Monolithic Power Systems Announces Results for the Third Quarter Ended September 30, 2013

    Monolithic Power Systems Announces Results for the Third Quarter Ended
                              September 30, 2013

PR Newswire

SAN JOSE, Calif., Oct. 24, 2013

SAN JOSE, Calif., Oct. 24, 2013 /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
ended September 30, 2013.

The results for the quarter ended September 30, 2013 are as follows:

  oNet revenue was $65.3 million, a 13.2% increase from $57.7 million in the
    second quarter of 2013 and a 15.6% increase from $56.5 million in the
    third quarter of 2012.
  oGross margin was 54.0%, compared with 53.6% in the second quarter of 2013
    and 53.1% in the third quarter of 2012.
  oGAAP operating expenses were $26.6 million, including $26.5 million for
    research and development (R&D) and selling, general and administrative
    (SG&A) expenses, which included $5.1 million for stock-based compensation
    and deferred compensation plan expenses, and $0.1 million for litigation
    expenses. Comparatively, for the quarter ended September 30, 2012, GAAP
    operating expenses were $23.7 million, including $23.9 million for R&D and
    SG&A expenses, which included $4.1 million for stock-based compensation
    expenses, and $(0.2) million for litigation benefit.
  oNon-GAAP(1) operating expenses were $21.6 million, excluding $5.1 million
    for stock-based compensation and deferred compensation plan expenses,
    compared with $19.6 million, excluding $4.1 million for stock-based
    compensation expenses, for the quarter ended September 30, 2012.
  oGAAP net income was $7.4 million and GAAP earnings per share were $0.19
    per diluted share. Comparatively, GAAP net income was $5.9 million and
    GAAP earnings per share were $0.16 per diluted share for the quarter ended
    September 30, 2012.
  oNon-GAAP(1) net income was $12.8 million and non-GAAP earnings per share
    were $0.33 per diluted share, excluding stock-based compensationand
    deferred compensation plan expenses and related tax effects, compared with
    non-GAAP net income of $9.9 million and non-GAAP earnings per share of
    $0.27 per diluted share, excluding stock-based compensation expenses and
    related tax effects, for the quarter ended September 30, 2012.

The results for the nine months ended September 30, 2013 are as follows:

  oNet revenue was $174.5 million, a 5.4% increase from $165.6 million for
    the nine months ended September 30, 2012.
  oGross margin was 53.6%, compared with 52.9% for the nine months ended
    September 30, 2012.
  oGAAP operating expenses were $77.7 million, including $78.2 million for
    R&D and SG&A expenses, which included $14.6 million for stock-based
    compensation and deferred compensation plan expenses, and $(0.5) million
    for litigation benefit. Comparatively, for the nine months ended September
    30, 2012, GAAP operating expenses were $71.3 million, including $71.6
    million for R&D and SG&A expenses, which included $11.0 million for
    stock-based compensation expenses, and $(0.3) million for litigation
    benefit.
  oNon-GAAP(1) operating expenses were $63.1 million, excluding $14.6 million
    for stock-based compensation and deferred compensation plan expenses,
    compared with $60.3 million, excluding $11.0 million for stock-based
    compensation expenses, for the nine months ended September 30, 2012.
  oGAAP net income was $15.4 million and GAAP earnings per share were $0.40
    per diluted share. Comparatively, GAAP net income was $15.5 million and
    GAAP earnings per share were $0.43 per diluted share for the nine months
    ended September 30, 2012.
  oNon-GAAP(1) net income was $28.5 million and non-GAAP earnings per share
    were $0.74 per diluted share, excluding stock-based compensationand
    deferred compensation plan expenses, a one-time cash award and related tax
    effects, compared with non-GAAP net income of $26.1 million and non-GAAP
    earnings per share of $0.73 per diluted share, excluding stock-based
    compensation expenses and related tax effects, for the nine months ended
    September 30, 2012.

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

                       Three months ended          Nine months ended September
                       September 30,               30,
End Market             2013            2012        2013             2012
Communication          $ 15.0          $ 12.8      $  43.2         $  38.7
Storage and Computing  12.2            10.8        35.3             31.2
Consumer               28.1            26.0        70.8             76.1
Industrial             10.0            6.9         25.2             19.6
Total                  $ 65.3          $ 56.5      $ 174.5          $ 165.6

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

                       Three months ended           Nine months ended
                       September 30,                September 30,
Product Family         2013             2012        2013            2012
DC to DC Converters   $ 57.8           $ 49.7      $ 154.8         $ 145.2
Lighting Control       7.5              6.8         19.7            20.4
Products
Total                 $ 65.3           $ 56.5      $ 174.5         $ 165.6

"MPS had an outstanding third quarter with sequential organic revenue growth
of 13.2%; well above industry average," said Michael Hsing, CEO and founder of
MPS. "We continue to closely monitor the macroeconomic conditions and to
control expenses. We are well positioned with new product revenue ramping in
multiple market segments for 2014 and beyond."

