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

Quarterly revenues were $124.8 million; GAAP earnings were $0.40 per diluted share; non-GAAP earnings were $0.48 per diluted share

$18.7 million used for share repurchases in the fourth quarter with $81.3 million remaining on authorization at quarter-end; quarterly dividend rising by six percent to $0.19 per share

SAN JOSE, Calif. — (BUSINESS WIRE) — February 6, 2023 — Power Integrations (NASDAQ: POWI) today announced financial results for the quarter and year ended December 31, 2022. Net revenues for the fourth quarter were $124.8 million, down 22 percent compared to the prior quarter and down 28 percent from the fourth quarter of 2021. Net income for the fourth quarter was $22.8 million or $0.40 per diluted share compared to $0.80 per diluted share in the prior quarter and $0.66 per diluted share in the fourth quarter of 2021. Cash flow from operations for the fourth quarter was $24.1 million.

For the full year, net revenues were $651.1 million dollars, down seven percent from the prior year. Net income for 2022 was $170.9 million or $2.93 per diluted share, compared to $2.67 per diluted share in the prior year. Cash flow from operations for the full year was $215.3 million.

In addition to its GAAP results, the company provided certain non-GAAP measures that exclude stock-based compensation, 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. Non-GAAP net income for the fourth quarter of 2022 was $27.9 million or $0.48 per diluted share compared to $0.84 per diluted share in the prior quarter and $0.83 per diluted share in the fourth quarter of 2021. Full-year non-GAAP net income was $191.9 million or $3.29 per diluted share compared to $3.26 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, president and CEO of Power Integrations: “Our results and outlook reflect weaker demand across most end-markets, as well as excess inventory in the supply chain. However, distribution inventory decreased in the fourth quarter, with further improvement to come in the months ahead, and we expect revenues to bottom in the first quarter. While the demand environment remains uncertain, we are well positioned for a recovery with a strong pipeline of design activity and a broad range of growth drivers including our highly integrated GaN products, motor-drive, renewable energy, EVs and advanced charging for mobile devices.”

Additional Highlights

Financial Outlook

The company issued the following forecast for the first quarter of 2023:

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/iobnvsok. 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, revenue bottoming in the first quarter and being well positioned for a recovery 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 impact of the COVID-19 pandemic on demand for the company’s products, its 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 (SEC) on February 7, 2022. 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 Ended Twelve Months Ended
December 31, 2022 September 30, 2022 December 31, 2021 December 31, 2022 December 31, 2021
NET REVENUES

$

124,770

 

$

160,233

 

$

172,654

 

$

651,138

 

$

703,277

 

 
COST OF REVENUES

 

57,416

 

 

68,198

 

 

79,478

 

 

284,231

 

 

342,638

 

 
GROSS PROFIT

 

67,354

 

 

92,035

 

 

93,176

 

 

366,907

 

 

360,639

 

 
OPERATING EXPENSES:
Research and development

 

23,504

 

 

23,205

 

 

22,028

 

 

93,894

 

 

84,933

 

Sales and marketing

 

15,493

 

 

14,700

 

 

15,590

 

 

62,333

 

 

60,037

 

General and administrative

 

7,465

 

 

5,759

 

 

11,073

 

 

28,897

 

 

39,840

 

Amortization of acquisition-related intangible assets

 

-

 

 

-

 

 

181

 

 

241

 

 

771

 

Other operating expenses, net

 

-

 

 

-

 

 

-

 

 

1,130

 

 

-

 

Total operating expenses

 

46,462

 

 

43,664

 

 

48,872

 

 

186,495

 

 

185,581

 

 
INCOME FROM OPERATIONS

 

20,892

 

 

48,371

 

 

44,304

 

 

180,412

 

 

175,058

 

 
OTHER INCOME

 

785

 

 

1,001

 

 

101

 

 

3,014

 

 

1,077

 

 
INCOME BEFORE INCOME TAXES

 

21,677

 

 

49,372

 

 

44,405

 

 

183,426

 

 

176,135

 

 
PROVISION (BENEFIT) FOR INCOME TAXES

 

(1,138

)

 

3,408

 

 

3,705

 

 

12,575

 

 

11,722

 

 
NET INCOME

$

22,815

 

$

45,964

 

$

40,700

 

$

170,851

 

$

164,413

 

 
EARNINGS PER SHARE:
Basic

$

0.40

 

$

0.80

 

$

0.68

 

$

2.96

 

$

2.73

 

Diluted

$

0.40

 

$

0.80

 

$

0.66

 

