Power Integrations Reports Fourth-Quarter and Full-Year Financial Results

Rhea-AI Summary

Power Integrations (POWI) reported a decline in quarterly revenues to $89.5 million, down 29% from the prior quarter and 28% from the fourth quarter of 2022. GAAP net income for the quarter was $14.3 million or $0.25 per diluted share. Full-year revenues were $444.5 million, with GAAP net income of $55.7 million. Non-GAAP net income for the fourth quarter was $12.7 million or $0.22 per diluted share, and $74.5 million or $1.29 per diluted share for the full year. The company repurchased 680 thousand shares during the quarter for $47 million.

Positive

• Strong cash flow from operations of $65.8 million for the full year.
• Non-GAAP net income of $74.5 million or $1.29 per diluted share for the full year, showcasing resilience amidst challenging market conditions.
• Repurchase of 680 thousand shares during the quarter for $47 million reflects confidence in the company's long-term prospects.

Negative

• Decline in quarterly revenues by 29% compared to the prior quarter and 28% from the fourth quarter of 2022.
• Decrease in GAAP net income per diluted share from the prior quarter and the fourth quarter of 2022.

Insights

Financial Analyst

The reported quarterly revenues of Power Integrations at $89.5 million signify a substantial decrease of 29% compared to the previous quarter and a 28% drop year-over-year. Such a decline may raise concerns among investors regarding the company's performance and sector health. This downturn is further reflected in the yearly revenue fall from $651.1 million to $444.5 million. The earnings per share (EPS), both GAAP and non-GAAP, have also decreased, indicating reduced profitability. This could potentially affect the company's stock price negatively as EPS is a critical metric for investors.

Moreover, the share repurchase program, involving 680 thousand shares for $47 million, suggests that the company is utilizing its capital to buy back shares, which can sometimes be perceived as a sign of confidence in the company's intrinsic value. However, it also means that the company is choosing to return capital to shareholders rather than reinvesting it for growth or paying down debt.

Investors should consider the company's operational cash flow, which remains positive at $65.8 million for the year, as an indicator of its ability to generate cash from its core business operations. However, the contrast between the GAAP and non-GAAP results, with non-GAAP net income excluding certain expenses, should be examined to understand the company's underlying financial health thoroughly.

Market Research Analyst

The significant revenue decline reported by Power Integrations could be symptomatic of broader market trends or company-specific challenges. For instance, it could be indicative of decreased demand for the company's products, increased competition, or perhaps supply chain disruptions. It's crucial for stakeholders to analyze the root causes of this downturn to assess whether it's a temporary setback or part of a longer-term trend.

Additionally, the projection of first-quarter sales suggests that the company expects the downward trend to continue, at least in the short term. This could influence market sentiment and investment decisions. Stakeholders would benefit from a deeper analysis of the company's market position, product pipeline and competitive strategy to evaluate its potential for recovery and growth.

Economist

An economist might explore the macroeconomic factors contributing to Power Integrations' performance. For example, fluctuations in consumer demand, exchange rates, or global economic conditions could have impacted sales. Additionally, the tech sector is often sensitive to changes in economic cycles and consumer spending, which can be affected by broader economic indicators such as GDP growth, unemployment rates and inflation.

Understanding these macroeconomic factors is essential for stakeholders to contextualize the company's results within the larger economic landscape. It could also provide insights into whether the revenue decline is part of a cyclical downturn or if it reflects structural changes in the industry that could have long-term implications for the company's performance.

Quarterly revenues were $89.5 million; GAAP earnings were $0.25 per diluted share; non-GAAP earnings were $0.22 per diluted share

Company repurchased 680 thousand shares during the quarter for $47 million

SAN JOSE, Calif.--(BUSINESS WIRE)-- Power Integrations (NASDAQ: POWI) today announced financial results for the quarter and year ended December 31, 2023. Net revenues for the fourth quarter were $89.5 million, down 29 percent compared to the prior quarter and down 28 percent from the fourth quarter of 2022. GAAP net income for the fourth quarter was $14.3 million or $0.25 per diluted share compared to $0.34 per diluted share in the prior quarter and $0.40 per diluted share in the fourth quarter of 2022.

