Power Integrations Reports Third-Quarter Financial Results

Rhea-AI Summary

Power Integrations (NASDAQ: POWI) reports a two percent sequential increase in revenues to $125.5 million, with GAAP earnings at $0.34 per diluted share and non-GAAP earnings at $0.46 per diluted share. The quarterly dividend has risen by five percent to $0.20 per share.

Positive

• The company has reported a sequential increase in revenues, indicating growth in its business operations.
• The introduction of InnoSwitch™ ICs incorporating a 1250-volt PowiGaN™ switch demonstrates the company's commitment to technology innovation and cost-effective alternatives in the market.
• The company's healthy design activity and progress on growth initiatives, such as EVs and efficient drivers for brushless DC motors, suggest potential for long-term growth and market expansion.

Negative

• Net revenues for the third quarter were down 22 percent from the third quarter of 2022, indicating a decline in year-over-year performance.
• The forecast for the fourth quarter of 2023 indicates a lower revenue expectation, which may impact short-term financial performance.

Revenues increased two percent sequentially to $125.5 million; GAAP earnings were $0.34 per diluted share; non-GAAP earnings were $0.46 per diluted share

Quarterly dividend rises by five percent to $0.20 per share

SAN JOSE, Calif.--(BUSINESS WIRE)-- Power Integrations (NASDAQ: POWI) today announced financial results for the quarter ended September 30, 2023. Net revenues for the third quarter were $125.5 million, up two percent compared to the prior quarter and down 22 percent from the third quarter of 2022. Net income for the third quarter was $19.8 million or $0.34 per diluted share compared to $0.26 per diluted share in the prior quarter and $0.80 per diluted share in the third quarter of 2022. Cash flow from operations for the third quarter was $26.7 million.

In addition to its GAAP results, the company provided non-GAAP measures that for the third quarter of 2023 exclude stock-based compensation, amortization of acquisition-related intangible assets and the related tax effects. Non-GAAP net income for the third quarter of 2023 was $26.6 million or $0.46 per diluted share compared to $0.36 per diluted share in the prior quarter and $0.84 per diluted share in the third quarter of 2022. 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: “Our results and forecast reflect the broad-based demand weakness and elevated supply-chain inventories cited by many of our peers this quarter. Notwithstanding the uncertain short-term outlook, our products are winning in the market, design activity remains healthy, and we are making excellent progress on growth initiatives such as EVs, efficient drivers for brushless DC motors, and our proprietary GaN technology.

“We took the next step on our GaN roadmap last month with the introduction of InnoSwitch™ ICs incorporating a 1250-volt PowiGaN™ switch. This breakthrough not only extends the efficiency benefits of GaN to a wider range of applications but also demonstrates that GaN will be a more cost-effective alternative to silicon carbide in the years ahead.”

Power Integrations paid a dividend of $0.19 per share on September 29, 2023, and will pay a dividend of $0.20 per share on December 29, 2023, to stockholders of record as of November 30, 2023. During the third quarter the company repurchased approximately 24,000 shares of its common stock for $1.8 million. The company had $73.4 million remaining on its repurchase authorization as of September 30, 2023.

Financial Outlook

The company issued the following forecast for the fourth quarter of 2023:

