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Monolithic Power Systems Announces Results for the First Quarter Ended March 31, 2020

KIRKLAND, Wash., April 28, 2020 (GLOBE NEWSWIRE) -- Monolithic Power Systems, Inc. (MPS) (Nasdaq: MPWR), a leading company in high performance analog solutions, today announced financial results for the quarter ended March 31, 2020. 

The following is a summary of revenue by end market for the periods indicated (in thousands):

  Three Months Ended March 31, 
End Market 2020  2019 
Computing and storage $51,957  $39,188 
Automotive  23,312   20,517 
Industrial  25,237   21,340 
Communications  27,870   22,182 
Consumer  37,402   38,136 
Total $165,778  $141,363 

The following is a summary of revenue by product family for the periods indicated (in thousands):

  Three Months Ended March 31, 
Product Family 2020  2019 
DC to DC $156,875  $132,711 
Lighting Control  8,903   8,652 
Total $165,778  $141,363 

“We are not immune to the macro-economic reality, but our long-term growth prospects remain intact," said Michael Hsing, CEO and founder of MPS. “We will continue to execute our plan and are prepared to manage the volatility of future customer demand.”

Business Outlook

The following are MPS’ financial targets for the second quarter ending June 30, 2020:

(1) Non-GAAP net income, non-GAAP earnings per share, non-GAAP gross margin, non-GAAP R&D and SG&A expenses, non-GAAP operating expenses, non-GAAP other income (expense), net, non-GAAP operating income and non-GAAP income before taxes differ from net income, earnings per share, gross margin, R&D and SG&A expenses, operating expenses, other income (expense), net, operating income and income before taxes determined in accordance with Generally Accepted Accounting Principles in the United States (GAAP). Non-GAAP net income and non-GAAP earnings per share exclude the effect of stock-based compensation expense, amortization of acquisition-related intangible assets, deferred compensation plan income/expense and related tax effects. Non-GAAP gross margin excludes the effect of stock-based compensation expense, amortization of acquisition-related intangible assets and deferred compensation plan income/expense. Non-GAAP operating expenses exclude the effect of stock-based compensation expense and deferred compensation plan income/expense. Non-GAAP other income (expense), net excludes the effect of deferred compensation plan income/expense. Non-GAAP operating income excludes the effect of stock-based compensation expense, amortization of acquisition-related intangible assets and deferred compensation plan income/expense. Non-GAAP income before taxes excludes the effect of stock-based compensation expense, amortization of acquisition-related intangible assets and deferred compensation plan income/expense. Projected non-GAAP gross margin excludes the effect of stock-based compensation expense. Projected non-GAAP R&D and SG&A expenses exclude the effect of stock-based compensation expense. These non-GAAP financial measures are not prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. A schedule reconciling non-GAAP financial measures is included at the end of this press release. MPS utilizes both GAAP and non-GAAP financial measures to assess what it believes to be its core operating performance and to evaluate and manage its internal business and assist in making financial operating decisions. MPS believes that the inclusion of non-GAAP financial measures, together with GAAP measures, provides investors with an alternative presentation useful to investors' understanding of MPS' core operating results and trends. Additionally, MPS believes that the inclusion of non-GAAP measures, together with GAAP measures, provides investors with an additional dimension of comparability to similar companies. However, investors should be aware that non-GAAP financial measures utilized by other companies are not likely to be comparable in most cases to the non-GAAP financial measures used by MPS.  

Conference Call
MPS plans to conduct an investor teleconference covering its financial results at 2:00 p.m. PT / 5:00 p.m. ET, April 28, 2020. To access the conference call and the following replay of the conference call, go to  http://ir.monolithicpower.com and click on the webcast link. From this site, you can listen to the teleconference, assuming that your computer system is configured properly. In addition to the webcast replay, which will be archived for all investors for one year on the MPS website, a phone replay will be available for seven days after the live call at (404) 537-3406, code number 5197519. This press release and any other information related to the call will also be posted on the website.

