Power Integrations Reports First-Quarter Financial Results

Rhea-AI Summary

Power Integrations (NASDAQ: POWI) reported strong financial results for Q1 2021, with net revenues at $173.7 million, up 58% year-over-year. Net income increased to $39.8 million or $0.65 per diluted share compared to $0.26 a year earlier. The company saw significant cash flow from operations of $58.1 million. For Q2 2021, revenues are expected to remain flat, with GAAP gross margins estimated between 49.5% and 50%. Power Integrations also announced a cash dividend of $0.13 per share and a $50 million increase in its share-repurchase authorization.

Positive

• Net revenues increased by 58% year-over-year.
• Net income rose to $39.8 million or $0.65 per diluted share.
• Strong cash flow from operations at $58.1 million.
• Continued strength in bookings and distribution sell-through.
• Dividend payment of $0.13 per share announced.

Negative

• Q2 2021 revenue forecast expected to be flat, plus or minus 5%.

Power Integrations (Nasdaq: POWI) today announced financial results for the quarter ended March 31, 2021. Per-share measures for all periods reflect the effect of the August 2020 two-for-one stock split.

Net revenues for the first quarter of 2021 were $173.7 million, up 15 percent compared to the prior quarter and up 58 percent from the first quarter of 2020. Net income for the first quarter was $39.8 million or $0.65 per diluted share compared to $0.45 per diluted share in the prior quarter and $0.26 per diluted share in the first quarter of 2020. Cash flow from operations for the first quarter was $58.1 million.

In addition to its GAAP results, the company provided certain non-GAAP measures that exclude stock-based compensation, amortization of acquisition-related intangible assets and the tax effects of these items. Non-GAAP net income for the first quarter of 2021 was $46.7 million or $0.76 per diluted share compared with $0.60 per diluted share in the prior quarter and $0.38 per diluted share in the first quarter of 2020. A reconciliation of GAAP to non-GAAP financial results appears at the end of this press release.

Commented Balu Balakrishnan, president and CEO of Power Integrations: “First-quarter revenues grew 58 percent year-over-year reflecting the strong demand conditions across the industry as well as our continued success in advanced mobile-device chargers, appliances and many other power-supply applications. Distribution sell-through exceeded sell-in again in the first quarter and we have seen continued strength in bookings in recent weeks. As a result, we expect strong year-over-year growth again in the second quarter.”

Power Integrations paid a cash dividend of $0.13 per share on March 31, 2021. A dividend of $0.13 per share will be paid on June 30, 2021 to stockholders of record as of May 28, 2021. Also, the company’s board of directors has added $50 million to its share-repurchase authorization, bringing the total authorization to $91.3 million.

Financial Outlook

The company issued the following forecast for the second quarter of 2021:

• Revenues are expected to be flat compared to the first quarter of 2021, plus or minus five percent.
• GAAP gross margin is expected to be between 49.5 and 50 percent, and non-GAAP gross margin is expected to be between 50 and 50.5 percent. (The difference between the expected GAAP and non-GAAP gross margins is approximately equally attributable to amortization of acquisition-related intangible assets and stock-based compensation.)
• GAAP operating expenses are expected to be approximately $47.5 million; non-GAAP operating expenses are expected to be approximately $38.5 million. (Non-GAAP expenses are expected to exclude approximately $8.8 million of stock-based compensation and $0.2 million of amortization of acquisition-related intangible assets.)

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: http://www.directeventreg.com/registration/event/1859015. A 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 forward-looking 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 impact of the COVID-19 pandemic on demand for the company’s products, its ability to supply products and its ability to conduct other aspects of its business such as competing for new design wins; changes in global macroeconomic conditions, including changing tariffs and uncertainty regarding 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 (SEC) on February 5, 2021. The company is under no obligation (and expressly disclaims any obligation) to update or alter its forward-looking statements, whether as a result 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.

POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per-share amounts)
				Three Months Ended
				March 31, 2021				December 31, 2020				March 31, 2020
NET REVENUES				$	173,737			$	150,693			$	109,664
COST OF REVENUES					89,326				76,688				53,184
GROSS PROFIT					84,411				74,005				56,480
OPERATING EXPENSES:
Research and development					20,027				21,921				19,152
Sales and marketing					13,907				14,113				13,216
General and administrative					10,075				10,028				8,761
Amortization of acquisition-related intangible assets					216				216				257
	Total operating expenses				44,225				46,278				41,386
INCOME FROM OPERATIONS					40,186				27,727				15,094
OTHER INCOME					597				630				1,777
INCOME BEFORE INCOME TAXES					40,783				28,357				16,871
PROVISION FOR INCOME TAXES					985				1,079				985
NET INCOME				$	39,798			$	27,278			$	15,886
EARNINGS PER SHARE:
	Basic			$	0.66			$	0.46			$	0.27
	Diluted			$	0.65			$	0.45			$	0.26
SHARES USED IN PER-SHARE CALCULATION:
	Basic				60,184				59,879				59,204
	Diluted				61,451				61,176				60,268
SUPPLEMENTAL INFORMATION:				Three Months Ended
				March 31, 2021				December 31, 2020				March 31, 2020
Stock-based compensation expenses included in:
	Cost of revenues			$	631			$	713			$	396
	Research and development				2,391				2,942				2,109
	Sales and marketing				1,614				1,740				1,392
	General and administrative				3,844				3,468				2,813
	Total stock-based compensation expense			$	8,480			$	8,863			$	6,710
Cost of revenues includes:
	Amortization of acquisition-related intangible assets			$	754			$	799			$	799
				Three Months Ended
REVENUE MIX BY END MARKET				March 31, 2021				December 31, 2020				March 31, 2020
	Communications				38	%			34	%			22	%
	Computer				8	%			9	%			4	%
	Consumer				29	%			31	%			41	%
	Industrial				25	%			26	%			33	%

POWER INTEGRATIONS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP RESULTS
(in thousands, except per-share amounts)
					Three Months Ended
					March 31, 2021				December 31, 2020				March 31, 2020
RECONCILIATION OF GROSS PROFIT
GAAP gross profit					$	84,411			$	74,005			$	56,480
	GAAP gross margin					48.6	%			49.1	%			51.5	%
Stock-based compensation included in cost of revenues						631				713				396
Amortization of acquisition-related intangible assets						754				799				799
Non-GAAP gross profit					$	85,796			$	75,517			$	57,675
	Non-GAAP gross margin					49.4	%			50.1	%			52.6	%
					Three Months Ended
RECONCILIATION OF OPERATING EXPENSES					March 31, 2021				December 31, 2020				March 31, 2020
GAAP operating expenses					$	44,225			$	46,278			$	41,386
Less: Stock-based compensation expense included in operating expenses
		Research and development				2,391				2,942				2,109
		Sales and marketing				1,614				1,740				1,392
		General and administrative				3,844				3,468				2,813
		Total				7,849				8,150				6,314
	Amortization of acquisition-related intangible assets					216				216				257
Non-GAAP operating expenses					$	36,160			$	37,912			$	34,815
					Three Months Ended
RECONCILIATION OF INCOME FROM OPERATIONS					March 31, 2021				December 31, 2020				March 31, 2020
GAAP income from operations					$	40,186			$	27,727			$	15,094
	GAAP operating margin					23.1	%			18.4	%			13.8	%
Add: Total stock-based compensation						8,480				8,863				6,710
	Amortization of acquisition-related intangible assets					970				1,015				1,056
Non-GAAP income from operations					$	49,636			$	37,605			$	22,860
	Non-GAAP operating margin					28.6	%			25.0	%			20.8	%
					Three Months Ended
RECONCILIATION OF PROVISION FOR INCOME TAXES					March 31, 2021				December 31, 2020				March 31, 2020
GAAP provision for income taxes					$	985			$	1,079			$	985
	GAAP effective tax rate					2.4	%			3.8	%			5.8	%
Tax effect of adjustments to GAAP results						(2,578	)			(725	)			(751	)
Non-GAAP provision for income taxes					$	3,563			$	1,804			$	1,736
	Non-GAAP effective tax rate					7.1	%			4.7	%			7.0	%
					Three Months Ended
RECONCILIATION OF NET INCOME PER SHARE (DILUTED)					March 31, 2021				December 31, 2020				March 31, 2020
GAAP net income					$	39,798			$	27,278			$	15,886
Adjustments to GAAP net income
	Stock-based compensation					8,480				8,863				6,710
	Amortization of acquisition-related intangible assets					970				1,015				1,056
	Tax effect of items excluded from non-GAAP results					(2,578	)			(725	)			(751	)
Non-GAAP net income					$	46,670			$	36,431			$	22,901
Average shares outstanding for calculation of non-GAAP net income per share (diluted)						61,451				61,176				60,268
Non-GAAP net income per share (diluted)					$	0.76			$	0.60			$	0.38
GAAP net income per share (diluted)					$	0.65			$	0.45			$	0.26

