POWI Power Integrations Inc

Revenues were $115.8 million; GAAP earnings were $0.25 per diluted share; non-GAAP earnings were $0.40 per diluted share

Announces five-percent dividend increase and $50 million share-repurchase authorization

Power Integrations (NASDAQ: POWI) today announced financial results for the quarter ended September 30, 2024. Net revenues for the third quarter were $115.8 million, up nine percent from the prior quarter and down eight percent from the third quarter of 2023. GAAP net income for the third quarter was $14.3 million or $0.25 per diluted share compared to $0.09 per diluted share in the prior quarter and $0.34 per diluted share in the third quarter of 2023. Cash flow from operations for the third quarter was $32.9 million.

In addition to its GAAP results, the company provided non-GAAP measures that exclude stock-based compensation, amortization of acquisition-related intangible assets and the related tax effects. Non-GAAP net income for the third quarter of 2024 was $22.6 million or $0.40 per diluted share compared to $0.28 per diluted share in the prior quarter and $0.46 per diluted share in the third quarter of 2023. 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 third-quarter results were on target, and while our outlook reflects soft end-market demand, particularly in consumer appliances, we nevertheless expect double-digit year-over-year revenue growth in the fourth quarter. In light of our strong balance sheet, our board of directors has authorized $50 million for share repurchases and increased our quarterly dividend by five percent.

“Progress on our PowiGaN™ technology roadmap continues apace, with the introduction earlier this week of the world’s first 1700-volt gallium-nitride transistors in our InnoMux™-2 product family. As PowiGaN technology reaches ever-higher voltage and power capabilities, it becomes an increasingly attractive, lower-cost alternative to silicon carbide. At the same time, its cost is approaching parity with the most advanced high-voltage silicon MOSFETs, but with far superior performance.”

Additional Highlights

• Power Integrations’ board of directors has authorized the use of $50 million for the repurchase of the company’s common shares, subject to pre-determined price/volume thresholds. The authorization does not have an expiration date.
• The company paid a dividend of $0.20 per share on September 30, 2024; a dividend of $0.21 per share will be paid on December 31, 2024, to stockholders of record as of November 29, 2024.

Financial Outlook

The company issued the following forecast for the fourth quarter of 2024:

• Revenues are expected to be $105 million plus or minus $5 million.
• GAAP gross margin is expected to be between 54 percent and 54.5 percent, and non-GAAP gross margin is expected to be between 55 percent and 55.5 percent. The difference between the 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 $53.5 million and $54 million; non-GAAP operating expenses are expected to be between $44.5 million and $45 million. Non-GAAP operating expenses are expected to exclude approximately $9 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. A live webcast of the call will be available on the investor section of the company's website, http://investors.power.com. Members of the investment community can access the telephonic conference call by going to: https://bit.ly/POWI-2024-Q3-Earnings-Call.

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 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 12, 2024. 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, PowiGaN, InnoMux 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, 2024 June 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 NET REVENUES

$

115,837

 

$

106,198

 

$

125,511

 

$

313,723

 

$

355,031

 

  COST OF REVENUES

 

52,666

 

 

49,665

 

 

59,566

 

 

146,239

 

 

172,283

 

  GROSS PROFIT

 

63,171

 

 

56,533

 

 

65,945

 

 

167,484

 

 

182,748

 

  OPERATING EXPENSES: Research and development

 

25,829

 

 

26,047

 

 

24,064

 

 

75,101

 

 

72,562

 

Sales and marketing

 

17,119

 

 

18,053

 

 

16,224

 

 

50,894

 

 

49,126

 

General and administrative

 

8,641

 

 

10,475

 

 

7,945

 

 

27,479

 

 

24,950

 

Total operating expenses

 

51,589

 

 

54,575

 

 

48,233

 

 

153,474

 

 

146,638

 

  INCOME FROM OPERATIONS

 

11,582

 

 

1,958

 

 

17,712

 

 

14,010

 

 

36,110

 

  OTHER INCOME

 

2,750

 

 

3,189

 

 

3,138

 

 

9,441

 

 

7,566

 

  INCOME BEFORE INCOME TAXES

 

14,332

 

 

5,147

 

