Power Integrations(US:POWI)2024-02-12 21:10Financial Performance - Net revenues for 2023 were $444.5 million, a decrease of 31.8% compared to $651.1 million in 2022[252]. - Gross profit for 2023 was $229.0 million, down from $366.9 million in 2022, reflecting a gross margin of 51.6%[252]. - Operating expenses increased to $193.9 million in 2023, compared to $186.5 million in 2022, with R&D expenses at $96.1 million[252]. - Net income for 2023 was $55.7 million, a significant decrease from $170.9 million in 2022[254]. - Basic earnings per share for 2023 were $0.97, down from $2.96 in 2022[252]. - The company reported a total comprehensive income of $61.6 million for 2023, compared to $167.2 million in 2022[254]. - Net income for 2023 decreased to $55.735 million from $170.851 million in 2022, representing a decline of approximately 67.4%[258]. - Total assets decreased to $819.9 million in 2023 from $840.1 million in 2022[249]. - Total liabilities reduced to $67.6 million in 2023, down from $84.9 million in 2022[249]. - Retained earnings as of December 31, 2023, were $753.7 million, a decrease from $762.5 million in 2022[249]. - Cash and cash equivalents decreased to $63.9 million in 2023 from $105.4 million in 2022[249]. Cash Flow and Investments - Net cash provided by operating activities fell to $65.759 million in 2023, down from $215.343 million in 2022, a decrease of about 69.5%[258]. - Cash and cash equivalents at the end of 2023 were $63.929 million, compared to $105.372 million at the end of 2022, reflecting a decrease of 39.3%[258]. - Purchases of marketable securities surged to $191.211 million in 2023, compared to $55.820 million in 2022, indicating a significant increase of 242.5%[258]. - The company experienced a net cash outflow from financing activities of $93.049 million in 2023, down from $346.424 million in 2022, a decrease of 73.1%[258]. - Cash paid for income taxes decreased to $13.769 million in 2023 from $17.880 million in 2022, a decline of 23.5%[258]. - As of December 31, 2023, the total fair value of the Company's cash equivalents and marketable securities was $267.688 million, a decrease from $307.487 million in 2022, representing a decline of approximately 12.9%[305]. - The Company held $20.275 million in commercial paper and $246.922 million in corporate securities as of December 31, 2023, with no instruments classified within Level 3 of the fair-value hierarchy[305]. Inventory and Assets - The company routinely evaluates inventory and records provisions for excess and obsolete inventories, which is critical for maintaining accurate financial reporting[243]. - The company's total inventory increased to $163.2 million in 2023, up from $135.4 million in 2022, with raw materials accounting for $96.5 million[300]. - Property and equipment net value as of December 31, 2023, was $164.2 million, compared to $176.7 million in 2022, with total depreciation expense for 2023 being approximately $35.2 million[301]. - The carrying amount of goodwill remained unchanged at $91.8 million for both 2023 and 2022, indicating stability in this asset category[309]. Foreign Exchange and Risk Management - A 10% change in the value of the U.S. dollar compared to the Japanese yen would result in a corresponding change in gross margin of approximately 1.5%[235]. - The potential impact on pretax income from a 5% and 10% change in the value of the U.S. dollar against the Swiss franc and euro is estimated at $125,000 and $250,000 respectively[232]. - The company does not hold any instruments for trading purposes, emphasizing a conservative investment strategy[228]. - The company has wafer supply agreements with major suppliers that are denominated in U.S. dollars, which helps mitigate foreign exchange risks[234]. - The company did not have an open foreign currency hedge program as of December 31, 2023, indicating a straightforward approach to currency risk management[233]. - The company recognized a foreign exchange loss of $0.4 million in 2023, compared to an immaterial loss in 2022 and a loss of $0.6 million in 2021[286]. Employee Compensation and Stock Plans - The Company had approximately 4.4 million shares of common stock reserved for future grant under all stock plans, indicating ongoing commitment to employee compensation[319]. - Stock-based compensation expense for the year ended December 31, 2023, was approximately $28.5 million, an increase of 27% from $22.4 million in 2022[321][322]. - Total unrecognized compensation expense related to unvested awards as of December 31, 2023, was $47.0 million, with 46,856 thousand related to restricted stock units and 155 thousand related to the purchase plan[321]. - The intrinsic value of PRSU awards outstanding as of December 31, 2023, was $20.99 million[331]. - The weighted average remaining recognition period for unrecognized compensation expense related to restricted stock units is 2.66 years[321]. - The Company’s performance-based awards program allows for shares to be released at the end of the performance year based on performance metrics, with a range from zero to 200% of the target number[325]. Customer Concentration and Sales - The Company's top ten customers accounted for approximately 80% of revenues in 2023, up from 76% in 2022[337]. - Sales to distributors in 2023 were $307.4 million, a decrease of 33% from $457.7 million in 2022[337]. - As of December 31, 2023, 86% of accounts receivable were concentrated with the Company's top ten customers[339]. - The company's accounts receivable from Avnet represented 39% of total customer accounts in 2023, down from 42% in 2022[340]. - Geographic net revenues from Hong Kong/China were $265.9 million in 2023, a decrease of 25.5% from $356.9 million in 2022[341]. - The company's foreign operations generated income before income taxes of $42.9 million in 2023, down from $166.2 million in 2022[355]. Tax and Compliance - Deferred tax assets increased to $33.4 million in 2023 from $24.7 million in 2022, primarily due to capitalized R&D costs[356]. - The effective tax rate for 2023 was -21.4%, significantly impacted by the geographic distribution of earnings and the release of reserves related to uncertain tax positions[355]. - The Company's total unrecognized tax benefits as of December 31, 2023, were $16.4 million, down from $23.4 million in 2022 and $21.4 million in 2021[361]. - An income tax benefit of $4.5 million would be recorded if the fiscal year 2023 unrecognized tax benefits are recognized[361]. Lease and Pension Obligations - Total lease expense for the year ended December 31, 2023, was $3.6 million, compared to $3.3 million in both 2022 and 2021[364]. - The projected benefit obligation for the Company's pension plan was $11.4 million as of December 31, 2023, with plan assets of $7.9 million, resulting in a net pension liability of $3.5 million[376]. - The Company expects to make contributions of approximately $0.4 million to the Pension Plan during 2024[376]. - Cash paid for operating leases was $3.6 million in 2023, an increase from $3.2 million in 2022[368]. - The weighted average remaining lease term decreased to 3.8 years in 2023 from 4.0 years in 2022[368]. - Future minimum lease payments total $11.2 million as of December 31, 2023[368].