Vicor(VICR) - 2025 Q2 - Quarterly Report

Part I — Financial Information Financial Statements (Unaudited) Unaudited statements for the period ended June 30, 2025, show significant financial improvement driven by a patent settlement and revenue growth Condensed Consolidated Balance Sheets Total assets grew to $693.5 million, primarily from an increase in cash, while total liabilities and equity also rose compared to year-end 2024 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $693,509 | $641,118 | | Cash and cash equivalents | $338,541 | $277,273 | | Inventories | $95,493 | $106,032 | | Total Liabilities | $84,643 | $70,827 | | Total current liabilities | $73,840 | $61,820 | | Total Equity | $608,866 | $570,291 | Condensed Consolidated Statements of Operations The company reported a net income of $41.2 million for Q2 2025, a significant turnaround driven by a $45 million patent settlement Q2 and H1 2025 vs 2024 Performance (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total net revenues and patent litigation settlement | $141,046 | $85,854 | $235,014 | $169,726 | | Patent litigation settlement | $45,000 | $— | $45,000 | $— | | Gross Margin | $92,128 | $42,771 | $136,493 | $87,894 | | Income (loss) from operations | $45,385 | $214 | $45,236 | $(15,901) | | Net income (loss) attributable to Vicor | $41,192 | $(1,196) | $43,731 | $(15,669) | | Diluted EPS | $0.91 | $(0.03) | $0.97 | $(0.35) | Condensed Consolidated Statements of Cash Flows Net cash from operations substantially increased to $85.4 million for the first six months of 2025, boosted by higher net income Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $85,353 | $18,148 | | Net cash used for investing activities | $(10,754) | $(13,411) | | Net cash (used for) provided by financing activities | $(13,469) | $5,138 | | Net increase in cash and cash equivalents | $61,268 | $9,665 | Notes to Condensed Consolidated Financial Statements Notes detail a $45 million patent settlement, revenue growth in Asia Pacific, and an accrued $26 million liability for ongoing litigation - The company received a $45 million payment in May 2025 from the settlement of various lawsuits, arbitrations, and appeals related to certain intellectual property claims[66] Revenue by Product Line (Six Months Ended June 30, in thousands) | Product Line | 2025 | 2024 | | :--- | :--- | :--- | | Advanced Products | $120,423 | $89,648 | | Brick Products | $69,591 | $80,078 | | Total | $190,014 | $169,726 | - The company is appealing a judgment in the SynQor patent infringement lawsuit totaling approximately $26 million, which has been fully accrued as a litigation liability[59][63] - The company operates as a single operating and reportable segment, with performance assessed on a consolidated basis by the CEO[36] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes strong Q2 2025 results to a $45 million patent litigation settlement and an 11.9% increase in net revenues Overview Vicor designs modular power components, focusing investment on its high-growth Advanced Products line for markets like AI and data centers - The company's strategy emphasizes investment in its Advanced Products line for high-growth markets, while maintaining its profitable Brick Products business[78] - Vicor has established a leadership position in the emerging market for powering high-performance processors used for AI acceleration[79] Results of Operations Q2 2025 net revenues rose 11.9% year-over-year, with gross margin surging to 65.3% due to the patent settlement Q2 Revenue by Product Line (in thousands) | Product Line | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Advanced Products | $60,566 | $46,368 | $14,198 | 30.6% | | Brick Products | $35,480 | $39,486 | $(4,006) | (10.1)% | | Total | $96,046 | $85,854 | $10,192 | 11.9% | - Gross margin for Q2 2025 increased to 65.3% of total net revenues and settlement, up from 49.8% in Q2 2024, primarily due to the $45 million patent litigation settlement[87] - SG&A expenses in Q2 2025 increased by $4.6 million (19.9%) YoY, mainly due to $5.1 million in legal fees associated with the patent litigation settlement[88] - For H1 2025, the company reported net income of $43.7 million ($0.97 per diluted share) compared to a net loss of $(15.7) million ($(0.35) per diluted share) for H1 2024[111] Liquidity and Capital Resources The company maintains a strong financial position with $338.5 million in cash and equivalents, sufficient for operational and capital needs - As of June 30, 2025, the company had $338.5 million in cash and cash equivalents and a current ratio of 7.0:1[112] - In H1 2025, primary cash uses included $17.6 million for Common Stock repurchases and $10.8 million for property and equipment purchases[114] - The company has approximately $82.0 million remaining available for stock repurchases under its New Repurchase Authorization as of June 30, 2025[115] Quantitative and Qualitative Disclosures About Market Risk Market risks from interest rate changes and foreign currency fluctuations are identified but not considered significant at this time - The company's long-term investment portfolio consists of a single failed auction rate security with a par value of $3.0 million and an estimated fair value of approximately $2.6 million as of June 30, 2025[122] - Exposure to foreign currency exchange rate risk is primarily related to the operations of its Japanese subsidiary (VJCL), whose functional currency is the Japanese Yen[123] Controls and Procedures Disclosure controls and procedures were deemed effective, and a new ERP system implementation modified internal controls over financial reporting - Management concluded that disclosure controls and procedures were effective as of June 30, 2025[126] - A new enterprise resource planning (ERP) system was implemented in the first half of 2025, leading to changes in internal controls over financial reporting[128] Part II — Other Information Legal Proceedings This section directs readers to Note 11 for details on legal matters, including ongoing litigation and a recent $45 million settlement - For details on legal proceedings, the report refers to Note 11 of the Condensed Consolidated Financial Statements[130] Risk Factors The company reports no material changes to the risk factors previously disclosed in its 2024 Annual Report on Form 10-K - There have been no material changes in the risk factors from those described in the company's 2024 Annual Report on Form 10-K[130] Unregistered Sales of Equity Securities and Use of Proceeds In Q2 2025, the company repurchased 412,219 shares of its common stock for approximately $17.7 million Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 1 - 30, 2025 | 72,400 | $42.86 | | May 1 - 31, 2025 | 258,536 | $42.24 | | June 1 - 30, 2025 | 81,283 | $44.31 | | Total | 412,219 | $43.00 | Other Information No director or Section 16 officer adopted or terminated a Rule 10b5-1 trading arrangement during the second quarter of 2025 - During Q2 2025, no director or Section 16 officer adopted or terminated a Rule 10b5-1 trading arrangement[133] Exhibits This section lists all exhibits filed with the Form 10-Q, including required CEO and CFO certifications - The filing includes certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[134]