 

20,850

 

 

23,451

 

 

43,676

 

  PROVISION FOR INCOME TAXES

 

41

 

 

298

 

 

1,054

 

 

357

 

 

2,212

 

  NET INCOME

$

14,291

 

$

4,849

 

$

19,796

 

$

23,094

 

$

41,464

 

  EARNINGS PER SHARE: Basic

$

0.25

 

$

0.09

 

$

0.34

 

$

0.41

 

$

0.72

 

Diluted

$

0.25

 

$

0.09

 

$

0.34

 

$

0.40

 

$

0.72

 

  SHARES USED IN PER-SHARE CALCULATION: Basic

 

56,817

 

 

56,780

 

 

57,383

 

 

56,810

 

 

57,282

 

Diluted

 

57,004

 

 

56,984

 

 

57,741

 

 

57,106

 

 

57,711

 

      SUPPLEMENTAL INFORMATION: Three Months Ended Nine Months Ended September 30, 2024 June 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 Stock-based compensation expenses included in: Cost of revenues

$

496

 

$

707

 

$

446

 

$

1,549

 

$

1,193

 

Research and development

 

2,997

 

 

3,885

 

 

2,895

 

 

9,307

 

 

7,992

 

Sales and marketing

 

1,876

 

 

2,510

 

 

1,787

 

 

5,990

 

 

5,061

 

General and administrative

 

2,969

 

 

3,933

 

 

1,777

 

 

8,941

 

 

6,779

 

Total stock-based compensation expense

$

8,338

 

$

11,035

 

$

6,905

 

$

25,787

 

$

21,025

 

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

$

147

 

$

258

 

$

482

 

$

887

 

$

1,446

 

    Three Months Ended Nine Months Ended REVENUE MIX BY END MARKET September 30, 2024 June 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 Communications

 

12

%

 

11

%

 

32

%

 

11

%

 

30

%

Computer

 

14

%

 

14

%

 

10

%

 

14

%

 

12

%

Consumer

 

38

%

 

42

%

 

26

%

 

40

%

 

26

%

Industrial

 

36

%

 

33

%

 

32

%

 

35

%

 

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, 2024 June 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 RECONCILIATION OF GROSS PROFIT GAAP gross profit

$

63,171

 

$

56,533

 

$

65,945

 

$

167,484

 

$

182,748

 

GAAP gross margin

 

54.5

%

 

53.2

%

 

52.5

%

 

53.4

%

 

51.5

%

  Stock-based compensation included in cost of revenues

 

496

 

 

707

 

 

446

 

 

1,549

 

 

1,193

 

Amortization of acquisition-related intangible assets

 

147

 

 

258

 

 

482

 

 

887

 

 

1,446

 

  Non-GAAP gross profit

$

63,814

 

$

57,498

 

$

66,873

 

$

169,920

 

$

185,387

 

Non-GAAP gross margin

 

55.1

%

 

54.1

%

 

53.3

%

 

54.2

%

 

52.2

%

    Three Months Ended Nine Months Ended RECONCILIATION OF OPERATING EXPENSES September 30, 2024 June 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 GAAP operating expenses

$

51,589

 

$

54,575

 

$

48,233

 

$

153,474

 

$

146,638

 

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

 

2,997

 

 

3,885

 

 

2,895

 

 

9,307

 

 

7,992

 

Sales and marketing

 

1,876

 

 

2,510

 

 

1,787

 

 

5,990

 

 

5,061

 

General and administrative

 

2,969

 

 

3,933

 

 

1,777

 

 

8,941

 

 

6,779

 

Total

 

7,842

 

 

10,328

 

 

6,459

 

 

24,238

 

 

19,832

 

  Non-GAAP operating expenses

$

43,747

 

$

44,247

 

$

41,774

 

$

129,236

 

$

126,806

 

    Three Months Ended Nine Months Ended RECONCILIATION OF INCOME FROM OPERATIONS September 30, 2024 June 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 GAAP income from operations

$

11,582

 

$

1,958

 

$

17,712

 

$

14,010

 

$

36,110

 

GAAP operating margin

 

10.0

%

 

1.8

%

 

14.1

%

 

4.5

%

 

