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Power Integrations(POWI) - 2024 Q4 - Annual Report
POWIPower Integrations(POWI)2025-02-07 21:10
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Financial Performance - Net revenues for 2024 were 418,973,adecreaseof5.7418,973, a decrease of 5.7% from 444,538 in 2023[246]. - Gross profit for 2024 was 224,751,downfrom224,751, down from 228,956 in 2023, reflecting a gross margin of approximately 53.7%[246]. - Operating expenses increased to 206,822in2024,comparedto206,822 in 2024, compared to 193,897 in 2023, primarily due to higher research and development costs[246]. - Net income for 2024 was 32,234,adeclineof42.232,234, a decline of 42.2% from 55,735 in 2023[248]. - Basic earnings per share for 2024 were 0.57,downfrom0.57, down from 0.97 in 2023[246]. - The company reported a total comprehensive income of 30,673for2024,downfrom30,673 for 2024, down from 61,617 in 2023[248]. - Net income for 2024 was 32,234,000,adecreaseof42.932,234,000, a decrease of 42.9% compared to 55,735,000 in 2023 and a significant drop from 170,851,000in2022[252].−Totalassetsincreasedto170,851,000 in 2022[252]. - Total assets increased to 828,826 in 2024, compared to 819,868in2023[251].−Totalliabilitiesroseto819,868 in 2023[251]. - Total liabilities rose to 79,054 in 2024, up from 67,627in2023[251].−Retainedearningsdecreasedto67,627 in 2023[251]. - Retained earnings decreased to 734,039 in 2024 from 753,680in2023[251].−Cashandcashequivalentsdecreasedto753,680 in 2023[251]. - Cash and cash equivalents decreased to 50,972 in 2024 from 63,929in2023[251].−Thecompanyreportedanetdecreaseincashandcashequivalentsof63,929 in 2023[251]. - The company reported a net decrease in cash and cash equivalents of 12,957,000 in 2024, compared to a decrease of 41,443,000in2023[252].−Interestincomefor2024increasedto41,443,000 in 2023[252]. - Interest income for 2024 increased to 13.576 million, up from 11.655millionin2023,reflectingimprovedcashmanagement[368].MarketRiskandCurrencyExposure−Thecompanyreportedasignificantexposuretomarketriskduetochangesininterestrates,primarilyrelatedtoitsinvestmentportfolio,whichincludescashequivalentsandshort−terminvestments[221].−Thepotentialimpactonpretaxincomefroma511.655 million in 2023, reflecting improved cash management[368]. Market Risk and Currency Exposure - The company reported a significant exposure to market risk due to changes in interest rates, primarily related to its investment portfolio, which includes cash equivalents and short-term investments[221]. - The potential impact on pretax income from a 5% and 10% change in the value of the U.S. dollar compared to the Swiss franc and euro is estimated at 132,000 and 263,000respectively[225].−A10263,000 respectively[225]. - A 10% change in the value of the U.S. dollar compared to the Japanese yen could result in a corresponding change in gross margin of approximately 1.4%[229]. - The company has wafer supply agreements with major suppliers that are based in U.S. dollars, allowing for mutual sharing of exchange rate fluctuations[228]. - The company did not have an open foreign currency hedge program as of December 31, 2024, and 2023[227]. Investment and Securities - The company’s investment policy aims to mitigate default risk, market risk, and reinvestment risk by investing in high-credit quality securities[221]. - The company’s marketable securities primarily consisted of commercial paper, corporate bonds, and government securities as of December 31, 2024, with a focus on maintaining liquidity for strategic investments[277]. - The total fair value of the company's cash equivalents and marketable securities increased from 267,688 thousand at December 31, 2023 to 252,388thousandatDecember31,2024[301].−Thecompanyreportedtotalmarketablesecuritiesvaluedat252,388 thousand at December 31, 2024[301]. - The company reported total marketable securities valued at 249,023 thousand as of December 31, 2024, with an amortized cost of 248,135thousand,resultingingrossunrealizedgainsof248,135 thousand, resulting in gross unrealized gains of 1,023 thousand and losses of (135)thousand[302].−Thetotalmarketablesecuritiesinacontinuousunrealizedlosspositiondecreasedfrom(135) thousand[302]. - The total marketable securities in a continuous unrealized loss position decreased from 128,130 thousand at December 31, 2023 to 47,021thousandatDecember31,2024[304].