KIRKLAND, Wash., Oct. 22, 2019 (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 September 30, 2019.

The financial results for the quarter ended September 30, 2019 are as follows:

  • Revenue was $168.8 million for the quarter ended September 30, 2019, an 11.8% increase from $151.0 million for the quarter ended June 30, 2019 and a 5.5% increase from $160.0 million for the quarter ended September 30, 2018.

  • GAAP gross margin was 55.2% for the quarter ended September 30, 2019, compared with 55.6% for the quarter ended September 30, 2018.

  • Non-GAAP (1) gross margin was 55.6% for the quarter ended September 30, 2019, excluding the impact of $0.6 million for stock-based compensation expense, compared with 56.1% for the quarter ended September 30, 2018, excluding the impact of $0.5 million for stock-based compensation expense and $0.2 million for the amortization of acquisition-related intangible assets.

  • GAAP operating expenses were $63.1 million for the quarter ended September 30, 2019, compared with $55.5 million for the quarter ended September 30, 2018.

  • Non-GAAP (1) operating expenses were $42.5 million for the quarter ended September 30, 2019, excluding $20.7 million for stock-based compensation expense, compared with $40.5 million for the quarter ended September 30, 2018, excluding $14.4 million for stock-based compensation expense and $0.7 million for deferred compensation plan expense.

  • GAAP operating income was $30.0 million for the quarter ended September 30, 2019, compared with $33.5 million for the quarter ended September 30, 2018.

  • Non-GAAP (1) operating income was $51.4 million for the quarter ended September 30, 2019, excluding $21.3 million for stock-based compensation expense, compared with $49.2 million for the quarter ended September 30, 2018, excluding $14.8 million for stock-based compensation expense, $0.2 million for the amortization of acquisition-related intangible assets and $0.7 million for deferred compensation plan expense.

  • GAAP interest and other income, net was $2.3 million for the quarter ended September 30, 2019, compared with $2.7 million for the quarter ended September 30, 2018.

  • Non-GAAP (1) interest and other income, net was $2.2 million for the quarter ended September 30, 2019, excluding $0.1 million for deferred compensation plan income, compared with $2.0 million for the quarter ended September 30, 2018, excluding $0.7 million for deferred compensation plan income.

  • GAAP income before income taxes was $32.3 million for the quarter ended September 30, 2019, compared with $36.2 million for the quarter ended September 30, 2018.

  • Non-GAAP (1) income before income taxes was $53.5 million for the quarter ended September 30, 2019, excluding $21.3 million for stock-based compensation expense and $0.1 million for deferred compensation plan income, compared with $51.2 million for the quarter ended September 30, 2018, excluding $14.8 million for stock-based compensation expense, $0.2 million for the amortization of acquisition-related intangible assets, and $0.1 million for deferred compensation plan income.

  • GAAP net income was $29.5 million and GAAP earnings per share were $0.64 per diluted share for the quarter ended September 30, 2019. Comparatively, GAAP net income was $31.6 million and GAAP earnings per share were $0.71 per diluted share for the quarter ended September 30, 2018.

  • Non-GAAP (1) net income was $49.5 million and non-GAAP earnings per share were $1.08 per diluted share for the quarter ended September 30, 2019, excluding stock-based compensation expense, amortization of acquisition-related intangible assets, net deferred compensation plan income and related tax effects, compared with non-GAAP net income of $47.3 million and non-GAAP earnings per share of $1.06 per diluted share for the quarter ended September 30, 2018, excluding stock-based compensation expense, amortization of acquisition-related intangible assets, net deferred compensation plan income and related tax effects.

The financial results for the nine months ended September 30, 2019 are as follows:

  • Revenue was $461.2 million for the nine months ended September 30, 2019, a 7.5% increase from $428.9 million for the nine months ended September 30, 2018.

  • GAAP gross margin was 55.2% for the nine months ended September 30, 2019, compared with 55.5% for the nine months ended September 30, 2018.

  • Non-GAAP (1) gross margin was 55.6% for the nine months ended September 30, 2019, excluding the impact of $1.8 million for stock-based compensation expense and $0.1 million for the amortization of acquisition-related intangible assets, compared with 56.0% for the nine months ended September 30, 2018, excluding the impact of $1.4 million for stock-based compensation expense and $0.6 million for the amortization of acquisition-related intangible assets.

  • GAAP operating expenses were $182.5 million for the nine months ended September 30, 2019, compared with $157.7 million for the nine months ended September 30, 2018.

