Monolithic Power Systems Announces Results for the Second Quarter Ended June 30, 2018
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Monolithic Power Systems Announces Results for the Second Quarter Ended June 30, 2018

SAN JOSE, Calif., July 25, 2018 (GLOBE NEWSWIRE) -- Monolithic Power Systems, Inc. (MPS) (Nasdaq:MPWR), a leading company in high performance analog solutions, today announced financial results for the quarter ended June 30, 2018.

 

The results for the quarter ended June 30, 2018 are as follows:

The results for the six months ended June 30, 2018 are as follows:

 

The following is a summary of revenue by end market for the periods indicated (in thousands): 

 

          
   Three Months Ended June 30, Six Months Ended June 30,
 End Market 2018 2017 2018 2017
 Consumer $47,809 $43,917 $94,953 $79,528
 Computing and storage  36,957  24,466  67,927  45,083
 Automotive  20,340  12,854  38,072  25,185
 Industrial  19,121  15,034  36,676  30,388
 Communications  15,534  15,927  31,283  32,376
 Total $139,761 $112,198 $268,911 $212,560
          

 

 The following is a summary of revenue by product family for the periods indicated (in thousands):  

 

          
   Three Months Ended June 30, Six Months Ended June 30,
 Product Family 2018 2017 2018 2017
 DC to DC $127,496 $102,187 $246,765 $193,611
 Lighting Control  12,265  10,011  22,146  18,949
 Total $139,761 $112,198 $268,911 $212,560
          

 

“We are continuing to execute our long-term business strategy, which we believe will maximize long-term shareholder value," said Michael Hsing, CEO and founder of MPS.

 

Business Outlook

 

The following are MPS’ financial targets for the third quarter ending September 30, 2018:

 

(1) Non-GAAP net income, non-GAAP earnings per share, non-GAAP gross margin, non-GAAP R&D and SG&A expenses, non-GAAP operating expenses, non-GAAP interest and other income, net, non-GAAP operating income and non-GAAP income before taxes differ from net income, earnings per share, gross margin, R&D and SG&A expenses, operating expenses, interest and other income, net, operating income and income before taxes determined in accordance with Generally Accepted Accounting Principles in the United States (GAAP). Non-GAAP net income and non-GAAP earnings per share exclude the effect of stock-based compensation expense, amortization of acquisition-related intangible assets, deferred compensation plan income/expense and related tax effects. Non-GAAP gross margin excludes the effect of stock-based compensation expense and amortization of acquisition-related intangible assets. Non-GAAP operating expenses exclude the effect of stock-based compensation expense and deferred compensation plan income/expense. Non-GAAP interest and other income, net excludes the effect of deferred compensation plan income/expense. Non-GAAP operating income excludes the effect of stock-based compensation expense, amortization of acquisition-related intangible assets and deferred compensation plan income/expense. Non-GAAP income before taxes excludes the effect of stock-based compensation expense, amortization of acquisition-related intangible assets and deferred compensation plan income/expense. Projected non-GAAP gross margin excludes the effect of stock-based compensation expense and amortization of acquisition-related intangible assets. Projected non-GAAP R&D and SG&A expenses exclude the effect of stock-based compensation expense. These non-GAAP financial measures are not prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. A schedule reconciling non-GAAP financial measures is included at the end of this press release. MPS utilizes both GAAP and non-GAAP financial measures to assess what it believes to be its core operating performance and to evaluate and manage its internal business and assist in making financial operating decisions. MPS believes that the inclusion of non-GAAP financial measures, together with GAAP measures, provides investors with an alternative presentation useful to investors' understanding of MPS' core operating results and trends. Additionally, MPS believes that the inclusion of non-GAAP measures, together with GAAP measures, provides investors with an additional dimension of comparability to similar companies. However, investors should be aware that non-GAAP financial measures utilized by other companies are not likely to be comparable in most cases to the non-GAAP financial measures used by MPS.

 

Conference Call
MPS plans to conduct an investor teleconference covering its financial results at 2:00 p.m. PT / 5:00 p.m. ET, July 25, 2018. To access the conference call and the following replay of the conference call, go to  http://ir.monolithicpower.com and click on the webcast link. From this site, you can listen to the teleconference, assuming that your computer system is configured properly. In addition to the webcast replay, which will be archived for all investors for one year on the MPS website, a phone replay will be available for seven days after the live call at (404) 537-3406, code number 4579634. This press release and any other information related to the call will also be posted on the website.

