GlobeNewswire Inc | Feb 4, 2021 04:01PM EST

February 04, 2021

KIRKLAND, Wash., Feb. 04, 2021 (GLOBE NEWSWIRE) -- Monolithic Power Systems, Inc. (MPS) (Nasdaq: MPWR), a leading company in high performance analog solutions, today announced financial results for the quarter and year ended December 31, 2020. The Company also announced that its Board of Directors has approved an increase in the quarterly cash dividend from $0.50 per share to $0.60 per share. The first quarter dividend of $0.60 per share will be paid on April 15, 2021 to all stockholders of record as of the close of business on March 31, 2021.

The financial results for the quarter ended December 31, 2020 are as follows:

-- Revenue was $233.0million for the quarter ended December 31, 2020, a 10.2% decrease from $259.4 million for the quarter ended September 30, 2020 and a 39.8% increase from $166.7 million for the quarter ended December 31, 2019. -- GAAP gross margin was 55.3% for the quarter ended December 31, 2020, compared with 55.1% for the quarter ended December 31, 2019. -- Non-GAAP (1) gross marginwas 55.7% for the quarter ended December 31, 2020, excluding the impact of $0.7 million for stock-based compensation expense and $0.3 million for deferred compensation plan expense, compared with 55.5% for the quarter ended December 31, 2019, excluding the impact of $0.6 million for stock-based compensation expense. -- GAAP operating expenses were $88.9million for the quarter ended December 31, 2020, compared with $61.2 million for the quarter ended December 31, 2019. -- Non-GAAP (1) operating expenses were $63.6million for the quarter ended December 31, 2020, excluding $22.3 million for stock-based compensation expense and $3.0 million for deferred compensation plan expense, compared with $41.8 million for the quarter ended December 31, 2019, excluding $18.1 million for stock-based compensation expense and $1.4 million for deferred compensation plan expense. -- GAAP operating income was $40.0 million for the quarter ended December 31, 2020, compared with $30.7 million for the quarter ended December 31, 2019. -- Non-GAAP (1) operating income was $66.3 million for the quarter ended December 31, 2020, excluding $23.0 million for stock-based compensation expense and $3.3 million for deferred compensation plan expense, compared with $50.8 million for the quarter ended December 31, 2019, excluding $18.7 million for stock-based compensation expense and $1.4 million for deferred compensation plan expense. -- GAAP other income, net, was $4.5 million for the quarter ended December 31, 2020, compared with$2.7 million for the quarter ended December 31, 2019. -- Non-GAAP (1) other income, net, was $1.3 million for the quarter ended December 31, 2020, excluding $3.2 million for deferred compensation plan income, compared with $1.6 million for the quarter ended December 31, 2019, excluding $1.2 million for deferred compensation plan income. -- GAAP income before income taxes was $44.4 million for the quarter ended December 31, 2020, compared with $33.4 million for the quarter ended December 31, 2019. -- Non-GAAP (1) income before income taxes was $67.6 million for the quarter ended December 31, 2020, excluding $23.0 million for stock-based compensation expense and $0.2 million for deferred compensation plan expense, compared with $52.3 million for the quarter ended December 31, 2019, excluding $18.7 million for stock-based compensation expense, and $0.2 million for deferred compensation plan expense. -- GAAP net income was $42.9 million and $0.90 per diluted share for the quarter ended December 31, 2020. Comparatively, GAAP net income was $32.4 million and $0.70 per diluted share for the quarter ended December 31, 2019. -- Non-GAAP (1) net income was $62.5 million and$1.31 per diluted share for the quarter ended December 31, 2020, excluding stock-based compensation expense, net deferred compensation plan expense and related tax effects, compared with non-GAAP net income of $48.4 million and $1.04 per diluted share for the quarter ended December 31, 2019, excluding stock-based compensation expense, net deferred compensation plan expense and related tax effects.