10.2

%

  Add: Stock-based compensation

 

8,338

 

 

11,035

 

 

6,905

 

 

25,787

 

 

21,025

 

Amortization of acquisition-related intangible assets

 

147

 

 

258

 

 

482

 

 

887

 

 

1,446

 

  Non-GAAP income from operations

$

20,067

 

$

13,251

 

$

25,099

 

$

40,684

 

$

58,581

 

Non-GAAP operating margin

 

17.3

%

 

12.5

%

 

20.0

%

 

13.0

%

 

16.5

%

    Three Months Ended Nine Months Ended RECONCILIATION OF PROVISION FOR INCOME TAXES September 30, 2024 June 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 GAAP provision for income taxes

$

41

 

$

298

 

$

1,054

 

$

357

 

$

2,212

 

GAAP effective tax rate

 

0.3

%

 

5.8

%

 

5.1

%

 

1.5

%

 

5.1

%

  Tax effect of adjustments to GAAP results

 

(160

)

 

(269

)

 

(580

)

 

(787

)

 

(2,097

)

  Non-GAAP provision for income taxes

$

201

 

$

567

 

$

1,634

 

$

1,144

 

$

4,309

 

Non-GAAP effective tax rate

 

0.9

%

 

3.4

%

 

5.8

%

 

2.3

%

 

6.5

%

    Three Months Ended Nine Months Ended RECONCILIATION OF NET INCOME PER SHARE (DILUTED) September 30, 2024 June 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 GAAP net income

$

14,291

 

$

4,849

 

$

19,796

 

$

23,094

 

$

41,464

 

  Adjustments to GAAP net income Stock-based compensation

 

8,338

 

 

11,035

 

 

6,905

 

 

25,787

 

 

21,025

 

Amortization of acquisition-related intangible assets

 

147

 

 

258

 

 

482

 

 

887

 

 

1,446

 

Tax effect of items excluded from non-GAAP results

 

(160

)

 

(269

)

 

(580

)

 

(787

)

 

(2,097

)

  Non-GAAP net income

$

22,616

 

$

15,873

 

$

26,603

 

$

48,981

 

$

61,838

 

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

 

57,004

 

 

56,984

 

 

57,741

 

 

57,106

 

 

57,711

 

  Non-GAAP net income per share (diluted)

$

0.40

 

$

0.28

 

$

0.46

 

$

0.86

 

$

1.07

 

  GAAP net income per share (diluted)

$

0.25

 

$

0.09

 

$

0.34

 

$

0.40

 

$

0.72

 

  POWER INTEGRATIONS, INC. CONSOLIDATED BALANCE SHEETS (in thousands)     September 30, 2024 June 30, 2024 December 31, 2023 ASSETS CURRENT ASSETS: Cash and cash equivalents

$

58,469

$

50,493

 

$

63,929

 

Short-term marketable securities

 

245,282

 

239,985

 

 

247,640

 

Accounts receivable, net

 

16,634

 

16,372

 

 

14,674

 

Inventories

 

167,680

 

169,884

 

 

163,164

 

Prepaid expenses and other current assets

 

19,821

 

23,102

 

 

22,193

 

Total current assets

 

507,886

 

499,836

 

 

511,600

 

  PROPERTY AND EQUIPMENT, net

 

153,313

 

153,785

 

 

164,213

 

INTANGIBLE ASSETS, net

 

8,283

 

3,561

 

 

4,424

 

GOODWILL

 

95,271

 

91,849

 

 

91,849

 

DEFERRED TAX ASSETS

 

36,393

 

31,640

 

 

28,325

 

OTHER ASSETS

 

23,845

 

24,089

 

 

19,457

 

Total assets

$

824,991

$

804,760

 

$

819,868

 

  LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable

$

27,091

$

24,831

 

$

26,390

 

Accrued payroll and related expenses

 

13,337

 

13,596

 

 

13,551

 

Taxes payable

 

1,063

 

827

 

 

1,016

 

Other accrued liabilities

 

9,267

 

10,970

 

 

7,910

 

Total current liabilities

 

50,758

 

50,224

 

 

48,867

 

  LONG-TERM LIABILITIES: Income taxes payable

 

