Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 6, 2024

______________

Power Integrations, Inc.

(Exact name of registrant as specified in its charter)

______________


Delaware	000-23441	94-3065014
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

5245 Hellyer Avenue

San Jose, California 95138-1002

(Address of principal executive offices, including zip code)

Registrant's telephone number, including area code (408) 414-9200

______________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 Par Value	POWI	The Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).


Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.	☐

Item 2.02. Results of Operations and Financial Condition.

On August 6, 2024 the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.


	Exhibit 99.1	Press release dated August 6, 2024
	Exhibit 104	Cover Page Interactive Data File (Formatted as Inline XBRL)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


		Power Integrations, Inc.

Dated:	August 6, 2024	By:	/s/ SANDEEP NAYYAR
			Sandeep Nayyar
			Chief Financial Officer

Exhibit 99.1

Power Integrations Reports Second-Quarter Financial Results

Quarterly revenues were $106.2 million; GAAP earnings were $0.09 per diluted share; non-GAAP earnings were $0.28 per diluted share

SAN JOSE, CALIF. – August 6, 2024 – Power Integrations (NASDAQ: POWI) today announced financial results for the quarter ended June 30, 2024. Net revenues for the second quarter were $106.2 million, up 16 percent from the prior quarter and down 14 percent from the second quarter of 2023. GAAP net income for the second quarter was $4.8 million or $0.09 per diluted share compared to $0.07 per diluted share in the prior quarter and $0.26 per diluted share in the second quarter of 2023. Cash flow from operations for the second quarter was $17.6 million.

In addition to its GAAP results, the company provided non-GAAP measures that exclude stock-based compensation, amortization of acquisition-related intangible assets and the related tax effects. Non-GAAP net income for the second quarter of 2024 was $15.9 million or $0.28 per diluted share compared to $0.18 per diluted share in the prior quarter and $0.36 per diluted share in the second quarter of 2023. A reconciliation of GAAP to non-GAAP financial results is included with the tables accompanying this press release.

Stated Balu Balakrishnan, chairman and CEO of Power Integrations: “Second-quarter revenues rebounded as expected, and while demand continues to be soft and visibility is limited, we expect another sequential increase in the third quarter driven by lower distributor inventories and new design wins. We also expect a further increase in our gross margin driven by the favorable dollar/yen exchange rate and higher manufacturing volumes.”

Additional Highlights

●

On July 1, 2024, Power Integrations completed its acquisition of the assets of Odyssey Semiconductor Technologies. The transaction is intended to augment the company’s development of high-power gallium-nitride (GaN) switching technology.

●

During the second quarter Power Integrations repurchased 164 thousand shares of its common stock for $11.3 million, completing its repurchase authorization.

●

Power Integrations paid a dividend of $0.20 per share on June 28, 2024; a dividend of $0.20 per share will be paid on September 30, 2024, to stockholders of record as of August 30, 2024.

Financial Outlook

The company issued the following forecast for the third quarter of 2024:

●

Revenues are expected to be $115 million plus or minus $5 million.

●

GAAP gross margin is expected to be between 53.5 percent and 54.0 percent; non-GAAP gross margin is expected to be between 54.5 percent and 55.0 percent. The difference between GAAP and non-GAAP gross margins is approximately equally attributable to stock-based compensation and amortization of acquisition-related intangible assets.

●

GAAP operating expenses are expected to be between $53.5 million and $54 million; non-GAAP operating expenses are expected to be between $44.5 million and $45 million. Non-GAAP operating expenses are expected to exclude approximately $9 million of stock-based compensation.

Conference Call Today at 1:30 p.m. Pacific Time

Power Integrations management will hold a conference call today at 1:30 p.m. Pacific time. A live webcast of the call will be available on the investor section of the company's website, http://investors.power.com. Members of the investment community can access the telephonic conference call by going to: https://bit.ly/POWI-2024-Q2-Earnings-Call

About Power Integrations

Power Integrations, Inc. is a leading innovator in semiconductor technologies for high-voltage power conversion. The company’s products are key building blocks in the clean-power ecosystem, enabling the generation of renewable energy as well as the efficient transmission and consumption of power in applications ranging from milliwatts to megawatts. For more information, please visit www.power.com.

