Monolithic Power Systems, Inc. (NASDAQ:MPWR) Q1 2023 Earnings Conference Call May 4, 2023 5:00 PM ET Company Participants Bernie Blegen - VP & CFO Michael Hsing - Founder, Chairman, President & CEO Conference Call Participants Tore Svanberg - Stifel, Nicolaus & Company Nathaniel Bolton - Needham & Company Matthew Ramsay - TD Cowen Richard Schafer - Oppenheimer Ross Seymore - Deutsche Bank William Stein - Truist Securities Operator Welcome, everyone, to the MPS' First Quarter 2023 Earnings Webinar. My name i ...

For the quarterly period ended March 31, 2023 OR Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 000-51026 Monolithic Power Systems, Inc. (Exact name of registrant as specified in its charter) Delaware 77-0466789 (State or other jurisdiction of ...

Part I [Business](index=6&type=section&id=Item%201%2E%20Business) MPS is a fabless semiconductor company specializing in high-performance power electronic solutions, with DC to DC products as its main revenue source - MPS is a fabless semiconductor company providing high-performance power electronic solutions, focusing on system integration, energy efficiency, and compact design[17](index=17&type=chunk) Revenue by End Market (2020-2022) | End Markets | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Storage and computing | 25.3% | 21.2% | 21.4% | | Enterprise Data | 14.0% | 9.6% | 8.6% | | Automotive | 16.7% | 16.9% | 12.9% | | Industrial | 12.2% | 15.3% | 14.2% | | Communications | 14.0% | 13.6% | 16.8% | | Consumer | 17.8% | 23.4% | 26.1% | - The DC to DC product family is the company's main revenue driver, accounting for **95% of total revenue** in 2022, 2021, and 2020, with Lighting Control accounting for the remaining **5%**[22](index=22&type=chunk)[23](index=23&type=chunk) - The company has a significant concentration of sales in Asia, accounting for **86% of revenue in 2022**, with its largest distributor representing **24% of total revenue** in 2022[26](index=26&type=chunk)[29](index=29&type=chunk) - As of December 31, 2022, MPS held **1,557 patents/applications issued or pending**, including **546 US patents**, operating a fabless model with third-party foundries in Asia[37](index=37&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk) - The company's employee count grew from **2,773** at the end of 2021 to **3,247** at the end of 2022[49](index=49&type=chunk) [Risk Factors](index=15&type=section&id=Item%201A%2E%20Risk%20Factors) The company faces risks from Asian market dependence, industry cyclicality, supply chain, cybersecurity, and intellectual property - A significant portion of revenue, **86% in 2022**, is derived from customers in Asia, exposing the company to geopolitical, regulatory, and economic risks, particularly in China, Taiwan, and Hong Kong[65](index=65&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk) - The business is subject to risks from U.S. and China trade policies, including tariffs and export restrictions, which could limit sales and increase costs[79](index=79&type=chunk)[80](index=80&type=chunk) - Dependence on a limited number of distributors and customers is a key risk, as the loss of a major customer could adversely affect financial results[96](index=96&type=chunk) - The company relies on third-party suppliers for wafers and assembly, and any disruption, capacity constraint, or price increase could negatively impact revenue and gross margins[103](index=103&type=chunk)[108](index=108&type=chunk)[112](index=112&type=chunk) - The semiconductor industry is highly cyclical and competitive, with MPS facing competition from larger companies and risks from industry consolidation[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk) - Cybersecurity threats, data protection breaches, and system failures pose significant risks to operations, reputation, and financial stability, compounded by complex data protection laws like GDPR and PIPL[123](index=123&type=chunk)[127](index=127&type=chunk) - The loss of key personnel, particularly experienced analog engineers and key executives, could materially harm the business due to specialized skill requirements[153](index=153&type=chunk) [Unresolved Staff Comments](index=43&type=section&id=Item%201B%2E%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[173](index=173&type=chunk) [Properties](index=43&type=section&id=Item%202%2E%20Properties) MPS owns and leases global facilities for executive, R&D, sales, and manufacturing operations, deemed adequate - The company owns major facilities in Kirkland, WA (principal executive office), San Jose, CA, and multiple locations in Chengdu, China for manufacturing and R&D[174](index=174&type=chunk) - Key leased properties include manufacturing and warehouse space in Chengdu, China, and R&D facilities in Barcelona, Spain, and Hsinchu, Taiwan[174](index=174&type=chunk) [Legal Proceedings](index=43&type=section&id=Item%203%2E%20Legal%20Proceedings) As of December 31, 2022, the company reported no material pending legal proceedings in the ordinary course of business - As of December 31, 2022, the company had no material pending legal proceedings[175](index=175&type=chunk) [Mine Safety Disclosures](index=43&type=section&id=Item%204%2E%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[176](index=176&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=44&type=section&id=Item%205%2E%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under "MPWR", with a dividend program for quarterly cash dividends - Common stock is traded on the Nasdaq Global Select Market under the symbol **"MPWR"**[179](index=179&type=chunk) - The company has a dividend program and intends to pay quarterly cash dividends, with future declarations at the discretion of the Board of Directors[180](index=180&type=chunk)[181](index=181&type=chunk) [[Reserved]](index=46&type=section&id=Item%206%2E%20%5BReserved%5D) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=46&type=section&id=Item%207%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) MPS achieved **$1.79 billion** revenue in 2022, with improved gross margin and doubled operating income, maintaining strong liquidity [Results of Operations](index=51&type=section&id=Results%20of%20Operations) For 2022, revenue increased **48.5%** to **$1.79 billion**, with gross profit up **53.0%** and operating income surging **100.8%** Consolidated Results of Operations (in thousands) | | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Revenue | $1,794,148 | $1,207,798 | $844,452 | | Gross profit | $1,048,552 | $685,459 | $465,954 | | Operating income | $526,785 | $262,417 | $158,882 | | Net income | $437,672 | $242,023 | $164,375 | Revenue by End Market (in thousands) | End Market | 2022 | 2021 | % Change (2021 to 2022) | | :--- | :--- | :--- | :--- | | Storage and Computing | $452,594 | $255,933 | 76.8% | | Enterprise Data | $251,415 | $116,345 | 116.1% | | Automotive | $300,016 | $204,335 | 46.8% | | Industrial | $219,179 | $184,784 | 18.6% | | Communications | $251,452 | $164,091 | 53.2% | | Consumer | $319,492 | $282,310 | 13.2% | | **Total** | **$1,794,148** | **$1,207,798** | **48.5%** | - Gross margin increased to **58.4% in 2022** from **56.8% in 2021**, primarily due to lower warranty expenses and a favorable product mix[221](index=221&type=chunk) - R&D expenses increased by **$49.6 million (26.0%)** in 2022, and SG&A expenses increased by **$47.4 million (21.0%)**, both primarily due to higher compensation costs[223](index=223&type=chunk)[225](index=225&type=chunk) [Liquidity and Capital Resources](index=55&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2022, the company held **$737.9 million** in cash and investments, with **$1.15 billion** working capital, sufficient for liquidity Key Liquidity Metrics (in thousands) | | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $288,607 | $189,265 | | Short-term investments | $449,266 | $535,817 | | **Total cash, cash equivalents and short-term investments** | **$737,873** | **$725,082** | | Working capital | $1,147,219 | $897,908 | Summary of Cash Flows (in thousands) | | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $246,674 | $320,010 | $267,803 | | Net cash used in investing activities | $(12,510) | $(378,886) | $(39,177) | | Net cash used in financing activities | $(128,785) | $(90,206) | $(71,557) | - The company has material cash requirements, including total estimated future unconditional purchase commitments of **$1.1 billion** as of December 31, 2022[241](index=241&type=chunk)[242](index=242&type=chunk) - In May 2022, MPS entered a long-term supply agreement for silicon wafers, making a prepayment of **$170.0 million**[242](index=242&type=chunk) - In February 2023, the Board of Directors approved an increase in the quarterly cash dividend from **$0.75 to $1.00 per share**[246](index=246&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=58&type=section&id=Item%207A%2E%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from interest rates and foreign currency exchange, with interest rate fluctuations posing a notable impact - The company's investments are subject to interest rate risk, where a hypothetical **100 basis point** increase would cause a **$3.2 million** decline in fair value as of year-end 2022[250](index=250&type=chunk) - Foreign currency exchange risk exists due to international operations, but fluctuations have not materially impacted operating results for the periods presented[252](index=252&type=chunk) [Financial Statements and Supplementary Data](index=59&type=section&id=Item%208%2E%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2022, along with detailed notes and supplementary data Consolidated Balance Sheet Data (in thousands) | | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Total current assets** | **$1,410,619** | **$1,124,852** | | Total assets | $2,058,885 | $1,585,825 | | **Total current liabilities** | **$263,400** | **$226,944** | | Total liabilities | $390,283 | $341,840 | | Total stockholders' equity | $1,668,602 | $1,243,985 | Consolidated Statement of Operations Data (in thousands) | | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2021 | | :--- | :--- | :--- | | Revenue | $1,794,148 | $1,207,798 | | Gross profit | $1,048,552 | $685,459 | | Operating income | $526,785 | $262,417 | | Net income | $437,672 | $242,023 | | Diluted EPS | $9.05 | $5.05 | - Ernst & Young LLP issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2022[258](index=258&type=chunk)[269](index=269&type=chunk) - A critical audit matter identified was the valuation of inventory, specifically estimates for excess and obsolete inventory, due to subjective judgment in demand forecasting[263](index=263&type=chunk)[264](index=264&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=106&type=section&id=Item%209%2E%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[445](index=445&type=chunk) [Controls and Procedures](index=106&type=section&id=Item%209A%2E%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2022 - Management concluded that disclosure controls and procedures were effective as of December 31, 2022[447](index=447&type=chunk) - Management concluded that internal control over financial reporting was effective as of December 31, 2022, an assessment concurred by Ernst & Young LLP[448](index=448&type=chunk)[449](index=449&type=chunk) [Other Information](index=106&type=section&id=Item%209B%2E%20Other%20Information) The company reports no other information for this item - None[452](index=452&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=106&type=section&id=Item%209C%2E%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[453](index=453&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=107&type=section&id=Item%2010%2E%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2023 Proxy Statement - Required information is incorporated by reference from the company's 2023 Proxy Statement[455](index=455&type=chunk) [Executive Compensation](index=107&type=section&id=Item%2011%2E%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's 2023 Proxy Statement - Required information is incorporated by reference from the company's 2023 Proxy Statement[456](index=456&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=107&type=section&id=Item%2012%2E%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership and equity compensation plans is incorporated by reference from the 2023 Proxy Statement - Required information is incorporated by reference from the company's 2023 Proxy Statement[457](index=457&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=107&type=section&id=Item%2013%2E%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the 2023 Proxy Statement - Required information is incorporated by reference from the company's 2023 Proxy Statement[458](index=458&type=chunk) [Principal Accountant Fees and Services](index=107&type=section&id=Item%2014%2E%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the 2023 Proxy Statement - Required information is incorporated by reference from the company's 2023 Proxy Statement[459](index=459&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=108&type=section&id=Item%2015%2E%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists documents filed as part of the Form 10-K, including consolidated financial statements and a comprehensive exhibit list - All required financial statements are included in the report[460](index=460&type=chunk) - Financial statement schedules have been omitted as the required information is not present or is included elsewhere in the report[461](index=461&type=chunk) - A comprehensive list of exhibits is provided, including corporate governance documents, material contracts, and Sarbanes-Oxley certifications[462](index=462&type=chunk)[464](index=464&type=chunk) [Form 10-K Summary](index=112&type=section&id=Item%2016%2E%20Form%2010-K%20Summary) The company provides no summary for this item - None[469](index=469&type=chunk)

