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News   Press Releases

Power Integrations Reports Third-Quarter Financial Results

POWI | November 7, 2023

Revenues increased two percent sequentially to $125.5 million; GAAP earnings were $0.34 per diluted share; non-GAAP earnings were $0.46 per diluted share

Quarterly dividend rises by five percent to $0.20 per share

Power Integrations (NASDAQ: POWI) today announced financial results for the quarter ended September 30, 2023. Net revenues for the third quarter were $125.5 million, up two percent compared to the prior quarter and down 22 percent from the third quarter of 2022. Net income for the third quarter was $19.8 million or $0.34 per diluted share compared to $0.26 per diluted share in the prior quarter and $0.80 per diluted share in the third quarter of 2022. Cash flow from operations for the third quarter was $26.7 million.

In addition to its GAAP results, the company provided non-GAAP measures that for the third quarter of 2023 exclude stock-based compensation, amortization of acquisition-related intangible assets and the related tax effects. Non-GAAP net income for the third quarter of 2023 was $26.6 million or $0.46 per diluted share compared to $0.36 per diluted share in the prior quarter and $0.84 per diluted share in the third quarter of 2022. A reconciliation of GAAP to non-GAAP financial results is included with the tables accompanying this press release.

Commented Balu Balakrishnan, chairman and CEO of Power Integrations: “Our results and forecast reflect the broad-based demand weakness and elevated supply-chain inventories cited by many of our peers this quarter. Notwithstanding the uncertain short-term outlook, our products are winning in the market, design activity remains healthy, and we are making excellent progress on growth initiatives such as EVs, efficient drivers for brushless DC motors, and our proprietary GaN technology.

“We took the next step on our GaN roadmap last month with the introduction of InnoSwitch™ ICs incorporating a 1250-volt PowiGaN™ switch. This breakthrough not only extends the efficiency benefits of GaN to a wider range of applications but also demonstrates that GaN will be a more cost-effective alternative to silicon carbide in the years ahead.”

Power Integrations paid a dividend of $0.19 per share on September 29, 2023, and will pay a dividend of $0.20 per share on December 29, 2023, to stockholders of record as of November 30, 2023. During the third quarter the company repurchased approximately 24,000 shares of its common stock for $1.8 million. The company had $73.4 million remaining on its repurchase authorization as of September 30, 2023.

Financial Outlook

The company issued the following forecast for the fourth quarter of 2023:

  • Revenues are expected to be $90 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 $50 million; non-GAAP operating expenses are expected to be approximately $42.5 million. Non-GAAP expenses are expected to exclude about $7.5 million of stock-based compensation.

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/YTVcHvJE. 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, net other operating expenses of $1.1 million in the second quarter of 2022 stemming from a patent-litigation settlement and an offsetting recovery from the liquidation of SemiSouth Laboratories, 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 and that GaN will be a more cost-effective alternative to silicon carbide 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, InnoSwitch, PowiGaN 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 Nine Months Ended
September 30,
2023		 June 30,
2023		 September 30,
2022		 September 30,
2023		 September 30,
2022
NET REVENUES

$

125,511

$

123,223

$

160,233

$

355,031

$

526,368

COST OF REVENUES

59,566

60,377

68,198

172,283

226,815

GROSS PROFIT

65,945

62,846

92,035

182,748

299,553

OPERATING EXPENSES:
Research and development

24,064

24,517

23,205

72,562

70,390

Sales and marketing

16,224

17,017

14,700

49,126

46,840

General and administrative

7,945

8,671

5,759

24,950

21,432

Amortization of acquisition-related intangible assets

-

-

-

-

241

Other operating expenses, net

-

-

-

-

1,130

Total operating expenses

48,233

50,205

43,664

146,638

140,033

INCOME FROM OPERATIONS

17,712

12,641

48,371

36,110

159,520

OTHER INCOME

3,138

2,714

1,001

7,566

2,229

INCOME BEFORE INCOME TAXES

20,850

15,355

49,372

43,676

161,749

PROVISION FOR INCOME TAXES

1,054

562

3,408

2,212

13,713

NET INCOME

$

19,796

$

14,793

$

45,964

$

41,464

$

148,036

EARNINGS PER SHARE:
Basic

$

0.34

$

0.26

$

0.80

$

0.72

$

2.55

Diluted

$

0.34

$

0.26

$

0.80

$

0.72

$

2.52

SHARES USED IN PER-SHARE CALCULATION:
Basic

57,383

57,355

57,172

57,282

58,039

Diluted

57,741

57,669

57,603

57,711

58,635

SUPPLEMENTAL INFORMATION: Three Months Ended Nine Months Ended
September 30,
2023		 June 30,
2023		 September 30,
2022		 September 30,
2023		 September 30,
2022
Stock-based compensation expenses included in:
Cost of revenues

