POWI - Earnings call transcript Q2 2024 | Power Integrations, Inc.

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Operator

Good afternoon, ladies and gentlemen. Welcome to the Power Integrations' Q2 2024 Earnings Conference Call. [Operator Instructions] Also today's call is being recorded. [Operator Instructions] And now, at this time, I would like to turn things over to Mr. Joe Shiffler, Director of Investor Relations. Please go ahead, sir.

Joe Shiffler

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

according to this to expenses, compensation our non-GAAP included these acquisition-related the is measures During items. will and of Non-GAAP in refer GAAP assets release. effects we not exclude results call, amortization calculated today's measures tax to intangible stock-based A GAAP. measures of financial press of reconciliation

risks call will in include outlook, Our the implied. of the statements including and to discussion press consent statements Q&A Form session, to from today's and would, and future expect, most without the today, words XXXX. This are by should, or with similar Power toward risks results of will, XX-K and is in differ recording filed Such written uncertainties Power those forecast, forward-looking XX, is projected materially are like Integrations. or look February discussed or our the rebroadcast recent denoted any expressly property anticipate performance. that events prohibited subject actual expressions Integrations, may on believe, that Such SEC estimate, cause release

Now, I'll it over Balu. turn to

Balu Balakrishnan

good and Joe, you, Thank afternoon.

led way recovery rebound these have uncertain. enable the headwinds times for make Nevertheless, outlook our behaving limited lead from for short way order QX to the the ended are all being another near-term week of distributors, X up of excess We only consider increase That's our off where weeks visibility recovery expected, prior at XX% third below of QX the levels past considerably, at conditions. Customers falling QX remain a recovery, needed. expected XXXX pockets weeks and macro quarter are up to in few our the to XXXX. The of of highly cautiously by clearing peak down quarter. the over well June the revenues As reflects category, a X.X we beginning lessened back XX% our year. a marked our of after range the XX.X overall. bottom. and peers, channel factors and inventory, in revenues is of last challenging weeks with sequentially and while products when in consumer the Like desirable quarters, slope X and many customers All inventory-related X

the home slower Integrations, the real rates, impact interest sales market Just XXXX. from our resulting revenue and supply as had to prior about had demand the outsized estate, after China correction bulked X/X Power the the appliances sharply accelerated the times. The on a during for collapse with more in of of of an the and broadly, hangover up including factors, coming chain from of inventory fell due higher shortages year, the purchases appliance COVID on confluence

the replenishing drawing overcorrected, year. chain and to As first inventories down often happens, supply the of throughout levels the half unsustainable then

Looking the we air quarter. soft, September ahead, demand expect lower appliance seasonally in conditioning remains and sales

thanks products. appliances is in win and now However, power our strength and to fundamental the through grow no of Integrations reliability appliance are dominant. Power the benefits the to efficiency factors world #X to in energy in cyclical forefront, longer and supplies, that we our business back the consumer content have our our continued to forward share dollar look coming we market downturn, of

products, efficiency $X and and BLDC such as addressable InnoSwitch as drums, standards, machine raising we EU incremental dryers standby inside double The heat kitchen to from power for of ICs. In as introduced and supply. higher These for pumps horsepower. mixers addressable motor-driver motor on range constricting solution adoption with inverter less content such the the power milliwatts cloth which such and additional products of leader, efficiency meet even tighter work motors BridgeSwitch consumption as BridgeSwitch-X GaN-based BridgeSwitch-X, sinks. have features encompasses challenges driver efficient LED and InnoMux-X such design to eliminates higher up available to performance, are June, range power our driving for washing our as greater displays our value the for XX than BLDC blenders, most and we track As new standby expanded X billion. our designers to on drive applications the market market limits XX%, the and is heat connectivity, lighting, need

our We recent pump and in European for weeks, dishwasher have China conditioning at OEM. including in from a a orders major BridgeSwitch-X first our received another appliance customers for X purchase air

the to continue range recent also India wins, hood We fan the with the first win for a with BridgeSwitch new market. generation programs including

also are for but separate eliminating DC-to-DC We conversion for to efficiency PowiGaN multiple stages. InnoMux-X up DC by incorporates reception new This independently-regulated with over introduced only losses InnoMux-X market compounded InnoMux-X, further in a we increases the simplifies need outputs, also our not for proprietary which is products DC excited X the equally switches, March. about by eliminating the conversion efficiency. multiple architecture the the providing designs, boosting stages outputs.

