Sandeep Nayyar, Power Integrations’ chief financial officer, commented: “We do not expect the adoption of the new accounting standard to have a material impact on our full-year results, though changing to the sell-in method may affect the quarter-to-quarter seasonality of revenues within a given year. For example, our revenue outlook for the first quarter of 2017 reflects the fact that shipments to distributors normally exceed sell-through in the first quarter, resulting in higher first-quarter revenues than we would have expected under the prior accounting rules. If the sell-through method were still in effect, our revenue forecast for the first quarter would be lower by approximately $3 million.”
Financial Outlook
The company issued the following forecast for the first quarter of 2017:
- Revenues (as calculated under the new revenue-recognition standard) are expected to be flat plus or minus three percent compared to the recast fourth-quarter revenues of $102.4 million.
- GAAP gross margin is expected to be between 47.9 percent and 48.4 percent; non-GAAP gross margin is expected to be between 49 percent and 49.5 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 0.2 percentage points from stock-based compensation.)
- GAAP operating expenses are expected to be between $35.6 million and $36.6 million; non-GAAP operating expenses are expected to be between $31 million and $32 million. (Non-GAAP expenses exclude approximately $4.0 million of stock-based compensation expenses and $0.6 million of amortization of acquisition-related intangible assets.)
Conference Call Tomorrow at 8:00 a.m. Pacific Time
Power Integrations management will hold a conference call tomorrow, February 2, at 8:00 a.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.
Note Regarding Forward-Looking Statements
The statements in this press release regarding the company’s forecast
for its first-quarter financial performance are forward-looking
statements reflecting management's current expectations and beliefs.
These forward-looking statements are based on current information that
is, by its nature, subject to rapid and even abrupt change. Due to risks
and uncertainties associated with the company's business, actual results
could differ materially from those projected or implied by these
statements. These risks and uncertainties include, but are not limited
to: changes in global macroeconomic conditions, which may impact the
level of demand for the company’s products; potential changes and shifts
in customer demand away from end products that utilize the company's
integrated circuits to end products that do not incorporate the
company's products; the effects of competition, which may cause the
company to decrease its selling prices for its products; the outcome and
cost of patent litigation, which may affect sales of the company’s
products or could result in higher expenses and charges than currently
expected; unforeseen costs and expenses; and unfavorable fluctuations in
component costs or operating expenses resulting from changes in
commodity prices and/or exchange rates. In addition, new product
introductions and design wins are subject to the risks and uncertainties
that typically accompany development and delivery of complex
technologies to the marketplace, including product development delays
and defects and market acceptance of the new products. These and other
risk factors that may cause actual results to differ are more fully
explained under the caption “Risk Factors” in the company's most recent
Annual Report on Form 10-K, filed with the Securities and Exchange
Commission (SEC) on February 11, 2016. The company is under no
obligation (and expressly disclaims any obligation) to update or alter
its forward-looking statements, whether as a result of new information,
future events or otherwise, except as otherwise required by the rules
and regulations of the SEC.
