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Power Integrations Reports Third-Quarter Financial Results

October 28, 2021

Revenues increased 46 percent year-over-year to $176.8 million; GAAP earnings were $0.69 per diluted share; non-GAAP earnings were $0.84 per diluted share

Quarterly dividend rises to $0.15 per share; $50M added to repurchase authorization

Power Integrations (Nasdaq: POWI) today announced financial results for the quarter ended September 30, 2021. Net revenues for the third quarter of 2021 were $176.8 million, down two percent compared to the prior quarter and up 46 percent from the third quarter of 2020. Net income for the third quarter was $42.0 million or $0.69 per diluted share compared to $0.68 per diluted share in the prior quarter and $0.24 per diluted share in the third quarter of 2020. Cash flow from operations for the third quarter was $58.7 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 third quarter of 2021 was $51.8 million or $0.84 per diluted share compared with $0.83 per diluted share in the prior quarter and $0.40 per diluted share in the third quarter of 2020. A reconciliation of GAAP to non-GAAP financial results is included with the tables accompanying this press release.

Commented Balu Balakrishnan, president and CEO of Power Integrations: “We delivered another quarter of strong growth in revenues, earnings and cash flows. For the first nine months of 2021 our revenues were up 57 percent, and we are on track to outgrow the analog semiconductor industry by a wide margin this year thanks to broad market-share gains, strong uptake of our highly integrated GaN products, and secular trends such as energy efficiency, electrification, smart homes and appliances, and advanced chargers for mobile devices.”

Additional Highlights

  • The company paid a cash dividend of $0.13 per share on September 30, 2021. The company’s board of directors has declared a dividend of $0.15 per share to be paid on December 31, 2021 to stockholders of record as of November 30, 2021.
  • Power Integrations repurchased approximately 120,000 shares of its common stock during the quarter for $9.8 million. The company had approximately $55 million remaining on its repurchase authorization at quarter-end; the company’s board of directors has subsequently allocated an additional $50 million for share repurchases bringing the total allocation to approximately $105 million.

Financial Outlook

The company issued the following forecast for the fourth quarter of 2021:

  • Revenues are expected to be $170 million plus or minus $5 million.
  • Gross margins are expected to be similar to the third-quarter levels.
  • GAAP operating expenses are expected to be approximately $49.5 million; non-GAAP operating expenses are expected to be approximately $40 million. Non-GAAP expenses are expected to exclude approximately $9.3 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: https://conferencingportals.com/event/iobnvsok. 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 fourth-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

 

Nine Months Ended

 

 

September 30, 2021

 

June 30, 2021

 

September 30, 2020

 

September 30, 2021

 

September 30, 2020

NET REVENUES

$

176,776

 

$

180,110

 

$

121,129

 

$

530,623

 

$

337,625

 

 
COST OF REVENUES

 

85,037

 

 

88,797

 

 

61,560

 

 

263,160

 

 

168,040

 

 
GROSS PROFIT

 

91,739

 

 

91,313

 

 

59,569

 

 

267,463

 

 

169,585

 

 
OPERATING EXPENSES:
Research and development

 

21,137

 

 

21,741

 

 

20,868

 

 

62,905

 

 

59,790

 

Sales and marketing

 

15,443

 

 

15,097

 

 

13,442

 

 

44,447

 

 

39,465

 

General and administrative

 

9,386

 

 

9,306

 

 

10,302

 

 

28,767

 

 

26,867

 

Amortization of acquisition-related intangible assets

 

181

 

 

193

 

 

216

 

 

590

 

 

703

 

Total operating expenses

 

46,147

 

 

46,337

 

 

44,828

 

 

136,709

 

 

126,825

 

 
INCOME FROM OPERATIONS

 

45,592

 

 

44,976

 

 

14,741

 

 

130,754

 

 

42,760

 

 
OTHER INCOME

 

206

 

 

173

 

 

877

 

 

976

 

 

4,134

 

 
INCOME BEFORE INCOME TAXES

 

45,798

 

 

45,149

 

 

15,618

 

 

131,730

 

 

46,894

 

 
PROVISION FOR INCOME TAXES

 

3,764

 

 

3,268

 

 

798

 

 

8,017

 

 

2,996

 

 
NET INCOME

$

42,034

 

$

41,881

 

$

14,820

 

$

123,713

 

$

43,898

 

 
EARNINGS PER SHARE:
Basic

$

0.70

 