Note Regarding Use of Non-GAAP Financial Measures

In addition to the company's consolidated financial statements, which are presented according to GAAP, the company provides certain non-GAAP financial information that excludes stock-based compensation expenses recorded under ASC 718-10, amortization of acquisition-related intangible assets and the tax effects of these items. The company uses these measures in its financial and operational decision-making and, with respect to one measure, in setting performance targets for compensation purposes. The company believes that these non-GAAP measures offer important analytical tools to help investors understand its operating results, and to facilitate comparability with the results of companies that provide similar measures. Non-GAAP measures have limitations as analytical tools and are not meant to be considered in isolation or as a substitute for GAAP financial information. For example, stock-based compensation is an important component of the company’s compensation mix and will continue to result in significant expenses in the company’s GAAP results for the foreseeable future but is not reflected in the non-GAAP measures. Also, other companies, including companies in Power Integrations’ industry, may calculate non-GAAP measures differently, limiting their usefulness as comparative measures. Reconciliations of non-GAAP measures to GAAP measures are attached to this press release.

Note Regarding Forward-Looking Statements

The above statements regarding the company’s forecast for its third-quarter financial performance are forward-looking statements reflecting management's current expectations and beliefs. These statements are based on current information that is, by its nature, subject to rapid and even abrupt change. Due to risks and uncertainties associated with the company's business, actual results could differ materially from those projected or implied by these statements. These risks and uncertainties include, but are not limited to: the company’s ability to supply products and its ability to conduct other aspects of its business such as competing for new design wins; changes in global economic and geopolitical conditions, including such factors as inflation, armed conflicts and trade negotiations, which may impact the level of demand for the company’s products; potential changes and shifts in customer demand away from end products that utilize the company's integrated circuits to end products that do not incorporate the company's products; the effects of competition, which may cause the company’s revenues to decrease or cause the company to decrease its selling prices for its products; unforeseen costs and expenses; and unfavorable fluctuations in component costs or operating expenses resulting from changes in commodity prices and/or exchange rates. In addition, new product introductions and design wins are subject to the risks and uncertainties that typically accompany development and delivery of complex technologies to the marketplace, including product development delays and defects and market acceptance of the new products. These and other risk factors that may cause actual results to differ are more fully explained under the caption “Risk Factors” in the company's most recent Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 12, 2024. The company is under no obligation (and expressly disclaims any obligation) to update or alter its forward-looking statements, whether because of new information, future events or otherwise, except as otherwise required by law.

Power Integrations and the Power Integrations logo are trademarks or registered trademarks of Power Integrations, Inc. All other trademarks are property of their respective owners.

POWER INTEGRATIONS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per-share amounts)


	Three Months Ended						Six Months Ended
	June 30, 2024		March 31, 2024		June 30, 2023		June 30, 2024		June 30, 2023
NET REVENUES	$	106,198	$	91,688	$	123,223	$	197,886	$	229,520

COST OF REVENUES		49,665		43,908		60,377		93,573		112,717

GROSS PROFIT		56,533		47,780		62,846		104,313		116,803

OPERATING EXPENSES:
Research and development		26,047		23,225		24,517		49,272		48,498
Sales and marketing		18,053		15,722		17,017		33,775		32,902
General and administrative		10,475		8,363		8,671		18,838		17,005
Total operating expenses		54,575		47,310		50,205		101,885		98,405

INCOME FROM OPERATIONS		1,958		470		12,641		2,428		18,398

OTHER INCOME		3,189		3,502		2,714		6,691		4,428

INCOME BEFORE INCOME TAXES		5,147		3,972		15,355		9,119		22,826

PROVISION FOR INCOME TAXES		298		18		562		316		1,158

NET INCOME	$	4,849	$	3,954	$	14,793	$	8,803	$	21,668

EARNINGS PER SHARE:
Basic	$	0.09	$	0.07	$	0.26	$	0.15	$	0.38
Diluted	$	0.09	$	0.07	$	0.26	$	0.15	$	0.38

SHARES USED IN PER-SHARE CALCULATION:
Basic		56,780		56,833		57,355		56,807		57,231
Diluted		56,984		57,132		57,669		57,104		57,654


SUPPLEMENTAL INFORMATION:	Three Months Ended						Six Months Ended
	June 30, 2024		March 31, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Stock-based compensation expenses included in:
Cost of revenues	$	707	$	346	$	446	$	1,053	$	747
Research and development		3,885		2,425		2,429		6,310		5,097
Sales and marketing		2,510		1,604		1,621		4,114		3,274
General and administrative		3,933		2,039		2,256		5,972		5,002
Total stock-based compensation expense	$	11,035	$	6,414	$	6,752	$	17,449	$	14,120

Cost of revenues includes:
Amortization of acquisition-related intangible assets	$	258	$	482	$	482	$	740	$	964


