Monolithic Power Systems Announces Results for the Second Quarter and Six Months Ended June 30, 2012

SAN JOSE, Calif., July 30, 2012 /PRNewswire/ -- Monolithic Power Systems (MPS) (Nasdaq: MPWR), a leading fabless manufacturer of high-performance analog and mixed-signal semiconductors, today announced financial results for the quarter and six months ended June 30, 2012.

The results for the quarter ended June 30, 2012 are as follows:

  • Net revenue of $58.6 million, a 16.1% increase from $50.5 million in the first quarter of 2012 and a 13.5% increase from $51.6 million in the second quarter of 2011.
  • Gross margin of 53.2% was up from 52.3% in the first quarter of 2012 and up 1.8% from 51.4% in the second quarter of 2011.
  • GAAP operating expenses of $24.4 million, including $24.6 million for research and development (R&D) and selling, general and administrative (SG&A) expenses, which include $3.7 million for stock-based compensation, and ($0.2) million for litigation benefit. Comparatively, for the three months ended June 30, 2011, GAAP operating expenses were $22.5 million, including $21.6 million for research and development and selling, general and administrative expenses, which included $3.6 million for stock-based compensation and $0.9 million for litigation expenses.
  • Non-GAAP(1) operating expenses of $20.7 million, excluding $3.7 million for stock-based compensation, compared to $18.9 million, excluding $3.6 million for stock-based compensation, for the quarter ended June 30, 2011.
  • GAAP net income of $6.6 million and GAAP earnings per share of $0.18 per diluted share. Comparatively, GAAP net income was $3.5 million and GAAP earnings per share was $0.10 per diluted share for the quarter ended June 30, 2011.
  • Non-GAAP(1) net income of $10.1 million and non-GAAP earnings per share of $0.28 per diluted share, excluding stock-based compensation and related tax effects, compared to non-GAAP net income of $7.2 million and non-GAAP earnings per share of $0.21 per diluted share, excluding stock-based compensation and related tax effects, for the quarter ended June 30, 2011.

The results for the six months ended June 30, 2012 are as follows:

  • Net revenue of $109.1 million, an increase of 13.5% from $96.1 million for the six months ended June 30, 2011.
  • Gross margin of 52.8%, compared to 50.8% for the six months ended June 30, 2011.
  • GAAP operating expenses of $47.6 million, including $47.7 million for research and development and selling, general and administrative expenses, which include $6.9 million for stock-based compensation, and ($0.1) million for litigation benefit. Comparatively, GAAP operating expenses were $42.9 million, including $41.2 million for research and development and selling, general and administrative expenses, which included $6.5 million for stock-based compensation and $1.7 million for litigation expenses for the six months ended June 30, 2011.
  • Non-GAAP(1) operating expenses of $40.7 million, excluding $6.9 million for stock-based compensation, compared to $36.4 million, excluding $6.5 million for stock-based compensation for the six months ended June 30, 2011.
  • GAAP net income of $9.6 million, with GAAP earnings per share of $0.27 per diluted share, compared to GAAP net income of $5.4 million, with GAAP earnings per share of $0.15 per diluted share for the six months ended June 30, 2011.
  • Non-GAAP(1) net income of $16.3 million, with non-GAAP earnings per share of $0.46 per diluted share, excluding stock-based compensation and related tax effects compared to non-GAAP net income of $11.9 million, with non-GAAP earnings per share of $0.33 per diluted share, excluding stock-based compensation and related tax effects for the six months ended June 30, 2011.

The following is a summary of revenue by end market for the period indicated, estimated based on the Company's assessment of available end market data (in millions):



Three months ended June 30,


Six months ended June 30,

End Market


2012


2011


2012


2011

      Communication


$  14.3


$  12.2


$    26.8


$  22.1

      Computing


10.2


7.1


19.6


12.7

      Consumer


26.2


29.2


50.1


55.7

      Industrial


7.9


3.1


12.6


5.6

      Total


$  58.6


$  51.6


$  109.1


$  96.1

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



Three months ended June 30,


Six months ended June 30,

Product Family


2012


2011 *


2012


2011 *

      DC to DC Converters


$  51.2


$  44.8


$    95.6


$  83.4

      Lighting Control Products

7.4


6.8


13.5


12.7

      Total


$  58.6


$  51.6


$  109.1


$  96.1










*  2011 Revenue associated with Audio Amplifiers has been included with DC to DC Converters to conform with current year presentation.






