Monolithic Power Systems, Inc.
Feb 9, 2017
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Monolithic Power Systems Announces Results for the Fourth Quarter and Year Ended December 31, 2016

SAN JOSE, Calif., Feb. 09, 2017 (GLOBE NEWSWIRE) -- Monolithic Power Systems, Inc. (MPS) (Nasdaq:MPWR), a leading company in high performance power solutions, today announced financial results for the quarter and year ended December 31, 2016.

The results for the quarter ended December 31, 2016 are as follows:

The results for the year ended December 31, 2016 are as follows:

The following is a summary of revenue by end market for the periods indicated, estimated based on MPS's assessment of available end market data (in thousands):

   Three Months Ended December 31, Year Ended December 31,
 End Market  2016  2015   2016  2015
 Consumer $37,970 $38,594 $153,732 $145,090
 Industrial  25,190  17,928  89,639  66,343
 Storage and computing  23,405  14,552  80,562  56,568
 Communications  17,053  15,844  64,732  65,066
 Total $103,618 $86,918 $388,665 $333,067

The following is a summary of revenue by product family for the periods indicated (in thousands):

   Three Months Ended December 31, Year Ended December 31,
 Product Family   2016  2015  2016  2015
 DC to DC $93,977 $77,515 $350,930 $299,726
 Lighting Control  9,641  9,403  37,735  33,341
 Total $103,618 $ 86,918 $388,665 $333,067

"In the last several years, MPS has focused on investing in new products and targeted markets," said Michael Hsing, CEO and founder of MPS.  "Starting this year, we believe MPS will begin to benefit from these investments which will translate to strong revenue growth in 2018 and beyond."

Business Outlook

The following are MPS' financial targets for the first quarter ending March 31, 2017:

(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 and non-GAAP operating income differ from net income, earnings per share, gross margin, R&D and SG&A expenses, operating expenses, interest and other income, net and operating income determined in accordance with GAAP (Generally Accepted Accounting Principles in the United States). 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, a credit related to the change in fair value of contingent consideration for a completed acquisition 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, deferred compensation plan income/expense and a credit related to the change in fair value of contingent consideration for a completed acquisition.  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, deferred compensation plan income/expense and a credit related to the change in fair value of contingent consideration. Projected non-GAAP gross margin excludes the effect of stock-based compensation expense and amortization of acquisition-related intangible assets. 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 Call
MPS plans to conduct an investor teleconference covering its quarter and year ended December 31, 2016 results at 2:00 p.m. PT / 5:00 p.m. ET, February 9, 2017. 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 56124739. 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, 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, amortization of acquisition-related intangible assets, litigation expenses, interest and other income and diluted shares outstanding for the quarter ending March 31, 2017, (ii) our outlook for the long-term prospects of the company, including our performance against our business plan, 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; 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 government regulations in foreign countries where MPS has offices or operations; 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; 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 February 29, 2016, and our quarterly report on Form 10-Q filed with the SEC on November 3, 2016.

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 Systems
Monolithic 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 headquartered in San Jose, CA. MPS can be contacted through its website at 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.


Condensed Consolidated Balance Sheets
(Unaudited, in thousands, except par value)
 
  
 December 31, 
  2016   2015 
ASSETS    
Current assets:    
Cash and cash equivalents$112,703  $90,860 
Short-term investments 155,521   144,103 
Accounts receivable, net 34,248   30,830 
Inventories 71,469   63,209 
Other current assets 9,043   2,926 
Total current assets 382,984   331,928 
Property and equipment, net 85,171   65,359 
Long-term investments 5,354   5,361 
Goodwill 6,571   6,571 
Acquisition-related intangible assets, net 3,002   5,053 
Deferred tax assets, net 633   672 
Other long-term assets 27,411   16,341 
Total assets$511,126   $431,285 
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Accounts payable$17,427  $13,487 
Accrued compensation and related benefits 12,578   9,812 
Accrued liabilities 22,916   19,984 
Total current liabilities 52,921   43,283 
Income tax liabilities 3,870   2,941 
Other long-term liabilities 23,219   16,545 
Total liabilities 80,010   62,769 
Commitments and contingencies    
Stockholders' equity:    
Common stock and additional paid-in capital, $0.001 par value; shares authorized:    
150,000; shares issued and outstanding: 40,793 and 39,689    
as of December 31, 2016 and December 31, 2015, respectively 315,969   265,763 
Retained earnings 119,362   101,287 
Accumulated other comprehensive income (loss) (4,215)  1,466 
Total stockholders' equity 431,116   368,516 
Total liabilities and stockholders' equity$511,126  $431,285 
     


Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share amounts)
        
 Three Months Ended December 31, Year Ended December 31,
  2016   2015    2016   2015 
Revenue$103,618  $86,918  $388,665  $333,067 
Cost of revenue 47,107   40,001   177,792   152,898 
Gross profit 56,511   46,917   210,873    180,169 
Operating expenses:       
Research and development 17,974   16,734   73,643   65,787 
Selling, general and administrative 21,316   18,107   83,012   72,312 
Litigation expense (benefit), net (321)  283   (229)  1,000 
Total operating expenses 38,969   35,124   156,426   139,099 
Income from operations 17,542   11,793   54,447    41,070 
Interest and other income, net 897   550   2,817   1,421 
Income before income taxes 18,439   12,343   57,264   42,491 
Income tax provision 1,866   2,233   4,544   7,319 
Net income$16,573  $10,110  $52,720  $35,172 
        
Net income per share:       
Basic$0.41  $0.26  $1.30  $0.89 
Diluted$0.39  $0.24  $1.26  $0.86 
Weighted-average shares outstanding:       
Basic 40,739   39,615   40,436   39,470 
Diluted 42,404   41,445   41,915   40,869 
        