$

2.93

 

$

2.67

 

 
SHARES USED IN PER-SHARE CALCULATION:
Basic

 

57,094

 

 

57,172

 

 

60,259

 

 

57,801

 

 

60,327

 

Diluted

 

57,535

 

 

57,603

 

 

61,381

 

 

58,371

 

 

61,467

 

 
 
 
SUPPLEMENTAL INFORMATION: Three Months Ended Twelve Months Ended
December 31, 2022 September 30, 2022 December 31, 2021 December 31, 2022 December 31, 2021
Stock-based compensation expenses included in:
Cost of revenues

$

405

 

$

172

 

$

424

 

$

1,132

 

$

2,359

 

Research and development

 

2,716

 

 

2,334

 

 

3,522

 

 

10,428

 

 

12,127

 

Sales and marketing

 

1,643

 

 

1,267

 

 

2,090

 

 

6,035

 

 

7,630

 

General and administrative

 

1,890

 

 

(755

)

 

4,248

 

 

4,769

 

 

15,493

 

Total stock-based compensation expense

$

6,654

 

$

3,018

 

$

10,284

 

$

22,364

 

$

37,609

 

 
Cost of revenues includes:
Amortization of acquisition-related intangible assets

$

482

 

$

482

 

$

552

 

$

1,928

 

$

2,477

 

 
 
Three Months Ended Twelve Months Ended
REVENUE MIX BY END MARKET December 31, 2022 September 30, 2022 December 31, 2021 December 31, 2022 December 31, 2021
Communications

 

23

%

 

16

%

 

23

%

 

21

%

 

30

%

Computer

 

12

%

 

11

%

 

10

%

 

10

%

 

10

%

Consumer

 

26

%

 

32

%

 

35

%

 

33

%

 

32

%

Industrial

 

39

%

 

41

%

 

32

%

 

36

%

 

28

%

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, 2022 September 30, 2022 December 31, 2021 December 31, 2022 December 31, 2021
RECONCILIATION OF GROSS PROFIT
GAAP gross profit

$

67,354

 

$

92,035

 

$

93,176

 

$

366,907

 

$

360,639

 

GAAP gross margin

 

54.0

%

 

57.4

%

 

54.0

%

 

56.3

%

 

51.3

%

 
Stock-based compensation included in cost of revenues

 

405

 

 

172

 

 

424

 

 

1,132

 

 

2,359

 

Amortization of acquisition-related intangible assets

 

482

 

 

482

 

 

552

 

 

1,928

 

 

2,477

 

 
Non-GAAP gross profit

$

68,241

 

$

92,689

 

$

94,152

 

$

369,967

 

$

365,475

 

Non-GAAP gross margin

 

54.7

%

 

57.8

%

 

54.5

%

 

56.8

%

 

52.0

%

 
 
Three Months Ended Twelve Months Ended
RECONCILIATION OF OPERATING EXPENSES December 31, 2022 September 30, 2022 December 31, 2021 December 31, 2022 December 31, 2021
GAAP operating expenses

$

46,462

 

$

43,664

 

$

48,872

 

$

186,495

 

$

185,581

 

 
Less: Stock-based compensation expense included in operating expenses
Research and development

 

2,716

 

 

2,334

 

 

3,522

 

 

10,428

 

 

12,127

 

Sales and marketing

 

1,643

 

 

1,267

 

 

2,090

 

 

6,035

 

 

7,630

 

General and administrative

 

1,890

 

 

(755

)

 

4,248

 

 

4,769

 

 

15,493

 

Total

 

6,249

 

 

2,846

 

 

9,860

 

 

21,232

 

 

35,250

 

 
Amortization of acquisition-related intangible assets

 

-

 

 

-

 

 

181

 

 

241

 

 

771

 

Other operating expenses, net

 

-

 

 

-

 

 

-

 

 

1,130

 

 

-

 

 
Non-GAAP operating expenses

$

40,213

 

$

40,818

 

$

38,831

 

$

163,892

 

$

149,560

 

 
 
Three Months Ended Twelve Months Ended
RECONCILIATION OF INCOME FROM OPERATIONS December 31, 2022 September 30, 2022 December 31, 2021 December 31, 2022 December 31, 2021
GAAP income from operations

$

20,892

 

$

48,371

 

$

44,304

 

$

180,412

 

$

175,058

 

GAAP operating margin

 

16.7

%

 

30.2

%

 

25.7

%

 

27.7

%

 

24.9

%

 
Add: Total stock-based compensation

 

6,654

 

 

