GlobeNewswire Inc | Jul 27, 2021 04:07PM EDT

July 27, 2021

KIRKLAND, Wash., July 27, 2021 (GLOBE NEWSWIRE) -- Monolithic Power Systems, Inc. (MPS) (Nasdaq: MPWR), a global company that provides high-performance, semiconductor-based power electronics solutions, today announced financial results for the quarter ended June 30, 2021.

Revenue was $293.3million for the quarter ended June 30, 2021, a 15.3%? increase from $254.5 million for the quarter ended March 31, 2021 and a 57.5% increase from $186.2 million for the quarter ended June 30, 2020. ? GAAP gross margin was 56.0% for the quarter ended June 30, 2021, compared with 55.1% for the quarter ended June 30, 2020. Non-GAAP (1) gross marginwas 56.3% for the quarter ended June 30, 2021, excluding the impact of $0.9 million for stock-based compensation expense and? $0.1 million for deferred compensation plan expense, compared with 55.7% for the quarter ended June 30, 2020, excluding the impact of $0.6 million for stock-based compensation expense and $0.5 million for deferred compensation plan expense. ? GAAP operating expenses were $103.6million for the quarter ended June 30, 2021, compared with $74.6 million for the quarter ended June 30, 2020. Non-GAAP (1) operating expenses were $70.3million for the quarter ended June 30, 2021, excluding $31.2 million for stock-based compensation expense and? $2.0 million for deferred compensation plan expense, compared with $50.7 million for the quarter ended June 30, 2020, excluding $20.4 million for stock-based compensation expense and $3.6 million for deferred compensation plan expense. ? GAAP operating income was $60.6 million for the quarter ended June 30, 2021, compared with $28.0 million for the quarter ended June 30, 2020. Non-GAAP (1) operating income was $94.9 million for the quarter ended June 30, 2021, excluding $32.1 million for stock-based compensation expense and? $2.2 million for deferred compensation plan expense, compared with $53.0 million for the quarter ended June 30, 2020, excluding $21.0 million for stock-based compensation expense and $4.0 million for deferred compensation plan expense. ? GAAP other income, net, was $3.0 million for the quarter ended June 30, 2021, compared with$5.2 million for the quarter ended June 30, 2020. Non-GAAP (1) other income, net, was $1.2 million for the quarter ended June? 30, 2021, excluding $1.9 million for deferred compensation plan income, compared with $1.6 million for the quarter ended June 30, 2020, excluding $3.6 million for deferred compensation plan income. ? GAAP income before income taxes was $63.7 million for the quarter ended June 30, 2021, compared with $33.2 million for the quarter ended June 30, 2020. Non-GAAP (1) income before income taxes was $96.1 million for the quarter ended June 30, 2021, excluding $32.1 million for stock-based compensation? expense and $0.3 million for deferred compensation plan expense, compared with $54.7 million for the quarter ended June 30, 2020, excluding $21.0 million for stock-based compensation expense, and $0.5 million for deferred compensation plan expense. GAAP net income was $55.2 million and $1.16 per diluted share for the quarter? ended June 30, 2021. Comparatively, GAAP net income was $30.2 million and $0.64 per diluted share for the quarter ended June 30, 2020. Non-GAAP (1) net income was $86.5 million and$1.81 per diluted share for the quarter ended June 30, 2021, excluding stock-based compensation expense, net? deferred compensation plan expense and related tax effects, compared with non-GAAP net income of $50.6 million and $1.08 per diluted share for the quarter ended June 30, 2020, excluding stock-based compensation expense, net deferred compensation plan expense and related tax effects.

The financial results for the six months ended June 30, 2021 are as follows:

? Revenue was $547.8 million for the six months ended June 30, 2021, a 55.6% increase from $352.0 million for the six months ended June 30, 2020. ? GAAP gross margin was 55.7% for the six months ended June 30, 2021, compared with 55.1% for the six months ended June 30, 2020. Non-GAAP (1) gross margin was 56.1% for the six months ended June 30, 2021, excluding the impact of $1.7 million for stock-based compensation expense and? $0.3 million for deferred compensation plan expense, compared with 55.6% for the six months ended June 30, 2020, excluding the impact of $1.2 million for stock-based compensation expense and $0.4 million for the deferred compensation plan expense. ? GAAP operating expenses were $198.6 million for the six months ended June 30, 2021, compared with $135.1 million for the six months ended June 30, 2020. Non-GAAP (1) operating expenses were $136.6 million for the six months ended June 30, 2021, excluding $59.0 million for stock-based compensation expense? and $3.0 million for deferred compensation plan expense, compared with $96.7 million for the six months ended June 30, 2020, excluding $38.4 million for stock-based compensation expense. ? GAAP operating income was $106.7 million for the six months ended June 30, 2021, compared with $58.9 million for the six months ended June 30, 2020. Non-GAAP (1) operating income was $170.7 million for the six months ended June 30, 2021, excluding $60.7 million for stock-based compensation expense? and $3.3 million for deferred compensation plan expense, compared with $98.9 million for the six months ended June 30, 2020, excluding $39.6 million for stock-based compensation expense and $0.4 million for deferred compensation plan expense. ? GAAP other income, net, was $5.6 million for the six months ended June 30, 2021, compared with $3.5 million for the six months ended June 30, 2020. Non-GAAP (1) other income, net was $2.6 million for the six months ended June? 30, 2021, excluding $3.0 million for deferred compensation plan income, compared with $3.7 million for the six months ended June 30, 2020, excluding $0.2 million for deferred compensation plan expense. GAAP income before income taxes was $112.3 million for the six months ended? June 30, 2021, compared with $62.4 million for the six months ended June 30, 2020. Non-GAAP (1) income before income taxes was $173.3 million for the six months ended June 30, 2021, excluding $60.7 million for stock-based compensation? expense and $0.2 million for deferred compensation plan expense, compared with $102.6 million for the six months ended June 30, 2020, excluding $39.6 million for stock-based compensation expense, and $0.6 million for deferred compensation plan expense. GAAP net income was $100.6 million and $2.11 per diluted share for the six? months ended June 30, 2021. Comparatively, GAAP net income was $65.9 million and $1.41 per diluted share for the six months ended June 30, 2020. Non-GAAP (1) net income was $155.9 million and$3.27 per diluted share for the six months ended June 30, 2021, excluding stock-based compensation expense, net deferred compensation plan expense and related tax effects,? compared with non-GAAP net income of $94.9 million and$2.03 per diluted share for the six months ended June 30, 2020, excluding stock-based compensation expense, 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 June 30, Six Months Ended June 30, End Market 2021 2020 2021 2020 Computing and $ 87,723 $ 64,087 $ 155,218 $ 116,044 storageAutomotive 48,699 17,779 93,566 41,091 Industrial 43,323 26,592 83,111 51,829 Communications 37,459 30,095 73,528 57,965 Consumer 76,113 47,656 142,349 85,058 Total $ 293,317 $ 186,209 $ 547,772 $ 351,987

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

Three Months Ended June 30, Six Months Ended June 30, Product Family 2021 2020 2021 2020 DC to DC $ 278,808 $ 176,113 $ 520,237 $ 332,988 Lighting 14,509 10,096 27,535 18,999 ControlTotal $ 293,317 $ 186,209 $ 547,772 $ 351,987

With our planned capacity expansion in place and as we release more parts into production, we are well positioned to accelerate our future revenue growth, said Michael Hsing, CEO and founder of MPS.

Business Outlook

The following are MPSs financial targets for the third quarter ending September 30, 2021:

? Revenue in the range of $309million to $321million. Gross margin, on both a GAAP and non-GAAP (1) basis, is expected to include a one-time benefit from a $4 million litigation settlement. Including this? one-time benefit, GAAP gross margin will be in the range of 57.3% to 57.9% and non-GAAP (1) gross margin will be in the range of 57.6% to 58.2%. Excluding this one-time item, non-GAAP (1) gross margin will be in the range of 56.3% to 56.9%. GAAP research and development (?R&D?) and selling, general and administrative (?SG&A?) expenses between $104.1million and $108.1million. Non-GAAP (1) R&D? and SG&A expenses between $73.9million and $75.9million, which excludes estimatedstock-based compensation expenses in the range of $30.2million to $32.2million. ? Total stock-based compensation expense of $31.2million to $33.2million. ? Litigation expenses ranging between $2.3million and $2.7million. ? Interest income of $1.0million to $1.4million. ? Fully diluted shares outstanding between 47.4 million and 48.4 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, deferred compensation plan income/expense and related tax effects. Non-GAAP gross margin excludes the effect of stock-based compensation expense 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 and deferred compensation plan income/expense. Non-GAAP income before taxes excludes the effect of stock-based compensation expenseand deferred compensation plan income/expense. Projected non-GAAP gross margin excludes the effect of stock-based compensation expense and a one-time benefit from a litigation settlement. 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's 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, on July 27, 2021. You can access the webinarat: https://mpsic.zoom.us/j/93453171033. 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 theSEConMarch 1, 2021 and our quarterly report on Form 10-Q filed with the SEC on May 10, 2021. 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) is a global company that provides high-performance, semiconductor-based power electronics solutions. MPSs mission is to reduce energy and material consumption to improve all aspects of quality of life. Founded in 1997 by Michael Hsing, MPS has three core strengths: deep system-level knowledge, strong semiconductor design expertise, and innovative proprietary semiconductor process and system integration technologies. These combined advantages enable MPS to provide customers with reliable, compact and monolithic solutions that offer highly energy-efficient and cost-effective products, as well as providing a consistent return on investment to our stockholders. MPS can be contacted through its website at www.monolithicpower.com or 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)

June 30, December 31, 2021 2020 ASSETS Current assets: Cash and cash equivalents $ 220,210 $ 334,944 Short-term investments 450,078 260,169 Accounts receivable, net 77,553 66,843 Inventories 177,322 157,062 Other current assets 24,917 22,980 Total current assets 950,080 841,998 Property and equipment, net 332,093 281,528 Goodwill 6,571 6,571 Deferred tax assets, net 17,699 18,556 Other long-term assets 66,548 59,838 Total assets $ 1,372,991 $ 1,208,491 LIABILITIES AND STOCKHOLDERS? EQUITY Current liabilities: Accounts payable $ 58,882 $ 38,169 Accrued compensation and related benefits 55,279 45,840 Other accrued liabilities 68,570 62,960 Total current liabilities 182,731 146,969 Income tax liabilities 38,498 37,062 Other long-term liabilities 64,407 57,873 Total liabilities 285,636 241,904 Commitments and contingencies Stockholders? equity: Common stock and additional paid-in capital:$0.001 par value; shares authorized: 150,000; 733,672 657,701 shares issued and outstanding: 45,917 and45,267, respectivelyRetained earnings 341,382 298,746 Accumulated other comprehensive income 12,301 10,140 Total stockholders? equity 1,087,355 966,587 Total liabilities and stockholders? equity $ 1,372,991 $ 1,208,491

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

Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Revenue $ 293,317 $ 186,209 $ 547,772 $ 351,987 Cost of revenue 129,102 83,616 242,498 157,947 Gross profit 164,215 102,593 305,274 194,040 Operating expenses:Research and 44,753 31,673 86,645 57,629 developmentSelling, generaland 57,238 40,883 108,691 73,047 administrativeLitigation 1,596 2,082 3,224 4,423 expenseTotal operating 103,587 74,638 198,560 135,099 expensesIncome from 60,628 27,955 106,714 58,941 operationsOther income, 3,031 5,200 5,618 3,486 netIncome before 63,659 33,155 112,332 62,427 income taxesIncome taxexpense 8,490 2,988 11,750 (3,495 )(benefit)Net income $ 55,169 $ 30,167 $ 100,582 $ 65,922 Net income per share:Basic $ 1.20 $ 0.67 $ 2.20 $ 1.48 Diluted $ 1.16 $ 0.64 $ 2.11 $ 1.41 Weighted-averageshares outstanding:Basic 45,796 44,785 45,647 44,620 Diluted 47,754 46,831 47,732 46,750

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

Three Months Ended June Six Months Ended June 30, 30, 2021 2020 2021 2020 Cost of revenue $ 885 $ 642 $ 1,700 $ 1,199 Research and 6,752 4,962 12,918 9,332 developmentSelling,general and 24,489 15,440 46,092 29,075 administrativeTotalstock-based $ 32,126 $ 21,044 $ 60,710 $ 39,606 compensationexpense