The financial results for the year ended December 31, 2020 are as follows:

-- Revenue was $844.5million for the year ended December 31, 2020, a 34.5% increase from $627.9 million for the year ended December 31, 2019. -- GAAP gross margin was 55.2% for the year ended December 31, 2020, compared with 55.2% for the year ended December 31, 2019. -- Non-GAAP (1) gross marginwas 55.6% for the year ended December 31, 2020, excluding the impact of $2.6 million for stock-based compensation expense and $0.9 million for deferred compensation plan expense, compared with 55.6% for the year ended December 31, 2019, excluding the impact of $2.4 million for stock-based compensation expense, $0.1 million for the amortization of acquisition-related intangible assets and $0.1 million for deferred compensation plan expense. -- GAAP operating expenses were $307.1million for the year ended December 31, 2020, compared with $243.8 million for the year ended December 31, 2019. -- Non-GAAP (1) operating expenses were $219.4million for the year ended December 31, 2020, excluding $83.0 million for stock-based compensation expense and $4.7 million for deferred compensation plan expense, compared with $163.5 million for the year ended December 31, 2019, excluding $76.3 million for stock-based compensation expense and $3.9 million for deferred compensation plan expense. -- GAAP operating income was $158.9 million for the year ended December 31, 2020, compared with $102.6 million for the year ended December 31, 2019. -- Non-GAAP (1) operating income was $250.1 million for the year ended December 31, 2020, excluding $85.6 million for stock-based compensation expense and $5.7 million for deferred compensation plan expense, compared with $185.4 million for the year ended December 31, 2019, excluding $78.7 million for stock-based compensation expense, $0.1 million for the amortization of acquisition-related intangible assets and $4.0 million for deferred compensation plan expense. -- GAAP other income, net, was $10.5 million for the year ended December 31, 2020, compared with$10.6 million for the year ended December 31, 2019. -- Non-GAAP (1) other income, net, was $5.9 million for the year ended December 31, 2020, excluding $4.6 million for deferred compensation plan income, compared with $6.8 million for the year ended December 31, 2019, excluding $3.8 million for deferred compensation plan income. -- GAAP income before income taxes was $169.3 million for the year ended December 31, 2020, compared with $113.1 million for the year ended December 31, 2019. -- Non-GAAP (1) income before income taxes was $256.0 million for the year ended December 31, 2020, excluding $85.6 million for stock-based compensation expense and $1.1 million for deferred compensation plan expense, compared with $192.1 million for the year ended December 31, 2019, excluding $78.7 million for stock-based compensation expense, and $0.1 million for the amortization of acquisition-related intangible assets and $$0.2 million for deferred compensation plan expense. -- GAAP net income was $164.4 million and$3.50 per diluted share for the year ended December 31, 2020. Comparatively, GAAP net income was $108.8 million and$2.38 per diluted share for the year ended December 31, 2019. -- Non-GAAP (1) net income was $236.8 million and$5.04 per diluted share for the year ended December 31, 2020, excluding stock-based compensation expense, net deferred compensation plan expense and related tax effects, compared with non-GAAP net income of $177.7 million and$3.88 per diluted share for the year ended December 31, 2019, excluding stock-based compensation expense, amortization of acquisition-related intangible assets, net deferred compensation plan expense and related tax effects.

The following is a summary of revenue by end market for the periods indicated (in thousands):

Three Months Ended December Year Ended December 31, 31,End Market 2020 2019 2020 2019Computing and $ 61,831 $ 55,644 $ 253,177 $ 189,215storageAutomotive 39,363 24,129 108,966 90,303Industrial 37,117 26,741 119,603 99,381Communications 29,656 21,866 142,326 84,794Consumer 65,076 38,358 220,380 164,228Total $ 233,043 $ 166,738 $ 844,452 $ 627,921

The following is a summary of revenue by product family for the periods indicated (in thousands):

Three Months Ended December Year Ended December 31, 31,Product Family 2020 2019 2020 2019DC to DC $ 219,930 $ 157,525 $ 800,478 $ 589,651Lighting Control 13,113 9,213 43,974 38,270Total $ 233,043 $ 166,738 $ 844,452 $ 627,921

Our performance in 2020 validated our strategy to grow through diversification and sustainability. We will continue to execute this strategy and invest in our future,saidMichael Hsing, CEO and founder of MPS.

