Monolithic Power Systems, Inc.
Apr 26, 2017
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Monolithic Power Systems Announces Results for the First Quarter Ended March 31, 2017

SAN JOSE, Calif., April 26, 2017 (GLOBE NEWSWIRE) -- 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, 2017.

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

  Three Months Ended March 31,
Market Segment  2017  2016
Consumer $  35,611 $  33,807
Industrial    27,685    18,437
Computing and storage     20,617    15,393
Communications    16,449    16,875
Total $  100,362 $  84,512

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

  Three Months Ended March 31,
Product Family  2017  2016
DC to DC $  91,424 $  77,118
Lighting Control    8,938    7,394
Total $  100,362 $   84,512

"We continue to grow and continue to enhance shareholder value," said Michael Hsing, CEO and founder of MPS.

Business Outlook

The following are MPS' financial targets for the second quarter ending June 30, 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 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. 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 ended March 31, 2017 results at 2:00 p.m. PT / 5:00 p.m. ET, April 26, 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 5343522. 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 June 30, 2017, (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; 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 March 1, 2017.

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)
 
  March 31, December 31,
  2017   2016 
ASSETS   
Current assets:   
Cash and cash equivalents$76,826  $112,703 
Short-term investments 201,815   155,521 
Accounts receivable, net 38,115   34,248 
Inventories 78,535   71,469 
Other current assets 11,045   9,043 
Total current assets  406,336   382,984  
Property and equipment, net 85,617   85,171 
Long-term investments 5,342   5,354 
Goodwill 6,571    6,571 
Acquisition-related intangible assets, net 2,489   3,002 
Deferred tax assets, net 641   633 
Other long-term assets 29,808   27,411 
Total assets$536,804  $511,126 
    
LIABILITIES AND STOCKHOLDERS' EQUITY   
Current liabilities:   
Accounts payable$22,637  $17,427 
Accrued compensation and related benefits 10,454   12,578 
Accrued liabilities 22,917   22,916 
Total current liabilities 56,008   52,921 
Income tax liabilities 4,111   3,870 
Other long-term liabilities 25,557   23,219 
Total liabilities 85,676   80,010 
Commitments and contingencies   
Stockholders' equity:   
Common stock and additional paid-in capital, $0.001 par value; shares authorized:   
150,000; shares issued and outstanding: 41,239 and 40,793   
as of March 31, 2017 and December 31, 2016, respectively 334,222   315,969 
Retained earnings 119,613   119,362 
Accumulated other comprehensive loss (2,707)  (4,215)
Total stockholders' equity 451,128   431,116 
Total liabilities and stockholders' equity$536,804  $511,126 

 

Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share amounts)
 
 Three Months Ended March 31,
  2017   2016 
Revenue$100,362  $84,512 
Cost of revenue 45,520   39,002 
Gross profit 54,842   45,510 
Operating expenses:   
Research and development 18,894   17,321 
Selling, general and administrative 22,092   17,768 
Litigation expense 286    45 
Total operating expenses 41,272   35,134 
Income from operations 13,570    10,376 
Interest and other income, net 1,381   543 
Income before income taxes 14,951   10,919 
Income tax provision 474   344 
Net income$14,477  $10,575 
    
Net income per share:   
Basic$0.35   $0.26 
Diluted$0.33  $0.25 
Weighted-average shares outstanding:   
Basic 41,047   40,028 
Diluted 43,268   41,646 
    
Cash dividends declared per common share$0.20  $0.20 
    
SUPPLEMENTAL FINANCIAL INFORMATION
STOCK-BASED COMPENSATION EXPENSE
(Unaudited, in thousands)
 Three Months Ended March 31,
  2017   2016  
Cost of revenue$  358  $  434 
Research and development   3,498     3,698 
Selling, general and administrative   7,806     4,847 
Total stock-based compensation expense$  11,662  $  8,979 
    
RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME
(Unaudited, in thousands, except per share amounts)
 Three Months Ended March 31,
  2017   2016 
Net income$14,477  $10,575 
Net income as a percentage of revenue 14.4 %  12.5%
    
Adjustments to reconcile net income to non-GAAP net income:  
Stock-based compensation expense 11,662   8,979 
Amortization of acquisition-related intangible assets 513   513 
Deferred compensation plan expense (income) 71   (145)
Tax effect (1,566)  (1,176)
Non-GAAP net income$25,157  $18,746 
Non-GAAP net income as a percentage of revenue 25.1%  22.2%
    
Non-GAAP net income per share:   
Basic$ 0.61  $0.47 
Diluted$0.58  $0.45 
    
Shares used in the calculation of non-GAAP net income per share:  
Basic 41,047   40,028 
Diluted 43,268   41,646 
    
RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN
(Unaudited, in thousands)
 Three Months Ended March 31,
  2017    2016 
Gross profit$  54,842  $  45,510 
Gross margin 54.6%  53.9%
    
Adjustments to reconcile gross profit to non-GAAP gross profit:  
Stock-based compensation expense   358     434 
Amortization of acquisition-related intangible assets   513     513 
Non-GAAP gross profit$  55,713  $  46,457 
Non-GAAP gross margin  55.5%  55.0%
     
RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
(Unaudited, in thousands)
 Three Months Ended March 31,
  2017   2016 
Total operating expenses$  41,272  $  35,134 
     
Adjustments to reconcile total operating expenses to non-GAAP total operating expenses:
Stock-based compensation expense   (11,304)    (8,545 )
Deferred compensation plan expense   (804)    (157)
Non-GAAP operating expenses$  29,164  $  26,432 
    
    
RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME
(Unaudited, in thousands)
 Three Months Ended March 31,
  2017   2016 
Total operating income$  13,570  $  10,376 
Operating income as a percentage of revenue 13.5%  12.3%
    
Adjustments to reconcile total operating income to non-GAAP total operating income:
Stock-based compensation expense 11,662   8,979 
Amortization of acquisition-related intangible assets 513   513 
Deferred compensation plan expense 804   157 
Non-GAAP operating income$26,549  $20,025 
Non-GAAP operating income as a percentage of revenue 26.5%  23.7%
     
    
RECONCILIATION OF OTHER INCOME TO NON-GAAP OTHER INCOME
(Unaudited, in thousands)
 Three Months Ended March 31,
  2017    2016 
Total interest and other income, net$  1,381  $  543 
    
Adjustments to reconcile interest and other income to non-GAAP interest and other income:
Deferred compensation plan income   (733)    (302)
Non-GAAP interest and other income, net$  648   $  241 
    


2017 SECOND QUARTER OUTLOOK
RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN
(Unaudited)
 Three Months Ending 
 June 30, 2017
 Low High
Gross margin 54.1%  55.1%
Adjustments to reconcile gross margin to non-GAAP gross margin:   
Stock-based compensation expense 0.4%  0.4%
Amortization of acquisition-related intangible assets 0.5%  0.5%
Non-GAAP gross margin 55.0%  56.0 %
    
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, 2017
 Low High
R&D and SG&A expense$  42,000  $  46,000 
Adjustments to reconcile R&D and SG&A expense to non-GAAP R&D and SG&A expense:   
Stock-based compensation expense   (12,100)    (14,100)
Non-GAAP R&D and SG&A expense$  29,900  $  31,900 


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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