Monolithic Power Systems Announces Record Third Quarter Revenue and Net Income Results
SAN JOSE, Calif., Oct. 23 /PRNewswire-FirstCall/ -- Monolithic Power Systems (MPS) (Nasdaq: MPWR), a leading fabless manufacturer of high- performance analog and mixed-signal semiconductors, today announced financial results for the three and nine months ended September 30, 2008.
The results for the quarter ended September 30, 2008 are as follows:
- Net revenues of $48.9 million, up 21.7% from $40.2 million in the third quarter of 2007 and up 17.8% sequentially from $41.5 million in the second quarter of 2008
- Gross margin of 62.8%, compared to 63.5% in the third quarter of 2007 and 63.0% in the second quarter of 2008
- GAAP operating expenses of $20.1 million, including $19.0 million for research and development and selling, general and administrative expenses, which includes $3.3 million for stock-based compensation, and $1.1 million for patent litigation expenses
- Non-GAAP(1) operating expenses of $16.8 million, excluding $3.3 million for stock-based compensation
- GAAP net income of $10.5 million, with GAAP EPS of $0.29 per diluted share
- Non-GAAP(1) net income of $12.1 million, or $0.33 per diluted share, excluding stock-based compensation and related tax effects
- Net revenues of $125.8 million, compared to $95.5 million for the nine months ended September 30, 2007, an increase of 31.7%
- Gross margin of 62.9%, compared to 63.5% for the nine months ended September 30, 2007
- GAAP operating expenses of $58.9 million, including $52.8 million for research and development and selling, general and administrative expenses, which includes $9.2 million for stock-based compensation and $6.1 million for patent litigation expenses
- Non-GAAP(1) operating expenses of $49.7 million, excluding $9.2 million for stock-based compensation
- GAAP net income of $21.0 million, with GAAP EPS of $0.58 per diluted share
- Non-GAAP(1) net income of $26.9 million, or $0.74 per diluted share, excluding stock-based compensation and related tax effects
"MPS saw very strong results this quarter, particularly in our DC to DC product segment," said Michael Hsing, chief executive officer and founder of MPS. "We are well-positioned to continue to capture opportunities in this market with our tremendous slate of new products. As our revenue approached $50M this quarter, MPS is becoming a major player in the Power Management segment of the analog semiconductor market."
"While MPS has been doing well and we continue to deliver innovative products, we recognize that the last few weeks have seen a deterioration in general demand for electronic products, as a result of the worldwide financial crisis and associated macro-economic slowdown. Despite excellent execution, MPS is affected by the current economic crisis. For the fourth quarter of 2008, our normal seasonality in the consumer segment typically means that the fourth quarter is somewhat down sequentially from the third quarter. We have noticed some cancelations and delays in new projects. On the other hand, we also see many of our new products starting to ramp up to volume production. Therefore, our fourth quarter revenue is very uncertain compared with prior years. Our fourth quarter revenue guidance is in a wider range of 39 to 43 million dollars," said Mr. Hsing.
The following are MPS' financial targets for the fourth quarter ending December 31, 2008:
- Revenues in the range of $39.0 million to $43.0 million
- Gross margin in the mid to upper end of the company's target range of 60% to 63%
- Research and development and selling, general and administrative expenses between $18.6 million and $19.6 million. Non-GAAP(1) research and development and selling, general and administrative expenses between $15.2 million and $15.8 million. This excludes an estimate of stock-based compensation expense in the range of $3.4 million to $3.8 million
- Litigation expense in the range of $0.7 million to $1.0 million
(1) Non-GAAP net income, non-GAAP operating expenses and non-GAAP research and development and selling, general and administrative expense differ from net income, operating expenses, and research and development and selling, general and administrative expense determined in accordance with GAAP (Generally Accepted Accounting Principles in the United States). Non-GAAP net income for the quarter and nine months ended September 30, 2008 and 2007 excludes the effect of stock-based compensation expense and a patent litigation settlement amount and their related tax effects. Non-GAAP operating expenses for the quarter and nine months ended September 30, 2008 and 2007 exclude the effect of stock-based compensation expense and a patent litigation settlement amount, and include a reversal of our lease write-off that was recorded previously. Projected non-GAAP research and development and selling, general and administrative expenses exclude the effect of stock-based compensation expense and related tax effects. A schedule reconciling these amounts is included in this news release. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. 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 financials measures used by MPS.
