Power Integrations Reports Third-Quarter Financial Results

Revenues rose one percent sequentially to $90.1 million; non-GAAP earnings were $0.65 per diluted share; GAAP earnings were $0.52 per diluted share

Cash flow from operations was $30.6 million; company increases share-repurchase authorization by $25 million

SAN JOSE, Calif. — (BUSINESS WIRE) — October 30, 2014 — Power Integrations (Nasdaq: POWI) today announced financial results for the quarter ended September 30, 2014. Net revenues for the quarter were $90.1 million, up one percent from the prior quarter and down two percent compared with the third quarter of 2013. GAAP gross margin for the third quarter was 54.4 percent; operating margin was 18.7 percent. Net income for the quarter was $16.1 million or $0.52 per diluted share, compared with $0.54 per diluted share in the prior quarter and $0.54 per diluted share in the third quarter of 2013.

In addition to its GAAP results, the company provided certain non-GAAP financial measures for the third quarter that exclude stock-based compensation expenses, acquisition-related amortization expenses and the accompanying tax effects. Non-GAAP gross margin for the quarter was 55.3 percent; non-GAAP operating margin was 23.0 percent. Non-GAAP net income for the quarter was $19.8 million or $0.65 per diluted share, compared with $0.61 per diluted share in the prior quarter and $0.71 per diluted share in the third quarter of 2013.

Commented Balu Balakrishnan, president and CEO of Power Integrations: “Revenues and earnings increased sequentially, but like many of our industry peers we saw a slowdown in orders over the course of the quarter, resulting in less-than-seasonal sales growth. Revenues from the communications end-market increased by more than 20 percent sequentially, but demand was less than expected across the other end-market categories.

“While our near-term outlook reflects a tepid demand environment, our profitability and cash flow remain healthy, and our strong balance sheet enables us to further expand our share-repurchase program at an opportune moment. We continue to invest for long-term growth, and we remain optimistic about our expanding addressable market, our pipeline of innovative products, and the growing demand for energy-efficiency and renewable energy.”

Additional Highlights

  • Cash flow from operations in the third quarter was $30.6 million; cash and investments totaled $213.9 million at quarter-end, up $1.5 million from the end of the prior quarter.
  • Power Integrations repurchased approximately 359,000 shares of its common stock during the quarter for $19.5 million. As of September 30, 2014, the company had approximately $34.3 million remaining on its repurchase authorization; in October the company’s board of directors increased the amount authorized by an additional $25 million.
  • The company paid a dividend of $0.12 per share on September 30, 2014. A dividend of $0.12 per share will be paid on December 31, 2014, to stockholders of record as of November 28, 2014.
  • The company received 23 U.S. patents during the quarter and had 668 U.S. patents at quarter-end.

Financial Outlook

The company issued the following forecast for the fourth quarter of 2014:

  • Fourth-quarter revenues are expected to be $86 million plus or minus $3 million.
  • Non-GAAP gross margin is expected to be approximately 54 percent. (Excludes approximately $0.2 million of stock-based compensation and $0.6 million of amortization of acquisition-related intangibles.) GAAP gross margin is expected to be approximately 53 percent.
  • Non-GAAP operating expenses are expected to be between $29.5 million and $30 million. (Excludes approximately $3.6 million of stock-based compensation and $0.6 million of amortization of acquisition-related intangibles.) GAAP operating expenses are expected to be between $33.7 million and $34.2 million.

Conference Call Today at 1:45 p.m. Pacific Time

Power Integrations management will hold a conference call today at 1:45 p.m. Pacific time. Members of the investment community can join the call by dialing 1-647-788-4901. The call will be available via a live and archived webcast on the investor section of the company's website, http://investors.powerint.com.

About Power Integrations

Power Integrations, Inc. is a Silicon Valley-based supplier of high-performance electronic components used in high-voltage power-conversion systems. The company’s integrated circuits and diodes enable compact, energy-efficient AC-DC power supplies for a vast range of electronic products including mobile devices, TVs, PCs, appliances, smart utility meters and LED lights. CONCEPT IGBT drivers enhance the efficiency, reliability and cost of high-power applications such as industrial motor drives, solar and wind energy systems, electric vehicles and high-voltage DC transmission. Since its introduction in 1998, Power Integrations’ EcoSmart <

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