Power Integrations Reports First-Quarter Financial Results

Rhea-AI Summary

Power Integrations (NASDAQ: POWI) reported quarterly revenues of $91.7 million, with GAAP earnings of $0.07 per diluted share and non-GAAP earnings of $0.18 per diluted share. Revenues were up 2% from the prior quarter but down 14% from the first quarter of 2023. The company's GAAP net income for the first quarter was $4.0 million. Power Integrations provided a positive outlook for the second quarter, expecting higher revenues and increased gross margin, driven by improved orders and efficiency enhancements in their power-conversion technology.

Positive

• Power Integrations reported an increase in quarterly revenues to $91.7 million.

• The company's non-GAAP earnings were $0.18 per diluted share, reflecting a positive financial performance.

• The outlook for the second quarter includes expectations of higher revenues and improved gross margins.

• Power Integrations introduced InnoMux-2 technology, enhancing power-conversion efficiency to over 90%.

• The acquisition of Odyssey Semiconductor assets is set to strengthen the company's high-power GaN technology development.

Negative

• Quarterly revenues were down 14% from the first quarter of 2023.

• GAAP net income for the first quarter decreased to $4.0 million.

• Non-GAAP net income was lower compared to the prior quarter and the first quarter of 2023.

• A decrease in gross margin was reported in the first quarter compared to previous periods.

• Power Integrations repurchased 207 thousand shares of its common stock, impacting shareholder equity.

Financial Analyst

Power Integrations experienced a modest quarter-over-quarter revenue increase of 2%, which could reflect a growth stabilization following the larger year-over-year decline of 14%. This mixed performance signals a possible sector-wide trend where companies are facing headwinds, potentially due to cyclical downturns or broader economic uncertainties.

The reported GAAP earnings per diluted share ($0.07) represent a significant decrease from previous quarters, which may alarm investors seeking consistent earnings growth. However, cash flow from operations remains robust at $15.9 million, suggesting efficient operational management.

Investors should consider the company's strategic moves such as the acquisition of Odyssey Semiconductor Technologies. This could bolster Power Integrations' position in the high-power GaN market, possibly driving long-term growth. Additionally, the ongoing stock repurchase program, with $11.3 million remaining, might provide a bullish signal on the company's perspective of its valuation.

The guidance for the second quarter with expected revenues of approximately $105 million and improved gross margins indicates management's confidence in the operational trajectory. However, investors should weigh the potential risks of integration costs associated with the recent acquisition and the consistent gap between GAAP and non-GAAP financials due to stock-based compensation and amortization.

Market Research Analyst

As Power Integrations projects an uptick in demand, with sequential revenue growth and margin improvement anticipated, it suggests an improving industry landscape. This recovery could be attributed to the normalization of supply-chain inventories as noted by the CEO.

The introduction of InnoMux™-2 and the focus on PowiGaN™ transistors reflect the company's commitment to innovation. These advancements could capture more market share by offering high-efficiency power-conversion technologies. The potential increase in system efficiency to over 90% is a notable competitive advantage.

For retail investors, these developments underline the importance of technological leadership in the semiconductor space, where product cycles and innovation can be pivotal. The anticipated closing of the Odyssey Semiconductor Technologies acquisition confirms a strategic expansion into high-current GaN technology, which could open new markets for the company.

However, investors should remain vigilant about the acquisition's integration, as these processes can be complex and impact future earnings reports. Additionally, while the dividend payment is a positive sign of returning value to shareholders, it should be evaluated in the context of the company's overall capital allocation strategy.

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

SAN JOSE, Calif.--(BUSINESS WIRE)-- 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

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240507489900/en/

Joe Shiffler

Power Integrations, Inc.

(408) 414-8528

joe@power.com

Source: Power Integrations, Inc.

FAQ

What were Power Integrations' quarterly revenues for the first quarter of 2024?

Power Integrations reported quarterly revenues of $91.7 million for the first quarter of 2024.

What were the GAAP earnings per diluted share for Power Integrations in the first quarter of 2024?

Power Integrations had GAAP earnings of $0.07 per diluted share for the first quarter of 2024.

What is the stock symbol for Power Integrations?

Power Integrations' stock symbol is NASDAQ: POWI.

What new technology did Power Integrations introduce in the first quarter of 2024?

Power Integrations introduced InnoMux-2 technology in the first quarter of 2024, enhancing power-conversion efficiency.

What is Power Integrations' financial outlook for the second quarter of 2024?

Power Integrations expects revenues of $105 million plus or minus $5 million for the second quarter of 2024.