EX-99.1 2 ex_182526.htm EXHIBIT 99.1 ex_182526.htm

Exhibit 99.1

 

 

 

PRESS RELEASE

 

For Immediate Release

 

 

Monolithic Power Systems Announces Results 

for the First Quarter Ended March 31, 2020

 

KIRKLAND, WASHINGTON, April 28, 2020-- 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, 2020. 

 

 

Revenue was $165.8 million for the quarter ended March 31, 2020, a 0.6% decrease from $166.7 million for the quarter ended December 31, 2019 and a 17.3% increase from $141.4 million for the quarter ended March 31, 2019.

 

 

 

 

GAAP gross margin was 55.2% for the quarter ended March 31, 2020, compared with 55.2% for the quarter ended March 31, 2019.

 

 

 

 

Non-GAAP (1) gross margin was 55.5% for the quarter ended March 31, 2020, excluding the impact of $0.6 million for stock-based compensation expense and $0.1 million for deferred compensation plan income, compared with 55.6% for the quarter ended March 31, 2019, excluding the impact of $0.5 million for stock-based compensation expense and $0.1 million for the amortization of acquisition-related intangible assets.

 

 

 

 

GAAP operating expenses were $60.5 million for the quarter ended March 31, 2020, compared with $56.3 million for the quarter ended March 31, 2019.

 

 

 

 

Non-GAAP (1) operating expenses were $46.1 million for the quarter ended March 31, 2020, excluding $18.0 million for stock-based compensation expense and $3.6 million for deferred compensation plan income, compared with $39.0 million for the quarter ended March 31, 2019, excluding $15.5 million for stock-based compensation expense and $1.8 million for deferred compensation plan expense.

 

 

 

 

GAAP operating income was $31.0 million for the quarter ended March 31, 2020, compared with $21.7 million for the quarter ended March 31, 2019.

 

 

 

 

Non-GAAP (1) operating income was $45.9 million for the quarter ended March 31, 2020, excluding $18.6 million for stock-based compensation expense and $3.7 million for deferred compensation plan income, compared with $39.6 million for the quarter ended March 31, 2019, excluding $16.0 million for stock-based compensation expense, $0.1 million for the amortization of acquisition-related intangible assets and $1.8 million for deferred compensation plan expense.

 

 

 

 

GAAP other expense, net, was $1.7 million for the quarter ended March 31, 2020, compared with other income, net, of $3.3 million for the quarter ended March 31, 2019.

  

 

Non-GAAP (1) other income, net was $2.0 million for the quarter ended March 31, 2020, excluding $3.8 million for deferred compensation plan expense, compared with $1.4 million for the quarter ended March 31, 2019, excluding $1.9 million for deferred compensation plan income.

 

 

 

 

GAAP income before income taxes was $29.3 million for the quarter ended March 31, 2020, compared with $25.1 million for the quarter ended March 31, 2019.

 

 

 

 

Non-GAAP (1) income before income taxes was $47.9 million for the quarter ended March 31, 2020, excluding $18.6 million for stock-based compensation expense and $0.1 million for deferred compensation plan expense, compared with $41.0 million for the quarter ended March 31, 2019, excluding $16.0 million for stock-based compensation expense, $0.1 million for the amortization of acquisition-related intangible assets, and $0.1 million for deferred compensation plan income.

 

 

 

 

GAAP net income was $35.8 million and GAAP earnings per share were $0.77 per diluted share for the quarter ended March 31, 2020. Comparatively, GAAP net income was $26.2 million and GAAP earnings per share were $0.58 per diluted share for the quarter ended March 31, 2019.

 

 

 

 

Non-GAAP (1) net income was $44.3 million and non-GAAP earnings per share were $0.95 per diluted share for the quarter ended March 31, 2020, 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 $37.9 million and non-GAAP earnings per share of $0.84 per diluted share for the quarter ended March 31, 2019, 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 March 31,

 

End Market

 

2020

   

2019

 

Computing and storage

  $ 51,957     $ 39,188  

Automotive

    23,312       20,517  

Industrial

    25,237       21,340  

Communications

    27,870       22,182  

Consumer

    37,402       38,136  

Total

  $ 165,778     $ 141,363  

 

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

 

   

Three Months Ended March 31,

 

Product Family

 

2020

   

2019

 

DC to DC

  $ 156,875     $ 132,711  

Lighting Control

    8,903       8,652  

Total

  $ 165,778     $ 141,363  

 

“We are not immune to the macro-economic reality, but our long-term growth prospects remain intact," said Michael Hsing, CEO and founder of MPS. “We will continue to execute our plan and are prepared to manage the volatility of future customer demand.”

