Revenues increased 16 percent sequentially to
$123.2 million; GAAP earnings were $0.26 per diluted share;
non-GAAP earnings were $0.36 per diluted share
Power Integrations (NASDAQ: POWI) today announced financial
results for the quarter ended June 30, 2023. Net revenues for the
second quarter were $123.2 million, up 16 percent compared to the
prior quarter and down 33 percent from the second quarter of 2022.
Net income for the second quarter was $14.8 million or $0.26 per
diluted share compared to $0.12 per diluted share in the prior
quarter and $0.96 per diluted share in the second quarter of 2022.
Cash flow from operations for the second quarter was $6.2
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 in the second quarter of 2022,
and the tax effects of these items. Non-GAAP net income for the
second quarter of 2023 was $21.0 million or $0.36 per diluted share
compared to $0.25 per diluted share in the prior quarter and $1.03
per diluted share in the second 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 second-quarter results mark the start of a
recovery from the cyclical trough. Consumer revenues grew 35
percent sequentially driven by appliances, while communication and
computer revenues also rose significantly. Industrial, the last
category to enter the cyclical downturn, fell slightly. Looking
ahead, while the pace of the recovery reflects a soft demand
environment, especially in China, we expect meaningful growth in
the second half of 2023 compared to the first half driven by design
wins and improving channel inventory. We also expect higher gross
margins in the second half driven by the dollar/yen exchange rate,
rising production volumes and a more favorable end-market mix.”
Power Integrations paid a dividend of $0.19 per share on June
30, 2023, and will pay a dividend of $0.19 per share on September
29, 2023, to stockholders of record as of August 31, 2023. During
the second quarter the company repurchased approximately 57,000
shares of its common stock for $4.3 million. The company had $75.3
million remaining on its repurchase authorization as of June 30,
2023.
Financial Outlook
The company issued the following forecast for the third quarter
of 2023:
- Revenues are expected to be $130 million plus or minus $5
million.
- GAAP gross margin is expected to be approximately 53.5 percent,
and non-GAAP gross margin is expected to be approximately 54
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 $43.5 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/fEIobxNC. 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
third-quarter and second-half 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 (SEC) 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 Six Months Ended
June 30, 2023 March 31, 2023 June
30, 2022 June 30,
2023 June 30, 2022
NET REVENUES
$
123,223
$
106,297
$
183,986
$
229,520
$
366,135
COST OF REVENUES
60,377
52,340
77,143
112,717
158,617
GROSS PROFIT
62,846
53,957
106,843
116,803
207,518
OPERATING EXPENSES: Research and development
24,517
23,981
23,507
48,498
47,185
Sales and marketing
17,017
15,885
15,985
32,902
32,140
General and administrative
8,671
8,334
6,059
17,005
15,673
Amortization of acquisition-related intangible assets
-
-
60
-
241
Other operating expenses, net
-
-
1,130
-
1,130
Total operating expenses
50,205
48,200
46,741
98,405
96,369
INCOME FROM OPERATIONS
12,641
5,757
60,102
18,398
111,149
OTHER INCOME
2,714
1,714
674
4,428
1,228
INCOME BEFORE INCOME TAXES
15,355
7,471
60,776
22,826
112,377
PROVISION FOR INCOME TAXES
562
596
4,952
1,158
10,305
NET INCOME
$
14,793
$
6,875
$
55,824
$
21,668
$
102,072
EARNINGS PER SHARE: Basic
$
0.26
$
0.12
$
0.97
$
0.38
$
1.75
Diluted
$
0.26
$
0.12
$
0.96
$
0.38
$
1.72
SHARES USED IN PER-SHARE CALCULATION: Basic
57,355
57,105
57,731
57,231
58,480
Diluted
57,669
57,579
58,305
57,654
59,192
SUPPLEMENTAL INFORMATION:
Three Months
Ended Six Months Ended June 30,
2023 March 31, 2023
June 30, 2022 June 30, 2023 June