in earlier high-volume in TV monitor and a progress markets. first across for production this Our XX-inch and PC have range tier a quarter a began of appliance the we OEM, top design designs computing,

low contribute expect from rollout OEM brands GaN in including and a chargers G-Power. USB uptick QX XG awareness InnoSwitch HiperPFS to wins migration system-level opportunities volumes reflecting and design to and customers next are we and relatively India's with and greater wireless also ease the over of fixed silicon less product incorporating customers' as includes This awareness are our XXX to our the discrete point revenues Anker, industrial take into to resources to multi-port notable also solutions. We GaN notebook learning PowiGaN from year. Overall, like a products, designs to costs from switches reflecting its portfolio the well end GaN the time design invest of about markets. by highly challenges industrial wide broader GaN, our advantage solving watts all and UGREEN across in the value doesn't continued range won particular. Because strip XX of should superior their customer as products, inclined ranging products GaN at to be our customer in of devote XXXX growth adoption PD products of engineering GaN, away which an We for of of inflection in so of have perspective GaN meaningful integrated in the customers, the at performance. complexity spread, the general

which and surges highly products to connected India, widely. applications the where especially and directly in grid exposed industrial XXX XXXX especially markets essentially grid InnoSwitch for such the spikes, well-suited are to well-suited, Our volt and utility GaN fluctuate meters, as like voltages are

metering to we million the are meters India in higher of the savings its reliability, deploy years. Automotive market, higher our the We our and including new have leading a with use, interest of encouraged voltage over GaN efficiency next products XXX products, level value proceeds position plan and ICs. by also of customers as voltage in space several India ease GaN

to of next year expect slated XX least in this year. electric XX begin end OEMs by the vehicle We production about at more and to be with production

GaN funnel battery billion acquisition in develop power cooling. We Semiconductor, vertical addressable high ahead, significantly believe assets a the higher our technology clean and much adding current a quick our potential years Odyssey applications, expertise and as of higher GaN power We opportunities compressors including we includes adding current development address micro also closed in $X will July X, to devices. The XX-volt the to with for go room DC-to-DC higher than we are supports automotive be emergency replacement, technology, enable turnaround of cabin quarter lateral market of overall and On range every to supplies, design levels. dozens much of today's shorten wafers the with time. the acquisition converters of which battery to

to believe we a we inverters. high-power with in that EV carbide X is GaN success next While introduce the high-power make as to breakthroughs applications not compete ultimately achieve silicon products drivetrain necessary years to the in X and such reality GaN can guaranteed,

board those are that, support to team the Sandeep I'll efforts. With to turn We for review have over it financials. excited on to the a of Odyssey

Sandeep Nayyar

afternoon. Balu, good Thanks, and

and so then up the and results are quickly outlook, QX Our just numbers will questions. for it straightforward, I open recap we will the

to As focus on non-GAAP which reconciled the are press results, remarks our in release. usual, GAAP my I will

a while Second we air operating to compared in high as the both prior quarter increases our earnings as revenues saw were the well In a in all market inventory were guidance, categories. sequentially, was noted. The per $XXX range major XX% the in conditioning, sequentially. were largely was excess Balu up our largest X board wins improvement through slightly computer the than inventories the typically category category, in industrial gradual seeing sequentially, in more seasonal as of design across metering, driven was including has a as its we reaches customer applications, India, appliances strength across slightly non-GAAP as category tablets, We quarter. guidance worked $X.XX with level digits inventory. as which but as Consumer, diluted better up quarter peak are margin small growth teens of channel improved gross share, where above driven and million, up end mid-single just XX% and by remains the up well above expenses. Revenues our continued key midpoint by in came June end QX. Revenue elevated implied on in

chargers computer and The notebook industrial, mix XX% in XX% sequentially, up handset communication driven a communication. clearance Revenue category consumer, customer. monitors. the also XX% key of strength We in saw at inventory quarter by was aftermarket XX% was XX% and the for

X.X week the again ended distribution as at the prior As quarter exceeded weeks, Balu full sell-through inventory noted, down quarter once a from sell-in.

