Workflow
Power Integrations(POWI) - 2024 Q2 - Quarterly Report
POWIPower Integrations(POWI)2024-08-06 20:09
Transcript

Revenue and Profit Performance - Net revenues for Q2 2024 were 106.2million,adecreasefrom106.2 million, a decrease from 123.2 million in Q2 2023[6] - Gross profit for Q2 2024 was 56.5million,downfrom56.5 million, down from 62.8 million in Q2 2023[6] - Net income for Q2 2024 was 4.8million,comparedto4.8 million, compared to 14.8 million in Q2 2023[6] - Net income for the six months ended June 30, 2024, was 8.8million,comparedto8.8 million, compared to 21.7 million in the same period in 2023[11] - Total comprehensive income for Q2 2024 was 4.2million,downfrom4.2 million, down from 14.1 million in Q2 2023[7] - Net revenues for the three and six months ended June 30, 2024 were 106.2millionand106.2 million and 197.9 million, respectively, compared to 123.2millionand123.2 million and 229.5 million in the corresponding periods of 2023[69] - Gross margin increased to 53% and 52.7% for the three and six months ended June 30, 2024, respectively, up from 51% and 50.9% in the corresponding periods of 2023[69][75] Expenses and Operating Costs - Research and development expenses increased to 26.0millioninQ22024from26.0 million in Q2 2024 from 24.5 million in Q2 2023[6] - Total operating expenses for Q2 2024 were 54.6million,upfrom54.6 million, up from 50.2 million in Q2 2023[6] - Total operating expenses increased to 54.6millionand54.6 million and 101.9 million for the three and six months ended June 30, 2024, respectively, compared to 50.2millionand50.2 million and 98.4 million in the corresponding periods of 2023[69] - R&D expenses increased to 26.0millionand26.0 million and 49.3 million for the three and six months ended June 30, 2024, respectively, compared to 24.5millionand24.5 million and 48.5 million in the corresponding periods of 2023[77] - Sales and marketing expenses increased to 18.1millionand18.1 million and 33.8 million for the three and six months ended June 30, 2024, respectively, compared to 17.0millionand17.0 million and 32.9 million in the corresponding periods of 2023[78] - G&A expenses increased to 10.5millionand10.5 million and 18.8 million for the three and six months ended June 30, 2024, respectively, compared to 8.7millionand8.7 million and 17.0 million in the corresponding periods of 2023[79] Cash Flow and Liquidity - Cash and cash equivalents decreased to 50.5millionasofJune30,2024,from50.5 million as of June 30, 2024, from 63.9 million as of December 31, 2023[5] - Net cash provided by operating activities for the six months ended June 30, 2024, was 33.5million,comparedto33.5 million, compared to 22.8 million in 2023[11] - Net cash used in investing activities for the six months ended June 30, 2024, was 948thousand,comparedto948 thousand, compared to 19.3 million in 2023[11] - Cash, cash equivalents, and short-term marketable securities decreased by 21.1millionto21.1 million to 290.5 million as of June 30, 2024, from 311.6millionasofDecember31,2023[82]−Operatingactivitiesgenerated311.6 million as of December 31, 2023[82] - Operating activities generated 33.5 million of cash in the six months ended June 30, 2024, compared to 22.8millioninthesameperiodof2023[83][84]−Investingactivitiesresultedina22.8 million in the same period of 2023[83][84] - Investing activities resulted in a 0.9 million net use of cash in the six months ended June 30, 2024, primarily due to 8.5millionusedforpurchasesofpropertyandequipment[85]−Financingactivitiesresultedina8.5 million used for purchases of property and equipment[85] - Financing activities resulted in a 46.0 million net use of cash in the six months ended June 30, 2024, including 26.0millionforstockrepurchasesand26.0 million for stock repurchases and 22.7 million for dividend payments[86] - The company's working capital decreased by 13.1millionto13.1 million to 449.6 million as of June 30, 2024, from 462.7millionasofDecember31,2023[82]−Thecompanybelievesexistingliquidityandcashgeneratedfromoperationswillsatisfyworkingcapitalandothercashrequirementsforatleastthenext12months[89]StockRepurchasesandDividends−RepurchaseofcommonstockforthesixmonthsendedJune30,2024,was462.7 million as of December 31, 2023[82] - The company believes existing liquidity and cash generated from operations will satisfy working capital and other cash requirements for at least the next 12 months[89] Stock Repurchases and Dividends - Repurchase of common stock for the six months ended June 30, 2024, was 25.9 million, significantly higher than 5.9millionin2023[11]−PaymentsofdividendstostockholdersforthesixmonthsendedJune30,2024,were5.9 