10-QPeriod: Q2 FY2014

MONOLITHIC POWER SYSTEMS INC Quarterly Report for Q2 Ended Jun 30, 2014

Filed July 29, 2014For Securities:MPWR

Summary

Monolithic Power Systems, Inc. (MPWR) reported solid revenue growth in its Form 10-Q filing for the period ending June 30, 2014. Revenue increased by 18.6% year-over-year for the quarter and 17.7% for the first six months, driven primarily by its DC to DC products. The company also demonstrated improved gross margins, rising from 53.6% to 54.2% year-over-year for the quarter, attributed to better absorption of manufacturing overhead. Financially, MPWR maintained a strong liquidity position with over $240 million in cash, cash equivalents, and short-term investments. The company initiated a quarterly dividend program in June 2014 and continued its stock repurchase program, repurchasing approximately $23.8 million in shares during the first six months. A significant positive development was the favorable resolution of the O2 Micro litigation, resulting in a $9.5 million benefit recorded in the first quarter. Investors should note the company's ongoing acquisition of Sensima Technology SA, which closed in July 2014, indicating a strategy for further growth and diversification.

Financial Highlights

44 data points
Beta

Revenue

$68.44M

54.2% Gross Margin

Net Income

$6.40M

9.3% Net Margin

EPS (Diluted)

$0.16

Total Assets

$386.65M

Cash & Equivalents

$107.86M

Free Cash Flow

$24.16M

Financial Statements
Beta
Revenue$68.44M
Cost of Revenue$31.34M
Gross Profit$37.10M
SG&A Expenses$16.85M
Operating Expenses$30.50M
Operating Income$6.60M
Net Income$6.40M
EPS (Basic)$0.17
EPS (Diluted)$0.16
Shares Outstanding (Basic)38.68M
Shares Outstanding (Diluted)39.61M

Key Highlights

  • 1Revenue increased by 18.6% year-over-year to $68.4 million for the three months ended June 30, 2014.
  • 2Gross margin improved to 54.2% for the quarter, up from 53.6% in the prior year period, due to manufacturing overhead absorption.
  • 3Net income for the quarter was $6.4 million ($0.16 per diluted share), a 16.5% increase from $5.5 million ($0.14 per diluted share) in the prior year.
  • 4The company received a $9.5 million benefit from the favorable resolution of the O2 Micro litigation in the first quarter.
  • 5MPWR initiated a quarterly dividend program, declaring its first dividend of $0.15 per share in June 2014.
  • 6Cash, cash equivalents, and short-term investments totaled $240.9 million as of June 30, 2014, providing strong liquidity.
  • 7The company completed the acquisition of Sensima Technology SA in July 2014, expanding its product portfolio.

Frequently Asked Questions

Revenue growth was primarily driven by higher sales of DC to DC products, which increased by 21.0% year-over-year, and to a lesser extent by lighting control products, which saw a 1.2% increase.

The company achieved a favorable resolution of the O2 Micro litigation in the first quarter of 2014, resulting in the release of a previously recorded liability and a net benefit of $9.5 million. This resolved a significant legal uncertainty.

In June 2014, MPWR initiated a quarterly dividend program, declaring its first dividend of $0.15 per share. The company also continued its stock repurchase program, repurchasing approximately $23.8 million of its common stock during the first six months of 2014, with $55.6 million remaining available under the program.

MPWR maintained a strong financial position with $107.9 million in cash and cash equivalents and $133.0 million in short-term investments as of June 30, 2014. Working capital was $264.3 million, indicating ample liquidity to fund operations and strategic initiatives.