Power Integrations Reports Fourth-Quarter and Full-Year

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

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POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per-share amounts)


		Three Months Ended			Twelve Months Ended
		December 31, 2021	September 30, 2021	December 31, 2020	December 31, 2021	December 31, 2020
NET REVENUES		$ 172,654	$ 176,776	$ 150,693	$ 703,277	$ 488,318

COST OF REVENUES		79,478	85,037	76,688	342,638	244,728

GROSS PROFIT		93,176	91,739	74,005	360,639	243,590

OPERATING EXPENSES:
Research and development		22,028	21,137	21,921	84,933	81,711
Sales and marketing		15,590	15,443	14,113	60,037	53,578
General and administrative		11,073	9,386	10,028	39,840	36,895
Amortization of acquisition-related intangible assets		181	181	216	771	919
	Total operating expenses	48,872	46,147	46,278	185,581	173,103

INCOME FROM OPERATIONS		44,304	45,592	27,727	175,058	70,487

OTHER INCOME		101	206	630	1,077	4,764

INCOME BEFORE INCOME TAXES		44,405	45,798	28,357	176,135	75,251

PROVISION FOR INCOME TAXES		3,705	3,764	1,079	11,722	4,075

NET INCOME		$ 40,700	$ 42,034	$ 27,278	$ 164,413	$ 71,176

EARNINGS PER SHARE:
	Basic	$ 0.68	$ 0.70	$ 0.46	$ 2.73	$ 1.19
	Diluted	$ 0.66	$ 0.69	$ 0.45	$ 2.67	$ 1.17

SHARES USED IN PER-SHARE CALCULATION:
	Basic	60,259	60,319	59,879	60,327	59,657
	Diluted	61,381	61,363	61,176	61,467	60,845



SUPPLEMENTAL INFORMATION:		Three Months Ended			Twelve Months Ended
		December 31, 2021	September 30, 2021	December 31, 2020	December 31, 2021	December 31, 2020
Stock-based compensation expenses included in:
	Cost of revenues	$ 424	$ 664	$ 713	$ 2,359	$ 1,963
	Research and development	3,522	3,055	2,942	12,127	10,378
	Sales and marketing	2,090	2,201	1,740	7,630	6,290
	General and administrative	4,248	3,725	3,468	15,493	12,281
	Total stock-based compensation expense	$ 10,284	$ 9,645	$ 8,863	$ 37,609	$ 30,912

Cost of revenues includes:
	Amortization of acquisition-related intangible assets	$ 552	$ 552	$ 799	$ 2,477	$ 3,196


		Three Months Ended			Twelve Months Ended
REVENUE MIX BY END MARKET		December 31, 2021	September 30, 2021	December 31, 2020	December 31, 2021	December 31, 2020
	Communications	23%	25%	34%	30%	30%
	Computer	10%	11%	9%	10%	7%
	Consumer	35%	34%	31%	32%	33%
	Industrial	32%	30%	26%	28%	30%


POWER INTEGRATIONS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP RESULTS
(in thousands, except per-share amounts)

			Three Months Ended						Twelve Months Ended
			December 31, 2021		September 30, 2021		December 31, 2020		December 31, 2021		December 31, 2020
RECONCILIATION OF GROSS PROFIT
GAAP gross profit			$ 93,176		$ 91,739		$ 74,005		$ 360,639		$ 243,590
	GAAP gross margin		54.0	%	51.9	%	49.1	%	51.3	%	49.9	%

Stock-based compensation included in cost of revenues			424		664		713		2,359		1,963
Amortization of acquisition-related intangible assets			552		552		799		2,477		3,196

Non-GAAP gross profit			$ 94,152		$ 92,955		$ 75,517		$ 365,475		$ 248,749
	Non-GAAP gross margin		54.5	%	52.6	%	50.1	%	52.0	%	50.9	%


			Three Months Ended						Twelve Months Ended
RECONCILIATION OF OPERATING EXPENSES			December 31, 2021		September 30, 2021		December 31, 2020		December 31, 2021		December 31, 2020
GAAP operating expenses			$ 48,872		$ 46,147		$ 46,278		$ 185,581		$ 173,103

