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

Quarterly revenues were $124.8 million; GAAP earnings were $0.40 per diluted share; non-GAAP earnings were $0.48 per diluted share

$18.7 million used for share repurchases in the fourth quarter with $81.3 million remaining on authorization at quarter-end; quarterly dividend rising by six percent to $0.19 per share

Power Integrations (NASDAQ: POWI) today announced financial results for the quarter and year ended December 31, 2022. Net revenues for the fourth quarter were $124.8 million, down 22 percent compared to the prior quarter and down 28 percent from the fourth quarter of 2021. Net income for the fourth quarter was $22.8 million or $0.40 per diluted share compared to $0.80 per diluted share in the prior quarter and $0.66 per diluted share in the fourth quarter of 2021. Cash flow from operations for the fourth quarter was $24.1 million.

For the full year, net revenues were $651.1 million dollars, down seven percent from the prior year. Net income for 2022 was $170.9 million or $2.93 per diluted share, compared to $2.67 per diluted share in the prior year. Cash flow from operations for the full year was $215.3 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, net other operating expenses of $1.1 million in the second quarter of 2022 stemming from a patent-litigation settlement and an offsetting recovery from the liquidation of SemiSouth Laboratories, and the tax effects of these items. Non-GAAP net income for the fourth quarter of 2022 was $27.9 million or $0.48 per diluted share compared to $0.84 per diluted share in the prior quarter and $0.83 per diluted share in the fourth quarter of 2021. Full-year non-GAAP net income was $191.9 million or $3.29 per diluted share compared to $3.26 per diluted share in the prior year. A reconciliation of GAAP to non-GAAP financial results is included with the tables accompanying this press release.

Commented Balu Balakrishnan, president and CEO of Power Integrations: “Our results and outlook reflect weaker demand across most end-markets, as well as excess inventory in the supply chain. However, distribution inventory decreased in the fourth quarter, with further improvement to come in the months ahead, and we expect revenues to bottom in the first quarter. While the demand environment remains uncertain, we are well positioned for a recovery with a strong pipeline of design activity and a broad range of growth drivers including our highly integrated GaN products, motor-drive, renewable energy, EVs and advanced charging for mobile devices.”

Additional Highlights

• Power Integrations repurchased approximately 266,000 shares of its common stock during the fourth quarter for $18.7 million. The company had $81.3 million remaining on its repurchase authorization at quarter-end.
• The company paid a dividend of $0.18 per share on December 30, 2022. A dividend of $0.19 per share is to be paid on March 31, 2023, to stockholders of record as of February 28, 2023.
• In December, Power Integrations received Great Place to Work Certification™ following an anonymous survey in which 82 percent of the company’s employees said that Power Integrations is a great place to work – 25 points higher than the average U.S. company.

Financial Outlook

The company issued the following forecast for the first quarter of 2023:

• Revenues are expected to be $105 million plus or minus $5 million.
• GAAP gross margin is expected to be approximately 53 percent, and non-GAAP gross margin is expected to be approximately 53.5 percent. The difference between GAAP and non-GAAP gross margins is approximately equally attributable to stock-based compensation and amortization of acquisition-related intangible assets.
• GAAP operating expenses are expected to be between $49 million and $49.5 million; non-GAAP operating expenses are expected to be between $42 million and $42.5 million. Non-GAAP expenses are expected to exclude about $7 million of stock-based compensation.

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 register for the call by visiting the following link: https://conferencingportals.com/event/iobnvsok. A live webcast of 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.

Note Regarding Use of Non-GAAP Financial Measures

In addition to the company's consolidated financial statements, which are presented according to GAAP, the company provides certain non-GAAP financial information that excludes stock-based compensation expenses recorded under ASC 718-10, amortization of acquisition-related intangible assets, net other operating expenses of $1.1 million in the second quarter of 2022 stemming from a patent-litigation settlement and an offsetting recovery from the liquidation of SemiSouth Laboratories, and the tax effects of these items. The company uses these measures in its financial and operational decision-making and, with respect to one measure, in setting performance targets for compensation purposes. The company believes that these non-GAAP measures offer important analytical tools to help investors understand its operating results, and to facilitate comparability with the results of companies that provide similar measures. Non-GAAP measures have limitations as analytical tools and are not meant to be considered in isolation or as a substitute for GAAP financial information. For example, stock-based compensation is an important component of the company’s compensation mix and will continue to result in significant expenses in the company’s GAAP results for the foreseeable future but is not reflected in the non-GAAP measures. Also, other companies, including companies in Power Integrations’ industry, may calculate non-GAAP measures differently, limiting their usefulness as comparative measures. Reconciliations of non-GAAP measures to GAAP measures are attached to this press release.

Note Regarding Forward-Looking Statements

The above statements regarding the company’s forecast for its first-quarter financial performance, revenue bottoming in the first quarter and being well positioned for a recovery are forward-looking statements reflecting management's current expectations and beliefs. These statements are based on current information that is, by its nature, subject to rapid and even abrupt change. Due to risks and uncertainties associated with the company's business, actual results could differ materially from those projected or implied by these statements. These risks and uncertainties include, but are not limited to: the impact of the COVID-19 pandemic on demand for the company’s products, its ability to supply products and its ability to conduct other aspects of its business such as competing for new design wins; changes in global economic and geopolitical conditions, including such factors as inflation, armed conflicts and trade negotiations, which may impact the level of demand for the company’s products; potential changes and shifts in customer demand away from end products that utilize the company's integrated circuits to end products that do not incorporate the company's products; the effects of competition, which may cause the company’s revenues to decrease or cause the company to decrease its selling prices for its products; unforeseen costs and expenses; and unfavorable fluctuations in component costs or operating expenses resulting from changes in commodity prices and/or exchange rates. In addition, new product introductions and design wins are subject to the risks and uncertainties that typically accompany development and delivery of complex technologies to the marketplace, including product development delays and defects and market acceptance of the new products. These and other risk factors that may cause actual results to differ are more fully explained under the caption “Risk Factors” in the company's most recent Annual Report on Form 10-K, filed with the Securities and Exchange Commission (SEC) on February 7, 2022. The company is under no obligation (and expressly disclaims any obligation) to update or alter its forward-looking statements, whether because of new information, future events or otherwise, except as otherwise required by law.

Power Integrations and the Power Integrations logo are trademarks or registered trademarks of Power Integrations, Inc. All other trademarks are property of their respective owners.

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