Monolithic Power Systems Announces Results for the Fourth Quarter and Year Ended December 31, 2017, and an Increase in Quarterly Cash Dividend

 

Monolithic Power Systems, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share amounts) 

        
  Three Months Ended December 31,  Year Ended December 31,
   2017    2016    2017    2016 
Revenue $  129,430  $  103,618  $  470,929  $  388,665 
Cost of revenue    58,269     47,107     212,646     177,792 
Gross profit    71,161     56,511     258,283     210,873 
Operating expenses:       
  Research and development    21,730     17,974     82,359     73,643 
  Selling, general and administrative    24,038     21,316     97,257     83,012 
  Litigation expense (benefit), net   340     (321)    1,243     (229)
Total operating expenses    46,108     38,969     180,859     156,426 
Income from operations    25,053     17,542     77,424     54,447 
Interest and other income, net   1,647     897     5,520     2,817 
Income before income taxes    26,700     18,439       82,944         57,264  
Income tax provision      14,629         1,866         17,741         4,544  
Net income  $   12,071     $   16,573     $   65,203     $   52,720  
               
  Net income per share:              
  Basic $   0.29     $   0.41     $   1.58     $   1.30  
  Diluted $   0.27     $   0.39     $   1.50     $   1.26  
Weighted-average shares outstanding:              
  Basic     41,574         40,739         41,350         40,436  
  Diluted     44,160         42,404         43,578         41,915  
               
Cash dividends declared per common share $   0.20     $   0.20     $   0.80     $   0.80  
               
               
               
SUPPLEMENTAL FINANCIAL INFORMATION  
STOCK-BASED COMPENSATION EXPENSE
(Unaudited, in thousands)
  Three Months Ended December 31,   Year Ended December 31,
    2017       2016       2017       2016  
Cost of revenue $   391     $   358     $   1,654     $   1,575  
Research and development     3,519         3,039         14,816         14,041  
Selling, general and administrative     7,948         7,350         36,147         29,373  
Total stock-based compensation expense $   11,858     $   10,747     $   52,617     $   44,989  
               
 
 
RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME
(Unaudited, in thousands, except per share amounts)
  Three Months Ended December 31,   Year Ended December 31,
    2017       2016       2017       2016  
Net income  $   12,071     $   16,573     $   65,203     $   52,720  
Net income as a percentage of revenue   9.3 %     16.0 %     13.8 %     13.6 %
               
Adjustments to reconcile net income to non-GAAP net income:            
Stock-based compensation expense     11,858         10,747         52,617         44,989  
Amortization of acquisition-related intangible assets     513         512         2,051         2,051  
Deferred compensation plan expense (income)     148         29         238         (188 )
Tax effect (1)     11,688         (364 )       7,402         (3,265 )
Non-GAAP net income $   36,278     $   27,497     $   127,511     $   96,307  
Non-GAAP net income as a percentage of revenue   28.0 %     26.5 %     27.1 %     24.8 %
               
Non-GAAP net income per share:              
Basic $   0.87     $   0.67     $   3.08     $   2.38  
Diluted $   0.82     $   0.65     $   2.93     $   2.30  
               
Shares used in the calculation of non-GAAP net income per share:            
Basic     41,574         40,739         41,350         40,436  
Diluted     44,160         42,404         43,578         41,915  
               
(1) Tax effect for the quarter and year ended December 31, 2017 includes a one-time charge of $13.5 million associated with the enactment of the 2017 Tax Act due to its unique non-recurring nature.
               
RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN
(Unaudited, in thousands)
  Three Months Ended December 31,   Year Ended December 31,
    2017       2016       2017       2016  
Gross profit $   71,161     $   56,511     $   258,283     $   210,873  
Gross margin   55.0 %     54.5 %     54.8 %     54.3 %
               
Adjustments to reconcile gross profit to non-GAAP gross profit:            
Stock-based compensation expense     391         358         1,654         1,575  
Amortization of acquisition-related intangible assets     513         512         2,051         2,051  
Non-GAAP gross profit $   72,065     $   57,381     $   261,988     $   214,499  
Non-GAAP gross margin   55.7 %     55.4 %     55.6 %     55.2 %
               
               
               
RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
(Unaudited, in thousands)
  Three Months Ended December 31,   Year Ended December 31,
    2017       2016       2017       2016  
Total operating expenses $   46,108     $   38,969     $   180,859     $   156,426  
               
Adjustments to reconcile total operating expenses to non-GAAP total operating expenses:        
Stock-based compensation expense     (11,467 )       (10,389 )       (50,963 )       (43,414 )
Deferred compensation plan expense     (776 )       (189 )       (2,769 )       (1,069 )
Non-GAAP operating expenses $   33,865     $   28,391     $   127,127     $   111,943  
               
               
               
RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME
(Unaudited, in thousands)
  Three Months Ended December 31,   Year Ended December 31,
    2017       2016       2017       2016  
Total operating income $   25,053     $   17,542     $   77,424     $   54,447  
Operating income as a percentage of revenue   19.4 %     16.9 %     16.4 %     14.0 %
               
Adjustments to reconcile total operating income to non-GAAP total operating income:        
Stock-based compensation expense     11,858         10,747         52,617         44,989  
Amortization of acquisition-related intangible assets     513         512         2,051         2,051  
Deferred compensation plan expense      776         189         2,769         1,069  
Non-GAAP operating income $   38,200     $   28,990     $   134,861     $   102,556  
Non-GAAP operating income as a percentage of revenue   29.5 %     28.0 %     28.6 %     26.4 %
               
               
               
RECONCILIATION OF INTEREST AND OTHER INCOME, NET, TO NON-GAAP INTEREST AND OTHER INCOME, NET
(Unaudited, in thousands)
  Three Months Ended December 31,   Year Ended December 31,
    2017       2016       2017       2016  
Total interest and other income, net $   1,647     $   897     $   5,520     $   2,817  
               
Adjustments to reconcile interest and other income to non-GAAP interest and other income:        
Deferred compensation plan income     (628 )       (160 )       (2,531 )       (1,257 )
Non-GAAP interest and other income, net $   1,019     $   737     $   2,989     $   1,560  
               
               
               
RECONCILIATION OF INCOME BEFORE INCOME TAXES TO NON-GAAP INCOME BEFORE INCOME TAXES
(Unaudited, in thousands)
  Three Months Ended December 31,   Year Ended December 31,
    2017       2016       2017       2016  
Total income before income taxes $   26,700     $   18,439     $   82,944     $   57,264  
               
Adjustments to reconcile income before income taxes to non-GAAP income before income taxes:        
Stock-based compensation expense     11,858         10,747         52,617         44,989  
Amortization of acquisition-related intangible assets     513         512         2,051         2,051  
Deferred compensation plan expense (income)     148         29         238         (188 )
Non-GAAP income before income taxes $   39,219     $   29,727     $   137,850     $   104,116  
               

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