Business Outlook

The following are MPS financial targets for the first quarter ending March 31, 2021:

-- Revenue in the range of $236million to $248million. -- GAAP gross margin between 55.1% and 55.7%. Non-GAAP (1) gross margin between 55.4% and 56.0%, which excludes an estimated impact of stock-based compensation expenses of 0.3%. -- GAAP research and development (R&D) and selling, general and administrative (SG&A) expenses between $89.0million and $93.0million. Non-GAAP (1) R&D and SG&A expenses between $62.8million and $64.8million, which excludes estimatedstock-based compensation expenses in the range of $26.2million to $28.2million. -- Total stock-based compensation expense of $27.0million to $29.0million. -- Litigation expenses ranging between $2.3million and $2.7million. -- Interest income of $1.4million to $1.8million. -- Fully diluted shares outstanding between 47.3 million and 48.3 million.

(1) Non-GAAP net income, non-GAAP earnings per share, non-GAAP gross margin, non-GAAP R&D and SG&A expenses, non-GAAP operating expenses, non-GAAP other income, net, non-GAAP operating income and non-GAAP income before taxes differ from net income, earnings per share, gross margin, R&D and SG&A expenses, operating expenses, other income, net, operating income and income before taxes determined in accordance with Generally Accepted Accounting Principles inthe United States(GAAP). Non-GAAP net income and non-GAAP earnings per share exclude the effect of stock-based compensation expense, amortization of acquisition-related intangible assets, deferred compensation plan income/expense and related tax effects. Non-GAAP gross margin excludes the effect of stock-based compensation expense, amortization of acquisition-related intangible assets and deferred compensation plan income/expense. Non-GAAP operating expenses exclude the effect of stock-based compensation expense and deferred compensation plan income/expense. Non-GAAP other income, net excludes the effect of deferred compensation plan income/expense. Non-GAAP operating income excludes the effect of stock-based compensation expense, amortization of acquisition-related intangible assets and deferred compensation plan income/expense. Non-GAAP income before taxes excludes the effect of stock-based compensation expense, amortization of acquisition-related intangible assets and deferred compensation plan income/expense. Projected non-GAAP gross margin excludes the effect of stock-based compensation expense. Projected non-GAAP R&D and SG&A expenses exclude the effect of stock-based compensation expense. These non-GAAP financial measures are not prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. A schedule reconciling non-GAAP financial measures is included at the end of this press release. MPS utilizes both GAAP and non-GAAP financial measures to assess what it believes to be its core operating performance and to evaluate and manage its internal business and assist in making financial operating decisions. MPS believes that the inclusion of non-GAAP financial measures, together with GAAP measures, provides investors with an alternative presentation useful to investors' understanding of MPS' core operating results and trends. Additionally, MPS believes that the inclusion of non-GAAP measures, together with GAAP measures, provides investors with an additional dimension of comparability to similar companies. However, investors should be aware that non-GAAP financial measures utilized by other companies are not likely to be comparable in most cases to the non-GAAP financial measures used by MPS.

Earnings WebinarMPS plans to host a Zoom webinar covering its financial results at2:00 p.m. PT/5:00 p.m. ET,February 4, 2021. You can access the webinar, free of charge, at: https://mpsic.zoom.us/s/98817942109. The webinar will be archived and available for replay for one year under the Investor Relations page on the MPS website.

