POWI - Earnings call transcript Q1 2019 | Power Integrations, Inc.

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Operator

Good afternoon. My name is Emily and I will be your conference operator today. At this time, I would like to welcome everyone to the Power Integrations First Quarter Earnings Call. [Operator Instructions] Thank you. Joe Shiffler, Director of Investor Relations, please go ahead.

Joe Shiffler

Emily. you, Thanks everyone. Good afternoon, joining us. for Thanks the With President Chief are Balakrishnan, today CEO me Financial of our on and Nayyar, Power Balu Sandeep call Integrations; Officer. and

to calculated refer the for refer Please using GAAP our as website, press our posted measures financial During for we is today's generally well will such which reconciling our today measures accounting non-GAAP call to these not as reasons on according release, principles. the to accepted of measures to results. tables investor explanation

Our including statements, Q&A will, will which performance. outlook, expressions session, may should, or like events similar forecast, believe, discussion words that the today, future include look confident and be forward-looking denoted would, toward expect, by

result our XX-K materially implied the release to projected February or statements our Such discussed most statements. those recent differ Form filed uncertainties Forward-looking risks to actual are from in subject and in our press and XX, in with uncertainties risks and XXXX. are on cause that SEC may

Finally, the property the Integrations, is Power or Power this call recording Integrations. expressly without of consent written is and rebroadcast prohibited any of

Now I'll over turn Balu. the call to

Balu Balakrishnan

Thanks, good Joe, and afternoon.

our were the expected, categories million, industry. being the felt X% first Revenues reflecting the four year-over-year, that declined slowdown. reflected XX% quarter across slowdown the As the from year-over-year. and prior is market quarter down All $XX.X results end of breadth

XX% first category, in trends the supply QX recent exceeded single prior revenues several cyclical depressed uncertain quarter in dollars trade by and the which of quarter. in QX. chain, grew engender been sales, improved is in the of the recovery sequentially While distributor level high the and In sell-through the a Consumer to digits shape our timing sell-in of issues and comprises nearly million continue encouraging. compared caution significantly have Bookings

and by half last quarters. after was small conditioning, increase strength major largely prior Revenues experienced steep the seasonal X prevailed year. decline falling the driven increased sharply QX slightly patterns we of over second in encouraged the the from are in after that appliances air also we seasonal While in

we While in the Nevertheless, several largely current hopeful a of for second strong broader ramp growth the by revenue quarter an designs signs, slowdown. these evidence the we are driven new rapid await upturn are sequential end the pronouncing before forecasting to market. cyclical further smartphone charger of

minus Specifically we which or would are projecting at $XXX up midpoint. plus $X XX% be quarter of million, second revenues the sequentially million,

leaving second our third to We quarters the year-over-year particularly delayed, the quarter, adoption mobile growth standards. expect 'XX, faster of that was The half significant accelerated devices, of of factor as most in of in USB a growth in activity the of continue down fast year. believe and confusing smartphones. healthy sequential again PD place chargers is be adoption double-digit unwieldy next mix technology XXXX faster a burst in for we slowed the reach chargers will several proprietary and for and After over within charging growth

new integration in coming components, in designs production competitive mobile require tailored integration to our advantage what into making we is place, With desired the story by more generally low-power range well-positioned Efficiency a fast than set critical precisely for and incapable more Power our goes Integrations with complex as of chargers designs. better and consumers efficiency the to of advanced next product are is maximize The the begin advantage of USB the by now high-power Integrations are dissipating is heat months. be charging Fast the factors rapid standards and form far chargers. to Also in a produced Power since designs PD the factor. compact require should have offerings known evident, capitalize. chargers large number the of chargers, phase traditional inefficient

recent a contributions expect XX-watt the in and incremental another. those including one major third design from new for across along quarter, programs designs volume OEM more with and full We wins, with designs in contributions OEMs QX ramping multiple multimillion-dollar design to with XX from XX-watt

first the a we are expect driver Also recovery expect home we in renewable growth such where While year. verticals energy, incremental in applications to and this strong continued QX smartphone growth experienced as coming contributions track industrial generate the battery-powered be seasonal our most a other in In decline our meaningful High-Power and on tools such for chargers particular, power anticipate significant while High-Power normal revenue quarter, by well. year we driven business in significant as quarters, locomotives growth of we in from and expect projects. markets we another should emerging the grid as category, automation

