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Power Integrations Reports First-Quarter Financial Results

April 28, 2022

Revenues increased five percent year-over-year to $182.1 million; GAAP earnings were $0.77 per diluted share; non-GAAP earnings were $0.93 per diluted share

Company repurchased 1.6M shares during the quarter for $135M; $75M added to repurchase authorization

Power Integrations (NASDAQ: POWI) today announced financial results for the quarter ended March 31, 2022. Net revenues for the first quarter were $182.1 million, up five percent compared to the prior quarter and up five percent from the first quarter of 2021. Net income for the first quarter was $46.2 million or $0.77 per diluted share compared to $0.66 per diluted share in the prior quarter and $0.65 per diluted share in the first quarter of 2021. Cash flow from operations for the first quarter was $74.6 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 2022 was $55.8 million or $0.93 per diluted share compared with $0.83 per diluted share in the prior quarter and $0.76 per diluted share in the first quarter of 2021. 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 continued our momentum with another quarter of record revenues, strong earnings growth and healthy cash flow. Our innovative products and strong delivery performance are driving broad-based market-share gains, while dollar content continues to expand in areas like appliances and mobile-device chargers. We are seeing strong uptake of our highly integrated GaN products and our BridgeSwitch™ motor-drive ICs, and we have a robust pipeline of new products leveraging leading-edge technologies such as FluxLink™ isolation technology and proprietary PowiGaN™ transistors.”

Additional Highlights

  • Power Integrations repurchased 1.6 million shares of its common stock during the first quarter for $134.7 million. Approximately $83 million remained on the company’s repurchase authorization at quarter-end, of which $75 million has been used in April for the repurchase of an additional 0.9 million shares. The company’s board of directors has subsequently allocated an additional $75 million for share repurchases.
  • The company paid a dividend of $0.18 per share on March 31, 2022. A dividend of $0.18 per share is to be paid on June 30, 2022, to stockholders of record as of May 31, 2022.

Financial Outlook

The company issued the following forecast for the second quarter of 2022:

  • Revenues are expected to be $190 million plus or minus $5 million.
  • GAAP gross margin is expected to be between 55.5 percent and 56 percent. Non-GAAP gross margin is expected to be between 56 percent and 56.5 percent. The difference between GAAP and non-GAAP gross margins is approximately equally attributable to stock-based compensation and amortization of acquisition-related intangible assets.
  • GAAP operating expenses are expected to be between $52.5 million and $53.5 million; non-GAAP operating expenses are expected to be between $43.5 million and $44.5 million. Non-GAAP expenses are expected to exclude approximately $8.9 million of stock-based compensation and $0.1 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 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 and geopolitical conditions, including such factors as inflation, armed conflicts and 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 7, 2022. The company is under no obligation (and expressly disclaims any obligation) to update or alter its forward-looking statements, whether because of new information, future events or otherwise, except as otherwise required by law.

Power Integrations, FluxLink, PowiGaN, BridgeSwitch 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, 2022 December 31, 2021 March 31, 2021
NET REVENUES

$

182,149

$

172,654

$

173,737

 
COST OF REVENUES

 

81,474

 

79,478

 

89,326

 
GROSS PROFIT

 

100,675

 

93,176

 

84,411

 
OPERATING EXPENSES:
Research and development

 

23,678

 

22,028

 

20,027

Sales and marketing

 

16,155

 

15,590

 

13,907

General and administrative

 

9,614

 

11,073

 

10,075

Amortization of acquisition-related intangible assets

 

181

 

181

 

216

Total operating expenses

 

49,628

 

48,872

 

44,225

 
INCOME FROM OPERATIONS

 

51,047

 

44,304

 

40,186

 
OTHER INCOME

 

554

 

101

 

597

 
INCOME BEFORE INCOME TAXES

 

51,601

 

44,405

 

40,783

 
PROVISION FOR INCOME TAXES

 

5,353

 

3,705

 

985

 
NET INCOME

$

46,248

$

40,700

$

39,798

 
EARNINGS PER SHARE:
Basic

$

0.78

$

0.68

$

0.66

Diluted

$

0.77

$

0.66

$

0.65

 
SHARES USED IN PER-SHARE CALCULATION:
Basic

 

59,238

 

60,259

 

60,184

Diluted

 

60,107

 

61,381

 

61,451

 
 