Safe Harbor StatementThis press release contains, and statements that will be made during the accompanying teleconference will contain, forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including, among other things, (i) projected revenues, GAAP and non-GAAP gross margin, GAAP and non-GAAP R&D and SG&A expenses, stock-based compensation expenses, litigation expenses, interest income, and diluted shares outstanding, (ii) our outlook for the long-term prospects of the company, including our performance against our business plan, revenue growth in certain of our market segments, our continued investment into R&D, expected revenue growth, customers' acceptance of our new product offerings, the prospects of our new product development, and our expectations regarding market and industry segment trends and prospects, (iii) our ability to penetrate new markets and expand our market share, (iv) the seasonality of our business, (v) our ability to reduce our expenses,and (vi) statements of the assumptions underlying or relating to any statement described in (i), (ii), (iii), (iv), or (v). These forward-looking statements are not historical facts or guarantees of future performance or events, are based on current expectations, estimates, beliefs, assumptions, goals, and objectives, and involve significant known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from the results expressed by these statements. Readers of this press release and listeners to the accompanying conference call are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. Factors that could cause actual results to differ include, but are not limited to, our ability to attract new customers and retain existing customers; acceptance of, or demand for, MPSs products, in particular the new products launched recently, being different than expected; our ability to efficiently and effectively develop new products and receive a return on our R&D expense investment; our ability to increase market share in our targeted markets; our ability to meet customer demand for our products due to constraints on our third-party suppliers ability to manufacture sufficient quantities of our products or otherwise; competition generally and the increasingly competitive nature of our industry; any market disruptions or interruptions in MPSs schedule of new product development releases; adverse changes in production and testing efficiency of our products; our ability to manage our inventory levels; our ability to effectively manage our growth and attract and retain qualified personnel; the effect of export controls, trade and economic sanctions regulations and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign markets, particularly in China;our ability to obtain governmental licenses and approvals for international trading activities or technology transfers, including export licenses; adverse changes in laws and government regulations such as tariffs on imports of foreign goods, export regulations and export classifications, including in foreign countries where MPS has offices or operations; adverse events arising from orders of governmental entities, including such orders that impact our customers, and adoptionof new or amended accounting standards; the effect of epidemics and pandemics, such as the COVID-19 outbreak first identified in December 2019, on the global economy and on our business; adequate supply of our products from our third-party manufacturing partners; the risks, uncertainties and costs of litigation in which we are involved; the outcome of any upcoming trials, hearings, motions and appeals; the adverse impact on MPSs financial performance if its tax and litigation provisions are inadequate; adverse changes or developments in the semiconductor industry generally, which is cyclical in nature, and our ability to adjust our operations to address such changes or developments; difficulty in predicting or budgeting for future customer demand and channel inventories, expenses and financial contingencies(including as a result of the COVID-19 pandemic); our ability to realize the anticipated benefits of companies and products that we acquire, and our ability to effectively and efficiently integrate these acquired companies and products into our operations; the ongoing consolidation of companies in the semiconductor industry; and other important risk factors identified in MPSsSecurities and Exchange Commission(SEC) filings, including, but not limited to, our annual report on Form 10-K filed with theSEConFebruary 28, 2020 and our quarterly report on Form 10-Q filed with the SEC on November 6, 2020. The forward-looking statements in this press release and statements made during the accompanying teleconference represent MPSs projections and current expectations, as of the date hereof, not predictions of actual performance. MPS assumes no obligation to update the information in this press release or in the accompanying conference call.

AboutMonolithic Power SystemsMonolithic Power Systems, Inc.(MPS) provides small, highly energy efficient, easy-to-use power solutions for systems found in industrial applications, telecom infrastructures, cloud computing, automotive, and consumer applications. MPS' mission is toreduce total energy consumption in its customers' systems with green, practical, compact solutions. The company was founded byMichael Hsingin 1997 and is based in the United States.MPS can be contacted through its website at www.monolithicpower.comor its support offices around the world.

Monolithic Power Systems, MPS, and the MPS logo are registered trademarks of Monolithic Power Systems, Inc. in the U.S. and trademarked in certain other countries.