MPS plans to conduct a management teleconference covering its three and nine months ended September 30, 2008 results at 2:00 p.m. PT / 5:00 p.m. ET today, October 23, 2008. To access the conference call and following replay, go to http://ir.monolithicpower.com and click 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 617-801-6888, code number 46174185. This press release and any other information related to the call will also be posted on the website.
Safe Harbor Statement
This press release contains forward-looking statements regarding targeted revenues, gross margin, GAAP and non-GAAP research and development and selling, general and administrative expenses, stock-based compensation expense and litigation expense for the three months ending December 31, 2008, our positioning to capture opportunities in the market in which we operate and volume production ramp up of certain products. These 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 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. Factors that could cause actual results to differ include, but are not limited to, the risks, uncertainties and costs of litigation in which the company is involved; the outcome of any upcoming trials, hearings, motions, and appeals; any market disruptions or interruptions in MPS' schedule of new product release development; adverse changes in production and testing efficiency; adverse changes in government regulations in foreign countries where MPS has offices; acceptance of, or demand for, MPS' products being lower than expected; the adverse impact on MPS' financial performance if its tax and litigation provisions are inadequate; difficulty in predicting or budgeting for future expenses and financial contingencies; and other important risk factors identified in MPS' SEC filings, including, but not limited to, its Form 10-Q filed on July 31, 2008.
The forward-looking statements in this press release represent MPS' targets, 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 Systems, Inc.
Monolithic Power Systems, Inc. (MPS) develops and markets proprietary, advanced analog and mixed-signal semiconductors. The company combines advanced process technology with its highly experienced analog designers to produce high-performance power management integrated circuits (ICs) for DC to DC converters, LED drivers, Cold Cathode Fluorescent Lamp (CCFL) backlight controllers, Class D audio amplifiers, and Linear ICs. MPS products are used extensively in computing and network communications products, LCD monitors and TVs, and a wide variety of consumer and portable electronics products. MPS partners with world-class manufacturing organizations to deliver top quality, ultra-compact, high-performance solutions through the most productive, cost- efficient channels. Founded in 1997 and headquartered in San Jose, California, the company has expanded its global presence with sales offices in Taiwan, China, Korea, Japan, and Europe, which operate under MPS International, Ltd.
