Monolithic Power Systems, Inc. (MPS) (Nasdaq: MPWR), a leading
company in high performance analog solutions, today announced
financial results for the quarter ended March 31, 2019.
- Revenue was $141.4 million for
the quarter ended March 31, 2019, a 7.9% decrease from $153.5
million for the quarter ended December 31, 2018 and a 9.5% increase
from $129.2 million for the quarter ended March 31,
2018.
- GAAP gross margin was 55.2% for the
quarter ended March 31, 2019, compared with 55.4% for the quarter
ended March 31, 2018.
- Non-GAAP (1) gross margin was
55.6% for the quarter ended March 31, 2019, excluding the impact of
$0.5 million for stock-based compensation expense and $0.1 million
for the amortization of acquisition-related intangible assets,
compared with 55.9% for the quarter ended March 31, 2018, excluding
the impact of $0.4 million for stock-based compensation expense and
$0.3 million for the amortization of acquisition-related intangible
assets.
- GAAP operating expenses were $56.3
million for the quarter ended March 31, 2019, compared with $49.5
million for the quarter ended March 31, 2018.
- Non-GAAP (1) operating expenses
were $39.0 million for the quarter ended March 31, 2019,
excluding $15.5 million for stock-based compensation expense and
$1.8 million for deferred compensation plan expense, compared with
$35.0 million for the quarter ended March 31, 2018, excluding $14.6
million for stock-based compensation expense and $0.1 million for
deferred compensation plan income.
- GAAP operating income was $21.7
million for the quarter ended March 31, 2019, compared with $22.0
million for the quarter ended March 31, 2018.
- Non-GAAP (1) operating income was
$39.6 million for the quarter ended March 31, 2019, excluding $16.0
million for stock-based compensation expense, $0.1 million for the
amortization of acquisition-related intangible assets and $1.8
million for deferred compensation plan expense, compared with $37.2
million for the quarter ended March 31, 2018, excluding $15.0
million for stock-based compensation expense, $0.3 million for the
amortization of acquisition-related intangible assets and $0.1
million for deferred compensation plan income.
- GAAP interest and other income, net
was $3.3 million for the quarter ended March 31, 2019, compared
with $0.4 million for the quarter ended March 31, 2018.
- Non-GAAP (1) interest and other
income, net was $1.4 million for the quarter ended March 31, 2019,
excluding $1.9 million for deferred compensation plan income,
compared with $0.6 million for the quarter ended March 31, 2018,
excluding $0.2 million for deferred compensation plan
expense.
- GAAP income before income taxes was
$25.1 million for the quarter ended March 31, 2019, compared with
$22.5 million for the quarter ended March 31, 2018.
- Non-GAAP (1) income before income
taxes was $41.0 million for the quarter ended March 31, 2019,
excluding $16.0 million for stock-based compensation expense, $0.1
million for the amortization of acquisition-related intangible
assets and $0.1 million for deferred compensation plan income,
compared with $37.8 million for the quarter ended March 31, 2018,
excluding $15.0 million for stock-based compensation expense and
$0.3 million for the amortization of acquisition-related intangible
assets.
- GAAP net income was $26.2 million
and GAAP earnings per share were $0.58 per diluted share for the
quarter ended March 31, 2019. Comparatively, GAAP net income was
$21.9 million and GAAP earnings per share were $0.49 per diluted
share for the quarter ended March 31, 2018.
- Non-GAAP (1) net income was $37.9
million and non-GAAP earnings per share were $0.84 per diluted
share for the quarter ended March 31, 2019, excluding stock-based
compensation expense, amortization of acquisition-related
intangible assets, net deferred compensation plan income and
related tax effects, compared with non-GAAP net income of $35.0
million and non-GAAP earnings per share of $0.79 per diluted share
for the quarter ended March 31, 2018, excluding stock-based
compensation income, amortization of acquisition-related intangible
assets, net deferred compensation plan expense and related tax
effects.
