Monolithic Power Systems, Inc.
Jul 26, 2017
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Monolithic Power Systems Announces Results for the Second Quarter Ended June 30, 2017

SAN JOSE, Calif., July 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 June 30, 2017.

The results for the six months ended June 30, 2017 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 June 30,   Six Months Ended June 30,
 End Market  2017  2016  2017  2016
 Consumer $  43,917 $  38,311 $  79,528 $  72,116
 Computing and storage    24,466    18,301    45,083    33,694
 Industrial    15,034    14,598    30,388    26,024
 Automotive    12,854    8,254    25,185    15,266
 Communications     15,927    14,615    32,376    31,491
 Total $  112,198 $  94,079 $  212,560 $  178,591
          

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

        
   Three Months Ended June 30, Six Months Ended June 30,
 Product Family  2017  2016  2017   2016
 DC to DC  $  102,187 $  84,221 $  193,611 $  161,339
 Lighting Control     10,011    9,858    18,949    17,252
 Total  $  112,198 $  94,079 $  212,560 $  178,591
        


"As we continue to execute against our long-term business strategy, we believe the success of our new product development will further propel MPS's future growth," said Michael Hsing, CEO and founder of MPS.

Business Outlook

The following are MPS' financial targets for the third quarter ending September 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 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. 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 June 30, 2017 results at 2:00 p.m. PT / 5:00 p.m. ET, July 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 53640273. 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 September 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 and our quarterly report on Form 10-Q filed with the SEC on May 5, 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 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.


Condensed Consolidated Balance Sheets 
(Unaudited, in thousands, except par value) 
  
 June 30, December 31, 
  2017   2016  
ASSETS    
Current assets:    
Cash and cash equivalents$  71,110  $  112,703  
Short-term investments   206,561     155,521  
Accounts receivable, net    41,982     34,248  
Inventories   92,666     71,469  
Other current assets   14,894     9,043  
Total current assets   427,213     382,984  
Property and equipment, net   100,562     85,171  
Long-term investments   5,348     5,354  
Goodwill   6,571     6,571  
Acquisition-related intangible assets, net   1,977     3,002  
Deferred tax assets, net   650     633  
Other long-term assets   25,725     27,411  
Total assets$  568,046  $  511,126  
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Accounts payable$  25,232  $  17,427  
Accrued compensation and related benefits   14,561     12,578  
Accrued liabilities   22,993     22,916  
Total current liabilities   62,786     52,921  
Income tax liabilities   4,303     3,870  
Other long-term liabilities   27,164     23,219  
  Total liabilities   94,253     80,010  
Commitments and contingencies     
Stockholders' equity:    
  Common stock and additional paid-in capital, $0.001 par value; shares authorized:     
  150,000; shares issued and outstanding: 41,366 and 40,793    
  as of June 30, 2017 and December 31, 2016, respectively   349,447     315,969  
Retained earnings    125,726     119,362  
Accumulated other comprehensive loss   (1,380)    (4,215) 
Total stockholders' equity   473,793     431,116  
Total liabilities and stockholders' equity$  568,046  $  511,126  
     



 Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share amounts) 
        
 Three Months Ended June 30, Six Months Ended June 30,
  2017   2016   2017   2016 
Revenue $  112,198  $  94,079  $  212,560  $  178,591 
Cost of revenue    50,773     43,153     96,293     82,155 
Gross profit    61,425     50,926     116,267     96,436 
Operating expenses:       
  Research and development    20,292     17,876     39,186     35,197 
  Selling, general and administrative    25,873     21,531     47,965     39,299 
  Litigation expense (benefit)   290     (8)    576     37 
Total operating expenses    46,455     39,399     87,727     74,533 
Income from operations    14,970     11,527     28,540     21,903 
Interest and other income, net   1,237     597     2,618     1,140 
Income before income taxes    16,207     12,124      31,158     23,043 
Income tax provision    1,193     926     1,668     1,270 
Net income $  15,014  $  11,198  $  29,490  $  21,773 
        
  Net income per share:       
  Basic$  0.36  $  0.28  $  0.72  $  0.54 
  Diluted$  0.35  $  0.27  $  0.68  $  0.52 
Weighted-average shares outstanding:       
  Basic    41,323     40,387     41,185      40,208 
  Diluted   43,397     41,716     43,332     41,681 
        
Cash dividends declared per common share$  0.20  $  0.20  $  0.40  $  0.40 
        
        
        
SUPPLEMENTAL FINANCIAL INFORMATION 
STOCK-BASED COMPENSATION EXPENSE
(Unaudited, in thousands)
 Three Months Ended June 30, Six Months Ended June 30,
  2017   2016   2017   2016 
Cost of revenue$  452  $  380  $  810  $  814 
Research and development   3,961     3,318      7,459     7,016 
Selling, general and administrative   10,714     8,049     18,520     12,896 
Total stock-based compensation expense$  15,127  $  11,747  $  26,789  $  20,726 
        
