Power Integrations, Inc. announced financial results for the quarter ended September 30, 2014. Net revenues for the quarter were $90.1 million, up one percent from the prior quarter and down two percent compared with the third quarter of 2013. GAAP gross margin for the third quarter was 54.4 percent; operating margin was 18.7 percent. Net income for the quarter was $16.1 million or $0.52 per diluted share, compared with $0.54 per diluted share in the prior quarter and $0.54 per diluted share in the third quarter of 2013.
In addition to its GAAP results, the company provided certain non-GAAP financial measures for the third quarter that exclude stock-based compensation expenses, acquisition-related amortization expenses and the accompanying tax effects. Non-GAAP gross margin for the quarter was 55.3 percent; non-GAAP operating margin was 23.0 percent. Non-GAAP net income for the quarter was $19.8 million or $0.65 per diluted share, compared with $0.61 per diluted share in the prior quarter and $0.71 per diluted share in the third quarter of 2013.
Commented Balu Balakrishnan, president and CEO of Power Integrations: “Revenues and earnings increased sequentially, but like many of our industry peers we saw a slowdown in orders over the course of the quarter, resulting in less-than-seasonal sales growth. Revenues from the communications end-market increased by more than 20 percent sequentially, but demand was less than expected across the other end-market categories.
“While our near-term outlook reflects a tepid demand environment, our profitability and cash flow remain healthy, and our strong balance sheet enables us to further expand our share-repurchase program at an opportune moment. We continue to invest for long-term growth, and we remain optimistic about our expanding addressable market, our pipeline of innovative products, and the growing demand for energy-efficiency and renewable energy.â€
Additional highlights include: Cash flow from operations in the third quarter was $30.6 million; cash and investments totaled $213.9 million at quarter-end, up $1.5 million from the end of the prior quarter. Power Integrations repurchased approximately 359,000 shares of its common stock during the quarter for $19.5 million. As of September 30, 2014, the company had approximately $34.3 million remaining on its repurchase authorization; in October the company’s board of directors increased the amount authorized by an additional $25 million. The company paid a dividend of $0.12 per share on September 30, 2014. A dividend of $0.12 per share will be paid on December 31, 2014, to stockholders of record as of November 28, 2014. And the company received 23 U.S. patents during the quarter and had 668 U.S. patents at quarter-end.
The company issued the following forecast for the fourth quarter of 2014: Fourth-quarter revenues are expected to be $86 million plus or minus $3 million. Non-GAAP gross margin is expected to be approximately 54 percent. (Excludes approximately $0.2 million of stock-based compensation and $0.6 million of amortization of acquisition-related intangibles.) GAAP gross margin is expected to be approximately 53 percent. Non-GAAP operating expenses are expected to be between $29.5 million and $30 million. (Excludes approximately $3.6 million of stock-based compensation and $0.6 million of amortization of acquisition-related intangibles.) GAAP operating expenses are expected to be between $33.7 million and $34.2 million.
