Power Integrations Reports First-Quarter Financial Results

May 2, 2013

Non-GAAP earnings increased 31 percent year-over-year to $0.47 per diluted share; GAAP earnings were $0.37 per diluted share

Cash flow from operations was $21.6 million; cash and investments increased $23.9 million during the quarter to $119.0 million

SAN JOSE, Calif.--(BUSINESS WIRE)-- Power Integrations (Nasdaq: POWI) today announced financial results for the quarter ended March 31, 2013. Net revenues for the quarter were $77.0 million, down three percent from the prior quarter and up seven percent from the first quarter of 2012. GAAP net income for the quarter was $10.9 million or $0.37 per diluted share, compared with $0.33 per diluted share in the prior quarter and $0.25 per diluted share in the first quarter of 2012. GAAP gross margin for the first quarter was 51.7 percent; operating margin was 11.8 percent.

In addition to its GAAP results, the company provided non-GAAP financial measures that exclude stock-based compensation expenses, certain acquisition-related expenses, charges related to SemiSouth Laboratories, non-cash interest income, and the tax effects of these items. Non-GAAP net income for the quarter was $14.0 million or $0.47 per diluted share, compared with $0.47 per diluted share in the prior quarter and $0.36 per diluted share in the first quarter of 2012. Non-GAAP gross margin for the first quarter was 52.9 percent; non-GAAP operating margin was 18.8 percent.

Commented Balu Balakrishnan , president and CEO of Power Integrations: “First-quarter revenues were within our projected range, albeit toward the lower end due in large part to a decline of nearly 20 percent in revenues from the computer market. Nevertheless, recent trends indicate that the broader demand environment is improving. Revenues from industrial and consumer applications, which account for nearly 70 percent of our sales, both increased sequentially in the first quarter. Book-to-bill was well above 1.0 for the quarter as total bookings increased more than 10 percent sequentially. While economic conditions remain uncertain, we believe these factors point toward sequential growth in the second quarter, and we expect our revenues for Q2 to be between $79 million and $85 million.”

Additional Highlights

  • Power Integrations paid a dividend of $0.08 per share on March 29, 2013. The next dividend of $0.08 per share is to be paid on June 28, 2013 to stockholders of record as of May 31, 2013.
  • Power Integrations received 11 U.S. patents and 38 non-U.S. patents during the quarter and had a total of 542 U.S. patents and 419 non-U.S. patents as of March 31, 2013.

Financial Outlook

The company issued the following forecast for the second quarter of 2013:

  • Second-quarter revenues are expected to be between $79 million and $85 million.
  • Non-GAAP gross margin is expected to be between 52 percent and 53 percent. (Excludes from cost of revenues approximately $0.6 million of amortization of acquisition-related intangible assets and $0.4 million of stock-based compensation.) GAAP gross margin is expected to be between 51 percent and 52 percent.
  • Non-GAAP operating expenses are expected to be approximately $27 million, plus or minus $0.5 million. (Excludes from GAAP operating expenses approximately $4 million of stock-based compensation expenses and $1 million of amortization expense for acquisition-related intangible assets.) GAAP operating expenses are expected to be $32 million, plus or minus $0.5 million.

Conference Call Today at 2:00 p.m. Pacific Time

Power Integrations management will hold a conference call today at 2:00 p.m. Pacific time. Members of the investment community can join the call by dialing 1-877-317-6789 from within the United States or 1-412-317-6789 from outside the U.S. The call will be available via a live and archived webcast on the investor section of the company's website, http://powerintegrations2014.q4web.com.

About Power Integrations

Power Integrations, Inc., is a Silicon Valley-based supplier of high-performance electronic components used in high-voltage power-conversion systems. The company’s integrated circuits and diodes enable compact, energy-efficient AC-DC power supplies for a vast range of electronic products including mobile devices, TVs, PCs, appliances, smart utility meters and LED lights. CONCEPT IGBT drivers enhance the efficiency, reliability and cost of high-power applications such as industrial motor drives, solar and wind energy systems, electric vehicles and high-voltage DC transmission. Since its introduction in 1998, Power Integrations’ EcoSmart® energy-efficiency technology has prevented billions of dollars’ worth of energy waste and millions of tons of carbon emissions. Reflecting the environmental benefits of the company’s products, Power Integrations’ stock is included in the NASDAQ® Clean Edge® Green Energy Index, The Cleantech Index®, and the Ardour Global IndexSM. For more information, including design-support tools and resources, please visit www.powerint.com; visit Power Integrations’ Green Room for a comprehensive guide to energy-efficiency standards around the world.

