Power Integrations Reports Second-Quarter Financial Results

About this update from Power Integrations, Inc.

Quarterly revenues were $106.2 million ; GAAP earnings were $0.09 per diluted share; non-GAAP earnings were $0.28 per diluted share SAN JOSE, Calif. --(BUSINESS WIRE)-- Power Integrations (NASDAQ: POWI ) today announced financial results for the quarter ended June 30, 2024 . Net revenues for the second quarter were $106.2 million , up 16 percent from the prior quarter and down 14 percent from the second quarter of 2023. GAAP net income for the second quarter was $4.8 million or $0.09 per diluted share compared to $0.07 per diluted share in the prior quarter and $0.26 per diluted share in the second quarter of 2023. Cash flow from operations for the second quarter was $17.6 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 second quarter of 2024 was $15.9 million or $0.28 per diluted share compared to $0.18 per diluted share in the prior quarter and $0.36 per diluted share in the second quarter of 2023. A reconciliation of GAAP to non-GAAP financial results is included with the tables accompanying this press release. Stated Balu Balakrishnan , chairman and CEO of Power Integrations : “Second-quarter revenues rebounded as expected, and while demand continues to be soft and visibility is limited, we expect another sequential increase in the third quarter driven by lower distributor inventories and new design wins. We also expect a further increase in our gross margin driven by the favorable dollar/yen exchange rate and higher manufacturing volumes.” Additional Highlights On July 1, 2024 , Power Integrations completed its acquisition of the assets of Odyssey Semiconductor Technologies. The transaction is intended to augment the company’s development of high-power gallium-nitride (GaN) switching technology. During the second quarter Power Integrations repurchased 164 thousand shares of its common stock for $11.3 million , completing its repurchase authorization. Power Integrations paid a dividend of $0.20 per share on June 28, 2024 ; a dividend of $0.20 per share will be paid on September 30, 2024 , to stockholders of record as of August 30, 2024 . Financial Outlook The company issued the following forecast for the third quarter of 2024: Revenues are expected to be $115 million plus or minus $5 million . GAAP gross margin is expected to be between 53.5 percent and 54.0 percent; non-GAAP gross margin is expected to be between 54.5 percent and 55.0 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 $53.5 million and $54 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 $9 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 . A live webcast of the call will be available on the investor section of the company's website, http://investors.power.com . Members of the investment community can access the telephonic conference call by clicking here . 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 third-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 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 Six Months Ended June 30, 2024 March 31, 2024 June 30, 2023 June 30, 2024 June 30, 2023 NET REVENUES $ 106,198 $ 91,688 $ 123,223 $ 197,886 $ 229,520 COST OF REVENUES 49,665 43,908 60,377 93,573 112,717 GROSS PROFIT 56,533 47,780 62,846 104,313 116,803 OPERATING EXPENSES: Research and development 26,047 23,225 24,517 49,272 48,498 Sales and marketing 18,053 15,722 17,017 33,775 32,902 General and administrative 10,475 8,363 8,671 18,838 17,005 Total operating expenses 54,575 47,310 50,205 101,885 98,405 INCOME FROM OPERATIONS 1,958 470 12,641 2,428 18,398 OTHER INCOME 3,189 3,502 2,714 6,691 4,428 INCOME BEFORE INCOME TAXES 5,147 3,972 15,355 9,119 22,826 PROVISION FOR INCOME TAXES 298 18 562 316 1,158 NET INCOME $ 4,849 $ 3,954 $ 14,793 $ 8,803 $ 21,668 EARNINGS PER SHARE: Basic $ 0.09 $ 0.07 $ 0.26 $ 0.15 $ 0.38 Diluted $ 0.09 $ 0.07 $ 0.26 $ 0.15 $ 0.38 SHARES USED