	Three Months Ended						Six Months Ended
	June 30, 2024		March 31, 2024		June 30, 2023		June 30, 2024		June 30, 2023
REVENUE MIX BY END MARKET
Communications		11%		11%		28%		11%		28%
Computer		14%		11%		14%		13%		14%
Consumer		42%		41%		29%		41%		27%
Industrial		33%		37%		29%		35%		31%

POWER INTEGRATIONS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP RESULTS
(in thousands, except per-share amounts)

	Three Months Ended						Six Months Ended
	June 30, 2024		March 31, 2024		June 30, 2023		June 30, 2024		June 30, 2023
RECONCILIATION OF GROSS PROFIT
GAAP gross profit	$	56,533	$	47,780	$	62,846		104,313	$	116,803
GAAP gross margin		53.2%		52.1%		51.0%		52.7%		50.9%

Stock-based compensation included in cost of revenues		707		346		446		1,053		747
Amortization of acquisition-related intangible assets		258		482		482		740		964

Non-GAAP gross profit	$	57,498	$	48,608	$	63,774		106,106	$	118,514
Non-GAAP gross margin		54.1%		53.0%		51.8%		53.6%		51.6%


	Three Months Ended						Six Months Ended
	June 30, 2024		March 31, 2024		June 30, 2023		June 30, 2024		June 30, 2023
RECONCILIATION OF OPERATING EXPENSES
GAAP operating expenses	$	54,575	$	47,310	$	50,205	$	101,885	$	98,405

Less: Stock-based compensation expense included in operating expenses
Research and development		3,885		2,425		2,429		6,310		5,097
Sales and marketing		2,510		1,604		1,621		4,114		3,274
General and administrative		3,933		2,039		2,256		5,972		5,002
Total		10,328		6,068		6,306		16,396		13,373

Non-GAAP operating expenses	$	44,247	$	41,242	$	43,899	$	85,489	$	85,032


	Three Months Ended						Six Months Ended
	June 30, 2024		March 31, 2024		June 30, 2023		June 30, 2024		June 30, 2023
RECONCILIATION OF INCOME FROM OPERATIONS
GAAP income from operations	$	1,958	$	470	$	12,641	$	2,428	$	18,398
GAAP operating margin		1.8%		0.5%		10.3%		1.2%		8.0%

Add: Total stock-based compensation		11,035		6,414		6,752		17,449		14,120
Amortization of acquisition-related intangible assets		258		482		482		740		964

Non-GAAP income from operations	$	13,251	$	7,366	$	19,875	$	$ 20,617	$	33,482
Non-GAAP operating margin		12.5%		8.0%		16.1%		10.4%		14.6%


	Three Months Ended						Six Months Ended
	June 30, 2024		March 31, 2024		June 30, 2023		June 30, 2024		June 30, 2023
RECONCILIATION OF PROVISION FOR INCOME TAXES
GAAP provision for income taxes	$	298	$	18	$	562	$	316	$	1,158
GAAP effective tax rate		5.8%		0.5%		3.7%		3.5%		5.1%

Tax effect of adjustments to GAAP results		(269)		(358)		(1,016)		(627)		(1,517)

Non-GAAP provision for income taxes	$	567	$	376	$	1,578	$	943	$	2,675
Non-GAAP effective tax rate		3.4%		3.5%		7.0%		3.5%		7.1%


	Three Months Ended						Six Months Ended
	June 30, 2024		March 31, 2024		June 30, 2023		June 30, 2024		June 30, 2023
RECONCILIATION OF NET INCOME PER SHARE (DILUTED)
GAAP net income	$	4,849	$	3,954	$	14,793	$	8,803	$	21,668

Adjustments to GAAP net income
Stock-based compensation		11,035		6,414		6,752		17,449		14,120
Amortization of acquisition-related intangible assets		258		482		482		740		964
Tax effect of items excluded from non-GAAP results		(269)		(358)		(1,016)		(627)		(1,517)

Non-GAAP net income	$	15,873	$	10,492	$	21,011	$	26,365	$	35,235


Average shares outstanding for calculation of non-GAAP net income per share (diluted)		56,984		57,132		57,669		57,104		57,654

Non-GAAP net income per share (diluted)	$	0.28	$	0.18	$	0.36	$	0.46	$	0.61

GAAP net income per share (diluted)	$	0.09	$	0.07	$	0.26	$	0.15	$	0.38

POWER INTEGRATIONS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)