$

446

$

446

$

172

$

1,193

$

727

Research and development

2,895

2,429

2,334

7,992

7,712

Sales and marketing

1,787

1,621

1,267

5,061

4,392

General and administrative

1,777

2,256

(755

)

6,779

2,879

Total stock-based compensation expense

$

6,905

$

6,752

$

3,018

$

21,025

$

15,710

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

$

482

$

482

$

482

$

1,446

$

1,446

Three Months Ended Nine Months Ended
REVENUE MIX BY END MARKET September 30,
2023		 June 30,
2023		 September 30,
2022		 September 30,
2023		 September 30,
2022
Communications

32

%

28

%

16

%

30

%

20

%

Computer

10

%

14

%

11

%

12

%

10

%

Consumer

26

%

29

%

32

%

26

%

35

%

Industrial

32

%

29

%

41

%

32

%

35

%

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,
2023		 June 30,
2023		 September 30,
2022		 September 30,
2023		 September 30,
2022
RECONCILIATION OF GROSS PROFIT
GAAP gross profit

$

65,945

$

62,846

$

92,035

$

182,748

$

299,553

GAAP gross margin

52.5

%

51.0

%

57.4

%

51.5

%

56.9

%
Stock-based compensation included in cost of revenues

446

446

172

1,193

727

Amortization of acquisition-related intangible assets

482

482

482

1,446

1,446

Non-GAAP gross profit

$

66,873

$

63,774

$

92,689

$

185,387

$

301,726

Non-GAAP gross margin

53.3

%

51.8

%

57.8

%

52.2

%

57.3

%
Three Months Ended Nine Months Ended
RECONCILIATION OF OPERATING EXPENSES September 30,
2023		 June 30,
2023		 September 30,
2022		 September 30,
2023		 September 30,
2022
GAAP operating expenses

$

48,233

$

50,205

$

43,664

$

146,638

$

140,033

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

2,895

2,429

2,334

7,992

7,712

Sales and marketing

1,787

1,621

1,267

5,061

4,392

General and administrative

1,777

2,256

(755

)

6,779

2,879

Total

6,459

6,306

2,846

19,832

14,983

Amortization of acquisition-related intangible assets

-

-

-

-

241

Other operating expenses, net

-

-

-

-

1,130

Non-GAAP operating expenses

$

41,774

$

43,899

$

40,818

$

126,806

$

123,679

Three Months Ended Nine Months Ended
RECONCILIATION OF INCOME FROM OPERATIONS September 30,
2023		 June 30,
2023		 September 30,
2022		 September 30,
2023		 September 30,
2022
GAAP income from operations

$

17,712

$

12,641

$

48,371

$

36,110

$

159,520

GAAP operating margin

14.1

%

10.3

%

30.2

%

10.2

%

30.3

%
Add:Total stock-based compensation

6,905

6,752

3,018

21,025

15,710

Amortization of acquisition-related intangible assets

482

482

482

1,446

1,687

Other operating expenses, net

-

-

-

-

1,130

Non-GAAP income from operations

$

25,099

$

19,875

$

51,871

$

58,581

$

178,047

Non-GAAP operating margin

20.0

%

16.1

%

32.4

%

16.5

%

33.8

%
Three Months Ended Nine Months Ended
RECONCILIATION OF PROVISION FOR INCOME TAXES September 30,
2023		 June 30,
2023		 September 30,
2022		 September 30,
2023		 September 30,
2022
GAAP provision for income taxes

$

1,054

$

562

$

3,408

$

2,212

$

13,713

GAAP effective tax rate

5.1

%

3.7

%

6.9

%

5.1

%

8.5

%
Tax effect of adjustments to GAAP results

(580

)

(1,016

)

(1,116

)

(2,097

)

(2,497

)

Non-GAAP provision for income taxes

$

1,634

$

1,578

$

4,524

$

4,309

$

16,210

Non-GAAP effective tax rate

5.8

%

7.0

%

8.6

%

6.5

%

9.0

%
Three Months Ended Nine Months Ended
RECONCILIATION OF NET INCOME PER SHARE (DILUTED) September 30,
2023		 June 30,
2023		 September 30,
2022		 September 30,
2023		 September 30,
2022
GAAP net income

$

19,796

$

14,793

$

45,964

$

41,464

$

148,036

Adjustments to GAAP net income
Stock-based compensation

6,905

6,752

3,018

21,025

15,710

Amortization of acquisition-related intangible assets

482

482

482

1,446

1,687

Other operating expenses, net

-

-

-

-

1,130

Tax effect of items excluded from non-GAAP results

(580

)