For the full year, net revenues were $444.5 million, compared to $651.1 million in the prior year. Full-year GAAP net income was $55.7 million or $0.97 per diluted share compared to $2.93 per diluted share in the prior year. Full-year cash flow from operations was $65.8 million.

In addition to its GAAP results, the company provided non-GAAP measures that for the fourth quarter of 2023 exclude stock-based compensation, amortization of acquisition-related intangible assets and the related tax effects. Non-GAAP net income for the fourth quarter of 2023 was $12.7 million or $0.22 per diluted share compared to $0.46 per diluted share in the prior quarter and $0.48 per diluted share in the fourth quarter of 2022. For the full year, non-GAAP net income was $74.5 million or $1.29 per diluted share compared to $3.29 per diluted share in the prior year. 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: “Fourth-quarter revenues declined as expected, and we project first-quarter sales to be about flat sequentially due to continued soft demand and elevated supply-chain inventories. However, channel inventory fell significantly in the fourth quarter, and we expect a further reduction in the first quarter. Based on lower inventories and seasonal patterns we expect sequential revenue growth beginning in the June quarter. We also expect gross margin to rise in the June quarter driven by the dollar/yen exchange rate, higher manufacturing utilization and end-market mix.”

During the fourth quarter Power Integrations repurchased 680 thousand shares of its common stock for $47.4 million. The company had $26.0 million remaining on its repurchase authorization as of December 31, 2023. Power Integrations paid a dividend of $0.20 per share on December 29, 2023, and will pay a dividend of $0.20 per share on March 29, 2024, to stockholders of record as of February 29, 2024.

Financial Outlook

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

• Revenues are expected to be $90 million plus or minus $5 million.
• GAAP gross margin is expected to be approximately 51.5 percent; non-GAAP gross margin is expected to be approximately 52.5 percent. The difference between GAAP and non-GAAP gross margins is equally attributable to stock-based compensation and amortization of acquisition-related intangible assets.
• GAAP operating expenses are expected to be approximately $49 million; non-GAAP operating expenses are expected to be approximately $42.5 million. Non-GAAP operating expenses are expected to exclude about $6.5 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/Q4I24588. 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, net other operating expenses of $1.1 million in the second quarter of 2022 stemming from a patent-litigation settlement and an offsetting recovery from the liquidation of SemiSouth Laboratories, 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 first-quarter financial performance, sequential growth beginning in the second quarter, channel inventory trends and rising gross margins over the course of the year 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 7, 2023. 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												Twelve Months Ended
		December 31, 2023				September 30, 2023				December 31, 2022				December 31, 2023				December 31, 2022
NET REVENUES		$	89,507			$	125,511			$	124,770			$	444,538			$	651,138
COST OF REVENUES			43,299				59,566				57,416				215,582				284,231
GROSS PROFIT			46,208				65,945				67,354				228,956				366,907
OPERATING EXPENSES:
Research and development			23,505				24,064				23,504				96,067				93,894
Sales and marketing			15,472				16,224				15,493				64,598				62,333
General and administrative			8,282				7,945				7,465				33,232				28,897
Amortization of acquisition-related intangible assets			-				-				-				-				241
Other operating expenses, net			-				-				-				-				1,130
Total operating expenses			47,259				48,233				46,462				193,897				186,495
INCOME (LOSS) FROM OPERATIONS			(1,051	)			17,712				20,892				35,059				180,412
OTHER INCOME			3,282				3,138				785				10,848				3,014
INCOME BEFORE INCOME TAXES			2,231				20,850				21,677				45,907				183,426
PROVISION (BENEFIT) FOR INCOME TAXES			(12,040	)			1,054				(1,138	)			(9,828	)			12,575
NET INCOME		$	14,271			$	19,796			$	22,815			$	55,735			$	170,851
EARNINGS PER SHARE:
Basic		$	0.25			$	0.34			$	0.40			$	0.97			$	2.96
Diluted		$	0.25			$	0.34			$	0.40			$	0.97			$	2.93
SHARES USED IN PER-SHARE CALCULATION:
Basic			56,937				57,383				57,094				57,195				57,801
Diluted			57,272				57,741				57,535				57,622				58,371
SUPPLEMENTAL INFORMATION:		Three Months Ended												Twelve Months Ended
		December 31, 2023				September 30, 2023				December 31, 2022				December 31, 2023				December 31, 2022
Stock-based compensation expenses included in:
Cost of revenues		$	499			$	446			$	405			$	1,692			$	1,132
Research and development			2,947				2,895				2,716				10,939				10,428
Sales and marketing			1,827				1,787				1,643				6,888				6,035
General and administrative			2,230				1,777				1,890				9,009				4,769
Total stock-based compensation expense		$	7,503			$	6,905			$	6,654			$	28,528			$	22,364
Cost of revenues includes:
Amortization of acquisition-related intangible assets		$	482			$	482			$	482			$	1,928			$	1,928
		Three Months Ended												Twelve Months Ended
REVENUE MIX BY END MARKET		December 31, 2023				September 30, 2023				December 31, 2022				December 31, 2023				December 31, 2022
Communications			27	%			32	%			23	%			29	%			21	%
Computer			9	%			10	%			12	%			12	%			10	%
Consumer			29	%			26	%			26	%			27	%			33	%
Industrial			35	%			32	%			39	%			32	%			36	%

