02/05/2019 21:05:00

Monolithic Power Systems Announces Results for the First Quarter Ended March 31, 2019

KIRKLAND, Wash., May 02, 2019 (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, 2019.

  • Revenue was $141.4 million for the quarter ended March 31, 2019, a 7.9% decrease from $153.5 million for the quarter ended December 31, 2018 and a 9.5% increase from $129.2 million for the quarter ended March 31, 2018.

     

  • GAAP gross margin was 55.2% for the quarter ended March 31, 2019, compared with 55.4% for the quarter ended March 31, 2018.

     

  • Non-GAAP (1) gross margin was 55.6% for the quarter ended March 31, 2019, excluding the impact of $0.5 million for stock-based compensation expense and $0.1 million for the amortization of acquisition-related intangible assets, compared with 55.9% for the quarter ended March 31, 2018, excluding the impact of $0.4 million for stock-based compensation expense and $0.3 million for the amortization of acquisition-related intangible assets.

     

  • GAAP operating expenses were $56.3 million for the quarter ended March 31, 2019, compared with $49.5 million for the quarter ended March 31, 2018.

     

  • Non-GAAP (1) operating expenses were $39.0 million for the quarter ended March 31, 2019, excluding $15.5 million for stock-based compensation expense and $1.8 million for deferred compensation plan expense, compared with $35.0 million for the quarter ended March 31, 2018, excluding $14.6 million for stock-based compensation expense and $0.1 million for deferred compensation plan income.

     

  • GAAP operating income was $21.7 million for the quarter ended March 31, 2019, compared with $22.0 million for the quarter ended March 31, 2018.

     

  • Non-GAAP (1) operating income was $39.6 million for the quarter ended March 31, 2019, excluding $16.0 million for stock-based compensation expense, $0.1 million for the amortization of acquisition-related intangible assets and $1.8 million for deferred compensation plan expense, compared with $37.2 million for the quarter ended March 31, 2018, excluding $15.0 million for stock-based compensation expense, $0.3 million for the amortization of acquisition-related intangible assets and $0.1 million for deferred compensation plan income.

     

  • GAAP interest and other income, net was $3.3 million for the quarter ended March 31, 2019, compared with $0.4 million for the quarter ended March 31, 2018.

     

  • Non-GAAP (1) interest and other income, net was $1.4 million for the quarter ended March 31, 2019, excluding $1.9 million for deferred compensation plan income, compared with $0.6 million for the quarter ended March 31, 2018, excluding $0.2 million for deferred compensation plan expense.

     

  • GAAP income before income taxes was $25.1 million for the quarter ended March 31, 2019, compared with $22.5 million for the quarter ended March 31, 2018.

     

  • Non-GAAP (1) income before income taxes was $41.0 million for the quarter ended March 31, 2019, excluding $16.0 million for stock-based compensation expense, $0.1 million for the amortization of acquisition-related intangible assets and $0.1 million for deferred compensation plan income, compared with $37.8 million for the quarter ended March 31, 2018, excluding $15.0 million for stock-based compensation expense and $0.3 million for the amortization of acquisition-related intangible assets.

     

  • GAAP net income was $26.2 million and GAAP earnings per share were $0.58 per diluted share for the quarter ended March 31, 2019. Comparatively, GAAP net income was $21.9 million and GAAP earnings per share were $0.49 per diluted share for the quarter ended March 31, 2018.

     

  • Non-GAAP (1) net income was $37.9 million and non-GAAP earnings per share were $0.84 per diluted share for the quarter ended March 31, 2019, excluding stock-based compensation expense, amortization of acquisition-related intangible assets, net deferred compensation plan income and related tax effects, compared with non-GAAP net income of $35.0 million and non-GAAP earnings per share of $0.79 per diluted share for the quarter ended March 31, 2018, excluding stock-based compensation income, amortization of acquisition-related intangible assets, net deferred compensation plan expense and related tax effects.

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

  

Three Months Ended March 31,

End Market

 

2019

 

2018

Computing and storage $  39,188 $  30,970
Automotive   20,517   17,732
Industrial   21,340   17,554
Communications   22,182   15,750
Consumer   38,136   47,144
Total $  141,363 $  129,150

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

  

Three Months Ended March 31,

Product Family

 

2019

 

2018

DC to DC  $  132,711 $  119,268
Lighting Control    8,652   9,882
Total  $  141,363 $  129,150

“For the second half of the year, we still see some uncertainty in our end markets and remain cautious," said Michael Hsing, CEO and founder of MPS. "We will continue to adapt to the changing market conditions and execute as planned,"

Business Outlook

The following are MPS’ financial targets for the second quarter ending June 30, 2019:

  • Revenue in the range of $147.5 million to $153.5 million.