million in 2023[11] - Payments of dividends to stockholders for the six months ended June 30, 2024, were 22.7 million, slightly higher than 21.7millionin2023[11]−Thecompanyrepurchased164,000sharesfor21.7 million in 2023[11] - The company repurchased 164,000 shares for 11.3 million in Q2 2024 and 371,000 shares for 26.0millioninthefirsthalfof2024,exhaustingitsauthorizedstockrepurchaseprogram[49]−CashdividendsdeclaredandpaidinQ22024were26.0 million in the first half of 2024, exhausting its authorized stock repurchase program[49] - Cash dividends declared and paid in Q2 2024 were 11.4 million, or 0.20pershare,comparedto0.20 per share, compared to 10.9 million, or 0.19pershare,inQ22023[50]−Dividendpayoutsof0.19 per share, in Q2 2023[50] - Dividend payouts of 11.4 million occurred on March 28, 2024, and June 28, 2024, with quarterly dividends raised to 0.20pershareinOctober2023[86]AssetsandLiabilities−Totalcurrentassetswere0.20 per share in October 2023[86] Assets and Liabilities - Total current assets were 499.8 million as of June 30, 2024, down from 511.6millionasofDecember31,2023[5]−Totalliabilitiesincreasedto511.6 million as of December 31, 2023[5] - Total liabilities increased to 74.0 million as of June 30, 2024, from 67.6millionasofDecember31,2023[5]−AccountsreceivabletradeasofJune30,2024,was67.6 million as of December 31, 2023[5] - Accounts receivable trade as of June 30, 2024, was 46.8 million, down from 53.1millionasofDecember31,2023[17]−AllowanceforcreditlossesasofJune30,2024,was53.1 million as of December 31, 2023[17] - Allowance for credit losses as of June 30, 2024, was 1.0 million, up from 681thousandasofDecember31,2023[17]−Totalinventoriesincreasedto681 thousand as of December 31, 2023[17] - Total inventories increased to 169,884 thousand as of June 30, 2024, compared to 163,164thousandasofDecember31,2023[20]−Intangibleassetsdecreasedto163,164 thousand as of December 31, 2023[20] - Intangible assets decreased to 3,561 thousand as of June 30, 2024, from 4,424thousandasofDecember31,2023[21]−Accumulatedothercomprehensivelossincreasedto4,424 thousand as of December 31, 2023[21] - Accumulated other comprehensive loss increased to 3,189 thousand as of June 30, 2024, compared to 5,757thousandasofJune30,2023[24]−Totalfairvalueofmarketablesecuritieswas5,757 thousand as of June 30, 2023[24] - Total fair value of marketable securities was 267,688 thousand as of June 30, 2024, with 267,197thousandclassifiedunderLevel2ofthefair−valuehierarchy[28]−Investmentsduein3monthsorlesshadanestimatedfairmarketvalueof267,197 thousand classified under Level 2 of the fair-value hierarchy[28] - Investments due in 3 months or less had an estimated fair market value of 3,975 thousand as of June 30, 2024[30] - Total marketable securities as of December 31, 2023, were valued at 247,640thousand,with247,640 thousand, with 247,384 thousand in amortized cost[31] - Total marketable securities as of June 30, 2024, had a fair market value of 190.3millionwithgrossunrealizedlossesof190.3 million with gross unrealized losses of 869,000[32] Stock-Based Compensation - Stock-based compensation expense for the six months ended June 30, 2024, was 17.4million,upfrom17.4 million, up from 14.1 million in 2023[11] - Stock-based compensation expense for the three months ended June 30, 2024, was 11.0million,with11.0 million, with 6.3 million related to RSU awards and 4.3millionrelatedtoPSUandPRSUawards[35]−Stock−basedcompensationexpenseforthesixmonthsendedJune30,2024,was4.3 million related to PSU and PRSU awards[35] - Stock-based compensation expense for the six months ended June 30, 2024, was 17.4 million, with 12.4millionrelatedtoRSUsand12.4 million related to RSUs and 4.3 million related to PSUs and PRSUs[35] - Approximately 38,000 shares subject to PSUs granted in 2023 vested and were released to employees and executives in Q1 2024[37] - PRSUs outstanding as of June 30, 2024, had an aggregate intrinsic value of 30.7millionwithaweighted−averageremainingcontractualtermof1.67years[39]−RSUsoutstandingasofJune30,2024,hadanaggregateintrinsicvalueof30.7 million with a weighted-average remaining contractual term of 1.67 years[39] - RSUs outstanding as of June 30, 2024, had an aggregate intrinsic value of 72.1 million with a weighted-average remaining contractual term of 1.84 years[40] Sales and Customer Concentration - The top ten customers accounted for approximately 80% and 78% of net revenues for the three and six months ended June 30, 2024, respectively[42] - Sales to distributors were 73.5millionand73.5 million and 139.9 million