the dollar rate XX.X%, gross its higher prior than second by driven a was in point from the value, and channel back-end reached margin manufacturing the for level exchange favorable X dollar-yen percentage volumes. years. terms of lowest Non-GAAP quarter, more quarter inventory up In

to the growth. for $XX $X.XX during the We share. Diluted slightly both by first which quarter down due XX prior projecting earnings quarter, for improvement took effect driven in provide XXX,XXX for expected, repurchases. up expenses for the repurchases sequential diluted buying another and million, used were sequentially factors are QX to due the early continue will was as were annual million as Non-GAAP from these increases, in also back salary operating to quarter, million, share $XX.X shares. count quarter mainly quarter quarter tailwinds. Non-GAAP the per headcount We the

in The operations for for quarter the for quarter. the from other primary use prior days CapEx. Cash was from Inventory down million. $XX were was additional at days $X an quarter-end, cash quarter dividends million million XX $XX the flow of with XXX

forward, Going glide recovery conjunction inventory in the revenues. downward in I to with expect days

XX% and expect modestly and million X% a additions increase sequential gross the be for the $XX midpoint. on between of million, north $X or be This with should expenses XX%. Non-GAAP by gross between the to by quarter, margin us once year yen. and QX utilization sequential be of to mainly million, $XX.X up revenues a Non-GAAP we again increase manufacturing from higher puts Turning the minus XX.X% course outlook, the a should plus million, full $XXX at second margin driven Odyssey. of operating driven

For versus year, tracking the full original Odyssey the increase That's prior year. $X.X towards plan about X% is OpEx about of non-GAAP of the the second adding our of OpEx an in half even below million with year. well

Q&A. be tax operator, our begin approximately the Finally, expect I QX X%. And let's to rate effective now,

Operator

[Operator to Williams of Instructions] afternoon We'll Benchmark. go David first this

David Williams

better China ask [Indiscernible] seems Thanks And here. I certain for a segments. in how question letting getting geographically. guess, seeing you're to be me things

And Just how seeing geography but of that some today. like how didn't same that. kind you're from seeing just sound maybe seeing thing, curious comments, you're your that of curious you're just

Balu Balakrishnan

mentioned, pickup a China, we exposure are our has inventory not The much biggest as situation in seeing is out. pretty we appliances. In cleared demand. And

seeing So, we we lower now would what which demand, actually have is the are than expected. much current

the of in half at design higher raw wins to due we because challenges increase growth to the China And thanks this estate our all will in is essentially and that actual I demand flat point think next of second levels, think year. But real a power However, are ASP has I above market. the and seeing demand. terms that is the through also continue

Now doing away taking the we higher because our bit cell they've the different Huawei end. phone share on the Obviously, moved end and little is more market. supply there high to is phones. can't Huawei from customers the to better they're on of a low-end

than performance, XX%. year, overall internal situation has China. But this that based the more projections, improved up has our you our this So, than more our in for year. the if be will not XX% But at rest been phone cell of on modeling look down our market,

So, China. doing well cell reasons are in we I really has everywhere market, phone for mentioned, The else. shifted

doing China. We of outside well very are

Sandeep Nayyar

infrastructure more in one thing. have China, the grid business high power And bit. the projects Even been in a delayed David,

also has saying in what what is which is that of So Balu a happening reflection impacted, is China.

Balu Balakrishnan

add will be this I growth has that, situation said next and year The see would very this I the a out all the at phone all of should point, be in good in nice And picture. should China, of for stabilized cell next us growth having we that, a year areas. think, because of

David Williams

Great there. Great. color

recovery. I deteriorating today that second here? kind like there bit quarter or than think things do different secondly, it Is about is half ago? just half, thinking you're the if in tempered when coming just about are push you the how and we So, guess, more were pulls than macro? thinking the really it about Is a obviously, a days macro of seems you're maybe it maybe other are second now are viewing XX stronger What last simply

Balu Balakrishnan

you that last call, very back the to growth half, back couldn't visibility second inventory has And grow poor. if pretty to come but the that Actually, we And what year. we the is The that know slope normal happened. of go we picture. -- didn't by said middle this demand said the will don't much the in our we we of the situation see also we will because was

you're So, correct.

the anticipated, minute last I growth the not can. now, but the People is is very, ordering, I in are for to visibility half would visible QX last Even they think us in less the quarter. at very low. was the that second have than because

has last couple in years. We They what have skittish happened lot are of holding after inventory. of the about inventory

So, need they parts. order when they the

So QX into to that difficult and of the makes it rest QX. look very

observation is say I would your So, correct.

