First-Quarter Revenues Grew 77 Percent Year-Over-Year to $71.5 Million
Wins First High-Volume Designs With New High-Power Hiper™, CAPZero™ IC Families
SAN JOSE, Calif., April 28, 2010 (GLOBE NEWSWIRE) -- Power Integrations (Nasdaq:POWI), the leader in high-voltage integrated circuits for energy-efficient power conversion, today announced financial results for the quarter ended March 31, 2010.
Net revenues for the quarter were $71.5 million, an increase of 8 percent compared with the prior quarter and 77 percent compared with the first quarter of 2009. Net income was a record $12.3 million, or $0.42 per diluted share, compared with net income of $9.2 million, or $0.32 per diluted share in the prior quarter and net income of $0.4 million, or $0.01 per share, in the first quarter of 2009. Gross margin for the first quarter was 50.2 percent; operating margin was 20.8 percent.
In addition to its GAAP results, the company provided certain non-GAAP measures that exclude stock-based compensation expenses and the related tax effects. Non-GAAP net income for the first quarter was $14.3 million or $0.49 per diluted share, compared with $12.2 million or $0.42 per diluted share in the prior quarter and $3.9 million or $0.14 per diluted share in the first quarter of 2009. Non-GAAP gross margin for the quarter was 50.5 percent; non-GAAP operating margin was 23.6 percent.
Commented Balu Balakrishnan, president and CEO of Power Integrations: "We achieved record revenues for the third straight quarter, surpassing $70 million in quarterly revenues for the first time ever, and we expanded our non-GAAP operating margin for the fifth straight quarter. Bookings increased dramatically during the quarter and have remained strong in April. While the strength in orders and resulting expansion of our backlog is partly attributable to extended lead times, we believe our revenue growth is being driven mainly by end-market demand as well as greater penetration of our products into the power-supply market."
Balakrishnan continued: "The demand for more energy-efficient power supplies continues to be a key driver in our business. Designers looking to meet standards such as the European Union's new requirements for standby power consumption are increasingly turning to our EcoSmart® technology to replace inefficient discrete and passive power supplies. Many manufacturers are tightening their specs beyond the requirements, both of their own volition and in response to incentive programs such as ENERGY STAR® and 80 PLUS®, as OEMs clearly see an advantage in offering greener products.
"During the first quarter we won multiple 80 PLUS high-efficiency designs for a top-tier PC OEM with two new, yet-to-be-announced members of our Hiper family of high-power ICs – our first high-volume design wins in the high-power segment of the AC-DC market. We have also won our first designs with the brand-new CAPZero family of X-capacitor discharge chips, which complement our EcoSmart technology by further reducing standby power consumption in high-power applications. We expect to begin production shipments of both of these new product families in the second quarter."
Additional Highlights
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Cash flow from operations was $16.8 million for the quarter. The company had $210.2 million in cash and investments as of March 31, 2010, an increase of $14.3 million during the quarter.
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Power Integrations repurchased approximately 171,000 shares during the quarter for a total of $6.0 million. Approximately $8 million remains under the $25 million repurchase authorization announced in May 2009.
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The company paid a quarterly dividend of $0.05 per share on March 31. The next quarterly dividend of $0.05 per share will be paid on June 30, 2010 to stockholders of record as of May 28, 2010.
- Power Integrations received 7 U.S. patents and 22 foreign patents during the quarter, and had a total of 297 U.S. patents and 193 foreign patents as of March 31, 2010.
Second-Quarter Outlook
The company expects its second quarter revenues to be in a range of $74 million to $78 million. GAAP gross margin is expected to be between 50 percent and 51 percent, including an impact of approximately half a percentage point from stock-based compensation. Operating expenses are expected to be between $22.5 million and $23.5 million, including approximately $3 million of stock-based compensation expenses.
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 join the call by dialing 1-877-303-9795 from within the United States or 1-631-291-4581 from outside the U.S. The call will be available via a live and archived webcast on the investor section of the company's website, http://investors.powerint.com/">http://investors.powerint.com.
