Power Integrations(US:POWI)2024-11-06 21:12Financial Performance - Net revenues for Q3 2024 were $115.8 million, a decrease of 7.7% compared to $125.5 million in Q3 2023[8] - Gross profit for Q3 2024 was $63.2 million, down 4.2% from $65.9 million in Q3 2023[8] - Net income for Q3 2024 was $14.3 million, a decrease of 27.8% compared to $19.8 million in Q3 2023[8] - Earnings per share (diluted) for Q3 2024 were $0.25, compared to $0.34 in Q3 2023[8] - Total comprehensive income for Q3 2024 was $18.5 million, down 6.7% from $19.8 million in Q3 2023[10] - Net income for the nine months ended September 2024 was $23.1 million, compared to $41.5 million in the same period in 2023[13] - Basic EPS was $0.25 and $0.41 for the three and nine months ended September 30, 2024, respectively[55] - Diluted EPS was $0.25 and $0.40 for the three and nine months ended September 30, 2024, respectively[55] - Net revenues for the three months ended September 30, 2024 were $115.8 million, down from $125.5 million in the same period of 2023[84] Cash Flow and Liquidity - Cash and cash equivalents decreased to $58.5 million as of September 30, 2024, from $63.9 million as of December 31, 2023[7] - Net cash provided by operating activities was $66.5 million for the nine months ended September 2024, compared to $49.5 million in 2023[13] - Cash, cash equivalents, and short-term marketable securities decreased to $303.8 million as of September 30, 2024, down from $311.6 million as of December 31, 2023[91] - Operating activities generated $66.5 million of cash in the nine months ended September 30, 2024, compared to $49.5 million in the same period of 2023[95] - Worldwide cash and marketable securities available for capital allocation needs without incurring additional U.S. federal income taxes as of September 30, 2024[99] - Cash generated from operations and existing liquidity sources expected to satisfy working capital and other cash requirements for at least the next 12 months[99] Assets and Liabilities - Total current assets were $507.9 million as of September 30, 2024, a slight decrease from $511.6 million as of December 31, 2023[7] - Accounts receivable increased to $16.6 million as of September 30, 2024, from $14.7 million as of December 31, 2023[7] - Inventories increased to $167.7 million as of September 30, 2024, from $163.2 million as of December 31, 2023[7] - Accounts receivable trade decreased to $50.1 million as of September 30, 2024, from $53.1 million as of December 31, 2023[19] - The allowance for credit losses decreased to $222,000 as of September 30, 2024, from $681,000 as of December 31, 2023[19] - Total stockholders' equity was $749.2 million as of September 30, 2024, compared to $785.1 million as of September 30, 2023[12] - Total inventories increased to $167,680,000 in September 2024 from $163,164,000 in December 2023[21] - Accumulated other comprehensive income (loss) ending balance improved to $2,256,000 in September 2024 from $(2,840,000) in September 2023[22] - Total fair value of marketable securities decreased to $259,713,000 in September 2024 from $267,688,000 in December 2023[26] - Total marketable securities increased to $245,282,000 in September 2024 from $247,640,000 in December 2023[27] - Accrued interest receivable increased to $2.6 million in September 2024 from $2.3 million in December 2023[27] - Total marketable securities as of September 30, 2024, had a fair market value of $24.012 million, with gross unrealized losses of $32 thousand[30] - Goodwill increased by $3.422 million during the nine months ended September 30, 2024, reaching a total of $95.271 million[31] - Total intangible assets as of September 30, 2024, amounted to $46.077 million, with a net value of $8.283 million after accumulated amortization[34] - Estimated amortization for the remaining three months of 2024 is $2.092 million, excluding $4.9 million of in-process research and development[35] Expenses and Costs - Research and development expenses increased to $25.8 million in Q3 2024, up 7.3% from $24.1 million in Q3 2023[8] - Stock-based compensation expense increased to $25.8 million for the nine months ended September 2024, up from $21.0 million in 2023[13] - The company recorded an acquisition-related expense of $9.5 million in the nine months ended September 2024[13] - Research and development expenses increased to 22.3% of net revenues in Q3 2024, up from 19.2% in Q3 2023, reflecting ongoing innovation efforts[78] - R&D expenses increased to $25.8 million for the three months ended September 30, 2024, up from $24.1 million in the same period of 2023, primarily due to higher headcount and salary increases[85][86] - Sales and marketing expenses rose to $17.1 million for the three months ended September 30, 2024, compared to $16.2 million in the same period of 2023, driven by higher stock-based compensation and salary increases[88] - General and administrative expenses increased to $8.6 million for the three months ended September 