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 Accounting Standard Codification 718-10, acquisition-related expenses, amortization of acquisition-related intangible assets and the fair-value write-up of acquired inventory, charges associated with SemiSouth, non-cash interest income, and the tax effects of the above items. The company uses these non-GAAP measures in its own financial and operational decision-making processes and, with respect to one measure, in setting performance targets for employee-compensation purposes. Further, the company believes that these non-GAAP measures offer an important analytical tool to help investors understand the company’s core operating results and trends, and to facilitate comparability with the operating results of other companies that provide similar non-GAAP measures. These non-GAAP measures have certain 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.

Note Regarding Forward-Looking Statements

The statements in this press release under the caption “Financial Outlook” and in Mr. Balakrishnan’s quote relating to the company’s projected 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 changes. Due to risks and uncertainties associated with the company's business, actual results could differ materially from those projected or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to: changes in global macroeconomic conditions, 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 to decrease its selling prices for its products; the outcome and cost of patent litigation, which may affect sales of the company’s products or could result in higher expenses and charges than currently expected; unforeseen costs and expenses; unfavorable fluctuations in component costs resulting from changes in commodity prices and/or the exchange rate between the U.S. dollar and the Japanese yen; and the challenges inherent in integrating and forecasting the performance of acquired businesses. 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 22, 2013. 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 the rules and regulations of the SEC.

Power Integrations, EcoSmart and the Power Integrations logo are trademarks or registered trademarks of Power Integrations, Inc. All other trademarks are property of their respective owners.

 
POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per-share amounts)
           
 
Three Months Ended

March 31, 2013

December 31, 2012

March 31, 2012

NET REVENUES $ 77,040 $ 79,170 $ 71,773
 
COST OF REVENUES   37,176     39,767     37,181  
 
GROSS PROFIT   39,864     39,403     34,592  
 
OPERATING EXPENSES:
Research and development 12,272 11,575 10,640
Sales and marketing 9,659 9,232 8,111
General and administrative 7,734 8,109 6,603
Amortization of acquisition-related intangible assets 1,122 1,122 28
Gain related to SemiSouth - (100 ) -
Acquisition expenses   -     -     489  
Total operating expenses   30,787     29,938     25,871  
 
INCOME (LOSS) FROM OPERATIONS 9,077 9,465 8,721
 
Gain related to SemiSouth - 192 -
Non-cash interest income - - 157
Other income (expense), net   217     (36 )   458  
 
INCOME BEFORE PROVISION (BENEFIT) FOR INCOME TAXES 9,294 9,621 9,336
 
PROVISION (BENEFIT) FOR INCOME TAXES   (1,609 )   (96 )   1,875  
 
NET INCOME $ 10,903   $ 9,717   $ 7,461  
 
EARNINGS PER SHARE:
Basic $ 0.38   $ 0.34   $ 0.26  
Diluted $ 0.37   $ 0.33   $ 0.25  
 
SHARES USED IN PER-SHARE CALCULATION:
Basic 28,754 28,785 28,227
Diluted 29,783 29,436 29,435
 
 
SUPPLEMENTAL INFORMATION:
 
Stock-based compensation expenses included in:
Cost of revenues $ 264 $ 286 245
Research and development 1,106 1,349 1,120
Sales and marketing 829 884 747
General and administrative   1,437     1,185     919  
Total stock-based compensation expense $ 3,636   $ 3,704   $ 3,031  
 
Cost of revenues includes:
Amortization of write-up of acquired inventory $ -   $ 1,459   $ 80  
Amortization of acquisition-related intangible assets $ 645   $ 645   $ 85  
 
Operating expenses include:
Patent-litigation expenses $ 1,399   $ 2,099   $ 1,296  
 