About Power Integrations
Power Integrations is the leading supplier of high-voltage analog integrated circuits used in energy-efficient power conversion. The company's innovative technology enables compact, energy-efficient power supplies in a wide range of electronic products, in AC-DC, DC-DC and LED lighting applications. Since its introduction in 1998, Power Integrations' EcoSmart®energy-efficiency technology has saved an estimated $4 billion of standby energy waste and prevented millions of tons of CO2 emissions. The company's Green Room web site (www.powerint.com/greenroom) provides a wealth of information about "energy vampires" and the issue of standby energy waste, along with a comprehensive guide to energy-efficiency standards around the world. Reflecting the environmental benefits of EcoSmart technology, Power Integrations is included in clean-technology stock indices sponsored by the Cleantech Group (Amex:CTIUS) and Clean Edge (Nasdaq:CELS). For more information, please visit www.powerint.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 Accounting Standard Codification 718-20 ("ASC 718-20"), and the related tax effects. The company uses these non-GAAP measures in its own financial and operational decision-making processes and, with respect to one measure, in setting performance targets for employee-compensation purposes. Further, the company believes that these non-GAAP measures offer an important analytical tool to help investors understand the company's core operating results and trends, and to facilitate comparability with the company's historical results and with the operating results of other companies that provide similar non-GAAP measures. These non-GAAP measures have certain 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 financial measures differently, limiting their usefulness as comparative measures.
Note Regarding Forward-Looking Statements
The statements in this press release relating to the company's expectation of the timing of production shipments of its new product families and its projected second-quarter 2010 financial performance are forward-looking statements, reflecting management's current forecast. These forward-looking statements are based on current information that is, by its nature, subject to rapid and even abrupt changes. Due to risks and uncertainties associated with the company's business, actual results could differ materially from those projected or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to: changes in global macroeconomic conditions that may impact the level of demand for the company's products; the ability of the company to obtain sufficient quantities of wafers in a timely manner from its suppliers; 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 company's ability to maintain and establish strategic relationships; the effects of competition; customer reaction to the effects of design wins may not be as the company expects; the risks inherent in the development and delivery of complex technologies; the outcome and cost of patent litigation; the company's ability to attract, retain and motivate qualified personnel; the emergence of new markets for the company's products and services; the company's ability to compete in those markets based on timeliness, cost and market demand; unforeseen costs and expenses; and fluctuations in currency 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 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 26, 2010. The company is under no obligation (and expressly disclaims any obligation) to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.
| POWER INTEGRATIONS, INC. | |||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||
| (in thousands, except per-share amounts) | |||
| Three Months Ended | |||
| March 31, 2010 | December 31, 2009 | March 31, 2009 | |
| NET REVENUES | $ 71,507 | $ 66,138 | $ 40,289 |
| COST OF REVENUES | 35,585 | 32,322 | 19,357 |
| GROSS PROFIT | 35,922 | 33,816 | 20,932 |
| OPERATING EXPENSES: | |||
| Research and development | 8,111 | 8,214 | 7,724 |
| Sales and marketing | 6,920 | 7,127 | 6,222 |
| General and administrative | 6,013 | 7,227 | 5,681 |
| Total operating expenses | 21,044 | 22,568 | 19,627 |
| INCOME FROM OPERATIONS | 14,878 | 11,248 | 1,305 |
| OTHER INCOME, net | 494 | 157 | 824 |
|
INCOME BEFORE PROVISION FOR INCOME TAXES |
15,372 | 11,405 | 2,129 |