$

0.69

 

$

0.25

 

$

2.05

 

$

0.74

 

Diluted

$

0.69

 

$

0.68

 

$

0.24

 

$

2.01

 

$

0.72

 

 
SHARES USED IN PER-SHARE CALCULATION:
Basic

 

60,319

 

 

60,544

 

 

59,823

 

 

60,350

 

 

59,582

 

Diluted

 

61,363

 

 

61,466

 

 

60,852

 

 

61,466

 

 

60,668

 

 
 
 
SUPPLEMENTAL INFORMATION:

Three Months Ended

 

Nine Months Ended

September 30, 2021

 

June 30, 2021

 

September 30, 2020

 

September 30, 2021

 

September 30, 2020

Stock-based compensation expenses included in:
Cost of revenues

$

664

 

$

640

 

$

602

 

$

1,935

 

$

1,250

 

Research and development

 

3,055

 

 

3,159

 

 

2,976

 

 

8,605

 

 

7,436

 

Sales and marketing

 

2,201

 

 

1,725

 

 

1,900

 

 

5,540

 

 

4,550

 

General and administrative

 

3,725

 

 

3,676

 

 

3,880

 

 

11,245

 

 

8,813

 

Total stock-based compensation expense

$

9,645

 

$

9,200

 

$

9,358

 

$

27,325

 

$

22,049

 

 
Cost of revenues includes:
Amortization of acquisition-related intangible assets

$

552

 

$

619

 

$

799

 

$

1,925

 

$

2,397

 

 
 

Three Months Ended

 

Nine Months Ended

REVENUE MIX BY END MARKET

September 30, 2021

 

June 30, 2021

 

September 30, 2020

 

September 30, 2021

 

September 30, 2020

Communications

 

25

%

 

35

%

 

32

%

 

33

%

 

28

%

Computer

 

11

%

 

8

%

 

9

%

 

9

%

 

6

%

Consumer

 

34

%

 

31

%

 

31

%

 

31

%

 

34

%

Industrial

 

30

%

 

26

%

 

28

%

 

27

%

 

32

%

 
POWER INTEGRATIONS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP RESULTS
(in thousands, except per-share amounts)
 
Three Months Ended Nine Months Ended
September 30, 2021 June 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
RECONCILIATION OF GROSS PROFIT
GAAP gross profit

$

91,739

 

$

91,313

 

$

59,569

 

$

267,463

 

$

169,585

 

GAAP gross margin

 

51.9

%

 

50.7

%

 

49.2

%

 

50.4

%

 

50.2

%

 
Stock-based compensation included in cost of revenues

 

664

 

 

640

 

 

602

 

 

1,935

 

 

1,250

 

Amortization of acquisition-related intangible assets

 

552

 

 

619

 

 

799

 

 

1,925

 

 

2,397

 

 
Non-GAAP gross profit

$

92,955

 

$

92,572

 

$

60,970

 

$

271,323

 

$

173,232

 

Non-GAAP gross margin

 

52.6

%

 

51.4

%

 

50.3

%

 

51.1

%

 

51.3

%

 
 
Three Months Ended Nine Months Ended

RECONCILIATION OF OPERATING EXPENSES

 

September 30, 2021 June 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
GAAP operating expenses

$

46,147

 

$

46,337

 

$

44,828

 

$

136,709

 

$

126,825

 

 
Less: Stock-based compensation expense included in operating expenses
Research and development

 

3,055

 

 

3,159

 

 

2,976

 

 

8,605

 

 

7,436

 

Sales and marketing

 

2,201

 

 

1,725

 

 

1,900

 

 

5,540

 

 

4,550

 

General and administrative

 

3,725

 

 

3,676

 

 

3,880

 

 

11,245

 

 

8,813

 

Total

 

8,981

 

 

8,560

 

 

8,756

 

 

25,390

 

 

20,799

 

 
Amortization of acquisition-related intangible assets

 

181

 

 

193

 

 

216

 

 

590

 

 

703

 

 
Non-GAAP operating expenses

$

36,985

 

$

37,584

 

$

35,856

 

$

110,729

 

$

105,323

 

 
 
Three Months Ended Nine Months Ended

RECONCILIATION OF INCOME FROM OPERATIONS

 

September 30, 2021 June 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
GAAP income from operations

$

45,592

 

$

44,976

 

$

14,741

 

$

130,754

 

$

42,760

 

GAAP operating margin

 