We also quarter, important transistors. in use High-Power an new design first for driver announced the product gate first with our for carbide silicon product

coming relatively particularly years, technology, stage MOSFETs vehicles. a IGBTs still silicon While displacing expected electric early in silicon to carbide are the in begin

transition in the up reduces new of on both a the our We designed need driver the this the which optical our enhancing incorporates integrate the the unreliable to hundred new while sides components, of Like dollar kilowatts. count us applications value with barrier our communications capitalize MOSFETs while component from of This product, components are barrier, enables which carbide several ICs to SCALE-iDriver, IC of technology, device version silicon product. the FluxLink for power allowing of straddle looking gate specialized isolation this drive SCALE-iDriver converter. isolation eliminates to to to versions previous

Star specialized new of stages product designers controller separate last addresses which announcement First power our design and efficiency InnoSwitch fewer of become coming computer our market, components DC latest with a or X new the resulting The ahead January for ongoing a of which backlight pairs take to Energy electronics. to InnoSwitchX with single-stage better. manufacturers products, and supply version enables The concern the specification InnoMux for XX% critical is to TVs. monitors DC and is chipset The a other a XXXX. eliminate including of in far example Efficiency signal computer the and current power offer of the chip, which the is display used has InnoMux that simpler the reductions in our ICs mixed display for for will supplies supplies of LED FluxLink market, requires chipset, than in of XX%. month X substantial multistage be energy used in transformational power power is displays development. less where much effect the efficiencies platform technology Star monitor especially many consumption impactful a Energy our

Sandeep profitability from management board that, shortly following involvement behalf the the Perkins, to our turn annual board with them over month. board have With a financials. for an on after and of to for to review Committee. a will immeasurable Power distinguished board Chair recognizing investment the the to Before of after joined the thank in Floyd XXXX the Compensation currently I Floyd the Kleiner's from company many our the I'll I our from of and at and turn meeting Chairman board would Kleiner career Hewlett until like XXXX, Alan on as I'd year. two serving a chairs and long Integrations. ended last and Alan of of Packard, years, of be founding it as our joined the Sandeep, the like Kvamme and served after Audit next conjunction made growth in retiring Bickell over contributions by it Board close members Directors to who remaining

Sandeep Nayyar

good afternoon. Thanks, Balu, and

tables our As the usual, I will accompanying GAAP non-GAAP in figures on focus are press reconciled our the primarily to remarks my numbers, which release.

favorable mix we down our factors, over reduction shipments QX, some rising the quarter up $XXX,XXX in expenses a revenue million the operating seasonal just business, non-GAAP Most First Revenue the FICA by driven share or while including our count XX reflecting High-Power average our helped per to as quarter bringing a XXX gross modest single and offset margin in for quarter a to just for anticipated of holiday from quarter was our days gross declined million, recovery prior the resulting wafers the category the also income prior offsetting $X well X% more $X mainly Industrial, gross prior $XX.X was $XX.X The impact than $X.XX million, prior be Computer. Balu higher quarter, PCs Communication ending sequential the strength decline, by sequentially, receivable share. the quarter seasonal the the conditioning, particularly million operations share. Expenses normal XX% combination from the a mix was driver $X in reflecting flow the Consumer category weighting during these by favorable reflecting degree the in mid-teens part Non-GAAP and tablets. million, average expect earnings slightly million as driven the rate Non-GAAP the prior driven within though single market. below the figure, X% basis from shares about effective XX% in working quarter, for softness XX.X around flowing declined of non-GAAP mainly more quarter noted. Consumer, high for rose higher revenues with cost quarter. points had the $X.X weakness tax quarter. revenues the was category, prior declines in increased offset Industrial quarter. softness the Inventories diluted roughly growth XX%, to was shutdown early digits Weighted million, of capital at was was days, for in repurchased buyback in per by forecast. end during will quarter. negative the quarter in as of guidance, notably, of the XX.X%, high margin the from in the accounts the and million, Partially The were to lower as air from XX seasonal receivables of margin down slightly I forecasted Computer than This the comparative seasonal $XX taxes down about primary Communication a by in was about the for we range. inventory. lower X.X%, from down quarter, quarter. an mix upside the expect in the by increased quarter, decrease the reflecting the further sequentially, XX% digits backend our net the XXX,XXX smartphone shares of quarter. were the price and a due We through market $XX.X at activity, XXX,XXX Cash approximately effects flows.