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

Three Months Ended June Six Months Ended June 30, 30, 2021 2020 2021 2020 Net income $ 55,169 $ 30,167 $ 100,582 $ 65,922 Adjustmentsto reconcilenet income to non-GAAP netincome:Stock-basedcompensation 32,126 21,044 60,710 39,606 expenseDeferredcompensation 290 460 233 554 plan expenseTax effect (1,117 ) (1,111 ) (5,578 ) (11,189 )Non-GAAP net $ 86,468 $ 50,560 $ 155,947 $ 94,893 income Non-GAAP netincome per share:Basic $ 1.89 $ 1.13 $ 3.42 $ 2.13 Diluted $ 1.81 $ 1.08 $ 3.27 $ 2.03 Shares usedin thecalculation of non-GAAPnet incomeper share:Basic 45,796 44,785 45,647 44,620 Diluted 47,754 46,831 47,732 46,750

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

Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Gross profit $ 164,215 $ 102,593 $ 305,274 $ 194,040 Gross margin 56.0 % 55.1 % 55.7 % 55.1 % Adjustmentsto reconcilegross profit to non-GAAPgrossprofit:Stock-basedcompensation 885 642 1,700 1,199 expenseDeferredcompensation 130 460 291 406 plan expenseNon-GAAP $ 165,230 $ 103,695 $ 307,265 $ 195,645 gross profitNon-GAAP 56.3 % 55.7 % 56.1 % 55.6 %gross margin

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

Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Totaloperating $ 103,587 $ 74,638 $ 198,560 $ 135,099 expenses Adjustmentsto reconciletotaloperatingexpenses to non-GAAPtotaloperatingexpenses:Stock-basedcompensation (31,241 ) (20,402 ) (59,010 ) (38,407 )expenseDeferredcompensation (2,022 ) (3,572 ) (2,981 ) 30 plan income(expense)Non-GAAPoperating $ 70,324 $ 50,664 $ 136,569 $ 96,722 expenses

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

Three Months Ended June Six Months Ended June 30, 30, 2021 2020 2021 2020 Totaloperating $ 60,628 $ 27,955 $ 106,714 $ 58,941 income Adjustments toreconciletotaloperating income tonon-GAAP totaloperatingincome:Stock-basedcompensation 32,126 21,044 60,710 39,606 expenseDeferredcompensation 2,152 4,032 3,272 377 plan expenseNon-GAAPoperating $ 94,906 $ 53,031 $ 170,696 $ 98,924 income

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

Three Months Ended June Six Months Ended June 30, 30, 2021 2020 2021 2020 Total other $ 3,031 $ 5,200 $ 5,618 $ 3,486 income, net Adjustments toreconcile otherincome, net to non-GAAP otherincome, net:Deferredcompensation (1,862 ) (3,572 ) (3,039 ) 177 plan expense(income)Non-GAAP other $ 1,169 $ 1,628 $ 2,579 $ 3,663 income, net

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

Three Months Ended June Six Months Ended June 30, 30, 2021 2020 2021 2020 Total incomebefore income $ 63,659 $ 33,155 $ 112,332 $ 62,427 taxes Adjustmentsto reconcileincome beforeincome taxes to non-GAAPincome beforeincome taxes:Stock-basedcompensation 32,126 21,044 60,710 39,606 expenseDeferredcompensation 290 460 233 554 plan expenseNon-GAAPincome before $ 96,075 $ 54,659 $ 173,275 $ 102,587 income taxes

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

Three Months Ending September 30, 2021 Low High Gross margin 57.3 % 57.9 %Adjustment to reconcile gross margin to non-GAAP gross margin:Stock-based compensation expense 0.3 % 0.3 %Non-GAAP gross margin 57.6 % 58.2 %Additional adjustment: One-time benefit from a litigation settlement (1.3 )% (1.3 )%Non-GAAP gross margin 56.3 % 56.9 %

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

Three Months Ending September 30, 2021 Low High R&D and SG&A expense $ 104,100 $ 108,100 Adjustments to reconcile R&D and SG&A expense to non-GAAP R&D and SG&A expense:Stock-based compensation expense (30,200 ) (32,200 )Non-GAAP R&D and SG&A expense $ 73,900 $ 75,900