Contact:Bernie BlegenChief Financial OfficerMonolithic Power Systems, Inc.408-826-0777investors@monolithicpower.com

Monolithic Power Systems, Inc.Condensed Consolidated Balance Sheets(Unaudited, in thousands, except par value)

December 31, 2020 2019 ASSETS Current assets: Cash and cash equivalents $ 334,944 $ 172,960 Short-term investments 260,169 282,437 Accounts receivable, net 66,843 52,704 Inventories 157,062 127,500 Other current assets 22,980 19,605 Total current assets 841,998 655,206 Property and equipment, net 281,528 228,315 Goodwill 6,571 6,571 Deferred tax assets, net 18,556 17,193 Other long-term assets 59,838 49,090 Total assets $ 1,208,491 $ 956,375 LIABILITIES AND STOCKHOLDERS? EQUITY Current liabilities: Accounts payable $ 38,169 $ 27,271 Accrued compensation and related benefits 45,840 26,164 Other accrued liabilities 62,960 44,790 Total current liabilities 146,969 98,225 Income tax liabilities 37,062 37,596 Other long-term liabilities 57,873 47,063 Total liabilities 241,904 182,884 Commitments and contingencies Stockholders? equity: Common stock and additional paid-in capital: $0.001par value; shares authorized: 150,000; shares 657,701 549,517 issued and outstanding: 45,267 and 43,616,respectivelyRetained earnings 298,746 229,450 Accumulated other comprehensive income (loss) 10,140 (5,476 )Total stockholders? equity 966,587 773,491 Total liabilities and stockholders? equity $ 1,208,491 $ 956,375

Monolithic Power Systems, Inc.Condensed Consolidated Statements of Operations(Unaudited, in thousands, except per share amounts)

Three Months Ended Year Ended December 31, December 31, 2020 2019 2020 2019Revenue $ 233,043 $ 166,738 $ 844,452 $ 627,921Cost of revenue 104,169 74,802 378,498 281,596Gross profit 128,874 91,936 465,954 346,325Operating expenses: Research and development 42,252 27,011 137,598 107,757Selling, general and 45,120 33,240 161,670 133,542administrativeLitigation expense 1,539 991 7,804 2,464Total operating expenses 88,911 61,242 307,072 243,763Income from operations 39,963 30,694 158,882 102,562Other income, net 4,480 2,731 10,460 10,558Income before income 44,443 33,425 169,342 113,120taxesIncome tax expense 1,556 989 4,967 4,281Net income $ 42,887 $ 32,436 $ 164,375 $ 108,839 Net income per share: Basic $ 0.95 $ 0.75 $ 3.67 $ 2.52Diluted $ 0.90 $ 0.70 $ 3.50 $ 2.38Weighted-average shares outstanding:Basic 45,148 43,496 44,840 43,165Diluted 47,600 46,503 47,014 45,763

SUPPLEMENTAL FINANCIAL INFORMATIONSTOCK-BASED COMPENSATION EXPENSE(Unaudited, in thousands)

Three Months Ended Year Ended December December 31, 31, 2020 2019 2020 2019Cost of revenue $ 686 $ 574 $ 2,592 $ 2,409Research and development 5,367 4,784 20,033 19,584Selling, general and 16,917 13,322 62,926 56,706administrativeTotal stock-based $ 22,970 $ 18,680 $ 85,551 $ 78,699compensation expense

RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME(Unaudited, in thousands, except per share amounts)

Three Months Ended Year Ended December 31, December 31, 2020 2019 2020 2019 Net income $ 42,887 $ 32,436 $ 164,375 $ 108,839 Adjustments toreconcile net income to non-GAAPnet income:Stock-basedcompensation 22,970 18,680 85,551 78,699 expenseAmortization ofacquisition-related - - - 110 intangible assetsDeferredcompensation plan 156 235 1,057 189 expenseTax effect (3,512 ) (2,937 ) (14,229 ) (10,128 )Non-GAAP net income $ 62,501 $ 48,414 $ 236,754 $ 177,709 Non-GAAP net income per share:Basic $ 1.38 $ 1.11 $ 5.28 $ 4.12 Diluted $ 1.31 $ 1.04 $ 5.04 $ 3.88 Shares used in thecalculation of non-GAAP net incomeper share:Basic 45,148 43,496 44,840 43,165 Diluted 47,600 46,503 47,014 45,763

RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN(Unaudited, in thousands)

