Power Integrations Reports Fourth-Quarter and Full-Year Financial Results
Power Integrations (POWI) reported a decline in quarterly revenues to $89.5 million, down 29% from the prior quarter and 28% from the fourth quarter of 2022. GAAP net income for the quarter was $14.3 million or $0.25 per diluted share. Full-year revenues were $444.5 million, with GAAP net income of $55.7 million. Non-GAAP net income for the fourth quarter was $12.7 million or $0.22 per diluted share, and $74.5 million or $1.29 per diluted share for the full year. The company repurchased 680 thousand shares during the quarter for $47 million.
Positive
Strong cash flow from operations of $65.8 million for the full year.
Non-GAAP net income of $74.5 million or $1.29 per diluted share for the full year, showcasing resilience amidst challenging market conditions.
Repurchase of 680 thousand shares during the quarter for $47 million reflects confidence in the company's long-term prospects.
Negative
Decline in quarterly revenues by 29% compared to the prior quarter and 28% from the fourth quarter of 2022.
Decrease in GAAP net income per diluted share from the prior quarter and the fourth quarter of 2022.
The reported quarterly revenues of Power Integrations at $89.5 million signify a substantial decrease of 29% compared to the previous quarter and a 28% drop year-over-year. Such a decline may raise concerns among investors regarding the company's performance and sector health. This downturn is further reflected in the yearly revenue fall from $651.1 million to $444.5 million. The earnings per share (EPS) , both GAAP and non-GAAP, have also decreased, indicating reduced profitability. This could potentially affect the company's stock price negatively as EPS is a critical metric for investors.
Moreover, the share repurchase program, involving 680 thousand shares for $47 million, suggests that the company is utilizing its capital to buy back shares, which can sometimes be perceived as a sign of confidence in the company's intrinsic value. However, it also means that the company is choosing to return capital to shareholders rather than reinvesting it for growth or paying down debt.
Investors should consider the company's operational cash flow , which remains positive at $65.8 million for the year, as an indicator of its ability to generate cash from its core business operations. However, the contrast between the GAAP and non-GAAP results, with non-GAAP net income excluding certain expenses, should be examined to understand the company's underlying financial health thoroughly.
The significant revenue decline reported by Power Integrations could be symptomatic of broader market trends or company-specific challenges. For instance, it could be indicative of decreased demand for the company's products, increased competition , or perhaps supply chain disruptions . It's crucial for stakeholders to analyze the root causes of this downturn to assess whether it's a temporary setback or part of a longer-term trend.
Additionally, the projection of first-quarter sales suggests that the company expects the downward trend to continue, at least in the short term. This could influence market sentiment and investment decisions. Stakeholders would benefit from a deeper analysis of the company's market position, product pipeline and competitive strategy to evaluate its potential for recovery and growth.
An economist might explore the macroeconomic factors contributing to Power Integrations' performance. For example, fluctuations in consumer demand , exchange rates , or global economic conditions could have impacted sales. Additionally, the tech sector is often sensitive to changes in economic cycles and consumer spending , which can be affected by broader economic indicators such as GDP growth, unemployment rates and inflation.
Understanding these macroeconomic factors is essential for stakeholders to contextualize the company's results within the larger economic landscape. It could also provide insights into whether the revenue decline is part of a cyclical downturn or if it reflects structural changes in the industry that could have long-term implications for the company's performance.
02/08/2024 - 04:01 PM
Quarterly revenues were $89.5 million $0.25 $0.22
Company repurchased 680 thousand shares during the quarter for $47 million
SAN JOSE, Calif. --(BUSINESS WIRE)--
Power Integrations (NASDAQ: POWI ) today announced financial results for the quarter and year ended December 31, 2023. Net revenues for the fourth quarter were $89.5 million $14.3 million $0.25 $0.34 $0.40
For the full year, net revenues were $444.5 million $651.1 million $55.7 million $0.97 $2.93 $65.8 million
In addition to its GAAP results, the company provided non-GAAP measures that for the fourth quarter of 2023 exclude stock-based compensation, amortization of acquisition-related intangible assets and the related tax effects. Non-GAAP net income for the fourth quarter of 2023 was $12.7 million $0.22 $0.46 $0.48 $74.5 million $1.29 $3.29
Commented Balu Balakrishnan, chairman and CEO of Power Integrations: “Fourth-quarter revenues declined as expected, and we project first-quarter sales to be about flat sequentially due to continued soft demand and elevated supply-chain inventories. However, channel inventory fell significantly in the fourth quarter, and we expect a further reduction in the first quarter. Based on lower inventories and seasonal patterns we expect sequential revenue growth beginning in the June quarter. We also expect gross margin to rise in the June quarter driven by the dollar/yen exchange rate, higher manufacturing utilization and end-market mix.”
