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, 2023. Net revenues for the fourth quarter were $89.5 million, down 29 percent compared to the prior quarter and down 28 percent from the fourth quarter of 2022. GAAP net income for the fourth quarter was $14.3 million or $0.25 per diluted share compared to $0.34 per diluted share in the prior quarter and $0.40 per diluted share in the fourth quarter of 2022.
For the full year, net revenues were $444.5 million, compared to $651.1 million in the prior year. Full-year GAAP net income was $55.7 million or $0.97 per diluted share compared to $2.93 per diluted share in the prior year. Full-year cash flow from operations was $65.8 million.
In addition to its GAAP results, the company provided non-GAAP measures that for the fourth quarter of 2023 exclude stock-based compensation, amortization of acquisition-related intangible assets and the related tax effects. Non-GAAP net income for the fourth quarter of 2023 was $12.7 million or $0.22 per diluted share compared to $0.46 per diluted share in the prior quarter and $0.48 per diluted share in the fourth quarter of 2022. For the full year, non-GAAP net income was $74.5 million or $1.29 per diluted share compared to $3.29 per diluted share in the prior year. 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: “Fourth-quarter revenues declined as expected, and we project first-quarter sales to be about flat sequentially due to continued soft demand and elevated supply-chain inventories. However, channel inventory fell significantly in the fourth quarter, and we expect a further reduction in the first quarter. Based on lower inventories and seasonal patterns we expect sequential revenue growth beginning in the June quarter. We also expect gross margin to rise in the June quarter driven by the dollar/yen exchange rate, higher manufacturing utilization and end-market mix.”
During the fourth quarter Power Integrations repurchased 680 thousand shares of its common stock for $47.4 million. The company had $26.0 million remaining on its repurchase authorization as of December 31, 2023. Power Integrations paid a dividend of $0.20 per share on December 29, 2023, and will pay a dividend of $0.20 per share on March 29, 2024, to stockholders of record as of February 29, 2024.
Financial Outlook
The company issued the following forecast for the first quarter of 2024:
Revenues are expected to be $90 million plus or minus $5 million. GAAP gross margin is expected to be approximately 51.5 percent; non-GAAP gross margin is expected to be approximately 52.5 percent. The difference between GAAP and non-GAAP gross margins is equally attributable to stock-based compensation and amortization of acquisition-related intangible assets. GAAP operating expenses are expected to be approximately $49 million; non-GAAP operating expenses are expected to be approximately $42.5 million. Non-GAAP operating expenses are expected to exclude about $6.5 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://registrations.events/direct/Q4I24588. 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 first-quarter financial performance, sequential growth beginning in the second quarter, channel inventory trends and rising gross margins over the course of the year 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 and the Power Integrations logo are trademarks or registered trademarks of Power Integrations, Inc. All other trademarks are property of their respective owners.
December 31,
2023
September 30,
2023
December 31,
2022
December 31,
2023
December 31,
2022
$
89,507
$
125,511
$
124,770
$
444,538
$
651,138
COST OF REVENUES
43,299
59,566
57,416
215,582
284,231
GROSS PROFIT
46,208
65,945
67,354
228,956
366,907
OPERATING EXPENSES: Research and development
23,505
24,064
23,504
96,067
93,894
Sales and marketing
15,472
16,224
15,493
64,598
62,333
General and administrative
8,282
7,945
7,465
33,232
28,897
Amortization of acquisition-related intangible assets
-
-
-
-
241
Other operating expenses, net
-
-
-
-
1,130
Total operating expenses
47,259
48,233
46,462
193,897
186,495