  • Non-GAAP (1) operating expenses were $121.8 million for the nine months ended September 30, 2019, excluding $58.2 million for stock-based compensation expense and $2.6 million for deferred compensation plan expense, compared with $112.4 million for the nine months ended September 30, 2018, excluding $44.4 million for stock-based compensation expense and $0.9 million for deferred compensation plan expense.

  • GAAP operating income was $71.9 million for the nine months ended September 30, 2019, compared with $80.4 million for the nine months ended September 30, 2018.

  • Non-GAAP (1) operating income was $134.6 million for the nine months ended September 30, 2019, excluding $60.0 million for stock-based compensation expense, $0.1 million for the amortization of acquisition-related intangible assets and $2.6 million for deferred compensation plan expense, compared with $127.7 million for the nine months ended September 30, 2018, excluding $45.8 million for stock-based compensation expense, $0.6 million for the amortization of acquisition-related intangible assets, and $0.9 million for deferred compensation plan expense.

  • GAAP interest and other income, net was $7.8 million for the nine months ended September 30, 2019, compared with $5.4 million for the nine months ended September 30, 2018.

  • Non-GAAP (1) interest and other income, net was $5.2 million for the nine months ended September 30, 2019, excluding $2.6 million for deferred compensation plan income, compared with $4.4 million for the nine months ended September 30, 2018, excluding $0.9 million for deferred compensation plan income.

  • GAAP income before income taxes was $79.7 million for the nine months ended September 30, 2019, compared with $85.8 million for the nine months ended September 30, 2018.

  • Non-GAAP (1) income before income taxes was $139.8 million for the nine months ended September 30, 2019, excluding $60.0 million for stock-based compensation expense and $0.1 million for the amortization of acquisition-related intangible assets, compared with $132.2 million for the nine months ended September 30, 2018, excluding $45.8 million for stock-based compensation expense and $0.6 million for the amortization of acquisition-related intangible assets.

  • GAAP net income was $76.4 million and GAAP earnings per share were $1.68 per diluted share for the nine months ended September 30, 2019. Comparatively, GAAP net income was $77.6 million and GAAP earnings per share were $1.75 per diluted share for the nine months ended September 30, 2018.

  • Non-GAAP (1) net income was $129.3 million and non-GAAP earnings per share were $2.84 per diluted share for the nine months ended September 30, 2019, excluding stock-based compensation expense, amortization of acquisition-related intangible assets, net deferred compensation plan income and related tax effects, compared with non-GAAP net income of $122.3 million and non-GAAP earnings per share of $2.75 per diluted share for the nine months ended September 30, 2018, excluding stock-based compensation expense, amortization of acquisition-related intangible assets, net deferred compensation plan income and related tax effects.

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

  Three Months Ended
September 30,
 Nine Months Ended
September 30,
End Market 2019 2018 2019 2018
Computing and storage $52,793 $47,658 $133,571 $115,584
Automotive  24,432  19,785  66,174  57,857
Industrial  28,862  24,869  72,640  61,544
Communications  18,778  19,158  62,928  50,442
Consumer  43,948  48,505  125,870  143,458
Total $168,813 $159,975 $461,183 $428,885

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

  Three Months Ended
September 30,
 Nine Months Ended
September 30,
Product Family 2019 2018 2019 2018
DC to DC $159,723 $147,727 $432,125 $394,492
Lighting Control  9,090  12,248  29,058  34,393
Total $168,813 $159,975 $461,183 $428,885

“We will continue to execute and deliver the results that speak for themselves,” said Michael Hsing, CEO and founder of MPS.

Business Outlook

The following are MPS’ financial targets for the fourth quarter ending December 31, 2019:

  • Revenue in the range of $160 million to $166 million.

  • GAAP gross margin between 54.8% and 55.4%. Non-GAAP (1) gross margin between 55.2% and 55.8%, which excludes an estimated impact of stock-based compensation expenses of 0.4%.

  • GAAP research and development (“R&D”) and selling, general and administrative (“SG&A”) expenses between $56.2 million and $60.2 million. Non-GAAP (1) R&D and SG&A expenses between $38.5 million and $40.5 million, which excludes an estimate of stock-based compensation expenses in the range of $17.7 million to $19.7 million.

  • Total stock-based compensation expense of $18.3 million to $20.3 million.

  • Litigation expenses ranging between $0.8 million and $1.2 million.   

