Power Integrations, Inc. CAPEX surged on 193% and Revenue jumped on 16.1%
02/02/2021 • About Power Integrations, Inc. (
$POWI) • By InTwits
Power Integrations, Inc. reported 2020 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is quite volatile: 20.7% in 2020, 58.0% in 2019, 19.2% in 2018, 19.0% in 2017, 18.6% in 2016
- Power Integrations, Inc. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.4%. At the same time it's in pair with industry average of 7.3%
- CAPEX is quite volatile: $71m in 2020, $24m in 2019, $25m in 2018, $32m in 2017, $12m in 2016
- The company has business model with low profitability: ROIC is 9.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 16.1%. Revenue growth showed acceleration in 20Q4 - it increased 31.7% YoY. During 2016-2020 Revenue growth bottomed in 2018 at -3.7% and was accelerating since that time. Revenue growth was financed by EBITDA margin decline. EBITDA Margin dropped on 37.2 pp from 58.0% to 20.7% in 2020. During 2016-2020 EBITDA Margin topped in 2019 at 58.0%.
Gross Margin decreased slightly on 0.85 pp from 50.7% to 49.9% in 2020. During the last 5 years Gross Margin topped in 2018 at 51.6% and was declining since that time. SG&A as a % of Revenue decreased on 3.1 pp from 21.8% to 18.7% in 2020.
Net Income margin dropped on 31.4 pp from 46.0% to 14.6% in 2020.
Investments (CAPEX, working capital and M&A)
In 2020 the company had CAPEX/Revenue of 14.5%. Power Integrations, Inc.'s CAPEX/Revenue increased on 6.9 pp from 7.5% in 2017 to 14.5% in 2020. Average CAPEX/Revenue for the last three years was 8.7%. The company invested a big chunk of EBITDA (69.7%) to CAPEX to fuel its growth.
Return on investment
The company operates at low ROIC (9.1%) and ROE (9.3%). ROIC dropped on 25.5 pp from 34.7% to 9.1% in 2020. ROE dropped on 21.6 pp from 30.9% to 9.3% in 2020.
Leverage (Debt)
Company's Net Debt / EBITDA is -2.5x and Debt / EBITDA is 0.1x. Debt jumped on 11.6% while cash surged on 44.9%.
Power Integrations, Inc. has no short term refinancing risk: cash is higher than short term debt (9,652.3%).
Valuation and dividends
The company's trades at EV/EBITDA 50.5x and P/E 75.4x.
Management team
Balu Balakrishnan is a the company's CEO. Balu Balakrishnan has spent 19 years with the company. The company's CFO is Sandeep Nayyar. Sandeep Nayyar has 10 years tenure at the company.
Financial and operational results
FY ended 12/31/2020
Power Integrations, Inc. ($POWI) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 389.7 | 431.8 | 416.0 | 420.7 | 488.3 | 16.1% |
| Gross Profit | 192.2 | 213.7 | 214.8 | 213.4 | 243.6 | 14.1% |
| SG&A | 81.0 | 87.5 | 88.6 | 91.9 | 91.4 | -0.5% |
| EBITDA | 72.3 | 82.1 | 79.8 | 243.9 | 101.3 | -58.5% |
| EBIT | 48.9 | 57.6 | 55.6 | | | |
| Tax | 1.1 | 32.7 | -10.2 | | | |
| Net Income | 48.9 | 27.6 | 70.0 | 193.5 | 71.2 | -63.2% |