The following is a summary of revenue by end market for the
periods indicated (in thousands):
|
|
Three Months Ended March 31, |
End Market |
|
2019 |
|
2018 |
Computing and
storage |
|
$ |
39,188 |
|
$ |
30,970 |
Automotive |
|
20,517 |
|
17,732 |
Industrial |
|
21,340 |
|
17,554 |
Communications |
|
22,182 |
|
15,750 |
Consumer |
|
38,136 |
|
47,144 |
Total |
|
$ |
141,363 |
|
$ |
129,150 |
The following is a summary of revenue by product
family for the periods indicated (in thousands):
|
|
Three Months Ended March 31, |
Product
Family |
|
2019 |
|
2018 |
DC to DC |
|
$ |
132,711 |
|
$ |
119,268 |
Lighting
Control |
|
8,652 |
|
9,882 |
Total |
|
$ |
141,363 |
|
$ |
129,150 |
“For the second half of the year, we still see
some uncertainty in our end markets and remain
cautious," said Michael Hsing, CEO and founder of MPS.
"We will continue to adapt to the changing market conditions and
execute as planned,"
Business Outlook
The following are MPS’ financial targets for the
second quarter ending June 30, 2019:
- Revenue in the range of $147.5 million to $153.5
million.
- GAAP gross margin between 54.9% and 55.5%. Non-GAAP (1) gross
margin between 55.3% and 55.9%, which excludes an estimated impact
of stock-based compensation expenses of 0.4%.
- GAAP research and development (“R&D”) and selling, general
and administrative (“SG&A”) expenses between $55.5 million and
$59.5 million. Non-GAAP (1) R&D and SG&A expenses between
$38.5 million and $40.5 million, which excludes an estimate of
stock-based compensation expenses in the range of $17.0 million to
$19.0 million.
- Total stock-based compensation expense of $17.6 million to
$19.6 million.
- Litigation expenses ranging between $300,000 and
$500,000.
- Interest and other income, net, of $1.4 million to $1.6 million
before foreign exchange gains or losses.
- Fully diluted shares outstanding between 45.1 million and 46.1
million.
(1) Non-GAAP net income, non-GAAP earnings per
share, non-GAAP gross margin, non-GAAP R&D and SG&A
expenses, non-GAAP operating expenses, non-GAAP interest and other
income, net, non-GAAP operating income and non-GAAP income before
taxes differ from net income, earnings per share, gross margin,
R&D and SG&A expenses, operating expenses, interest and
other income, net, operating income and income before taxes
determined in accordance with Generally Accepted Accounting
Principles in the United States (GAAP). Non-GAAP net
income and non-GAAP earnings per share exclude the effect of
stock-based compensation expense, amortization of
acquisition-related intangible assets, deferred compensation plan
income/expense and related tax effects. Non-GAAP gross margin
excludes the effect of stock-based compensation expense and
amortization of acquisition-related intangible assets. Non-GAAP
operating expenses exclude the effect of stock-based compensation
expense and deferred compensation plan income/expense. Non-GAAP
interest and other income, net excludes the effect of deferred
compensation plan income/expense. Non-GAAP operating income
excludes the effect of stock-based compensation expense,
amortization of acquisition-related intangible assets and deferred
compensation plan income/expense. Non-GAAP income before taxes
excludes the effect of stock-based compensation expense,
amortization of acquisition-related intangible assets and deferred
compensation plan income/expense. Projected non-GAAP gross margin
excludes the effect of stock-based compensation expense. Projected
non-GAAP R&D and SG&A expenses exclude the effect of
stock-based compensation expense. These non-GAAP financial measures
are not prepared in accordance with GAAP and should not be
considered as a substitute for, or superior to, measures of
financial performance prepared in accordance with GAAP. A schedule
reconciling non-GAAP financial measures is included at the end of
this press release. MPS utilizes both GAAP and non-GAAP financial
measures to assess what it believes to be its core operating
performance and to evaluate and manage its internal business and
assist in making financial operating decisions. MPS believes that
the inclusion of non-GAAP financial measures, together with GAAP
measures, provides investors with an alternative presentation
useful to investors' understanding of MPS' core operating results
and trends. Additionally, MPS believes that the inclusion of
non-GAAP measures, together with GAAP measures, provides investors
with an additional dimension of comparability to similar companies.