Safe Harbor Statement
This press release contains, and statements that will be made during the accompanying teleconference will contain, forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including, among other things, (i) projected revenues, GAAP and non-GAAP gross margin, GAAP and non-GAAP R&D and SG&A expenses, stock-based compensation expenses, litigation expenses, interest income, and diluted shares outstanding, (ii) our outlook for the long-term prospects of the company, including our performance against our business plan, revenue growth in certain of our market segments, our continued investment into R&D, expected revenue growth, customers' acceptance of our new product offerings, the prospects of our new product development, and our expectations regarding market and industry segment trends and prospects, (iii) our ability to penetrate new markets and expand our market share, (iv) the seasonality of our business, (v) our ability to reduce our expenses, and (vi) statements of the assumptions underlying or relating to any statement described in (i), (ii), (iii), (iv), or (v). These forward-looking statements are not historical facts or guarantees of future performance or events, are based on current expectations, estimates, beliefs, assumptions, goals, and objectives, and involve significant known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from the results expressed by these statements. Readers of this press release and listeners to the accompanying conference call are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. Factors that could cause actual results to differ include, but are not limited to, our ability to attract new customers and retain existing customers; acceptance of, or demand for, MPS' products, in particular the new products launched recently, being different than expected; our ability to efficiently and effectively develop new products and receive a return on our R&D expense investment; our ability to increase market share in our targeted markets; competition generally and the increasingly competitive nature of our industry; any market disruptions or interruptions in MPS' schedule of new product development releases; adverse changes in production and testing efficiency of our products; our ability to realize the anticipated benefits of companies and products that we acquire, and our ability to effectively and efficiently integrate these acquired companies and products into our operations; our ability to manage our inventory levels; the effect of export controls, trade and economic sanctions regulations and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign markets, particularly in China; our ability to obtain governmental licenses and approvals for international trading activities or technology transfers, including export licenses; adverse changes in laws and government regulations such as tariffs on imports of foreign goods, export regulations and export classifications, including in foreign countries where MPS has offices or operations; adverse events arising from orders of governmental entities, including such orders that impact our customers, and adopting of new or amended accounting standards; the effect of epidemics and pandemics, such as the COVID-19 outbreak first identified in December 2019, on the global economy and on our business; adequate supply of our products from our third-party manufacturing partners; the risks, uncertainties and costs of litigation in which we are involved; the outcome of any upcoming trials, hearings, motions and appeals; the adverse impact on MPS' financial performance if its tax and litigation provisions are inadequate; adverse changes or developments in the semiconductor industry generally, which is cyclical in nature, and our ability to adjust our operations to address such changes or developments; difficulty in predicting or budgeting for future customer demand and channel inventories, expenses and financial contingencies; the ongoing consolidation of companies in the semiconductor industry; and other important risk factors identified in MPS’s Securities and Exchange Commission (SEC) filings, including, but not limited to, our annual report on Form 10-K filed with the SEC on February 28, 2020. The forward-looking statements in this press release and statements made during the accompanying teleconference represent MPS’s projections and current expectations, as of the date hereof, not predictions of actual performance. MPS assumes no obligation to update the information in this press release or in the accompanying conference call.

About Monolithic Power Systems
Monolithic Power Systems, Inc. (MPS) provides small, highly energy efficient, easy-to-use power solutions for systems found in industrial applications, telecom infrastructures, cloud computing, automotive, and consumer applications. MPS' mission is to reduce total energy consumption in its customers' systems with green, practical, compact solutions. The company was founded by Michael Hsing in 1997 and is based in the United States. MPS can be contacted through its website at www.monolithicpower.com or its support offices around the world.

Monolithic Power Systems, MPS, and the MPS logo are registered trademarks of Monolithic Power Systems, Inc. in the U.S. and trademarked in certain other countries.

Contact:
Bernie Blegen
Chief Financial Officer
Monolithic Power Systems, Inc.
408-826-0777
investors@monolithicpower.com

Monolithic Power Systems, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands, except par value) 

  March 31,  December 31, 
  2020  2019 
ASSETS        
Current assets:        
Cash and cash equivalents $154,880  $172,960 
Short-term investments  334,386   282,437 
Accounts receivable, net  54,341   52,704 
Inventories  131,499   127,500 
Other current assets  29,679   19,605 
Total current assets  704,785   655,206 
Property and equipment, net  236,807   228,315 
Long-term investments  3,057   3,138 
Goodwill  6,571   6,571 
Deferred tax assets, net  13,821   17,193 
Other long-term assets  42,463   45,952 
Total assets $1,007,504  $956,375 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Current liabilities:        
Accounts payable $37,752  $27,271 
Accrued compensation and related benefits  18,633   26,164 
Other accrued liabilities  56,110   44,790 
Total current liabilities  112,495   98,225 
Income tax liabilities  37,596   37,596 
Other long-term liabilities  44,223   47,063 
Total liabilities  194,314   182,884 
Commitments and contingencies        
Stockholders’ equity:        
Common stock and additional paid-in capital: $0.001 par value; shares authorized: 150,000; shares issued and outstanding: 44,715 and 43,616, respectively  581,736   549,517 
Retained earnings  241,465   229,450 
Accumulated other comprehensive loss  (10,011)  (5,476)
Total stockholders’ equity  813,190   773,491 
Total liabilities and stockholders’ equity $1,007,504  $956,375 
 

Monolithic Power Systems, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share amounts)

  Three Months Ended March 31, 
  2020  2019 
Revenue $165,778  $141,363 
Cost of revenue  74,331   63,357 
Gross profit  91,447   78,006 
Operating expenses:        
Research and development  25,956   25,458 
Selling, general and administrative  32,164   30,553 
Litigation expense  2,341   278 
Total operating expenses  60,461   56,289 
Income from operations  30,986   21,717 
Other income (expense), net  (1,714)  3,341 
Income before income taxes  29,272   25,058 
Income tax benefit  (6,484)  (1,123)
Net income $35,756  $26,181 
         