30, 2024, up from $7.9 million in the same period of 2023, primarily due to higher stock-based compensation and salary increases[87] Shareholder Activities - The company repurchased $25.98 million worth of common stock in the nine months ended September 2024, compared to $7.83 million in 2023[13] - Dividends paid to stockholders totaled $34.1 million for the nine months ended September 2024, up from $32.7 million in 2023[13] - The company repurchased 371,000 shares for $26.0 million in the nine months ended September 30, 2024, exhausting its repurchase authorization[51] - Quarterly cash dividend increased to $0.21 per share starting Q4 2024[52] - The board of directors raised the quarterly cash dividend to $0.21 per share, effective from the fourth quarter of 2024, up from $0.20 per share previously[97] Market and Sales - Top 10 customers accounted for 78% of net revenues for both the three and nine months ended September 30, 2024[45] - Sales to distributors were $80.5 million and $220.4 million in the three and nine months ended September 30, 2024, respectively[46] - Avnet accounted for 31% and 30% of net revenues in the three and nine months ended September 30, 2024, respectively[46] - 84% of accounts receivable were concentrated with the top 10 customers as of September 30, 2024[47] - APAC region accounted for $178.23 million and $215.83 million of net revenues in the nine months ended September 30, 2024 and 2023, respectively[49] - International sales accounted for 98% of net revenues in both Q3 2024 and Q3 2023, with Asia representing 85% of sales in Q3 2024[79] - Top ten customers accounted for 78% of net revenues in Q3 2024, down from 83% in Q3 2023[74] - Consumer end-market sales increased to 38% of net revenues in Q3 2024, up from 26% in Q3 2023[80] Tax and Legal - The company's effective tax rate for the three and nine months ended September 30, 2024 was 0.3% and 1.5%, respectively, compared to 5.1% in the corresponding periods of 2023[56] - The company's effective tax rate is lower than the statutory federal income-tax rate of 21% due to earnings in lower-tax jurisdictions and federal research tax credits[56] - 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[56] - The company is involved in ongoing legal proceedings, including a patent infringement case with CogniPower LLC, with a trial scheduled for August 2025[58] - The company's distributor sales agreements include indemnification provisions for losses related to patent, copyright, or trademark infringement claims[61] Acquisitions and Investments - The company acquired Odyssey Semiconductor Technologies for $9.52 million in cash, with $1.168 million allocated to property and equipment, $4.93 million to in-process research and development, and $3.422 million to goodwill[62][63] - The Company acquired in-process research and development assets worth $4.9 million from Odyssey Semiconductor Technologies in July 2024[32] - The company's acquisition of Odyssey Semiconductor Technologies is intended to augment its development of high-power GaN switching technology[62] Product and Technology - The company's products are used in AC-DC power supplies for various electronic devices, including appliances, mobile phones, and electric vehicles[69] - The company's system-level power-conversion products offer benefits such as reduced design complexity, smaller size, and lower energy consumption[69] - The company's EcoSmart™ and PowiGaN™ technologies contribute to energy efficiency and renewable energy adoption, aligning with global carbon reduction goals[70] - New products like BridgeSwitch-2 and automotive-qualified products are expected to further expand the SAM, particularly in the EV market[71] - The company's addressable market (SAM) expanded from $1.5 billion pre-2010 to approximately $4 billion through product introductions and market expansions[71] Risk and Compliance - No material changes in contractual commitments as of September 30, 2024 compared to December 31, 2023[99] - No material changes in interest rate risk and foreign currency exchange risk during the first nine months of 2024[101] - The company's wafer-supply agreements with Seiko Epson Corporation and ROHM Lapis Semiconductor Co., Ltd. include mutual sharing of exchange rate fluctuations between the Japanese yen and the U.S. dollar[57] Stock-Based Compensation - Stock-based compensation expense for the three months ended September 30, 2024, was $8.338 million, with $6.6 million related to RSU awards[36] - Approximately 38,000 shares subject to PSUs granted in 2023 vested in February 2024, with an aggregate intrinsic value of $11.121 million as of September 30, 2024[40] - Outstanding PRSUs as of September 30, 2024, totaled 421 thousand shares, with an aggregate intrinsic value of $26.982 million[42] - Outstanding RSUs at September 30, 2024 were 988,000 shares with a weighted-average grant date fair value of $71.18 per share and an aggregate intrinsic value of $63.36 million[43]