However, investors should be aware that non-GAAP financial measures
utilized by other companies are not likely to be comparable in most
cases to the non-GAAP financial measures used by
MPS.
Conference CallMPS plans to
conduct an investor teleconference covering its financial results
at 2:00 p.m. PT / 5:00 p.m. ET, May 2, 2019. To
access the conference call and the following replay of the
conference call, go to http://ir.monolithicpower.com and
click on the webcast link. From this site, you can listen to the
teleconference, assuming that your computer system is configured
properly. In addition to the webcast replay, which will be archived
for all investors for one year on the MPS website, a phone replay
will be available for seven days after the live call at (404)
537-3406, code number 8052948. This press release and any other
information related to the call will also be posted on the
website.
Safe Harbor StatementThis press
release contains, and statements that will be made during the
accompanying teleconference will contain, forward-looking
statements, as that term is defined in the Private Securities
Litigation Reform Act of 1995, including, among other things, (i)
projected revenues, GAAP and non-GAAP gross margin, GAAP and
non-GAAP R&D and SG&A expenses, stock-based compensation
expenses, interest and other income, and diluted shares
outstanding, (ii) our outlook for the long-term prospects of the
company, including our performance against our business plan,
revenue growth in certain of our market segments, our continued
investment into R&D, expected revenue growth, customers'
acceptance of our new product offerings, the prospects of our new
product development, and our expectations regarding market and
industry segment trends and prospects, (iii) our ability to
penetrate new markets and expand our market share, (iv) the
seasonality of our business, (v) our ability to reduce our
expenses, and (vi) statements of the assumptions underlying or
relating to any statement described in (i), (ii), (iii), (iv), or
(v). These forward-looking statements are not historical facts or
guarantees of future performance or events, are based on current
expectations, estimates, beliefs, assumptions, goals, and
objectives, and involve significant known and unknown risks,
uncertainties and other factors that may cause actual results to be
materially different from the results expressed by these
statements. Readers of this press release and listeners to the
accompanying conference call are cautioned not to place undue
reliance on any forward-looking statements, which speak only as of
the date hereof. Factors that could cause actual results to differ
include, but are not limited to, our ability to attract new
customers and retain existing customers; acceptance of, or demand
for, MPS' products, in particular the new products launched
recently, being different than expected; our ability to efficiently
and effectively develop new products and receive a return on our
R&D expense investment; our ability to increase market share in
our targeted markets; competition generally and the increasingly
competitive nature of our industry; any market disruptions or
interruptions in MPS' schedule of new product development releases;
adverse changes in production and testing efficiency of our
products; our ability to realize the anticipated benefits of
companies and products that we acquire, and our ability to
effectively and efficiently integrate these acquired companies and
products into our operations; our ability to manage our inventory
levels; adverse changes in laws and government regulations such as
tariffs on imports of foreign goods, including in foreign countries
where MPS has offices or operations; adverse events arising from
orders of governmental entities, including such orders that impact
our customers, and adopting of new or amended accounting standards;
the effect of catastrophic events; adequate supply of our products
from our third-party manufacturing partners; the risks,
uncertainties and costs of litigation in which we are involved; the
outcome of any upcoming trials, hearings, motions and appeals; the
adverse impact on MPS' financial performance if its tax and
litigation provisions are inadequate; adverse changes or
developments in the semiconductor industry generally, which is
cyclical in nature, and our ability to adjust our operations to
address such changes or developments; difficulty in predicting or
budgeting for future customer demand and channel inventories,
expenses and financial contingencies; the ongoing consolidation of
companies in the semiconductor industry; and other important risk
factors identified in MPS' Securities and Exchange
Commission (SEC) filings, including, but not limited to, our
annual report on Form 10-K filed with
the SEC on March 1, 2019. The forward-looking
statements in this press release and statements made during the
accompanying teleconference represent MPS' projections and current
expectations, as of the date hereof, not predictions of actual
performance. MPS assumes no obligation to update the information in
this press release or in the accompanying conference call.
