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Power Integrations Reports First-Quarter Financial Results

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Revenues increased 58 percent year-over-year to $173.7 million; GAAP earnings were $0.65 per diluted share; non-GAAP earnings were $0.76 per diluted share

Share-repurchase authorization increased by $50 million

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.

POWER INTEGRATIONS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per-share amounts)

Three Months Ended

March 31, 2021

December 31, 2020

March 31, 2020

NET REVENUES

$

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

%

POWER INTEGRATIONS, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP RESULTS

(in thousands, except per-share amounts)

Three Months Ended

March 31, 2021

December 31, 2020

March 31, 2020

RECONCILIATION OF GROSS PROFIT

GAAP gross profit

$

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

POWER INTEGRATIONS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands)

March 31, 2021

December 31, 2020

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

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

POWER INTEGRATIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Three Months Ended

March 31, 2021

December 31, 2020

March 31, 2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20210429005989/en/

Contacts

Joe Shiffler
Power Integrations, Inc.
(408) 414-8528
joe@power.com