Power Integrations (POWI) Q4 2009 earnings summary

Executive summary

• FY09 revenue rose 7% to a record $215.7M, the eighth consecutive year of growth, despite the downturn in the analog semiconductor market.

• FY09 net income was $23.3M, diluted EPS was $0.82, and operating cash flow reached $45.0M; year-end cash and investments totaled $195.9M with no debt.

• Demand recovered sharply from Q1 2009; growth reflected increased product penetration and new demand in appliances, home entertainment, LED lighting and utility meters.

Financial highlights

• FY09 revenue was $215.7M vs. $201.7M in FY08; net income was $23.3M vs. $1.8M, and operating income was $28.6M vs. $3.0M.

• Q4 revenue was $66.1M vs. $42.4M in Q4 2008; net income was $9.2M vs. a $20.7M loss, which included a $19.3M accelerated stock-comp charge and $2.0M impairment in Q4 2008.

• FY09 gross profit was $108.1M; the $0.7M benefit from previously reserved inventory sales partly offset lower-margin new products, yen effects and reduced Panasonic royalties.

• FY09 operating expenses fell to $79.5M from $102.0M, largely reflecting lower stock-based compensation; FY08 included $19.3M of accelerated tender-offer expense.

Outlook and guidance

• Management expected a record number of new product families in 2010 and continued significant R&D investment.

• High-power AC-DC applications were viewed as a ~$400M expansion of the addressable market; entry targets include flat-panel TVs, PCs and game consoles.

• Four 2010 quarterly dividends of $0.05/share were declared, equal to an annualized $0.20/share; expected quarterly cash use was ~$1.4M.

• Existing liquidity and operating cash flow were expected to cover working-capital and other cash needs for at least 12 months.