     

  • GAAP gross margin between 54.9% and 55.5%. Non-GAAP (1) gross margin between 55.3% and 55.9%, which excludes an estimated impact of stock-based compensation expenses of 0.4%.

     

  • GAAP research and development (“R&D”) and selling, general and administrative (“SG&A”) expenses between $55.5 million and $59.5 million. Non-GAAP (1) R&D and SG&A expenses between $38.5 million and $40.5 million, which excludes an estimate of stock-based compensation expenses in the range of $17.0 million to $19.0 million.

     

  • Total stock-based compensation expense of $17.6 million to $19.6 million.

     

  • Litigation expenses ranging between $300,000 and $500,000.

     

  • Interest and other income, net, of $1.4 million to $1.6 million before foreign exchange gains or losses.

 

  • Fully diluted shares outstanding between 45.1 million and 46.1 million.
  • (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, non-GAAP operating income and non-GAAP income before taxes differ from net income, earnings per share, gross margin, R&D and SG&A expenses, operating expenses, interest and other income, net, operating income and income before taxes 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. Non-GAAP income before taxes 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. 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 financial results at 2:00 p.m. PT / 5:00 p.m. ET, May 2, 2019. To access the conference call and the following replay of the conference call, go to https://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 8052948. 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, interest and other income, and diluted shares outstanding, (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; our ability to increase market share in our targeted markets; 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 laws and government regulations such as tariffs on imports of foreign goods, including in foreign countries where MPS has offices or operations; adverse events arising from orders of governmental entities, including such orders that impact our customers, and adopting of new or amended accounting standards; 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, and our ability to adjust our operations to address such changes or developments; 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, 2019. 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 based in the United States. 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.

    Contact:

    Bernie Blegen

    Chief Financial Officer

    Monolithic Power Systems, Inc.

    408-826-0777

    investors@monolithicpower.com

    Monolithic Power Systems, Inc.

    Condensed Consolidated Balance Sheets

    (Unaudited, in thousands, except par value)

     

    March 31,

     

    December 31,

      

    2019

       

    2018

     

    ASSETS

       
    Current assets:   
    Cash and cash equivalents$181,769  $172,704 
    Short-term investments 177,255   204,577 
    Accounts receivable, net 58,889   55,214 
    Inventories 142,543   136,384 
    Other current assets 13,629   11,931 
    Total current assets 574,085   580,810 
    Property and equipment, net 205,497   150,001 
    Long-term investments 3,290   3,241 
    Goodwill 6,571   6,571 
    Deferred tax assets, net 16,779   16,830 
    Other long-term assets 41,987   35,979 
    Total assets$848,209  $793,432 
        

    LIABILITIES AND STOCKHOLDERS’ EQUITY

       
    Current liabilities:   
    Accounts payable$27,259  $22,678 
    Accrued compensation and related benefits 18,969   18,799 
    Other accrued liabilities 45,348   38,962 
    Total current liabilities 91,576   80,439 
    Income tax liabilities 34,375   34,375 
    Other long-term liabilities 42,007   38,525 
    Total liabilities 167,958   153,339 
    Commitments and contingencies   
    Stockholders' equity:   
    Common stock and additional paid-in capital, $0.001 par value; shares authorized:   
    150,000; shares issued and outstanding: 43,033 and 42,505, respectively 478,913   450,908 
    Retained earnings 202,378   194,728 
    Accumulated other comprehensive loss (1,040)  (5,543)
    Total stockholders’ equity 680,251   640,093 
    Total liabilities and stockholders’ equity$848,209  $793,432 
        

    Monolithic Power Systems, Inc.

    Condensed Consolidated Statements of Operations

    (Unaudited, in thousands, except per share amounts) 

     

    Three Months Ended March 31,

      

    2019

       

    2018

     
    Revenue$141,363  $129,150 
    Cost of revenue 63,357   57,655 
    Gross profit 78,006   71,495 
    Operating expenses:   
    Research and development 25,458   21,609 
    Selling, general and administrative 30,553   27,318 
    Litigation expense 278   531 
    Total operating expenses 56,289   49,458 
    Income from operations 21,717   22,037 
    Interest and other income, net 3,341   440 
    Income before income taxes 25,058   22,477 
    Income tax expense (benefit) (1,123)  621 
    Net income$26,181  $21,856 
        
    Net income per share:   
    Basic$0.61  $0.52 
    Diluted$0.58  $0.49 
    Weighted-average shares outstanding:   
    Basic 42,749   41,922 
    Diluted 45,232   44,282 
        