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. Consolidated Balance Sheet (Unaudited, in thousands, except par value) September 30, December 31, 2008 2007 ASSETS Current assets: Cash and cash equivalents $75,917 $83,114 Short-term investments 8,711 27,765 Accounts receivable, net of allowances of $0 in 2008 and $227 in 2007 18,781 8,239 Inventories 22,305 17,487 Deferred income tax asset-current 76 72 Prepaid expenses and other current assets 3,840 4,733 Restricted assets 13,512 7,350 Total current assets 143,142 148,760 Property and equipment, net 14,474 14,175 Long-term investments 36,825 - Deferred income tax asset-long term 776 776 Other assets 598 539 Restricted assets 7 8,340 Total assets $195,822 $172,590 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $8,155 $6,154 Accrued compensation and related benefits 6,377 8,299 Accrued liabilities 14,150 14,959 Total current liabilities 28,682 29,412 Deferred rent and other liabilities 38 323 Non-current income tax liability 5,316 5,318 Total liabilities 34,036 35,053 Stockholders' equity: Common stock, $0.001 par value, $34 and $33 in 2008 and 2007, respectively; shares authorized: 150,000,000; shares issued and outstanding: 33,927,788 and 33,454,595 in 2008 and 2007, respectively 148,353 143,890 Deferred stock compensation - (3) Retained earnings (accumulated deficit) 14,178 (6,815) Accumulated other comprehensive income (loss) (745) 465 Total stockholders' equity 161,786 137,537 Total liabilities and stockholders' equity $195,822 $172,590 Consolidated Income Statement (Unaudited, in thousands, except per share amounts) Three months ended Nine months ended September September 30, 2007 30, 2007 (as (as restated, restated, September see Note September see Note 30, 2008 10) 30, 2008 10) Revenue $48,891 $40,188 $125,802 $95,517 Cost of revenue* 18,201 14,662 46,620 34,873 Gross profit 30,690 25,526 79,182 60,644 Operating expenses: Research and development* 9,420 7,489 25,594 19,849 Selling, general and administrative* 9,560 8,071 27,200 21,387 Lease abandonment - - - (496) Patent litigation settlement - - - 9,800 Provision for litigation expense 1,090 1,452 6,120 8,327 Total operating expenses 20,070 17,012 58,914 58,867 Income from operations 10,620 8,514 20,268 1,777 Other income (expense): Interest and other income 684 1,223 2,928 3,399 Interest and other expense (389) 8 (507) (21) Total other income, net 295 1,231 2,421 3,378 Income before income taxes 10,915 9,745 22,689 5,155 Income tax provision 458 752 1,697 2,857 Net income $10,457 $8,993 $20,992 $2,298 Basic net income per share $0.31 $0.28 $0.63 $0.07 Diluted net income per share $0.29 $0.25 $0.58 $0.07 Weighted average common shares outstanding 33,869 31,995 33,482 31,293 Stock options and restricted stock 2,733 3,958 2,850 3,697 Diluted weighted-average common equivalent shares outstanding 36,602 35,953 36,332 34,990 * Stock-based compensation has been included in the following line items: Cost of revenue $76 $149 $249 $373 Research and development 1,471 1,326 4,074 3,379 Selling, general and administrative 1,787 1,748 5,141 4,296 Total $3,334 $3,223 $9,464 $8,048 RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME (in thousands, except per share amounts) Net income $10,457 $8,993 $20,992 $2,298 Adjustments to reconcile net income to non-GAAP net income Stock-based compensation $3,334 $3,223 $9,464 $8,048 Patent litigation settlement - - - 9,800 Reversal of lease write-off - - - (540) Tax effect (1,679) (2,490) (3,603) (3,108) Non-GAAP net income $12,112 $9,726 $26,853 $16,498 Non-GAAP earnings per share, excluding stock-based compensation and related tax effects: Basic $0.36 $0.30 $0.80 $0.53 Diluted $0.33 $0.27 $0.74 $0.47 Shares used in the calculation of non- GAAP earnings per share: Basic 33,869 31,995 33,482 31,293 Diluted 36,602 35,953 36,332 34,990 RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES (in thousands, except per share amounts) Total operating expenses $20,070 $17,012 $58,914 $58,867 Adjustments to reconcile total operating expenses to non-GAAP total operating expenses Stock-based compensation $(3,258) $(3,074) $(9,215) $(7,675) Patent litigation settlement - - - (9,800) Reversal of lease write-off - - - 496 Non-GAAP total operating expenses $16,812 $13,938 $49,699 $41,888 2008 Fourth Quarter Outlook RECONCILIATION OF R&D AND SG&A EXPENSES TO NON-GAAP R&D AND SG&A EXPENSES (in thousands) Three months ended December 31, 2008 Low High R&D and SG&A $18,600 $19,600 Adjustments to reconcile R&D and SG&A to non-GAAP R&D and SG&A Stock-based compensation (3,400) (3,800) Non-GAAP R&D and SG&A $15,200 $15,800
SOURCE Monolithic Power Systems