Less:	Stock-based compensation expense included in operating expenses
		Research and development	3,522		3,055		2,942		12,127		10,378
		Sales and marketing	2,090		2,201		1,740		7,630		6,290
		General and administrative	4,248		3,725		3,468		15,493		12,281
		Total	9,860		8,981		8,150		35,250		28,949

	Amortization of acquisition-related intangible assets		181		181		216		771		919

Non-GAAP operating expenses			$ 38,831		$ 36,985		$ 37,912		$ 149,560		$ 143,235


			Three Months Ended						Twelve Months Ended
RECONCILIATION OF INCOME FROM OPERATIONS			December 31, 2021		September 30, 2021		December 31, 2020		December 31, 2021		December 31, 2020
GAAP income from operations			$ 44,304		$ 45,592		$ 27,727		$ 175,058		$ 70,487
	GAAP operating margin		25.7	%	25.8	%	18.4	%	24.9	%	14.4	%

Add:	Total stock-based compensation		10,284		9,645		8,863		37,609		30,912
	Amortization of acquisition-related intangible assets		733		733		1,015		3,248		4,115

Non-GAAP income from operations			$ 55,321		$ 55,970		$ 37,605		$ 215,915		$ 105,514
	Non-GAAP operating margin		32.0	%	31.7	%	25.0	%	30.7	%	21.6	%


			Three Months Ended						Twelve Months Ended
RECONCILIATION OF PROVISION FOR INCOME TAXES			December 31, 2021		September 30, 2021		December 31, 2020		December 31, 2021		December 31, 2020
GAAP provision for income taxes			$ 3,705		$ 3,764		$ 1,079		$ 11,722		$ 4,075
	GAAP effective tax rate		8.3	%	8.2	%	3.8	%	6.7	%	5.4	%

Tax effect of adjustments to GAAP results			(800	)	(565	)	(725	)	(5,044	)	(2,719	)

Non-GAAP provision for income taxes			$ 4,505		$ 4,329		$ 1,804		$ 16,766		$ 6,794
	Non-GAAP effective tax rate		8.1	%	7.7	%	4.7	%	7.7	%	6.2	%


			Three Months Ended						Twelve Months Ended
RECONCILIATION OF NET INCOME PER SHARE (DILUTED)			December 31, 2021		September 30, 2021		December 31, 2020		December 31, 2021		December 31, 2020
GAAP net income			$ 40,700		$ 42,034		$ 27,278		$ 164,413		$ 71,176

Adjustments to GAAP net income
	Stock-based compensation		10,284		9,645		8,863		37,609		30,912
	Amortization of acquisition-related intangible assets		733		733		1,015		3,248		4,115
	Tax effect of items excluded from non-GAAP results		(800	)	(565	)	(725	)	(5,044	)	(2,719	)

Non-GAAP net income			$ 50,917		$ 51,847		$ 36,431		$ 200,226		$ 103,484

Average shares outstanding for calculation
	of non-GAAP net income per share (diluted)		61,381		61,363		61,176		61,467		60,845

Non-GAAP net income per share (diluted)			$ 0.83		$ 0.84		$ 0.60		$ 3.26		$ 1.70

GAAP net income per share (diluted)			$ 0.66		$ 0.69		$ 0.45		$ 2.67		$ 1.17

POWER INTEGRATIONS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)


		December 31, 2021		September 30, 2021		December 31, 2020
ASSETS
	CURRENT ASSETS:
	Cash and cash equivalents	$ 158,117		$ 262,435		$ 258,874
	Short-term marketable securities	372,235		286,506		190,318
	Accounts receivable, net	41,393		38,872		35,910
	Inventories	99,266		91,814		102,878
	Prepaid expenses and other current assets	15,804		23,720		13,252
	Total current assets	686,815		703,347		601,232