Financial Data and Key Metrics Changes - For the full year 2022, Monolithic Power Systems (MPS) achieved record revenue of $1.79 billion, growing 48.5% from the prior year despite industry-wide supply chain constraints [8] - Q4 2022 revenue was $460 million, down 7.1% from Q3 2022 but up 36.7% from Q4 2021 [26] - Q4 2022 non-GAAP net income was $154 million or $3.17 per fully diluted share, compared to $3.53 per share in Q3 2022 and $2.12 per share in Q4 2021 [22] - Q4 2022 GAAP gross margin was 58.2%, down 50 basis points from Q3 2022 but up 60 basis points from Q4 2021 [27] Business Line Data and Key Metrics Changes - Enterprise Data revenue grew 116.1% year-over-year to $251.4 million, primarily due to higher sales of power management solutions for cloud-based applications [14] - Storage and Computing revenue increased 76.8% to $452.6 million, driven by strong sales growth for storage applications and enterprise notebooks [15] - Automotive revenue rose 46.8% to $300 million, reflecting increased sales for automated driver assistance systems [24] - Industrial revenue grew 18.6% to $218.2 million, while Consumer revenue increased 13.2% to $319.5 million [16] Market Data and Key Metrics Changes - In Q4 2022, Automotive revenue grew 72.8%, Enterprise Data revenue increased 69.0%, and Storage and Computing revenue grew 55.0% year-over-year [18] - Consumer revenue decreased by 20.1% in Q4 2022 compared to the previous year [18] Company Strategy and Development Direction - MPS is diversifying its global footprint by expanding R&D centers and supply chain partnerships outside of China to better align with customer demand [12] - The company introduced a new product line of isolated power modules for applications exceeding 1 kilowatt, with initial revenue expected in 2024 [9] - MPS aims to leverage its advanced technologies and product quality to maintain a competitive edge in the market [8] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding near-term business conditions due to elevated inventory levels but noted the ability to adapt to market changes [17] - For Q1 2023, MPS forecasts revenue in the range of $440 million to $460 million, with GAAP gross margin expected between 57.4% and 58.0% [35] Other Important Information - MPS announced a 33% increase in its quarterly dividend to $1 per share [38] - The company is focusing on business development and investing in infrastructure to support long-term growth [38] Q&A Session Summary Question: Outlook for computing storage business - Management noted that while there is weakness in notebooks, memory sales remain strong, and they expect notebooks to improve in early 2023, leading to a flat outlook for the first half of the year [42][44] Question: Update on power isolation module business - MPS is venturing into wide bandgap materials and expects to see results in the second half of the year [51] Question: Impact of sourcing outside China - Management clarified that MPS has significant manufacturing capacity outside of China and has not seen any revenue impact from customers wanting to source products outside of China [66] Question: Consumer business strategy - Management indicated that they are prepared to be more aggressive in the consumer market as opportunities arise, despite it being a smaller segment of revenue [68][70] Question: Inventory levels and revenue growth contributors - Management confirmed that channel inventories have stabilized and that revenue growth is driven by a mix of ASP increases and unit growth [79][81] Question: Concerns about 2022 growth sustainability - Management emphasized that their products are unique and programmable, which helps maintain market share despite potential headwinds [97] Question: Update on data converter business - Management acknowledged the high barriers to entry in the data converter market but expressed optimism about their competitive positioning [132]

