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Power Integrations Reports Third-Quarter Financial Results

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

 

 

Contacts

Joe Shiffler

Power Integrations, Inc.

(408) 414-8528

joe@power.com

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