Quarterly revenues surpassed $100 million for the first time, growing 17 percent year-over-year to $103.8 million

GAAP earnings were $0.48 per diluted share; non-GAAP earnings were $0.72 per diluted share; cash flow from operations was $26.3 million

SAN JOSE, Calif. — (BUSINESS WIRE) — October 27, 2016 — Power Integrations (Nasdaq: POWI) today announced financial results for the quarter ended September 30, 2016. Net revenues for the third quarter were $103.8 million, an increase of seven percent from the prior quarter, and up 17 percent compared to the third quarter of 2015. Net income was $14.2 million or $0.48 per diluted share, compared to $0.38 per diluted share in the prior quarter and $0.39 per diluted share in the third quarter of 2015. Cash flow from operations was $26.3 million.

In addition to its GAAP results, the company provided certain non-GAAP financial measures that exclude stock-based compensation expenses, amortization of intangible assets, other acquisition-related expenses, and the tax effects of these items. Non-GAAP net income for the third quarter was $21.2 million or $0.72 per diluted share, compared with $0.60 per diluted share in the prior quarter and $0.55 per diluted share in the third quarter of 2015.

Commented Balu Balakrishnan, president and CEO of Power Integrations: “Our quarterly revenues grew 17 percent year-over-year, surpassing $100 million for the first time. We believe we are on track for double-digit revenue growth in 2016, and we expect to carry strong momentum into 2017 on the strength of the InnoSwitch™ product cycle, new products for the high-power and lighting markets, and a robust product pipeline that will further expand our addressable market in the years ahead.”

Additional Highlights

• Power Integrations paid a dividend of $0.13 per share on September 30, 2016. A dividend of $0.13 per share is scheduled to be paid on December 30, 2016, to stockholders of record as of November 30, 2016.
• The company had $226.6 million in cash and short-term marketable securities at quarter-end, an increase of $24.3 million during the quarter.
• Power Integrations was issued 15 U.S. patents during the third quarter.

Financial Outlook

The company issued the following forecast for the fourth quarter of 2016:

• Revenues are expected to be in a range of $101 million plus or minus $3 million.
• GAAP gross margin is expected to be approximately 48.8 percent; non-GAAP gross margin is expected to be approximately 50 percent. (The difference between the expected GAAP and non-GAAP gross margins is composed of approximately 0.9 percentage points from amortization of acquisition-related intangible assets and 0.3 percentage points from stock-based compensation.)
• GAAP operating expenses are expected to be between $37 million and $38 million; non-GAAP operating expenses are expected to be between $31 million and $32 million. (Non-GAAP operating expenses exclude approximately $5.4 million of stock-based compensation expenses and $0.6 million of amortization of acquisition-related intangible assets.)

Conference Call Today at 1:30 p.m. Pacific Time

Power Integrations management will hold a conference call today at 1:30 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, severance and transition expenses, amortization of in-place lease intangible assets, 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.