(1,016

)

(1,116

)

(2,097

)

(2,497

)

Non-GAAP net income

$

26,603

$

21,011

$

48,348

$

61,838

$

164,066

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

57,741

57,669

57,603

57,711

58,635

Non-GAAP net income per share (diluted)

$

0.46

$

0.36

$

0.84

$

1.07

$

2.80

GAAP net income per share (diluted)

$

0.34

$

0.26

$

0.80

$

0.72

$

2.52

POWER INTEGRATIONS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, 2023 June 30, 2023 December 31, 2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents

$

94,743

$

84,096

$

105,372

Short-term marketable securities

261,896

262,219

248,441

Accounts receivable, net

28,539

32,077

20,836

Inventories

150,246

149,741

135,420

Prepaid expenses and other current assets

20,692

22,854

15,004

Total current assets

556,116

550,987

525,073

PROPERTY AND EQUIPMENT, net

166,391

168,066

176,681

INTANGIBLE ASSETS, net

4,967

5,511

6,597

GOODWILL

91,849

91,849

91,849

DEFERRED TAX ASSETS

28,943

21,771

19,034

OTHER ASSETS

17,224

21,273

20,862

Total assets

$

865,490

$

859,457

$

840,096

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable

$

28,553

$

40,531

$

30,088

Accrued payroll and related expenses

13,778

14,041

14,778

Taxes payable

774

704

938

Other accrued liabilities

10,316

9,543

12,572

Total current liabilities

53,421

64,819

58,376

LONG-TERM LIABILITIES:
Income taxes payable

16,724

16,009

15,757

Other liabilities

10,288

10,700

10,747

Total liabilities

80,433

91,528

84,880

STOCKHOLDERS' EQUITY:
Common stock

23

23

24

Additional paid-in capital

19,429

11,220

-

Accumulated other comprehensive loss

(5,730

)

(5,757

)

(7,344

)

Retained earnings

771,335

762,443

762,536

Total stockholders' equity

785,057

767,929

755,216

Total liabilities and stockholders' equity

$

865,490

$

859,457

$

840,096

POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended Nine Months Ended
September 30,
2023		 June 30,
2023		 September 30,
2022		 September 30,
2023		 September 30,
2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income

$

19,796

$

14,793

$

45,964

$

41,464

$

148,036

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

8,663

8,692

8,881

26,316

26,055

Amortization of intangible assets

544

543

543

1,630

1,871

Loss on disposal of property and equipment

64

15

128

86

1,162

Stock-based compensation expense

6,905

6,752

3,018

21,025

15,710

Amortization of premium on marketable securities

(273

)

15

771

146

2,638

Deferred income taxes

(7,170

)

(2,044

)

(4,108

)

(9,952

)

(7,390

)

Increase (decrease) in accounts receivable allowance for credit losses

-

-

431

(454

)

690

Change in operating assets and liabilities:
Accounts receivable

3,538

(11,492

)

11,474

(7,249

)

24,628

Inventories

(505

)

(7,297

)

(8,834

)

(14,826

)

(20,826

)

Prepaid expenses and other assets

6,404

(4,939

)

4,353

(837

)

8,428

Accounts payable

(11,695

)

5,887

(11,451

)

(2,882

)

(5,874

)

Taxes payable and other accrued liabilities

455

(4,744

)

(1,344

)

(4,975

)

(3,883

)

Net cash provided by operating activities

26,726

6,181

49,826

49,492

191,245

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment

(7,530

)

(3,129

)

(5,500

)

(14,741

)

(33,444

)

Proceeds from sale of property and equipment

-

-

-

-

1,202

Purchases of marketable securities

(62,205

)

(73,888

)

(6,534

)

(173,015

)

(27,244

)

Proceeds from sales and maturities of marketable securities

63,256

75,948

35,487

161,897

161,014

Net cash provided by (used in) investing activities

(6,479

)

(1,069

)

23,453

(25,859

)

101,528

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

3,139

-

3,105

6,237

6,162

Repurchase of common stock

(1,835

)

(4,312

)

-

(7,834

)

(292,349

)

Payments of dividends to stockholders

(10,904

)

(10,893

)

(10,293

)

(32,665

)

(31,229

)

Net cash used in financing activities

(9,600

)

(15,205

)

(7,188

)

(34,262

)

(317,416

)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

10,647

(10,093

)

66,091

(10,629

)

(24,643

)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

84,096

94,189

67,383

105,372

158,117

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

94,743

$

84,096

$

133,474

$

94,743

$

133,474

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