INCOME (LOSS) FROM OPERATIONS
(1,051
)
17,712
20,892
35,059
180,412
OTHER INCOME
3,282
3,138
785
10,848
3,014
INCOME BEFORE INCOME TAXES
2,231
20,850
21,677
45,907
183,426
PROVISION (BENEFIT) FOR INCOME TAXES
(12,040
)
1,054
(1,138
)
(9,828
)
12,575
NET INCOME
$
14,271
$
19,796
$
22,815
$
55,735
$
170,851
EARNINGS PER SHARE: Basic
$
0.25
$
0.34
$
0.40
$
0.97
$
2.96
Diluted
$
0.25
$
0.34
$
0.40
$
0.97
$
2.93
SHARES USED IN PER-SHARE CALCULATION: Basic
56,937
57,383
57,094
57,195
57,801
Diluted
57,272
57,741
57,535
57,622
58,371
SUPPLEMENTAL INFORMATION: Three Months Ended Twelve Months Ended
December 31,
2023
September 30,
2023
December 31,
2022
December 31,
2023
December 31,
2022
$
499
$
446
$
405
$
1,692
$
1,132
Research and development
2,947
2,895
2,716
10,939
10,428
Sales and marketing
1,827
1,787
1,643
6,888
6,035
General and administrative
2,230
1,777
1,890
9,009
4,769
Total stock-based compensation expense
$
7,503
$
6,905
$
6,654
$
28,528
$
22,364
Cost of revenues includes: Amortization of acquisition-related intangible assets
$
482
$
482
$
482
$
1,928
$
1,928
Three Months Ended Twelve Months Ended REVENUE MIX BY END MARKET
December 31,
2023
September 30,
2023
December 31,
2022
December 31,
2023
December 31,
2022
27
%
32
%
23
%
29
%
21
%
Computer
9
%
10
%
12
%
12
%
10
%
Consumer
29
%
26
%
26
%
27
%
33
%
Industrial
35
%
32
%
39
%
32
%
36
%
2023 September 30,
2023 December 31,
2022 December 31,
2023 December 31,
2022 RECONCILIATION OF GROSS PROFIT GAAP gross profit
$
46,208
$
65,945
$
67,354
$
228,956
$
366,907
GAAP gross margin
51.6
%
52.5
%
54.0
%
51.5
%
56.3
%
Stock-based compensation included in cost of revenues
499
446
405
1,692
1,132
Amortization of acquisition-related intangible assets
482
482
482
1,928
1,928
Non-GAAP gross profit
$
47,189
$
66,873
$
68,241
$
232,576
$
369,967
Non-GAAP gross margin
52.7
%
53.3
%
54.7
%
52.3
%
56.8
%
Three Months Ended Twelve Months Ended RECONCILIATION OF OPERATING EXPENSES December 31,2023 September 30,
2023 December 31,
2022 December 31,
2023 December 31,
2022 GAAP operating expenses
$
47,259
$
48,233
$
46,462
$
193,897
$
186,495
Less: Stock-based compensation expense included in operating expenses Research and development
2,947
2,895
2,716
10,939
10,428
Sales and marketing
1,827
1,787
1,643
6,888
6,035
General and administrative
2,230
1,777
1,890
9,009
4,769
Total
7,004
6,459
6,249
26,836
21,232
Amortization of acquisition-related intangible assets
-
-
-
-
241
Other operating expenses, net
-
-
-
-
1,130
Non-GAAP operating expenses
$
40,255
$
41,774
$
40,213
$
167,061
$
163,892
Three Months Ended Twelve Months Ended RECONCILIATION OF INCOME FROM OPERATIONS December 31,
2023 September 30,
2023 December 31,
2022 December 31,
2023 December 31,
2022 GAAP income (loss) from operations
$
(1,051
)
$
17,712
$
20,892
$
35,059
$
180,412
GAAP operating margin
-1.2
%
14.1
%
16.7
%
7.9
%
27.7
%
Add: Total stock-based compensation
7,503
6,905
6,654
28,528
22,364
Amortization of acquisition-related intangible assets
482
482
482
1,928
2,169
Other operating expenses, net
-
-
-
-
1,130
Non-GAAP income from operations
$
6,934
$
25,099
$
28,028
$
65,515
$
206,075
Non-GAAP operating margin
7.7
%
20.0
%
22.5
%
14.7
%
31.6
%
Three Months Ended Twelve Months Ended RECONCILIATION OF PROVISION FOR INCOME TAXES December 31,2023 September 30,
2023 December 31,
2022 December 31,
2023 December 31,
2022 GAAP provision (benefit) for income taxes
$
(12,040
)
$
1,054
$
(1,138
)
$
(9,828
)
$
12,575
GAAP effective tax rate
-539.7
%
5.1
%
-5.2
%
-21.4
%
6.9
%
Tax effect of adjustments to GAAP results
(9,556
)
(580
)
(2,085
)
(11,653
)
(4,582
)
Non-GAAP provision (benefit) for income taxes$
(2,484
)
$
1,634
$
947
$
1,825
$
17,157
Non-GAAP effective tax rate
-24.3
%
5.8
%
3.3
%
2.4
%
8.2
%
Three Months Ended Twelve Months Ended RECONCILIATION OF NET INCOME PER SHARE (DILUTED) December 31,2023 September 30,
2023 December 31,
2022 December 31,
2023 December 31,
2022 GAAP net income
$
14,271
$
19,796
$
22,815
$
55,735
$
170,851
Adjustments to GAAP net income Stock-based compensation
7,503
6,905
6,654
28,528
22,364