25.8

%

 

25.0

%

 

12.2

%

 

24.6

%

 

12.7

%

 
Add: Total stock-based compensation

 

9,645

 

 

9,200

 

 

9,358

 

 

27,325

 

 

22,049

 

Amortization of acquisition-related intangible assets

 

733

 

 

812

 

 

1,015

 

 

2,515

 

 

3,100

 

 
Non-GAAP income from operations

$

55,970

 

$

54,988

 

$

25,114

 

$

160,594

 

$

67,909

 

Non-GAAP operating margin

 

31.7

%

 

30.5

%

 

20.7

%

 

30.3

%

 

20.1

%

 
 
Three Months Ended Nine Months Ended

RECONCILIATION OF PROVISION FOR INCOME TAXES

 

September 30, 2021 June 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
GAAP provision for income taxes

$

3,764

 

$

3,268

 

$

798

 

$

8,017

 

$

2,996

 

GAAP effective tax rate

 

8.2

%

 

7.2

%

 

5.1

%

 

6.1

%

 

6.4

%

 
Tax effect of adjustments to GAAP results

 

(565

)

 

(1,101

)

 

(971

)

 

(4,244

)

 

(1,994

)

 
Non-GAAP provision for income taxes

$

4,329

 

$

4,369

 

$

1,769

 

$

12,261

 

$

4,990

 

Non-GAAP effective tax rate

 

7.7

%

 

7.9

%

 

6.8

%

 

7.6

%

 

6.9

%

 
 
Three Months Ended Nine Months Ended

RECONCILIATION OF NET INCOME PER SHARE (DILUTED)

 

September 30, 2021 June 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
GAAP net income

$

42,034

 

$

41,881

 

$

14,820

 

$

123,713

 

$

43,898

 

 
Adjustments to GAAP net income
Stock-based compensation

 

9,645

 

 

9,200

 

 

9,358

 

 

27,325

 

 

22,049

 

Amortization of acquisition-related intangible assets

 

733

 

 

812

 

 

1,015

 

 

2,515

 

 

3,100

 

Tax effect of items excluded from non-GAAP results

 

(565

)

 

(1,101

)

 

(971

)

 

(4,244

)

 

(1,994

)

 
Non-GAAP net income

$

51,847

 

$

50,792

 

$

24,222

 

$

149,309

 

$

67,053

 

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

 

61,363

 

 

61,466

 

 

60,852

 

 

61,466

 

 

60,668

 

 
Non-GAAP net income per share (diluted)

$

0.84

 

$

0.83

 

$

0.40

 

$

2.43

 

$

1.11

 

 
GAAP net income per share (diluted)

$

0.69

 

$

0.68

 

$

0.24

 

$

2.01

 

$

0.72

 

 
POWER INTEGRATIONS, INC.
CONSOLIDATED BALANCE SHEETS

(in thousands)

 
 

 

 

 

September 30, 2021

 

June 30, 2021

 

December 31, 2020

ASSETS
CURRENT ASSETS:
Cash and cash equivalents

$

262,435

 

$

297,481

 

$

258,874

 

Short-term marketable securities

 

286,506

 

 

217,777

 

 

190,318

 

Accounts receivable, net

 

38,872

 

 

41,352

 

 

35,910

 

Inventories

 

91,814

 

 

89,643

 

 

102,878

 

Prepaid expenses and other current assets

 

23,720

 

 

21,292

 

 

13,252

 

Total current assets

 

703,347

 

 

667,545

 

 

601,232

 

 
PROPERTY AND EQUIPMENT, net

 

168,498

 

 

167,079

 

 

166,188

 

INTANGIBLE ASSETS, net

 

9,807

 

 

10,601

 

 

12,506

 

GOODWILL

 

91,849

 

 

91,849

 

 

91,849

 

DEFERRED TAX ASSETS

 

3,266

 

 

2,072

 

 

3,339

 

OTHER ASSETS

 

28,223

 

 

28,703

 

 

28,225

 

Total assets

$

1,004,990

 

$

967,849

 

$

903,339

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable

$

40,390

 

$

41,898

 

$

34,712

 

Accrued payroll and related expenses

 

14,064

 

 

16,652

 

 

14,806

 

Taxes payable

 

970

 

 

989

 

 

902

 

Other accrued liabilities

 

10,638

 

 

8,727

 

 

12,106

 

Total current liabilities

 

66,062

 

 