"I am pleased to see our new product revenues ramping in multiple markets. In the near term, we will closely monitor the macroeconomic conditions and control expenses," said Michael Hsing, CEO and founder of MPS. "We are well positioned for future growth."

Business Outlook

The following are MPS' financial targets for the third quarter ending September 30, 2012:

  • Revenue in the range of $56 million to $60 million.
  • Gross margin will be in a range similar to Q2 2012.
  • GAAP research and development and selling, general and administrative expenses between $24.0 million and $26.0 million. Non-GAAP(1) research and development and selling, general and administrative expenses between $20.0 million and $21.5 million. This excludes an estimate of stock-based compensation expense in the range of $4.0 million to $4.5 million.

(1) Non-GAAP net income, non-GAAP earnings per share, Non-GAAP operating expenses and non-GAAP research and development and selling, general and administrative expenses differ from net income, earnings per share, operating expenses, and research and development and selling, general and administrative expenses determined in accordance with GAAP (Generally Accepted Accounting Principles in the United States). Non-GAAP net income and Non-GAAP earnings per share for the quarter and six months ended June 30, 2012 and 2011 exclude the effect of stock-based compensation expense and its related tax effect. Non-GAAP operating expenses for the quarter and six months ended June 30, 2012 and 2011 exclude the effect of stock-based compensation expense. Projected non-GAAP research and development and selling, general and administrative 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 quarter and six months ended June 30, 2012 results at 2:00 p.m. PT / 5:00 p.m. ET today, July 30, 2012. 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 41756353. 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 forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including, among other things, (i) projected revenues, gross margin, GAAP and non-GAAP research and development and selling, general and administrative expenses, stock-based compensation expense and litigation expense for the quarter ending September 30, 2012, (ii) our outlook for the long-term prospects of the company, including the prospects of our new product families, (iii) our ability to penetrate new markets and expand our market share, (iv) our expected pricing practices in 2012, (v) the seasonality of our business, (vi) our ability to reduce our manufacturing costs, 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 within the past 18 months, being different than expected; competition generally and the increasingly competitive nature of our industry; any market disruptions or interruptions in MPS' schedule of new product release development; adverse changes in production and testing efficiency of our products; adverse changes in government regulations in foreign countries where MPS has offices or operations; the effect of catastrophic events; adequate supply of our products from our third-party manufacturer; 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; difficulty in predicting or budgeting for future customer demand and channel inventories, expenses and financial contingencies; and other important risk factors identified in MPS' SEC filings, including, but not limited to, its Form 10-K filed on March 12, 2012.

The forward-looking statements in this press release 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, Inc.

Monolithic Power Systems, Inc. (MPS) develops and markets proprietary, advanced analog and mixed-signal semiconductors. The company combines advanced process technology with its highly experienced analog designers to produce high-performance power management integrated circuits (ICs) for DC to DC converters, LED drivers, Cold Cathode Fluorescent Lamp (CCFL) backlight controllers, Class D audio amplifiers, and Linear ICs. MPS products are used extensively in computing and network communications products, LCD monitors and TVs, and a wide variety of consumer and portable electronics products. MPS partners with world-class manufacturing organizations to deliver top quality, ultra-compact, high-performance solutions through the most productive, cost-efficient channels. Founded in 1997 and headquartered in San Jose, California, the company has expanded its global presence with sales offices in Taiwan, China, Korea, Singapore, Japan, and Europe, which operate under MPS International, Ltd.

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.

 

Condensed Consolidated Balance Sheets

(Unaudited, in thousands, except par value and share amounts)






June 30,


December 31,


2012


2011

ASSETS




Current assets:




Cash and cash equivalents

$    81,644


$          96,371

Short-term investments

103,013


77,827

Accounts receivable, net of allowances of $5 in 2012 and 2011

21,415


15,097

Inventories

29,455


20,104

Deferred income tax assets, net - current

646


421

Prepaid expenses and other current assets

1,978


1,685

Total current assets

238,151


211,505

Property and equipment, net

59,584


47,794

Long-term investments

11,714


13,675

Deferred income tax assets, net - long-term

19


239

Other assets

606


654

Total assets

$  310,074


$        273,867





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable

$    17,701


$            8,904

Accrued compensation and related benefits

11,035


9,321

Accrued liabilities

6,848


7,845

Total current liabilities

35,584


26,070





Non-current income tax liabilities

5,249


4,920

      Total liabilities

40,833


30,990

Commitments and contingencies




Stockholders' equity:




Common stock, $0.001 par value, $35 and $34 in 2012 and 2011, respectively; shares authorized: 150,000,000; shares issued and outstanding: 34,820,281 and 33,826,032 in 2012 and 2011, respectively