  • Interest income of $1.4 million to $1.6 million.

  • Fully diluted shares outstanding between 45.8 million and 46.8 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, amortization of acquisition-related intangible assets and deferred compensation plan income/expense. 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. 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, October 22, 2019. 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 8743388. 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, litigation expenses, interest and other income, and diluted shares outstanding, (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, and (vi) statements of the assumptions underlying or relating to any statement described in (i), (ii), (iii), (iv), or (v). 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; our ability to increase market share in our targeted markets; 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; the effect of export controls, trade and economic sanctions regulations and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign markets, particularly in China; our ability to obtain governmental licenses and approvals for international trading activities or technology transfers, including export licenses; adverse changes in laws and government regulations such as tariffs on imports of foreign goods, export regulations and export classifications, 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, and our ability to adjust our operations to address such changes or developments; 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, 2019, and our quarterly report on Form 10-Q filed with the SEC on August 2, 2019. 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) 
 
 September 30,  December 31, 
 2019  2018 
ASSETS       
Current assets:       
Cash and cash equivalents$205,229  $172,704 
Short-term investments 213,511   204,577 
Accounts receivable, net 58,261   55,214 
Inventories 135,634   136,384 
Other current assets 16,660   11,931 
Total current assets 629,295   580,810 
Property and equipment, net 217,043   150,001 
Long-term investments 3,264   3,241 
Goodwill 6,571   6,571 
Deferred tax assets, net 16,619   16,830 
Other long-term assets 43,343   35,979 
Total assets$916,135  $793,432 
        
LIABILITIES AND STOCKHOLDERS’ EQUITY       
Current liabilities:       
Accounts payable$30,318  $22,678 
Accrued compensation and related benefits 28,724   18,799 
Other accrued liabilities 45,984   38,962 
Total current liabilities 105,026   80,439 
Income tax liabilities 32,402   34,375 
Other long-term liabilities 44,279   38,525 
Total liabilities 181,707   153,339 
Commitments and contingencies       
Stockholders' equity:       
Common stock and additional paid-in capital: $0.001 par value; shares authorized: 150,000; shares issued and outstanding: 43,435 and 42,505, respectively 528,775   450,908 
Retained earnings 215,692   194,728 
Accumulated other comprehensive loss (10,039)  (5,543)
Total stockholders’ equity 734,428   640,093 
Total liabilities and stockholders’ equity$916,135  $793,432 
 


 
Monolithic Power Systems, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share amounts) 
 
 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2019 2018 2019 2018
Revenue$168,813 $159,975 $461,183 $428,885
Cost of revenue 75,655  70,957  206,794  190,810
Gross profit 93,158  89,018  254,389  238,075
Operating expenses:           
Research and development 27,742  25,630  80,746  70,720
Selling, general and administrative 34,692  29,552  100,302  85,431
Litigation expense 692  343  1,473  1,513
Total operating expenses 63,126  55,525  182,521  157,664
Income from operations 30,032  33,493  71,868  80,411
Interest and other income, net 2,257  2,714  7,827  5,387
Income before income taxes 32,289  36,207  79,695  85,798
Income tax expense 2,761  4,639  3,293  8,168
Net income$29,528 $31,568 $76,402 $77,630
            
Net income per share:           
Basic$0.68 $0.75 $1.77 $1.84
Diluted$0.64 $0.71 $1.68 $1.75
Weighted-average shares outstanding:           
Basic 43,308  42,362  43,055  42,173
Diluted 45,833  44,669  45,516  44,450
 


 
SUPPLEMENTAL FINANCIAL INFORMATION 
STOCK-BASED COMPENSATION EXPENSE
(Unaudited, in thousands)
 
 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2019 2018 2019 2018
Cost of revenue$641 $471 $1,834 $1,384
Research and development 4,960  3,979  14,801  12,168
Selling, general and administrative 15,699  10,393  43,384  32,213
Total stock-based compensation expense$21,300 $14,843 $60,019 $45,765
 


 
RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME
(Unaudited, in thousands, except per share amounts)
 
 Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
 2019  2018  2019  2018 
Net income$29,528  $31,568  $76,402  $77,630 
Net income as a percentage of revenue 17.5%  19.7%  16.6%  18.1%
                
