Power Integrations(US:POWI)2023-05-04 20:10Financial Performance - Net revenues for the three months ended March 31, 2023, were $106.3 million, a decrease of 41.7% compared to $182.1 million for the same period in 2022[12] - Gross profit for the same period was $54.0 million, down 46.3% from $100.7 million year-over-year[12] - Net income for Q1 2023 was $6.9 million, a decline of 85.1% compared to $46.2 million in Q1 2022[12] - Earnings per share (EPS) for Q1 2023 were $0.12, down from $0.78 in Q1 2022[12] - Total operating expenses decreased to $48.2 million in Q1 2023 from $49.6 million in Q1 2022, mainly due to lower stock-based compensation and patent litigation expenses[105] - Gross margin decreased to 50.8% in Q1 2023 from 55.3% in Q1 2022, primarily due to an unfavorable end-market mix and lower manufacturing volume[104][113] Assets and Liabilities - Total current assets increased to $539.2 million as of March 31, 2023, compared to $525.1 million at the end of 2022[11] - Total liabilities rose to $89.1 million as of March 31, 2023, compared to $84.9 million at the end of 2022[11] - Cash and cash equivalents decreased to $94.2 million from $105.4 million at the end of 2022[20] - Total stockholders' equity increased to $762.3 million as of March 31, 2023, from $755.2 million at the end of 2022[11] - Working capital as of March 31, 2023 was $476.1 million, up approximately $9.4 million from $466.7 million as of December 31, 2022[120] Cash Flow - The company reported a net cash provided by operating activities of $16.6 million for Q1 2023, down from $74.6 million in Q1 2022[20] - Operating activities generated $16.6 million of cash in Q1 2023, with net income of $6.9 million[122] - Investing activities resulted in a cash outflow of $18.3 million in Q1 2023, primarily due to $14.2 million for marketable securities purchases[124] - Financing activities in Q1 2023 resulted in a net cash outflow of $9.5 million, including $10.9 million paid in dividends[126] Market and Sales - The company anticipates continued challenges in demand for its products in major end markets, which may impact future revenues[9] - The Company's top ten customers accounted for approximately 78% of net revenues for the three months ended March 31, 2023, compared to 77% in the same period of 2022[56] - Sales to distributors were $66.8 million for the three months ended March 31, 2023, down from $135.7 million in the same period of 2022[56] - The Company's revenue from Hong Kong/China for the three months ended March 31, 2023, was $59.6 million, a decrease of 43.4% from $105.2 million in the same period of 2022[60] - The Company's revenue from Germany for the three months ended March 31, 2023, was $7.5 million, down from $11.5 million in the same period of 2022[60] Inventory and Receivables - Accounts receivable decreased from $78,914 thousand on December 31, 2022, to $68,860 thousand on March 31, 2023, reflecting a reduction of approximately 12.8%[26] - Total inventories increased from $135,420 thousand on December 31, 2022, to $142,444 thousand on March 31, 2023, representing an increase of approximately 5.5%[29] - The total allowance for credit losses decreased from $1,135 thousand at the beginning of the period to $681 thousand at the end of the period, indicating a reduction of approximately 40%[27] - The allowance for credit losses included recoveries collected of $893 thousand in the three months ended March 31, 2023, compared to $325 thousand in the same period of 2022, reflecting an increase of approximately 174%[27] Dividends and Stock Repurchase - The Company declared dividends of $0.19 per share for the three months ended March 31, 2023, compared to $0.18 per share in the same period of 2022[65] - As of March 31, 2023, the Company had $79.6 million remaining under its authorized stock-repurchase program after purchasing 23,000 shares for $1.7 million[64] - The company declared a dividend of $0.19 per share for 2023, with a payout of $10.9 million on March 31, 2023[128] - As of March 31, 2023, the company had $81.3 million remaining under its stock-repurchase program, having repurchased 23,000 shares for $1.7 million in Q1 2023[131] Research and Development - Research and development expenses increased to $24.0 million in Q1 2023 from $23.7 million in Q1 2022, driven by higher product development costs[114] - The company aims to increase market penetration in AC-DC applications with power outputs up to approximately 500 watts and gate-driver applications ranging from a few kilowatts to gigawatts[94] - The company launched PowerPros℠ in 2022, a live online video support service for power-supply designers, available 24/6 globally[96] - The company expects automotive applications to become a significant portion of its SAM over time, with plans to introduce additional EV-targeted products[97] Legal and Tax Matters - The company believes it has strong claims and defenses in ongoing legal proceedings, but the outcomes remain uncertain[82] - The company maintains a valuation allowance on its California and New Jersey deferred tax assets as of March 31, 2023[73] - Provision for income taxes for Q1 2023 was $0.6 million, down from $5.4 million in Q1 2022, with an effective tax rate of 8.0% compared to 10.4% in the prior year[118] - The effective tax rate for the three months ended March 31, 2023, was 8.0%, lower than the 10.4% effective tax rate in the same period of 2022, primarily due to earnings in lower-tax jurisdictions[72] Market Conditions - Net revenues for the three months ended March 31, 2023, were $106.3 million, a decrease from $182.1 million in the same period of 2022, reflecting a decline in demand due to macroeconomic factors and a cyclical downturn in the semiconductor industry[102][109] - Sales to distributors represented 63% of total sales in Q1 2023, down from 75% in Q1 2022[111] - The addressable market (SAM) has expanded from approximately $1.5 billion in 2010 to about $4 billion, driven by new product introductions and market entries[97] - The introduction of gallium-nitride (GaN) transistors in products began in 2019, enhancing energy efficiency and expanding application ranges[98]