    SUPPLEMENTAL FINANCIAL INFORMATION

    STOCK-BASED COMPENSATION EXPENSE

    (Unaudited, in thousands)
     Three Months Ended March 31,
      2019   2018 
    Cost of revenue$531  $433 
    Research and development 4,429   3,995 
    Selling, general and administrative 11,050   10,602 
    Total stock-based compensation expense$16,010  $15,030 
        

    RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME

    (Unaudited, in thousands, except per share amounts)
     Three Months Ended March 31,
      2019   2018 
    Net income$26,181  $21,856 
    Net income as a percentage of revenue 18.5%  16.9%
        
    Adjustments to reconcile net income to non-GAAP net income:   
    Stock-based compensation expense 16,010   15,030 
    Amortization of acquisition-related intangible assets 51   250 
    Deferred compensation plan expense (income) (136)  49 
    Tax effect (4,197)  (2,214)
    Non-GAAP net income$37,909  $34,971 
    Non-GAAP net income as a percentage of revenue 26.8%  27.1%
        
    Non-GAAP net income per share:   
    Basic$0.89  $0.83 
    Diluted$0.84  $0.79 
        
    Shares used in the calculation of non-GAAP net income per share:   
    Basic 42,749   41,922 
    Diluted 45,232   44,282 
        

    RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN

    (Unaudited, in thousands)
     Three Months Ended March 31,
      2019   2018 
    Gross profit$78,006  $71,495 
    Gross margin 55.2%  55.4%
        
    Adjustments to reconcile gross profit to non-GAAP gross profit:   
    Stock-based compensation expense 531   433 
    Amortization of acquisition-related intangible assets 51   250 
    Non-GAAP gross profit$78,588  $72,178 
    Non-GAAP gross margin 55.6%  55.9%
        

    RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES

    (Unaudited, in thousands)
     Three Months Ended March 31,
      2019   2018 
    Total operating expenses$56,289  $49,458 
        
    Adjustments to reconcile total operating expenses to non-GAAP total operating expenses:   
    Stock-based compensation expense (15,479)  (14,597)
    Deferred compensation plan income (expense) (1,799)  137 
    Non-GAAP operating expenses$39,011  $34,998 
        
        

    RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME

    (Unaudited, in thousands)
     Three Months Ended March 31,
      2019   2018 
    Total operating income$21,717  $22,037 
        
    Adjustments to reconcile total operating income to non-GAAP total operating income:   
    Stock-based compensation expense 16,010   15,030 
    Amortization of acquisition-related intangible assets 51   250 
    Deferred compensation plan expense (income) 1,799   (137)
    Non-GAAP operating income$39,577  $37,180 
        
        

    RECONCILIATION OF INTEREST AND OTHER INCOME, NET, TO NON-GAAP INTEREST AND OTHER INCOME, NET

    (Unaudited, in thousands)
     Three Months Ended March 31,
      2019   2018 
    Total interest and other income, net$3,341  $440 
        
    Adjustments to reconcile interest and other income to non-GAAP interest and other income:   
    Deferred compensation plan expense (income) (1,935)  186 
    Non-GAAP interest and other income, net$1,406  $626 
        
        

    RECONCILIATION OF INCOME BEFORE INCOME TAXES TO NON-GAAP INCOME BEFORE INCOME TAXES

    (Unaudited, in thousands)
     Three Months Ended March 31,
      2019   2018 
    Total income before income taxes$25,058  $22,477 
        
    Adjustments to reconcile income before income taxes to non-GAAP income before income taxes:   
    Stock-based compensation expense 16,010   15,030 
    Amortization of acquisition-related intangible assets 51   250 
    Deferred compensation plan expense (income) (136)  49 
    Non-GAAP income before income taxes$40,983  $37,806 
        

    2019 SECOND QUARTER OUTLOOK

    RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN

    (Unaudited)
     

    Three Months Ending

     

    June 30, 2019

     

    Low

     

    High

    Gross margin 54.9%  55.5%
    Adjustments to reconcile gross margin to non-GAAP gross margin:   
    Stock-based compensation expense 0.4%  0.4%
    Non-GAAP gross margin 55.3%  55.9%
        

    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, 2019

     

    Low

     

    High

    R&D and SG&A expense$55,500  $59,500 
    Adjustments to reconcile R&D and SG&A expense to non-GAAP R&D and SG&A expense:   
    Stock-based compensation expense (17,000)  (19,000)
    Non-GAAP R&D and SG&A expense$38,500  $40,500 
        

    mps1.jpg

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