About Monolithic Power
SystemsMonolithic Power Systems, Inc. (MPS) provides
small, highly energy efficient, easy-to-use power solutions for
systems found in industrial applications, telecom infrastructures,
cloud computing, automotive, and consumer applications. MPS'
mission is to reduce total energy consumption in its
customers' systems with green, practical, compact solutions. The
company was founded by Michael Hsing in 1997 and is based
in the United States. MPS can be contacted through its website
at www.monolithicpower.com or its support offices around the
world.
Monolithic Power Systems, MPS, and the MPS logo
are registered trademarks of Monolithic Power Systems, Inc. in the
U.S. and trademarked in certain other countries.
Contact:Bernie BlegenChief Financial
OfficerMonolithic Power Systems,
Inc.408-826-0777investors@monolithicpower.com
Monolithic Power Systems,
Inc.Condensed Consolidated Balance
Sheets(Unaudited, in thousands, except par value)
|
March
31, |
|
December
31, |
|
|
2019 |
|
|
|
2018 |
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
181,769 |
|
|
$ |
172,704 |
|
Short-term investments |
|
177,255 |
|
|
|
204,577 |
|
Accounts receivable, net |
|
58,889 |
|
|
|
55,214 |
|
Inventories |
|
142,543 |
|
|
|
136,384 |
|
Other current assets |
|
13,629 |
|
|
|
11,931 |
|
Total current assets |
|
574,085 |
|
|
|
580,810 |
|
Property and equipment, net |
|
205,497 |
|
|
|
150,001 |
|
Long-term investments |
|
3,290 |
|
|
|
3,241 |
|
Goodwill |
|
6,571 |
|
|
|
6,571 |
|
Deferred tax assets, net |
|
16,779 |
|
|
|
16,830 |
|
Other long-term assets |
|
41,987 |
|
|
|
35,979 |
|
Total assets |
$ |
848,209 |
|
|
$ |
793,432 |
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
27,259 |
|
|
$ |
22,678 |
|
Accrued compensation and related
benefits |
|
18,969 |
|
|
|
18,799 |
|
Other accrued liabilities |
|
45,348 |
|
|
|
38,962 |
|
Total current liabilities |
|
91,576 |
|
|
|
80,439 |
|
Income tax liabilities |
|
34,375 |
|
|
|
34,375 |
|
Other long-term liabilities |
|
42,007 |
|
|
|
38,525 |
|
Total liabilities |
|
167,958 |
|
|
|
153,339 |
|
Commitments and contingencies |
|
|
|
Stockholders' equity: |
|
|
|
Common stock and additional paid-in
capital, $0.001 par value; shares authorized: |
|
|
|
150,000; shares issued and
outstanding: 43,033 and 42,505, respectively |
|
478,913 |
|
|
|
450,908 |
|
Retained earnings |
|
202,378 |
|
|
|
194,728 |
|
Accumulated other comprehensive
loss |
|
(1,040 |
) |
|
|
(5,543 |
) |
Total stockholders’ equity |
|
680,251 |
|
|
|
640,093 |
|
Total liabilities and stockholders’
equity |
$ |
848,209 |
|
|
$ |
793,432 |
|
|
|
|
|
Monolithic Power Systems,
Inc.Condensed Consolidated Statements of
Operations(Unaudited, in thousands, except per share
amounts)
|
Three Months Ended March 31, |
|
|
2019 |
|
|
|
2018 |
|
Revenue |
$ |
141,363 |
|
|
$ |
129,150 |
|
Cost of revenue |
|
63,357 |
|
|
|
57,655 |
|
Gross profit |
|
78,006 |
|
|
|
71,495 |
|
Operating expenses: |
