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Monolithic Power Systems Announces Results for the Fourth Quarter and Year Ended December 31, 2020, and an Increase in Quarterly Cash Dividend

KIRKLAND, Wash., Feb. 04, 2021 (GLOBE NEWSWIRE) -- Monolithic Power Systems, Inc. (MPS) (Nasdaq: MPWR), a leading company in high performance analog solutions, today announced financial results for the quarter and year ended December 31, 2020. The Company also announced that its Board of Directors has approved an increase in the quarterly cash dividend from $0.50 per share to $0.60 per share. The first quarter dividend of $0.60 per share will be paid on April 15, 2021 to all stockholders of record as of the close of business on March 31, 2021. 

The financial results for the quarter ended December 31, 2020 are as follows:

The financial results for the year ended December 31, 2020 are as follows:

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

  Three Months Ended December 31, Year Ended December 31,
End Market 2020 2019 2020 2019
Computing and storage $61,831 $55,644 $253,177 $189,215
Automotive  39,363  24,129  108,966  90,303
Industrial  37,117  26,741  119,603  99,381
Communications  29,656  21,866  142,326  84,794
Consumer  65,076  38,358  220,380  164,228
Total $233,043 $166,738 $844,452 $627,921

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

  Three Months Ended December 31, Year Ended December 31,
Product Family 2020 2019 2020 2019
DC to DC $219,930 $157,525 $800,478 $589,651
Lighting Control  13,113  9,213  43,974  38,270
Total $233,043 $166,738 $844,452 $627,921

“Our performance in 2020 validated our strategy to grow through diversification and sustainability. We will continue to execute this strategy and invest in our future,” said Michael Hsing, CEO and founder of MPS.

Business Outlook

The following are MPS’ financial targets for the first quarter ending March 31, 2021:

(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, 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, 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, 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.  

Earnings Webinar
MPS plans to host a Zoom webinar covering its financial results at 2:00 p.m. PT / 5:00 p.m. ET, February 4, 2021. You can access the webinar, free of charge, at: https://mpsic.zoom.us/s/98817942109. The webinar will be archived and available for replay for one year under the Investor Relations page on the MPS 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’s 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; our ability to meet customer demand for our products due to constraints on our third-party suppliers’ ability to manufacture sufficient quantities of our products or otherwise; competition generally and the increasingly competitive nature of our industry; any market disruptions or interruptions in MPS’s schedule of new product development releases; adverse changes in production and testing efficiency of our products; our ability to manage our inventory levels; our ability to effectively manage our growth and attract and retain qualified personnel; 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 adoption 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’s 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 (including as a result of the COVID-19 pandemic); 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; 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 and our quarterly report on Form 10-Q filed with the SEC on November 6, 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) 

  December 31, 
  2020 2019 
ASSETS       
Current assets:       
Cash and cash equivalents $334,944 $172,960 
Short-term investments  260,169  282,437 
Accounts receivable, net  66,843  52,704 
Inventories  157,062  127,500 
Other current assets  22,980  19,605 
Total current assets  841,998  655,206 
Property and equipment, net  281,528  228,315 
Goodwill  6,571  6,571 
Deferred tax assets, net  18,556  17,193 
Other long-term assets  59,838  49,090 
Total assets $1,208,491 $956,375 
        
LIABILITIES AND STOCKHOLDERS’ EQUITY       
Current liabilities:       
Accounts payable $38,169 $27,271 
Accrued compensation and related benefits  45,840  26,164 
Other accrued liabilities  62,960  44,790 
Total current liabilities  146,969  98,225 
Income tax liabilities  37,062  37,596 
Other long-term liabilities  57,873  47,063 
Total liabilities  241,904  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: 45,267 and 43,616, respectively  657,701  549,517 
Retained earnings  298,746  229,450 
Accumulated other comprehensive income (loss)  10,140  (5,476)
Total stockholders’ equity  966,587  773,491 
Total liabilities and stockholders’ equity $1,208,491 $956,375 


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

  Three Months Ended December 31, Year Ended December 31,
  2020 2019 2020 2019
Revenue $233,043 $166,738 $844,452 $627,921
Cost of revenue  104,169  74,802  378,498  281,596
Gross profit  128,874  91,936  465,954  346,325
Operating expenses:            
Research and development  42,252  27,011  137,598  107,757
Selling, general and administrative  45,120  33,240  161,670  133,542
Litigation expense  1,539  991  7,804  2,464
Total operating expenses  88,911  61,242  307,072  243,763
Income from operations  39,963  30,694  158,882  102,562
Other income, net  4,480  2,731  10,460  10,558
Income before income taxes  44,443  33,425  169,342  113,120
Income tax expense  1,556  989  4,967  4,281
Net income $42,887 $32,436 $164,375 $108,839
             
Net income per share:            
Basic $0.95 $0.75 $3.67 $2.52
Diluted $0.90 $0.70 $3.50 $2.38
Weighted-average shares outstanding:            
Basic  45,148  43,496  44,840  43,165
Diluted  47,600  46,503  47,014  45,763


SUPPLEMENTAL FINANCIAL INFORMATION
STOCK-BASED COMPENSATION EXPENSE
(Unaudited, in thousands)