• Revenues are expected to be $90 million plus or minus $5 million.
• Gross margins are expected to be similar to the third-quarter levels.
• GAAP operating expenses are expected to be approximately $50 million; non-GAAP operating expenses are expected to be approximately $42.5 million. Non-GAAP expenses are expected to exclude about $7.5 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/YTVcHvJE. 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 fourth-quarter financial performance and that GaN will be a more cost-effective alternative to silicon carbide 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, InnoSwitch, 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												Nine Months Ended
	September 30, 2023				June 30, 2023				September 30, 2022				September 30, 2023				September 30, 2022
NET REVENUES	$	125,511			$	123,223			$	160,233			$	355,031			$	526,368
COST OF REVENUES		59,566				60,377				68,198				172,283				226,815
GROSS PROFIT		65,945				62,846				92,035				182,748				299,553
OPERATING EXPENSES:
Research and development		24,064				24,517				23,205				72,562				70,390
Sales and marketing		16,224				17,017				14,700				49,126				46,840
General and administrative		7,945				8,671				5,759				24,950				21,432
Amortization of acquisition-related intangible assets		-				-				-				-				241
Other operating expenses, net		-				-				-				-				1,130
Total operating expenses		48,233				50,205				43,664				146,638				140,033
INCOME FROM OPERATIONS		17,712				12,641				48,371				36,110				159,520
OTHER INCOME		3,138				2,714				1,001				7,566				2,229
INCOME BEFORE INCOME TAXES		20,850				15,355				49,372				43,676				161,749
PROVISION FOR INCOME TAXES		1,054				562				3,408				2,212				13,713
NET INCOME	$	19,796			$	14,793			$	45,964			$	41,464			$	148,036
EARNINGS PER SHARE:
Basic	$	0.34			$	0.26			$	0.80			$	0.72			$	2.55
Diluted	$	0.34			$	0.26			$	0.80			$	0.72			$	2.52
SHARES USED IN PER-SHARE CALCULATION:
Basic		57,383				57,355				57,172				57,282				58,039
Diluted		57,741				57,669				57,603				57,711				58,635
SUPPLEMENTAL INFORMATION:	Three Months Ended												Nine Months Ended
	September 30, 2023				June 30, 2023				September 30, 2022				September 30, 2023				September 30, 2022
Stock-based compensation expenses included in:
Cost of revenues	$	446			$	446			$	172			$	1,193			$	727
Research and development		2,895				2,429				2,334				7,992				7,712
Sales and marketing		1,787				1,621				1,267				5,061				4,392
General and administrative		1,777				2,256				(755	)			6,779				2,879
Total stock-based compensation expense	$	6,905			$	6,752			$	3,018			$	21,025			$	15,710
Cost of revenues includes:
Amortization of acquisition-related intangible assets	$	482			$	482			$	482			$	1,446			$	1,446
	Three Months Ended												Nine Months Ended
REVENUE MIX BY END MARKET	September 30, 2023				June 30, 2023				September 30, 2022				September 30, 2023				September 30, 2022
Communications		32	%			28	%			16	%			30	%			20	%
Computer		10	%			14	%			11	%			12	%			10	%
Consumer		26	%			29	%			32	%			26	%			35	%
Industrial		32	%			29	%			41	%			32	%			35	%

