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Power Integrations Reports Third-Quarter Financial Results

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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

SAN JOSE, Calif., October 28, 2021--(BUSINESS WIRE)--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

View source version on businesswire.com: https://www.businesswire.com/news/home/20211028006185/en/

Contacts

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

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