Power Integrations Reports Fourth-Quarter Financial Results

Fourth-quarter revenues grew six percent year-over-year to $108.2 million; GAAP net loss of $0.57 per share driven by tax charge; non-GAAP earnings were $0.74 per diluted share

Full-year revenues grew 11 percent to $431.8 million; GAAP earnings were $0.90 per diluted share; non-GAAP earnings were $2.84 per diluted share, up 12 percent from prior year

Quarterly dividend rises to $0.16 per share; $30 million added to repurchase authorization

SAN JOSE, CALIF. — (BUSINESS WIRE) — February 1, 2018 — Power Integrations (Nasdaq: POWI) today announced financial results for the quarter and year ended December 31, 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 fourth quarter were $108.2 million, a decrease of three percent from the prior quarter and an increase of six percent from the fourth quarter of 2016. Net loss for the quarter was $16.9 million or $0.57 per share, compared to net income of $0.54 per diluted share in the prior quarter and net income of $0.48 per diluted share in the fourth quarter of 2016. The fourth-quarter loss includes a net charge of $37.5 million resulting from the 2017 tax legislation. Cash flow from operations was $27.4 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, the tax effects of these items, and the fourth-quarter charge resulting from the 2017 tax legislation. Non-GAAP net income for the fourth quarter was $22.7 million or $0.74 per diluted share, compared with $0.78 per diluted share in the prior quarter and $0.70 per diluted share in the fourth quarter of 2016.

For the full year, net revenues were $431.8 million, an increase of 11 percent from the prior year. GAAP net income, which includes the impact of the tax charge, was $27.6 million or $0.90 per diluted share compared to $1.65 per diluted share for the prior year. Non-GAAP net income was $86.6 million or $2.84 per diluted share compared to $2.53 per diluted share for the prior year. Cash flow from operations was $82.0 million for the full year.

Commented Balu Balakrishnan, president and CEO of Power Integrations: “We are pleased to report double-digit growth in annual revenues and non-GAAP earnings again in 2017. Revenues from the industrial market grew 20 percent for the year, while the consumer category grew more than 15 percent driven by appliance applications. Together, these two end-markets accounted for more than 70 percent of our sales in 2017.

“While demand has moderated of late, particularly in the handset and appliance markets, we expect continued growth in 2018 and beyond, driven by trends such as energy efficiency, clean energy, IoT, faster charging, the switch to battery-powered motors for tools and transportation, and the mass adoption of convenience and comfort appliances in emerging markets. These trends are driving demand for increasingly innovative power-conversion technologies, and we are especially well-positioned to capitalize on these opportunities.”

Additional Highlights

  • Power Integrations paid a dividend of $0.14 per share on December 29, 2017. A dividend of $0.16 per share is scheduled to be paid on March 30, 2018, to stockholders of record as of February 28, 2018.
  • Power Integrations repurchased approximately 33,000 shares of its common stock during the fourth quarter, and had $44.4 million remaining on its repurchase authorization at year-end. The company’s board of directors has subsequently increased the repurchase authorization by a further $30 million.
  • Power Integrations was issued eight U.S. patents during the fourth quarter of 2017.

Financial Outlook

The company issued the following forecast for the first quarter of 2018:

  • Revenues are expected to be $103 million plus or minus $3 million.
  • GAAP gross margin is expected to be approximately 50.3 percent; non-GAAP gross margin is expected to be approximately 51.5 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 $41 million and $41.5 million; non-GAAP operating expenses are expected to be between $34 million and $34.5 million. (Non-GAAP expenses are expected to exclude approximately $6.5 million of stock-based compensation and $0.5 million of amortization of acquisition-related intangible assets.)

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