IN PER-SHARE CALCULATION: Basic 56,780 56,833 57,355 56,807 57,231 Diluted 56,984 57,132 57,669 57,104 57,654 SUPPLEMENTAL INFORMATION: Three Months Ended Six Months Ended June 30, 2024 March 31, 2024 June 30, 2023 June 30, 2024 June 30, 2023 Stock-based compensation expenses included in: Cost of revenues $ 707 $ 346 $ 446 $ 1,053 $ 747 Research and development 3,885 2,425 2,429 6,310 5,097 Sales and marketing 2,510 1,604 1,621 4,114 3,274 General and administrative 3,933 2,039 2,256 5,972 5,002 Total stock-based compensation expense $ 11,035 $ 6,414 $ 6,752 $ 17,449 $ 14,120 Cost of revenues includes: Amortization of acquisition-related intangible assets $ 258 $ 482 $ 482 $ 740 $ 964 Three Months Ended Six Months Ended REVENUE MIX BY END MARKET June 30, 2024 March 31, 2024 June 30, 2023 June 30, 2024 June 30, 2023 Communications 11 % 11 % 28 % 11 % 28 % Computer 14 % 11 % 14 % 13 % 14 % Consumer 42 % 41 % 29 % 41 % 27 % Industrial 33 % 37 % 29 % 35 % 31 % POWER INTEGRATIONS, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP RESULTS (in thousands, except per-share amounts) Three Months Ended Six Months Ended June 30, 2024 March 31, 2024 June 30, 2023 June 30, 2024 June 30, 2023 RECONCILIATION OF GROSS PROFIT GAAP gross profit $ 56,533 $ 47,780 $ 62,846 $ 104,313 $ 116,803 GAAP gross margin 53.2 % 52.1 % 51.0 % 52.7 % 50.9 % Stock-based compensation included in cost of revenues 707 346 446 1,053 747 Amortization of acquisition-related intangible assets 258 482 482 740 964 Non-GAAP gross profit $ 57,498 $ 48,608 $ 63,774 $ 106,106 $ 118,514 Non-GAAP gross margin 54.1 % 53.0 % 51.8 % 53.6 % 51.6 % Three Months Ended Six Months Ended RECONCILIATION OF OPERATING EXPENSES June 30, 2024 March 31, 2024 June 30, 2023 June 30, 2024 June 30, 2023 GAAP operating expenses $ 54,575 $ 47,310 $ 50,205 $ 101,885 $ 98,405 Less: Stock-based compensation expense included in operating expenses Research and development 3,885 2,425 2,429 6,310 5,097 Sales and marketing 2,510 1,604 1,621 4,114 3,274 General and administrative 3,933 2,039 2,256 5,972 5,002 Total 10,328 6,068 6,306 16,396 13,373 Non-GAAP operating expenses $ 44,247 $ 41,242 $ 43,899 $ 85,489 $ 85,032 Three Months Ended Six Months Ended RECONCILIATION OF INCOME FROM OPERATIONS June 30, 2024 March 31, 2024 June 30, 2023 June 30, 2024 June 30, 2023 GAAP income from operations $ 1,958 $ 470 $ 12,641 $ 2,428 $ 18,398 GAAP operating margin 1.8 % 0.5 % 10.3 % 1.2 % 8.0 % Add: Stock-based compensation 11,035 6,414 6,752 17,449 14,120 Amortization of acquisition-related intangible assets 258 482 482 740 964 Non-GAAP income from operations $ 13,251 $ 7,366 $ 19,875 $ 20,617 $ 33,482 Non-GAAP operating margin 12.5 % 8.0 % 16.1 % 10.4 % 14.6 % Three Months Ended Six Months Ended RECONCILIATION OF PROVISION FOR INCOME TAXES June 30, 2024 March 31, 2024 June 30, 2023 June 30, 2024 June 30, 2023 GAAP provision for income taxes $ 298 $ 18 $ 562 $ 316 $ 1,158 GAAP effective tax rate 5.8 % 0.5 % 3.7 % 3.5 % 5.1 % Tax effect of adjustments to GAAP results (269 ) (358 ) (1,016 ) (627 ) (1,517 ) Non-GAAP provision for income taxes $ 567 $ 376 $ 1,578 $ 943 $ 2,675 Non-GAAP effective tax rate 3.4 % 3.5 % 7.0 % 3.5 % 7.1 % Three Months Ended Six Months Ended RECONCILIATION OF NET INCOME PER SHARE (DILUTED) June 30, 2024 March 31, 2024 June 30, 2023 June 30, 2024 June 30, 2023 GAAP net income $ 4,849 $ 3,954 $ 14,793 $ 8,803 $ 21,668 Adjustments to GAAP net income Stock-based compensation 11,035 6,414 6,752 17,449 14,120 Amortization of acquisition-related intangible assets 258 482 482 740 964 Tax effect of items excluded from non-GAAP results (269 ) (358 ) (1,016 ) (627 ) (1,517 ) Non-GAAP net income $ 15,873 $ 10,492 $ 21,011 $ 26,365 $ 35,235 Average shares outstanding for calculation of non-GAAP net income per share (diluted) 56,984 57,132 57,669 57,104 57,654 Non-GAAP net income per share (diluted) $ 0.28 $ 0.18 $ 0.36 $ 0.46 $ 0.61 GAAP net income per