Power Integrations Reports First-Quarter Financial Results
Power Integrations (Nasdaq: POWI) today announced financial results for the quarter ended March 31, 2021. Per-share measures for all periods reflect the effect of the August 2020 two-for-one stock split.
Net revenues for the first quarter of 2021 were $173.7 million, up 15 percent compared to the prior quarter and up 58 percent from the first quarter of 2020. Net income for the first quarter was $39.8 million or $0.65 per diluted share compared to $0.45 per diluted share in the prior quarter and $0.26 per diluted share in the first quarter of 2020. Cash flow from operations for the first quarter was $58.1 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 and the tax effects of these items. Non-GAAP net income for the first quarter of 2021 was $46.7 million or $0.76 per diluted share compared with $0.60 per diluted share in the prior quarter and $0.38 per diluted share in the first quarter of 2020. A reconciliation of GAAP to non-GAAP financial results appears at the end of this press release.
Commented Balu Balakrishnan, president and CEO of Power Integrations: “First-quarter revenues grew 58 percent year-over-year reflecting the strong demand conditions across the industry as well as our continued success in advanced mobile-device chargers, appliances and many other power-supply applications. Distribution sell-through exceeded sell-in again in the first quarter and we have seen continued strength in bookings in recent weeks. As a result, we expect strong year-over-year growth again in the second quarter.”
Power Integrations paid a cash dividend of $0.13 per share on March 31, 2021. A dividend of $0.13 per share will be paid on June 30, 2021 to stockholders of record as of May 28, 2021. Also, the company’s board of directors has added $50 million to its share-repurchase authorization, bringing the total authorization to $91.3 million.
Financial Outlook
The company issued the following forecast for the second quarter of 2021:
Revenues are expected to be flat compared to the first quarter of 2021, plus or minus five percent. GAAP gross margin is expected to be between 49.5 and 50 percent, and non-GAAP gross margin is expected to be between 50 and 50.5 percent. (The difference between the expected GAAP and non-GAAP gross margins is approximately equally attributable to amortization of acquisition-related intangible assets and stock-based compensation.) GAAP operating expenses are expected to be approximately $47.5 million; non-GAAP operating expenses are expected to be approximately $38.5 million. (Non-GAAP expenses are expected to exclude approximately $8.8 million of stock-based compensation and $0.2 million of amortization of acquisition-related intangible assets.)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: http://www.directeventreg.com/registration/event/1859015. A 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, 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 second-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 conditions, including changing tariffs and uncertainty regarding 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 5, 2021. The company is under no obligation (and expressly disclaims any obligation) to update or alter its forward-looking statements, whether as a result 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.
$
173,737
$
150,693
$
109,664
COST OF REVENUES
89,326
76,688
53,184
GROSS PROFIT
84,411
74,005
56,480
OPERATING EXPENSES: Research and development
20,027
21,921
19,152
Sales and marketing
13,907
14,113
13,216
General and administrative
10,075
10,028
8,761
Amortization of acquisition-related intangible assets
216
216
257
Total operating expenses
44,225
46,278
41,386
INCOME FROM OPERATIONS
40,186
27,727
15,094
OTHER INCOME
597
630
1,777
INCOME BEFORE INCOME TAXES
40,783
28,357
16,871
PROVISION FOR INCOME TAXES
985
1,079
985
NET INCOME
$
39,798
$
27,278
$
15,886
EARNINGS PER SHARE: Basic
$
0.66
$
0.46
$
0.27
Diluted
$
0.65
$
0.45
$
0.26
SHARES USED IN PER-SHARE CALCULATION: Basic
60,184
59,879
59,204
Diluted
61,451
61,176
60,268
SUPPLEMENTAL INFORMATION: Three Months Ended March 31, 2021 December 31, 2020 March 31, 2020 Stock-based compensation expenses included in: Cost of revenues
$
631
$
713
$
396
Research and development
2,391
2,942
2,109
Sales and marketing
1,614
1,740
1,392
General and administrative
3,844
3,468
2,813
Total stock-based compensation expense
$
8,480
$
8,863
$
6,710
Cost of revenues includes: Amortization of acquisition-related intangible assets
$
754
$
799
$
799
Three Months Ended REVENUE MIX BY END MARKET March 31, 2021 December 31, 2020 March 31, 2020 Communications
38
%
34
%
22
%
Computer
8
%
9
%
4
%
Consumer
29
%
31
%
41
%
Industrial
25
%
26
%
33
%
$
84,411
$
74,005
$
56,480
GAAP gross margin
48.6
%
49.1
%
51.5
%
Stock-based compensation included in cost of revenues