        
        
RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME
(Unaudited, in thousands, except per share amounts)
 Three Months Ended June 30, Six Months Ended June 30,
  2017   2016   2017   2016 
Net income $  15,014  $  11,198  $  29,490  $  21,773  
  Net income as a percentage of revenue 13.4%  11.9%  13.9%  12.2%
        
Adjustments to reconcile net income to non-GAAP net income:      
  Stock-based compensation expense   15,127     11,747     26,789     20,726 
  Amortization of acquisition-related intangible assets   513     513     1,026     1,026 
  Deferred compensation plan expense (income)   70     (3)    141     (147)
  Tax effect    (1,201)    (903)    (2,766)    (2,079)
  Non-GAAP net income$  29,523  $  22,552  $  54,680  $  41,299 
  Non-GAAP net income as a percentage of revenue 26.3%  24.0%  25.7%  23.1%
        
Non-GAAP net income per share:       
  Basic$  0.71  $  0.56  $  1.33  $  1.03 
  Diluted$  0.68  $  0.54  $  1.26  $  0.99 
        
Shares used in the calculation of non-GAAP net income per share:       
  Basic   41,323     40,387     41,185     40,208 
  Diluted   43,397     41,716     43,332     41,681 
        
        
        
RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN
(Unaudited, in thousands)
 Three Months Ended June 30, Six Months Ended June 30,
  2017   2016   2017   2016 
Gross profit$  61,425  $  50,926  $  116,267  $  96,436 
  Gross margin 54.7%  54.1%  54.7%  54.0%
        
Adjustments to reconcile gross profit to non-GAAP gross profit:      
  Stock-based compensation expense   452     380     810     814 
  Amortization of acquisition-related intangible assets   513     513     1,026      1,026 
Non-GAAP gross profit$  62,390  $  51,819  $  118,103  $  98,276 
Non-GAAP gross margin 55.6%  55.1%  55.6%  55.0%
        
        
        
RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
(Unaudited, in thousands)
 Three Months Ended June 30, Six Months Ended June 30,
  2017   2016    2017   2016 
Total operating expenses $  46,455  $  39,399  $  87,727  $  74,533 
        
Adjustments to reconcile total operating expenses to non-GAAP total operating expenses:    
  Stock-based compensation expense   (14,675 )    (11,367)    (25,979)    (19,912)
  Deferred compensation plan expense   (603)    (304)    (1,407)    (461)
Non-GAAP operating expenses$  31,177  $  27,728  $  60,341  $  54,160 
        
        
        
RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME
(Unaudited, in thousands)
 Three Months Ended June 30, Six Months Ended June 30,
  2017   2016   2017   2016 
Total operating income$  14,970  $  11,527  $  28,540  $  21,903 
  Operating income as a percentage of revenue 13.3%  12.3%  13.4%  12.3%
        
Adjustments to reconcile total operating income to non-GAAP total operating income:    
  Stock-based compensation expense   15,127     11,747     26,789     20,726 
  Amortization of acquisition-related intangible assets   513     513     1,026     1,026 
  Deferred compensation plan expense    603     304     1,407     461 
  Non-GAAP operating income$  31,213  $  24,091  $  57,762  $  44,116 
Non-GAAP operating income as a percentage of revenue 27.8%  25.6%  27.2%  24.7%
        
        
        
RECONCILIATION OF INTEREST AND OTHER INCOME, NET, TO NON-GAAP INTEREST AND OTHER INCOME, NET
(Unaudited, in thousands)
 Three Months Ended June 30, Six Months Ended June 30,
  2017   2016   2017   2016 
Total interest and other income, net$  1,237  $  597  $  2,618  $  1,140 
        
Adjustments to reconcile interest and other income to non-GAAP interest and other income:    
  Deferred compensation plan income   (533)    (307)    (1,266)    (608)
Non-GAAP interest and other income, net$  704  $  290  $  1,352  $  532 
        

 

 

2017 THIRD QUARTER OUTLOOK 
RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN 
(Unaudited) 
 Three Months Ending  
 September 30, 2017 
 Low High 
Gross margin 54.4%  55.4% 
Adjustments to reconcile gross margin to non-GAAP gross margin:    
  Stock-based compensation expense  0.4%  0.4% 
  Amortization of acquisition-related intangible assets 0.4%  0.4% 
Non-GAAP gross margin 55.2%  56.2% 
     
RECONCILIATION OF R&D AND SG&A EXPENSES TO NON-GAAP R&D AND SG&A EXPENSES 
(Unaudited, in thousands) 
 Three Months Ending  
 September 30, 2017 
 Low High 
R&D and SG&A expense$  43,800  $  47,800  
Adjustments to reconcile R&D and SG&A expense to non-GAAP R&D and SG&A expense:    
  Stock-based compensation expense   (12,600)    (14,600) 
Non-GAAP R&D and SG&A expense$  31,200  $  33,200   
     
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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