175,624


159,336

Retained earnings 

89,535


79,948

Accumulated other comprehensive income

4,082


3,593

Total stockholders' equity

269,241


242,877

Total liabilities and stockholders' equity

$  310,074


$        273,867

 

Condensed Consolidated Statement of Operations

(Unaudited, in thousands, except per share amounts)






Three months ended June 30,


Six months ended June 30,


2012


2011


2012


2011

















Revenue 

$ 58,607


$  51,628


$ 109,091


$  96,096

Cost of revenue (1)

27,435


25,070


51,509


47,233









Gross profit 

31,172


26,558


57,582


48,863

Operating expenses:








  Research and development (2)

12,468


11,237


23,586


21,323

  Selling, general and administrative (3)

12,167


10,343


24,133


19,833

  Litigation expense (benefit)

(244)


939


(116)


1,752









Total operating expenses 

24,391


22,519


47,603


42,908









Income from operations 

6,781


4,039


9,979


5,955

Interest income and other, net

359


24


465


207









Income before income taxes 

7,140


4,063


10,444


6,162

Income tax provision

548


581


857


787









Net income 

$   6,592


$    3,482


$     9,587


$    5,375

Basic net income per share

$     0.19


$      0.10


$       0.28


$      0.16

Diluted net income per share

$     0.18


$      0.10


$       0.27


$      0.15

Weighted average common shares outstanding:








  Basic

34,665


33,846


34,385


34,432

  Diluted

35,997


34,903


35,660


35,598

















  (1) Includes stock-based compensation expense

$      118


$         89


$        213


$       152

  (2) Includes stock-based compensation expense

1,524


1,550


2,790


2,977

  (3) Includes stock-based compensation expense

2,187


2,036


4,141


3,533

            Total stock-based compensation expense

$   3,829


$    3,675


$     7,144


$    6,662

 


Three months ended June 30,


Six months ended June 30,


2012


2011


2012


2011









RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME

(in thousands, except per share amounts)









Net income 

$   6,592


$    3,482


$     9,587


$    5,375

   Net income as a percentage of revenue

11.2%


6.7%


8.8%


5.6%









Adjustments to reconcile net income to non-GAAP net income





    Stock-based compensation

$   3,829


$    3,675


$     7,144


$    6,662

    Tax effect 

(275)


1


(462)


(175)

    Non-GAAP net income

$ 10,146


$    7,158


$   16,269


$  11,862

        Non-GAAP net income as a percentage of revenue

17.3%


13.9%


14.9%


12.3%









Non-GAAP earnings per share, excluding stock-based compensation and related tax effects:


    Basic

$     0.29


$      0.21


$       0.47


$      0.34

    Diluted

$     0.28


$      0.21


$       0.46


$      0.33









Shares used in the calculation of non-GAAP earnings per share:





    Basic

34,665


33,846


34,385


34,432

    Diluted

35,997


34,903


35,660


35,598

















RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES

(in thousands)









Total operating expenses

$ 24,391


$  22,519


$   47,603


$  42,908

















Adjustments to reconcile total operating expenses to non-GAAP total operating expenses



    Stock-based compensation

$ (3,711)


$   (3,586)


$   (6,931)


$   (6,510)

    Non-GAAP operating expenses

$ 20,680


$  18,933


$   40,672


$  36,398

















RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME

(in thousands)









Total operating income

$   6,781


$    4,039


$     9,979


$    5,955

   Operating income as a percentage of revenue

11.6%


7.8%


9.1%


6.2%









Adjustments to reconcile total operating income to non-GAAP total operating income



    Stock-based compensation

$   3,829


$    3,675


$     7,144


$    6,662

    Non-GAAP operating income

$ 10,610


$    7,714


$   17,123


$  12,617

       Non-GAAP operating income as a percentage of revenue

18.1%


14.9%


15.7%


13.1%









 

2012 THIRD QUARTER OUTLOOK





RECONCILIATION OF R&D AND SG&A EXPENSES TO NON-GAAP R&D AND SG&A EXPENSES

(in thousands)






Three months ended


September 30, 2012


Low


High

R&D and SG&A

$  24,000


$  26,000





Adjustments to reconcile R&D and SG&A to non-GAAP R&D and SG&A




    Stock-based compensation

$  (4,000)


$  (4,500)

Non-GAAP R&D and SG&A

$  20,000


$  21,500

 

 

 

SOURCE Monolithic Power Systems, Inc.



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