Power Integrations(POWI) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenues for Q1 were $106 million, up 15% year over year and flat sequentially [16] - Non-GAAP EPS for Q1 was $0.31, with a non-GAAP gross margin of 55.9%, up 80 basis points from the prior quarter [16][18] - Cash flow from operations was $26 million, with CapEx at $6 million [19] Business Line Data and Key Metrics Changes - Consumer revenues increased about 20% sequentially, driven by appliances and air conditioning [17] - Industrial revenues decreased 3% sequentially, below expectations due to seasonality [17] - Computer and Communication categories saw mid-teens and mid-20s percentage declines respectively, largely driven by seasonality [17] Market Data and Key Metrics Changes - All four end markets were up year over year, with consumer and computer categories leading with over 20% growth [7] - Industrial is expected to be the fastest-growing market this year, driven by high power design wins [10] - The communications category grew slightly year over year, now dominated by non-Chinese OEM branded accessory chargers [9] Company Strategy and Development Direction - The company is focusing on high voltage semiconductors to meet demand driven by energy efficiency, artificial intelligence, and electrification [14] - The outlook for the second half of the year is highly dependent on trade policy, with expectations for mid-teens growth if tariffs do not impact demand [55] - The company is actively buying back shares, utilizing its strong balance sheet during market volatility [6][19] Management's Comments on Operating Environment and Future Outlook - Management noted stable bookings and healthy distribution inventory, with no significant changes in business trends since the tariff announcement [6] - The company anticipates a seasonally higher second quarter, with revenues expected to be $115 million plus or minus $5 million [12] - Management expressed confidence in the industrial segment's growth, particularly in high voltage DC transmission and renewables [10][36] Other Important Information - The company has authorized an additional $50 million for share repurchases, following $23 million in buybacks during the quarter [19] - Channel inventory is at 7.9 weeks, considered normal, with consumer inventory below normal levels [20][56] Q&A Session Summary Question: Changes in ramp timing or volume for design wins - Management indicated that the delay in high power ramp is unrelated to tariffs and is specific to a particular program, expected to ramp in Q2 [24] Question: Trends for margins for the rest of the year - Management expects non-GAAP gross margin to remain steady around 55.5% for the year, with operating margins benefiting from revenue increases in Q3 and Q4 [26] Question: Strength in automotive design wins - Management reported better than anticipated performance in automotive design wins, with expectations of reaching around $100 million in revenue by 2029 [32] Question: Impact of tariffs on the second half - Management noted that while it is hard to predict the impact of tariffs, they have not seen unusual trends so far and expect mid-teens growth if tariffs do not affect demand [55] Question: Geographic demand and shifts in manufacturing - Management observed that OEMs in China are pragmatic and continue to use their products, with some manufacturing shifting to India and Vietnam [63] Question: Impact of currency fluctuations on gross margins - A 10% change in the yen impacts gross margins by about 100 to 120 basis points, with current conditions providing a benefit of around 200 basis points [66]