Power Integrations Reports Second-Quarter Financial Results
Power Integrations (Nasdaq: POWI) today announced financial results for the quarter ended June 30, 2021. Per-share measures for all periods reflect the effect of the August 2020 two-for-one stock split.
Net revenues for the second quarter of 2021 were $180.1 million, up four percent compared to the prior quarter and up 69 percent from the second quarter of 2020. Net income for the second quarter was $41.9 million or $0.68 per diluted share compared to $0.65 per diluted share in the prior quarter and $0.22 per diluted share in the second quarter of 2020. Cash flow from operations for the second quarter was $66.8 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 second quarter of 2021 was $50.8 million or $0.83 per diluted share compared with $0.76 per diluted share in the prior quarter and $0.33 per diluted share in the second 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: “We achieved record sales in the second quarter, and our revenues for the first half of 2021 are up 63 percent from a year ago. This growth reflects significant market-share gains and the impact of secular trends such as energy efficiency, electrification, advanced charging for mobile devices, and smarter homes, buildings and appliances.”
Additional Highlights
Power Integrations repurchased approximately 335,000 shares of its common stock during the quarter for $26.4 million. The company had $64.9 million remaining on its repurchase authorization at quarter-end. The company paid a cash dividend of $0.13 per share on June 30, 2021. A dividend of $0.13 per share will be paid on September 30, 2021 to stockholders of record as of August 31, 2021.Financial Outlook
The company issued the following forecast for the third quarter of 2021:
Revenues are expected to decrease by three percent compared to the second quarter of 2021, plus or minus five percent. GAAP gross margin is expected to be approximately 51 percent, and non-GAAP gross margin is expected to be approximately 51.5 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 between $47.5 million and $48 million; non-GAAP operating expenses are expected to be between $38.5 million and $39 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/8646289. 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 third-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.
$
180,110
$
173,737
$
106,832
$
353,847
$
216,496
COST OF REVENUES
88,797
89,326
53,296
178,123
106,480
GROSS PROFIT
91,313
84,411
53,536
175,724
110,016
OPERATING EXPENSES: Research and development
21,741
20,027
19,770
41,768
38,922
Sales and marketing
15,097
13,907
12,807
29,004
26,023
General and administrative
9,306
10,075
7,804
19,381
16,565
Amortization of acquisition-related intangible assets
193
216
230
409
487
Total operating expenses
46,337
44,225
40,611
90,562
81,997
INCOME FROM OPERATIONS
44,976
40,186
12,925
85,162
28,019
OTHER INCOME
173
597
1,480
770
3,257
INCOME BEFORE INCOME TAXES
45,149
40,783
14,405
85,932
31,276
PROVISION FOR INCOME TAXES
3,268
985
1,213
4,253
2,198
NET INCOME
$
41,881
$
39,798
$
13,192
$
81,679
$
29,078
EARNINGS PER SHARE: Basic
$
0.69
$
0.66
$
0.22
$
1.35
$
0.49
Diluted
$
0.68
$
0.65
$
0.22
$
1.33
$
0.48
SHARES USED IN PER-SHARE CALCULATION: Basic
60,544
60,184
59,712
60,366
59,458
Diluted
61,466
61,451
60,624
61,481
60,464
SUPPLEMENTAL INFORMATION: Three Months Ended Six Months Ended June 30, 2021 March 31, 2021 June 30, 2020 June 30, 2021 June 30, 2020 Stock-based compensation expenses included in: Cost of revenues