share (diluted) $ 0.09 $ 0.07 $ 0.26 $ 0.15 $ 0.38 POWER INTEGRATIONS, INC. CONSOLIDATED BALANCE SHEETS (in thousands) June 30, 2024 March 31, 2024 December 31, 2023 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 50,493 $ 56,443 $ 63,929 Short-term marketable securities 239,985 243,163 247,640 Accounts receivable, net 16,372 12,279 14,674 Inventories 169,884 167,865 163,164 Prepaid expenses and other current assets 23,102 22,714 22,193 Total current assets 499,836 502,464 511,600 PROPERTY AND EQUIPMENT, net 153,785 159,945 164,213 INTANGIBLE ASSETS, net 3,561 3,881 4,424 GOODWILL 91,849 91,849 91,849 DEFERRED TAX ASSETS 31,640 29,654 28,325 OTHER ASSETS 24,089 17,983 19,457 Total assets $ 804,760 $ 805,776 $ 819,868 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $ 24,831 $ 27,361 $ 26,390 Accrued payroll and related expenses 13,596 11,822 13,551 Taxes payable 827 878 1,016 Other accrued liabilities 10,970 9,474 7,910 Total current liabilities 50,224 49,535 48,867 LONG-TERM LIABILITIES: Income taxes payable 6,237 6,193 6,244 Other liabilities 17,557 11,870 12,516 Total liabilities 74,018 67,598 67,627 STOCKHOLDERS' EQUITY: Common stock 22 22 23 Additional paid-in capital - - - Accumulated other comprehensive loss (3,189 ) (2,559 ) (1,462 ) Retained earnings 733,909 740,715 753,680 Total stockholders' equity 730,742 738,178 752,241 Total liabilities and stockholders' equity $ 804,760 $ 805,776 $ 819,868 POWER INTEGRATIONS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Three Months Ended Six Months Ended June 30, 2024 March 31, 2024 June 30, 2023 June 30, 2024 June 30, 2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 4,849 $ 3,954 $ 14,793 $ 8,803 $ 21,668 Adjustments to reconcile net income to cash provided by operating activities Depreciation 8,391 8,715 8,692 17,106 17,653 Amortization of intangible assets 320 543 543 863 1,086 Loss on disposal of property and equipment - 8 15 8 22 Stock-based compensation expense 11,035 6,414 6,752 17,449 14,120 Amortization of premium (accretion of discount) on marketable securities (413 ) (496 ) 15 (909 ) 419 Deferred income taxes (2,152 ) (1,330 ) (2,044 ) (3,482 ) (2,782 ) Increase (decrease) in accounts receivable allowance for credit losses 163 163 - 326 (454 ) Change in operating assets and liabilities: Accounts receivable (4,256 ) 2,232 (11,492 ) (2,024 ) (10,787 ) Inventories (2,019 ) (4,701 ) (7,297 ) (6,720 ) (14,321 ) Prepaid expenses and other assets 1,226 846 (4,939 ) 2,072 (7,241 ) Accounts payable (1,411 ) 1,294 5,887 (117 ) 8,813 Taxes payable and other accrued liabilities 1,898 (1,737 ) (4,744 ) 161 (5,430 ) Net cash provided by operating activities 17,631 15,905 6,181 33,536 22,766 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (4,167 ) (4,343 ) (3,129 ) (8,510 ) (7,211 ) Purchases of marketable securities (27,918 ) (49,912 ) (73,888 ) (77,830 ) (110,810 ) Proceeds from sales and maturities of marketable securities 31,194 54,198 75,948 85,392 98,641 Net cash used in investing activities (891 ) (57 ) (1,069 ) (948 ) (19,380 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuance of common stock - 2,691 - 2,691 3,098 Repurchase of common stock (11,338 ) (14,641 ) (4,312 ) (25,979 ) (5,999 ) Payments of dividends to stockholders (11,352 ) (11,384 ) (10,893 ) (22,736 ) (21,761 ) Net cash used in financing activities (22,690 ) (23,334 ) (15,205 ) (46,024 ) (24,662 ) NET DECREASE IN CASH AND CASH EQUIVALENTS (5,950 ) (7,486 ) (10,093 ) (13,436 ) (21,276 ) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 56,443 63,929 94,189 63,929 105,372 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 50,493 $ 56,443 $ 84,096 $ 50,493 $ 84,096 View source version on businesswire.com : https://www.businesswire.com/news/home/20240806486746/en/ Joe Shiffler Power Integrations, Inc. (408) 414-8528 [email protected] Source: Power Integrations, Inc.

View stock analysis, news, and events for Power Integrations, Inc.