Power Integrations Reports Second-Quarter Financial Results

Rhea-AI Summary

Power Integrations (NASDAQ: POWI) reported its Q2 2024 financial results. Net revenues were $106.2 million, up 16% from the previous quarter but down 14% year-over-year. GAAP net income was $4.8 million or $0.09 per diluted share, while non-GAAP net income was $15.9 million or $0.28 per diluted share. The company expects Q3 2024 revenues of $115 million ±$5 million and improved gross margins.

Key highlights include the completion of Odyssey Semiconductor Technologies asset acquisition, stock repurchases of 164,000 shares for $11.3 million, and a dividend payment of $0.20 per share. Despite soft demand and visibility, POWI anticipates sequential growth in Q3 driven by lower distributor inventories and new design wins.

Positive

• Q2 revenues increased 16% quarter-over-quarter to $106.2 million
• Non-GAAP earnings per diluted share rose to $0.28 from $0.18 in the previous quarter
• Q3 2024 revenue guidance of $115 million ±$5 million, indicating further growth
• Expected increase in gross margin for Q3 2024
• Completed acquisition of Odyssey Semiconductor Technologies assets to enhance GaN technology development

Negative

• Q2 revenues decreased 14% year-over-year
• GAAP net income declined to $0.09 per diluted share from $0.26 in Q2 2023
• Non-GAAP earnings per diluted share decreased from $0.36 in Q2 2023 to $0.28 in Q2 2024
• Soft demand and visibility in the market

Financial Analyst

Power Integrations' Q2 2024 results show a mixed performance. While revenues increased 16% quarter-over-quarter to $106.2 million, they're down 14% year-over-year. The GAAP EPS of $0.09 and non-GAAP EPS of $0.28 indicate profitability, but at lower levels compared to Q2 2023.

The company's outlook for Q3 2024 suggests cautious optimism, with expected revenues of $115 million (±$5 million) and improved gross margins. The acquisition of Odyssey Semiconductor Technologies' assets could potentially strengthen their position in GaN technology, a growing market in power electronics.

However, the mention of soft demand and visibility raises concerns about the broader market conditions affecting the semiconductor industry. Investors should closely monitor the company's ability to capitalize on new design wins and manage inventory levels in the coming quarters.

Market Research Analyst

The semiconductor industry is facing challenges, as evidenced by Power Integrations' year-over-year revenue decline. However, the sequential growth and positive Q3 outlook suggest a potential market stabilization. The company's focus on GaN technology through the Odyssey Semiconductor acquisition aligns with the industry trend towards more efficient power solutions.

The lower distributor inventories mentioned could indicate improving supply chain dynamics or increasing demand. This, coupled with new design wins, might lead to stronger performance in upcoming quarters. However, the soft demand and visibility highlight ongoing market uncertainties that could impact future growth.

Investors should consider the broader economic factors affecting the semiconductor industry, such as global trade tensions and potential shifts in consumer electronics demand, when evaluating Power Integrations' long-term prospects.

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.--(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, http://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			31,194				54,198				75,948				85,392				98,641
Net cash used in investing activities			(891	)			(57	)			(1,069	)			(948	)			(19,380	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock			-				2,691				-				2,691				3,098
Repurchase of common stock			(11,338	)			(14,641	)			(4,312	)			(25,979	)			(5,999	)
Payments of dividends to stockholders			(11,352	)			(11,384	)			(10,893	)			(22,736	)			(21,761	)
Net cash used in financing activities			(22,690	)			(23,334	)			(15,205	)			(46,024	)			(24,662	)
NET DECREASE IN CASH AND CASH EQUIVALENTS			(5,950	)			(7,486	)			(10,093	)			(13,436	)			(21,276	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD			56,443				63,929				94,189				63,929				105,372
CASH AND CASH EQUIVALENTS AT END OF PERIOD		$	50,493			$	56,443			$	84,096			$	50,493			$	84,096

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240806486746/en/

Joe Shiffler

Power Integrations, Inc.

(408) 414-8528

joe@power.com

Source: Power Integrations, Inc.

FAQ

What were Power Integrations' (POWI) Q2 2024 revenue and earnings?

Power Integrations reported Q2 2024 revenues of $106.2 million, with GAAP earnings of $0.09 per diluted share and non-GAAP earnings of $0.28 per diluted share.

How did POWI's Q2 2024 results compare to the previous quarter and year?

Q2 2024 revenues were up 16% from the previous quarter but down 14% year-over-year. GAAP earnings improved from $0.07 to $0.09 per diluted share quarter-over-quarter but decreased from $0.26 year-over-year.

What is Power Integrations' revenue guidance for Q3 2024?

Power Integrations expects Q3 2024 revenues to be $115 million plus or minus $5 million, indicating a sequential increase from Q2 2024.

Did Power Integrations (POWI) complete any acquisitions in Q2 2024?

Yes, Power Integrations completed the acquisition of Odyssey Semiconductor Technologies' assets on July 1, 2024, to enhance its gallium-nitride (GaN) switching technology development.

What dividend did POWI declare for Q3 2024?

Power Integrations declared a dividend of $0.20 per share to be paid on September 30, 2024, to stockholders of record as of August 30, 2024.