 

Safe Harbor Statement
This press release contains, and statements that will be made during the accompanying teleconference will contain, forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including, among other things, (i) projected revenues, GAAP and non-GAAP gross margin, GAAP and non-GAAP R&D and SG&A expenses, stock-based compensation expenses, amortization of acquisition-related intangible assets, interest and other income, and diluted shares outstanding, (ii) our outlook for the long-term prospects of the company, including our performance against our business plan, revenue growth in certain of our market segments, our continued investment into R&D, expected revenue growth, customers' acceptance of our new product offerings, the prospects of our new product development, and our expectations regarding market and industry segment trends and prospects, (iii) our ability to penetrate new markets and expand our market share, (iv) the seasonality of our business, (v) our ability to reduce our expenses, (vi) the impact of the 2017 Tax Act on our tax rate and provision; and (vii) statements of the assumptions underlying or relating to any statement described in (i), (ii), (iii), (iv), (v), or (vi). These forward-looking statements are not historical facts or guarantees of future performance or events, are based on current expectations, estimates, beliefs, assumptions, goals, and objectives, and involve significant known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from the results expressed by these statements. Readers of this press release and listeners to the accompanying conference call are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. Factors that could cause actual results to differ include, but are not limited to, our ability to attract new customers and retain existing customers; acceptance of, or demand for, MPS' products, in particular the new products launched recently, being different than expected; our ability to efficiently and effectively develop new products and receive a return on our R&D expense investment; competition generally and the increasingly competitive nature of our industry; any market disruptions or interruptions in MPS' schedule of new product development releases; adverse changes in production and testing efficiency of our products; our ability to realize the anticipated benefits of companies and products that we acquire, and our ability to effectively and efficiently integrate these acquired companies and products into our operations; our ability to manage our inventory levels; adverse changes in laws and government regulations, including in foreign countries where MPS has offices or operations; adverse events arising from orders of governmental entities, including such orders that impact our customers, and adopting of new or amended accounting standards; the effect of catastrophic events; adequate supply of our products from our third-party manufacturing partners; the risks, uncertainties and costs of litigation in which we are involved; the outcome of any upcoming trials, hearings, motions and appeals; the adverse impact on MPS' financial performance if its tax and litigation provisions are inadequate; adverse changes or developments in the semiconductor industry generally, which is cyclical in nature; difficulty in predicting or budgeting for future customer demand and channel inventories, expenses and financial contingencies; the ongoing consolidation of companies in the semiconductor industry; and other important risk factors identified in MPS' Securities and Exchange Commission (SEC) filings, including, but not limited to, our annual report on Form 10-K filed with the SEC on March 1, 2018 and our quarterly report on Form 10-Q filed with the SEC on May 8, 2018. The forward-looking statements in this press release and statements made during the accompanying teleconference represent MPS' projections and current expectations, as of the date hereof, not predictions of actual performance. MPS assumes no obligation to update the information in this press release or in the accompanying conference call.

 

About Monolithic Power Systems
Monolithic Power Systems, Inc. (MPS) provides small, highly energy efficient, easy-to-use power solutions for systems found in industrial applications, telecom infrastructures, cloud computing, automotive, and consumer applications. MPS' mission is to reduce total energy consumption in its customers' systems with green, practical, compact solutions. The company was founded by Michael Hsing in 1997 and is based in the United States. MPS can be contacted through its website at www.monolithicpower.com or its support offices around the world.

 

Monolithic Power Systems, MPS, and the MPS logo are registered trademarks of Monolithic Power Systems, Inc. in the U.S. and trademarked in certain other countries.

 

Contact:
Bernie Blegen
Chief Financial Officer
Monolithic Power Systems, Inc.
408-826-0777
investors@monolithicpower.com 

 

Monolithic Power Systems, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands, except par value)
 
 June 30, December 31, 
 2018 2017 
ASSETS    
Current assets:    
Cash and cash equivalents$  83,075  $  82,759 
Short-term investments   230,428     216,331 
Accounts receivable   53,460     38,037 
Inventories   128,909     99,281 
Other current assets   13,974     12,762 
Total current assets   509,846     449,170 
Property and equipment, net   150,658     144,636 
Long-term investments   5,247     5,256 
Goodwill   6,571     6,571 
Acquisition-related intangible assets, net   504     951 
Deferred tax assets, net   15,791     15,917 
Other long-term assets   31,335     30,068 
Total assets$  719,952  $  652,569 
     
