Net revenues were $82.6 million; non-GAAP earnings were $0.43 per diluted share; GAAP earnings were $0.21 per diluted share

SAN JOSE, Calif. — (BUSINESS WIRE) — April 29, 2015 — Power Integrations (Nasdaq: POWI) today announced financial results for the quarter ended March 31, 2015. Net revenues for the first quarter were $82.6 million, down five percent from the prior quarter and one percent from the first quarter of 2014. GAAP gross margin for the first quarter was 51.2 percent; operating margin was 8.4 percent. Net income for the quarter was $6.3 million or $0.21 per diluted share, compared with $0.48 per diluted share in the prior quarter and $0.40 per diluted share in the first quarter of 2014.

In addition to its GAAP results, the company provided non-GAAP financial measures that exclude stock-based compensation expenses, acquisition-related expenses and the related tax effects of these items. Non-GAAP gross margin for the first quarter was 53.1 percent; operating margin was 17.1 percent. Non-GAAP net income for the quarter was $13.0 million or $0.43 per diluted share, compared with $0.59 per diluted share in the prior quarter and $0.56 per diluted share in the first quarter of 2014.

Commented Balu Balakrishnan, president and CEO of Power Integrations: “First-quarter revenues were within the expected range, albeit toward the lower end, largely reflecting continued softness in the desktop PC market. While the overall demand environment appears somewhat mixed, we expect growth in key focus areas in the months ahead, including rapid-charging and high-power applications. Notably, shipments increased nearly ten percent sequentially in the first quarter in anticipation of stronger demand through the distribution channel. All in all, we expect second-quarter revenues to increase sequentially by five to ten percent.”

Additional Highlights

• The company paid a dividend of $0.12 per share on March 31. A dividend of $0.12 per share is scheduled to be paid on June 30, 2015, to stockholders of record as of May 29.
• In January the company acquired Cambridge Semiconductor, a UK-based supplier of controller ICs for AC-DC power supplies, for $22.1 million net of cash assumed.
• Power Integrations had $173.2 million in cash and short-term marketable securities at quarter-end, a decrease of $2.1 million during the quarter. Cash flow from operations in the quarter was $17.7 million.
• Power Integrations was issued 13 U.S. patents during the first quarter and had 724 U.S. patents at quarter-end including patents acquired during the quarter.

Financial Outlook

The company issued the following forecast for the second quarter of 2015:

• Revenues are expected to increase by five to ten percent compared to the first quarter.
• Non-GAAP gross margin is expected to be between 52.5 percent and 53 percent. (Excludes $0.3 million of stock-based compensation and $1 million of amortization of acquisition-related intangibles.) GAAP gross margin is expected to be between 51 percent and 51.5 percent.
• Non-GAAP operating expenses are expected to be between $31.5 million and $32 million. (Excludes approximately $4.3 million of stock-based compensation and $0.7 million of amortization of acquisition-related intangibles.) GAAP operating expenses are expected to be between $36.5 million and $37 million.

Conference Call Today at 1:45 p.m. Pacific Time

Power Integrations management will hold a conference call today at 1:45 p.m. PT. Members of the investment community can join the call by dialing 1-647-788-4901. The call will also be available on the investor section of the company's website, http://investors.power.com.

About Power Integrations

Power Integrations, Inc. is a leading innovator in semiconductor technologies for high-voltage power-conversion. The company’s products are key building blocks in the clean-power ecosystem, enabling the generation of renewable energy as well as the efficient transmission and consumption of power in applications ranging from milliwatts to megawatts. For more information please visit www.power.com.

Note Regarding Use of Non-GAAP Financial Measures

In addition to the company's consolidated financial statements, which are presented according to GAAP, the company provides certain non-GAAP financial information that excludes stock-based compensation expenses recorded under ASC 718-10, amortization of acquisition-related intangible assets and the write-up of acquired inventory, acquisition expenses and related transition expenses, and the tax effects of these items. The company uses these measures in its own financial and operational decision-making and, with respect to one measure, in setting performance targets for employee-compensation purposes. Further, the company believes that these non-GAAP measures offer an important analytical tool to help investors understand the company’s core operating results and trends, and to facilitate comparability with the operating results of other companies that provide similar measures. These non-GAAP measures have certain limitations as analytical tools and are not meant to be considered in isolation or as a substitute for GAAP financial information. For example, stock-based compensation is an important component of the company’s compensation mix, and will continue to result in significant expenses in the company’s GAAP results for the foreseeable future, but is not reflected in the non-GAAP measures. Also, other companies, including companies in Power Integrations’ industry, may calculate non-GAAP measures differently, limiting their usefulness as comparative measures.