|
|
|
Research and development |
|
25,458 |
|
|
|
21,609 |
|
Selling, general and
administrative |
|
30,553 |
|
|
|
27,318 |
|
Litigation expense |
|
278 |
|
|
|
531 |
|
Total operating expenses |
|
56,289 |
|
|
|
49,458 |
|
Income from operations |
|
21,717 |
|
|
|
22,037 |
|
Interest and other income, net |
|
3,341 |
|
|
|
440 |
|
Income before income taxes |
|
25,058 |
|
|
|
22,477 |
|
Income tax expense (benefit) |
|
(1,123 |
) |
|
|
621 |
|
Net income |
$ |
26,181 |
|
|
$ |
21,856 |
|
|
|
|
|
Net income per share: |
|
|
|
Basic |
$ |
0.61 |
|
|
$ |
0.52 |
|
Diluted |
$ |
0.58 |
|
|
$ |
0.49 |
|
Weighted-average shares
outstanding: |
|
|
|
Basic |
|
42,749 |
|
|
|
41,922 |
|
Diluted |
|
45,232 |
|
|
|
44,282 |
|
|
|
|
|
SUPPLEMENTAL
FINANCIAL INFORMATION |
STOCK-BASED
COMPENSATION EXPENSE |
(Unaudited, in
thousands) |
|
Three Months Ended March 31, |
|
|
2019 |
|
|
|
2018 |
|
Cost of revenue |
$ |
531 |
|
|
$ |
433 |
|
Research and development |
|
4,429 |
|
|
|
3,995 |
|
Selling, general and
administrative |
|
11,050 |
|
|
|
10,602 |
|
Total stock-based compensation
expense |
$ |
16,010 |
|
|
$ |
15,030 |
|
|
|
|
|
RECONCILIATION OF NET INCOME TO NON-GAAP NET
INCOME |
(Unaudited, in
thousands, except per share amounts) |
|
Three Months Ended March 31, |
|
|
2019 |
|
|
|
2018 |
|
Net income |
$ |
26,181 |
|
|
$ |
21,856 |
|
Net income as a percentage of
revenue |
|
18.5 |
% |
|
|
16.9 |
% |
|
|
|
|
Adjustments to reconcile net
income to non-GAAP net income: |
|
|
|
Stock-based compensation
expense |
|
16,010 |
|
|
|
15,030 |
|
Amortization of acquisition-related
intangible assets |
|
51 |
|
|
|
250 |
|
Deferred compensation plan expense
(income) |
|
(136 |
) |
|
|
49 |
|
Tax effect |
|
(4,197 |
) |
|
|
(2,214 |
) |
Non-GAAP net income |
$ |
37,909 |
|
|
$ |
34,971 |
|
Non-GAAP net income as a percentage
of revenue |
|
26.8 |
% |
|
|
27.1 |
% |
|
|
|
|
Non-GAAP net income per
share: |
|
|
|
Basic |
$ |
0.89 |
|
|
$ |
0.83 |
|
Diluted |
$ |
0.84 |
|
|
$ |
0.79 |
|
|
|
|
|
Shares used in the calculation of
non-GAAP net income per share: |
|
|
|
Basic |
|
42,749 |
|
|
|
41,922 |
|
Diluted |
|
45,232 |
|
|
|
44,282 |
|
|
|
|
|
RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS
MARGIN |
(Unaudited, in
thousands) |
|
Three Months Ended March 31, |
|
|
2019 |
|
|
|
2018 |
|
Gross profit |
$ |
78,006 |
|
|
$ |
71,495 |
|
Gross margin |
|
55.2 |
% |
|
|
55.4 |
% |
|
|
|
|
Adjustments to reconcile gross
profit to non-GAAP gross profit: |
|
|
|
Stock-based compensation
expense |
|
531 |
|
|
|
433 |
|
Amortization of acquisition-related
intangible assets |
|
51 |
|
|
|
250 |
|
Non-GAAP gross profit |
$ |
78,588 |
|
|
$ |
72,178 |
|
Non-GAAP gross margin |
|
55.6 |
% |
|
|
55.9 |
% |
|
|
|
|
RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING
EXPENSES |
(Unaudited, in
thousands) |
|
Three Months Ended March 31, |
|
|
2019 |
|
|
|
2018 |
|
Total operating expenses |
$ |
56,289 |
|
|
$ |
49,458 |
|
|
|
|
|