68,266

 

 

62,526

 

 
LONG-TERM LIABILITIES:
Income taxes payable

 

14,644

 

 

14,340

 

 

15,588

 

Other liabilities

 

15,928

 

 

14,899

 

 

14,814

 

Total liabilities

 

96,634

 

 

97,505

 

 

92,928

 

 
STOCKHOLDERS' EQUITY:
Common stock

 

28

 

 

28

 

 

28

 

Additional paid-in capital

 

189,790

 

 

185,878

 

 

190,920

 

Accumulated other comprehensive loss

 

(3,249

)

 

(3,155

)

 

(2,163

)

Retained earnings

 

721,787

 

 

687,593

 

 

621,626

 

Total stockholders' equity

 

908,356

 

 

870,344

 

 

810,411

 

Total liabilities and stockholders' equity

$

1,004,990

 

$

967,849

 

$

903,339

 

 
POWER INTEGRATIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30, 2021

 

June 30, 2021

 

September 30, 2020

 

September 30, 2021

 

September 30, 2020

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income

$

42,034

 

$

41,881

 

$

14,820

 

$

123,713

 

$

43,898

 

Adjustments to reconcile net income to cash provided by operating activities
Depreciation

 

8,126

 

 

7,821

 

 

6,002

 

 

23,400

 

 

17,071

 

Amortization of intangible assets

 

794

 

 

873

 

 

1,076

 

 

2,699

 

 

3,283

 

Loss on disposal of property and equipment

 

2,162

 

 

21

 

 

19

 

 

2,200

 

 

311

 

Stock-based compensation expense

 

9,645

 

 

9,200

 

 

9,358

 

 

27,325

 

 

22,049

 

Amortization of premium on marketable securities

 

475

 

 

124

 

 

204

 

 

775

 

 

525

 

Deferred income taxes

 

(1,194

)

 

(263

)

 

(1,179

)

 

(12

)

 

100

 

Increase (decrease) in accounts receivable allowance for credit losses

 

(74

)

 

93

 

 

309

 

 

17

 

 

155

 

Change in operating assets and liabilities:
Accounts receivable

 

2,554

 

 

812

 

 

(16,884

)

 

(2,979

)

 

(5,328

)

Inventories

 

(2,171

)

 

866

 

 

(842

)

 

11,064

 

 

(14,425

)

Prepaid expenses and other assets

 

(472

)

 

(1,248

)

 

2,041

 

 

(4,973

)

 

6,133

 

Accounts payable

 

(1,420

)

 

4,772

 

 

504

 

 

6,633

 

 

6,365

 

Taxes payable and other accrued liabilities

 

(1,724

)

 

1,896

 

 

801

 

 

(6,157

)

 

(864

)

Net cash provided by operating activities

 

58,735

 

 

66,848

 

 

16,229

 

 

183,705

 

 

79,273

 

 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment

 

(11,011

)

 

(8,243

)

 

(14,116

)

 

(30,305

)

 

(35,738

)

Proceeds from sale of property and equipment

 

-

 

 

10

 

 

-

 

 

35

 

 

331

 

Purchases of marketable securities

 

(193,150

)

 

(166,782

)

 

(46,239

)

 

(381,903

)

 

(66,066

)

Proceeds from sales and maturities of marketable securities

 

123,953

 

 

96,617

 

 

28,033

 

 

284,036

 

 

86,995

 

Net cash used in investing activities

 

(80,208

)

 

(78,398

)

 

(32,322

)

 

(128,137

)

 

(14,478

)

 
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock

 

4,058

 

 

-

 

 

3,364

 

 

7,710

 

 

9,662

 

Repurchase of common stock

 

(9,791

)

 

(26,374

)

 

-

 

 

(36,165

)

 

(2,636

)

Payments of dividends to stockholders

 

(7,840

)

 

(7,867

)

 

(6,582

)

 

(23,552

)

 

(18,497

)

Net cash used in financing activities

 

(13,573

)

 

(34,241

)

 

(3,218

)

 

(52,007

)

 

(11,471

)

 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

(35,046

)

 

(45,791

)

 

(19,311

)

 

3,561

 

 

53,324

 

 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

297,481

 

 

343,272

 

 

251,325

 

 

258,874

 

 

178,690

 

 
CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

262,435

 

$

297,481

 

$

232,014

 

$

262,435

 

$

232,014

 

 

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

Source: Power Integrations, Inc.

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