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Monolithic Power (MPWR) Q1 Earnings, Revenues Beat Estimates

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Monolithic Power Systems Inc. MPWR delivered first-quarter 2018 earnings of 79 cents, which beat the Zacks Consensus Estimate by a couple of cents. The figure surged 36.2% on a year-over-year basis.

Revenues surpassed the Zacks Consensus Estimate of $125 million and improved 28.7% from the year-ago quarter to $129.2 million. The figure was better than management’s guidance of $122-$128 million.

Robust demand in high-end consumer markets, including the likes of power chargers, lighting and home appliances aided growth. The company’s strategic business mix in diversified markets is also a positive. Management revealed that upside in few traditional consumer markets benefited performance.

DC to DC segment (92.3% of total revenues) revenues increased 30.5% year over year to $119.27 million. Lighting Control (7.6% of total revenues) climbed 10.6% to $9.88 million.

Monolithic’s shares have returned 28% in the past year, substantially outperforming industry’s rally of 12.4%.

 

 

End-Market Details

Consumer (36.5% of total revenues) revenues grew 32.4% from the year-ago quarter to $47.1 million. Sales gains in high-end consumer applications drove year-over-year growth. Further impressive sales in SSD storage, high end notebooks and cloud computing aided segment performance.

Computing & Storage (24.0% of total revenues) revenues rose 50.2% to $30.9 million. The upside was driven by higher product sales for applications in safety, infotainment and connectivity application products.

Industrial (13.6% of total revenues) revenues grew 14.3% to $17.6 million.

Automotive (13.7% of total revenues) revenues were $17.7 million, up 43.8% from the year-ago quarter primarily due to improvement in sales of smart meters, security and power sources.

However, Communications (12.2% of total revenues) revenues declined 4.3% to $15.8 million.

Monolithic Power Systems, Inc. Price, Consensus and EPS Surprise

Monolithic Power Systems, Inc. Price, Consensus and EPS Surprise | Monolithic Power Systems, Inc. Quote

Operating Details

Non-GAAP gross margin expanded 40 basis points (bps) year over year to 55.9% in the reported quarter.

Non-GAAP operating expenses were $34.9 million during the quarter, up 19.9% year over year.

Operating margin expanded 830 bps from the year-ago quarter to 27.1%.

Balance Sheet & Cash Flow

Cash, cash equivalents and investments were $76.02 million at the end of fourth-quarter 2017 down from $82.76 million at the end of the previous quarter.

Monolithic Power generated operating cash flow of about $16.3 million down from $21.9 million in the previous quarter.

Guidance

For the second quarter of 2018, Monolithic Power forecasts revenues in the range of $135-$141million. Non-GAAP gross margin is projected between 55.4% and 56.4%.

Zacks Rank & Key Picks

Currently, Monolithic Power carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Seagate Technology PLC STX, Mellanox Technologies, Ltd. MLNX and Micron Technology, Inc. MU, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The projected earnings growth rate (3-5 years) for Seagate, Mellanox and Micron are 15.60%, 15% and 10%, respectively.

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