During the fourth quarter Power Integrations repurchased 680 thousand shares of its common stock for $47.4 million $26.0 million $0.20 $0.20
Financial Outlook
The company issued the following forecast for the first quarter of 2024:
Revenues are expected to be $90 million $5 million
GAAP gross margin is expected to be approximately 51.5 percent; non-GAAP gross margin is expected to be approximately 52.5 percent. The difference between GAAP and non-GAAP gross margins is equally attributable to stock-based compensation and amortization of acquisition-related intangible assets.
GAAP operating expenses are expected to be approximately $49 million $42.5 million $6.5 million
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://registrations.events/direct/Q4I24588 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, net other operating expenses of $1.1 million
Note Regarding Forward-Looking Statements
The above statements regarding the company’s forecast for its first-quarter financial performance, sequential growth beginning in the second quarter, channel inventory trends and rising gross margins over the course of the year are forward-looking statements reflecting management's current expectations and beliefs. These 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 company’s ability to supply products and its ability to conduct other aspects of its business such as competing for new design wins; changes in global economic 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 on February 7, 2023. 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 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 INCOME
(in thousands, except per-share amounts)
Three Months Ended Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
NET REVENUES
$
89,507
$
125,511
$
124,770
$
444,538
$
651,138
COST OF REVENUES
43,299
59,566
57,416
215,582
284,231
GROSS PROFIT
46,208
65,945
67,354
228,956
366,907
OPERATING EXPENSES:
Research and development
23,505
24,064
23,504
96,067
93,894
Sales and marketing
15,472
16,224
15,493
64,598
62,333
General and administrative
8,282
7,945
7,465
33,232
28,897
Amortization of acquisition-related intangible assets
-
-
-
-
241
Other operating expenses, net
-
-
-
-
1,130
Total operating expenses
47,259
48,233
46,462
193,897
186,495
INCOME (LOSS) FROM OPERATIONS
(1,051
)
17,712
20,892
35,059
180,412
OTHER INCOME
3,282
3,138
785
10,848
3,014
INCOME BEFORE INCOME TAXES
2,231
20,850
21,677
45,907
183,426
PROVISION (BENEFIT) FOR INCOME TAXES
(12,040
)
1,054
(1,138
)
(9,828
)
12,575
NET INCOME
$
14,271
$
19,796
$
22,815
$
55,735
$
170,851
EARNINGS PER SHARE:
Basic
$
0.25
$
0.34
$
0.40
$
0.97
$
2.96
Diluted
$
0.25
$
0.34
$
0.40
$
0.97
$
2.93
SHARES USED IN PER-SHARE CALCULATION:
Basic
56,937
57,383
57,094
57,195
57,801
Diluted
57,272
57,741
57,535
57,622
58,371
SUPPLEMENTAL INFORMATION:
Three Months Ended Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
Stock-based compensation expenses included in:
Cost of revenues
$
499
$
446
$
405
$
1,692
$
1,132
Research and development
2,947
2,895
2,716
10,939
10,428
Sales and marketing
1,827
1,787
1,643
6,888
6,035
General and administrative
2,230
1,777
1,890
9,009
4,769
Total stock-based compensation expense
$
7,503
$
6,905
$
6,654
$
28,528
$
22,364
Cost of revenues includes:
Amortization of acquisition-related intangible assets
$
482
$
482
$
482
$
1,928
$
1,928
Three Months Ended Twelve Months Ended
REVENUE MIX BY END MARKET
December 31,
September 30,
December 31,
December 31,
December 31,
Communications
27
%
32
%
23
%
29
%
21
%
Computer
9
%
10
%
12
%
12
%
10
%
Consumer
29
%
26
%
26
%
27
%
33
%
Industrial
35
%
32
%
39
%
32
%
36
%
POWER INTEGRATIONS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP RESULTS
(in thousands, except per-share amounts)
Three Months Ended Twelve Months Ended
December 31, September 30, December 31, December 31, December 31,
RECONCILIATION OF GROSS PROFIT
GAAP gross profit
$
46,208
$
65,945
$
67,354
$
228,956
$
366,907