Operator

Instructions] Matt Cowen. now Ramsay go We to next [Operator at TD

Matthew Ramsay

things first caught to and XXXX my was of in an wanted on. commentary markets movement markets GaN lots I in I prepared end term. for the end things hit I guess about of across your what Balu, script, your But couple guys your of a potentially A in you inflection my think question, bit attention mentioned short about little the beyond. the

of And if little is out a do guess, confidence? you're business with today maybe So, what years, that that like you can then think part, get what you I you X is wins could that what where second that unpack bit, design And gives X, percentage seeing look based the the like on GaN? seeing? you you're

Balu Balakrishnan

mentioned it's seeing What new GaN that new be they have much most other we proliferation InnoSwitch voltage and GaN got multiple of traction have into we phones shorter GaN. will cycles. times are our GaN. design higher because of and our first has InnoMux-X, markets, using is products now the cell all by InnoGaN, -- best using on products we that like the driven been So, of with And the

be will see and starting point we in an inflection into XXXX. -- production these are of going time, All over

rough rate give our of idea, So, as rate the could happening XX%. much now. much a expected, it's shifting, XXXX. next revenue the pretty grow see And growth is -- it year, you and it's GaN the we that nice slope starting see as to just And right to in growth

we think could have range. would in rather by And for future. could GaN the be far As be I GaN revenues, focus we million on revenue going exact -- what as that XXXX, $XXX

Matthew Ramsay

quarter current of fluctuations, give hours the variability trying X Got that part if is would that Sandeep, when model. appreciate yen, out? of how to a given Remind comments if of Just maybe a sell. a last up guess you sort a they manufacture follow-up Is bit there the the that it rule of quarter? sort with that something could the is the with long to get thumb. moves? the take And about manufacturing were the color Is there that hits us and sort historic show sense sustained of a business Really few quarters how I of affects And currency things the it. my versus in just there us little there. of XX out? question, when in P&L

Sandeep Nayyar

Yes.

before, So XX% And inventory take. in yen it would in changed change we into and But typically, impact, of past, give within P&L. we our about carrying. us said the a as level are have the points, with Matt, XXX off yen the would have flow affect months X basis things

what at if carrying are is today you significantly so, look And larger. we

before As a about P&L. X the result, flows it into quarters takes it to for X it

a know, if of change period manufacturing call not while, yen, recently, I a you because over -- with it for have yen-sharing daily a the we adjust. saw we on basis it's So, think we the what holds a that you big our our arrangement It's that in time, as partners.

is, happened saying, are take little or change my with So of in inventory, us the a quarter maybe we recently in bit it'll fourth probably the level impact holds, QX if of this 'XX. that

because pretty will next of inventory year, the flow. So, for much we benefit the the have, level yen of of

still fact, phone to benefit that growth comes had saw from from from we input In we'll this year we'll see, yen little still get headwinds we while, mix But increasing way. year costs have favorability have next -- the in cell also from this phone all because yen more we but if into P&L, this from the areas. next non-cell the the year, will a depreciated

said we had the remember which of we end we higher mix but XXX, and had could means go So, -- even what the normalizes, us it still stay a in our ahead, the out go favorable, earlier. going is, will the yet said -- Analyst playing to the goes would kept will mix we What And on favorable, said back that to but when model. we the become of yen for what pretty model. it's kind if said had you Day, would we yen much headwind

the what having higher at feel costs will margin next Now to that high got we at input impact still year will P&L is, and from all challenge, even the the a for good we model. next continue have least this year our that, said be of be But end the costs year.

Matthew Ramsay

Fine.

is there think think there, we of moving I them. most pieces lot I of but got

Operator

Instructions] [Operator

Joe Shiffler

further looks no it guess. Well, questions. group I have we right. All like today, Shy

So, be a today. dialing investor Thanks, this of our we'll will afternoon. replay in available is And there. which it and everybody, Thanks there website, good for leave call on again, investors.power.com.

Operator

Thank so you, of thanks second Shiffler. we remainder gentlemen, Ladies wish everyone, earnings Goodbye. conclude and that your Integrations' much today's us, quarter all Mr. again, will a joining for day. Again, great conference. Power and you

Power Integrations (POWI) 6 Aug 242024 Q2 Earnings call transcript