural processing at edge nodes.
- Released new In-Circuit Emulator (ICE) development tool to boost productivity with feature-rich programming and debugging of code for MCUs. Microchip’s MPLAB ® ICE 4 is a full emulation, programming and debugging system featuring wireless connectivity, power debugging and real-time code profiling using trace.
- Unveiled a new family of Time Sensitive Networking (TSN) Ethernet switches that provides the industry’s first turnkey solution for industrial automation networks. Microchip’s LAN9668x family of Ethernet switches enables single network architecture and, combined with the new LAN8814 PHYs, reduces system cost and risk for designers while speeding time to market.
- Announced enablement of Qi ® 1.3 wireless charging with authentication by releasing a new secure storage subsystem and key provisioning system now mandated by the Wireless Power Consortium (WPC) Qi 1.3 wireless charging standard.
