Power Integrations Reports Fourth-Quarter and Full-Year

Power Integrations Reports Fourth-Quarter and Full-Year Financial Results

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POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per-share amounts)


	Three Months Ended									Twelve Months Ended
	December 31, 2022			September 30, 2022			December 31, 2021			December 31, 2022			December 31, 2021
NET REVENUES	$	124,770		$	160,233		$	172,654		$	651,138		$	703,277

COST OF REVENUES		57,416			68,198			79,478			284,231			342,638

GROSS PROFIT		67,354			92,035			93,176			366,907			360,639

OPERATING EXPENSES:
Research and development		23,504			23,205			22,028			93,894			84,933
Sales and marketing		15,493			14,700			15,590			62,333			60,037
General and administrative		7,465			5,759			11,073			28,897			39,840
Amortization of acquisition-related intangible assets		-			-			181			241			771
Other operating expenses, net		-			-			-			1,130			-
Total operating expenses		46,462			43,664			48,872			186,495			185,581

INCOME FROM OPERATIONS		20,892			48,371			44,304			180,412			175,058

OTHER INCOME		785			1,001			101			3,014			1,077

INCOME BEFORE INCOME TAXES		21,677			49,372			44,405			183,426			176,135

PROVISION (BENEFIT) FOR INCOME TAXES		(1,138	)		3,408			3,705			12,575			11,722

NET INCOME	$	22,815		$	45,964		$	40,700		$	170,851		$	164,413

EARNINGS PER SHARE:
Basic	$	0.40		$	0.80		$	0.68		$	2.96		$	2.73
Diluted	$	0.40		$	0.80		$	0.66		$	2.93		$	2.67

SHARES USED IN PER-SHARE CALCULATION:
Basic		57,094			57,172			60,259			57,801			60,327
Diluted		57,535			57,603			61,381			58,371			61,467



SUPPLEMENTAL INFORMATION:	Three Months Ended									Twelve Months Ended
	December 31, 2022			September 30, 2022			December 31, 2021			December 31, 2022			December 31, 2021
Stock-based compensation expenses included in:
Cost of revenues	$	405		$	172		$	424		$	1,132		$	2,359
Research and development		2,716			2,334			3,522			10,428			12,127
Sales and marketing		1,643			1,267			2,090			6,035			7,630
General and administrative		1,890			(755	)		4,248			4,769			15,493
Total stock-based compensation expense	$	6,654		$	3,018		$	10,284		$	22,364		$	37,609

Cost of revenues includes:
Amortization of acquisition-related intangible assets	$	482		$	482		$	552		$	1,928		$	2,477


	Three Months Ended									Twelve Months Ended
REVENUE MIX BY END MARKET	December 31, 2022			September 30, 2022			December 31, 2021			December 31, 2022			December 31, 2021
Communications		23	%		16	%		23	%		21	%		30	%
Computer		12	%		11	%		10	%		10	%		10	%
Consumer		26	%		32	%		35	%		33	%		32	%
Industrial		39	%		41	%		32	%		36	%		28	%

POWER INTEGRATIONS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP RESULTS
(in thousands, except per-share amounts)

		Three Months Ended									Twelve Months Ended
		December 31, 2022			September 30, 2022			December 31, 2021			December 31, 2022			December 31, 2021
RECONCILIATION OF GROSS PROFIT
GAAP gross profit		$	67,354		$	92,035		$	93,176		$	366,907		$	360,639
	GAAP gross margin		54.0	%		57.4	%		54.0	%		56.3	%		51.3	%

Stock-based compensation included in cost of revenues			405			172			424			1,132			2,359
Amortization of acquisition-related intangible assets			482			482			552			1,928			2,477

Non-GAAP gross profit		$	68,241		$	92,689		$	94,152		$	369,967		$	365,475
	Non-GAAP gross margin		54.7	%		57.8	%		54.5	%		56.8	%		52.0	%


