Microchip Technology Inc. (NASDAQ:MCHP) Q2 2019 Earnings Conference Call - Final Transcript
Aug 06, 2019 • 05:00 pm ET
Good day everyone and welcome to this Microchip's First Quarter Fiscal 2020 Financial Results Conference Call.
At this time, I would like to turn the call over to Microchip's Chief Financial Officer, Mr. Eric Bjornholt. Please go ahead, sir.
J. Eric Bjornholt
Thank you and good afternoon, everyone. During the course of this conference call we will be making projections and other forward-looking statements regarding future events or the future financial performance of the company. We wish to caution you that such statements are predictions and that actual events or results may differ materially. We refer you to our press releases of today as well as our recent filings with the SEC that identify important risk factors that may impact Microchip's business and results of operations. And in attendance with me today are Steve Sanghi, Microchip's Chairman and CEO; and Ganesh Moorthy, Microchip's President and COO.
I will comment on our first quarter fiscal year 2020 financial performance and Steve and Ganesh will then give their comments on the results, discuss the current business environment as well as our guidance and provide an update on our ongoing integration activities associated with the Microsemi acquisition. We will then be available to respond to specific investor and analyst questions. We are including information in our press release and this conference call on various GAAP and non-GAAP measures. We have posted a full GAAP to non-GAAP reconciliation on the Investor Relations page of our website at www.microchip.com, which we believe, you will find useful when comparing our GAAP and non-GAAP results. We have also posted a summary of our outstanding debt and leverage metrics on our website. And I understand that those schedules aren't showing up right away but we should have that issue corrected very shortly here for all of you.
I want to remind investors that during the June quarter of 2018, we adopted the new GAAP revenue recognition standard, which requires revenue to be recognized at the time products are sold to distributors versus our historical revenue recognition policy, where revenue on such transactions was deferred until the product was sold by our distributors to an end customer. As discussed in previous earnings conference calls, we continue to track and measure our performance internally based on direct revenue plus distribution sell-through activity. And each quarter we will provide a metric for this called end-market demand in our earnings release. Therefore, along with our GAAP and non-GAAP results based on distribution sell-in, we will also provide investors with our end-market demand based on distribution sell-out but will not provide the P&L based on end-market demand. End market demand in the June 2019 quarter was $1.35 billion, which was up 0.7% sequentially from the March 2019 quarter. End market demand was about $27 million more than our GAAP revenue in the June quarter.
I will now go through some of the operating results, including net sales, gross margin and operating expenses. I will be referring to these results on a non-GAAP basis, which is