  Three Months Ended December 31, Year Ended December 31,
  2020 2019 2020 2019
Cost of revenue $686 $574 $2,592 $2,409
Research and development  5,367  4,784  20,033  19,584
Selling, general and administrative  16,917  13,322  62,926  56,706
Total stock-based compensation expense $22,970 $18,680 $85,551 $78,699



RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME
(Unaudited, in thousands, except per share amounts)

  Three Months Ended December 31,  Year Ended December 31, 
  2020  2019  2020  2019 
Net income $42,887  $32,436  $164,375  $108,839 
                 
Adjustments to reconcile net income to non-GAAP net income:                
Stock-based compensation expense  22,970   18,680   85,551   78,699 
Amortization of acquisition-related intangible assets  -   -   -   110 
Deferred compensation plan expense  156   235   1,057   189 
Tax effect  (3,512)  (2,937)  (14,229)  (10,128)
Non-GAAP net income $62,501  $48,414  $236,754  $177,709 
                 
Non-GAAP net income per share:                
Basic $1.38  $1.11  $5.28  $4.12 
Diluted $1.31  $1.04  $5.04  $3.88 
                 
Shares used in the calculation of non-GAAP net income per share:                
Basic  45,148   43,496   44,840   43,165 
Diluted  47,600   46,503   47,014   45,763 


RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN
(Unaudited, in thousands)

  Three Months Ended December 31,  Year Ended December 31, 
  2020  2019  2020  2019 
Gross profit $128,874  $91,936  $465,954  $346,325 
Gross margin  55.3%  55.1%  55.2%  55.2%
                 
Adjustments to reconcile gross profit to non-GAAP gross profit:                
Stock-based compensation expense  686   574   2,592   2,409 
Deferred compensation plan expense  281   29   931   54 
Amortization of acquisition-related intangible assets  -   -   -   110 
Non-GAAP gross profit $129,841  $92,539  $469,477  $348,898 
Non-GAAP gross margin  55.7%  55.5%  55.6%  55.6%


RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
(Unaudited, in thousands)

  Three Months Ended December 31,  Year Ended December 31, 
  2020  2019  2020  2019 
Total operating expenses $88,911  $61,242  $307,072  $243,763 
                 
Adjustments to reconcile total operating expenses to non-GAAP total operating expenses:                
Stock-based compensation expense  (22,284)  (18,106)  (82,959)  (76,290)
Deferred compensation plan expense  (3,047)  (1,383)  (4,719)  (3,941)
Non-GAAP operating expenses $63,580  $41,753  $219,394  $163,532 


RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME
(Unaudited, in thousands)

  Three Months Ended December 31,  Year Ended December 31, 
  2020  2019  2020  2019 
Total operating income $39,963  $30,694  $158,882  $102,562 
                 
Adjustments to reconcile total operating income to non-GAAP total operating income:                
Stock-based compensation expense  22,970   18,680   85,551   78,699 
Amortization of acquisition-related intangible assets  -   -   -   110 
Deferred compensation plan expense  3,328   1,412   5,650   3,995 
Non-GAAP operating income $66,261  $50,786  $250,083  $185,366 


RECONCILIATION OF OTHER INCOME, NET, TO NON-GAAP OTHER INCOME, NET
(Unaudited, in thousands)

  Three Months Ended December 31,  Year Ended December 31, 
  2020  2019  2020  2019 
Total other income, net $4,480  $2,731  $10,460  $10,558 
                 
Adjustments to reconcile other income, net to non-GAAP other income, net:                
Deferred compensation plan income  (3,172)  (1,176)  (4,593)  (3,806)
Non-GAAP other income, net $1,308  $1,555  $5,867  $6,752 


RECONCILIATION OF INCOME BEFORE INCOME TAXES TO NON-GAAP INCOME BEFORE INCOME TAXES
(Unaudited, in thousands)

  Three Months Ended December 31,  Year Ended December 31, 
  2020  2019  2020  2019 
Total income before income taxes $44,443  $33,425  $169,342  $113,120 
                 
Adjustments to reconcile income before income taxes to non-GAAP income before income taxes:                
Stock-based compensation expense  22,970   18,680   85,551   78,699 
Amortization of acquisition-related intangible assets  -   -   -   110 
Deferred compensation plan expense  156   235   1,057   189 
Non-GAAP income before income taxes $67,569  $52,340  $255,950  $192,118 


2021 FIRST QUARTER OUTLOOK
RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN
(Unaudited)

  Three Months Ending  
  March 31, 2021 
  Low  High 
Gross margin  55.1%  55.7%
Adjustments to reconcile gross margin to non-GAAP gross margin:        
Stock-based compensation expense  0.3%  0.3%
Non-GAAP gross margin  55.4%  56.0%


RECONCILIATION OF R&D AND SG&A EXPENSES TO NON-GAAP R&D AND SG&A EXPENSES
(Unaudited, in thousands)

  Three Months Ending  
  March 31, 2021 
  Low  High 
R&D and SG&A expense $89,000  $93,000 
Adjustments to reconcile R&D and SG&A expense to non-GAAP R&D and SG&A expense:        
Stock-based compensation expense  (26,200)  (28,200)
Non-GAAP R&D and SG&A expense $62,800  $64,800 

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