Power Integrations Reports First-Quarter Financial Results

By: Power Integrations, Inc. via Business Wire

May 07, 2024 at 16:01 PM EDT

Quarterly revenues were $91.7 million; GAAP earnings were $0.07 per diluted share; non-GAAP earnings were $0.18 per diluted share

Power Integrations (NASDAQ: POWI) today announced financial results for the quarter ended March 31, 2024. Net revenues for the first quarter were $91.7 million, up two percent from the prior quarter and down 14 percent from the first quarter of 2023. GAAP net income for the first quarter was $4.0 million or $0.07 per diluted share compared to $0.25 per diluted share in the prior quarter and $0.12 per diluted share in the first quarter of 2023. Cash flow from operations for the first quarter was $15.9 million.

In addition to its GAAP results, the company provided non-GAAP measures that exclude stock-based compensation, amortization of acquisition-related intangible assets and the related tax effects. Non-GAAP net income for the first quarter of 2024 was $10.5 million or $0.18 per diluted share compared to $0.22 per diluted share in the prior quarter and $0.25 per diluted share in the first quarter of 2023. A reconciliation of GAAP to non-GAAP financial results is included with the tables accompanying this press release.

Commented Balu Balakrishnan, chairman and CEO of Power Integrations: “Orders have improved in recent months as supply-chain inventories continue to normalize. We expect sequentially higher revenues in the second quarter, accompanied by a further increase in gross margin driven by the dollar/yen exchange rate and higher manufacturing utilization.”

Mr. Balakrishnan continued: “We further advanced the state of the art in power-conversion technology in the first quarter with the introduction of InnoMux™-2. The new ICs provide multiple, independently regulated DC outputs, eliminating the need for separate DC-DC stages and greatly increasing efficiency. The efficiency of InnoMux-2 is further enhanced by our PowiGaN™ transistors, bringing total system efficiency to more than 90 percent. Meanwhile, our acquisition of the assets of Odyssey Semiconductor augments our efforts to develop high-current GaN and bring the benefits of GaN technology to much higher-power applications.”

Additional Highlights

Power Integrations has agreed to acquire the assets of Odyssey Semiconductor Technologies, augmenting the company’s development of high-power gallium-nitride (GaN) switching technology. The purchase is expected to close in July 2024.
During the first quarter Power Integrations repurchased 207 thousand shares of its common stock for $14.6 million; the company had $11.3 million remaining on its repurchase authorization as of March 31, 2024.
Power Integrations paid a dividend of $0.20 per share on March 28, 2024; a dividend of $0.20 per share will be paid on June 28, 2024, to stockholders of record as of May 31, 2024.

Financial Outlook

The company issued the following forecast for the second quarter of 2024:

Revenues are expected to be $105 million plus or minus $5 million.
GAAP gross margin is expected to be between 52.5 percent and 53.0 percent; non-GAAP gross margin is expected to be between 53.5 percent and 54.0 percent. The difference between GAAP and non-GAAP gross margins is approximately equally attributable to stock-based compensation and amortization of acquisition-related intangible assets.
GAAP operating expenses are expected to be between $54.5 million and $55 million; non-GAAP operating expenses are expected to be between $44.5 million and $45 million. Non-GAAP operating expenses are expected to exclude approximately $10 million of stock-based compensation.

Conference Call Today at 1:30 p.m. Pacific Time

Power Integrations management will hold a conference call today at 1:30 p.m. Pacific time. Members of the investment community can register for the call by visiting the following link: https://registrations.events/direct/Q4I245880. A live webcast of the call will also be available on the investor section of the company's website, http://investors.power.com.

About Power Integrations

Power Integrations, Inc. is a leading innovator in semiconductor technologies for high-voltage power conversion. The company’s products are key building blocks in the clean-power ecosystem, enabling the generation of renewable energy as well as the efficient transmission and consumption of power in applications ranging from milliwatts to megawatts. For more information, please visit www.power.com.

Note Regarding Use of Non-GAAP Financial Measures

In addition to the company's consolidated financial statements, which are presented according to GAAP, the company provides certain non-GAAP financial information that excludes stock-based compensation expenses recorded under ASC 718-10, amortization of acquisition-related intangible assets and the tax effects of these items. The company uses these measures in its financial and operational decision-making and, with respect to one measure, in setting performance targets for compensation purposes. The company believes that these non-GAAP measures offer important analytical tools to help investors understand its operating results, and to facilitate comparability with the results of companies that provide similar measures. Non-GAAP measures have limitations as analytical tools and are not meant to be considered in isolation or as a substitute for GAAP financial information. For example, stock-based compensation is an important component of the company’s compensation mix and will continue to result in significant expenses in the company’s GAAP results for the foreseeable future but is not reflected in the non-GAAP measures. Also, other companies, including companies in Power Integrations’ industry, may calculate non-GAAP measures differently, limiting their usefulness as comparative measures. Reconciliations of non-GAAP measures to GAAP measures are attached to this press release.