 

Business Outlook

 

The following are MPS’ financial targets for the second quarter ending June 30, 2020:

 

 

Revenue in the range of $167 million to $173 million.

 

 

GAAP gross margin between 55.0% and 55.6%. Non-GAAP (1) gross margin between 55.3% and 55.9%, which excludes an estimated impact of stock-based compensation expenses of 0.3%.

 

 

GAAP research and development (“R&D”) and selling, general and administrative (“SG&A”) expenses between $60.9 million and $64.9 million. Non-GAAP (1) R&D and SG&A expenses between $43.4 million and $45.4 million, which excludes an estimate of stock-based compensation expenses in the range of $17.5 million to $19.5 million.

 

 

Total stock-based compensation expense of $18.1 million to $20.1 million.

  

 

Litigation expenses ranging between $1.7 million and $2.1 million.

 

 

Interest income of $1.7 million to $1.9 million.

 

 

Fully diluted shares outstanding between 45.8 million and 47.8 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 other income (expense), 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, other income (expense), 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 other income (expense), 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 2:00 p.m. PT / 5:00 p.m. ET, April 28, 2020. 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 5197519. 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 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 epidemics and pandemics, such as the COVID-19 outbreak first identified in December 2019, on the global economy and on our business; 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’s Securities and Exchange Commission (SEC) filings, including, but not limited to, our annual report on Form 10-K filed with the SEC on February 28, 2020. The forward-looking statements in this press release and statements made during the accompanying teleconference represent MPS’s 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,

 
   

2020

   

2019

 

ASSETS

               

Current assets:

               

Cash and cash equivalents

  $ 154,880     $ 172,960  

Short-term investments

    334,386       282,437  

Accounts receivable, net

    54,341       52,704  

Inventories

    131,499       127,500  

Other current assets

    29,679       19,605  

Total current assets

    704,785       655,206  

Property and equipment, net

    236,807       228,315  

Long-term investments

    3,057       3,138  

Goodwill

    6,571       6,571  

Deferred tax assets, net

    13,821       17,193  

Other long-term assets

    42,463       45,952  

Total assets

  $ 1,007,504     $ 956,375  
                 

LIABILITIES AND STOCKHOLDERS’ EQUITY

               

Current liabilities:

               

Accounts payable

  $ 37,752     $ 27,271  

Accrued compensation and related benefits

    18,633       26,164  

Other accrued liabilities

    56,110       44,790  

Total current liabilities

    112,495       98,225  

Income tax liabilities

    37,596       37,596  

Other long-term liabilities

    44,223       47,063  

Total liabilities

    194,314       182,884  

Commitments and contingencies

               

Stockholders’ equity:

               

Common stock and additional paid-in capital: $0.001 par value; shares authorized: 150,000; shares issued and outstanding: 44,715 and 43,616, respectively

    581,736       549,517  

Retained earnings

    241,465       229,450  

Accumulated other comprehensive loss

    (10,011 )     (5,476 )

Total stockholders’ equity

    813,190       773,491  

Total liabilities and stockholders’ equity

  $ 1,007,504     $ 956,375  

 

 

 

Monolithic Power Systems, Inc.

Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except per share amounts)

 

   

Three Months Ended March 31,

 
   

2020

   

2019

 

Revenue

  $ 165,778     $ 141,363  

Cost of revenue

    74,331       63,357  

Gross profit

    91,447       78,006  

Operating expenses:

               

Research and development

    25,956       25,458  

Selling, general and administrative

    32,164       30,553  

Litigation expense

    2,341       278  

Total operating expenses

    60,461       56,289  

Income from operations

    30,986       21,717  

Other income (expense), net

    (1,714 )     3,341  

Income before income taxes

    29,272       25,058  

Income tax benefit

    (6,484 )     (1,123 )

Net income

  $ 35,756     $ 26,181  
                 

Net income per share:

               

Basic

  $ 0.80     $ 0.61  

Diluted

  $ 0.77     $ 0.58  

Weighted-average shares outstanding:

               

Basic

    44,455       42,749  

Diluted

    46,670       45,232  

 

 

 

SUPPLEMENTAL FINANCIAL INFORMATION

 

STOCK-BASED COMPENSATION EXPENSE

 

(Unaudited, in thousands)

 
   

Three Months Ended March 31,

 
   

2020

   

2019

 

