Power Integrations Reports Third-Quarter Financial Results

Revenues grew nine percent year-over-year to $111.3 million; cash flow from operations was $24.6 million

GAAP earnings were $0.54/diluted share; non-GAAP earnings were $0.78/diluted share

SAN JOSE, Calif. — (BUSINESS WIRE) — October 26, 2017 — Power Integrations (Nasdaq: POWI) today announced financial results for the quarter ended September 30, 2017. Results are calculated using the “sell-in” method of revenue recognition on sales to distributors, reflecting the company’s adoption of ASC 606 effective January 1, 2017. Prior-year results have been recast as if ASC 606 had been in effect for those periods.

Net revenues for the third quarter were $111.3 million, an increase of three percent from the prior quarter and nine percent from the third quarter of 2016. Net income was $16.5 million or $0.54 per diluted share, compared to $0.46 per diluted share in the prior quarter and $0.43 per diluted share in the third quarter of 2016. Cash flow from operations was $24.6 million for the quarter.

In addition to its GAAP results, the company provided certain non-GAAP financial measures that exclude stock-based compensation expenses, amortization of intangible assets and the tax effects of these items. Non-GAAP net income for the third quarter was $23.7 million or $0.78 per diluted share, compared with $0.69 per diluted share in the prior quarter and $0.67 per diluted share in the third quarter of 2016.

Commented Balu Balakrishnan, president and CEO of Power Integrations: “Revenues are up 13 percent for the first nine months of 2017, putting us on course for another year of double-digit revenue growth. We have a broad set of attractive opportunities ahead of us in the high-voltage power conversion market, including global trends such as energy efficiency as well as fast-growing vertical markets like rapid charging, smart homes and clean energy. We have a strong portfolio of products with which to address these opportunities, including our new InnoSwitch™3 family of ICs, which significantly advances the state of the art in power-supply design with its unprecedented levels of integration and energy efficiency.”

Additional Highlights

  • Power Integrations repurchased approximately 96,000 shares of its common stock during the third quarter for $6.7 million; the company has $46.8 million remaining under its current repurchase authorization.
  • Power Integrations paid a dividend of $0.14 per share on September 29, 2017. A dividend of $0.14 per share is scheduled to be paid on December 29, 2017, to stockholders of record as of November 30, 2017.
  • Power Integrations was issued 17 U.S. patents during the third quarter of 2017.

Financial Outlook

The company issued the following forecast for the fourth quarter of 2017:

  • Revenues are expected to be $110 million plus or minus $3 million.
  • GAAP gross margin is expected to be approximately 49.8 percent; non-GAAP gross margin is expected to be approximately 51 percent. (The difference between the expected GAAP and non-GAAP gross margins is composed of approximately 0.9 percentage points from amortization of acquisition-related intangible assets and 0.3 percentage points from stock-based compensation.)
  • GAAP operating expenses are expected to be between $40 million and $40.5 million; non-GAAP operating expenses are expected to be between $33 million and $33.5 million. (Non-GAAP expenses are expected to exclude approximately $6.5 million of stock-based compensation expenses and $0.5 million of amortization of acquisition-related intangible assets.)

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 1-647-689-4187. 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 (including in-place lease intangible assets) 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. These 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.

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