6,351

 

6,237

 

 

6,244

 

Other liabilities

 

18,669

 

17,557

 

 

12,516

 

Total liabilities

 

75,778

 

74,018

 

 

67,627

 

  STOCKHOLDERS' EQUITY: Common stock

 

22

 

22

 

 

23

 

Additional paid-in capital

 

11,347

 

-

 

 

-

 

Accumulated other comprehensive income (loss)

 

1,008

 

(3,189

)

 

(1,462

)

Retained earnings

 

736,836

 

733,909

 

 

753,680

 

Total stockholders' equity

 

749,213

 

730,742

 

 

752,241

 

Total liabilities and stockholders' equity

$

824,991

$

804,760

 

$

819,868

 

  POWER INTEGRATIONS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)   Three Months Ended Nine Months Ended September 30, 2024 June 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net income

$

14,291

 

$

4,849

 

$

19,796

 

$

23,094

 

$

41,464

 

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

 

8,454

 

 

8,391

 

 

8,663

 

 

25,560

 

 

26,316

 

Amortization of intangible assets

 

208

 

 

320

 

 

544

 

 

1,071

 

 

1,630

 

Loss on disposal of property and equipment

 

208

 

 

-

 

 

64

 

 

216

 

 

86

 

Stock-based compensation expense

 

8,338

 

 

11,035

 

 

6,905

 

 

25,787

 

 

21,025

 

Amortization of premium (accretion of discount) on marketable securities

 

(343

)

 

(413

)

 

(273

)

 

(1,252

)

 

146

 

Deferred income taxes

 

(5,206

)

 

(2,152

)

 

(7,170

)

 

(8,688

)

 

(9,952

)

Increase (decrease) in accounts receivable allowance for credit losses

 

(785

)

 

163

 

 

-

 

 

(459

)

 

(454

)

Change in operating assets and liabilities: Accounts receivable

 

523

 

 

(4,256

)

 

3,538

 

 

(1,501

)

 

(7,249

)

Inventories

 

2,204

 

 

(2,019

)

 

(505

)

 

(4,516

)

 

(14,826

)

Prepaid expenses and other assets

 

3,542

 

 

1,226

 

 

6,404

 

 

5,614

 

 

(837

)

Accounts payable

 

2,031

 

 

(1,411

)

 

(11,695

)

 

1,914

 

 

(2,882

)

Taxes payable and other accrued liabilities

 

(546

)

 

1,898

 

 

455

 

 

(385

)

 

(4,975

)

Net cash provided by operating activities

 

32,919

 

 

17,631

 

 

26,726

 

 

66,455

 

 

49,492

 

  CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment

 

(5,731

)

 

(4,167

)

 

(7,530

)

 

(14,241

)

 

(14,741

)

Purchases of marketable securities

 

(19,751

)

 

(27,918

)

 

(62,205

)

 

(97,581

)

 

(173,015

)

Proceeds from sales and maturities of marketable securities

 

18,414

 

 

31,194

 

 

63,256

 

 

103,806

 

 

161,897

 

Acquisition

 

(9,520

)

 

-

 

 

-

 

 

(9,520

)

 

-

 

Net cash used in investing activities

 

(16,588

)

 

(891

)

 

(6,479

)

 

(17,536

)

 

(25,859

)

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

 

3,009

 

 

-

 

 

3,139

 

 

5,700

 

 

6,237

 

Repurchase of common stock

 

-

 

 

(11,338

)

 

(1,835

)

 

(25,979

)

 

(7,834

)

Payments of dividends to stockholders

 

(11,364

)

 

(11,352

)

 

(10,904

)

 

(34,100

)

 

(32,665

)

Net cash used in financing activities

 

(8,355

)

 

(22,690

)

 

(9,600

)

 

(54,379

)

 

(34,262

)

  NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

7,976

 

 

(5,950

)

 

10,647

 

 

(5,460

)

 

(10,629

)

  CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

50,493

 

 

56,443

 

 

84,096

 

 

63,929

 

 

105,372

 

  CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

58,469

 

$

50,493

 

$

94,743

 

$

58,469

 

$

94,743

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241106320623/en/

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