Power Integrations Reports Fourth-Quarter and Full-Year Financial Results
Power Integrations (Nasdaq: POWI) today announced financial results for the quarter and year ended December 31, 2021. Net revenues for the fourth quarter of 2021 were $172.7 million, down two percent compared to the prior quarter and up 15 percent from the fourth quarter of 2020. Net income for the fourth quarter was $40.7 million or $0.66 per diluted share compared to $0.69 per diluted share in the prior quarter and $0.45 per diluted share in the fourth quarter of 2020. Cash flow from operations for the fourth quarter was $47.2 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 and the tax effects of these items. Non-GAAP net income for the fourth quarter of 2021 was $50.9 million or $0.83 per diluted share compared with $0.84 per diluted share in the prior quarter and $0.60 per diluted share in the fourth quarter of 2020. A reconciliation of GAAP to non-GAAP financial results is included with the tables accompanying this press release.
For the full year, net revenues were $703.3 million, an increase of 44 percent compared to the prior year. Net income was $164.4 million or $2.67 per diluted share, compared to $1.17 per diluted share in the prior year. Non-GAAP net income was $200.2 million or $3.26 per diluted share, up 92 percent compared to $1.70 per diluted share in the prior year. Cash flow from operations for the year was $230.9 million.
Commented Balu Balakrishnan, president and CEO of Power Integrations: “We capped an outstanding year with another strong quarter, and we are excited about the opportunities ahead. The secular trends underpinning our 2021 results—including energy efficiency, electrification, smart homes and appliances, and advanced chargers—remain in full effect for 2022. Our highly integrated GaN products are driving a revolution in smartphone and notebook chargers, and we expect a wide range of impressive new designs to come to market in the year ahead. Our BridgeSwitch™ motor-drive ICs are ramping at top-tier appliance customers, adding a new revenue stream for 2022. Our manufacturing model and our investments in capacity have been competitive advantages for us in this supply-constrained environment, and we are well positioned in terms of inventory and capacity to support strong demand in 2022.”
Additional Highlights
Power Integrations repurchased approximately 423,000 shares of its common stock during the fourth quarter and approximately 820,000 shares in January, exhausting the $105 million remaining on the company’s repurchase authorization. The company’s board of directors has subsequently allocated an additional $100 million for share repurchases. The company paid a cash dividend of $0.15 per share on December 31, 2021. The company’s board of directors has declared a dividend of $0.18 per share to be paid on March 31, 2022 to stockholders of record as of February 28, 2022.Financial Outlook
The company issued the following forecast for the first quarter of 2022:
Revenues are expected to be $180 million plus or minus $5 million. Gross margins are expected to be similar to the levels of the prior quarter. GAAP operating expenses are expected to be between $48.5 million and $49.5 million; non-GAAP operating expenses are expected to be between $40.5 million and $41.5 million. Non-GAAP expenses are expected to exclude approximately $7.8 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: https://conferencingportals.com/event/iobnvsok. 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, 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 first-quarter financial performance, secular trends remaining in full effect, adoption of GaN products, new designs coming to market and its ability to support strong demand in 2022 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, BridgeSwitch and the Power Integrations logo are trademarks or registered trademarks of Power Integrations, Inc.
$ 172,654
$ 176,776
$ 150,693
$ 703,277
$ 488,318
COST OF REVENUES79,478
85,037
76,688
342,638
244,728
GROSS PROFIT93,176
