Monolithic Power Systems Announces Record Results for the Fourth Quarter and Year Ended December 31, 2013

 Monolithic Power Systems Announces Record Results for the Fourth Quarter and
                         Year Ended December 31, 2013

PR Newswire

SAN JOSE, Calif., Feb. 6, 2014

SAN JOSE, Calif., Feb. 6, 2014 /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 year ended December 31, 2013.

The results for the quarter ended December 31, 2013 are as follows:

  oNet revenue was $63.6 million, a 2.7% decrease from $65.3 million in the
    third quarter of 2013 and a 31.8% increase from $48.2 million in the
    fourth quarter of 2012.
  oGross margin was 54.0%, compared with 54.0% in the third quarter of 2013
    and 53.0% in the fourth quarter of 2012.
  oGAAP operating expenses were $26.3 million, including $26.2 million for
    research and development (R&D) and selling, general and administrative
    (SG&A) expenses, which included $5.5 million for stock-based compensation
    and deferred compensation plan expenses, and $0.1 million for litigation
    expenses. Comparatively, for the quarter ended December 31, 2012, GAAP
    operating expenses were $24.6 million, including $27.2 million for R&D and
    SG&A expenses, which included $7.1 million for stock-based compensation
    expenses, and $(2.6) million for litigation benefit.
  oNon-GAAP(1) operating expenses were $20.8 million, excluding $5.5 million
    for stock-based compensation and deferred compensation plan expenses,
    compared with $17.5 million, excluding $7.1 million for stock-based
    compensation expenses, for the quarter ended December 31, 2012.
  oGAAP net income was $7.5 million and GAAP earnings per share were $0.19
    per diluted share. Comparatively, GAAP net income was $0.2 million and
    GAAP earnings per share were $0.01 per diluted share for the quarter ended
    December 31, 2012.
  oNon-GAAP(1) net income was $12.6 million and non-GAAP earnings per share
    were $0.32 per diluted share, excluding stock-based compensation and
    deferred compensation plan expenses and related tax effects, compared with
    non-GAAP net income of $7.7 million and non-GAAP earnings per share of
    $0.21 per diluted share, excluding stock-based compensation expenses and
    related tax effects, for the quarter ended December 31, 2012.

The results for the year ended December 31, 2013 are as follows:

  oNet revenue was $238.1 million, an 11.4% increase from $213.8 million for
    the year ended December 31, 2012.
  oGross margin was 53.7%, compared with 52.9% for the year ended December
    31, 2012.
  oGAAP operating expenses were $104.0 million, including $104.4 million for
    R&D and SG&A expenses, which included $20.1 million for stock-based
    compensation and deferred compensation plan expenses, and $(0.4) million
    for litigation benefit. Comparatively, for the year ended December 31,
    2012, GAAP operating expenses were $95.9 million, including $98.8 million
    for R&D and SG&A expenses, which included $18.1 million for stock-based
    compensation expenses, and $(2.9) million for litigation benefit.
  oNon-GAAP(1) operating expenses were $83.9 million, excluding $20.1 million
    for stock-based compensation and deferred compensation plan expenses,
    compared with $77.7 million, excluding $18.1 million for stock-based
    compensation expenses, for the year ended December 31, 2012.
  oGAAP net income was $22.9 million and GAAP earnings per share were $0.59
    per diluted share. Comparatively, GAAP net income was $15.8 million and
    GAAP earnings per share were $0.43 per diluted share for the year ended
    December 31, 2012.
  oNon-GAAP(1) net income was $41.1 million and non-GAAP earnings per share
    were $1.06 per diluted share, excluding stock-based compensation and
    deferred compensation plan expenses, a one-time benefit from a cash award
    and related tax effects, compared with non-GAAP net income of $33.8
    million and non-GAAP earnings per share of $0.93 per diluted share,
    excluding stock-based compensation expenses and related tax effects, for
    the year ended December 31, 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 December 31,  Year Ended December 31,
End Market            2013                2012         2013          2012
Communication         $ 12.9              $ 12.2       $  56.1      $  50.9
Storage and Computing 12.6                10.2         47.9          41.3
Consumer              29.2                19.8         99.9          95.8
Industrial            8.9                 6.0          34.2          25.8
Total                 $ 63.6              $ 48.2       $ 238.1       $ 213.8