Note Regarding Forward-Looking Statements

The above statements regarding the company’s forecast for its second-quarter financial performance are forward-looking statements reflecting management's current expectations and beliefs. These statements are based on current information that is, by its nature, subject to rapid and even abrupt change. Due to risks and uncertainties associated with the company's business, actual results could differ materially from those projected or implied by these statements. These risks and uncertainties include, but are not limited to: the company’s ability to supply products and its ability to conduct other aspects of its business such as competing for new design wins; changes in global economic and geopolitical conditions, including such factors as inflation, armed conflicts and trade negotiations, which may impact the level of demand for the company’s products; potential changes and shifts in customer demand away from end products that utilize the company's integrated circuits to end products that do not incorporate the company's products; the effects of competition, which may cause the company’s revenues to decrease or cause the company to decrease its selling prices for its products; unforeseen costs and expenses; and unfavorable fluctuations in component costs or operating expenses resulting from changes in commodity prices and/or exchange rates. In addition, new product introductions and design wins are subject to the risks and uncertainties that typically accompany development and delivery of complex technologies to the marketplace, including product development delays and defects and market acceptance of the new products. These and other risk factors that may cause actual results to differ are more fully explained under the caption “Risk Factors” in the company's most recent Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 12, 2024. The company is under no obligation (and expressly disclaims any obligation) to update or alter its forward-looking statements, whether because of new information, future events or otherwise, except as otherwise required by law.

Power Integrations, InnoMux, PowiGaN and the Power Integrations logo are trademarks or registered trademarks of Power Integrations, Inc. All other trademarks are property of their respective owners.

POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per-share amounts)


	Three Months Ended
	March 31, 2024			December 31, 2023			March 31, 2023
NET REVENUES	$	91,688		$	89,507		$	106,297

COST OF REVENUES		43,908			43,299			52,340

GROSS PROFIT		47,780			46,208			53,957

OPERATING EXPENSES:
Research and development		23,225			23,505			23,981
Sales and marketing		15,722			15,472			15,885
General and administrative		8,363			8,282			8,334
Total operating expenses		47,310			47,259			48,200

INCOME (LOSS) FROM OPERATIONS		470			(1,051	)		5,757

OTHER INCOME		3,502			3,282			1,714

INCOME BEFORE INCOME TAXES		3,972			2,231			7,471

PROVISION (BENEFIT) FOR INCOME TAXES		18			(12,040	)		596

NET INCOME	$	3,954		$	14,271		$	6,875

EARNINGS PER SHARE:
Basic	$	0.07		$	0.25		$	0.12
Diluted	$	0.07		$	0.25		$	0.12

SHARES USED IN PER-SHARE CALCULATION:
Basic		56,833			56,937			57,105
Diluted		57,132			57,272			57,579



SUPPLEMENTAL INFORMATION:	Three Months Ended
	March 31, 2024			December 31, 2023			March 31, 2023
Stock-based compensation expenses included in:
Cost of revenues	$	346		$	499		$	301
Research and development		2,425			2,947			2,668
Sales and marketing		1,604			1,827			1,653
General and administrative		2,039			2,230			2,746
Total stock-based compensation expense	$	6,414		$	7,503		$	7,368

Cost of revenues includes:
Amortization of acquisition-related intangible assets	$	482		$	482		$	482


	Three Months Ended
REVENUE MIX BY END MARKET	March 31, 2024			December 31, 2023			March 31, 2023
Communications		11	%		27	%		28	%
Computer		11	%		9	%		14	%
Consumer		41	%		29	%		24	%
Industrial		37	%		35	%		34	%

POWER INTEGRATIONS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP RESULTS
(in thousands, except per-share amounts)

	Three Months Ended
	March 31, 2024			December 31, 2023			March 31, 2023
RECONCILIATION OF GROSS PROFIT
GAAP gross profit	$	47,780		$	46,208		$	53,957
GAAP gross margin		52.1	%		51.6	%		50.8	%

Stock-based compensation included in cost of revenues		346			499			301
Amortization of acquisition-related intangible assets		482			482			482

Non-GAAP gross profit	$	48,608		$	47,189		$	54,740
Non-GAAP gross margin		53.0	%		52.7	%		51.5	%


	Three Months Ended
RECONCILIATION OF OPERATING EXPENSES	March 31, 2024			December 31, 2023			March 31, 2023
GAAP operating expenses	$	47,310		$	47,259		$	48,200

Less: Stock-based compensation expense included in operating expenses
Research and development		2,425			2,947			2,668
Sales and marketing		1,604			1,827			1,653
General and administrative		2,039			2,230			2,746
Total		6,068			7,004			7,067

Non-GAAP operating expenses	$	41,242		$	40,255		$	41,133


	Three Months Ended
RECONCILIATION OF INCOME FROM OPERATIONS	March 31, 2024			December 31, 2023			March 31, 2023
GAAP income (loss) from operations	$	470		$	(1,051	)	$	5,757
GAAP operating margin		0.5	%		-1.2	%		5.4	%

