February 23, 2024

Power Integrations Reports Fourth-Quarter and Full-Year Financial Results

Quarterly revenues were $89.5 million; GAAP earnings were $0.25 per diluted share; non-GAAP earnings were $0.22 per diluted share

Company repurchased 680 thousand shares during the quarter for $47 million

Contacts

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, down 29 percent compared to the prior quarter and down 28 percent from the fourth quarter of 2022. GAAP net income for the fourth quarter was $14.3 million or $0.25 per diluted share compared to $0.34 per diluted share in the prior quarter and $0.40 per diluted share in the fourth quarter of 2022.

For the full year, net revenues were $444.5 million, compared to $651.1 million in the prior year. Full-year GAAP net income was $55.7 million or $0.97 per diluted share compared to $2.93 per diluted share in the prior year. Full-year cash flow from operations was $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 or $0.22 per diluted share compared to $0.46 per diluted share in the prior quarter and $0.48 per diluted share in the fourth quarter of 2022. For the full year, non-GAAP net income was $74.5 million or $1.29 per diluted share compared to $3.29 per diluted share in the prior year. 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: “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. The company had $26.0 million remaining on its repurchase authorization as of December 31, 2023. Power Integrations paid a dividend of $0.20 per share on December 29, 2023, and will pay a dividend of $0.20 per share on March 29, 2024, to stockholders of record as of February 29, 2024.

Financial Outlook

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

  • Revenues are expected to be $90 million plus or minus $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; non-GAAP operating expenses are expected to be approximately $42.5 million. Non-GAAP operating expenses are expected to exclude about $6.5 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://registrations.events/direct/Q4I24588. 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 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 EndedTwelve Months Ended

December 31,

2023

September 30,

2023

December 31,

2022

December 31,

2023

December 31,

2022

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 EndedTwelve Months Ended

December 31,

2023

September 30,

2023

December 31,

2022

December 31,

2023

December 31,

2022

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 EndedTwelve Months Ended
REVENUE MIX BY END MARKET

December 31,

2023

September 30,

2023

December 31,

2022

December 31,

2023

December 31,

2022

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 EndedTwelve Months Ended
December 31,

2023
September 30,

2023
December 31,

2022
December 31,

2023
December 31,

2022
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 EndedTwelve Months Ended
RECONCILIATION OF OPERATING EXPENSESDecember 31,

2023
September 30,

2023
December 31,

2022
December 31,

2023
December 31,

2022
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 EndedTwelve Months Ended
RECONCILIATION OF INCOME FROM OPERATIONSDecember 31,

2023
September 30,

2023
December 31,

2022
December 31,

2023
December 31,

2022
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 EndedTwelve Months Ended
RECONCILIATION OF PROVISION FOR INCOME TAXESDecember 31,

2023
September 30,

2023
December 31,

2022
December 31,

2023
December 31,

2022
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 EndedTwelve Months Ended
RECONCILIATION OF NET INCOME PER SHARE (DILUTED)December 31,

2023
September 30,

2023
December 31,

2022
December 31,

2023
December 31,

2022
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, 2023September 30, 2023December 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 EndedTwelve Months Ended
December 31,

2023
September 30,

2023
December 31,

2022
December 31,

2023
December 31,

2022
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

 

 

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