Business Outlook

The following are MPS' financial targets for the fourth quarter ending
December 31, 2013:

  oRevenue in the range of $61 million to $65 million.
  oGross margin between 53.5% and 54.5%.
  oGAAP R&D and SG&A expenses between $25.0 million and $26.8 million.
    Non-GAAP(1) R&D and SG&A expenses between $20.0 million and $21.0 million.
    This excludes an estimate of stock-based compensation and deferred
    compensation plan expenses in the range of $5.0 million to $5.8 million.
  oFully diluted shares outstanding between 39.7 million and 39.9 million
    before shares buyback.

(1) Non-GAAP net income, non-GAAP earnings per share, non-GAAP operating
expenses and non-GAAP R&D and SG&A expenses differ from net income, earnings
per share, operating expenses, R&D and SG&A 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 three and nine
months ended September 30, 2013 and 2012 exclude the effect of stock-based
compensation, deferred compensation plan expenses, a one-time cash award and
their related tax effects. Non-GAAP operating expenses for the three and nine
months ended September 30, 2013 and 2012 exclude the effect of stock-based
compensation and deferred compensation plan expenses. Projected non-GAAP R&D
and SG&A expenses exclude the effect of stock-based compensation and deferred
compensation plan expenses. 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 ended
September 30, 2013 results at 2:00 p.m. PT / 5:00 p.m. ET, October 24, 2013.
To access the conference call and the following replay of the conference call,
go to ir.monolithicpower.comand 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
75901144. 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
R&D and SG&A expenses, stock-based compensation expenses, deferred
compensation plan expenses, litigation expense and diluted shares outstanding
for the quarter ending December 31, 2013, (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, (vi)
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 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' Securities and Exchange Commission (SEC) filings,
including, but not limited to, its quarterly report on Form 10-Q filed with
the SEC on August 6, 2013.

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 (MPS) is a fabless semiconductor company specializing
in high-performance analog ICs. Founded in 1997, MPS's core technology is its
innovative and proprietary manufacturing process combined with superior analog
circuit design capabilities across system-level and end customer applications.
These combined advantages enable MPS to deliver highly integrated monolithic
products that offer energy efficient and cost-effective solutions. MPS product
families include DC/DC converters, LED drivers and controllers, Class-D audio
amplifiers, battery chargers and protections, USB and current-limit switches
and AC/DC offline products. MPS has over 1,000 employees worldwide, located in
the United States, China, Taiwan, Korea, Japan, Singaporeand across Europe.

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)
                                         September 30,      December 31,
                                         2013               2012
ASSETS
Current assets:
Cash and cash equivalents                $     110,446  $     75,104
Short-term investments                   93,902             85,521
Accounts receivable, net of allowances
of $10 as of September 30, 2013 and $20  21,957             19,383
as of December 31, 2012
Inventories                              42,975             32,115
Deferred income tax assets, net -        19                 1
current
Prepaid expenses and other current       1,651              2,177
assets
Total current assets                     270,950            214,301
Property and equipment, net              67,221             59,412
Long-term investments                    9,847              11,755
Deferred income tax assets, net -        669                669
long-term
Other assets                             1,353              1,025
Total assets                             $     350,040  $    287,162
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable                         $      10,406 $      9,859
Accrued compensation and related         6,708              7,686
benefits
Accrued liabilities                      9,245              5,915
Total current liabilities                26,359             23,460
Long-term liabilities                    1,311              -
Non-current income tax liabilities       5,039              5,408
 Total liabilities                  32,709             28,868
Stockholders' equity:
Common stock, $0.001 par value; shares
authorized: 150,000; shares issued and
outstanding: 38,227 and 35,673 as of     235,993            194,079
September 30, 2013 and December 31,
2012, respectively
Retained earnings                       75,439             60,040
Accumulated other comprehensive income   5,899              4,175
Total stockholders' equity               317,331            258,294
Total liabilities and stockholders'      $     350,040  $    287,162
equity





