Power Integrations Inc. (NASDAQ:POWI) Q1 2018 Earnings Conference Call - Preliminary Transcript

Apr 26, 2018 • 04:30 pm ET


Power Integrations Inc. (NASDAQ:POWI) Q1 2018 Earnings Conference Call - Preliminary Transcript


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Good afternoon. My name is Jessa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Power Integrations First Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.(Operator Instructions) Thank you.

Mr. Joe Shiffler, Director of Investor Relations, you may begin your conference.

Joe Shiffler

Thank you. Good afternoon, and thanks for joining us. With me on the call today are Balu Balakrishnan, President and CEO of Power Integrations; and Sandeep Nayyar, our Chief Financial Officer.

During the call today, we will refer to financial measures not calculated according to Generally Accepted Accounting Principles. Please refer to today's press release, which is posted on our Investor website, for an explanation of our reasons for using such non-GAAP measures as well as tables reconciling these measures to our GAAP results.

Our discussion today, including the Q&A session, will include forward-looking statements denoted by words like will, would, believe, should, expect, outlook, forecast, and similar expressions that look toward future events or performance. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected or implied in our statements. Such risks and uncertainties are discussed in our press release and in our most recent Form 10-K filed with the SEC on February 14, 2018.

Finally, this call is the property of Power Integrations and any recording or rebroadcast is expressly prohibited without the written consent of Power Integrations.

Now, I'll turn the call over to Balu.

Balu Balakrishnan

Thanks, Joe, and good afternoon. As we discussed on our February call, our expectations for Q1 were tempered by the ongoing slowdown in the smartphone market, particularly in China, and by a short-term inventory correction in consumer appliances after a run of very strong growth in that market. We also noted that orders had recovered in January, after slowing in December, but that the looming holidays in Asia made the recovery difficult to interpret.

At a high level, the quarter played out largely as expected with revenues landing in the middle of our projected range at $103.1 million, down 5% from the prior quarter. However, looking more closely at the end markets, the softness in the smartphones was somewhat more pronounced than we anticipated, while the appliance market proved more resilient. In fact, while revenues from the communications category fell sharply from the prior quarter, the consumer category grew slightly as did the industrial and computer categories.

On a year-over-year basis, Q1 revenues were down 2% overall, driven entirely by the communications category, while combined revenues from the other three categories grew approximately 10%. This growth was led by the industrial category, which grew in the mid-teens year-over-year, driven by the same broad range of applications and big picture trends that drove our growth in 2017. These include the high-power market, where we continue to see steady growth in the renewable energy applications and have