30, 2022 Stock-based compensation expenses included in:
Cost of revenues
$
446
$
301
$
235
$
747
$
555
Research and development
2,429
2,668
2,323
5,097
5,378
Sales and marketing
1,621
1,653
1,177
3,274
3,125
General and administrative
2,256
2,746
(56
)
5,002
3,634
Total stock-based compensation expense
$
6,752
$
7,368
$
3,679
$
14,120
$
12,692
Cost of revenues includes: Amortization of
acquisition-related intangible assets
$
482
$
482
$
482
$
964
$
964
Three Months Ended Six Months Ended
REVENUE MIX BY END MARKET
June 30,
2023 March 31, 2023
June 30, 2022 June 30, 2023 June
30, 2022 Communications
28
%
28
%
18
%
28
%
22
%
Computer
14
%
14
%
9
%
14
%
10
%
Consumer
29
%
24
%
38
%
27
%
36
%
Industrial
29
%
34
%
35
%
31
%
32
%
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, 2023
March 31, 2023 June 30, 2022 June
30, 2023 June 30,
2022 RECONCILIATION OF GROSS PROFIT GAAP gross
profit
$
62,846
$
53,957
$
106,843
$
116,803
$
207,518
GAAP gross margin
51.0
%
50.8
%
58.1
%
50.9
%
56.7
%
Stock-based compensation included in cost of revenues
446
301
235
747
555
Amortization of acquisition-related intangible assets
482
482
482
964
964
Non-GAAP gross profit
$
63,774
$
54,740
$
107,560
$
118,514
$
209,037
Non-GAAP gross margin
51.8
%
51.5
%
58.5
%
51.6
%
57.1
%
Three Months Ended Six Months Ended
RECONCILIATION OF OPERATING EXPENSES June 30, 2023 March
31, 2023 June 30,
2022 June 30, 2023
June 30, 2022 GAAP operating
expenses
$
50,205
$
48,200
$
46,741
$
98,405
$
96,369
Less:Stock-based compensation expense included in operating
expenses Research and development
2,429
2,668
2,323
5,097
5,378
Sales and marketing
1,621
1,653
1,177
3,274
3,125
General and administrative
2,256
2,746
(56
)
5,002
3,634
Total
6,306
7,067
3,444
13,373
12,137
Amortization of acquisition-related intangible assets
-
-
60
-
241
Other operating expenses, net
-
-
1,130
-
1,130
Non-GAAP operating expenses
$
43,899
$
41,133
$
42,107
$
85,032
$
82,861
Three Months Ended Six Months Ended
RECONCILIATION OF INCOME FROM OPERATIONS June 30, 2023 March
31, 2023 June 30,
2022 June 30, 2023
June 30, 2022 GAAP income from
operations
$
12,641
$
5,757
$
60,102
$
18,398
$
111,149
GAAP operating margin
10.3
%
5.4
%
32.7
%
8.0
%
30.4
%
Add:Total stock-based compensation
6,752
7,368
3,679
14,120
12,692
Amortization of acquisition-related intangible assets
482
482
542
964
1,205
Other operating expenses, net
-
-
1,130
-
1,130
Non-GAAP income from operations
$
19,875
$
13,607
$
65,453
$
33,482
$
126,176
Non-GAAP operating margin
16.1
%
12.8
%
35.6
%
14.6
%
34.5
%
Three Months Ended Six Months Ended
RECONCILIATION OF PROVISION FOR INCOME TAXES June 30, 2023 March
31, 2023 June 30,
2022 June 30, 2023
June 30, 2022 GAAP provision
for income taxes
$
562
$
596
$
4,952
$
1,158
$
10,305
GAAP effective tax rate
3.7
%
8.0
%
8.1
%
5.1
%
9.2
%
Tax effect of adjustments to GAAP results
(1,016
)
(501
)
(1,259
)
(1,517
)
(1,381
)
Non-GAAP provision for income taxes
$
1,578
$
1,097
$
6,211
$
2,675
$
11,686
Non-GAAP effective tax rate
7.0
%
7.2
%
9.4
%
7.1
%
9.2
%
Three Months Ended Six Months Ended
RECONCILIATION OF NET INCOME PER SHARE (DILUTED)
June 30, 2023 March 31, 2023 June
30, 2022 June 30,
2023 June 30, 2022
GAAP net income
$
14,793
$
6,875
$
55,824
$
21,668
$
102,072
Adjustments to GAAP net income Stock-based compensation
6,752
7,368
3,679
14,120
12,692
Amortization of acquisition-related intangible assets
482
482
542
964
1,205
Other operating expenses, net
-
-
1,130
-
1,130
Tax effect of items excluded from non-GAAP results
(1,016
)
(501
)
(1,259
)
(1,517
)
(1,381
)
Non-GAAP net income
$
21,011
$
14,224
$
59,916
$
35,235
$
115,718
Average shares outstanding for calculation of non-GAAP net
income per share (diluted)
57,669
57,579
58,305
57,654
59,192
Non-GAAP net income per share (diluted)
$
0.36
$
0.25
$
1.03
$
0.61
$
1.95
GAAP net income per share (diluted)
$
0.26
$
0.12
$
0.96
$
0.38
$
1.72
POWER INTEGRATIONS, INC. CONSOLIDATED BALANCE SHEETS