Cash dividends declared per common share$0.20  $0.20  $0.80  $0.80 
        
SUPPLEMENTAL FINANCIAL INFORMATION 
STOCK-BASED COMPENSATION EXPENSE
(Unaudited, in thousands)
 Three Months Ended December 31, Year Ended December 31,
  2016   2015   2016   2015 
Cost of revenue$ 358  $336  $1,575  $1,166 
Research and development 3,039   3,102   14,041   11,156 
Selling, general and administrative  7,350   8,934   29,373   29,241 
Total stock-based compensation expense$10,747  $12,372  $44,989  $41,563 
        
RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME
(Unaudited, in thousands, except per share amounts)
 Three Months Ended December 31, Year Ended December 31,
  2016   2015   2016   2015 
Net income$16,573  $10,110  $52,720  $35,172 
Net income as a percentage of revenue 16.0%  11.6%  13.6%  10.6%
        
Adjustments to reconcile net income to non-GAAP net income:      
Stock-based compensation expense 10,747   12,372   44,989   41,563 
Change in fair value of contingent consideration -   (2,507)  -   (2,507)
Amortization of acquisition-related intangible assets 512   512   2,051   1,759 
Deferred compensation plan expense (income) 29   98   (188)  175 
Tax effect (364)  522   (3,265)  1,058 
Non-GAAP net income$27,497  $21,107  $96,307  $77,220 
Non-GAAP net income as a percentage of revenue 26.5%  24.3%  24.8%  23.2%
        
Non-GAAP net income per share:       
Basic$0.67   $0.53  $2.38  $1.96 
Diluted$0.65  $0.51  $2.30  $1.89 
        
Shares used in the calculation of non-GAAP net income per share:      
Basic 40,739   39,615   40,436    39,470 
Diluted 42,404   41,445   41,915   40,869 
        
RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN
(Unaudited, in thousands)
 Three Months Ended December 31, Year Ended December 31,
  2016   2015   2016   2015 
Gross profit$56,511  $46,917  $210,873  $180,169 
Gross margin 54.5%  54.0%  54.3%  54.1%
        
Adjustments to reconcile gross profit to non-GAAP gross profit:      
Stock-based compensation expense 358   336   1,575   1,166 
Amortization of acquisition-related intangible assets 512   512   2,051   1,759 
Non-GAAP gross profit$57,381  $47,765  $214,499  $183,094 
Non-GAAP gross margin 55.4%  55.0%  55.2%  55.0%
        
RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
(Unaudited, in thousands)
 Three Months Ended December 31, Year Ended December 31,
  2016   2015   2016   2015 
Total operating expenses$38,969  $35,124  $156,426  $139,099 
        
Adjustments to reconcile total operating expenses to non-GAAP total operating expenses:    
Stock-based compensation expense (10,389)  (12,036)  (43,414)  (40,397)
Change in fair value of contingent consideration -   2,507   -   2,507 
Deferred compensation plan income (expense) (189)  (290)  (1,069)  200 
Non-GAAP operating expenses$28,391  $25,305  $111,943  $101,409 
        
        
RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME
(Unaudited, in thousands)
 Three Months Ended December 31, Year Ended December 31,
  2016    2015   2016    2015 
Total operating income$17,542  $11,793  $54,447  $41,070 
Operating income as a percentage of revenue 16.9%   13.6%  14.0%  12.3%
        
Adjustments to reconcile total operating income to non-GAAP total operating income:    
Stock-based compensation expense  10,747   12,372   44,989   41,563 
Change in fair value of contingent consideration -   (2,507)  -   (2,507)
Amortization of acquisition-related intangible assets 512   512   2,051   1,759 
Deferred compensation plan expense (income) 189   290   1,069   (200)
Non-GAAP operating income$28,990  $22,460  $102,556  $81,685 
Non-GAAP operating income as a percentage of revenue 28.0%  25.8%  26.4%  24.5%
        
        
RECONCILIATION OF OTHER INCOME TO NON-GAAP OTHER INCOME
(Unaudited, in thousands)
 Three Months Ended December 31, Year Ended December 31,
  2016   2015   2016   2015 
Total interest and other income, net$897  $550  $2,817  $1,421 
        
Adjustments to reconcile interest and other income to non-GAAP interest and other income:    
Deferred compensation plan expense (income) (160)  (192)  (1,257)  375 
Non-GAAP interest and other income, net$737   $358  $1,560  $1,796 
         


2017 FIRST QUARTER OUTLOOK 
RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN 
(Unaudited) 
 Three Months Ending  
 March 31, 2017 
 Low High 
Gross margin 53.8%  54.8% 
Adjustments to reconcile gross margin to non-GAAP gross margin:    
Stock-based compensation expense 0.5%  0.5% 
Amortization of acquisition-related intangible assets 0.5%  0.5% 
Non-GAAP gross margin 54.8%  55.8% 
     
RECONCILIATION OF R&D AND SG&A EXPENSES TO NON-GAAP R&D AND SG&A EXPENSES 
(Unaudited, in thousands) 
 Three Months Ending  
 March 31, 2017 
 Low High 
R&D and SG&A expense$40,000  $44,000  
Adjustments to reconcile R&D and SG&A expense to non-GAAP R&D and SG&A expense:    
Stock-based compensation expense (11,700)  (13,700) 
Non-GAAP R&D and SG&A expense$28,300  $30,300  
     


Contact:

Bernie Blegen

Chief Financial Officer

Monolithic Power Systems, Inc.

408-826-0777

investors@monolithicpower.com

Source: Monolithic Power Systems, Inc.

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