LIABILITIES AND STOCKHOLDERS’ EQUITY    
Current liabilities:    
Accounts payable$  26,689  $  22,813 
Accrued compensation and related benefits   15,604     15,597 
Accrued liabilities   33,033     27,507 
Total current liabilities   75,326     65,917 
Income tax liabilities   30,735     31,621 
Other long-term liabilities   34,871     33,024 
  Total liabilities   140,932     130,562 
Commitments and contingencies     
Stockholders' equity:    
  Common stock and additional paid-in capital, $0.001 par value; shares authorized:     
  150,000; shares issued and outstanding:  42,285 and 41,614     
  as of June 30, 2018 and December 31, 2017, respectively   417,866     376,586 
Retained earnings    162,859     143,608 
Accumulated other comprehensive income (loss)   (1,705)    1,813 
Total stockholders’ equity   579,020     522,007 
Total liabilities and stockholders’ equity$  719,952  $  652,569 
     

 

 

 

 
Monolithic Power Systems, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share amounts) 
 
 Three Months Ended June 30, Six Months Ended June 30,
 2018 2017 2018 2017
Revenue $  139,761  $  112,198  $  268,911  $  212,560 
Cost of revenue    62,197     50,773     119,852     96,293 
Gross profit    77,564     61,425     149,059     116,267 
Operating expenses:       
  Research and development    23,481     20,292     45,091     39,186 
  Selling, general and administrative    28,561     25,873     55,879     47,965 
  Litigation expense    640     290     1,171     576 
Total operating expenses    52,682     46,455     102,141     87,727 
Income from operations    24,882     14,970     46,918     28,540 
Interest and other income, net   2,232     1,237     2,673     2,618 
Income before income taxes    27,114     16,207     49,591     31,158 
Income tax provision    2,908     1,193     3,529     1,668 
Net income $  24,206  $  15,014  $  46,062  $  29,490 
        
  Net income per share:       
  Basic$  0.57  $  0.36  $  1.09  $  0.72 
  Diluted$  0.55  $  0.35  $  1.04  $  0.68 
Weighted-average shares outstanding:       
  Basic   42,237     41,323     42,079     41,185 
  Diluted   44,400     43,397     44,341     43,332 
        
Cash dividends declared per common share$  0.30  $  0.20  $  0.60  $  0.40 
        
 
SUPPLEMENTAL FINANCIAL INFORMATION 
STOCK-BASED COMPENSATION EXPENSE
(Unaudited, in thousands)
 Three Months Ended June 30, Six Months Ended June 30,
  2018   2017   2018   2017 
Cost of revenue$  480  $  452  $  913  $  810 
Research and development   4,194     3,961     8,188     7,459 
Selling, general and administrative   11,218     10,714     21,820     18,520 
Total stock-based compensation expense$  15,892  $  15,127  $  30,921  $  26,789 
        
 
RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME
(Unaudited, in thousands, except per share amounts)
 Three Months Ended June 30, Six Months Ended June 30,
  2018   2017   2018   2017 
Net income $  24,206  $  15,014  $  46,062  $  29,490 
  Net income as a percentage of revenue 17.3%  13.4%  17.1%  13.9%
        
Adjustments to reconcile net income to non-GAAP net income:      
  Stock-based compensation expense   15,892     15,127     30,921     26,789 
  Amortization of acquisition-related intangible assets   197     513     447     1,026 
  Deferred compensation plan (income) expense   (9)    70     40     141 
  Tax effect    (332)    (1,201)    (2,546)    (2,766)
Non-GAAP net income$  39,954  $  29,523  $  74,924  $  54,680 
  Non-GAAP net income as a percentage of revenue 28.6%  26.3%  27.9%  25.7%
        
Non-GAAP net income per share:       
  Basic$  0.95  $  0.71  $  1.78  $  1.33 
  Diluted$  0.90  $  0.68  $  1.69  $  1.26 
        
Shares used in the calculation of non-GAAP net income per share:      
  Basic   42,237     41,323     42,079     41,185 
  Diluted   44,400     43,397     44,341     43,332 
        