POWER INTEGRATIONS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP RESULTS
(in thousands, except per-share amounts)
	Three Months Ended												Nine Months Ended
	September 30, 2023				June 30, 2023				September 30, 2022				September 30, 2023				September 30, 2022
RECONCILIATION OF GROSS PROFIT
GAAP gross profit	$	65,945			$	62,846			$	92,035			$	182,748			$	299,553
GAAP gross margin		52.5	%			51.0	%			57.4	%			51.5	%			56.9	%
Stock-based compensation included in cost of revenues		446				446				172				1,193				727
Amortization of acquisition-related intangible assets		482				482				482				1,446				1,446
Non-GAAP gross profit	$	66,873			$	63,774			$	92,689			$	185,387			$	301,726
Non-GAAP gross margin		53.3	%			51.8	%			57.8	%			52.2	%			57.3	%
	Three Months Ended												Nine Months Ended
RECONCILIATION OF OPERATING EXPENSES	September 30, 2023				June 30, 2023				September 30, 2022				September 30, 2023				September 30, 2022
GAAP operating expenses	$	48,233			$	50,205			$	43,664			$	146,638			$	140,033
Less:Stock-based compensation expense included in operating expenses
Research and development		2,895				2,429				2,334				7,992				7,712
Sales and marketing		1,787				1,621				1,267				5,061				4,392
General and administrative		1,777				2,256				(755	)			6,779				2,879
Total		6,459				6,306				2,846				19,832				14,983
Amortization of acquisition-related intangible assets		-				-				-				-				241
Other operating expenses, net		-				-				-				-				1,130
Non-GAAP operating expenses	$	41,774			$	43,899			$	40,818			$	126,806			$	123,679
	Three Months Ended												Nine Months Ended
RECONCILIATION OF INCOME FROM OPERATIONS	September 30, 2023				June 30, 2023				September 30, 2022				September 30, 2023				September 30, 2022
GAAP income from operations	$	17,712			$	12,641			$	48,371			$	36,110			$	159,520
GAAP operating margin		14.1	%			10.3	%			30.2	%			10.2	%			30.3	%
Add:Total stock-based compensation		6,905				6,752				3,018				21,025				15,710
Amortization of acquisition-related intangible assets		482				482				482				1,446				1,687
Other operating expenses, net		-				-				-				-				1,130
Non-GAAP income from operations	$	25,099			$	19,875			$	51,871			$	58,581			$	178,047
Non-GAAP operating margin		20.0	%			16.1	%			32.4	%			16.5	%			33.8	%
	Three Months Ended												Nine Months Ended
RECONCILIATION OF PROVISION FOR INCOME TAXES	September 30, 2023				June 30, 2023				September 30, 2022				September 30, 2023				September 30, 2022
GAAP provision for income taxes	$	1,054			$	562			$	3,408			$	2,212			$	13,713
GAAP effective tax rate		5.1	%			3.7	%			6.9	%			5.1	%			8.5	%
Tax effect of adjustments to GAAP results		(580	)			(1,016	)			(1,116	)			(2,097	)			(2,497	)
Non-GAAP provision for income taxes	$	1,634			$	1,578			$	4,524			$	4,309			$	16,210
Non-GAAP effective tax rate		5.8	%			7.0	%			8.6	%			6.5	%			9.0	%
	Three Months Ended												Nine Months Ended
RECONCILIATION OF NET INCOME PER SHARE (DILUTED)	September 30, 2023				June 30, 2023				September 30, 2022				September 30, 2023				September 30, 2022
GAAP net income	$	19,796			$	14,793			$	45,964			$	41,464			$	148,036
Adjustments to GAAP net income
Stock-based compensation		6,905				6,752				3,018				21,025				15,710
Amortization of acquisition-related intangible assets		482				482				482				1,446				1,687
Other operating expenses, net		-				-				-				-				1,130
Tax effect of items excluded from non-GAAP results		(580	)			(1,016	)			(1,116	)			(2,097	)			(2,497	)
Non-GAAP net income	$	26,603			$	21,011			$	48,348			$	61,838			$	164,066
Average shares outstanding for calculation of non-GAAP net income per share (diluted)		57,741				57,669				57,603				57,711				58,635
Non-GAAP net income per share (diluted)	$	0.46			$	0.36			$	0.84			$	1.07			$	2.80
GAAP net income per share (diluted)	$	0.34			$	0.26			$	0.80			$	0.72			$	2.52

POWER INTEGRATIONS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
		September 30, 2023				June 30, 2023				December 31, 2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	94,743			$	84,096			$	105,372
Short-term marketable securities			261,896				262,219				248,441
Accounts receivable, net			28,539				32,077				20,836
Inventories			150,246				149,741				135,420
Prepaid expenses and other current assets			20,692				22,854				15,004
Total current assets			556,116				550,987				525,073
PROPERTY AND EQUIPMENT, net			166,391				168,066				176,681
INTANGIBLE ASSETS, net			4,967				5,511				6,597
GOODWILL			91,849				91,849				91,849
DEFERRED TAX ASSETS			28,943				21,771				19,034
OTHER ASSETS			17,224				21,273				20,862
Total assets		$	865,490			$	859,457			$	840,096
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	28,553			$	40,531			$	30,088
Accrued payroll and related expenses			13,778				14,041				14,778
Taxes payable			774				704				938
Other accrued liabilities			10,316				9,543				12,572
Total current liabilities			53,421				64,819				58,376
LONG-TERM LIABILITIES:
Income taxes payable			16,724				16,009				15,757
Other liabilities			10,288				10,700				10,747
Total liabilities			80,433				91,528				84,880
STOCKHOLDERS' EQUITY:
Common stock			23				23				24
Additional paid-in capital			19,429				11,220				-
Accumulated other comprehensive loss			(5,730	)			(5,757	)			(7,344	)
Retained earnings			771,335				762,443				762,536
Total stockholders' equity			785,057				767,929				755,216
Total liabilities and stockholders' equity		$	865,490			$	859,457			$	840,096

POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
	Three Months Ended												Nine Months Ended
	September 30, 2023				June 30, 2023				September 30, 2022				September 30, 2023				September 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	19,796			$	14,793			$	45,964			$	41,464			$	148,036
Adjustments to reconcile net income to cash provided by operating activities
Depreciation		8,663				8,692				8,881				26,316				26,055
Amortization of intangible assets		544				543				543				1,630				1,871
Loss on disposal of property and equipment		64				15				128				86				1,162
Stock-based compensation expense		6,905				6,752				3,018				21,025				15,710
Amortization of premium on marketable securities		(273	)			15				771				146				2,638
Deferred income taxes		(7,170	)			(2,044	)			(4,108	)			(9,952	)			(7,390	)
Increase (decrease) in accounts receivable allowance for credit losses		-				-				431				(454	)			690
Change in operating assets and liabilities:
Accounts receivable		3,538				(11,492	)			11,474				(7,249	)			24,628
Inventories		(505	)			(7,297	)			(8,834	)			(14,826	)			(20,826	)
Prepaid expenses and other assets		6,404				(4,939	)			4,353				(837	)			8,428
Accounts payable		(11,695	)			5,887				(11,451	)			(2,882	)			(5,874	)
Taxes payable and other accrued liabilities		455				(4,744	)			(1,344	)			(4,975	)			(3,883	)
Net cash provided by operating activities		26,726				6,181				49,826				49,492				191,245
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(7,530	)			(3,129	)			(5,500	)			(14,741	)			(33,444	)
Proceeds from sale of property and equipment		-				-				-				-				1,202
Purchases of marketable securities		(62,205	)			(73,888	)			(6,534	)			(173,015	)			(27,244	)
Proceeds from sales and maturities of marketable securities		63,256				75,948				35,487				161,897				161,014
Net cash provided by (used in) investing activities		(6,479	)			(1,069	)			23,453				(25,859	)			101,528
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock		3,139				-				3,105				6,237				6,162
Repurchase of common stock		(1,835	)			(4,312	)			-				(7,834	)			(292,349	)
Payments of dividends to stockholders		(10,904	)			(10,893	)			(10,293	)			(32,665	)			(31,229	)
Net cash used in financing activities		(9,600	)			(15,205	)			(7,188	)			(34,262	)			(317,416	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		10,647				(10,093	)			66,091				(10,629	)			(24,643	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		84,096				94,189				67,383				105,372				158,117
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	94,743			$	84,096			$	133,474			$	94,743			$	133,474

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20231107480518/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 third quarter of 2023?

Power Integrations reported net revenues of $125.5 million for the third quarter of 2023, representing a two percent sequential increase.

What is the company's financial outlook for the fourth quarter of 2023?

Power Integrations expects revenues of $90 million plus or minus $5 million for the fourth quarter of 2023, with similar gross margins to the third quarter levels. GAAP operating expenses are expected to be approximately $50 million, and non-GAAP operating expenses are expected to be approximately $42.5 million.

What is the company's dividend payment schedule?

Power Integrations paid a dividend of $0.19 per share on September 29, 2023, and will pay a dividend of $0.20 per share on December 29, 2023, to stockholders of record as of November 30, 2023.

What progress has Power Integrations made on growth initiatives?

The company has made progress on growth initiatives such as EVs, efficient drivers for brushless DC motors, and proprietary GaN technology, indicating a focus on innovation and market expansion.