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

                  Three Months Ended December 31,  Year Ended December 31,
Product Family    2013                2012         2013           2012
DC to DC         $ 56.6              $ 43.5       $ 211.3        $ 188.7
Lighting Control 7.0                 4.7          26.8           25.1
Total            $ 63.6              $ 48.2       $ 238.1        $ 213.8

"MPS had an outstanding fourth quarter with 31.8 percent year-over-year
revenue growth, which was much better than the overall analog market," said
Michael Hsing, CEO and founder of MPS. "This was MPS's best Q4 and the best
year yet in our history. We continue to deliver on our growth strategy as
evidenced by revenue diversification and growth far exceeding the analog
industry. We are confident in our future growth."

Business Outlook

The following are MPS' financial targets for the first quarter ending March
31, 2014:

  oRevenue in the range of $58 million to $62 million.
  oGross margin between 53.5% and 54.5%.
  oGAAP R&D and SG&A expenses between $26.3 million and $29.5 million.
    Non-GAAP(1) R&D and SG&A expenses between $20.0 million and $22.5 million.
    This excludes an estimate of stock-based compensation and deferred
    compensation plan expenses in the range of $6.3 million to $7.0 million.
  oLitigation expense between $200,000 and $400,000.
  oFully diluted shares outstanding between 39.5 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 quarter and year
ended December 31, 2013 and 2012 exclude the effect of stock-based
compensation expenses, deferred compensation plan expenses, a one-time benefit
from a cash award and their related tax effects. Non-GAAP operating expenses
for the quarter and year ended December 31, 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 and year
ended December 31, 2013 results at 2:00 p.m. PT / 5:00 p.m. ET, February 6,
2014. To access the conference call and the following replay of the conference
call, go to http://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 33431773. 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 March 31, 2014, (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)
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 October 28, 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)
                                         December 31,       December 31,
                                         2013               2012
ASSETS
Current assets:
Cash and cash equivalents                $    101,213   $     75,104
Short-term investments                   125,126            85,521
Accounts receivable, net of allowances
of $0 as of December 31, 2013 and $20 as 23,730             19,383
of December 31, 2012
Inventories                              39,737             32,115
Deferred income tax assets, net -        294                1
current
Prepaid expenses and other current       1,986              2,177
assets
Total current assets                     292,086            214,301
Property and equipment, net              64,837             59,412
Long-term investments                    9,860              11,755
Deferred income tax assets, net -        481                669
long-term
Other long-term assets                   1,644              1,025
Total assets                             $    368,908   $    287,162
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable                         $     10,694  $      9,859
Accrued compensation and related         10,419             7,686
benefits
Accrued liabilities                      17,376             5,915
Total current liabilities                38,489             23,460
Long-term liabilities                    1,478              -
Non-current income tax liabilities       5,542              5,408
 Total liabilities                45,509             28,868
Stockholders' equity:
Common stock, $0.001 par value; shares
authorized: 150,000; shares issued and
outstanding: 38,291 and 35,673 as of     234,201            194,079
December 31, 2013 and December 31, 2012,
respectively
Retained earnings                       82,938             60,040
Accumulated other comprehensive income   6,260              4,175
Total stockholders' equity               323,399            258,294
Total liabilities and stockholders'      $    368,908   $    287,162
equity