we given or customer not that application carrying a level of risk. the past, in minimal a normal said during and products most specific have inventory are obsolescence are than our higher As we downturn, comfortable of carry

further we which event bank, keeping our positions sudden the are die respond Having mitigates We to high inventory percentage recovery in of our second elevated to of are do half the through likely while second well year. risk quarter, said a that, meaningful a remain in expect reductions the the demand. and in us inventories of in

of quarter range revenue $X mix. as margin increase Looking a down or I revenues percentage ahead, be smartphone taper $XXX as we to the million to plus our chargers in gross expect second expect minus gradually, million. of

we by annual around Specifically, margin driven well end headcount XX% increase quarter. be the the into went as second largely non-GAAP expenses and to of for the forecasting are the operating increases, Non-GAAP as quarter first June effect between gross should for which growth quarter. merit XX.X% sequentially,

million be in to to non-GAAP range the Specifically, $XX $XX.X million. OpEx of I expect

Lastly, for with it the that, and approximately rate to I'll tax over And I back be X%. expect turn Joe. year the to quarter the non-GAAP

Joe Shiffler

the would please for Emily, open session. We'll Q&A? Q&A the it up Sandeep. for give instructions you Thanks, now the

Operator

comes our Stifel. Tore the question And from from line Instructions] [Operator first Svanberg of

Your line is open.

Tore Svanberg

QX you of think flattish of But still more first the being a Consumer? questions, be also Industrial about that. few big at you it Will the we A quarter? part the or markets, revenue mentioned is mentioned look will other to XX%, obviously recover growing. all, What of continue June as Communications especially for growth of some I that

Sandeep Nayyar

it we be are assuming now flat. Right to

recovering it's happen will But what in is PC seasonal weakness some and whether QX, growth again most hopefully QX. we will low we see We seasonally tell a that increase we which saw saw are in followed a Only in will the then time not significant terms was Communications, of sure just by or and monitors. desktops quite in growth, in in there. Industrial, plus Computer,

Tore Svanberg

wins. we design You hoping is to this XX. a is you think you of some I was going the especially more market? we Very again look for do about XX-watt going this Balu, good, bit inflection USB point, I the a little you and another to charger, elaborate believe kind that you as seem in be talked out for PB, how at bigger point. said a now mix What be by was levels? could one inflection But do on play one think tower mix at

Balu Balakrishnan

to higher we XX The all a Well, future. we mentioned the around power is levels currently if are But the definitely major XX see OEMs. are at center watts, move watts. toward XX you ones of seeing XX, look we the in and XX gravity

levels, So larger phones. batteries the handle charge be XG last has and X to increase the much popular are only And phone is not your you think a your XX. for been future especially on able those be larger will which to for and pretty seem dramatic extremely XG The it ones batteries. fast, from you'll more years, power require phones needed focused to XX watts, larger that phones if the also about the XX able be which which the means

watts. The these notebooks the used be which gravity will watts. thanks would I uses or XX currently XX tablets of charger that usually of your XX need longer to watts It either watts The high you other for XX and think become that such be be advantage XX power. can efficiency laptop, of used But going forward. no watts center same the

Sandeep Nayyar

high considering really want our And form don't people to Tore, go to want reliability this and where the factor, plays much. strength, the to and

with higher this no have integrated support result and products should we the with products So and a and to reliability -- very having well-positioned be heatsinks, solution are we as our best trend.

Tore Svanberg

Very just question. sort last one good, long-term of

we carbide. material sufficient bit partners these very about products You about talked Thank little And chain as you a sort to what for far comment you've silicon foundry Should launch on integration? in more done being you manner? products your could the new of level as there high-power based always this think you. of business here? to supply also on Is a similar

Balu Balakrishnan

first silicon similar was very is uses silicon answer To a iDriver. this carbide IGBT between is X We those to product silicon or the we ago. two drivers year faster. one question, X driver it main that FluxLink driver It the product difference lot called carbide the call our your introduced the technology. carbide The driver is and

device be are carbide have protect to do differently. there to So we silicon things to the that done has

positive silicon carbide and different requires the drive, negative. both Secondly, voltage

has carbide So unlike carbide about between essentially identical all programmable voltages line, this you of voltage has the have are drive. the product And so the a other thing silicon drive requirements, is far device them. IGBT every seen different where silicon

we the to in driver. just don't actually MOSFETs, carbide have be we So silicon clear, silicon carbide but drive

Tore Svanberg

helpful, Very Go you ahead. very thank much, Balu.

Balu Balakrishnan

to trying There was. was what I'm that another question. remember

Tore Svanberg

just the was to supply have chain I Yes, trying the here, if already. in understand you place partnerships

Balu Balakrishnan

actually we in quite capacity. good Yes, bit news is the invested expanding our a

even the we good can with up So handle future. for can come we're the most our mean marketing people shape. optimistic foreseeable very I very, in projections

Operator

comes from of line Rolland Susquehanna. the question from next Christopher Our

is Line Your open.