Amortization of acquisition-related intangible assets
482
482
482
1,928
2,169
Other operating expenses, net
-
-
-
-
1,130
Tax effect of items excluded from non-GAAP results
(9,556
)
(580
)
(2,085
)
(11,653
)
(4,582
)
Non-GAAP net income$
12,700
$
26,603
$
27,866
$
74,538
$
191,932
Average shares outstanding for calculation of non-GAAP net income per share (diluted)
57,272
57,741
57,535
57,622
58,371
Non-GAAP net income per share (diluted)
$
0.22
$
0.46
$
0.48
$
1.29
$
3.29
GAAP net income per share (diluted)
$
0.25
$
0.34
$
0.40
$
0.97
$
2.93
$
63,929
$
94,743
$
105,372
Short-term marketable securities
247,640
261,896
248,441
Accounts receivable, net
14,674
28,539
20,836
Inventories
163,164
150,246
135,420
Prepaid expenses and other current assets
22,193
20,692
15,004
Total current assets
511,600
556,116
525,073
PROPERTY AND EQUIPMENT, net
164,213
166,391
176,681
INTANGIBLE ASSETS, net
4,424
4,967
6,597
GOODWILL
91,849
91,849
91,849
DEFERRED TAX ASSETS
28,325
28,943
19,034
OTHER ASSETS
19,457
17,224
20,862
Total assets
$
819,868
$
865,490
$
840,096
LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable
$
26,390
$
28,553
$
30,088
Accrued payroll and related expenses
13,551
13,778
14,778
Taxes payable
1,016
774
938
Other accrued liabilities
7,910
10,316
12,572
Total current liabilities
48,867
53,421
58,376
LONG-TERM LIABILITIES: Income taxes payable
6,244
16,724
15,757
Other liabilities
12,516
10,288
10,747
Total liabilities
67,627
80,433
84,880
STOCKHOLDERS' EQUITY: Common stock
23
23
24
Additional paid-in capital
-
19,429
-
Accumulated other comprehensive loss
(1,462
)
(5,730
)
(7,344
)
Retained earnings
753,680
771,335
762,536
Total stockholders' equity
752,241
785,057
755,216
Total liabilities and stockholders' equity
$
819,868
$
865,490
$
840,096
2023 September 30,
2023 December 31,
2022 December 31,
2023 December 31,
2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net income
$
14,271
$
19,796
$
22,815
$
55,735
$
170,851
Adjustments to reconcile net income to cash provided by operating activities Depreciation
8,887
8,663
8,875
35,203
34,930
Amortization of intangible assets
543
544
544
2,173
2,415
Loss on disposal of property and equipment
14
64
209
100
1,371
Stock-based compensation expense
7,503
6,905
6,654
28,528
22,364
Amortization of premium (accretion of discount) on marketable securities
(497
)
(273
)
654
(351
)
3,292
Deferred income taxes
705
(7,170
)
4,824
(9,247
)
(2,566
)
Increase (decrease) in accounts receivable allowance for credit losses
-
-
-
(454
)
690
Change in operating assets and liabilities: Accounts receivable
13,865
3,538
(4,761
)
6,616
19,867
Inventories
(12,918
)
(505
)
(15,328
)
(27,744
)
(36,154
)
Prepaid expenses and other assets
(346
)
6,404
(1,085
)
(1,183
)
7,343
Accounts payable
(2,553
)
(11,695
)
2,038
(5,435
)
(3,836
)
Taxes payable and other accrued liabilities
(13,207
)
455
(1,341
)
(18,182
)
(5,224
)
Net cash provided by operating activities
16,267
26,726
24,098
65,759
215,343
CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment
(6,143
)
(7,530
)
(5,767
)
(20,884
)
(39,211
)
Proceeds from sale of property and equipment
-
-
-
-
1,202
Purchases of marketable securities
(18,196
)
(62,205
)
(28,576
)
(191,211
)
(55,820
)
Proceeds from sales and maturities of marketable securities
36,045
63,256
11,151
197,942
172,165
Net cash provided by (used in) investing activities
11,706
(6,479
)
(23,192
)
(14,153
)
78,336
CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuance of common stock
-
3,139
-
6,237
6,162
Repurchase of common stock
(47,444
)
(1,835
)
(18,745
)
(55,278
)
(311,094
)
Payments of dividends to stockholders
(11,343
)
(10,904
)
(10,263
)
(44,008
)
(41,492
)
Net cash used in financing activities
(58,787
)
(9,600
)
(29,008
)
(93,049
)
(346,424
)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(30,814
)
10,647
(28,102
)
(41,443
)
(52,745
)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
94,743
84,096
133,474
105,372
158,117
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
63,929
$
94,743
$
105,372
$
63,929
$
105,372
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