Adjustments to reconcile total
operating expenses to non-GAAP total operating expenses: |
|
|
|
Stock-based compensation
expense |
|
(15,479 |
) |
|
|
(14,597 |
) |
Deferred compensation plan income
(expense) |
|
(1,799 |
) |
|
|
137 |
|
Non-GAAP operating expenses |
$ |
39,011 |
|
|
$ |
34,998 |
|
|
|
|
|
|
|
|
|
RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING
INCOME |
(Unaudited, in
thousands) |
|
Three Months Ended March 31, |
|
|
2019 |
|
|
|
2018 |
|
Total operating income |
$ |
21,717 |
|
|
$ |
22,037 |
|
|
|
|
|
Adjustments to reconcile total
operating income to non-GAAP total operating income: |
|
|
|
Stock-based compensation
expense |
|
16,010 |
|
|
|
15,030 |
|
Amortization of acquisition-related
intangible assets |
|
51 |
|
|
|
250 |
|
Deferred compensation plan expense
(income) |
|
1,799 |
|
|
|
(137 |
) |
Non-GAAP operating income |
$ |
39,577 |
|
|
$ |
37,180 |
|
|
|
|
|
|
|
|
|
RECONCILIATION OF INTEREST AND OTHER INCOME, NET, TO
NON-GAAP INTEREST AND OTHER INCOME, NET |
(Unaudited, in
thousands) |
|
Three Months Ended March 31, |
|
|
2019 |
|
|
|
2018 |
|
Total interest and other income,
net |
$ |
3,341 |
|
|
$ |
440 |
|
|
|
|
|
Adjustments to reconcile interest
and other income to non-GAAP interest and other income: |
|
|
|
Deferred compensation plan expense
(income) |
|
(1,935 |
) |
|
|
186 |
|
Non-GAAP interest and other
income, net |
$ |
1,406 |
|
|
$ |
626 |
|
|
|
|
|
|
|
|
|
RECONCILIATION OF INCOME BEFORE INCOME TAXES TO NON-GAAP
INCOME BEFORE INCOME TAXES |
(Unaudited, in
thousands) |
|
Three Months Ended March 31, |
|
|
2019 |
|
|
|
2018 |
|
Total income before income
taxes |
$ |
25,058 |
|
|
$ |
22,477 |
|
|
|
|
|
Adjustments to reconcile income
before income taxes to non-GAAP income before income taxes: |
|
|
|
Stock-based compensation
expense |
|
16,010 |
|
|
|
15,030 |
|
Amortization of acquisition-related
intangible assets |
|
51 |
|
|
|
250 |
|
Deferred compensation plan expense
(income) |
|
(136 |
) |
|
|
49 |
|
Non-GAAP income before income
taxes |
$ |
40,983 |
|
|
$ |
37,806 |
|
|
|
|
|
2019 SECOND
QUARTER OUTLOOK |
RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS
MARGIN |
(Unaudited) |
|
Three Months
Ending |
|
June 30, 2019 |
|
Low |
|
High |
Gross margin |
|
54.9 |
% |
|
|
55.5 |
% |
Adjustments to reconcile gross
margin to non-GAAP gross margin: |
|
|
|
Stock-based compensation
expense |
|
0.4 |
% |
|
|
0.4 |
% |
Non-GAAP gross margin |
|
55.3 |
% |
|
|
55.9 |
% |
|
|
|
|
RECONCILIATION OF R&D AND SG&A EXPENSES TO NON-GAAP
R&D AND SG&A EXPENSES |
(Unaudited, in
thousands) |
|
Three Months
Ending |
|
June 30, 2019 |
|
Low |
|
High |
R&D and SG&A expense |
$ |
55,500 |
|
|
$ |
59,500 |
|
Adjustments to reconcile R&D
and SG&A expense to non-GAAP R&D and SG&A expense: |
|
|
|
Stock-based compensation
expense |
|
(17,000 |
) |
|
|
(19,000 |
) |
Non-GAAP R&D and SG&A
expense |
$ |
38,500 |
|
|
$ |
40,500 |
|
|
|
|
|
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