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Power Integrations (POWI) Q3 Earnings & Revenues Miss Estimates
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Power Integrations (POWI - Free Report) reported third-quarter 2023 adjusted earnings of 46 cents per share, which missed the Zacks Consensus Estimate by 4.17% and decreased 45.2% year over year.
Net sales decreased 21.7% year over year to $125.5 billion, which lagged the consensus mark by 4.01%.
The slow growth of the appliance market (one-fourth of POWI’s sales) and other industrial markets have pulled down the revenues for this quarter.
Top Line Details
The Communications end-market contributed 32% of net sales compared with 16% in the year-ago quarter. Sequentially, the sector increased in the mid-teens, driven by design win and channel restocking linked with the Chinese handset market.
Power Integrations, Inc. Price, Consensus and EPS Surprise
The Industrial end-market contributed 32% of the net sales compared with 41% in the year-ago quarter. Sequentially, the end-market increased in the mid-teens, driven by strong growth in utility-scale solar and the automotive segment.
The consumer end-market segment contributed 26% of net sales in the reported quarter. Sequentially, revenues declined 30%. Consumer revenues were down mid-single digits, driven mainly by seasonality and air conditioning and the continued softness in the overall appliance market.
The Computer end-market revenues contributed 10% of net sales in the reported quarter. Revenues were down more than 30% sequentially, contributing about 10% of total revenues for the reported quarter. Tablets, notebooks and after-market charges restrained the segment.
Operating Details
In the third quarter, gross margin contracted 460 basis points (bps) on a year-over-year basis to 53.3%. The gross margin contracted primarily due to the unfavorable end-market mix.
Gross margin expanded 150 bps sequentially, driven by improved manufacturing efficiency and the weaker yen.
Balance Sheet
As of Sep 30, 2023, cash & cash equivalents were $94.7 million compared with $84.1 million as of Jun 30, 2023.
Short-term marketable securities, as of Sep 30, 2023, were $261.8 million, down from $262.2 million as of Jun 30, 2023.
Power Integrations paid a dividend of 19 cents per share in the reported quarter.
The company will pay a dividend of 20 cents per share on Dec 29, 2023, to stockholders of record as of Nov 30, 2023.
During the third quarter, it repurchased approximately 24,000 shares of its common stock for $1.8 million. The company had $73.4 million remaining on its repurchase authorization as of Sep 30, 2023.
Guidance
For fourth-quarter 2023, Power Integrations expects revenues to be $90 million (+/-$5 million).
Gross margin is expected to be similar to the reported quarter figure of 53.3%.
Non-GAAP operating expenses are expected to be approximately $42.5 million for the fourth quarter.
Power Integrations expects to introduce higher voltage for its GaN road map soon to drive GaN beyond 10 Kilowatts.
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #3 (Hold).
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Power Integrations (POWI) Q3 Earnings & Revenues Miss Estimates
Power Integrations (POWI - Free Report) reported third-quarter 2023 adjusted earnings of 46 cents per share, which missed the Zacks Consensus Estimate by 4.17% and decreased 45.2% year over year.
Net sales decreased 21.7% year over year to $125.5 billion, which lagged the consensus mark by 4.01%.
The slow growth of the appliance market (one-fourth of POWI’s sales) and other industrial markets have pulled down the revenues for this quarter.
Top Line Details
The Communications end-market contributed 32% of net sales compared with 16% in the year-ago quarter. Sequentially, the sector increased in the mid-teens, driven by design win and channel restocking linked with the Chinese handset market.
Power Integrations, Inc. Price, Consensus and EPS Surprise
Power Integrations, Inc. price-consensus-eps-surprise-chart | Power Integrations, Inc. Quote
The Industrial end-market contributed 32% of the net sales compared with 41% in the year-ago quarter. Sequentially, the end-market increased in the mid-teens, driven by strong growth in utility-scale solar and the automotive segment.
The consumer end-market segment contributed 26% of net sales in the reported quarter. Sequentially, revenues declined 30%. Consumer revenues were down mid-single digits, driven mainly by seasonality and air conditioning and the continued softness in the overall appliance market.
The Computer end-market revenues contributed 10% of net sales in the reported quarter. Revenues were down more than 30% sequentially, contributing about 10% of total revenues for the reported quarter. Tablets, notebooks and after-market charges restrained the segment.
Operating Details
In the third quarter, gross margin contracted 460 basis points (bps) on a year-over-year basis to 53.3%. The gross margin contracted primarily due to the unfavorable end-market mix.
Gross margin expanded 150 bps sequentially, driven by improved manufacturing efficiency and the weaker yen.
Balance Sheet
As of Sep 30, 2023, cash & cash equivalents were $94.7 million compared with $84.1 million as of Jun 30, 2023.
Short-term marketable securities, as of Sep 30, 2023, were $261.8 million, down from $262.2 million as of Jun 30, 2023.
Power Integrations paid a dividend of 19 cents per share in the reported quarter.
The company will pay a dividend of 20 cents per share on Dec 29, 2023, to stockholders of record as of Nov 30, 2023.
During the third quarter, it repurchased approximately 24,000 shares of its common stock for $1.8 million. The company had $73.4 million remaining on its repurchase authorization as of Sep 30, 2023.
Guidance
For fourth-quarter 2023, Power Integrations expects revenues to be $90 million (+/-$5 million).
Gross margin is expected to be similar to the reported quarter figure of 53.3%.
Non-GAAP operating expenses are expected to be approximately $42.5 million for the fourth quarter.
Power Integrations expects to introduce higher voltage for its GaN road map soon to drive GaN beyond 10 Kilowatts.
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #3 (Hold).
NetEase (NTES - Free Report) , NVIDIA (NVDA - Free Report) and Model N are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NetEase shares have gained 54.8% year to date. NTES is set to report its third-quarter 2023 results on Nov 16.
NVIDIA shares have returned 216.8% year to date. NVDA is set to report its third-quarter fiscal 2024 results on Nov 21.
Model N shares have declined 38.9% year to date. MODN is set to report its fourth-quarter fiscal 2023 results on Nov 9.