Power Integrations Reports Fourth-Quarter and Full-Year

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

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


	Three Months Ended									Twelve Months Ended
	December 31, 2023			September 30, 2023			December 31, 2022			December 31, 2023			December 31, 2022
NET REVENUES	$	89,507		$	125,511		$	124,770		$	444,538		$	651,138

COST OF REVENUES		43,299			59,566			57,416			215,582			284,231

GROSS PROFIT		46,208			65,945			67,354			228,956			366,907

OPERATING EXPENSES:
Research and development		23,505			24,064			23,504			96,067			93,894
Sales and marketing		15,472			16,224			15,493			64,598			62,333
General and administrative		8,282			7,945			7,465			33,232			28,897
Amortization of acquisition-related intangible assets		-			-			-			-			241
Other operating expenses, net		-			-			-			-			1,130
Total operating expenses		47,259			48,233			46,462			193,897			186,495

INCOME (LOSS) FROM OPERATIONS		(1,051	)		17,712			20,892			35,059			180,412

OTHER INCOME		3,282			3,138			785			10,848			3,014

INCOME BEFORE INCOME TAXES		2,231			20,850			21,677			45,907			183,426

PROVISION (BENEFIT) FOR INCOME TAXES		(12,040	)		1,054			(1,138	)		(9,828	)		12,575

NET INCOME	$	14,271		$	19,796		$	22,815		$	55,735		$	170,851

EARNINGS PER SHARE:
Basic	$	0.25		$	0.34		$	0.40		$	0.97		$	2.96
Diluted	$	0.25		$	0.34		$	0.40		$	0.97		$	2.93

SHARES USED IN PER-SHARE CALCULATION:
Basic		56,937			57,383			57,094			57,195			57,801
Diluted		57,272			57,741			57,535			57,622			58,371



SUPPLEMENTAL INFORMATION:	Three Months Ended									Twelve Months Ended
	December 31, 2023			September 30, 2023			December 31, 2022			December 31, 2023			December 31, 2022
Stock-based compensation expenses included in:
Cost of revenues	$	499		$	446		$	405		$	1,692		$	1,132
Research and development		2,947			2,895			2,716			10,939			10,428
Sales and marketing		1,827			1,787			1,643			6,888			6,035
General and administrative		2,230			1,777			1,890			9,009			4,769
Total stock-based compensation expense	$	7,503		$	6,905		$	6,654		$	28,528		$	22,364

Cost of revenues includes:
Amortization of acquisition-related intangible assets	$	482		$	482		$	482		$	1,928		$	1,928


	Three Months Ended									Twelve Months Ended
REVENUE MIX BY END MARKET	December 31, 2023			September 30, 2023			December 31, 2022			December 31, 2023			December 31, 2022
Communications		27	%		32	%		23	%		29	%		21	%
Computer		9	%		10	%		12	%		12	%		10	%
Consumer		29	%		26	%		26	%		27	%		33	%
Industrial		35	%		32	%		39	%		32	%		36	%

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, 2023			September 30, 2023			December 31, 2022			December 31, 2023			December 31, 2022
RECONCILIATION OF GROSS PROFIT
GAAP gross profit	$	46,208		$	65,945		$	67,354		$	228,956		$	366,907
GAAP gross margin		51.6	%		52.5	%		54.0	%		51.5	%		56.3	%

Stock-based compensation included in cost of revenues		499			446			405			1,692			1,132
Amortization of acquisition-related intangible assets		482			482			482			1,928			1,928

Non-GAAP gross profit	$	47,189		$	66,873		$	68,241		$	232,576		$	369,967
Non-GAAP gross margin		52.7	%		53.3	%		54.7	%		52.3	%		56.8	%


	Three Months Ended									Twelve Months Ended
RECONCILIATION OF OPERATING EXPENSES	December 31, 2023			September 30, 2023			December 31, 2022			December 31, 2023			December 31, 2022
GAAP operating expenses	$	47,259		$	48,233		$	46,462		$	193,897		$	186,495

Less: Stock-based compensation expense included in operating expenses
Research and development		2,947			2,895			2,716			10,939			10,428
Sales and marketing		1,827			1,787			1,643			6,888			6,035
General and administrative		2,230			1,777			1,890			9,009			4,769
Total		7,004			6,459			6,249			26,836			21,232

Amortization of acquisition-related intangible assets		-			-			-			-			241
Other operating expenses, net		-			-			-			-			1,130

Non-GAAP operating expenses	$	40,255		$	41,774		$	40,213		$	167,061		$	163,892


	Three Months Ended									Twelve Months Ended
RECONCILIATION OF INCOME FROM OPERATIONS	December 31, 2023			September 30, 2023			December 31, 2022			December 31, 2023			December 31, 2022
GAAP income (loss) from operations	$	(1,051	)	$	17,712		$	20,892		$	35,059		$	180,412
GAAP operating margin		-1.2	%		14.1	%		16.7	%		7.9	%		27.7	%

Add: Total stock-based compensation		7,503			6,905			6,654			28,528			22,364
Amortization of acquisition-related intangible assets		482			482			482			1,928			2,169
Other operating expenses, net		-			-			-			-			1,130

Non-GAAP income from operations	$	6,934		$	25,099		$	28,028		$	65,515		$	206,075
Non-GAAP operating margin		7.7	%		20.0	%		22.5	%		14.7	%		31.6	%


	Three Months Ended									Twelve Months Ended
RECONCILIATION OF PROVISION FOR INCOME TAXES	December 31, 2023			September 30, 2023			December 31, 2022			December 31, 2023			December 31, 2022
GAAP provision (benefit) for income taxes	$	(12,040	)	$	1,054		$	(1,138	)	$	(9,828	)	$	12,575
GAAP effective tax rate		-539.7	%		5.1	%		-5.2	%		-21.4	%		6.9	%