| Stock Based Compensation | 20.9 | 24.7 | 21.6 | | | |
Balance Sheet
|
|---|
| Cash | 62.1 | 93.7 | 134.1 | 178.7 | 258.9 | 44.9% |
| Accounts Receivable | 6.5 | 16.8 | 11.1 | | | |
| Inventory | 52.6 | 57.1 | 80.9 | | | |
| Accounts Payable | 29.7 | 33.2 | 31.6 | | | |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 2.0 | 2.7 | 37.3% |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 7.0 | 7.3 | 4.5% |
Cash flow
|
|---|
| Capex | 12.2 | 32.5 | 24.7 | 24.1 | 70.6 | 192.8% |
| Dividends | 15.0 | 17.0 | 19.0 | | | |
Ratios
|
|---|
| Revenue growth | 13.3% | 10.8% | -3.7% | 1.1% | 16.1% | |
| EBITDA growth | 15.8% | 13.5% | -2.8% | 205.5% | -58.5% | |
|
|---|
| Gross Margin | 49.3% | 49.5% | 51.6% | 50.7% | 49.9% | -0.8% |
| EBITDA Margin | 18.6% | 19.0% | 19.2% | 58.0% | 20.7% | -37.2% |
| EBIT Margin | 12.5% | 13.3% | 13.4% | | |
| SG&A, % of revenue | 20.8% | 20.3% | 21.3% | 21.8% | 18.7% | -3.1% |
| SBC, % of revenue | 5.4% | 5.7% | 5.2% | | |
| Net Income Margin | 12.5% | 6.4% | 16.8% | 46.0% | 14.6% | -31.4% |
| CAPEX, % of revenue | 3.1% | 7.5% | 5.9% | 5.7% | 14.5% | 8.7% |
|
|---|
| ROIC | 10.7% | 11.1% | 10.4% | 34.7% | 9.1% | -25.5% |
| ROE | 10.5% | 5.3% | 13.0% | 30.9% | 9.3% | -21.6% |
| Net Debt/EBITDA | -0.9x | -1.1x | -1.7x | -0.7x | -2.5x | -1.8x |
People
|
|---|
| Insider ownership | 4.7% | 4.7% | 4.7% | | | |
| Employees | 626 | 646 | 662 | | | |
| Revenue/Employee, th. $ | 622 | 668 | 628 | | | |
Power Integrations, Inc. ($POWI) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 110 | 107 | 121 | 151 | | 23.0% | 3.9% | 6.1% | 31.7% |
| EBITDA | 22 | 20 | 22 | 35 | | 72.4% | 19.4% | -10.5% | -81.4% |
| Net Income | 16 | 13 | 15 | 27 | | 119.6% | 21.6% | -13.3% | -82.8% |
Balance Sheet
|
|---|
| Cash | 190 | 251 | 232 | 259 | | 51.4% | 152.6% | 189.4% | 44.9% |
| Short Term Debt | 0 | 0 | 0 | 3 | | -100.0% | -100.0% | -100.0% | 37.3% |
| Long Term Debt | 0 | 0 | 0 | 7 | | -100.0% | -100.0% | -100.0% | 4.5% |
Ratios
|
|---|
| Gross Margin | 51.5% | 50.1% | 49.2% | 49.1% | | 0.5% | -0.0% | -1.7% | -1.8% |
| EBITDA Margin | 19.8% | 18.3% | 18.0% | 23.5% | | 5.7% | 2.4% | -3.3% | -143.0% |
| Net Income Margin | 14.5% | 12.3% | 12.2% | 18.1% | | 6.4% | 1.8% | -2.7% | -120.2% |
Peers in Semiconductors
Below we provide Power Integrations, Inc. benchmarking against other companies in Semiconductors industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Inphi Corporation ($IPHI) | - | 30.8% | -15.4% | 24.2% | 86.8% |
| Sequans Communications S.A. ($SQNS) | - | 5.9% | -16.6% | -23.3% | 65.0% |
| MaxLinear, Inc ($MXL) | - | 8.4% | -8.4% | -17.6% | 50.9% |
| Advanced Micro Devices, Inc. ($AMD) | - | 21.6% | 23.3% | 4.0% | 45.0% |
| Kopin Corporation ($KOPN) | - | 23.0% | -12.1% | 20.7% | 35.9% |
| |
|---|
| Median (43 companies) | 1.2% | 11.0% | 4.9% | -3.2% | 1.0% |
|---|
