A telephonic replay of the conference call will be available at approximately 8:00 p.m. (Eastern Time) on February 2, 2023 and will remain available until 5:00 p.m. (Eastern Time) on February 16, 2023. Interested parties may listen to the replay by dialing 201-612-7415/877-660-6853 and entering access code 13735518.
Cautionary Statement:
The statements in this release relating to our consistent results demonstrating our team's relentless focus on operational excellence, which we believe positions us well to capture market share gains over the business cycle, supply gradually improving, starting to see improvements in lead times, remaining focused on strategically reducing our unsupported backlog in a disciplined manner, while preserving the quality of the new backlog that gets placed, aiming to better serve our customers by targeting lead times for most of our products to be 26 weeks or less by the second half of 2023, remaining cautiously optimistic that we can deliver a soft landing for our business and expect our operating metrics to once again demonstrate resiliency through this business cycle, targeting to return $469.8 million to our shareholders in the March quarter through dividends and share repurchases, remaining committed to increasing cash returns to shareholders, expecting to exit the March quarter with our net leverage below 1.5X, that we will accelerate the percentage of free cash flow returned, expecting to increase the percentage of adjusted free cash flow we return to shareholders every quarter by 500 basis points, until we reach 100% of adjusted free cash flow returned which is targeted to occur in approximately eight quarters, that we now expect to return 67.5% of our adjusted free cash flow from the March quarter to shareholders, aggressively paying down our debt, actively managing the working capital requirements for the business, that our capital return strategy is expected to give us the flexibility to continue to pay down high-interest debt, continuing on our Microchip 3.0 journey, that we have more capacity improvements coming into effect, taking active steps to help customers with inventory positions to selectively push out some of their backlog, that we expect net sales in the March quarter to be up between 1% and 4% sequentially, and we expect to grow revenue sequentially again in the June quarter, that at the mid-point of our guidance for the March quarter, net sales would be 20.6% higher than the year-ago quarter, our fourth quarter fiscal 2023 guidance for net sales and GAAP and non-GAAP gross margin, operating expenses, operating income, other expense, net, income tax provision, net income, diluted common shares outstanding, earnings per diluted share, expected inventory days in the March 2023 quarter, capital expenditures for the March 2023 quarter and for all of fiscal 2023, continuing to add capital equipment to maintain, grow and operate our internal manufacturing capabilities to support the expected growth of our business, our belief that non-GAAP measures are useful to investors and our assumed average stock price in the March 2023 quarter are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause our actual results to differ materially, including, but not limited to: any continued uncertainty, fluctuations or weakness in the U.S. and world economies (including China) due to rising interest rates, high inflation or the impact of the COVID-19 pandemic (including lock-downs in China), actions taken or which may be taken by the Biden administration or the U.S. Congress, monetary policy, political, geopolitical, trade or other issues in the U.S. or internationally (including the Ukraine-Russia military conflict), changes in demand or market acceptance of our products and the products of our customers and our ability to meet any continued increases in market demand; the impact that the CHIPS Act will have on increasing manufacturing capacity in our industry by providing incentives for us, our competitors and foundries to build new wafer manufacturing facilities; the amount and timing of any incentives we may receive under the CHIPS Act, the impact of current and future changes in U.S. corporate tax laws (including the Inflation Reduction Act of 2022 and the Tax Cuts and Jobs Act of 2017), foreign currency effects on our business; the mix of inventory we hold and our ability to satisfy short-term orders from our inventory; changes in utilization of our manufacturing capacity and our ability to effectively manage and expand our production levels to meet any continued increases in market demand; the impact of inflation on our business; competitive developments including pricing pressures; the level of orders that are received and can be shipped in a quarter; our ability to realize the expected benefits of our preferred supply program and our long-term supply assurance program; changes or fluctuations in customer order patterns and seasonality; our ability to obtain a sufficient supply of wafers from third party wafer foundries to meet our increasing needs and the cost of such wafers, our ability to obtain additional capacity from our suppliers to increase production to meet any continued increases in market demand; our ability to successfully integrate the operations and employees, retain key employees and customers and otherwise realize the expected synergies and benefits of our acquisitions; the impact of any future significant acquisitions or strategic transactions we may make; the costs and outcome of any current or future litigation or other matters involving our Microsemi acquisition, the Microsemi business, intellectual property, customers, or other issues; the costs and outcome of any current or future tax audit or investigation regarding our business or the business of Microsemi, our actual average stock price in the March quarter and the impact such price will have on our share count; fluctuations in our stock price and trading volume which could impact the number of shares we acquire under our share repurchase program and the timing of such repurchases; disruptions in our business or the businesses of our customers or suppliers due to natural disasters (including any floods in Thailand), terrorist activity, armed conflict, war, worldwide oil prices and supply, public health concerns (including the COVID-19 pandemic) or disruptions in the transportation system; and general economic, industry or political conditions in the United States or internationally.
For a detailed discussion of these and other risk factors, please refer to Microchip's filings on Forms 10-K and 10-Q. You can obtain copies of Forms 10-K and 10-Q and other relevant documents for free at Microchip's website ( www.microchip.com) or the SEC's website ( www.sec.gov) or from commercial document retrieval services.
Stockholders of Microchip are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date such statements are made. Microchip does not undertake any obligation to publicly update any forward-looking statements to reflect events, circumstances or new information after this February 2, 2023 press release, or to reflect the occurrence of unanticipated events.
About Microchip:
Microchip Technology Incorporated is a leading provider of smart, connected and secure embedded control solutions. Its easy-to-use development tools and comprehensive product portfolio enable customers to create optimal designs, which reduce risk while lowering total system cost and time to market. The Company's solutions serve more than 125,000 customers across the industrial, automotive, consumer, aerospace and defense, communications and computing markets. Headquartered in Chandler, Arizona, Microchip offers outstanding technical support along with dependable delivery and quality. For more information, visit the Microchip website at www.microchip.com.
Note: The Microchip name and logo, the Microchip logo, IGLOO and PolarFire are registered trademarks of Microchip Technology Incorporated in the U.S.A. and other countries. SmartFusion is a registered trademark of Microchip Technology Incorporated in the U.S.A. All other trademarks mentioned herein are the property of their respective companies.
INVESTOR RELATIONS CONTACT:
J. Eric Bjornholt -- CFO (480) 792-7804