		Three Months Ended									Twelve Months Ended
RECONCILIATION OF OPERATING EXPENSES		December 31, 2022			September 30, 2022			December 31, 2021			December 31, 2022			December 31, 2021
GAAP operating expenses		$	46,462		$	43,664		$	48,872		$	186,495		$	185,581

Less:	Stock-based compensation expense included in operating expenses
	Research and development		2,716			2,334			3,522			10,428			12,127
	Sales and marketing		1,643			1,267			2,090			6,035			7,630
	General and administrative		1,890			(755	)		4,248			4,769			15,493
	Total		6,249			2,846			9,860			21,232			35,250

	Amortization of acquisition-related intangible assets		-			-			181			241			771
	Other operating expenses, net		-			-			-			1,130			-

Non-GAAP operating expenses		$	40,213		$	40,818		$	38,831		$	163,892		$	149,560


		Three Months Ended									Twelve Months Ended
RECONCILIATION OF INCOME FROM OPERATIONS		December 31, 2022			September 30, 2022			December 31, 2021			December 31, 2022			December 31, 2021
GAAP income from operations		$	20,892		$	48,371		$	44,304		$	180,412		$	175,058
	GAAP operating margin		16.7	%		30.2	%		25.7	%		27.7	%		24.9	%

Add:	Total stock-based compensation		6,654			3,018			10,284			22,364			37,609
	Amortization of acquisition-related intangible assets		482			482			733			2,169			3,248
	Other operating expenses, net		-			-			-			1,130			-

Non-GAAP income from operations		$	28,028		$	51,871		$	55,321		$	206,075		$	215,915
	Non-GAAP operating margin		22.5	%		32.4	%		32.0	%		31.6	%		30.7	%


		Three Months Ended									Twelve Months Ended
RECONCILIATION OF PROVISION (BENEFIT) FOR INCOME TAXES		December 31, 2022			September 30, 2022			December 31, 2021			December 31, 2022			December 31, 2021
GAAP provision (benefit) for income taxes		$	(1,138	)	$	3,408		$	3,705		$	12,575		$	11,722
	GAAP effective tax rate		-5.2	%		6.9	%		8.3	%		6.9	%		6.7	%

Tax effect of adjustments to GAAP results			(2,085	)		(1,116	)		(800	)		(4,582	)		(5,044	)

Non-GAAP provision for income taxes		$	947		$	4,524		$	4,505		$	17,157		$	16,766
	Non-GAAP effective tax rate		3.3	%		8.6	%		8.1	%		8.2	%		7.7	%


		Three Months Ended									Twelve Months Ended
RECONCILIATION OF NET INCOME PER SHARE (DILUTED)		December 31, 2022			September 30, 2022			December 31, 2021			December 31, 2022			December 31, 2021
GAAP net income		$	22,815		$	45,964		$	40,700		$	170,851		$	164,413

Adjustments to GAAP net income
	Stock-based compensation		6,654			3,018			10,284			22,364			37,609
	Amortization of acquisition-related intangible assets		482			482			733			2,169			3,248
	Other operating expenses, net		-			-			-			1,130			-
	Tax effect of items excluded from non-GAAP results		(2,085	)		(1,116	)		(800	)		(4,582	)		(5,044	)

Non-GAAP net income		$	27,866		$	48,348		$	50,917		$	191,932		$	200,226

Average shares outstanding for calculation
	of non-GAAP net income per share (diluted)		57,535			57,603			61,381			58,371			61,467

Non-GAAP net income per share (diluted)		$	0.48		$	0.84		$	0.83		$	3.29		$	3.26

GAAP net income per share (diluted)		$	0.40		$	0.80		$	0.66		$	2.93		$	2.67

POWER INTEGRATIONS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)


