GAAP earnings were $0.77 per diluted share including tax benefit; non-GAAP earnings were $0.54 per diluted share; revenues were $93.3 million

Repurchased 488K shares in the quarter; quarterly dividend rises to $0.17 per share

SAN JOSE, Calif. — (BUSINESS WIRE) — February 7, 2019 — Power Integrations (Nasdaq: POWI) today announced financial results for the quarter and year ended December 31, 2018. Net revenues for the fourth quarter were $93.3 million, down 15 percent from the prior quarter and down 14 percent from the fourth quarter of 2017. Net income was $22.7 million or $0.77 per diluted share, including a tax benefit reflecting the revision of prior estimates of the transition tax from the 2017 U.S. tax legislation. This compares to net income of $0.59 per diluted share in the prior quarter and a net loss of $0.57 per share in the fourth quarter of 2017, in which the company incurred a charge associated with the tax legislation. Cash flow from operations was $18.3 million for the fourth quarter.

For the full year, net revenues were $416.0 million, a decrease of four percent compared to 2017. GAAP net income for the full year was $70.0 million or $2.32 per diluted share, compared to $0.90 per diluted share in 2017. Cash flow from operations for the full year was $84.0 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, the tax effects of these items, and the above-mentioned tax benefit and charge associated with the 2017 tax legislation. Non-GAAP net income for the fourth quarter of 2018 was $15.9 million or $0.54 per diluted share, compared with $0.77 per diluted share in the prior quarter and $0.74 per diluted share in the fourth quarter of 2017. Non-GAAP net income for the full year was $81.7 million or $2.71 per diluted share, compared to $2.84 per diluted share in 2017.

Commented Balu Balakrishnan, president and CEO of Power Integrations: “Our fourth-quarter results and first-quarter outlook reflect the current slowdown in demand across the industry. Nevertheless, we are well positioned to capitalize on a range of secular opportunities in the year ahead, including faster charging for mobile devices, energy efficiency, smart homes and appliances, renewable energy, and battery-powered tools and transportation. Our new BridgeSwitch™ ICs expand our opportunity in appliances and other motor-drive applications, adding about half a billion dollars to our addressable market.”

Additional Highlights

• Power Integrations repurchased approximately 488,000 shares of its common stock during the fourth quarter, utilizing $28.8 million. At quarter end, $51.2 million remained available in the company’s repurchase authorization.
• The company paid a dividend of $0.16 per share on December 31, 2018. The company’s board has declared dividends of $0.17 per share for each quarter of 2019, the first of which is scheduled to be paid on March 29 to stockholders of record as of February 28.

Financial Outlook

The company issued the following forecast for the first quarter of 2019:

• Revenues are expected to be $90 million plus or minus $3 million.
• GAAP gross margin is expected to be approximately 51 percent. Non-GAAP gross margin is expected to be approximately 52 percent. (The difference between the expected GAAP and non-GAAP gross margins is composed of approximately 0.7 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 $35 million and $35.5 million. (Non-GAAP expenses are expected to exclude approximately $5.5 million of stock-based compensation 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 .