Add: Stock-based compensation		6,414			7,503			7,368
Amortization of acquisition-related intangible assets		482			482			482

Non-GAAP income from operations	$	7,366		$	6,934		$	13,607
Non-GAAP operating margin		8.0	%		7.7	%		12.8	%


	Three Months Ended
RECONCILIATION OF PROVISION FOR INCOME TAXES	March 31, 2024			December 31, 2023			March 31, 2023
GAAP provision (benefit) for income taxes	$	18		$	(12,040	)	$	596
GAAP effective tax rate		0.5	%		-539.7	%		8.0	%

Tax effect of adjustments to GAAP results		(358	)		(9,556	)		(501	)

Non-GAAP provision (benefit) for income taxes	$	376		$	(2,484	)	$	1,097
Non-GAAP effective tax rate		3.5	%		-24.3	%		7.2	%


	Three Months Ended
RECONCILIATION OF NET INCOME PER SHARE (DILUTED)	March 31, 2024			December 31, 2023			March 31, 2023
GAAP net income	$	3,954		$	14,271		$	6,875

Adjustments to GAAP net income
Stock-based compensation		6,414			7,503			7,368
Amortization of acquisition-related intangible assets		482			482			482
Tax effect of items excluded from non-GAAP results		(358	)		(9,556	)		(501	)

Non-GAAP net income	$	10,492		$	12,700		$	14,224

Average shares outstanding for calculation
of non-GAAP net income per share (diluted)		57,132			57,272			57,579

Non-GAAP net income per share (diluted)	$	0.18		$	0.22		$	0.25

GAAP net income per share (diluted)	$	0.07		$	0.25		$	0.12

POWER INTEGRATIONS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)


	March 31, 2024			December 31, 2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	56,443		$	63,929
Short-term marketable securities		243,163			247,640
Accounts receivable, net		12,279			14,674
Inventories		167,865			163,164
Prepaid expenses and other current assets		22,714			22,193
Total current assets		502,464			511,600

PROPERTY AND EQUIPMENT, net		159,945			164,213
INTANGIBLE ASSETS, net		3,881			4,424
GOODWILL		91,849			91,849
DEFERRED TAX ASSETS		29,654			28,325
OTHER ASSETS		17,983			19,457
Total assets	$	805,776		$	819,868

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	27,361		$	26,390
Accrued payroll and related expenses		11,822			13,551
Taxes payable		878			1,016
Other accrued liabilities		9,474			7,910
Total current liabilities		49,535			48,867

LONG-TERM LIABILITIES:
Income taxes payable		6,193			6,244
Other liabilities		11,870			12,516
Total liabilities		67,598			67,627

STOCKHOLDERS' EQUITY:
Common stock		22			23
Additional paid-in capital		-			-
Accumulated other comprehensive loss		(2,559	)		(1,462	)
Retained earnings		740,715			753,680
Total stockholders' equity		738,178			752,241
Total liabilities and stockholders' equity	$	805,776		$	819,868

POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

	Three Months Ended
	March 31, 2024			December 31, 2023			March 31, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	3,954		$	14,271		$	6,875
Adjustments to reconcile net income to cash provided by operating activities
Depreciation		8,715			8,887			8,961
Amortization of intangible assets		543			543			543
Loss on disposal of property and equipment		8			14			7
Stock-based compensation expense		6,414			7,503			7,368
Amortization of premium (accretion of discount) on marketable securities		(496	)		(497	)		404
Deferred income taxes		(1,330	)		705			(738	)
Increase (decrease) in accounts receivable allowance for credit losses		163			-			(454	)
Change in operating assets and liabilities:
Accounts receivable		2,232			13,865			705
Inventories		(4,701	)		(12,918	)		(7,024	)
Prepaid expenses and other assets		846			(346	)		(2,302	)
Accounts payable		1,294			(2,553	)		2,926
Taxes payable and other accrued liabilities		(1,737	)		(13,207	)		(686	)
Net cash provided by operating activities		15,905			16,267			16,585

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(4,343	)		(6,143	)		(4,082	)
Purchases of marketable securities		(49,912	)		(18,196	)		(36,922	)
Proceeds from sales and maturities of marketable securities		54,198			36,045			22,693
Net cash provided by (used in) investing activities		(57	)		11,706			(18,311	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock		2,691			-			3,098
Repurchase of common stock		(14,641	)		(47,444	)		(1,687	)
Payments of dividends to stockholders		(11,384	)		(11,343	)		(10,868	)
Net cash used in financing activities		(23,334	)		(58,787	)		(9,457	)

NET DECREASE IN CASH AND CASH EQUIVALENTS		(7,486	)		(30,814	)		(11,183	)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		63,929			94,743			105,372

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	56,443		$	63,929		$	94,189

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Contacts

Joe Shiffler

Power Integrations, Inc.

(408) 414-8528

joe@power.com

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Power Integrations Reports First-Quarter Financial Results

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