631
713
396
Amortization of acquisition-related intangible assets
754
799
799
Non-GAAP gross profit
$
85,796
$
75,517
$
57,675
Non-GAAP gross margin
49.4
%
50.1
%
52.6
%
Three Months Ended RECONCILIATION OF OPERATING EXPENSES March 31, 2021 December 31, 2020 March 31, 2020 GAAP operating expenses$
44,225
$
46,278
$
41,386
Less: Stock-based compensation expense included in operating expenses Research and development
2,391
2,942
2,109
Sales and marketing
1,614
1,740
1,392
General and administrative
3,844
3,468
2,813
Total
7,849
8,150
6,314
Amortization of acquisition-related intangible assets
216
216
257
Non-GAAP operating expenses
$
36,160
$
37,912
$
34,815
Three Months Ended RECONCILIATION OF INCOME FROM OPERATIONS March 31, 2021 December 31, 2020 March 31, 2020 GAAP income from operations
$
40,186
$
27,727
$
15,094
GAAP operating margin
23.1
%
18.4
%
13.8
%
Add: Total stock-based compensation
8,480
8,863
6,710
Amortization of acquisition-related intangible assets
970
1,015
1,056
Non-GAAP income from operations
$
49,636
$
37,605
$
22,860
Non-GAAP operating margin
28.6
%
25.0
%
20.8
%
Three Months Ended RECONCILIATION OF PROVISION FOR INCOME TAXES March 31, 2021 December 31, 2020 March 31, 2020 GAAP provision for income taxes$
985
$
1,079
$
985
GAAP effective tax rate
2.4
%
3.8
%
5.8
%
Tax effect of adjustments to GAAP results
(2,578
)
(725
)
(751
)
Non-GAAP provision for income taxes$
3,563
$
1,804
$
1,736
Non-GAAP effective tax rate
7.1
%
4.7
%
7.0
%
Three Months Ended RECONCILIATION OF NET INCOME PER SHARE (DILUTED) March 31, 2021 December 31, 2020 March 31, 2020 GAAP net income$
39,798
$
27,278
$
15,886
Adjustments to GAAP net income Stock-based compensation
8,480
8,863
6,710
Amortization of acquisition-related intangible assets
970
1,015
1,056
Tax effect of items excluded from non-GAAP results
(2,578
)
(725
)
(751
)
Non-GAAP net income$
46,670
$
36,431
$
22,901
Average shares outstanding for calculation of non-GAAP net income per share (diluted)
61,451
61,176
60,268
Non-GAAP net income per share (diluted)
$
0.76
$
0.60
$
0.38
GAAP net income per share (diluted)
$
0.65
$
0.45
$
0.26
$
343,272
$
258,874
Short-term marketable securities
148,067
190,318
Accounts receivable, net
42,257
35,910
Inventories
90,509
102,878
Prepaid expenses and other current assets
18,207
13,252
Total current assets
642,312
601,232
PROPERTY AND EQUIPMENT, net
168,712
166,188
INTANGIBLE ASSETS, net
11,474
12,506
GOODWILL
91,849
91,849
DEFERRED TAX ASSETS
1,892
3,339
OTHER ASSETS
28,480
28,225
Total assets
$
944,719
$
903,339
LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable
$
38,172
$
34,712
Accrued payroll and related expenses
13,339
14,806
Taxes payable
856
902
Other accrued liabilities
10,160
12,106
Total current liabilities
62,527
62,526
LONG-TERM LIABILITIES: Income taxes payable
14,033
15,588
Other liabilities
14,336
14,814
Total liabilities
90,896
92,928
STOCKHOLDERS' EQUITY: Common stock
29
28
Additional paid-in capital
203,051
190,920
Accumulated other comprehensive loss
(2,836
)
(2,163
)
Retained earnings
653,579
621,626
Total stockholders' equity
853,823
810,411
Total liabilities and stockholders' equity
$
944,719
$
903,339
$
39,798
$
27,278
$
15,886
Adjustments to reconcile net income to cash provided by operating activities Depreciation
7,453
6,672
5,488
Amortization of intangible assets
1,032
1,076
1,117
Loss on disposal of property and equipment
17
214
30
Stock-based compensation expense
8,480
8,863
6,710
Amortization of premium on marketable securities
176
180
154
Deferred income taxes
1,445
(692
)
1,095
Decrease in accounts receivable allowance for credit losses
(2
)
(491
)
(154
)
Change in operating assets and liabilities: Accounts receivable
(6,345
)
(5,972
)
3,831
Inventories
12,369
1,927
(6,253
)
Prepaid expenses and other assets
(3,253
)
3,020
(3,992
)
Accounts payable
3,281
(668
)
8,828
Taxes payable and other accrued liabilities
(6,329
)
4,959
(6,349
)
Net cash provided by operating activities
58,122
46,366
26,391
CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment
(11,051
)
(34,860
)
(11,603
)
Proceeds from sale of property and equipment
25
320
-
Purchases of marketable securities
(21,971
)
(43,637
)
(16,838
)
Proceeds from sales and maturities of marketable securities
63,466
64,390
15,947
Net cash provided by (used in) investing activities
30,469
(13,787
)
(12,494
)
CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuance of common stock
3,652
865
5,529
Repurchase of common stock
-
-
(2,013
)
Payments of dividends to stockholders
(7,845
)
(6,584
)
(5,644
)
Net cash used in financing activities
(4,193
)
(5,719
)
(2,128
)
NET INCREASE IN CASH AND CASH EQUIVALENTS
84,398
26,860
11,769
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
258,874
232,014
178,690
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
343,272
$
258,874
$
190,459
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