91,739
74,005
360,639
243,590
OPERATING EXPENSES: Research and development22,028
21,137
21,921
84,933
81,711
Sales and marketing15,590
15,443
14,113
60,037
53,578
General and administrative11,073
9,386
10,028
39,840
36,895
Amortization of acquisition-related intangible assets181
181
216
771
919
Total operating expenses48,872
46,147
46,278
185,581
173,103
INCOME FROM OPERATIONS44,304
45,592
27,727
175,058
70,487
OTHER INCOME101
206
630
1,077
4,764
INCOME BEFORE INCOME TAXES44,405
45,798
28,357
176,135
75,251
PROVISION FOR INCOME TAXES3,705
3,764
1,079
11,722
4,075
NET INCOME$ 40,700
$ 42,034
$ 27,278
$ 164,413
$ 71,176
EARNINGS PER SHARE: Basic$ 0.68
$ 0.70
$ 0.46
$ 2.73
$ 1.19
Diluted$ 0.66
$ 0.69
$ 0.45
$ 2.67
$ 1.17
SHARES USED IN PER-SHARE CALCULATION: Basic60,259
60,319
59,879
60,327
59,657
Diluted61,381
61,363
61,176
61,467
60,845
SUPPLEMENTAL INFORMATION: Three Months Ended Twelve Months Ended December 31, 2021 September 30, 2021 December 31, 2020 December 31, 2021 December 31, 2020 Stock-based compensation expenses included in: Cost of revenues$ 424
$ 664
$ 713
$ 2,359
$ 1,963
Research and development3,522
3,055
2,942
12,127
10,378
Sales and marketing2,090
2,201
1,740
7,630
6,290
General and administrative4,248
3,725
3,468
15,493
12,281
Total stock-based compensation expense$ 10,284
$ 9,645
$ 8,863
$ 37,609
$ 30,912
Cost of revenues includes: Amortization of acquisition-related intangible assets$ 552
$ 552
$ 799
$ 2,477
$ 3,196
Three Months Ended Twelve Months Ended REVENUE MIX BY END MARKET December 31, 2021 September 30, 2021 December 31, 2020 December 31, 2021 December 31, 2020 Communications23%
25%
34%
30%
30%
Computer10%
11%
9%
10%
7%
Consumer35%
34%
31%
32%
33%
Industrial32%
30%
26%
28%
30%
$ 93,176
$ 91,739
$ 74,005
$ 360,639
$ 243,590
GAAP gross margin
54.0
%
51.9
%
49.1
%
51.3
%
49.9
%
Stock-based compensation included in cost of revenues424
664
713
2,359
1,963
Amortization of acquisition-related intangible assets
552
552
799
2,477
3,196
Non-GAAP gross profit
$ 94,152
$ 92,955
$ 75,517
$ 365,475
$ 248,749
Non-GAAP gross margin
54.5
%
52.6
%
50.1
%
52.0
%
50.9
%
Three Months Ended Twelve Months Ended RECONCILIATION OF OPERATING EXPENSES December 31, 2021 September 30, 2021 December 31, 2020 December 31, 2021 December 31, 2020 GAAP operating expenses$ 48,872
$ 46,147
$ 46,278
$ 185,581
$ 173,103
Less: Stock-based compensation expense included in operating expenses Research and development
3,522
3,055
2,942
12,127
10,378
Sales and marketing
2,090
2,201
1,740
7,630
6,290
General and administrative
4,248
3,725
3,468
15,493
12,281
Total
9,860
8,981
8,150
35,250
28,949
Amortization of acquisition-related intangible assets
181
181
216
771
919
Non-GAAP operating expenses
$ 38,831
$ 36,985
$ 37,912
$ 149,560
$ 143,235
Three Months Ended Twelve Months Ended RECONCILIATION OF INCOME FROM OPERATIONS December 31, 2021 September 30, 2021 December 31, 2020 December 31, 2021 December 31, 2020 GAAP income from operations
$ 44,304
$ 45,592
$ 27,727
$ 175,058
$ 70,487
GAAP operating margin
25.7
%
25.8
%
18.4
%
24.9
%
14.4
%
Add: Total stock-based compensation10,284
9,645
8,863
37,609
30,912
Amortization of acquisition-related intangible assets
733
733
1,015
3,248
4,115
Non-GAAP income from operations
$ 55,321
$ 55,970
$ 37,605
$ 215,915
$ 105,514
Non-GAAP operating margin
32.0
%
31.7
%
25.0
%
30.7
%
21.6
%
Three Months Ended Twelve Months Ended RECONCILIATION OF PROVISION FOR INCOME TAXES December 31, 2021 September 30, 2021 December 31, 2020 December 31, 2021 December 31, 2020 GAAP provision for income taxes$ 3,705
$ 3,764
$ 1,079
$ 11,722
$ 4,075
GAAP effective tax rate
8.3
%
8.2
%
3.8
%
6.7
%
5.4
%
Tax effect of adjustments to GAAP results(800
)
(565
)
(725
)
(5,044
)
(2,719
)
Non-GAAP provision for income taxes$ 4,505
$ 4,329
$ 1,804
$ 16,766
$ 6,794
Non-GAAP effective tax rate
8.1
%
7.7
%
4.7
%
7.7
%
6.2
%
Three Months Ended Twelve Months Ended RECONCILIATION OF NET INCOME PER SHARE (DILUTED) December 31, 2021 September 30, 2021 December 31, 2020 December 31, 2021 December 31, 2020 GAAP net income$ 40,700
