10-QPeriod: Q3 FY2012

MONOLITHIC POWER SYSTEMS INC Quarterly Report for Q3 Ended Sep 30, 2012

Filed November 5, 2012For Securities:MPWR

Summary

Monolithic Power Systems, Inc. (MPWR) reported third quarter and year-to-date results for the period ending September 30, 2012. The company saw a revenue increase of 6.7% to $56.5 million for the third quarter compared to the same period last year, driven primarily by strong demand for its DC to DC converters. For the nine-month period, revenue grew 11.1% to $165.6 million. Gross margins remained healthy, increasing to 53.1% in Q3 2012 from 52.5% in Q3 2011, and improved year-to-date to 52.9% from 51.4%. Operating expenses, while increasing in absolute terms due to R&D and SG&A investments, remained relatively stable as a percentage of revenue year-over-year. The company also reported a significant decrease in litigation expenses, largely due to settlement payments received. MPWR ended the quarter with a solid cash position, though cash and cash equivalents decreased from the prior year-end due to investments in short-term securities and building improvements.

Financial Highlights

42 data points
Beta

Revenue

$56.51M

53.1% Gross Margin

Net Income

$5.92M

10.5% Net Margin

EPS (Diluted)

$0.16

Total Assets

$315.27M

Cash & Equivalents

$78.25M

Free Cash Flow

-$4.39M

Financial Statements
Beta
Revenue$56.51M
Cost of Revenue$26.50M
Gross Profit$30.01M
SG&A Expenses$11.96M
Operating Expenses$23.69M
Operating Income$6.32M
Net Income$5.92M
EPS (Basic)$0.17
EPS (Diluted)$0.16
Shares Outstanding (Basic)35.15M
Shares Outstanding (Diluted)36.44M

Key Highlights

  • 1Revenue increased by 6.7% to $56.5 million in Q3 2012 and by 11.1% to $165.6 million for the first nine months of 2012, year-over-year.
  • 2DC to DC converters remain the primary revenue driver, showing a 10.6% increase in Q3 and a 13.2% increase year-to-date.
  • 3Gross margin improved year-over-year, reaching 53.1% in Q3 2012 and 52.9% for the nine-month period, indicating effective cost management and favorable product mix.
  • 4Operating expenses as a percentage of revenue remained stable, with R&D and SG&A investments supporting future growth.
  • 5Litigation expenses significantly decreased, partly due to $0.9 million in settlement payments received year-to-date.
  • 6The company maintained a strong liquidity position with $185.5 million in cash, cash equivalents, and short-term investments as of September 30, 2012.
  • 7Inventories increased by 62% year-over-year to $32.6 million, potentially indicating anticipation of increased future demand or a buildup for new product launches.

Frequently Asked Questions

The primary driver of revenue growth was increased demand for Monolithic Power Systems' DC to DC converters, which saw a 10.6% increase in sales for the third quarter compared to the same period in 2011.

The company's gross margin showed improvement, reaching 53.1% in the third quarter of 2012, up from 52.5% in the third quarter of 2011. Year-to-date, the gross margin was 52.9% compared to 51.4% in the prior year.

As of September 30, 2012, MPWR held $78.2 million in cash and cash equivalents and $107.3 million in short-term investments, totaling $185.5 million. A portion of cash and equivalents ($18.1 million decrease for the nine months) was used for investments in short-term securities and building improvements at their new headquarters.

While the company is involved in ongoing litigation, litigation expenses have significantly decreased. This reduction is partly due to receiving $0.9 million in settlement payments year-to-date related to a patent infringement case. The company is also pursuing appeals in other legal matters, such as the O2 Micro case.