for the three and six months ended June 30, 2024, respectively[42] - Avnet represented 28% and 29% of net revenues for the three and six months ended June 30, 2024, respectively[43] - Avnet accounted for 27% of accounts receivable as of June 30, 2024[46] - International sales accounted for 104.6millionand104.6 million and 194.6 million in the three and six months ended June 30, 2024, respectively, representing 85% and 83% of net revenues[72] - Sales to distributors accounted for 69% and 71% of net revenues in the three and six months ended June 30, 2024, respectively, up from 64% and 63% in the corresponding periods of 2023[72] Geographic Revenue - Geographic net revenues for the three months ended June 30, 2024, were 106.2million,adecreasefrom106.2 million, a decrease from 123.2 million in the same period in 2023[47] - Hong Kong/China contributed 63.1milliontonetrevenuesinQ22024,downfrom63.1 million to net revenues in Q2 2024, down from 76.5 million in Q2 2023[47] - Total net revenues for the six months ended June 30, 2024, were 197.9million,comparedto197.9 million, compared to 229.5 million in the same period in 2023[47] Earnings Per Share and Tax Rates - Earnings per share (diluted) for Q2 2024 were 0.09,comparedto0.09, compared to 0.26 in Q2 2023[6] - Basic earnings per share for Q2 2024 were 0.09,downfrom0.09, down from 0.26 in Q2 2023[52] - The company's effective tax rate for Q2 2024 was 5.8%, compared to 3.7% in Q2 2023[53] - The effective tax rate was 5.8% and 3.5% for the three and six months ended June 30, 2024, respectively, compared to 3.7% and 5.1% in the corresponding periods of 2023[80] - Effective tax rates for the three and six months ended June 30, 2024 were 5.8% and 3.5%, respectively, compared to 3.7% and 5.1% in the corresponding periods of 2023[81] - The company's effective tax rate was favorably impacted by excess tax benefits related to share-based payments in both Q2 2024 and Q2 2023[53] - The company maintains a valuation allowance on its California and New Jersey deferred tax assets, as well as deferred tax assets related to tax credits in Canada[53] Legal and Regulatory Matters - The company is involved in ongoing legal proceedings, including a patent infringement case with CogniPower LLC, with a trial scheduled for August 2025[55] - The company has not incurred any material indemnification claims or reimbursements to distributors or customers as of June 30, 2024[58] Market and Product Strategy - The company's addressable market (SAM) has expanded from 1.5billionpre−2010toapproximately1.5 billion pre-2010 to approximately 4 billion through product introductions and market expansions[65] - The company introduced BridgeSwitch-2 motor-driver ICs in 2024, expanding its addressable power range for motor-drive applications[65] - The company's products contribute to energy efficiency and renewable energy adoption, aligning with global carbon emission reduction goals[64] - The company's system-level power-conversion products offer benefits such as reduced design complexity, smaller size, and higher reliability compared to discrete designs[63] - The company expects automotive applications, particularly in the EV market, to become a significant portion of its SAM over time[65] Other Financial Metrics - Provision for credit loss expense for the six months ended June 30, 2024, was 847thousand,comparedto847 thousand, compared to 827 thousand in 2023[18] - Purchases of marketable securities for the six months ended June 30, 2024, were 77.8million,downfrom77.8 million, down from 110.8 million in 2023[11] - Estimated amortization for intangible assets is projected to be 2,300thousandoverthenextfouryears[23]−Otherincomeincreasedto2,300 thousand over the next four years[23] - Other income increased to 3.2 million and 6.7millionforthethreeandsixmonthsendedJune30,2024,respectively,comparedto6.7 million for the three and six months ended June 30, 2024, respectively, compared to 2.7 million and 4.4millioninthecorrespondingperiodsof2023[79]−Unrecognizedtaxbenefitsandassociatedinteresttotaledapproximately4.4 million in the corresponding periods of 2023[79] - Unrecognized tax benefits and associated interest totaled approximately 16.4 million and 0.3million,respectively,asofJune30,2024[88]AcquisitionsandInvestments−ThecompanyacquiredOdysseySemiconductorTechnologiesfor0.3 million, respectively, as of June 30, 2024[88] Acquisitions and Investments - The company acquired Odyssey Semiconductor Technologies for 9.52 million in cash consideration, expanding its vertical gallium-nitride (GaN) transistor technology capabilities[59]