GAAP gross margin
51.6
%
52.5
%
54.0
%
51.5
%
56.3
%
Stock-based compensation included in cost of revenues
499
446
405
1,692
1,132
Amortization of acquisition-related intangible assets
482
482
482
1,928
1,928
Non-GAAP gross profit
$
47,189
$
66,873
$
68,241
$
232,576
$
369,967
Non-GAAP gross margin
52.7
%
53.3
%
54.7
%
52.3
%
56.8
%
Three Months Ended Twelve Months Ended
RECONCILIATION OF OPERATING EXPENSES December 31, September 30, December 31, December 31, December 31,
GAAP operating expenses
$
47,259
$
48,233
$
46,462
$
193,897
$
186,495
Less: Stock-based compensation expense included in operating expenses
Research and development
2,947
2,895
2,716
10,939
10,428
Sales and marketing
1,827
1,787
1,643
6,888
6,035
General and administrative
2,230
1,777
1,890
9,009
4,769
Total
7,004
6,459
6,249
26,836
21,232
Amortization of acquisition-related intangible assets
-
-
-
-
241
Other operating expenses, net
-
-
-
-
1,130
Non-GAAP operating expenses
$
40,255
$
41,774
$
40,213
$
167,061
$
163,892
Three Months Ended Twelve Months Ended
RECONCILIATION OF INCOME FROM OPERATIONS December 31, September 30, December 31, December 31, December 31,
GAAP income (loss) from operations
$
(1,051
)
$
17,712
$
20,892
$
35,059
$
180,412
GAAP operating margin
-1.2
%
14.1
%
16.7
%
7.9
%
27.7
%
Add: Total stock-based compensation
7,503
6,905
6,654
28,528
22,364
Amortization of acquisition-related intangible assets
482
482
482
1,928
2,169
Other operating expenses, net
-
-
-
-
1,130
Non-GAAP income from operations
$
6,934
$
25,099
$
28,028
$
65,515
$
206,075
Non-GAAP operating margin
7.7
%
20.0
%
22.5
%
14.7
%
31.6
%
Three Months Ended Twelve Months Ended
RECONCILIATION OF PROVISION FOR INCOME TAXES December 31, September 30, December 31, December 31, December 31,
GAAP provision (benefit) for income taxes
$
(12,040
)
$
1,054
$
(1,138
)
$
(9,828
)
$
12,575
GAAP effective tax rate
-539.7
%
5.1
%
-5.2
%
-21.4
%
6.9
%
Tax effect of adjustments to GAAP results
(9,556
)
(580
)
(2,085
)
(11,653
)
(4,582
)
Non-GAAP provision (benefit) for income taxes
$
(2,484
)
$
1,634
$
947
$
1,825
$
17,157
Non-GAAP effective tax rate
-24.3
%
5.8
%
3.3
%
2.4
%
8.2
%
Three Months Ended Twelve Months Ended
RECONCILIATION OF NET INCOME PER SHARE (DILUTED) December 31, September 30, December 31, December 31, December 31,
GAAP net income
$
14,271
$
19,796
$
22,815
$
55,735
$
170,851
Adjustments to GAAP net income
Stock-based compensation
7,503
6,905
6,654
28,528
22,364
Amortization of acquisition-related intangible assets
482
482
482
1,928
2,169
Other operating expenses, net
-
-
-
-
1,130
Tax effect of items excluded from non-GAAP results
(9,556
)
(580
)
(2,085
)
(11,653
)
(4,582
)
Non-GAAP net income
$
12,700
$
26,603
$
27,866
$
74,538
$
191,932
Average shares outstanding for calculation of non-GAAP net income per share (diluted)
57,272
57,741
57,535
57,622
58,371
Non-GAAP net income per share (diluted)
$
0.22
$
0.46
$
0.48
$
1.29
$
3.29
GAAP net income per share (diluted)
$
0.25
$
0.34
$
0.40
$
0.97
$
2.93
POWER INTEGRATIONS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, 2023 September 30, 2023 December 31, 2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
63,929
$
94,743
$
105,372
Short-term marketable securities
247,640
261,896
248,441
Accounts receivable, net
14,674
28,539
20,836
Inventories
163,164
150,246
135,420
Prepaid expenses and other current assets
22,193
20,692
15,004
Total current assets
511,600
556,116
525,073
PROPERTY AND EQUIPMENT, net
164,213
166,391
176,681
INTANGIBLE ASSETS, net
4,424
4,967
6,597
GOODWILL
91,849
91,849
91,849
DEFERRED TAX ASSETS
28,325
28,943
19,034
OTHER ASSETS
19,457
17,224
20,862
Total assets
$
819,868
$
865,490
$
840,096
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable
$
26,390
$
28,553
$
30,088
Accrued payroll and related expenses
13,551
13,778
14,778
Taxes payable
1,016
774
938
Other accrued liabilities
7,910
10,316
12,572
Total current liabilities
48,867
53,421
58,376
LONG-TERM LIABILITIES:
Income taxes payable
6,244
16,724
15,757
Other liabilities
12,516
10,288
10,747
Total liabilities
67,627
80,433
84,880
STOCKHOLDERS' EQUITY:
Common stock
23
23
24
Additional paid-in capital
-
19,429
-
Accumulated other comprehensive loss
(1,462
)
(5,730
)
(7,344
)
Retained earnings
753,680
771,335
762,536
Total stockholders' equity
752,241
785,057
755,216
Total liabilities and stockholders' equity
$
819,868
$
865,490
$
840,096
POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended Twelve Months Ended
December 31, September 30, December 31, December 31, December 31,
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
14,271
$
19,796
$
22,815
$
55,735
$
170,851
Adjustments to reconcile net income to cash provided by operating activities
Depreciation
8,887
8,663
8,875
35,203
34,930
Amortization of intangible assets
543
544
544
2,173
2,415
Loss on disposal of property and equipment
14
64
209
100
1,371
Stock-based compensation expense
7,503
6,905
6,654
28,528
22,364
Amortization of premium (accretion of discount) on marketable securities
(497
)
(273
)
654
(351
)
3,292
Deferred income taxes
705
(7,170
)
4,824
(9,247
)
(2,566
)
Increase (decrease) in accounts receivable allowance for credit losses
-
-
-
(454
)
690
Change in operating assets and liabilities:
Accounts receivable
13,865
3,538
(4,761
)
6,616
19,867
Inventories
(12,918
)
(505
)
(15,328
)
(27,744
)
(36,154
)
Prepaid expenses and other assets
(346
)
6,404
(1,085
)
(1,183
)
7,343
Accounts payable
(2,553
)
(11,695
)
2,038
(5,435
)
(3,836
)
Taxes payable and other accrued liabilities
(13,207
)
455
(1,341
)
(18,182
)
(5,224
)
Net cash provided by operating activities
16,267
26,726
24,098
65,759
215,343
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment
(6,143
)
(7,530
)
(5,767
)
(20,884
)
(39,211
)
Proceeds from sale of property and equipment
-
-
-
-
1,202
Purchases of marketable securities
(18,196
)
(62,205
)
(28,576
)
(191,211
)
(55,820
)
Proceeds from sales and maturities of marketable securities
36,045
63,256
11,151
197,942
172,165
Net cash provided by (used in) investing activities
11,706
(6,479
)
(23,192
)
(14,153
)
78,336
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock
-
3,139
-
6,237
6,162
Repurchase of common stock
(47,444
)
(1,835
)
(18,745
)
(55,278
)
(311,094
)
Payments of dividends to stockholders
(11,343
)
(10,904
)
(10,263
)
(44,008
)
(41,492
)
Net cash used in financing activities
(58,787
)
(9,600
)
(29,008
)
(93,049
)
(346,424
)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(30,814
)
10,647
(28,102
)
(41,443
)
(52,745
)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
94,743
84,096
133,474
105,372
158,117
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
63,929
$
94,743
$
105,372
$
63,929
$
105,372
View source version on businesswire.com: https://www.businesswire.com/news/home/20240208131628/en/
Joe Shiffler
joe@power.com
Source: Power Integrations, Inc.
What were Power Integrations' (POWI) quarterly revenues?
Power Integrations (POWI) reported quarterly revenues of $89.5 million.
What was the GAAP net income for the fourth quarter?
The GAAP net income for the fourth quarter was $14.3 million or $0.25 per diluted share.
How many shares did Power Integrations (POWI) repurchase during the quarter?
Power Integrations (POWI) repurchased 680 thousand shares during the quarter for $47 million.
What was the non-GAAP net income for the fourth quarter?
The non-GAAP net income for the fourth quarter was $12.7 million or $0.22 per diluted share.
What was the full-year revenues for Power Integrations (POWI)?
The full-year revenues for Power Integrations (POWI) were $444.5 million.
What was the full-year GAAP net income for Power Integrations (POWI)?
The full-year GAAP net income for Power Integrations (POWI) was $55.7 million.
What was the full-year non-GAAP net income for Power Integrations (POWI)?
The full-year non-GAAP net income for Power Integrations (POWI) was $74.5 million or $1.29 per diluted share.