 
SUPPLEMENTAL INFORMATION: Three Months Ended
March 31, 2022 December 31, 2021 March 31, 2021
Stock-based compensation expenses included in:
Cost of revenues

$

320

$

424

$

631

Research and development

 

3,055

 

3,522

 

2,391

Sales and marketing

 

1,948

 

2,090

 

1,614

General and administrative

 

3,690

 

4,248

 

3,844

Total stock-based compensation expense

$

9,013

$

10,284

$

8,480

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

$

482

$

552

$

754

 
 
Three Months Ended
REVENUE MIX BY END MARKET March 31, 2022 December 31, 2021 March 31, 2021
Communications

 

26%

 

23%

 

38%

Computer

 

10%

 

10%

 

8%

Consumer

 

35%

 

35%

 

29%

Industrial

 

29%

 

32%

 

25%

POWER INTEGRATIONS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP RESULTS
(in thousands, except per-share amounts)
 
Three Months Ended
March 31, 2022 December 31, 2021 March 31, 2021
RECONCILIATION OF GROSS PROFIT
GAAP gross profit

$

100,675

 

$

93,176

 

$

84,411

 

GAAP gross margin

 

55.3

%

 

54.0

%

 

48.6

%

 
Stock-based compensation included in cost of revenues

 

320

 

 

424

 

 

631

 

Amortization of acquisition-related intangible assets

 

482

 

 

552

 

 

754

 

 
Non-GAAP gross profit

$

101,477

 

$

94,152

 

$

85,796

 

Non-GAAP gross margin

 

55.7

%

 

54.5

%

 

49.4

%

 
 
Three Months Ended
RECONCILIATION OF OPERATING EXPENSES March 31, 2022 December 31, 2021 March 31, 2021
GAAP operating expenses

$

49,628

 

$

48,872

 

$

44,225

 

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

 

3,055

 

 

3,522

 

 

2,391

 

Sales and marketing

 

1,948

 

 

2,090

 

 

1,614

 

General and administrative

 

3,690

 

 

4,248

 

 

3,844

 

Total

 

8,693

 

 

9,860

 

 

7,849

 

 
Amortization of acquisition-related intangible assets

 

181

 

 

181

 

 

216

 

 
Non-GAAP operating expenses

$

40,754

 

$

38,831

 

$

36,160

 

 
 
Three Months Ended
RECONCILIATION OF INCOME FROM OPERATIONS March 31, 2022 December 31, 2021 March 31, 2021
GAAP income from operations

$

51,047

 

$

44,304

 

$

40,186

 

GAAP operating margin

 

28.0

%

 

25.7

%

 

23.1

%

 
Add: total stock-based compensation

 

9,013

 

 

10,284

 

 

8,480

 

Amortization of acquisition-related intangible assets

 

663

 

 

733

 

 

970

 

 
Non-GAAP income from operations

$

60,723

 

$

55,321

 

$

49,636

 

Non-GAAP operating margin

 

33.3

%

 

32.0

%

 

28.6

%

 
 
Three Months Ended
RECONCILIATION OF PROVISION FOR INCOME TAXES March 31, 2022 December 31, 2021 March 31, 2021
GAAP provision for income taxes

$

5,353

 

$

3,705

 

$

985

 

GAAP effective tax rate

 

10.4

%

 

8.3

%

 

2.4

%

 
Tax effect of adjustments to GAAP results

 

(122

)

 

(800

)

 

(2,578

)

 
Non-GAAP provision for income taxes

$

5,475

 

$

4,505

 

$

3,563

 

Non-GAAP effective tax rate

 

8.9

%

 

8.1

%

 

7.1

%

 
 
Three Months Ended
RECONCILIATION OF NET INCOME PER SHARE (DILUTED) March 31, 2022 December 31, 2021 March 31, 2021
GAAP net income

$

46,248

 

$

40,700

 

$

39,798

 

 
Adjustments to GAAP net income
Stock-based compensation

 

9,013

 

 

10,284

 

 

8,480

 

Amortization of acquisition-related intangible assets

 

663

 

 

733

 

 

970

 

Tax effect of items excluded from non-GAAP results

 

(122

)

 

(800

)

 

(2,578

)

 
Non-GAAP net income

$

55,802

 

$

50,917

 

$

46,670

 

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

 

60,107

 

 

61,381

 

 

61,451

 

 
Non-GAAP net income per share (diluted)

$

0.93

 

