Power Integrations Reports Second-Quarter Financial Results

Rhea-AI Summary

Power Integrations reported Q2 2022 revenues of $184 million, a 2% year-over-year increase. GAAP earnings reached $0.96 per diluted share, up from $0.68 in Q2 2021. Non-GAAP earnings increased 24% YoY to $1.03 per diluted share. Cash flow from operations was $66.8 million. Despite a weaker demand outlook due to challenges from Chinese smartphone customers and macroeconomic headwinds, the company plans to continue investing in long-term growth initiatives. They returned over $160 million to shareholders via buybacks and dividends.

Positive

• Non-GAAP EPS growth of 24% year-over-year
• Generated $66.8 million in cash from operations
• Returned over $160 million to shareholders through buybacks and dividends
• Plans to expand into automotive and energy-efficient products

Negative

• Weakening demand outlook due to challenges from Chinese smartphone customers
• Broader macroeconomic headwinds impacting sales

Revenues increased two percent year-over-year to $184 million; GAAP earnings were $0.96 per diluted share; non-GAAP earnings per diluted share grew 24 percent year-over-year to $1.03

SAN JOSE, Calif.--(BUSINESS WIRE)-- Power Integrations (NASDAQ: POWI) today announced financial results for the quarter ended June 30, 2022. Net revenues for the second quarter were $184.0 million, up one percent compared to the prior quarter and up two percent from the second quarter of 2021. Net income for the second quarter was $55.8 million or $0.96 per diluted share compared to $0.77 per diluted share in the prior quarter and $0.68 per diluted share in the second quarter of 2021. Cash flow from operations for the second quarter was $66.8 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, net other operating expenses of $1.1 million stemming from a patent-litigation settlement and an offsetting recovery from the liquidation of SemiSouth Laboratories, and the tax effects of these items. Non-GAAP net income for the second quarter of 2022 was $59.9 million or $1.03 per diluted share compared with $0.93 per diluted share in the prior quarter and $0.83 per diluted share in the second quarter of 2021. A reconciliation of GAAP to non-GAAP financial results is included with the tables accompanying this press release.

Commented Balu Balakrishnan, president and CEO of Power Integrations: “Our second-quarter revenues and third-quarter outlook reflect softness at Chinese smartphone customers as well as broader macroeconomic headwinds. Nevertheless, we grew our non-GAAP earnings per share by 24 percent year-over-year in the second quarter, generated $67 million in cash from operations and returned more than $160 million to stockholders through buybacks and dividends. While the near-term demand outlook has weakened, we continue to make great progress on long-term growth initiatives like automotive, motor drive, and expanding our portfolio of products incorporating our energy-efficient, proprietary GaN technology.”

Additional Highlights

• Power Integrations repurchased 1.9 million shares of its common stock during the second quarter for $157.7 million, exhausting the company’s repurchase authorization.
• The company paid a dividend of $0.18 per share on June 30, 2022. A dividend of $0.18 per share is to be paid on September 30, 2022, to stockholders of record as of August 31, 2022.

Financial Outlook

The company issued the following forecast for the third quarter of 2022:

• Revenues are expected to be $165 million plus or minus five percent.
• GAAP gross margin is expected to be approximately 57.5 percent. Non-GAAP gross margin is expected to be approximately 58 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 approximately $51 million; non-GAAP operating expenses are expected to be approximately $42.5 million. Non-GAAP expenses are expected to exclude approximately $8.5 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://conferencingportals.com/event/iobnvsok. 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 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 third-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 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 (SEC) on February 7, 2022. 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.

POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per-share amounts)
				Three Months Ended												Six Months Ended
				June 30, 2022				March 31, 2022				June 30, 2021				June 30, 2022			June 30, 2021
NET REVENUES				$	183,986			$	182,149			$	180,110			$	366,135		$	353,847
COST OF REVENUES					77,143				81,474				88,797				158,617			178,123
GROSS PROFIT					106,843				100,675				91,313				207,518			175,724
OPERATING EXPENSES:
Research and development					23,507				23,678				21,741				47,185			41,768
Sales and marketing					15,985				16,155				15,097				32,140			29,004
General and administrative					6,059				9,614				9,306				15,673			19,381
Amortization of acquisition-related intangible assets					60				181				193				241			409
Other operating expenses, net					1,130				-				-				1,130			-
	Total operating expenses				46,741				49,628				46,337				96,369			90,562
INCOME FROM OPERATIONS					60,102				51,047				44,976				111,149			85,162
OTHER INCOME					674				554				173				1,228			770
INCOME BEFORE INCOME TAXES					60,776				51,601				45,149				112,377			85,932
PROVISION FOR INCOME TAXES					4,952				5,353				3,268				10,305			4,253
NET INCOME				$	55,824			$	46,248			$	41,881			$	102,072		$	81,679
EARNINGS PER SHARE:
	Basic			$	0.97			$	0.78			$	0.69			$	1.75		$	1.35
	Diluted			$	0.96			$	0.77			$	0.68			$	1.72		$	1.33
SHARES USED IN PER-SHARE CALCULATION:
	Basic				57,731				59,238				60,544				58,480			60,366
	Diluted				58,305				60,107				61,466				59,192			61,481
SUPPLEMENTAL INFORMATION:				Three Months Ended												Six Months Ended
				June 30, 2022				March 31, 2022				June 30, 2021				June 30, 2022			June 30, 2021
Stock-based compensation expenses included in:
	Cost of revenues			$	235			$	320			$	640			$	555		$	1,271
	Research and development				2,323				3,055				3,159				5,378			5,550
	Sales and marketing				1,177				1,948				1,725				3,125			3,339
	General and administrative				(56	)			3,690				3,676				3,634			7,520
	Total stock-based compensation expense			$	3,679			$	9,013			$	9,200			$	12,692		$	17,680
Cost of revenues includes:
	Amortization of acquisition-related intangible assets			$	482			$	482			$	619			$	964		$	1,373
				Three Months Ended												Six Months Ended
REVENUE MIX BY END MARKET				June 30, 2022				March 31, 2022				June 30, 2021				June 30, 2022			June 30, 2021
	Communications				18	%			26	%			35	%			22	%		37	%
	Computer				9	%			10	%			8	%			10	%		8	%
	Consumer				38	%			35	%			31	%			36	%		30	%
	Industrial				35	%			29	%			26	%			32	%		25	%