Cost of revenue

  $ 557     $ 531  

Research and development

    4,370       4,429  

Selling, general and administrative

    13,635       11,050  

Total stock-based compensation expense

  $ 18,562     $ 16,010  

 

 

 

RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME

 

(Unaudited, in thousands, except per share amounts)

 
   

Three Months Ended March 31,

 
   

2020

   

2019

 

Net income

  $ 35,756     $ 26,181  

Net income as a percentage of revenue

    21.6 %     18.5 %
                 

Adjustments to reconcile net income to non-GAAP net income:

               

Stock-based compensation expense

    18,562       16,010  

Amortization of acquisition-related intangible assets

    -       51  

Deferred compensation plan (income) expense

    94       (136 )

Tax effect

    (10,079 )     (4,197 )

Non-GAAP net income

  $ 44,333     $ 37,909  

Non-GAAP net income as a percentage of revenue

    26.7 %     26.8 %
                 

Non-GAAP net income per share:

               

Basic

  $ 1.00     $ 0.89  

Diluted

  $ 0.95     $ 0.84  
                 

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

               

Basic

    44,455       42,749  

Diluted

    46,670       45,232  

 

 

 

RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN

 

(Unaudited, in thousands)

 
   

Three Months Ended March 31,

 
   

2020

   

2019

 

Gross profit

  $ 91,447     $ 78,006  

Gross margin

    55.2 %     55.2 %
                 

Adjustments to reconcile gross profit to non-GAAP gross profit:

               

Stock-based compensation expense

    557       531  

Deferred compensation plan income

    (54 )     -  

Amortization of acquisition-related intangible assets

    -       51  

Non-GAAP gross profit

  $ 91,950     $ 78,588  

Non-GAAP gross margin

    55.5 %     55.6 %

 

RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES

 

(Unaudited, in thousands)

 
   

Three Months Ended March 31,

 
   

2020

   

2019

 

Total operating expenses

  $ 60,461     $ 56,289  
                 

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

         

Stock-based compensation expense

    (18,005 )     (15,479 )

Deferred compensation plan (expense) income

    3,602       (1,799 )

Non-GAAP operating expenses

  $ 46,058     $ 39,011  

 

RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME

 

(Unaudited, in thousands)

 
   

Three Months Ended March 31,

 
   

2020

   

2019

 

Total operating income

  $ 30,986     $ 21,717  
                 

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

         

Stock-based compensation expense

    18,562       16,010  

Amortization of acquisition-related intangible assets

    -       51  

Deferred compensation plan (income) expense

    (3,656 )     1,799  

Non-GAAP operating income

  $ 45,892     $ 39,577  

 

RECONCILIATION OF OTHER INCOME (EXPENSE), NET, TO NON-GAAP OTHER INCOME, NET

 

(Unaudited, in thousands)

 
   

Three Months Ended March 31,

 
   

2020

   

2019

 

Total other income (expense), net

  $ (1,714 )   $ 3,341  
                 

Adjustments to reconcile other income (expense), net to non-GAAP other income, net:

         

Deferred compensation plan (income) expense

    3,750       (1,935 )

Non-GAAP other income, net

  $ 2,036     $ 1,406  

 

RECONCILIATION OF INCOME BEFORE INCOME TAXES TO NON-GAAP INCOME BEFORE INCOME TAXES

 

(Unaudited, in thousands)

 
   

Three Months Ended March 31,

 
   

2020

   

2019

 

Total income before income taxes

  $ 29,272     $ 25,058  
                 

Adjustments to reconcile income before income taxes to non-GAAP income before income taxes:

         

Stock-based compensation expense

    18,562       16,010  

Amortization of acquisition-related intangible assets

    -       51  

Deferred compensation plan (income) expense

    94       (136 )

Non-GAAP income before income taxes

  $ 47,928     $ 40,983  

 

 

 

2020 SECOND QUARTER OUTLOOK

 

RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN

 

(Unaudited)

 
   

Three Months Ending

 
   

June 30, 2020

 
   

Low

   

High

 

Gross margin

    55.0 %     55.6 %

Adjustments to reconcile gross margin to non-GAAP gross margin:

               

Stock-based compensation expense

    0.3 %     0.3 %

Non-GAAP gross margin

    55.3 %     55.9 %

 

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, 2020

 
   

Low

   

High

 

R&D and SG&A expense

  $ 60,900     $ 64,900  

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

               

Stock-based compensation expense

    (17,500 )     (19,500 )

Non-GAAP R&D and SG&A expense

  $ 43,400     $ 45,400