$ 42,034
$ 27,278
$ 164,413
$ 71,176
Adjustments to GAAP net income Stock-based compensation
10,284
9,645
8,863
37,609
30,912
Amortization of acquisition-related intangible assets
733
733
1,015
3,248
4,115
Tax effect of items excluded from non-GAAP results
(800
)
(565
)
(725
)
(5,044
)
(2,719
)
Non-GAAP net income$ 50,917
$ 51,847
$ 36,431
$ 200,226
$ 103,484
Average shares outstanding for calculation of non-GAAP net income per share (diluted)
61,381
61,363
61,176
61,467
60,845
Non-GAAP net income per share (diluted)
$ 0.83
$ 0.84
$ 0.60
$ 3.26
$ 1.70
GAAP net income per share (diluted)
$ 0.66
$ 0.69
$ 0.45
$ 2.67
$ 1.17
$ 158,117
$ 262,435
$ 258,874
Short-term marketable securities
372,235
286,506
190,318
Accounts receivable, net
41,393
38,872
35,910
Inventories
99,266
91,814
102,878
Prepaid expenses and other current assets
15,804
23,720
13,252
Total current assets
686,815
703,347
601,232
PROPERTY AND EQUIPMENT, net
179,824
168,498
166,188
INTANGIBLE ASSETS, net
9,012
9,807
12,506
GOODWILL
91,849
91,849
91,849
DEFERRED TAX ASSETS
16,433
3,266
3,339
OTHER ASSETS
30,554
28,223
28,225
Total assets
$ 1,014,487
$ 1,004,990
$ 903,339
LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable
$ 43,721
$ 40,390
$ 34,712
Accrued payroll and related expenses
15,492
14,064
14,806
Taxes payable
1,210
970
902
Other accrued liabilities
11,898
10,638
12,106
Total current liabilities
72,321
66,062
62,526
LONG-TERM LIABILITIES: Income taxes payable
15,280
14,644
15,588
Other liabilities
14,854
15,928
14,814
Total liabilities
102,455
96,634
92,928
STOCKHOLDERS' EQUITY: Common stock
28
28
28
Additional paid-in capital
162,301
189,790
190,920
Accumulated other comprehensive loss
(3,737
)
(3,249
)
(2,163
)
Retained earnings753,440
721,787
621,626
Total stockholders' equity
912,032
908,356
810,411
Total liabilities and stockholders' equity
$ 1,014,487
$ 1,004,990
$ 903,339
$ 40,700
$ 42,034
$ 27,278
$ 164,413
$ 71,176
Adjustments to reconcile net income to cash provided by operating activities Depreciation
8,054
8,126
6,672
31,454
23,743
Amortization of intangible assets
795
794
1,076
3,494
4,359
Loss on disposal of property and equipment
905
2,162
214
3,105
525
Stock-based compensation expense
10,284
9,645
8,863
37,609
30,912
Amortization of premium on marketable securities
815
475
180
1,590
705
Deferred income taxes
(13,228
)
(1,194
)
(692
)
(13,240
)
(592
)
Increase (decrease) in accounts receivable allowance for credit losses1
(74
)
(491
)
18
(336
)
Change in operating assets and liabilities: Accounts receivable(2,522
)
2,554
(5,972
)
(5,501
)
(11,300
)
Inventories(7,452
)
(2,171
)
1,927
3,612
(12,498
)
Prepaid expenses and other assets9,299
(472
)
3,020
4,326
9,153
Accounts payable
(2,566
)
(1,420
)
(668
)
4,067
5,697
Taxes payable and other accrued liabilities
2,078
(1,724
)
4,959
(4,079
)
4,095
Net cash provided by operating activities
47,163
58,735
46,366
230,868
125,639
CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment
(16,967
)
(11,011
)
(34,860
)
(47,272
)
(70,598
)
Proceeds from sale of property and equipment-
-
320
35
651
Purchases of marketable securities
(172,115
)
(193,150
)
(43,637
)
(554,018
)
(109,703
)
Proceeds from sales and maturities of marketable securities84,421
123,953
64,390
368,457
151,385
Net cash used in investing activities
(104,661
)
(80,208
)
(13,787
)
(232,798
)
(28,265
)
CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuance of common stock-
4,058
865
7,710
10,527
Repurchase of common stock
(37,773
)
(9,791
)
-
(73,938
)
(2,636
)
Payments of dividends to stockholders(9,047
)
(7,840
)
(6,584
)
(32,599
)
(25,081
)
Net cash used in financing activities(46,820
)
(13,573
)
(5,719
)
(98,827
)
(17,190
)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS(104,318
)
(35,046
)
26,860
(100,757
)
80,184
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
262,435
297,481
232,014
258,874
178,690
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$ 158,117
$ 262,435
$ 258,874
$ 158,117
$ 258,874
View source version on businesswire.com: https://www.businesswire.com/news/home/20220203005910/en/