$
640
$
631
$
252
$
1,271
$
648
Research and development
3,159
2,391
2,351
5,550
4,460
Sales and marketing
1,725
1,614
1,258
3,339
2,650
General and administrative
3,676
3,844
2,120
7,520
4,933
Total stock-based compensation expense
$
9,200
$
8,480
$
5,981
$
17,680
$
12,691
Cost of revenues includes: Amortization of acquisition-related intangible assets
$
619
$
754
$
799
$
1,373
$
1,598
Three Months Ended Six Months Ended REVENUE MIX BY END MARKET June 30, 2021 March 31, 2021 June 30, 2020 June 30, 2021 June 30, 2020 Communications
35
%
38
%
28
%
37
%
25
%
Computer
8
%
8
%
6
%
8
%
5
%
Consumer
31
%
29
%
31
%
30
%
36
%
Industrial
26
%
25
%
35
%
25
%
34
%
$
91,313
$
84,411
$
53,536
$
175,724
$
110,016
GAAP gross margin
50.7
%
48.6
%
50.1
%
49.7
%
50.8
%
Stock-based compensation included in cost of revenues
640
631
252
1,271
648
Amortization of acquisition-related intangible assets
619
754
799
1,373
1,598
Non-GAAP gross profit
$
92,572
$
85,796
$
54,587
$
178,368
$
112,262
Non-GAAP gross margin
51.4
%
49.4
%
51.1
%
50.4
%
51.9
%
Three Months Ended Six Months Ended RECONCILIATION OF OPERATING EXPENSES June 30, 2021 March 31, 2021 June 30, 2020 June 30, 2021 June 30, 2020 GAAP operating expenses$
46,337
$
44,225
$
40,611
$
90,562
$
81,997
Less: Stock-based compensation expense included in operating expenses Research and development
3,159
2,391
2,351
5,550
4,460
Sales and marketing
1,725
1,614
1,258
3,339
2,650
General and administrative
3,676
3,844
2,120
7,520
4,933
Total
8,560
7,849
5,729
16,409
12,043
Amortization of acquisition-related intangible assets
193
216
230
409
487
Non-GAAP operating expenses
$
37,584
$
36,160
$
34,652
$
73,744
$
69,467
Three Months Ended Six Months Ended RECONCILIATION OF INCOME FROM OPERATIONS June 30, 2021 March 31, 2021 June 30, 2020 June 30, 2021 June 30, 2020 GAAP income from operations
$
44,976
$
40,186
$
12,925
$
85,162
$
28,019
GAAP operating margin
25.0
%
23.1
%
12.1
%
24.1
%
12.9
%
Add: Total stock-based compensation
9,200
8,480
5,981
17,680
12,691
Amortization of acquisition-related intangible assets
812
970
1,029
1,782
2,085
Non-GAAP income from operations
$
54,988
$
49,636
$
19,935
$
104,624
$
42,795
Non-GAAP operating margin
30.5
%
28.6
%
18.7
%
29.6
%
19.8
%
Three Months Ended Six Months Ended RECONCILIATION OF PROVISION FOR INCOME TAXES June 30, 2021 March 31, 2021 June 30, 2020 June 30, 2021 June 30, 2020 GAAP provision for income taxes$
3,268
$
985
$
1,213
$
4,253
$
2,198
GAAP effective tax rate
7.2
%
2.4
%
8.4
%
4.9
%
7.0
%
Tax effect of adjustments to GAAP results
(1,101
)
(2,578
)
(272
)
(3,679
)
(1,023
)
Non-GAAP provision for income taxes$
4,369
$
3,563
$
1,485
$
7,932
$
3,221
Non-GAAP effective tax rate
7.9
%
7.1
%
6.9
%
7.5
%
7.0
%
Three Months Ended Six Months Ended RECONCILIATION OF NET INCOME PER SHARE (DILUTED) June 30, 2021 March 31, 2021 June 30, 2020 June 30, 2021 June 30, 2020 GAAP net income$
41,881
$
39,798
$
13,192
$
81,679
$
29,078
Adjustments to GAAP net income Stock-based compensation
9,200
8,480
5,981
17,680
12,691
Amortization of acquisition-related intangible assets
812
970
1,029
1,782
2,085
Tax effect of items excluded from non-GAAP results
(1,101
)
(2,578
)
(272
)
(3,679
)
(1,023
)
Non-GAAP net income$
50,792
$
46,670
$
19,930
$
97,462
$
42,831
Average shares outstanding for calculation of non-GAAP net income per share (diluted)
61,466
61,451
60,624
61,481
60,464