3,018

 

 

10,284

 

 

22,364

 

 

37,609

 

Amortization of acquisition-related intangible assets

 

482

 

 

482

 

 

733

 

 

2,169

 

 

3,248

 

Other operating expenses, net

 

-

 

 

-

 

 

-

 

 

1,130

 

 

-

 

 
Non-GAAP income from operations

$

28,028

 

$

51,871

 

$

55,321

 

$

206,075

 

$

215,915

 

Non-GAAP operating margin

 

22.5

%

 

32.4

%

 

32.0

%

 

31.6

%

 

30.7

%

 
 
Three Months Ended Twelve Months Ended
RECONCILIATION OF PROVISION (BENEFIT) FOR INCOME TAXES December 31, 2022 September 30, 2022 December 31, 2021 December 31, 2022 December 31, 2021
GAAP provision (benefit) for income taxes

$

(1,138

)

$

3,408

 

$

3,705

 

$

12,575

 

$

11,722

 

GAAP effective tax rate

 

-5.2

%

 

6.9

%

 

8.3

%

 

6.9

%

 

6.7

%

 
Tax effect of adjustments to GAAP results

 

(2,085

)

 

(1,116

)

 

(800

)

 

(4,582

)

 

(5,044

)

 
Non-GAAP provision for income taxes

$

947

 

$

4,524

 

$

4,505

 

$

17,157

 

$

16,766

 

Non-GAAP effective tax rate

 

3.3

%

 

8.6

%

 

8.1

%

 

8.2

%

 

7.7

%

 
 
Three Months Ended Twelve Months Ended
RECONCILIATION OF NET INCOME PER SHARE (DILUTED) December 31, 2022 September 30, 2022 December 31, 2021 December 31, 2022 December 31, 2021
GAAP net income

$

22,815

 

$

45,964

 

$

40,700

 

$

170,851

 

$

164,413

 

 
Adjustments to GAAP net income
Stock-based compensation

 

6,654

 

 

3,018

 

 

10,284

 

 

22,364

 

 

37,609

 

Amortization of acquisition-related intangible assets

 

482

 

 

482

 

 

733

 

 

2,169

 

 

3,248

 

Other operating expenses, net

 

-

 

 

-

 

 

-

 

 

1,130

 

 

-

 

Tax effect of items excluded from non-GAAP results

 

(2,085

)

 

(1,116

)

 

(800

)

 

(4,582

)

 

(5,044

)

 
Non-GAAP net income

$

27,866

 

$

48,348

 

$

50,917

 

$

191,932

 

$

200,226

 

 
Average shares outstanding for calculation
of non-GAAP net income per share (diluted)

 

57,535

 

 

57,603

 

 

61,381

 

 

58,371

 

 

61,467

 

 
Non-GAAP net income per share (diluted)

$

0.48

 

$

0.84

 

$

0.83

 

$

3.29

 

$

3.26

 

 
GAAP net income per share (diluted)

$

0.40

 

$

0.80

 

$

0.66

 

$

2.93

 

$

2.67

 

POWER INTEGRATIONS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
 
 
December 31, 2022 September 30, 2022 December 31, 2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents

$

105,372

 

$

133,474

 

$

158,117

 

Short-term marketable securities

 

248,441

 

 

229,754

 

 

372,235

 

Accounts receivable, net

 

20,836

 

 

16,075

 

 

41,393

 

Inventories

 

135,420

 

 

120,092

 

 

99,266

 

Prepaid expenses and other current assets

 

15,004

 

 

12,634

 

 

15,804

 

Total current assets

 

525,073

 

 

512,029

 

 

686,815

 

 
PROPERTY AND EQUIPMENT, net

 

176,681

 

 

181,224

 

 

179,824

 

INTANGIBLE ASSETS, net

 

6,597

 

 

7,141

 

 

9,012

 

GOODWILL

 

91,849

 

 

91,849

 

 

91,849

 

DEFERRED TAX ASSETS

 

19,034

 

 

23,935

 

 

16,433

 

OTHER ASSETS

 

20,862

 

 

21,785

 

 

30,554

 

Total assets

$

840,096

 

$

837,963

 

$

1,014,487

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable

$

30,088

 

$

29,521

 

$

43,721

 

Accrued payroll and related expenses

 

14,778

 

 

13,765

 

 

15,492

 

Taxes payable

 

938

 

 

2,960

 

 

1,210

 

Other accrued liabilities

 

12,572

 

 

12,613

 

 

11,898

 

Total current liabilities

 

58,376

 