−ThecompanydidnotrecognizeanyunrealizedlossesonmarketablesecuritiesinincomefortheyearsendedDecember31,2024and2023[304].ResearchandDevelopment−Researchanddevelopmentexpensesfor2024were47,021 thousand at December 31, 2024[304]. - The company did not recognize any unrealized losses on marketable securities in income for the years ended December 31, 2024 and 2023[304]. Research and Development - Research and development expenses for 2024 were 88,203 million, slightly up from 85,128millionin2023,indicatingacontinuedinvestmentininnovation[368].−TheCompany’sresearchanddevelopmentcostsareexpensedasincurred,reflectingitscommitmenttoinnovationandproductdevelopment[286].Stock−BasedCompensation−Thecompanyreportedastock−basedcompensationexpenseof85,128 million in 2023, indicating a continued investment in innovation[368]. - The Company’s research and development costs are expensed as incurred, reflecting its commitment to innovation and product development[286]. Stock-Based Compensation - The company reported a stock-based compensation expense of 35,076,000 in 2024, which is an increase of 23.1% from 28,528,000in2023[252].−Totalstock−basedcompensationexpensefortheyearendedDecember31,2024,wasapproximately28,528,000 in 2023[252]. - Total stock-based compensation expense for the year ended December 31, 2024, was approximately 35.1 million, an increase from 28.5millionin2023[316].−TheCompanyrecognizedstock−basedcompensationexpenseofapproximately28.5 million in 2023[316]. - The Company recognized stock-based compensation expense of approximately 12.6 million in research and development for the year ended December 31, 2024[315]. - As of December 31, 2024, the total unrecognized compensation expense related to unvested awards was 55.7million[317].CustomerConcentration−Thecompany′stoptencustomersaccountedforapproximately7955.7 million[317]. Customer Concentration - The company's top ten customers accounted for approximately 79%, 80%, and 76% of revenues in 2024, 2023, and 2022, respectively[332]. - As of December 31, 2024, 87% of accounts receivable were concentrated with the company's top ten customers[334]. Acquisitions - The company acquired Odyssey Semiconductor Technologies for 9.52 million in cash, aimed at enhancing its high-power GaN switching technology[375]. - The company made an acquisition costing 9,520,000in2024,markingastrategicinvestmentingrowth[252].−Thecompanyacquiredin−processresearchanddevelopmentvaluedat9,520,000 in 2024, marking a strategic investment in growth[252]. - The company acquired in-process research and development valued at 4.9 million as part of the Odyssey acquisition, which will not commence amortization until development is completed[306]. Tax and Deferred Tax Assets - The effective tax rate for 2024 was -4.8%, significantly improved from -21.4% in 2023, primarily due to federal research tax credits and the release of uncertain tax positions[351]. - Deferred tax assets increased to 46.288millionin2024from46.288 million in 2024 from 33.357 million in 2023, driven by capitalized R&D costs and tax credit carry-forwards[353]. - The company maintained a valuation allowance of 32.659millionasofDecember31,2024,indicatinguncertaintyregardingtherealizationofcertaindeferredtaxassets[354].−Unrecognizedtaxbenefitsdecreasedto32.659 million as of December 31, 2024, indicating uncertainty regarding the realization of certain deferred tax assets[354]. - Unrecognized tax benefits decreased to 15.175 million in 2024 from 16.389millionin2023,withapotentialincometaxbenefitof16.389 million in 2023, with a potential income tax benefit of 3.8 million if recognized[358]. Lease Obligations - Total lease expense for 2024 was 3.9million,upfrom3.9 million, up from 3.6 million in 2023, reflecting ongoing operational commitments[361]. - The company reported right-of-use assets of 16.076millionandtotalleaseliabilitiesof16.076 million and total lease liabilities of 15.560 million as of December 31, 2024[363]. - The weighted average remaining lease term increased to 5.8 years in 2024 from 3.8 years in 2023, indicating longer commitments[364]. Operational Segments - The company operates as a single reportable segment focused on the design, development, manufacture, and marketing of integrated circuits for high-voltage power conversion[365].