Adjustments to reconcile net income to non-GAAP net income:               
Stock-based compensation expense 21,300   14,843   60,019   45,765 
Amortization of acquisition-related intangible assets 8   197   110   644 
Deferred compensation plan income (61)  (66)  (46)  (26)
Tax effect (1,254)  800   (7,190)  (1,746)
Non-GAAP net income$49,521  $47,342  $129,295  $122,267 
Non-GAAP net income as a percentage of revenue 29.3%  29.6%  28.0%  28.5%
                
Non-GAAP net income per share:               
Basic$1.14  $1.12  $3.00  $2.90 
Diluted$1.08  $1.06  $2.84  $2.75 
                
Shares used in the calculation of non-GAAP net income per share:               
Basic 43,308   42,362   43,055   42,173 
Diluted 45,833   44,669   45,516   44,450 
                


 
RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN
(Unaudited, in thousands)
 
 Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
 2019  2018  2019  2018 
Gross profit$93,158  $89,018  $254,389  $238,075 
Gross margin 55.2%  55.6%  55.2%  55.5%
                
Adjustments to reconcile gross profit to non-GAAP gross profit:             
Stock-based compensation expense 641   471   1,834   1,384 
Deferred compensation plan expense 25   -   25   - 
Amortization of acquisition-related intangible assets 8   197   110   644 
Non-GAAP gross profit$93,832  $89,686  $256,358  $240,103 
Non-GAAP gross margin 55.6%  56.1%  55.6%  56.0%
 


RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
(Unaudited, in thousands)
 
 Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
 2019  2018  2019  2018 
Total operating expenses$63,126  $55,525  $182,521  $157,664 
                
Adjustments to reconcile total operating expenses to non-GAAP total operating expenses:         
Stock-based compensation expense (20,659)  (14,372)  (58,185)  (44,381)
Deferred compensation plan (expense) income 13   (650)  (2,558)  (923)
Non-GAAP operating expenses$42,480  $40,503  $121,778  $112,360 
 


RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME
(Unaudited, in thousands)
 
 Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
 2019  2018  2019  2018 
Total operating income$30,032  $33,493  $71,868  $80,411 
                
Adjustments to reconcile total operating income to non-GAAP total operating income:      
Stock-based compensation expense 21,300   14,843   60,019   45,765 
Amortization of acquisition-related intangible assets 8   197   110   644 
Deferred compensation plan expense 12   650   2,584   923 
Non-GAAP operating income$51,352  $49,183  $134,581  $127,743 
 


RECONCILIATION OF INTEREST AND OTHER INCOME, NET, TO NON-GAAP INTEREST AND OTHER INCOME, NET
(Unaudited, in thousands)
 
 Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
 2019  2018  2019  2018 
Total interest and other income, net$2,257  $2,714  $7,827  $5,387 
                
Adjustments to reconcile interest and other income to non-GAAP interest and other income:       
Deferred compensation plan income (74)  (716)  (2,630)  (949)
Non-GAAP interest and other income, net$2,183  $1,998  $5,197  $4,438 
 


RECONCILIATION OF INCOME BEFORE INCOME TAXES TO NON-GAAP INCOME BEFORE INCOME TAXES
(Unaudited, in thousands)
 
 Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
 2019  2018  2019  2018 
Total income before income taxes$32,289  $36,207  $79,695  $85,798 
                
Adjustments to reconcile income before income taxes to non-GAAP income before income taxes:         
Stock-based compensation expense 21,300   14,843   60,019   45,765 
Amortization of acquisition-related intangible assets 8   197   110   644 
Deferred compensation plan income (61)  (66)  (46)  (26)
Non-GAAP income before income taxes$53,536  $51,181  $139,778  $132,181 
 


 
2019 FOURTH QUARTER OUTLOOK
 
RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN
(Unaudited)
 
 Three Months Ending  
 December 31, 2019 
 Low  High 
Gross margin 54.8%  55.4%
Adjustments to reconcile gross margin to non-GAAP gross margin:       
Stock-based compensation expense 0.4%  0.4%
Non-GAAP gross margin 55.2%  55.8%
 


RECONCILIATION OF R&D AND SG&A EXPENSES TO NON-GAAP R&D AND SG&A EXPENSES
(Unaudited, in thousands)
 
 Three Months Ending  
 December 31, 2019 
 Low  High 
R&D and SG&A expense$56,200  $60,200 
Adjustments to reconcile R&D and SG&A expense to non-GAAP R&D and SG&A expense:       
Stock-based compensation expense (17,700)  (19,700)
Non-GAAP R&D and SG&A expense$38,500  $40,500