	June 30, 2024		March 31, 2024		December 31, 2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	50,493	$	56,443	$	63,929
Short-term marketable securities		239,985		243,163		247,640
Accounts receivable, net		16,372		12,279		14,674
Inventories		169,884		167,865		163,164
Prepaid expenses and other current assets		23,102		22,714		22,193
Total current assets		499,836		502,464		511,600

PROPERTY AND EQUIPMENT, net		153,785		159,945		164,213
INTANGIBLE ASSETS, net		3,561		3,881		4,424
GOODWILL		91,849		91,849		91,849
DEFERRED TAX ASSETS		31,640		29,654		28,325
OTHER ASSETS		24,089		17,983		19,457
Total assets	$	804,760	$	805,776	$	819,868

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	24,831	$	27,361	$	26,390
Accrued payroll and related expenses		13,596		11,822		13,551
Taxes payable		827		878		1,016
Other accrued liabilities		10,970		9,474		7,910
Total current liabilities		50,224		49,535		48,867

LONG-TERM LIABILITIES:
Income taxes payable		6,237		6,193		6,244
Other liabilities		17,557		11,870		12,516
Total liabilities		74,018		67,598		67,627

STOCKHOLDERS' EQUITY:
Common stock		22		22		23
Additional paid-in capital		—		—		—
Accumulated other comprehensive loss		(3,189)		(2,559)		(1,462)
Retained earnings		733,909		740,715		753,680
Total stockholders' equity		730,742		738,178		752,241
Total liabilities and stockholders' equity	$	804,760	$	805,776	$	819,868

POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

	Three Months Ended						Six Months Ended
	June 30, 2024		March 31, 2024		June 30, 2023		June 30, 2024		June 30, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	4,849	$	3,954	$	14,793	$	8,803	$	21,668
Adjustments to reconcile net income to cash provided by operating activities
Depreciation		8,391		8,715		8,692		17,106		17,653
Amortization of intangible assets		320		543		543		863		1,086
Loss on disposal of property and equipment		—		8		15		8		22
Stock-based compensation expense		11,035		6,414		6,752		17,449		14,120
Amortization of premium (accretion of discount) on marketable securities		(413)		(496)		15		(909)		419
Deferred income taxes		(2,152)		(1,330)		(2,044)		(3,482)		(2,782)
Increase (decrease) in accounts receivable allowance for credit losses		163		163		—		326		(454)
Change in operating assets and liabilities:
Accounts receivable		(4,256)		2,232		(11,492)		(2,024)		(10,787)
Inventories		(2,019)		(4,701)		(7,297)		(6,720)		(14,321)
Prepaid expenses and other assets		1,226		846		(4,939)		2,072		(7,241)
Accounts payable		(1,411)		1,294		5,887		(117)		8,813
Taxes payable and other accrued liabilities		1,898		(1,737)		(4,744)		161		(5,430)
Net cash provided by operating activities		17,631		15,905		6,181		33,536		22,766

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(4,167)		(4,343)		(3,129)		(8,510)		(7,211)
Purchases of marketable securities		(27,918)		(49,912)		(73,888)		(77,830)		(110,810)
Proceeds from sales and maturities of marketable securities		31,194		54,198		75,948		85,392		98,641
Net cash used in investing activities		(891)		(57)		(1,069)		(948)		(19,380)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock		—		2,691		—		2,691		3,098
Repurchase of common stock		(11,338)		(14,641)		(4,312)		(25,979)		(5,999)
Payments of dividends to stockholders		(11,352)		(11,384)		(10,893)		(22,736)		(21,761)
Net cash used in financing activities		(22,690)		(23,334)		(15,205)		(46,024)		(24,662)

NET DECREASE IN CASH AND CASH EQUIVALENTS		(5,950)		(7,486)		(10,093)		(13,436)		(21,276)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		56,443		63,929		94,189		63,929		105,372

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	50,493	$	56,443	$	84,096	$	50,493	$	84,096

Contacts

Joe Shiffler
Power Integrations, Inc.
(408) 414-8528
joe@power.com

Document and Entity Information	Aug. 06, 2024
Document and Entity Information [Abstract]
Document Type	8-K
Document Period End Date	Aug. 06, 2024
Entity File Number	000-23441
Entity Registrant Name	Power Integrations, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	94-3065014
Entity Address, Address Line One	5245 Hellyer Avenue
Entity Address, City or Town	San Jose
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	95138-1002
City Area Code	408
Local Phone Number	414-9200
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.001 Par Value
Trading Symbol	POWI
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Entity Central Index Key	0000833640
Amendment Flag	false