Power Integrations Inc. (NASDAQ:POWI) Q4 2018 Earnings Conference Call Transcript

Feb 07, 2019 • 04:30 pm ET


Power Integrations Inc. (NASDAQ:POWI) Q4 2018 Earnings Conference Call Transcript


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Good afternoon. My name is Christina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Power Integrations' Fourth 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.

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

Joe Shiffler

Thanks, Christina. Good afternoon, everyone. 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, which may be denoted by words like will, would, believe, should, expect, outlook, forecast, confident, 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 14th, 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 expected, fourth quarter revenues declined as a result of the downturn, currently being felt across the semiconductor industry. Reflecting the broad-based nature of the slowdown, all four revenue categories declined by double-digit percentages in the fourth quarter compared to Q3. As many of our peers have noted, the downturn appears to be cyclical in nature, though it has been amplified by trade tensions and weaker domestic demand in China. These additional factors have hit especially hard in the appliance and smartphone markets which accounts for roughly half of our total sales. Our Communications category, which is dominated by smartphone chargers and skews (ph) heavily towards Chinese OEMs declined nearly 20% for the full year.

The decline was driven not only by general weak handset demand, but also by slower adoption of fast charges ahead of the upcoming transition to USB PD technology. Our Consumer category, which is dominated by appliances fell 6% for the year, reflecting weaker consumer demand in China as well as the impact of tariffs and broader trade disputes which have driven up the cost of appliances, for US consumers, while making customers and distributors more cautious about holding inventory.

As a result, despite solid growth in our Industrial and Computer categories, our total revenues for the full year fell by 4%, while disappointed in these results, we feel good about our