10-QPeriod: Q1 FY2017

MONOLITHIC POWER SYSTEMS INC Quarterly Report for Q1 Ended Mar 31, 2017

Filed May 5, 2017For Securities:MPWR

Summary

Monolithic Power Systems, Inc. (MPWR) reported solid financial results for the first quarter ended March 31, 2017, showcasing significant top-line growth and improved profitability. Revenue increased by 18.8% year-over-year, driven by strong performance across its industrial, computing and storage, and consumer segments. This growth was supported by an increase in unit shipments and average selling prices. The company also demonstrated an improvement in gross margin, reaching 54.6%, up from 53.9% in the prior year's quarter, reflecting a favorable product mix and better cost management. Net income also saw a substantial increase, rising to $14.5 million from $10.6 million in the first quarter of 2016, translating to diluted earnings per share of $0.33. The company maintained its quarterly cash dividend and demonstrated healthy working capital. Overall, MPWR presented a positive financial picture with robust revenue growth and enhanced profitability.

Financial Highlights

48 data points
Beta

Revenue

$100.36M

54.6% Gross Margin

Net Income

$14.48M

14.4% Net Margin

EPS (Diluted)

$0.33

Total Assets

$536.80M

Cash & Equivalents

$76.94M

Free Cash Flow

$18.47M

Financial Statements
Beta
Revenue$100.36M
Cost of Revenue$45.52M
Gross Profit$54.84M
SG&A Expenses$22.09M
Operating Expenses$41.27M
Operating Income$13.57M
Net Income$14.48M
EPS (Basic)$0.35
EPS (Diluted)$0.33
Shares Outstanding (Basic)41.05M
Shares Outstanding (Diluted)43.27M

Key Highlights

  • 1Revenue increased 18.8% year-over-year to $100.4 million, driven by strong demand in industrial, computing and storage, and consumer segments.
  • 2Gross margin improved to 54.6% from 53.9% year-over-year, indicating better pricing power and cost efficiencies.
  • 3Net income grew significantly to $14.5 million, up from $10.6 million in the prior year's quarter.
  • 4Diluted Earnings Per Share (EPS) rose to $0.33, compared to $0.25 in Q1 2016.
  • 5Operating expenses as a percentage of revenue decreased in R&D (18.8% vs. 20.5%) but increased slightly in SG&A (22.0% vs. 21.0%).
  • 6The company maintained its quarterly cash dividend of $0.20 per share.
  • 7Cash and cash equivalents decreased to $76.8 million from $112.7 million, while short-term investments increased to $201.8 million from $155.5 million, indicating strategic deployment of capital.

Frequently Asked Questions

Revenue growth was primarily driven by higher sales in the consumer, industrial, and computing and storage segments. This was a result of increased unit shipments due to higher market demand and design wins with new customers, coupled with an increase in average selling prices.

The company's gross margin improved to 54.6% in the first quarter of 2017, up from 53.9% in the same period of 2016. This improvement was mainly due to increased sales of higher margin products and lower direct and overhead costs as a percentage of revenue.

Monolithic Power Systems, Inc. continued its quarterly cash dividend program, declaring a dividend of $0.20 per share. The company also has an active stock repurchase program, with $50 million available for future repurchases as of March 31, 2017.

While cash and cash equivalents decreased, the company increased its holdings in short-term investments, suggesting a strategic deployment of capital. The majority of cash and short-term investments were held by international subsidiaries, with the intention to indefinitely reinvest these funds outside the U.S.