Condensed Consolidated Statement of Operations
(Unaudited, in thousands, except per share amounts)
                         Three Months Ended December  Year Ended December 31,
                         31,
                         2013             2012        2013         2012
Revenue                 $ 63,560         $ 48,214    $ 238,091    $ 213,813
Cost of revenue (1)      29,266           22,661      110,190      100,665
Gross profit            34,294           25,553      127,901      113,148
Operating expenses:
 Research and           12,487           13,243      49,733       48,796
development (1)
 Selling, general and   13,683           13,930      54,624       50,018
administrative (1)
 Litigation expense     84               (2,600)     (371)        (2,945)
(benefit), net
Total operating          26,254           24,573      103,986      95,869
expenses
Income from operations  8,040            980         23,915       17,279
Interest and other       (57)             (10)        92           611
income (expense), net
Income before income     7,983            970         24,007       17,890
taxes
Income tax provision    484              722         1,109        2,134
Net income              $  7,499        $   248  $  22,898   $  15,756
Basic net income per     $   0.20       $   0.01  $         $   
share                                                0.61         0.45
Diluted net income per   $   0.19       $   0.01  $         $   
share                                                0.59         0.43
Weighted average common
shares outstanding:
 Basic          38,328           35,556      37,387       34,871
 Diluted        39,524           36,763      38,620       36,247
(1) Includes stock-based
compensation expense as
follows:
Cost of       $   166       $   185  $         $   
revenue                                               631         510
 Research and   1,661            2,667       6,219        6,922
development
 Selling,
general and              3,792            4,474       13,851       11,220
administrative
 Total
stock-based compensation $  5,619        $  7,326   $  20,701   $  18,652
expense
RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME
(Unaudited, in thousands, except per share amounts)
                         Three Months Ended December  Year Ended December 31,
                         31,
                         2013             2012        2013         2012
Net income              $  7,499        $   248  $  22,898   $  15,756
 Net income as a       11.8%            0.5%        9.6%         7.4%
percentage of revenue
Adjustments to reconcile
net income to non-GAAP
net income:
 Stock-based          $  5,619        $  7,326   $  20,701   $  18,652
compensation
 Deferred
compensation plan        12               -           21           -
expense, net
 Cash award          -                -           (266)        -
 Tax effect          (537)            100         (2,226)      (607)
 Non-GAAP net income  $ 12,593         $  7,674   $  41,128   $  33,801
 Non-GAAP net
income as a percentage   19.8%            15.9%       17.3%        15.8%
of revenue
Non-GAAP earnings per
share:
 Basic                $   0.33       $   0.22  $         $   
                                                      1.10         0.97
 Diluted              $   0.32       $   0.21  $         $   
                                                      1.06         0.93
Shares used in the
calculation of non-GAAP
earnings per share:
 Basic                38,328           35,556      37,387       34,871
 Diluted              39,524           36,763      38,620       36,247
RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
(Unaudited, in thousands)
                         Three Months Ended December  Year Ended December 31,
                         31,
                         2013             2012        2013         2012
Total operating expenses $ 26,254         $ 24,573    $ 103,986    $  95,869
Adjustments to reconcile total operating expenses to
non-GAAP total operating expenses:
 Stock-based          $ (5,453)        $ (7,141)   $ (20,070)   $ (18,142)
compensation
 Deferred
compensation plan        (8)              -           (11)         -
expense, net
 Non-GAAP operating   $ 20,793         $ 17,432    $  83,905   $  77,727
expenses
RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME
(Unaudited, in thousands)
                         Three Months Ended December  Year Ended December 31,
                         31,
                         2013             2012        2013         2012
Total operating income   $  8,040        $   980  $  23,915   $  17,279
 Operating income as a 12.6%            2.0%        10.0%        8.1%
percentage of revenue
Adjustments to reconcile total operating
income to non-GAAP total operating
income:
 Stock-based          $  5,619        $  7,326   $  20,701   $  18,652
compensation
 Deferred
compensation plan        8                -           11           -
expense, net
 Non-GAAP operating   $ 13,667         $  8,306   $  44,627   $  35,931
income
 Non-GAAP
operating income as a    21.5%            17.2%       18.7%        16.8%
percentage of revenue

2014 FIRST QUARTER OUTLOOK
RECONCILIATION OF R&D AND SG&A EXPENSES TO NON-GAAP R&D AND SG&A EXPENSES
(Unaudited, in thousands)
                                              Three Months Ending
                                              March 31, 2014
                                              Low             High
R&D and SG&A                                  $    26,300  $     29,500
Adjustments to reconcile R&D and SG&A to
non-GAAP R&D and SG&A
 Stock-based compensation and deferred     (6,300)         (7,000)
compensation plan expense
 Non-GAAP R&D and SG&A                     $    20,000  $     22,500



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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