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Power Integrations Reports Second-Quarter Financial Results

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Revenues increased 69 percent year-over-year to a record $180.1 million; GAAP earnings were $0.68 per diluted share; non-GAAP earnings were $0.83 per diluted share

Cash flow from operations for the second quarter was $66.8 million

SAN JOSE, Calif., July 29, 2021--(BUSINESS WIRE)--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.

POWER INTEGRATIONS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per-share amounts)

Three Months Ended

Six Months Ended

June 30, 2021

March 31, 2021

June 30, 2020

June 30, 2021

June 30, 2020

NET REVENUES

$

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

%

POWER INTEGRATIONS, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP RESULTS

(in thousands, except per-share amounts)

Three Months Ended

Six Months Ended

June 30, 2021

March 31, 2021

June 30, 2020

June 30, 2021

June 30, 2020

RECONCILIATION OF GROSS PROFIT

GAAP gross profit

$

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

POWER INTEGRATIONS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands)

June 30, 2021

March 31, 2021

December 31, 2020

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

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

POWER INTEGRATIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Three Months Ended

Six Months Ended

June 30, 2021

March 31, 2021

June 30, 2020

June 30, 2021

June 30, 2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20210729006057/en/

Contacts

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