| PROVISION FOR INCOME TAXES | 3,058 | 2,221 | 1,725 |
| NET INCOME | $ 12,314 | $ 9,184 | $ 404 |
| EARNINGS PER SHARE: | |||
| Basic | $ 0.45 | $ 0.34 | $ 0.01 |
| Diluted | $ 0.42 | $ 0.32 | $ 0.01 |
| SHARES USED IN PER-SHARE CALCULATION: | |||
| Basic | 27,470 | 27,106 | 27,048 |
| Diluted | 29,358 | 29,116 | 28,057 |
| SUPPLEMENTAL INFORMATION: | |||
| Stock-based compensation expenses included in: | |||
| Cost of revenues | $ 157 | $ 176 | $ 162 |
| Research and development | 727 | 1,115 | 1,836 |
| Sales and marketing | 410 | 820 | 994 |
| General and administrative | 733 | 1,174 | 993 |
| Total stock-based compensation expense | $ 2,027 | $ 3,285 | $ 3,985 |
| Operating expenses include the following: | |||
| Patent-litigation expenses | $ 1,087 | $ 2,334 | $ 831 |
| REVENUE MIX BY PRODUCT FAMILY | |||
| TOPSwitch | 24% | 22% | 23% |
| TinySwitch | 39% | 41% | 46% |
| LinkSwitch | 36% | 36% | 29% |
| Other | 1% | 1% | 2% |
| REVENUE MIX BY END MARKET | |||
| Communications | 32% | 36% | 33% |
| Computer | 12% | 14% | 15% |
| Consumer | 36% | 33% | 34% |
| Industrial | 20% | 17% | 18% |
| POWER INTEGRATIONS, INC. | |||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP RESULTS | |||
| (in thousands, except per-share amounts) | |||
| Three Months Ended | |||
| March 31, 2010 | Dec. 31, 2009 | March 31, 2009 | |
| RECONCILIATION OF GROSS PROFIT | |||
| GAAP gross profit | $ 35,922 | $ 33,816 | $ 20,932 |
| GAAP gross profit margin | 50.2% | 51.1% | 52.0% |
|
Stock-based compensation expense included in cost of revenues |
157 | 176 | 162 |
| Non-GAAP gross profit | $ 36,079 | $ 33,992 | $ 21,094 |
| Non-GAAP gross profit margin | 50.5% | 51.4% | 52.4% |
| RECONCILIATION OF OPERATING EXPENSES | |||
| GAAP operating expenses | $ 21,044 | $ 22,568 | $ 19,627 |
| Less: | |||
|
Stock-based compensation expense included in operating expenses: |
|||
| Research and development | 727 | 1,115 | 1,836 |
| Sales and marketing | 410 | 820 | 994 |
| General and administrative | 733 | 1,174 | 993 |
| Total | 1,870 | 3,109 | 3,823 |
| Non-GAAP operating expenses | $ 19,174 | $ 19,459 | $ 15,804 |
| RECONCILIATION OF INCOME FROM OPERATIONS | |||
| GAAP income from operations | $ 14,878 | $ 11,248 | $ 1,305 |
| GAAP operating margin | 20.8% | 17.0% | 3.2% |
| Stock-based compensation included in cost of revenues | 157 | 176 | 162 |
| Stock-based compensation included in operating expenses | 1,870 | 3,109 | 3,823 |
| Non-GAAP income from operations | $ 16,905 | $ 14,533 | $ 5,290 |
| Non-GAAP operating margin | 23.6% | 22.0% | 13.1% |
| RECONCILIATION OF PROVISION FOR INCOME TAXES | |||
| GAAP provision for income taxes | $ 3,058 | $ 2,221 | $ 1,725 |
| GAAP effective tax rate | 19.9% | 19.5% | 81.0% |
| Tax effect of items excluded from non-GAAP results | (6) | (290) | (450) |
| Non-GAAP provision for income taxes | $ 3,064 | $ 2,511 | $ 2,175 |
| Non-GAAP effective tax rate | 17.6% | 17.1% | 35.6% |
| RECONCILIATION OF NET INCOME PER SHARE (DILUTED) | |||
| GAAP net income | $ 12,314 | $ 9,184 | $ 404 |
| Adjustments to GAAP net income | |||
| Total stock-based compensation | 2,027 | 3,285 | 3,985 |
| Tax effect of items excluded from non-GAAP results | (6) | (290) | (450) |
| Non-GAAP net income | $ 14,335 | $ 12,179 | $ 3,939 |
|
Average shares outstanding for calculation of non-GAAP income per share (diluted) |
29,358 | 29,116 | 28,057 |
| Non-GAAP income per share (diluted) | $ 0.49 | $ 0.42 | $ 0.14 |
| Note on use of non-GAAP financial measures: | |||
| In addition to the company's consolidated financial statements, which are prepared according to GAAP, the company provides certain non-GAAP financial information that excludes stock-based compensation expenses recognized under Accounting Standard Codification ("ASC") 718-20, and the related tax effects. The company uses these non-GAAP measures in its own financial and operational decision-making processes and, with respect to one measure, in setting performance targets for employee-compensation purposes. Further, the company believes that these non-GAAP measures offer an important analytical tool to help investors understand the company's core operating results and trends, and to facilitate comparability with the company's historical results and with the operating results of other companies that provide similar non-GAAP measures. These non-GAAP measures have certain limitations as analytical tools and are not meant to be considered in isolation or as a substitute for GAAP financial information. | |||