Non-GAAP net income per share (diluted)
$
0.83
$
0.76
$
0.33
$
1.59
$
0.71
GAAP net income per share (diluted)
$
0.68
$
0.65
$
0.22
$
1.33
$
0.48
$
297,481
$
343,272
$
258,874
Short-term marketable securities
217,777
148,067
190,318
Accounts receivable, net
41,352
42,257
35,910
Inventories
89,643
90,509
102,878
Prepaid expenses and other current assets
21,292
18,207
13,252
Total current assets
667,545
642,312
601,232
PROPERTY AND EQUIPMENT, net
167,079
168,712
166,188
INTANGIBLE ASSETS, net
10,601
11,474
12,506
GOODWILL
91,849
91,849
91,849
DEFERRED TAX ASSETS
2,072
1,892
3,339
OTHER ASSETS
28,703
28,480
28,225
Total assets
$
967,849
$
944,719
$
903,339
LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable
$
41,898
$
38,172
$
34,712
Accrued payroll and related expenses
16,652
13,339
14,806
Taxes payable
989
856
902
Other accrued liabilities
8,727
10,160
12,106
Total current liabilities
68,266
62,527
62,526
LONG-TERM LIABILITIES: Income taxes payable
14,340
14,033
15,588
Other liabilities
14,899
14,336
14,814
Total liabilities
97,505
90,896
92,928
STOCKHOLDERS' EQUITY: Common stock
28
29
28
Additional paid-in capital
185,878
203,051
190,920
Accumulated other comprehensive loss
(3,155
)
(2,836
)
(2,163
)
Retained earnings
687,593
653,579
621,626
Total stockholders' equity
870,344
853,823
810,411
Total liabilities and stockholders' equity
$
967,849
$
944,719
$
903,339
$
41,881
$
39,798
$
13,192
$
81,679
$
29,078
Adjustments to reconcile net income to cash provided by operating activities Depreciation
7,821
7,453
5,581
15,274
11,069
Amortization of intangible assets
873
1,032
1,090
1,905
2,207
Loss on disposal of property and equipment
21
17
262
38
292
Stock-based compensation expense
9,200
8,480
5,981
17,680
12,691
Amortization of premium on marketable securities
124
176
167
300
321
Deferred income taxes
(263
)
1,445
184
1,182
1,279
Increase (decrease) in accounts receivable allowance for credit losses
93
(2
)
-
91
(154
)
Change in operating assets and liabilities: Accounts receivable
812
(6,345
)
7,725
(5,533
)
11,556
Inventories
866
12,369
(7,330
)
13,235
(13,583
)
Prepaid expenses and other assets
(1,248
)
(3,253
)
8,084
(4,501
)
4,092
Accounts payable
4,772
3,281
(2,967
)
8,053
5,861
Taxes payable and other accrued liabilities
1,896
(6,329
)
4,684
(4,433
)
(1,665
)
Net cash provided by operating activities
66,848
58,122
36,653
124,970
63,044
CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment
(8,243
)
(11,051
)
(10,019
)
(19,294
)
(21,622
)
Proceeds from sale of property and equipment
10
25
331
35
331
Purchases of marketable securities
(166,782
)
(21,971
)
(2,989
)
(188,753
)
(19,827
)
Proceeds from sales and maturities of marketable securities
96,617
63,466
43,015
160,083
58,962
Net cash provided by (used in) investing activities
(78,398
)
30,469
30,338
(47,929
)
17,844
CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuance of common stock
-
3,652
769
3,652
6,298
Repurchase of common stock
(26,374
)
-
(623
)
(26,374
)
(2,636
)
Payments of dividends to stockholders
(7,867
)
(7,845
)
(6,271
)
(15,712
)
(11,915
)
Net cash used in financing activities
(34,241
)
(4,193
)
(6,125
)
(38,434
)
(8,253
)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(45,791
)
84,398
60,866
38,607
72,635
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
343,272
258,874
190,459
258,874
178,690
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
297,481
$
343,272
$
251,325
$
297,481
$
251,325
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