$

0.83

 

$

0.76

 

 
GAAP net income per share (diluted)

$

0.77

 

$

0.66

 

$

0.65

 

POWER INTEGRATIONS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
 
 
March 31, 2022 December 31, 2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents

$

170,624

 

$

158,117

 

Short-term marketable securities

 

273,419

 

 

372,235

 

Accounts receivable, net

 

30,658

 

 

41,393

 

Inventories

 

103,115

 

 

99,266

 

Prepaid expenses and other current assets

 

14,685

 

 

15,804

 

Total current assets

 

592,501

 

 

686,815

 

 
PROPERTY AND EQUIPMENT, net

 

180,073

 

 

179,824

 

INTANGIBLE ASSETS, net

 

8,288

 

 

9,012

 

GOODWILL

 

91,849

 

 

91,849

 

DEFERRED TAX ASSETS

 

17,371

 

 

16,433

 

OTHER ASSETS

 

29,113

 

 

30,554

 

Total assets

$

919,195

 

$

1,014,487

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable

$

36,175

 

$

43,721

 

Accrued payroll and related expenses

 

13,459

 

 

15,492

 

Taxes payable

 

5,601

 

 

1,210

 

Other accrued liabilities

 

13,999

 

 

11,898

 

Total current liabilities

 

69,234

 

 

72,321

 

 
LONG-TERM LIABILITIES:
Income taxes payable

 

15,384

 

 

15,280

 

Other liabilities

 

14,004

 

 

14,854

 

Total liabilities

 

98,622

 

 

102,455

 

 
STOCKHOLDERS' EQUITY:
Common stock

 

26

 

 

28

 

Additional paid-in capital

 

39,684

 

 

162,301

 

Accumulated other comprehensive loss

 

(8,169

)

 

(3,737

)

Retained earnings

 

789,032

 

 

753,440

 

Total stockholders' equity

 

820,573

 

 

912,032

 

Total liabilities and stockholders' equity

$

919,195

 

$

1,014,487

 

POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
Three Months Ended
March 31, 2022 December 31, 2021 March 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income

$

46,248

 

$

40,700

 

$

39,798

 

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

 

8,408

 

 

8,054

 

 

7,453

 

Amortization of intangible assets

 

724

 

 

795

 

 

1,032

 

Loss on disposal of property and equipment

 

75

 

 

905

 

 

17

 

Stock-based compensation expense

 

9,013

 

 

10,284

 

 

8,480

 

Amortization of premium on marketable securities

 

937

 

 

815

 

 

176

 

Deferred income taxes

 

(936

)

 

(13,228

)

 

1,445

 

Increase (decrease) in accounts receivable allowance for credit losses

 

75

 

 

1

 

 

(2

)

Change in operating assets and liabilities:
Accounts receivable

 

10,660

 

 

(2,522

)

 

(6,345

)

Inventories

 

(3,849

)

 

(7,452

)

 

12,369

 

Prepaid expenses and other assets

 

1,552

 

 

9,299

 

 

(3,253

)

Accounts payable

 

(1,709

)

 

(2,566

)

 

3,281

 

Taxes payable and other accrued liabilities

 

3,399

 

 

2,078

 

 

(6,329

)

Net cash provided by operating activities

 

74,597

 

 

47,163

 

 

58,122

 

 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment

 

(14,700

)

 

(16,967

)

 

(11,051

)

Proceeds from sale of property and equipment

 

1,202

 

 

-

 

 

25

 

Purchases of marketable securities

 

(15,121

)

 

(172,115

)

 

(21,971

)

Proceeds from sales and maturities of marketable securities

 

108,817

 

 

84,421

 

 

63,466

 

Net cash provided by (used in) investing activities

 

80,198

 

 

(104,661

)

 

30,469

 

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

 

3,057

 

 

-

 

 

3,652

 

Repurchase of common stock

 

(134,689

)

 

(37,773

)

 

-

 

Payments of dividends to stockholders

 

(10,656

)

 

(9,047

)

 

(7,845

)

Net cash used in financing activities

 

(142,288

)

 

(46,820

)

 

(4,193

)

 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

12,507

 

 

(104,318

)

 

84,398

 

 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

158,117

 

 

262,435

 

 

258,874

 

 
CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

170,624

 

$

158,117

 

$

343,272

 

 

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

Source: Power Integrations, Inc.

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