 
REVENUE MIX BY END MARKET
Communications 22 % 24 % 27 %
Computer 10 % 12 % 12 %
Consumer 36 % 33 % 40 %
Industrial 32 % 31 % 21 %
 
 

POWER INTEGRATIONS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP RESULTS
(in thousands, except per-share amounts)
           
Three Months Ended

March 31, 2013

December 31, 2012

March 31, 2012

RECONCILIATION OF GROSS PROFIT
GAAP gross profit $ 39,864 $ 39,403 $ 34,592
GAAP gross profit margin 51.7 % 49.8 % 48.2 %
 
Stock-based compensation included in cost of revenues 264 286 245
Amortization of write-up of acquired inventory - 1,459 80
Amortization of acquisition-related intangible assets   645     645     85  
 
Non-GAAP gross profit $ 40,773   $ 41,793   $ 35,002  
Non-GAAP gross profit margin 52.9 % 52.8 % 48.8 %
 
 
RECONCILIATION OF OPERATING EXPENSES
GAAP operating expenses $ 30,787 $ 29,938 $ 25,871

 

Less: Stock-based compensation expense included in operating expenses

Research and development 1,106 1,349 1,120
Sales and marketing 829 884 747
General and administrative   1,437     1,185     919  
Total   3,372     3,418     2,786  
 
Acquisition expenses   -     -     489  
 
Amortization of acquisition-related intangible assets   1,122     1,122     28  
 
Gain related to SemiSouth   -     (100 )   -  
 
Non-GAAP operating expenses $ 26,293   $ 25,498   $ 22,568  
 
 
RECONCILIATION OF INCOME FROM OPERATIONS
GAAP income from operations $ 9,077 $ 9,465 $ 8,721
GAAP operating margin 11.8 % 12.0 % 12.2 %
 

Add: Total stock-based compensation

3,636 3,704 3,031
Amortization of write-up of acquired inventory - 1,459 80
Amortization of acquisition-related intangible assets 1,767 1,767 113
Acquisition expenses - - 489
Gain related to SemiSouth   -     (100 )   -  
 
Non-GAAP income from operations $ 14,480   $ 16,295   $ 12,434  
Non-GAAP operating margin 18.8 % 20.6 % 17.3 %
 
 
RECONCILIATION OF PROVISION FOR INCOME TAXES
GAAP provision (benefit) for income taxes $ (1,609 ) $ (96 ) $ 1,875
GAAP effective tax rate -17.3 % -1.0 % 20.1 %
 
Tax effect of adjustments to GAAP results   (2,295 )   (2,634 )   (304 )
 
Non-GAAP provision for income taxes $ 686   $ 2,538   $ 2,179  
Non-GAAP effective tax rate 4.7 % 15.6 % 16.9 %
 
 
RECONCILIATION OF NET INCOME PER SHARE (DILUTED)
GAAP net income $ 10,903 $ 9,717 $ 7,461
 
Adjustments to GAAP net income
Stock-based compensation 3,636 3,704 3,031
Amortization of write-up of acquired inventory - 1,459 80
Amortization of acquisition-related intangible assets 1,767 1,767 113
Acquisition expenses - - 489
Non-cash interest income - - (157 )
Gain related to SemiSouth - (292 ) -
Tax effect of items excluded from non-GAAP results   (2,295 )   (2,634 )   (304 )
 
Non-GAAP net income $ 14,011   $ 13,721   $ 10,713  
 

Average shares outstanding for calculation of non-GAAP income per share (diluted)

  29,783     29,436     29,435  
 
Non-GAAP net income per share (diluted) $ 0.47   $ 0.47   $ 0.36  
 
GAAP income per share $ 0.37   $ 0.33   $ 0.25  
 
 

POWER INTEGRATIONS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
       
 

March 31, 2013

December 31, 2012

ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 69,489 $ 63,394
Short-term marketable securities 49,530 31,766
Accounts receivable 14,739 7,326
Inventories 43,708 44,625
Deferred tax assets 349 352
Prepaid expenses and other current assets   13,296     17,401  
Total current assets   191,111     164,864  
 