POWER INTEGRATIONS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP RESULTS
(in thousands, except per-share amounts)
		Three Months Ended												Twelve Months Ended
		December 31, 2023				September 30, 2023				December 31, 2022				December 31, 2023				December 31, 2022
RECONCILIATION OF GROSS PROFIT
GAAP gross profit		$	46,208			$	65,945			$	67,354			$	228,956			$	366,907
GAAP gross margin			51.6	%			52.5	%			54.0	%			51.5	%			56.3	%
Stock-based compensation included in cost of revenues			499				446				405				1,692				1,132
Amortization of acquisition-related intangible assets			482				482				482				1,928				1,928
Non-GAAP gross profit		$	47,189			$	66,873			$	68,241			$	232,576			$	369,967
Non-GAAP gross margin			52.7	%			53.3	%			54.7	%			52.3	%			56.8	%
		Three Months Ended												Twelve Months Ended
RECONCILIATION OF OPERATING EXPENSES		December 31, 2023				September 30, 2023				December 31, 2022				December 31, 2023				December 31, 2022
GAAP operating expenses		$	47,259			$	48,233			$	46,462			$	193,897			$	186,495
Less: Stock-based compensation expense included in operating expenses
Research and development			2,947				2,895				2,716				10,939				10,428
Sales and marketing			1,827				1,787				1,643				6,888				6,035
General and administrative			2,230				1,777				1,890				9,009				4,769
Total			7,004				6,459				6,249				26,836				21,232
Amortization of acquisition-related intangible assets			-				-				-				-				241
Other operating expenses, net			-				-				-				-				1,130
Non-GAAP operating expenses		$	40,255			$	41,774			$	40,213			$	167,061			$	163,892
		Three Months Ended												Twelve Months Ended
RECONCILIATION OF INCOME FROM OPERATIONS		December 31, 2023				September 30, 2023				December 31, 2022				December 31, 2023				December 31, 2022
GAAP income (loss) from operations		$	(1,051	)		$	17,712			$	20,892			$	35,059			$	180,412
GAAP operating margin			-1.2	%			14.1	%			16.7	%			7.9	%			27.7	%
Add: Total stock-based compensation			7,503				6,905				6,654				28,528				22,364
Amortization of acquisition-related intangible assets			482				482				482				1,928				2,169
Other operating expenses, net			-				-				-				-				1,130
Non-GAAP income from operations		$	6,934			$	25,099			$	28,028			$	65,515			$	206,075
Non-GAAP operating margin			7.7	%			20.0	%			22.5	%			14.7	%			31.6	%
		Three Months Ended												Twelve Months Ended
RECONCILIATION OF PROVISION FOR INCOME TAXES		December 31, 2023				September 30, 2023				December 31, 2022				December 31, 2023				December 31, 2022
GAAP provision (benefit) for income taxes		$	(12,040	)		$	1,054			$	(1,138	)		$	(9,828	)		$	12,575
GAAP effective tax rate			-539.7	%			5.1	%			-5.2	%			-21.4	%			6.9	%
Tax effect of adjustments to GAAP results			(9,556	)			(580	)			(2,085	)			(11,653	)			(4,582	)
Non-GAAP provision (benefit) for income taxes		$	(2,484	)		$	1,634			$	947			$	1,825			$	17,157
Non-GAAP effective tax rate			-24.3	%			5.8	%			3.3	%			2.4	%			8.2	%
		Three Months Ended												Twelve Months Ended
RECONCILIATION OF NET INCOME PER SHARE (DILUTED)		December 31, 2023				September 30, 2023				December 31, 2022				December 31, 2023				December 31, 2022
GAAP net income		$	14,271			$	19,796			$	22,815			$	55,735			$	170,851
Adjustments to GAAP net income
Stock-based compensation			7,503				6,905				6,654				28,528				22,364
Amortization of acquisition-related intangible assets			482				482				482				1,928				2,169
Other operating expenses, net			-				-				-				-				1,130
Tax effect of items excluded from non-GAAP results			(9,556	)			(580	)			(2,085	)			(11,653	)			(4,582	)
Non-GAAP net income		$	12,700			$	26,603			$	27,866			$	74,538			$	191,932
Average shares outstanding for calculation of non-GAAP net income per share (diluted)			57,272				57,741				57,535				57,622				58,371
Non-GAAP net income per share (diluted)		$	0.22			$	0.46			$	0.48			$	1.29			$	3.29
GAAP net income per share (diluted)		$	0.25			$	0.34			$	0.40			$	0.97			$	2.93

