10-QPeriod: Q1 FY2013

MONOLITHIC POWER SYSTEMS INC Quarterly Report for Q1 Ended Mar 31, 2013

Filed May 2, 2013For Securities:MPWR

Summary

Monolithic Power Systems Inc. (MPWR) reported its first quarter results for 2013, showing modest revenue growth of 2% year-over-year, reaching $51.5 million. This growth was primarily driven by a 5% increase in DC to DC converters, which constitute the majority of their sales, partially offset by an 18% decline in lighting control products. The company improved its gross margin to 53.2% from 52.3% in the prior year's quarter, driven by a better product mix. Operating expenses increased, particularly in Research & Development (R&D) and Selling, General & Administrative (SG&A), largely due to higher stock-based compensation expenses. Net income decreased to $2.5 million from $3.0 million in the first quarter of 2012, resulting in basic and diluted EPS of $0.07. The company's balance sheet remains strong, with cash and cash equivalents increasing to $93.3 million, and working capital growing to $206.6 million, indicating a healthy liquidity position.

Financial Highlights

41 data points
Beta

Revenue

$51.47M

53.2% Gross Margin

Net Income

$2.50M

4.9% Net Margin

EPS (Diluted)

$0.07

Total Assets

$310.79M

Cash & Equivalents

$93.29M

Free Cash Flow

$3.27M

Financial Statements
Beta
Revenue$51.47M
Cost of Revenue$24.09M
Gross Profit$27.39M
SG&A Expenses$13.26M
Operating Expenses$25.08M
Operating Income$2.31M
Net Income$2.50M
EPS (Basic)$0.07
EPS (Diluted)$0.07
Shares Outstanding (Basic)36.26M
Shares Outstanding (Diluted)37.71M

Key Highlights

  • 1Revenue increased by 2.0% year-over-year to $51.5 million, primarily driven by DC to DC converters (+5%).
  • 2Gross margin improved to 53.2% from 52.3% in the prior year's quarter, attributed to a more favorable product mix.
  • 3Net income decreased by 16.5% year-over-year to $2.5 million, resulting in diluted EPS of $0.07.
  • 4Operating expenses, particularly R&D and SG&A, increased due to higher stock-based compensation expenses.
  • 5The company's cash and cash equivalents increased to $93.3 million from $75.1 million at the end of the prior year.
  • 6Working capital increased to $206.6 million, indicating strong liquidity.
  • 7The company reported a litigation benefit of $0.3 million due to a settlement with Silergy, compared to an expense in the prior year's quarter.

Frequently Asked Questions

The primary driver of revenue growth was the strong performance of their DC to DC converter product family, which saw a 5% increase in revenue. This segment represents the largest portion of the company's sales.

Net income decreased primarily due to an increase in operating expenses, specifically in Research & Development (R&D) and Selling, General & Administrative (SG&A) costs. A significant portion of this increase was attributed to higher stock-based compensation expenses.

The company maintains a strong liquidity position. Cash and cash equivalents increased to $93.3 million from $75.1 million at the end of the previous year, and working capital grew to $206.6 million, indicating sufficient funds to meet short-term obligations.

In the first quarter of 2013, the company recorded a litigation benefit of $0.3 million due to a settlement with Silergy, which positively impacted the results compared to the litigation expense reported in the prior year's quarter. However, the company is still involved in other legal proceedings, including an appeal by O2 Micro concerning a prior patent litigation.