(in thousands) June
30, 2023 March 31,
2023 December 31,
2022 ASSETS CURRENT ASSETS: Cash and cash
equivalents
$
84,096
$
94,189
$
105,372
Short-term marketable securities
262,219
264,439
248,441
Accounts receivable, net
32,077
20,585
20,836
Inventories
149,741
142,444
135,420
Prepaid expenses and other current assets
22,854
17,538
15,004
Total current assets
550,987
539,195
525,073
PROPERTY AND EQUIPMENT, net
168,066
173,506
176,681
INTANGIBLE ASSETS, net
5,511
6,054
6,597
GOODWILL
91,849
91,849
91,849
DEFERRED TAX ASSETS
21,771
19,771
19,034
OTHER ASSETS
21,273
21,030
20,862
Total assets
$
859,457
$
851,405
$
840,096
LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT
LIABILITIES: Accounts payable
$
40,531
$
34,694
$
30,088
Accrued payroll and related expenses
14,041
13,442
14,778
Taxes payable
704
667
938
Other accrued liabilities
9,543
14,259
12,572
Total current liabilities
64,819
63,062
58,376
LONG-TERM LIABILITIES: Income taxes payable
16,009
15,741
15,757
Other liabilities
10,700
10,300
10,747
Total liabilities
91,528
89,103
84,880
STOCKHOLDERS' EQUITY: Common stock
23
23
24
Additional paid-in capital
11,220
8,780
-
Accumulated other comprehensive loss
(5,757
)
(5,044
)
(7,344
)
Retained earnings
762,443
758,543
762,536
Total stockholders' equity
767,929
762,302
755,216
Total liabilities and stockholders' equity
$
859,457
$
851,405
$
840,096
POWER INTEGRATIONS, INC. CONSOLIDATED STATEMENTS OF CASH
FLOWS (in thousands) Three Months Ended
Six Months Ended June 30,
2023 March 31, 2023
June 30, 2022 June 30, 2023 June
30, 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net
income
$
14,793
$
6,875
$
55,824
$
21,668
$
102,072
Adjustments to reconcile net income to cash provided by operating
activities Depreciation
8,692
8,961
8,766
17,653
17,174
Amortization of intangible assets
543
543
604
1,086
1,328
Loss on disposal of property and equipment
15
7
959
22
1,034
Stock-based compensation expense
6,752
7,368
3,679
14,120
12,692
Amortization of premium on marketable securities
15
404
930
419
1,867
Deferred income taxes
(2,044
)
(738
)
(2,346
)
(2,782
)
(3,282
)
Increase (decrease) in accounts receivable allowance for credit
losses
-
(454
)
184
(454
)
259
Change in operating assets and liabilities: Accounts receivable
(11,492
)
705
2,494
(10,787
)
13,154
Inventories
(7,297
)
(7,024
)
(8,143
)
(14,321
)
(11,992
)
Prepaid expenses and other assets
(4,939
)
(2,302
)
2,523
(7,241
)
4,075
Accounts payable
5,887
2,926
7,286
8,813
5,577
Taxes payable and other accrued liabilities
(4,744
)
(686
)
(5,938
)
(5,430
)
(2,539
)
Net cash provided by operating activities
6,181
16,585
66,822
22,766
141,419
CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property
and equipment
(3,129
)
(4,082
)
(13,244
)
(7,211
)
(27,944
)
Proceeds from sale of property and equipment
-
-
-
-
1,202
Purchases of marketable securities
(73,888
)
(36,922
)
(5,589
)
(110,810
)
(20,710
)
Proceeds from sales and maturities of marketable securities
75,948
22,693
16,710
98,641
125,527
Net cash provided by (used in) investing activities
(1,069
)
(18,311
)
(2,123
)
(19,380
)
78,075
CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from
issuance of common stock
-
3,098
-
3,098
3,057
Repurchase of common stock
(4,312
)
(1,687
)
(157,660
)
(5,999
)
(292,349
)
Payments of dividends to stockholders
(10,893
)
(10,868
)
(10,280
)
(21,761
)
(20,936
)
Net cash used in financing activities
(15,205
)
(9,457
)
(167,940
)
(24,662
)
(310,228
)
NET DECREASE IN CASH AND CASH EQUIVALENTS
(10,093
)
(11,183
)
(103,241
)
(21,276
)
(90,734
)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
94,189
105,372
170,624
105,372
158,117
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
84,096
$
94,189
$
67,383
$
84,096
$
67,383
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230803463563/en/
Joe Shiffler Power Integrations, Inc. (408) 414-8528
joe@power.com
Power Integrations (NASDAQ:POWI)
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