Monolithic Power Systems, Inc.
Oct 31, 2016
PDF

Monolithic Power Systems Announces Results for the Third Quarter Ended September 30, 2016

SAN JOSE, Calif., Oct. 31, 2016 (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 nine months ended September 30, 2016.

The results for the quarter ended September 30, 2016 are as follows:

The results for the nine months ended September 30, 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 September 30, Nine Months Ended September 30,
End Market  2016   2015   2016   2015 
Communication $16,188  $14,824  $47,679  $49,221 
Storage and Computing  23,463   18,007   57,157   42,016 
Consumer  43,646   39,506   115,763   106,497 
Industrial  23,159   18,857   64,448   48,414 
Total $106,456  $91,194  $285,047  $246,148 
         

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

         
  Three Months Ended September 30, Nine Months Ended September 30,
Product Family  2016   2015   2016   2015 
DC to DC $95,615  $82,718  $256,953  $222,210 
Lighting Control  10,841   8,476   28,094   23,938 
Total $106,456  $91,194  $285,047  $246,148 
         

"Thanks to acceptance of our new product offerings and with our shareholders' support, we will continue to deliver outstanding products to our customers and consistent results to our shareholders," said Michael Hsing, CEO and founder of MPS.

Business Outlook

The following are MPS' financial targets for the fourth quarter ending December 31, 2016:

(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 September 30, 2016 results at 2:00 p.m. PT / 5:00 p.m. ET, October 31, 2016. 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 94719606. 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 December 31, 2016, (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 within the past 18 months, being different than expected; 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; 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 July 29, 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 R. 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) 
  
  September 30, December 31, 
   2016   2015  
ASSETS     
Current assets:     
Cash and cash equivalents $109,479  $90,860  
Short-term investments  149,584    144,103  
Accounts receivable, net  33,335   30,830  
Inventories  70,692   63,209  
Other current assets  3,720   2,926  
Total current assets  366,810   331,928  
Property and equipment, net  82,097   65,359  
Long-term investments  5,382   5,361  
Goodwill  6,571   6,571  
Acquisition-related intangible assets, net  3,515   5,053   
Deferred tax assets, net  644   672  
Other long-term assets  29,837   16,341  
Total assets $494,856  $431,285  
      
LIABILITIES AND STOCKHOLDERS' EQUITY     
Current liabilities:     
Accounts payable $17,332  $13,487  
Accrued compensation and related benefits  16,311   9,812  
Accrued liabilities  21,873   19,984  
Total current liabilities  55,516   43,283  
Income tax liabilities  3,594   2,941  
Other long-term liabilities  19,448   16,545  
Total liabilities  78,558   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: 40,661 and 39,689     
as of September 30, 2016 and December 31, 2015, respectively  304,700   265,763  
Retained earnings  111,535    101,287  
Accumulated other comprehensive income  63   1,466  
Total stockholders' equity  416,298    368,516  
Total liabilities and stockholders' equity $494,856  $431,285  
      

 

Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share amounts)
 
 Three Months Ended September 30, Nine Months Ended September 30,
  2016    2015   2016   2015 
Revenue$106,456  $91,194   $285,047  $246,148 
Cost of revenue 48,531   41,754   130,686   112,896 
Gross profit 57,925   49,440   154,361   133,252 
Operating expenses:       
Research and development 20,472   17,272   55,669   49,053 
Selling, general and administrative 22,397   18,722   61,696    54,204 
Litigation expense, net 55   136    92   717 
Total operating expenses 42,924   36,130   117,457   103,974 
Income from operations 15,001   13,310    36,904   29,278 
Interest and other income (expense), net 780   (6)  1,920   871 
Income before income taxes 15,781   13,304   38,824   30,149 
Income tax provision 1,408   2,103   2,678   5,086 
Net income$14,373  $11,201  $36,146  $25,063 
        
Net income per share:       
Basic$0.35  $0.28  $0.90  $0.64 
Diluted$0.34  $0.28  $0.87  $0.62 
Weighted-average shares outstanding:       
Basic 40,590   39,592   40,335   39,422 
Diluted 41,895   40,689   41,752   40,676 
        
Cash dividends declared per common share$0.20  $0.20  $0.60  $0.60 
        
SUPPLEMENTAL FINANCIAL INFORMATION 
STOCK-BASED COMPENSATION EXPENSE
(Unaudited, in thousands)
 Three Months Ended September 30, Nine Months Ended September 30,
  2016   2015   2016   2015 
Cost of revenue$403  $303  $1,217  $829 
Research and development 3,986   2,932   11,001   8,055 
Selling, general and administrative 9,127   7,240   22,023   20,307 
Total stock-based compensation expense$13,516  $10,475  $34,241   $29,191 
        
RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME
(Unaudited, in thousands, except per share amounts)
 Three Months Ended September 30, Nine Months Ended September 30,
  2016   2015   2016    2015 
Net income$14,373  $11,201   $36,146  $25,063 
Net income as a percentage of revenue 13.5%  12.3%   12.7%  10.2%
        
Adjustments to reconcile net income to non-GAAP net income:      
Stock-based compensation expense 13,516   10,475   34,241   29,191 
Amortization of acquisition-related intangible assets 513   513   1,538   1,246 
Deferred compensation plan expense (income)  (70)  (32)  (218)  77 
Tax effect (823)  284   (2,901)  536 
Non-GAAP net income$27,509  $22,441   $68,806  $56,113 
Non-GAAP net income as a percentage of revenue 25.8%  24.6%  24.1%  22.8%
        
Non-GAAP net income per share:       
Basic$0.68  $0.57  $1.71   $1.42 
Diluted$0.66  $0.55  $1.65  $1.38 
        
Shares used in the calculation of non-GAAP net income per share:      
Basic 40,590   39,592   40,335    39,422 
Diluted 41,895   40,689    41,752   40,676 
        
RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN
(Unaudited, in thousands)
 Three Months Ended September 30, Nine Months Ended September 30,
  2016    2015   2016   2015 
Gross profit$57,925  $49,440  $154,361  $133,252 
Gross margin 54.4%  54.2%  54.2%  54.1%
        
Adjustments to reconcile gross profit to non-GAAP gross profit:      
Stock-based compensation expense 403   303   1,217   829 
Amortization of acquisition-related intangible assets 513   513   1,538   1,246 
Non-GAAP gross profit$58,841  $50,256  $157,116  $135,327 
Non-GAAP gross margin 55.3%  55.1%  55.1%  55.0%
        
RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
(Unaudited, in thousands)
 Three Months Ended September 30, Nine Months Ended September 30,
  2016   2015   2016   2015 
Total operating expenses$42,924  $36,130  $117,457  $103,974 
        
Adjustments to reconcile total operating expenses to non-GAAP total operating expenses:    
Stock-based compensation expense (13,113)  (10,172)   (33,024)  (28,362)
Deferred compensation plan income (expense) (418)  511   (879)  491 
Non-GAAP operating expenses$29,393  $26,469  $83,554  $76,103 
        
        
RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME
(Unaudited, in thousands)
 Three Months Ended September 30, Nine Months Ended September 30,
  2016   2015   2016    2015 
Total operating income$15,001  $13,310  $36,904  $29,278 
Operating income as a percentage of revenue  14.1%  14.6%  12.9%  11.9%
        
Adjustments to reconcile total operating income to non-GAAP total operating income:     
Stock-based compensation expense 13,516   10,475   34,241   29,191 
Amortization of acquisition-related intangible assets 513   513   1,538   1,246 
Deferred compensation plan expense (income) 418   (511)  879   (491)
Non-GAAP operating income$29,448  $23,787   $73,562  $59,224 
Non-GAAP operating income as a percentage of revenue 27.7%  26.1%  25.8%  24.1%
        
        
RECONCILIATION OF OTHER INCOME TO NON-GAAP OTHER INCOME
(Unaudited, in thousands)
 Three Months Ended September 30, Nine Months Ended September 30,
  2016   2015   2016   2015 
Total interest and other income (expense), net$780  $(6) $1,920  $871 
        
Adjustments to reconcile interest and other income to non-GAAP interest and other income:    
Deferred compensation plan expense (income) (488)  479   (1,097)  568 
Non-GAAP interest and other income, net$292  $473  $823  $1,439 
        


2016 FOURTH QUARTER OUTLOOK 
RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN 
(Unaudited) 
 Three Months Ending   
 December 31, 2016 
 Low High 
Gross margin 53.9%  54.9% 
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 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  
 December 31, 2016 
 Low High 
R&D and SG&A expense$38,700  $42,700  
Adjustments to reconcile R& D and SG&A expense to non-GAAP R&D and SG&A expense:    
Stock-based compensation expense (11,400)  (13,400) 
Non-GAAP R&D and SG&A expense$27,300  $29,300  
     

Contact:

Bernie Blegen

Chief Financial Officer

Monolithic Power Systems, Inc.

408-826-0777

investors@monolithicpower.com

Source: Monolithic Power Systems, Inc.

News Provided by Acquire Media