POWER INTEGRATIONS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
			March 31, 2021				December 31, 2020
ASSETS
	CURRENT ASSETS:
	Cash and cash equivalents		$	343,272			$	258,874
	Short-term marketable securities			148,067				190,318
	Accounts receivable, net			42,257				35,910
	Inventories			90,509				102,878
	Prepaid expenses and other current assets			18,207				13,252
	Total current assets			642,312				601,232
	PROPERTY AND EQUIPMENT, net			168,712				166,188
	INTANGIBLE ASSETS, net			11,474				12,506
	GOODWILL			91,849				91,849
	DEFERRED TAX ASSETS			1,892				3,339
	OTHER ASSETS			28,480				28,225
	Total assets		$	944,719			$	903,339
LIABILITIES AND STOCKHOLDERS’ EQUITY
	CURRENT LIABILITIES:
	Accounts payable		$	38,172			$	34,712
	Accrued payroll and related expenses			13,339				14,806
	Taxes payable			856				902
	Other accrued liabilities			10,160				12,106
	Total current liabilities			62,527				62,526
	LONG-TERM LIABILITIES:
	Income taxes payable			14,033				15,588
	Other liabilities			14,336				14,814
	Total liabilities			90,896				92,928
STOCKHOLDERS' EQUITY:
	Common stock			29				28
	Additional paid-in capital			203,051				190,920
	Accumulated other comprehensive loss			(2,836	)			(2,163	)
	Retained earnings			653,579				621,626
	Total stockholders' equity			853,823				810,411
	Total liabilities and stockholders' equity		$	944,719			$	903,339

POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
		Three Months Ended
		March 31, 2021				December 31, 2020				March 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income	$	39,798			$	27,278			$	15,886
	Adjustments to reconcile net income to cash provided by operating activities
	Depreciation		7,453				6,672				5,488
	Amortization of intangible assets		1,032				1,076				1,117
	Loss on disposal of property and equipment		17				214				30
	Stock-based compensation expense		8,480				8,863				6,710
	Amortization of premium on marketable securities		176				180				154
	Deferred income taxes		1,445				(692	)			1,095
	Decrease in accounts receivable allowance for credit losses		(2	)			(491	)			(154	)
	Change in operating assets and liabilities:
	Accounts receivable		(6,345	)			(5,972	)			3,831
	Inventories		12,369				1,927				(6,253	)
	Prepaid expenses and other assets		(3,253	)			3,020				(3,992	)
	Accounts payable		3,281				(668	)			8,828
	Taxes payable and other accrued liabilities		(6,329	)			4,959				(6,349	)
	Net cash provided by operating activities		58,122				46,366				26,391
CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchases of property and equipment		(11,051	)			(34,860	)			(11,603	)
	Proceeds from sale of property and equipment		25				320				-
	Purchases of marketable securities		(21,971	)			(43,637	)			(16,838	)
	Proceeds from sales and maturities of marketable securities		63,466				64,390				15,947
	Net cash provided by (used in) investing activities		30,469				(13,787	)			(12,494	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Net proceeds from issuance of common stock		3,652				865				5,529
	Repurchase of common stock		-				-				(2,013	)
	Payments of dividends to stockholders		(7,845	)			(6,584	)			(5,644	)
	Net cash used in financing activities		(4,193	)			(5,719	)			(2,128	)
NET INCREASE IN CASH AND CASH EQUIVALENTS			84,398				26,860				11,769
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD			258,874				232,014				178,690
CASH AND CASH EQUIVALENTS AT END OF PERIOD		$	343,272			$	258,874			$	190,459

 

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FAQ

What are Power Integrations' Q1 2021 earnings results?

In Q1 2021, Power Integrations reported net revenues of $173.7 million and net income of $39.8 million, or $0.65 per diluted share.

What is the financial outlook for Power Integrations in Q2 2021?

Power Integrations expects Q2 2021 revenues to be flat compared to Q1 2021, with GAAP gross margin estimated between 49.5% and 50%.

How much is the dividend announced by Power Integrations?

Power Integrations declared a cash dividend of $0.13 per share, with the next payment scheduled for June 30, 2021.

What is the significance of the share repurchase authorization for POWI?

Power Integrations' board added $50 million to its share-repurchase authorization, increasing the total to $91.3 million, which may enhance shareholder value.