Non-GAAP earnings were $0.47/diluted share; GAAP earnings were $0.29/diluted share

Cash flow from operations was $25.1 million for the quarter; company announces new $30 million share-repurchase plan

SAN JOSE, Calif. — (BUSINESS WIRE) — July 29, 2015 — Power Integrations (Nasdaq: POWI) today announced financial results for the quarter ended June 30, 2015. Net revenues for the second quarter were $85.3 million, up three percent from the prior quarter and down four percent from the second quarter of 2014. GAAP gross margin for the second quarter was 51.6 percent; operating margin was 10.8 percent. Net income for the quarter was $8.6 million or $0.29 per diluted share, compared with $0.21 per diluted share in the prior quarter and $0.54 per diluted share in the second quarter of 2014. (GAAP net income for the year-ago quarter included a non-recurring tax benefit of $3.3 million.)

In addition to its GAAP results, the company provided non-GAAP financial measures that exclude stock-based compensation expenses, certain acquisition-related expenses, the tax effects of these items, and the above-mentioned tax benefit recognized in 2014. Non-GAAP gross margin for the second quarter was 53.1 percent; operating margin was 17.6 percent. Non-GAAP net income for the quarter was $14.2 million or $0.47 per diluted share, compared with $0.43 per diluted share in the prior quarter and $0.61 per diluted share in the second quarter of 2014.

Commented Balu Balakrishnan, president and CEO of Power Integrations: “Like many of our industry peers, we experienced lower-than-expected demand in the second quarter. However, we proactively adjusted our operating expenses during the quarter and delivered solid earnings and strong cash flow.

“While macroeconomic factors remain a concern, we did see an uptick in sales and bookings in the latter part of the second quarter. We anticipate sequential revenue growth in the third quarter, led by adoption of our new InnoSwitch™ product family, which continues to ramp into the mobile-device market and is now gaining adoption by customers in our other end-markets as well.”

Additional Highlights

• Power Integrations repurchased approximately 460,000 shares of its common stock during the quarter for $22.3 million. Approximately $0.6 million remained on the company’s repurchase authorization at quarter-end. Earlier this month the company’s board of directors authorized the use of an additional $30 million for further repurchases.
• The company paid a dividend of $0.12 per share on June 30. A dividend of $0.12 per share is scheduled to be paid on September 30, 2015, to stockholders of record as of August 31, 2015.
• Power Integrations had $170.9 million in cash and short-term marketable securities at quarter-end, a decrease of $2.3 million during the quarter. Cash flow from operations in the quarter was $25.1 million.
• Power Integrations was issued 10 U.S. patents during the second quarter and had 734 U.S. patents at quarter-end.

Financial Outlook

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

• Revenues are expected to be in a range of flat to seven percent higher compared with the second 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 approximately $30.5 million. (Excludes $3.8 million of stock-based compensation expenses and $0.7 million of amortization of acquisition-related intangible assets.) GAAP operating expenses are expected to be approximately $35 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 .