Three Months Ended Year Ended December 31, December 31, 2020 2019 2020 2019 Gross profit $ 128,874 $ 91,936 $ 465,954 $ 346,325 Gross margin 55.3 % 55.1 % 55.2 % 55.2 % Adjustments toreconcile gross profit to non-GAAPgross profit:Stock-basedcompensation 686 574 2,592 2,409 expenseDeferredcompensation plan 281 29 931 54 expenseAmortization ofacquisition-related - - - 110 intangible assetsNon-GAAP gross $ 129,841 $ 92,539 $ 469,477 $ 348,898 profitNon-GAAP gross 55.7 % 55.5 % 55.6 % 55.6 %margin

RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES(Unaudited, in thousands)

Three Months Ended December Year Ended December 31, 31, 2020 2019 2020 2019 Totaloperating $ 88,911 $ 61,242 $ 307,072 $ 243,763 expenses Adjustmentsto reconciletotaloperatingexpenses to non-GAAPtotaloperatingexpenses:Stock-basedcompensation (22,284 ) (18,106 ) (82,959 ) (76,290 )expenseDeferredcompensation (3,047 ) (1,383 ) (4,719 ) (3,941 )plan expenseNon-GAAPoperating $ 63,580 $ 41,753 $ 219,394 $ 163,532 expenses

RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME(Unaudited, in thousands)

Three Months Ended Year Ended December 31, December 31, 2020 2019 2020 2019 Total operating $ 39,963 $ 30,694 $ 158,882 $ 102,562 income Adjustments toreconcile totaloperating income to non-GAAP totaloperating income:Stock-basedcompensation 22,970 18,680 85,551 78,699 expenseAmortization ofacquisition-related - - - 110 intangible assetsDeferredcompensation plan 3,328 1,412 5,650 3,995 expenseNon-GAAP operating $ 66,261 $ 50,786 $ 250,083 $ 185,366 income

RECONCILIATION OF OTHER INCOME, NET, TO NON-GAAP OTHER INCOME, NET(Unaudited, in thousands)

Three Months Ended Year Ended December 31, December 31, 2020 2019 2020 2019 Total other $ 4,480 $ 2,731 $ 10,460 $ 10,558 income, net Adjustments toreconcile otherincome, net to non-GAAP otherincome, net:Deferredcompensation (3,172 ) (1,176 ) (4,593 ) (3,806 )plan incomeNon-GAAP other $ 1,308 $ 1,555 $ 5,867 $ 6,752 income, net

RECONCILIATION OF INCOME BEFORE INCOME TAXES TO NON-GAAP INCOME BEFORE INCOME TAXES(Unaudited, in thousands)

Three Months Ended Year Ended December 31, December 31, 2020 2019 2020 2019 Total income before $ 44,443 $ 33,425 $ 169,342 $ 113,120 income taxes Adjustments toreconcile incomebefore income taxes to non-GAAP incomebefore incometaxes:Stock-basedcompensation 22,970 18,680 85,551 78,699 expenseAmortization ofacquisition-related - - - 110 intangible assetsDeferredcompensation plan 156 235 1,057 189 expenseNon-GAAP income $ 67,569 $ 52,340 $ 255,950 $ 192,118 before income taxes

2021 FIRST QUARTER OUTLOOKRECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN(Unaudited)

Three Months Ending March 31, 2021 Low High Gross margin 55.1 % 55.7 %Adjustments to reconcile gross margin to non-GAAP gross margin:Stock-based compensation expense 0.3 % 0.3 %Non-GAAP gross margin 55.4 % 56.0 %

RECONCILIATION OF R&D AND SG&A EXPENSES TO NON-GAAP R&D AND SG&A EXPENSES(Unaudited, in thousands)

Three Months Ending March 31, 2021 Low High R&D and SG&A expense $ 89,000 $ 93,000 Adjustments to reconcile R&D and SG&A expense to non-GAAP R&D and SG&A expense:Stock-based compensation expense (26,200 ) (28,200 )Non-GAAP R&D and SG&A expense $ 62,800 $ 64,800