| POWER INTEGRATIONS, INC. | ||
| CONSOLIDATED BALANCE SHEETS | ||
| (in thousands) | ||
| March 31, 2010 | December 31, 2009 | |
| ASSETS | ||
| CURRENT ASSETS: | ||
| Cash and cash equivalents | $ 125,295 | $ 134,974 |
| Restricted cash | 250 | 250 |
| Short-term investments | 22,129 | 20,567 |
| Accounts receivable | 27,586 | 21,756 |
| Inventories | 31,426 | 26,248 |
| Note receivable | -- | -- |
| Deferred tax assets | 1,486 | 1,389 |
| Prepaid expenses and other current assets | 13,130 | 10,691 |
| Total current assets | 221,302 | 215,875 |
| INVESTMENTS | 62,562 | 40,100 |
| PROPERTY AND EQUIPMENT, net | 65,877 | 62,381 |
| INTANGIBLE ASSETS, net | 2,927 | 3,099 |
| GOODWILL | 1,824 | 1,824 |
| DEFERRED TAX ASSETS | 12,996 | 14,590 |
| OTHER ASSETS | 6,683 | 6,698 |
| Total assets | $ 374,171 | $ 344,567 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| CURRENT LIABILITIES: | ||
| Accounts payable | $ 26,158 | $ 16,944 |
| Accrued payroll and related expenses | 5,227 | 6,145 |
| Income taxes payable | 453 | 478 |
| Deferred income on sales to distributors | 11,917 | 9,040 |
| Other accrued liabilities | 2,543 | 3,309 |
| Total current liabilities | 46,298 | 35,916 |
| LONG-TERM LIABILITIES | ||
| Income taxes payable | 25,023 | 23,859 |
| Total liabilities | 71,321 | 59,775 |
| STOCKHOLDERS' EQUITY: | ||
| Common stock | 28 | 27 |
| Additional paid-in capital | 157,193 | 150,021 |
| Cumulative translation adjustment | (46) | 4 |
| Retained earnings | 145,675 | 134,740 |
| Total stockholders' equity | 302,850 | 284,792 |
| Total liabilities stockholders' equity | $ 374,171 | $ 344,567 |
| POWER INTEGRATIONS, INC. | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| (in thousands) | ||
| Three Months Ended | ||
| March 31, 2010 | March 31, 2009 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Net income | $ 12,314 | $ 404 |
| Adjustments to reconcile net income to net cash provided by operating activities | ||
| Depreciation and amortization | 2,933 | 2,496 |
| Loss on sale of property, plant and equipment | 13 | -- |
| Stock-based compensation expense | 2,027 | 3,986 |
| Amortization of discount (premium) on held-to-maturity investments | 350 | (53) |
| Deferred income taxes | 1,498 | 1,232 |
| Provision for (reduction in provision for) accounts receivable and other allowances | -- | (99) |
| Excess tax benefit from stock options exercised | (1,176) | (5) |
| Tax benefit associated with employee stock plans | 2,535 | 73 |
| Change in operating assets and liabilities: | ||
| Accounts receivable | (5,830) | (5,031) |
| Inventories | (5,185) | (250) |
| Prepaid expenses and other assets | (672) | (729) |
| Accounts payable | 6,295 | (894) |
| Taxes payable and other accrued liabilities | (1,200) | (1,055) |
| Deferred income on sales to distributors | 2,877 | 1,774 |
| Net cash provided by operating activities | 16,779 | 1,849 |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Purchases of property and equipment | (3,360) | (1,767) |
| Advance for acquisition of business | (1,750) | -- |
| Purchases of held-to-maturity investments | (27,224) | (2,755) |
| Proceeds from held-to-maturity investments | 2,850 | 3,000 |
| Net cash used in investing activities | (29,484) | (1,522) |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Net proceeds from issuance of common stock | 10,035 | 4,117 |
| Repurchase of common stock | (6,038) | (17,635) |
| Retirement of performance shares for income tax withholding | (769) | -- |
| Repurchase of stock options | -- | (9,048) |
| Payments of dividends to stockholders | (1,378) | (672) |
| Excess tax benefit from stock options exercised | 1,176 | 5 |
| Net cash provided by (used in) financing activities | 3,026 | (23,233) |
| NET DECREASE IN CASH AND CASH EQUIVALENTS | (9,679) | (22,906) |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 134,974 | 167,472 |
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ 125,295 | $ 144,566 |
|
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: |
||
| Unpaid property and equipment, net | $ 2,918 | $ 168 |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
| Cash paid for interest | $ -- | $ 3 |
| Cash paid for income taxes, net of refunds | $ 16 | $ 173 |