| Power Integrations, Inc. ($POWI) | - | 10.8% | -3.7% | 1.1% | 16.1% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| CEVA, Inc. ($CEVA) | 91.6% | 92.1% | 89.8% | 88.4% | 89.3% |
| Universal Display Corporation ($OLED) | 83.9% | 80.8% | 75.5% | 78.5% | 80.1% |
| Rambus, Inc. ($RMBS) | 80.1% | 79.9% | 76.8% | 77.1% | 75.0% |
| Analog Devices, Inc. ($ADI) | 65.1% | 59.9% | 68.3% | 67.0% | 65.9% |
| MoSys, Inc. ($MOSY) | 49.0% | 46.9% | 61.8% | 61.0% | 65.7% |
| |
|---|
| Median (43 companies) | 47.2% | 48.6% | 50.2% | 50.4% | 49.2% |
|---|
| Power Integrations, Inc. ($POWI) | 49.3% | 49.5% | 51.6% | 50.7% | 49.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Texas Instruments Incorporated ($TXN) | 43.5% | 46.7% | 48.6% | 47.5% | 47.6% |
| Intel Corp ($INTC) | 35.2% | 41.7% | 45.7% | 45.9% | 46.7% |
| Broadcom Inc. ($AVGO) | 19.9% | 40.4% | 44.2% | 40.9% | 46.2% |
| Universal Display Corporation ($OLED) | 44.8% | 51.6% | 35.3% | 48.0% | 45.9% |
| Analog Devices, Inc. ($ADI) | 36.2% | 32.1% | 43.2% | 42.1% | 42.0% |
| |
|---|
| Median (41 companies) | 9.2% | 10.7% | 9.3% | 12.9% | 17.3% |
|---|
| Power Integrations, Inc. ($POWI) | 18.6% | 19.0% | 19.2% | 58.0% | 20.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Micron Technology, Inc. ($MU) | 46.9% | 23.3% | 29.2% | 41.8% | 38.4% |
| Sequans Communications S.A. ($SQNS) | 11.8% | 13.3% | 22.9% | 29.6% | 27.1% |
| Intel Corp ($INTC) | 16.2% | 18.8% | 21.4% | 22.5% | 18.6% |
| First Solar, Inc. ($FSLR) | 7.9% | 17.5% | 33.0% | 21.8% | 15.4% |
| Rambus, Inc. ($RMBS) | 2.5% | 2.4% | 4.7% | 2.9% | 12.2% |
| |
|---|
| Median (40 companies) | 3.7% | 4.7% | 4.2% | 3.7% | 3.6% |
|---|
| Power Integrations, Inc. ($POWI) | 3.1% | 7.5% | 5.9% | 5.7% | 14.5% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Texas Instruments Incorporated ($TXN) | 34.9% | 43.1% | 47.5% | 39.7% | 38.2% |
| Applied Materials Inc ($AMAT) | 19.0% | 31.2% | 36.4% | 27.7% | 32.1% |
| Advanced Micro Devices, Inc. ($AMD) | -21.7% | 7.3% | 21.6% | 21.5% | 31.8% |
| QUALCOMM Incorporated ($QCOM) | 15.8% | 5.7% | 2.2% | 38.0% | 28.1% |
| NVIDIA Corporation ($NVDA) | 13.1% | 27.3% | 35.3% | 36.9% | 22.7% |
| |
|---|
| Median (45 companies) | 1.4% | 3.2% | 2.2% | 2.2% | 5.3% |
|---|
| Power Integrations, Inc. ($POWI) | 10.7% | 11.1% | 10.4% | 34.7% | 9.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| SunPower Corporation ($SPWR) | - | - | - | - | 8.2x |
| MACOM Technology Solutions Holdings, Inc. ($MTSI) | 3.0x | 7.2x | 98.6x | - | 6.6x |
| Rambus, Inc. ($RMBS) | -0.1x | -0.1x | - | - | 5.9x |
| Inphi Corporation ($IPHI) | 4.5x | 33.7x | 32.2x | 4.5x | 3.4x |
| Canadian Solar Inc. ($CSIQ) | 11.3x | 6.8x | 2.7x | 3.4x | 3.3x |
| |
|---|
| Median (31 companies) | 0.4x | 0.4x | 0.3x | 0.5x | 0.5x |
|---|
| Power Integrations, Inc. ($POWI) | -0.9x | -1.1x | -1.7x | -0.7x | -2.5x |