Monolithic Power Systems, Inc. (NASDAQ:MPWR) Q3 2022 Earnings Conference Call October 27, 2022 4:30 PM ET Company Representatives Michael Hsing - Chief Executive Officer, Founder Bernie Blegen - Vice President, Chief Financial Officer Genevieve Cunningham - Marketing Communications Manager Conference Call Participants Matt Ramsay - Cowen Quinn Bolton - Needham William Stein - Truist Jeremy Kwan - Stifel Rick Schafer - Oppenheimer Alex Vecchi - William Blair Melissa Fairbanks - Raymond James Genevieve Cunnin ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 000-51026 Monolithic Power Systems, Inc. (Exact name of registrant as specified in its charter) Delaware 77-0466789 (State or other jurisdiction of ...

Monolithic Power Systems, Inc. (NASDAQ:MPWR) Q2 2022 Earnings Conference Call August 1, 2022 5:00 PM ET Company Participants Genevieve Cunningham - Marketing Communications Manager Michael Hsing - Chief Executive Officer and Founder Bernie Blegen - Vice President and Chief Financial Officer Conference Call Participants Rick Schafer - Oppenheimer Matt Ramsay - Cowen William Stein - Truist Quinn Bolton - Needham Tore Svanberg - Stifel Ross Seymore - Deutsche Bank Melissa Fairbanks - Raymond James Alessandra V ...

MPS Management June 2, 2022 Forward Looking Statements 1 This presentation includes forward-looking statements that involve risks and uncertainties, including our belief in continued expansion of our product lines, advances in our technology, anticipated market opportunities, gross margin targets, net & operating margin targets, inventory targets, continuing business diversification, growth and opportunities in China and Taiwan, and increasing sales penetration in Japan, Korea, the U.S., Singapore and Europ ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 000-51026 Monolithic Power Systems, Inc. (Exact name of registrant as specified in its charter) Delaware 77-0466789 1 Table of Contents Indicate by ...

Monolithic Power Systems, Inc. (NASDAQ:MPWR) Q1 2022 Earnings Conference Call May 2, 2022 5:00 PM ET Company Participants Genevieve Cunningham - Supervisor, Marketing Communications Bernie Blegen - VP & CFO Michael Hsing - Founder, Chairman, President & CEO Conference Call Participants Alex Vecchi - William Blair & Company Matthew Ramsay - Cowen and Company Nathaniel Bolton - Needham & Company William Stein - Truist Securities Richard Schafer - Oppenheimer Christopher Caso - Raymond James & Associates Tore ...