Tax effect of adjustments to GAAP results		(9,556	)		(580	)		(2,085	)		(11,653	)		(4,582	)

Non-GAAP provision (benefit) for income taxes	$	(2,484	)	$	1,634		$	947		$	1,825		$	17,157
Non-GAAP effective tax rate		-24.3	%		5.8	%		3.3	%		2.4	%		8.2	%


	Three Months Ended									Twelve Months Ended
RECONCILIATION OF NET INCOME PER SHARE (DILUTED)	December 31, 2023			September 30, 2023			December 31, 2022			December 31, 2023			December 31, 2022
GAAP net income	$	14,271		$	19,796		$	22,815		$	55,735		$	170,851

Adjustments to GAAP net income
Stock-based compensation		7,503			6,905			6,654			28,528			22,364
Amortization of acquisition-related intangible assets		482			482			482			1,928			2,169
Other operating expenses, net		-			-			-			-			1,130
Tax effect of items excluded from non-GAAP results		(9,556	)		(580	)		(2,085	)		(11,653	)		(4,582	)

Non-GAAP net income	$	12,700		$	26,603		$	27,866		$	74,538		$	191,932

Average shares outstanding for calculation of non-GAAP net income per share (diluted)		57,272			57,741			57,535			57,622			58,371

Non-GAAP net income per share (diluted)	$	0.22		$	0.46		$	0.48		$	1.29		$	3.29

GAAP net income per share (diluted)	$	0.25		$	0.34		$	0.40		$	0.97		$	2.93

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


	December 31, 2023			September 30, 2023			December 31, 2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	63,929		$	94,743		$	105,372
Short-term marketable securities		247,640			261,896			248,441
Accounts receivable, net		14,674			28,539			20,836
Inventories		163,164			150,246			135,420
Prepaid expenses and other current assets		22,193			20,692			15,004
Total current assets		511,600			556,116			525,073

PROPERTY AND EQUIPMENT, net		164,213			166,391			176,681
INTANGIBLE ASSETS, net		4,424			4,967			6,597
GOODWILL		91,849			91,849			91,849
DEFERRED TAX ASSETS		28,325			28,943			19,034
OTHER ASSETS		19,457			17,224			20,862
Total assets	$	819,868		$	865,490		$	840,096

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	26,390		$	28,553		$	30,088
Accrued payroll and related expenses		13,551			13,778			14,778
Taxes payable		1,016			774			938
Other accrued liabilities		7,910			10,316			12,572
Total current liabilities		48,867			53,421			58,376

LONG-TERM LIABILITIES:
Income taxes payable		6,244			16,724			15,757
Other liabilities		12,516			10,288			10,747
Total liabilities		67,627			80,433			84,880

STOCKHOLDERS' EQUITY:
Common stock		23			23			24
Additional paid-in capital		-			19,429			-
Accumulated other comprehensive loss		(1,462	)		(5,730	)		(7,344	)
Retained earnings		753,680			771,335			762,536
Total stockholders' equity		752,241			785,057			755,216
Total liabilities and stockholders' equity	$	819,868		$	865,490		$	840,096

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

	Three Months Ended									Twelve Months Ended
	December 31, 2023			September 30, 2023			December 31, 2022			December 31, 2023			December 31, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	14,271		$	19,796		$	22,815		$	55,735		$	170,851
Adjustments to reconcile net income to cash provided by operating activities
Depreciation		8,887			8,663			8,875			35,203			34,930
Amortization of intangible assets		543			544			544			2,173			2,415
Loss on disposal of property and equipment		14			64			209			100			1,371
Stock-based compensation expense		7,503			6,905			6,654			28,528			22,364
Amortization of premium (accretion of discount) on marketable securities		(497	)		(273	)		654			(351	)		3,292
Deferred income taxes		705			(7,170	)		4,824			(9,247	)		(2,566	)
Increase (decrease) in accounts receivable allowance for credit losses		-			-			-			(454	)		690
Change in operating assets and liabilities:
Accounts receivable		13,865			3,538			(4,761	)		6,616			19,867
Inventories		(12,918	)		(505	)		(15,328	)		(27,744	)		(36,154	)
Prepaid expenses and other assets		(346	)		6,404			(1,085	)		(1,183	)		7,343
Accounts payable		(2,553	)		(11,695	)		2,038			(5,435	)		(3,836	)
Taxes payable and other accrued liabilities		(13,207	)		455			(1,341	)		(18,182	)		(5,224	)
Net cash provided by operating activities		16,267			26,726			24,098			65,759			215,343

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(6,143	)		(7,530	)		(5,767	)		(20,884	)		(39,211	)
Proceeds from sale of property and equipment		-			-			-			-			1,202
Purchases of marketable securities		(18,196	)		(62,205	)		(28,576	)		(191,211	)		(55,820	)
Proceeds from sales and maturities of marketable securities		36,045			63,256			11,151			197,942			172,165
Net cash provided by (used in) investing activities		11,706			(6,479	)		(23,192	)		(14,153	)		78,336

CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock		-			3,139			-			6,237			6,162
Repurchase of common stock		(47,444	)		(1,835	)		(18,745	)		(55,278	)		(311,094	)
Payments of dividends to stockholders		(11,343	)		(10,904	)		(10,263	)		(44,008	)		(41,492	)
Net cash used in financing activities		(58,787	)		(9,600	)		(29,008	)		(93,049	)		(346,424	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(30,814	)		10,647			(28,102	)		(41,443	)		(52,745	)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		94,743			84,096			133,474			105,372			158,117

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	63,929		$	94,743		$	105,372		$	63,929		$	105,372

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