POWI Power Integrations Inc

Quarterly revenues were $106.2 million; GAAP earnings were $0.09 per diluted share; non-GAAP earnings were $0.28 per diluted share

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