Power Integrations Reports Second-Quarter Financial Results

Power Integrations (NASDAQ: POWI) today announced financial results for the quarter ended June 30, 2023. Net revenues for the second quarter were $123.2 million, up 16 percent compared to the prior quarter and down 33 percent from the second quarter of 2022. Net income for the second quarter was $14.8 million or $0.26 per diluted share compared to $0.12 per diluted share in the prior quarter and $0.96 per diluted share in the second quarter of 2022. Cash flow from operations for the second quarter was $6.2 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, and the tax effects of these items. Non-GAAP net income for the second quarter of 2023 was $21.0 million or $0.36 per diluted share compared to $0.25 per diluted share in the prior quarter and $1.03 per diluted share in the second quarter of 2022. A reconciliation of GAAP to non-GAAP financial results is included with the tables accompanying this press release.

Commented Balu Balakrishnan, chairman and CEO of Power Integrations: “Our second-quarter results mark the start of a recovery from the cyclical trough. Consumer revenues grew 35 percent sequentially driven by appliances, while communication and computer revenues also rose significantly. Industrial, the last category to enter the cyclical downturn, fell slightly. Looking ahead, while the pace of the recovery reflects a soft demand environment, especially in China, we expect meaningful growth in the second half of 2023 compared to the first half driven by design wins and improving channel inventory. We also expect higher gross margins in the second half driven by the dollar/yen exchange rate, rising production volumes and a more favorable end-market mix.”

Power Integrations paid a dividend of $0.19 per share on June 30, 2023, and will pay a dividend of $0.19 per share on September 29, 2023, to stockholders of record as of August 31, 2023. During the second quarter the company repurchased approximately 57,000 shares of its common stock for $4.3 million. The company had $75.3 million remaining on its repurchase authorization as of June 30, 2023.

Financial Outlook

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

• Revenues are expected to be $130 million plus or minus $5 million.
• GAAP gross margin is expected to be approximately 53.5 percent, and non-GAAP gross margin is expected to be approximately 54 percent. The difference between GAAP and non-GAAP gross margins is approximately equally attributable to stock-based compensation and amortization of acquisition-related intangible assets.
• GAAP operating expenses are expected to be approximately $51 million; non-GAAP operating expenses are expected to be approximately $43.5 million. Non-GAAP expenses are expected to exclude about $7.5 million of stock-based compensation.

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/fEIobxNC. 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 third-quarter and second-half financial performance 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 company’s 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, 2023. 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.