	PROPERTY AND EQUIPMENT, net	179,824		168,498		166,188
	INTANGIBLE ASSETS, net	9,012		9,807		12,506
	GOODWILL	91,849		91,849		91,849
	DEFERRED TAX ASSETS	16,433		3,266		3,339
	OTHER ASSETS	30,554		28,223		28,225
	Total assets	$ 1,014,487		$ 1,004,990		$ 903,339

LIABILITIES AND STOCKHOLDERS’ EQUITY
	CURRENT LIABILITIES:
	Accounts payable	$ 43,721		$ 40,390		$ 34,712
	Accrued payroll and related expenses	15,492		14,064		14,806
	Taxes payable	1,210		970		902
	Other accrued liabilities	11,898		10,638		12,106
	Total current liabilities	72,321		66,062		62,526

	LONG-TERM LIABILITIES:
	Income taxes payable	15,280		14,644		15,588
	Other liabilities	14,854		15,928		14,814
	Total liabilities	102,455		96,634		92,928

STOCKHOLDERS' EQUITY:
	Common stock	28		28		28
	Additional paid-in capital	162,301		189,790		190,920
	Accumulated other comprehensive loss	(3,737	)	(3,249	)	(2,163	)
	Retained earnings	753,440		721,787		621,626
	Total stockholders' equity	912,032		908,356		810,411
	Total liabilities and stockholders' equity	$ 1,014,487		$ 1,004,990		$ 903,339

POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

		Three Months Ended						Twelve Months Ended
		December 31, 2021		September 30, 2021		December 31, 2020		December 31, 2021		December 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income	$ 40,700		$ 42,034		$ 27,278		$ 164,413		$ 71,176
	Adjustments to reconcile net income to cash provided by operating activities
	Depreciation	8,054		8,126		6,672		31,454		23,743
	Amortization of intangible assets	795		794		1,076		3,494		4,359
	Loss on disposal of property and equipment	905		2,162		214		3,105		525
	Stock-based compensation expense	10,284		9,645		8,863		37,609		30,912
	Amortization of premium on marketable securities	815		475		180		1,590		705
	Deferred income taxes	(13,228	)	(1,194	)	(692	)	(13,240	)	(592	)
	Increase (decrease) in accounts receivable allowance for credit losses	1		(74	)	(491	)	18		(336	)
	Change in operating assets and liabilities:
	Accounts receivable	(2,522	)	2,554		(5,972	)	(5,501	)	(11,300	)
	Inventories	(7,452	)	(2,171	)	1,927		3,612		(12,498	)
	Prepaid expenses and other assets	9,299		(472	)	3,020		4,326		9,153
	Accounts payable	(2,566	)	(1,420	)	(668	)	4,067		5,697
	Taxes payable and other accrued liabilities	2,078		(1,724	)	4,959		(4,079	)	4,095
	Net cash provided by operating activities	47,163		58,735		46,366		230,868		125,639

CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchases of property and equipment	(16,967	)	(11,011	)	(34,860	)	(47,272	)	(70,598	)
	Proceeds from sale of property and equipment	-		-		320		35		651
	Purchases of marketable securities	(172,115	)	(193,150	)	(43,637	)	(554,018	)	(109,703	)
	Proceeds from sales and maturities of marketable securities	84,421		123,953		64,390		368,457		151,385
	Net cash used in investing activities	(104,661	)	(80,208	)	(13,787	)	(232,798	)	(28,265	)

CASH FLOWS FROM FINANCING ACTIVITIES:
	Net proceeds from issuance of common stock	-		4,058		865		7,710		10,527
	Repurchase of common stock	(37,773	)	(9,791	)	-		(73,938	)	(2,636	)
	Payments of dividends to stockholders	(9,047	)	(7,840	)	(6,584	)	(32,599	)	(25,081	)
	Net cash used in financing activities	(46,820	)	(13,573	)	(5,719	)	(98,827	)	(17,190	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(104,318	)	(35,046	)	26,860		(100,757	)	80,184

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		262,435		297,481		232,014		258,874		178,690

CASH AND CASH EQUIVALENTS AT END OF PERIOD		$ 158,117		$ 262,435		$ 258,874		$ 158,117		$ 258,874

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