 
RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN
(Unaudited, in thousands)
 Three Months Ended June 30, Six Months Ended June 30,
  2018   2017   2018   2017 
Gross profit$  77,564  $  61,425  $  149,059  $  116,267 
  Gross margin 55.5%  54.7%  55.4%  54.7%
        
Adjustments to reconcile gross profit to non-GAAP gross profit:      
  Stock-based compensation expense   480     452     913     810 
  Amortization of acquisition-related intangible assets   197     513     447     1,026 
Non-GAAP gross profit$  78,241  $  62,390  $  150,419  $  118,103 
  Non-GAAP gross margin 56.0%  55.6%  55.9%  55.6%
        
RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
(Unaudited, in thousands)
 Three Months Ended June 30, Six Months Ended June 30,
  2018   2017   2018   2017 
Total operating expenses$  52,682  $  46,455  $  102,141  $  87,727 
        
Adjustments to reconcile total operating expenses to non-GAAP total operating expenses:    
  Stock-based compensation expense   (15,412)    (14,675)    (30,008)    (25,979)
  Deferred compensation plan expense   (410)    (603)    (273)    (1,407)
Non-GAAP operating expenses$  36,860  $  31,177  $  71,860  $  60,341 
        
        
RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME
(Unaudited, in thousands)
 Three Months Ended June 30, Six Months Ended June 30,
  2018   2017   2018   2017 
Total operating income$  24,882  $  14,970  $  46,918  $  28,540 
  Operating income as a percentage of revenue 17.8%  13.3%  17.4%  13.4%
        
Adjustments to reconcile total operating income to non-GAAP total operating income:    
  Stock-based compensation expense   15,892     15,127     30,921     26,789 
  Amortization of acquisition-related intangible assets   197     513     447     1,026 
  Deferred compensation plan expense    410     603     273     1,407 
Non-GAAP operating income$  41,381  $  31,213  $  78,559  $  57,762 
  Non-GAAP operating income as a percentage of revenue 29.6%  27.8%  29.2%  27.2%
        
        
RECONCILIATION OF INTEREST AND OTHER INCOME, NET, TO NON-GAAP INTEREST AND OTHER INCOME, NET
(Unaudited, in thousands)
 Three Months Ended June 30, Six Months Ended June 30,
  2018   2017   2018   2017 
Total interest and other income, net$  2,232  $  1,237  $  2,673  $  2,618 
        
Adjustments to reconcile interest and other income to non-GAAP interest and other income:    
  Deferred compensation plan income   (419)    (533)    (233)    (1,266)
Non-GAAP interest and other income, net$  1,813  $  704  $  2,440  $  1,352 
        
        
RECONCILIATION OF INCOME BEFORE INCOME TAXES TO NON-GAAP INCOME BEFORE INCOME TAXES
(Unaudited, in thousands)
 Three Months Ended June 30, Six Months Ended June 30,
  2018   2017   2018   2017 
Total income before income taxes$  27,114  $  16,207  $  49,591  $  31,158 
        
Adjustments to reconcile income before income taxes to non-GAAP income before income taxes:   
  Stock-based compensation expense   15,892     15,127     30,921     26,789 
  Amortization of acquisition-related intangible assets   197     513     447     1,026 
  Deferred compensation plan (income) expense    (9)    70     40     141 
Non-GAAP income before income taxes$  43,194  $  31,917  $  80,999  $  59,114 
        

 

 

 

  
2018 THIRD QUARTER OUTLOOK 
RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN 
(Unaudited) 
 Three Months Ending  
 September 30, 2018 
 Low High 
Gross margin 55.2%  56.2% 
Adjustments to reconcile gross margin to non-GAAP gross margin:    
  Stock-based compensation expense  0.3%  0.3% 
  Amortization of acquisition-related intangible assets 0.1%  0.1% 
Non-GAAP gross margin 55.6%  56.6% 
     
RECONCILIATION OF R&D AND SG&A EXPENSES TO NON-GAAP R&D AND SG&A EXPENSES 
(Unaudited, in thousands) 
 Three Months Ending  
 September 30, 2018 
 Low High 
R&D and SG&A expense$  52,300  $  57,300  
Adjustments to reconcile R&D and SG&A expense to non-GAAP R&D and SG&A expense:    
  Stock-based compensation expense   (14,500)    (16,500) 
Non-GAAP R&D and SG&A expense$  37,800  $  40,800  
     

 

 

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