MPWR
$140.21
Monolithic Power Sys
$.30
.21%
Earnings Details
1st Quarter March 2018
Monday, April 30, 2018 4:05:00 PM
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Summary

Monolithic Power Systems Guides In-line

Monolithic Power Sys (MPWR) reported 1st Quarter March 2018 earnings of $0.50 per share on revenue of $129.2 million. The consensus earnings estimate was $0.51 per share on revenue of $125.2 million. Revenue grew 28.7% on a year-over-year basis.

The company said it expects second quarter revenue of $135.0 million to $141.0 million. The current consensus revenue estimate is $136.9 million for the quarter ending June 30, 2018.

Monolithic Power Systems Inc operates in the cyclical semiconductor industry. The Company designs, develops, markets and sells mixed-signal analog semiconductors for the communications, storage and computing, consumer and industrial markets.

Results
Reported Earnings
$0.50
Earnings Whisper
-
Consensus Estimate
$0.51
Reported Revenue
$129.2 Mil
Revenue Estimate
$125.2 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Monolithic Power Systems Announces Results for the First Quarter Ended March 31, 2018

SAN JOSE, Calif., April 30, 2018 (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, 2018.  

  • Revenue was $129.2 million for the quarter ended March 31, 2018, a 0.2% decrease from $129.4 million for the quarter ended December 31, 2017 and a 28.7% increase from $100.4 million for the quarter ended March 31, 2017.

  • GAAP gross margin was 55.4% for the quarter ended March 31, 2018, compared with 54.6% for the quarter ended March 31, 2017.

  • Non-GAAP (1) gross margin was 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, compared with 55.5% for the quarter ended March 31, 2017, excluding the impact of $0.4 million for stock-based compensation expense and $0.5 million for the amortization of acquisition-related intangible assets.

  • GAAP operating expenses were $49.5 million for the quarter ended March 31, 2018, compared with $41.3 million for the quarter ended March 31, 2017.

  • Non-GAAP (1) operating expenses were $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, compared with $29.2 million for the quarter ended March 31, 2017, excluding $11.3 million for stock-based compensation expense and $0.8 million for deferred compensation plan expense.

  • GAAP operating income was $22.0 million for the quarter ended March 31, 2018, compared with $13.6 million for the quarter ended March 31, 2017.

  • Non-GAAP (1) operating income was $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, compared with $26.5 million for the quarter ended March 31, 2017, excluding $11.7 million for stock-based compensation expense, $0.5 million for the amortization of acquisition-related intangible assets and $0.8 million for deferred compensation plan expense.

  • GAAP interest and other income, net was $0.4 million for the quarter ended March 31, 2018, compared with $1.4 million for the quarter ended March 31, 2017.

  • Non-GAAP (1) interest and other income, net was $0.6 million for the quarter ended March 31, 2018, excluding $0.2 million for deferred compensation plan expense, compared with $0.6 million for the quarter ended March 31, 2017, excluding $0.7 million for deferred compensation plan income.

  • GAAP income before income taxes was $22.5 million for the quarter ended March 31, 2018, compared with $15.0 million for the quarter ended March 31, 2017.

  • Non-GAAP (1) income before income taxes was $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, compared with $27.2 million for the quarter ended March 31, 2017, excluding $11.7 million for stock-based compensation expense and $0.5 million for the amortization of acquisition-related intangible assets.

  • 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. Comparatively, GAAP net income was $14.5 million and GAAP earnings per share were $0.33 per diluted share for the quarter ended March 31, 2017.

  • Non-GAAP (1) net income was $35.0 million and non-GAAP earnings per share were $0.79 per diluted share for the quarter ended March 31, 2018, excluding stock-based compensation expense, amortization of acquisition-related intangible assets, net deferred compensation plan expense and related tax effects, compared with non-GAAP net income of $25.2 million and non-GAAP earnings per share of $0.58 per diluted share for the quarter ended March 31, 2017, 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, estimated based on MPS’s assessment of available end market data (in thousands):

  

      
   Three Months Ended March 31,
 End Market  2018  2017
 Consumer $  47,144 $  35,611
 Computing and storage    30,970    20,617
 Industrial    17,554    15,354
 Automotive    17,732    12,331
 Communications    15,750    16,449
 Total $  129,150 $  100,362
      

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

       
   Three Months Ended March 31, 
 Product Family  2018  2017 
 DC to DC  $  119,268 $  91,424 
 Lighting Control     9,882    8,938 
 Total  $  129,150 $  100,362 
       

“We continue to grow and continue to enhance shareholder value," said Michael Hsing, CEO and founder of MPS.

