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., August 06, 2024--(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, https://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