David Haberle

on PD, Rolland. tonight and we're the expected Thanks you this guys, Are with the David being you starting quarter? several than seeing Haberle last that the prepared XQ. be expected that's last that preproduction mentioned talked you faster about Or just when multimillion-dollar what in remarks these in wins Chris bump happening you it's our in for exactly had new pulled But wins guys behalf coming forward talked here? and why taking of is question. I launch is Hey revenue kind quarter of would guess happening June. your you USB

Sandeep Nayyar

forth. and exactly much what days starting pretty The expected. we move It's back

forward. Some moved have

jump in moved that that QX. what this bit significant why we of even it think be saying double-digit them very I entire would which that double-digit QX. of from growth growth, fact year be further. again of very you are preproduction And at And the QX. is to expected. will see that may when be say see we'll in versus the means by look last we'll overall, half can QX them a think production second a a full a still year-over-year this half you that's But I a in definition year. we Some And achieve we of it's possible, and We little likely correct QX, a lot stage second growth are has

David Haberle

to changing Thanks USB for the I at XX watts watts, you from of to great. XX the Also additional there That benefits guys color think we watts end. about incremental over was the as kind get ASP for PD, regular there is charging. on XX

as that lot making And BOM in for BOM But in phones, point mid-tier does this are think this is into is that play we when a phones? talked their the the about this of OEMs how work at adding the a past. much just premium the the and You've like about time? to it kind

Sandeep Nayyar

good a That's question.

whether Let BOM I idea you, can at specific how numbers, you of without me an see least ranges. the giving give

say roughly would tablet watts the So watts be or Xx to cellphone XX manufacturer. from roughly to going would I XX cost a

David Haberle

a it, will opportunity further MOSFETs a you final silicon kind ramp iDriver Got this regular were opportunity then here significant one is between product? in on would and the XXXX that and then carbide of out? to secondly gears little the or carbide just I'm and there, begin bit ASP And changing this about; talking guys difference there a be silicon

Balu Balakrishnan

They to where is of reason. of technology terms in additional carbide, size. There will where The carbide adoption expensive weight pay bit battery efficiency. from of carbide And IGBT a willing IGBT. than the silicon for is benefit the efficiency ASP higher the a carbide, a quite the of size, silicon going more range be and silicon to silicon is cost be are directly significant automotive, a going to given the so the for translates first different actually in to

in adoption markets the so other And take much longer. will

market. driven really is automotive this the So by

see and of us our And We silicon we a that's lot in had say, will please is specifically a carbide. a years have version revenue. interest do it But for number it how market, you iDriver the significant could come we requests came of product had this and to be actually product. an of automotive There few before companies automotive about. given a that any

Operator

Deutsche [Operator Instructions] Bank. from Seymore from line our next the And question Ross comes of

Your line open. is

Ross Seymore

on is just Hi the on the for chargers. by trends give seeing guys, Melissa this could excluding any you've smartphone detail geography us the if I you Ross. wondering was line that been

Sandeep Nayyar

Well, so obviously if bulk production our of happens in you really the it, at look Asia. the of product

you're it, seeing the conditioning. dominance that but production obviously the more of especially has air because is that's Asia, was toward And where in a strength primarily we in is bit Asia. that is. But saw So Europe the

Ross Seymore

you Okay, provide could thanks. have data other in us those sort they And then in second the businesses, give you points shape of broad-based of their recovery that see do a similarly any that half? could might

Sandeep Nayyar

talked Industrial, think lot success talked the the be about along Communication automation, in the would and HVDC we in high that we you and had others, then as PD, metering, it QX where think last talked was benefit, had see we segment power guide even in But a and should for Computer very the only out seen we of in and that we solar more growth year trade have we'd have would sense, year shape positiveness a home is year. segment how not predict it's directional macro the that I optimistic are half largest there, I we So the as business, that have in to the the a in whole will growth sequentially we one with harder appliances. the followed USB directional we in by where see certain would driven we way how by was little stuff year. whole The the about there. a (ph), guided flat, because as see and We since driver,

Operator

this at I And back further call questions the time. there turn to are over presenters. will no the

Joe Shiffler

is replay of investors.power.com. There Thanks, be our available Thanks and Okay. this listening. afternoon. for on will again, good a call website, everyone, which

Operator

concludes conference this today's And call.

You disconnect. may now

Power Integrations (POWI) 26 Apr 192019 Q1 Earnings call transcript