POWER INTEGRATIONS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
		December 31, 2023				September 30, 2023				December 31, 2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	63,929			$	94,743			$	105,372
Short-term marketable securities			247,640				261,896				248,441
Accounts receivable, net			14,674				28,539				20,836
Inventories			163,164				150,246				135,420
Prepaid expenses and other current assets			22,193				20,692				15,004
Total current assets			511,600				556,116				525,073
PROPERTY AND EQUIPMENT, net			164,213				166,391				176,681
INTANGIBLE ASSETS, net			4,424				4,967				6,597
GOODWILL			91,849				91,849				91,849
DEFERRED TAX ASSETS			28,325				28,943				19,034
OTHER ASSETS			19,457				17,224				20,862
Total assets		$	819,868			$	865,490			$	840,096
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	26,390			$	28,553			$	30,088
Accrued payroll and related expenses			13,551				13,778				14,778
Taxes payable			1,016				774				938
Other accrued liabilities			7,910				10,316				12,572
Total current liabilities			48,867				53,421				58,376
LONG-TERM LIABILITIES:
Income taxes payable			6,244				16,724				15,757
Other liabilities			12,516				10,288				10,747
Total liabilities			67,627				80,433				84,880
STOCKHOLDERS' EQUITY:
Common stock			23				23				24
Additional paid-in capital			-				19,429				-
Accumulated other comprehensive loss			(1,462	)			(5,730	)			(7,344	)
Retained earnings			753,680				771,335				762,536
Total stockholders' equity			752,241				785,057				755,216
Total liabilities and stockholders' equity		$	819,868			$	865,490			$	840,096

POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
		Three Months Ended												Twelve Months Ended
		December 31, 2023				September 30, 2023				December 31, 2022				December 31, 2023				December 31, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	14,271			$	19,796			$	22,815			$	55,735			$	170,851
Adjustments to reconcile net income to cash provided by operating activities
Depreciation			8,887				8,663				8,875				35,203				34,930
Amortization of intangible assets			543				544				544				2,173				2,415
Loss on disposal of property and equipment			14				64				209				100				1,371
Stock-based compensation expense			7,503				6,905				6,654				28,528				22,364
Amortization of premium (accretion of discount) on marketable securities			(497	)			(273	)			654				(351	)			3,292
Deferred income taxes			705				(7,170	)			4,824				(9,247	)			(2,566	)
Increase (decrease) in accounts receivable allowance for credit losses			-				-				-				(454	)			690
Change in operating assets and liabilities:
Accounts receivable			13,865				3,538				(4,761	)			6,616				19,867
Inventories			(12,918	)			(505	)			(15,328	)			(27,744	)			(36,154	)
Prepaid expenses and other assets			(346	)			6,404				(1,085	)			(1,183	)			7,343
Accounts payable			(2,553	)			(11,695	)			2,038				(5,435	)			(3,836	)
Taxes payable and other accrued liabilities			(13,207	)			455				(1,341	)			(18,182	)			(5,224	)
Net cash provided by operating activities			16,267				26,726				24,098				65,759				215,343
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment			(6,143	)			(7,530	)			(5,767	)			(20,884	)			(39,211	)
Proceeds from sale of property and equipment			-				-				-				-				1,202
Purchases of marketable securities			(18,196	)			(62,205	)			(28,576	)			(191,211	)			(55,820	)
Proceeds from sales and maturities of marketable securities			36,045				63,256				11,151				197,942				172,165
Net cash provided by (used in) investing activities			11,706				(6,479	)			(23,192	)			(14,153	)			78,336
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock			-				3,139				-				6,237				6,162
Repurchase of common stock			(47,444	)			(1,835	)			(18,745	)			(55,278	)			(311,094	)
Payments of dividends to stockholders			(11,343	)			(10,904	)			(10,263	)			(44,008	)			(41,492	)
Net cash used in financing activities			(58,787	)			(9,600	)			(29,008	)			(93,049	)			(346,424	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			(30,814	)			10,647				(28,102	)			(41,443	)			(52,745	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD			94,743				84,096				133,474				105,372				158,117
CASH AND CASH EQUIVALENTS AT END OF PERIOD		$	63,929			$	94,743			$	105,372			$	63,929			$	105,372

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240208131628/en/

Joe Shiffler

Power Integrations, Inc.

(408) 414-8528

joe@power.com

Source: Power Integrations, Inc.

FAQ

What were Power Integrations' (POWI) quarterly revenues?

Power Integrations (POWI) reported quarterly revenues of $89.5 million.

What was the GAAP net income for the fourth quarter?

The GAAP net income for the fourth quarter was $14.3 million or $0.25 per diluted share.

How many shares did Power Integrations (POWI) repurchase during the quarter?

Power Integrations (POWI) repurchased 680 thousand shares during the quarter for $47 million.

What was the non-GAAP net income for the fourth quarter?

The non-GAAP net income for the fourth quarter was $12.7 million or $0.22 per diluted share.

What was the full-year revenues for Power Integrations (POWI)?

The full-year revenues for Power Integrations (POWI) were $444.5 million.

What was the full-year GAAP net income for Power Integrations (POWI)?

The full-year GAAP net income for Power Integrations (POWI) was $55.7 million.

What was the full-year non-GAAP net income for Power Integrations (POWI)?

The full-year non-GAAP net income for Power Integrations (POWI) was $74.5 million or $1.29 per diluted share.