Business Outlook

The following are MPS’ financial targets for the second quarter ending June 30, 2018:

  • Revenue in the range of $135 million to $141 million.

  • GAAP gross margin between 54.9% and 55.9%. Non-GAAP (1) gross margin between 55.4% and 56.4%, which excludes an estimated impact of stock-based compensation expenses of 0.4% and amortization of acquisition-related intangible assets of 0.1%.

  • GAAP research and development (“R&D”) and selling, general and administrative (“SG&A”) expenses between $48.4 million and $53.4 million. Non-GAAP (1) R&D and SG&A expenses between $33.7 million and $36.7 million, which excludes an estimate of stock-based compensation expenses in the range of $14.7 million to $16.7 million.

  • Total stock-based compensation expense of $15.2 million to $17.2 million.

  • Litigation expenses of $300,000 to $500,000.

  • Interest and other income, net, of $600,000 to $700,000 before foreign exchange gains or losses.

  • Fully diluted shares outstanding between 43.9 million and 44.9 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 and amortization of acquisition-related intangible assets. 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 3:00 p.m. PT / 6:00 p.m. ET, April 30, 2018. To access the conference call and the following replay of the conference call, go to http://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 3469457. 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, amortization of acquisition-related intangible assets, litigation expenses, interest and other income, diluted shares outstanding and tax rate, (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, (vi) the impact of the 2017 Tax Act on our tax rate and provision; and (vii) statements of the assumptions underlying or relating to any statement described in (i), (ii), (iii), (iv), (v), or (vi). 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; 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, 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; 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, 2018. 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, 
  2018  2017 
ASSETS    
Current assets:    
Cash and cash equivalents$  76,016 $  82,759 
Short-term investments   231,243    216,331 
Accounts receivable, net    48,241    38,037 
Inventories   111,897    99,281 
Other current assets   16,707    12,762 
Total current assets   484,104    449,170 
Property and equipment, net   153,770    144,636 
Long-term investments   5,250    5,256 
Goodwill   6,571    6,571 
Acquisition-related intangible assets, net   701    951 
Deferred tax assets, net   15,840    15,917 
Other long-term assets   31,531    30,068 
Total assets$  697,767 $  652,569 
     
LIABILITIES AND STOCKHOLDERS’ EQUITY    
Current liabilities:    
Accounts payable$  27,511 $  22,813 
Accrued compensation and related benefits   13,060    15,597 
Accrued liabilities   32,730    27,507 
Total current liabilities   73,301    65,917 
Income tax liabilities   31,900    31,621 
Other long-term liabilities   34,260    33,024 
      Total liabilities   139,461    130,562 
Commitments and contingencies     
Stockholders' equity:    
  Common stock and additional paid-in capital, $0.001 par value; shares authorized:     
  150,000; shares issued and outstanding:  42,145 and 41,614     
  as of March 31, 2018 and December 31, 2017, respectively   401,007    376,586 
Retained earnings    152,257    143,608 
Accumulated other comprehensive income    5,042    1,813 
Total stockholders’ equity   558,306    522,007 
Total liabilities and stockholders’ equity$  697,767 $  652,569 
     


  
Monolithic Power Systems, Inc. 
Condensed Consolidated Statements of Operations 
(Unaudited, in thousands, except per share amounts) 
  
 Three Months Ended March 31, 
  2018   2017  
Revenue $  129,150  $  100,362  
Cost of revenue    57,655     45,520  
Gross profit    71,495     54,842  
Operating expenses:    
  Research and development    21,609     18,894  
  Selling, general and administrative    27,318     22,092  
  Litigation expense    531     286  
Total operating expenses    49,458     41,272  
Income from operations    22,037     13,570  
Interest and other income, net   440     1,381  
Income before income taxes    22,477     14,951  
Income tax provision    621     474  
Net income $  21,856  $  14,477  
     
  Net income per share:    
    Basic$  0.52  $  0.35  
    Diluted$  0.49  $  0.33  
Weighted-average shares outstanding:    
    Basic   41,922     41,047  
    Diluted   44,282     43,268  
     
Cash dividends declared per common share$  0.30  $  0.20  
     
 
 
SUPPLEMENTAL FINANCIAL INFORMATION 
STOCK-BASED COMPENSATION EXPENSE
(Unaudited, in thousands)
 Three Months Ended March 31, 
  2018   2017  
Cost of revenue$  433  $  358  
Research and development   3,995     3,498  
Selling, general and administrative   10,602     7,806  
Total stock-based compensation expense$  15,030  $  11,662  
     