Condensed Consolidated Statement of Operations
(Unaudited, in thousands, except per share amounts)
                                Three months ended      Nine months ended
                                September 30,           September 30,
                                2013        2012        2013        2012
Revenue                        $ 65,347    $ 56,508    $ 174,531   $ 165,599
Cost of revenue (1)             30,053      26,495      80,924      78,004
Gross profit                   35,294      30,013      93,607      87,595
Operating expenses:
 Research and development (1)  12,643      11,967      37,246      35,553
 Selling, general and          13,891      11,955      40,941      36,088
administrative (1)
 Litigation expense (benefit)  104         (229)       (455)       (345)
 Total operating       26,638      23,693      77,732      71,296
expenses
Income from operations         8,656       6,320       15,875      16,299
Interest and other income       (59)        156         149         621
(expense), net
Income before income taxes     8,597       6,476       16,024      16,920
Income tax provision           1,187       555         625         1,412
Net income                     $  7,410   $  5,921   $  15,399  $  15,508
Basic net income per share     $   0.20  $   0.17  $        $   
                                                        0.42        0.45
Diluted net income per share   $   0.19  $   0.16  $        $   
                                                        0.40        0.43
Weighted average common shares
outstanding:
 Basic                 37,910      35,145      37,079      34,677
 Diluted               39,009      36,438      38,419      36,008
(1) Includes stock-based
compensation expense as
follows:
 Cost of revenue   $   163  $   112  $        $   
                                                        465        325
 Research and          1,491       1,465       4,557       4,255
development
 Selling, general and  3,577       2,605       10,059      6,746
administrative
 Total stock-based       $  5,231   $  4,182   $  15,081  $  11,326
compensation expense

RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME
(Unaudited, in thousands, except per share amounts)
                        Three months ended         Nine months ended September
                        September 30,              30,
                        2013          2012         2013            2012
Net income             $  7,410     $  5,921    $  15,399      $  15,508
 Net income as a      11.3%         10.5%        8.8%            9.4%
percentage of revenue
Adjustments to
reconcile net income to
non-GAAP net income:
 Stock-based         $  5,231     $  4,182    $  15,081      $  11,326
compensation
 Deferred
compensation plan       9             -            9               -
expense
 Cash award         -             -            (266)           -
 Tax effect         149           (244)        (1,689)         (706)
 Non-GAAP net income $ 12,799      $  9,859    $  28,534      $  26,128
 Non-GAAP net
income as a percentage  19.6%         17.4%        16.3%           15.8%
of revenue
Non-GAAP earnings per share
 Basic               $   0.34    $   0.28   $    0.77    $   
                                                                   0.75
 Diluted             $   0.33    $   0.27   $    0.74    $   
                                                                   0.73
Shares used in the
calculation of non-GAAP
earnings per share:
 Basic               37,910        35,145       37,079          34,677
 Diluted             39,009        36,438       38,419          36,008
RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
(Unaudited, in thousands)
                        Three months ended         Nine months ended September
                        September 30,              30,
                        2013          2012         2013            2012
Total operating         $ 26,638      $ 23,693     $  77,732      $  71,296
expenses
Adjustments to reconcile total operating expenses
to non-GAAP total operating expenses:
 Stock-based         $ (5,068)     $ (4,070)    $ (14,616)      $ (11,001)
compensation
 Deferred
compensation plan       (3)           -            (3)             -
expense
 Non-GAAP operating  $ 21,567      $ 19,623     $  63,113      $  60,295
expenses
RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME
(Unaudited, in thousands)
                        Three months ended         Nine months ended September
                        September 30,              30,
                        2013          2012         2013            2012
Total operating income  $  8,656     $  6,320    $  15,875      $  16,299
 Operating income as  13.2%         11.2%        9.1%            9.8%
a percentage of revenue
Adjustments to reconcile total operating income
to non-GAAP total operating income:
 Stock-based         $  5,231     $  4,182    $  15,081      $  11,326
compensation
 Deferred
compensation plan       3             -            3               -
expense
 Non-GAAP operating  $ 13,890      $ 10,502     $  30,959      $  27,625
income
 Non-GAAP
operating income as a   21.3%         18.6%        17.7%           16.7%
percentage of revenue



2013 FOURTH QUARTER OUTLOOK
RECONCILIATION OF R&D AND SG&A EXPENSES TO NON-GAAP R&D AND SG&A EXPENSES
(Unaudited, in thousands)
                                         Three months endingDecember 31, 2013
                                         Low                    High
R&D and SG&A                             $ 25,000               $ 26,800
Adjustments to reconcile R&D and SG&A to
non-GAAP R&D and SG&A
 Stock-based compensation and         (5,000)                (5,800)
deferred compensation plan expense
 Non-GAAP R&D and SG&A                $ 20,000               $ 21,000



SOURCE Monolithic Power Systems, Inc.

Website: http://www.monolithicpower.com
Contact: Meera Rao, Chief Financial Officer, Monolithic Power Systems, Inc.,
408-826-0777, investors@monolithicpower.com
 
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