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, 2022				March 31, 2022				June 30, 2021				June 30, 2022				June 30, 2021
RECONCILIATION OF GROSS PROFIT
GAAP gross profit					$	106,843			$	100,675			$	91,313			$	207,518			$	175,724
	GAAP gross margin					58.1	%			55.3	%			50.7	%			56.7	%			49.7	%
Stock-based compensation included in cost of revenues						235				320				640				555				1,271
Amortization of acquisition-related intangible assets						482				482				619				964				1,373
Non-GAAP gross profit					$	107,560			$	101,477			$	92,572			$	209,037			$	178,368
	Non-GAAP gross margin					58.5	%			55.7	%			51.4	%			57.1	%			50.4	%
					Three Months Ended												Six Months Ended
RECONCILIATION OF OPERATING EXPENSES					June 30, 2022				March 31, 2022				June 30, 2021				June 30, 2022				June 30, 2021
GAAP operating expenses					$	46,741			$	49,628			$	46,337			$	96,369			$	90,562
Less:	Stock-based compensation expense included in operating expenses
		Research and development				2,323				3,055				3,159				5,378				5,550
		Sales and marketing				1,177				1,948				1,725				3,125				3,339
		General and administrative				(56	)			3,690				3,676				3,634				7,520
		Total				3,444				8,693				8,560				12,137				16,409
	Amortization of acquisition-related intangible assets					60				181				193				241				409
	Other operating expenses, net					1,130				-				-				1,130				-
Non-GAAP operating expenses					$	42,107			$	40,754			$	37,584			$	82,861			$	73,744
					Three Months Ended												Six Months Ended
RECONCILIATION OF INCOME FROM OPERATIONS					June 30, 2022				March 31, 2022				June 30, 2021				June 30, 2022				June 30, 2021
GAAP income from operations					$	60,102			$	51,047			$	44,976			$	111,149			$	85,162
	GAAP operating margin					32.7	%			28.0	%			25.0	%			30.4	%			24.1	%
Add:	Total stock-based compensation					3,679				9,013				9,200				12,692				17,680
	Amortization of acquisition-related intangible assets					542				663				812				1,205				1,782
	Other operating expenses, net					1,130				-				-				1,130				-
Non-GAAP income from operations					$	65,453			$	60,723			$	54,988			$	126,176			$	104,624
	Non-GAAP operating margin					35.6	%			33.3	%			30.5	%			34.5	%			29.6	%
					Three Months Ended
RECONCILIATION OF PROVISION FOR INCOME TAXES					June 30, 2022				March 31, 2022				June 30, 2021				June 30, 2022				June 30, 2021
GAAP provision for income taxes					$	4,952			$	5,353			$	3,268			$	10,305			$	4,253
	GAAP effective tax rate					8.1	%			10.4	%			7.2	%			9.2	%			4.9	%
Tax effect of adjustments to GAAP results						(1,259	)			(122	)			(1,101	)			(1,381	)			(3,679	)
Non-GAAP provision for income taxes					$	6,211			$	5,475			$	4,369			$	11,686			$	7,932
	Non-GAAP effective tax rate					9.4	%			8.9	%			7.9	%			9.2	%			7.5	%
					Three Months Ended												Six Months Ended
RECONCILIATION OF NET INCOME PER SHARE (DILUTED)					June 30, 2022				March 31, 2022				June 30, 2021				June 30, 2022				June 30, 2021
GAAP net income					$	55,824			$	46,248			$	41,881			$	102,072			$	81,679
Adjustments to GAAP net income
	Stock-based compensation					3,679				9,013				9,200				12,692				17,680
	Amortization of acquisition-related intangible assets					542				663				812				1,205				1,782
	Other operating expenses, net					1,130				-				-				1,130				-
	Tax effect of items excluded from non-GAAP results					(1,259	)			(122	)			(1,101	)			(1,381	)			(3,679	)
Non-GAAP net income					$	59,916			$	55,802			$	50,792			$	115,718			$	97,462
Average shares outstanding for calculation
	of non-GAAP net income per share (diluted)					58,305				60,107				61,466				59,192				61,481
Non-GAAP net income per share (diluted)					$	1.03			$	0.93			$	0.83			$	1.95			$	1.59
GAAP net income per share (diluted)					$	0.96			$	0.77			$	0.68			$	1.72			$	1.33

POWER INTEGRATIONS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
			June 30, 2022				March 31, 2022				December 31, 2021
ASSETS
	CURRENT ASSETS:
	Cash and cash equivalents		$	67,383			$	170,624			$	158,117
	Short-term marketable securities			260,209				273,419				372,235
	Accounts receivable, net			27,980				30,658				41,393
	Inventories			111,258				103,115				99,266
	Prepaid expenses and other current assets			14,219				14,685				15,804
	Total current assets			481,049				592,501				686,815
	PROPERTY AND EQUIPMENT, net			184,245				180,073				179,824
	INTANGIBLE ASSETS, net			7,684				8,288				9,012
	GOODWILL			91,849				91,849				91,849
	DEFERRED TAX ASSETS			19,830				17,371				16,433
	OTHER ASSETS			24,347				29,113				30,554
	Total assets		$	809,004			$	919,195			$	1,014,487
LIABILITIES AND STOCKHOLDERS’ EQUITY
	CURRENT LIABILITIES:
	Accounts payable		$	41,402			$	36,175			$	43,721
	Accrued payroll and related expenses			14,569				13,459				15,492
	Taxes payable			561				5,601				1,210
	Other accrued liabilities			13,597				13,999				11,898
	Total current liabilities			70,129				69,234				72,321
	LONG-TERM LIABILITIES:
	Income taxes payable			15,739				15,384				15,280
	Other liabilities			12,891				14,004				14,854
	Total liabilities			98,759				98,622				102,455
STOCKHOLDERS' EQUITY:
	Common stock			24				26				28
	Additional paid-in capital			-				39,684				162,301
	Accumulated other comprehensive loss			(10,060	)			(8,169	)			(3,737	)
	Retained earnings			720,281				789,032				753,440
	Total stockholders' equity			710,245				820,573				912,032
	Total liabilities and stockholders' equity		$	809,004			$	919,195			$	1,014,487

POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
		Three Months Ended												Six Months Ended
		June 30, 2022				March 31, 2022				June 30, 2021				June 30, 2022				June 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income	$	55,824			$	46,248			$	41,881			$	102,072			$	81,679
	Adjustments to reconcile net income to cash provided by operating activities
	Depreciation		8,766				8,408				7,821				17,174				15,274
	Amortization of intangible assets		604				724				873				1,328				1,905
	Loss on disposal of property and equipment		959				75				21				1,034				38
	Stock-based compensation expense		3,679				9,013				9,200				12,692				17,680
	Amortization of premium on marketable securities		930				937				124				1,867				300
	Deferred income taxes		(2,346	)			(936	)			(263	)			(3,282	)			1,182
	Increase in accounts receivable allowance for credit losses		184				75				93				259				91
	Change in operating assets and liabilities:
	Accounts receivable		2,494				10,660				812				13,154				(5,533	)
	Inventories		(8,143	)			(3,849	)			866				(11,992	)			13,235
	Prepaid expenses and other assets		2,523				1,552				(1,248	)			4,075				(4,501	)
	Accounts payable		7,286				(1,709	)			4,772				5,577				8,053
	Taxes payable and other accrued liabilities		(5,938	)			3,399				1,896				(2,539	)			(4,433	)
	Net cash provided by operating activities		66,822				74,597				66,848				141,419				124,970
CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchases of property and equipment		(13,244	)			(14,700	)			(8,243	)			(27,944	)			(19,294	)
	Proceeds from sale of property and equipment		-				1,202				10				1,202				35
	Purchases of marketable securities		(5,589	)			(15,121	)			(166,782	)			(20,710	)			(188,753	)
	Proceeds from sales and maturities of marketable securities		16,710				108,817				96,617				125,527				160,083
	Net cash provided by (used in) investing activities		(2,123	)			80,198				(78,398	)			78,075				(47,929	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Net proceeds from issuance of common stock		-				3,057				-				3,057				3,652
	Repurchase of common stock		(157,660	)			(134,689	)			(26,374	)			(292,349	)			(26,374	)
	Payments of dividends to stockholders		(10,280	)			(10,656	)			(7,867	)			(20,936	)			(15,712	)
	Net cash used in financing activities		(167,940	)			(142,288	)			(34,241	)			(310,228	)			(38,434	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			(103,241	)			12,507				(45,791	)			(90,734	)			38,607
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD			170,624				158,117				343,272				158,117				258,874
CASH AND CASH EQUIVALENTS AT END OF PERIOD		$	67,383			$	170,624			$	297,481			$	67,383			$	297,481

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220804005958/en/

Joe Shiffler

Power Integrations, Inc.

(408) 414-8528

joe@power.com

Source: Power Integrations, Inc.

FAQ

What were Power Integrations' Q2 2022 earnings results?

In Q2 2022, Power Integrations reported revenues of $184 million and GAAP earnings of $0.96 per diluted share.

What is Power Integrations' financial outlook for Q3 2022?

The company expects Q3 2022 revenues to range around $165 million, plus or minus 5%.

How much cash did Power Integrations generate from operations in Q2 2022?

Power Integrations generated $66.8 million in cash flow from operations in Q2 2022.

What was the non-GAAP earnings per diluted share for Power Integrations in Q2 2022?

The non-GAAP earnings per diluted share for Q2 2022 was $1.03, marking a 24% increase year-over-year.

How much did Power Integrations return to shareholders in Q2 2022?

Power Integrations returned over $160 million to shareholders through buybacks and dividends in Q2 2022.