 
RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME
(Unaudited, in thousands, except per share amounts)
 Three Months Ended March 31, 
  2018   2017  
Net income $  21,856  $  14,477  
  Net income as a percentage of revenue 16.9%  14.4% 
     
Adjustments to reconcile net income to non-GAAP net income:    
  Stock-based compensation expense   15,030     11,662  
  Amortization of acquisition-related intangible assets   250     513  
  Deferred compensation plan expense    49     71  
  Tax effect    (2,214)    (1,566) 
Non-GAAP net income$  34,971  $  25,157  
  Non-GAAP net income as a percentage of revenue 27.1%  25.1% 
     
Non-GAAP net income per share:    
  Basic$  0.83  $  0.61  
  Diluted$  0.79  $  0.58  
     
Shares used in the calculation of non-GAAP net income per share:    
  Basic   41,922     41,047  
  Diluted   44,282     43,268  
     
RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN
(Unaudited, in thousands)
 Three Months Ended March 31, 
  2018   2017  
Gross profit$  71,495  $  54,842  
  Gross margin 55.4%  54.6% 
     
Adjustments to reconcile gross profit to non-GAAP gross profit:    
  Stock-based compensation expense   433     358  
  Amortization of acquisition-related intangible assets   250     513  
Non-GAAP gross profit$  72,178  $  55,713  
  Non-GAAP gross margin 55.9%  55.5% 
     
RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
(Unaudited, in thousands)
 Three Months Ended March 31, 
  2018   2017  
Total operating expenses$  49,458  $  41,272  
     
Adjustments to reconcile total operating expenses to non-GAAP total operating expenses:   
  Stock-based compensation expense   (14,597)    (11,304) 
  Deferred compensation plan income (expense)   137     (804) 
Non-GAAP operating expenses$  34,998  $  29,164  
     
     
RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME
(Unaudited, in thousands)
 Three Months Ended March 31, 
  2018   2017  
Total operating income$  22,037  $  13,570  
  Operating income as a percentage of revenue 17.1%  13.5% 
     
Adjustments to reconcile total operating income to non-GAAP total operating income:   
  Stock-based compensation expense   15,030     11,662  
  Amortization of acquisition-related intangible assets   250     513  
  Deferred compensation plan (income) expense    (137)    804  
Non-GAAP operating income$  37,180  $  26,549  
  Non-GAAP operating income as a percentage of revenue 28.8%  26.5% 
     
     
RECONCILIATION OF INTEREST AND OTHER INCOME, NET, TO NON-GAAP INTEREST AND OTHER INCOME, NET
(Unaudited, in thousands)
 Three Months Ended March 31, 
  2018   2017  
Total interest and other income, net$  440  $  1,381  
     
Adjustments to reconcile interest and other income to non-GAAP interest and other income:   
  Deferred compensation plan (income) expense   186     (733) 
Non-GAAP interest and other income, net$  626  $  648  
     
     
RECONCILIATION OF INCOME BEFORE INCOME TAXES TO NON-GAAP INCOME BEFORE INCOME TAXES
(Unaudited, in thousands)
 Three Months Ended March 31, 
  2018   2017  
Total income before income taxes$  22,477  $  14,951  
     
Adjustments to reconcile income before income taxes to non-GAAP income before income taxes:   
  Stock-based compensation expense   15,030     11,662  
  Amortization of acquisition-related intangible assets   250     513  
  Deferred compensation plan expense    49     71  
Non-GAAP income before income taxes$  37,806  $  27,197  
     


2018 SECOND QUARTER OUTLOOK 
RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN 
(Unaudited) 
 Three Months Ending  
 June 30, 2018 
 Low High 
Gross margin 54.9%  55.9% 
Adjustments to reconcile gross margin to non-GAAP gross margin:    
  Stock-based compensation expense  0.4%  0.4% 
  Amortization of acquisition-related intangible assets 0.1%  0.1% 
Non-GAAP gross margin 55.4%  56.4% 
     
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, 2018 
 Low High 
R&D and SG&A expense$  48,400  $  53,400  
Adjustments to reconcile R&D and SG&A expense to non-GAAP R&D and SG&A expense:    
  Stock-based compensation expense   (14,700)    (16,700) 
Non-GAAP R&D and SG&A expense$  33,700  $  36,700  
     

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Source: Monolithic Power Systems, Inc.