 

58,859

 

 

72,321

 

 
LONG-TERM LIABILITIES:
Income taxes payable

 

15,757

 

 

16,398

 

 

15,280

 

Other liabilities

 

10,747

 

 

12,424

 

 

14,854

 

Total liabilities

 

84,880

 

 

87,681

 

 

102,455

 

 
STOCKHOLDERS' EQUITY:
Common stock

 

24

 

 

24

 

 

28

 

Additional paid-in capital

 

-

 

 

6,123

 

 

162,301

 

Accumulated other comprehensive loss

 

(7,344

)

 

(11,817

)

 

(3,737

)

Retained earnings

 

762,536

 

 

755,952

 

 

753,440

 

Total stockholders' equity

 

755,216

 

 

750,282

 

 

912,032

 

Total liabilities and stockholders' equity

$

840,096

 

$

837,963

 

$

1,014,487

 

POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
Three Months Ended Twelve Months Ended
December 31, 2022 September 30, 2022 December 31, 2021 December 31, 2022 December 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income

$

22,815

 

$

45,964

 

$

40,700

 

$

170,851

 

$

164,413

 

Adjustments to reconcile net income to cash provided by operating activities
Depreciation

 

8,875

 

 

8,881

 

 

8,054

 

 

34,930

 

 

31,454

 

Amortization of intangible assets

 

544

 

 

543

 

 

795

 

 

2,415

 

 

3,494

 

Loss on disposal of property and equipment

 

209

 

 

128

 

 

905

 

 

1,371

 

 

3,105

 

Stock-based compensation expense

 

6,654

 

 

3,018

 

 

10,284

 

 

22,364

 

 

37,609

 

Amortization of premium on marketable securities

 

654

 

 

771

 

 

815

 

 

3,292

 

 

1,590

 

Deferred income taxes

 

4,824

 

 

(4,108

)

 

(13,228

)

 

(2,566

)

 

(13,240

)

Increase in accounts receivable allowance for credit losses

 

-

 

 

431

 

 

1

 

 

690

 

 

18

 

Change in operating assets and liabilities:
Accounts receivable

 

(4,761

)

 

11,474

 

 

(2,522

)

 

19,867

 

 

(5,501

)

Inventories

 

(15,328

)

 

(8,834

)

 

(7,452

)

 

(36,154

)

 

3,612

 

Prepaid expenses and other assets

 

(1,085

)

 

4,353

 

 

9,299

 

 

7,343

 

 

4,326

 

Accounts payable

 

2,038

 

 

(11,451

)

 

(2,566

)

 

(3,836

)

 

4,067

 

Taxes payable and other accrued liabilities

 

(1,341

)

 

(1,344

)

 

2,078

 

 

(5,224

)

 

(4,079

)

Net cash provided by operating activities

 

24,098

 

 

49,826

 

 

47,163

 

 

215,343

 

 

230,868

 

 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment

 

(5,767

)

 

(5,500

)

 

(16,967

)

 

(39,211

)

 

(47,272

)

Proceeds from sale of property and equipment

 

-

 

 

-

 

 

-

 

 

1,202

 

 

35

 

Purchases of marketable securities

 

(28,576

)

 

(6,534

)

 

(172,115

)

 

(55,820

)

 

(554,018

)

Proceeds from sales and maturities of marketable securities

 

11,151

 

 

35,487

 

 

84,421

 

 

172,165

 

 

368,457

 

Net cash provided by (used in) investing activities

 

(23,192

)

 

23,453

 

 

(104,661

)

 

78,336

 

 

(232,798

)

 
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock

 

-

 

 

3,105

 

 

-

 

 

6,162

 

 

7,710

 

Repurchase of common stock

 

(18,745

)

 

-

 

 

(37,773

)

 

(311,094

)

 

(73,938

)

Payments of dividends to stockholders

 

(10,263

)

 

(10,293

)

 

(9,047

)

 

(41,492

)

 

(32,599

)

Net cash used in financing activities

 

(29,008

)

 

(7,188

)

 

(46,820

)

 

(346,424

)

 

(98,827

)

 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

(28,102

)

 

66,091

 

 

(104,318

)

 

(52,745

)

 

(100,757

)

 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

133,474

 

 

67,383

 

 

262,435

 

 

158,117

 

 

258,874

 

 
CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

105,372

 

$

133,474

 

$

158,117

 

$

105,372

 

$

158,117

 

 



Contact:

Joe Shiffler
Power Integrations, Inc.
(408) 414-8528
joe@power.com