PROPERTY AND EQUIPMENT, net 89,872 89,724
INTANGIBLE ASSETS, net 45,896 47,738
GOODWILL 80,599 80,599
DEFERRED TAX ASSETS 14,034 11,532
OTHER ASSETS   5,137     4,673  
Total assets $ 426,649   $ 399,130  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable $ 19,743 $ 16,452
Accrued payroll and related expenses 6,713 6,720
Taxes payable 1,444 1,213
Deferred taxes 687 1,193
Deferred income on sales to distributors 14,487 11,550
Other accrued liabilities   4,022     3,439  
Total current liabilities   47,096     40,567  
 
LONG-TERM LIABILITIES
Income taxes payable 8,484 7,937
Deferred taxes 7,948 8,179
Pension liability   1,353     1,398  
 
Total liabilities   64,881     58,081  
 
STOCKHOLDERS' EQUITY:
Common stock 29 28
Additional paid-in capital 187,984 175,668
Accumulated other comprehensive income (loss) (484 ) (293 )
Retained earnings   174,239     165,646  
Total stockholders' equity   361,768     341,049  
Total liabilities and stockholders' equity $ 426,649   $ 399,130  
 
 

POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
           
Three Months Ended

March 31, 2013

Dec. 31, 2012

March 31, 2012

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 10,903 $ 9,717 $ 7,461
Adjustments to reconcile net income to cash provided by operating activities
Depreciation 3,975 3,830 3,732
Amortization of intangible assets 1,842 1,842 189
Gain related to SemiSouth - (292 ) -
Gain on sale of property and equipment - - (1 )
Stock-based compensation expense 3,636 3,704 3,031
Amortization of premium on marketable securities 104 112 309
Non-cash interest income - - (157 )
Deferred income taxes (3,236 ) (2,072 ) (327 )
Decrease in accounts receivable allowances (20 ) (45 ) -
Excess tax benefit from stock options exercised - (144 ) (198 )
Tax benefit (deficiency) associated with employee stock plans - (110 ) 782
Change in operating assets and liabilities:
Accounts receivable (7,393 ) 3,824 (7,300 )
Inventories 893 2,281 9,161
Prepaid expenses and other assets 3,928 327 1,306
Accounts payable 2,832 (2,771 ) 1,485
Taxes payable and other accrued liabilities 1,172 2,226 604
Deferred income on sales to distributors   2,936     (278 )   1,490  

 Net cash provided by operating activities

  21,572     22,151     21,567  
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (3,950 ) (4,177 ) (7,471 )
Proceeds from sale of property and equipment - - 2
Increase in financing lease receivables - - (383 )
Collections of financing lease receivables - - 299
Loan to SemiSouth - - (18,000 )
Payment of guarantee of SemiSouth debt - (15,200 ) -
Purchases of marketable securities (19,422 ) - -
Proceeds from maturities of marketable securities   1,500     3,675     6,065  
Net cash used in investing activities   (21,872 )   (15,702 )   (19,488 )
 
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issuance of common stock 8,705 3,975 6,457
Repurchase of common stock - (20,467 ) -
Payments of dividends to stockholders (2,310 ) (1,454 ) (1,415 )
Excess tax benefit from stock options exercised   -     144     198  
Net cash provided by (used in) financing activities   6,395     (17,802 )   5,240  
 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 6,095 (11,353 ) 7,319
 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD   63,394     74,747     139,836  
 
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 69,489   $ 63,394   $ 147,155  
 

Source: Power Integrations, Inc.

Power Integrations, Inc.

Joe Shiffler, 408-414-8528

jshiffler@powerint.com

NASDAQ: POWI $119.08 -1.23
-1.02% Volume: 129,556 August 7, 2020

Contact Us

Joe Shiffler
Director, Investor Relations & Corporate Communications
(408) 414-8528
joe@power.com

Literature Requests
ir@power.com

Mailing Address:
Power Integrations
Attn: Investor Relations
5245 Hellyer Avenue San Jose, CA. 95138

Transfer Agent:
Computershare
P.O. Box 30170
College Station, TX 77842
Phone: (781) 575-2879




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