Net income per share:        
Basic $0.80  $0.61 
Diluted $0.77  $0.58 
Weighted-average shares outstanding:        
Basic  44,455   42,749 
Diluted  46,670   45,232 
         


  
SUPPLEMENTAL FINANCIAL INFORMATION  
STOCK-BASED COMPENSATION EXPENSE 
(Unaudited, in thousands) 
  Three Months Ended March 31, 
  2020  2019 
Cost of revenue $557  $531 
Research and development  4,370   4,429 
Selling, general and administrative  13,635   11,050 
Total stock-based compensation expense $18,562  $16,010 
 


  
RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME 
(Unaudited, in thousands, except per share amounts) 
  Three Months Ended March 31, 
  2020  2019 
Net income $35,756  $26,181 
Net income as a percentage of revenue  21.6%  18.5%
         
Adjustments to reconcile net income to non-GAAP net income:        
Stock-based compensation expense  18,562   16,010 
Amortization of acquisition-related intangible assets  -   51 
Deferred compensation plan (income) expense  94   (136)
Tax effect  (10,079)  (4,197)
Non-GAAP net income $44,333  $37,909 
Non-GAAP net income as a percentage of revenue  26.7%  26.8%
         
Non-GAAP net income per share:        
Basic $1.00  $0.89 
Diluted $0.95  $0.84 
         
Shares used in the calculation of non-GAAP net income per share:        
Basic  44,455   42,749 
Diluted  46,670   45,232 
         


  
RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN 
(Unaudited, in thousands) 
  Three Months Ended March 31, 
  2020  2019 
Gross profit $91,447  $78,006 
Gross margin  55.2%  55.2%
         
Adjustments to reconcile gross profit to non-GAAP gross profit:        
Stock-based compensation expense  557   531 
Deferred compensation plan income  (54)  - 
Amortization of acquisition-related intangible assets  -   51 
Non-GAAP gross profit $91,950  $78,588 
Non-GAAP gross margin  55.5%  55.6%
         


  
RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES 
(Unaudited, in thousands) 
  Three Months Ended March 31, 
  2020  2019 
Total operating expenses $60,461  $56,289 
         
Adjustments to reconcile total operating expenses to non-GAAP total operating expenses:     
Stock-based compensation expense  (18,005)  (15,479)
Deferred compensation plan (expense) income  3,602   (1,799)
Non-GAAP operating expenses $46,058  $39,011 
         


  
RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME 
(Unaudited, in thousands) 
  Three Months Ended March 31, 
  2020  2019 
Total operating income $30,986  $21,717 
         
Adjustments to reconcile total operating income to non-GAAP total operating income:     
Stock-based compensation expense  18,562   16,010 
Amortization of acquisition-related intangible assets  -   51 
Deferred compensation plan (income) expense  (3,656)  1,799 
Non-GAAP operating income $45,892  $39,577 
         


  
RECONCILIATION OF OTHER INCOME (EXPENSE), NET, TO NON-GAAP OTHER INCOME, NET 
(Unaudited, in thousands) 
  Three Months Ended March 31, 
  2020  2019 
Total other income (expense), net $(1,714) $3,341 
         
Adjustments to reconcile other income (expense), net to non-GAAP other income, net:     
Deferred compensation plan (income) expense  3,750   (1,935)
Non-GAAP other income, net $2,036  $1,406 
         


  
RECONCILIATION OF INCOME BEFORE INCOME TAXES TO NON-GAAP INCOME BEFORE INCOME TAXES 
(Unaudited, in thousands) 
  Three Months Ended March 31, 
  2020  2019 
Total income before income taxes $29,272  $25,058 
         
Adjustments to reconcile income before income taxes to non-GAAP income before income taxes:     
Stock-based compensation expense  18,562   16,010 
Amortization of acquisition-related intangible assets  -   51 
Deferred compensation plan (income) expense  94   (136)
Non-GAAP income before income taxes $47,928  $40,983 
         


  
2020 SECOND QUARTER OUTLOOK 
RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN 
(Unaudited) 
  Three Months Ending  
  June 30, 2020 
  Low  High 
Gross margin  55.0%  55.6%
Adjustments to reconcile gross margin to non-GAAP gross margin:        
Stock-based compensation expense  0.3%  0.3%
Non-GAAP gross margin  55.3%  55.9%
         


  
RECONCILIATION OF R&D AND SG&A EXPENSES TO NON-GAAP R&D AND SG&A EXPENSES 
(Unaudited, in thousands) 
  Three Months Ending  
  June 30, 2020 
  Low  High 
R&D and SG&A expense $60,900  $64,900 
Adjustments to reconcile R&D and SG&A expense to non-GAAP R&D and SG&A expense:        
Stock-based compensation expense  (17,500)  (19,500)
Non-GAAP R&D and SG&A expense $43,400  $45,400 

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