	December 31, 2022			September 30, 2022			December 31, 2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	105,372		$	133,474		$	158,117
Short-term marketable securities		248,441			229,754			372,235
Accounts receivable, net		20,836			16,075			41,393
Inventories		135,420			120,092			99,266
Prepaid expenses and other current assets		15,004			12,634			15,804
Total current assets		525,073			512,029			686,815

PROPERTY AND EQUIPMENT, net		176,681			181,224			179,824
INTANGIBLE ASSETS, net		6,597			7,141			9,012
GOODWILL		91,849			91,849			91,849
DEFERRED TAX ASSETS		19,034			23,935			16,433
OTHER ASSETS		20,862			21,785			30,554
Total assets	$	840,096		$	837,963		$	1,014,487

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	30,088		$	29,521		$	43,721
Accrued payroll and related expenses		14,778			13,765			15,492
Taxes payable		938			2,960			1,210
Other accrued liabilities		12,572			12,613			11,898
Total current liabilities		58,376			58,859			72,321

LONG-TERM LIABILITIES:
Income taxes payable		15,757			16,398			15,280
Other liabilities		10,747			12,424			14,854
Total liabilities		84,880			87,681			102,455

STOCKHOLDERS' EQUITY:
Common stock		24			24			28
Additional paid-in capital		-			6,123			162,301
Accumulated other comprehensive loss		(7,344	)		(11,817	)		(3,737	)
Retained earnings		762,536			755,952			753,440
Total stockholders' equity		755,216			750,282			912,032
Total liabilities and stockholders' equity	$	840,096		$	837,963		$	1,014,487

POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

	Three Months Ended									Twelve Months Ended
	December 31, 2022			September 30, 2022			December 31, 2021			December 31, 2022			December 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	22,815		$	45,964		$	40,700		$	170,851		$	164,413
Adjustments to reconcile net income to cash provided by operating activities
Depreciation		8,875			8,881			8,054			34,930			31,454
Amortization of intangible assets		544			543			795			2,415			3,494
Loss on disposal of property and equipment		209			128			905			1,371			3,105
Stock-based compensation expense		6,654			3,018			10,284			22,364			37,609
Amortization of premium on marketable securities		654			771			815			3,292			1,590
Deferred income taxes		4,824			(4,108	)		(13,228	)		(2,566	)		(13,240	)
Increase in accounts receivable allowance for credit losses		-			431			1			690			18
Change in operating assets and liabilities:
Accounts receivable		(4,761	)		11,474			(2,522	)		19,867			(5,501	)
Inventories		(15,328	)		(8,834	)		(7,452	)		(36,154	)		3,612
Prepaid expenses and other assets		(1,085	)		4,353			9,299			7,343			4,326
Accounts payable		2,038			(11,451	)		(2,566	)		(3,836	)		4,067
Taxes payable and other accrued liabilities		(1,341	)		(1,344	)		2,078			(5,224	)		(4,079	)
Net cash provided by operating activities		24,098			49,826			47,163			215,343			230,868

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(5,767	)		(5,500	)		(16,967	)		(39,211	)		(47,272	)
Proceeds from sale of property and equipment		-			-			-			1,202			35
Purchases of marketable securities		(28,576	)		(6,534	)		(172,115	)		(55,820	)		(554,018	)
Proceeds from sales and maturities of marketable securities		11,151			35,487			84,421			172,165			368,457
Net cash provided by (used in) investing activities		(23,192	)		23,453			(104,661	)		78,336			(232,798	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock		-			3,105			-			6,162			7,710
Repurchase of common stock		(18,745	)		-			(37,773	)		(311,094	)		(73,938	)
Payments of dividends to stockholders		(10,263	)		(10,293	)		(9,047	)		(41,492	)		(32,599	)
Net cash used in financing activities		(29,008	)		(7,188	)		(46,820	)		(346,424	)		(98,827	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(28,102	)		66,091			(104,318	)		(52,745	)		(100,757	)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		133,474			67,383			262,435			158,117			258,874

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	105,372		$	133,474		$	158,117		$	105,372		$	158,117

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