Power Integrations Inc. (NASDAQ:POWI) Q2 2020 Earnings Conference Call - Final Transcript

Jul 30, 2020 • 04:30 pm ET

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Power Integrations Inc. (NASDAQ:POWI) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Power Integrations Second Quarter Earnings Call. [Operator Instructions] After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Joe Shiffler, Director of Investor Relations. Please go ahead, sir.

Executive
Joe Shiffler

Thanks, Stephen. Good afternoon, and thanks everyone 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. 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. Such risks and uncertainties are discussed in today's press release and in our most recent Form 10-K filed with the SEC on February 7, 2020.

During this call, we will refer to financial measures not calculated according to generally accepted accounting principles. Non-GAAP measures exclude stock-based compensation expenses, amortization of acquisition related intangible assets and the tax effects of these items. A reconciliation of non-GAAP measures to our GAAP results is included in our press release.

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.

Executive
Balu Balakrishnan

Thanks, Joe, and good afternoon. Second quarter revenues were $106.8 million in line with our guidance and up 4% year-over-year in spite of a challenging demand environment. The year-over-year growth was driven by communications and industrial categories. Industrial grew high single digits year-over-year and was our largest revenue category in the quarter at 35% of sales.

We saw a combination of the recovery and broad-based industrial applications as well as incremental growth across diverse range of verticals, where trends like home and building automation, electrification are creating opportunities for our products. On the automation side, we are seeing growth in USB wall outlets, smart meters, and other IoT applications such as network thermostats and door locks, where high reliability, compact size, low standby power consumption are critical factors.

Meanwhile, electrification is creating opportunities in applications like lawn equipment, vacuum cleaners, and personnel transportation such as scooters and e-bikes, where rechargeable batteries are replacing traditional power sources. Growth in these areas was offset somewhat by lower revenues from high-power due to softer demand in the energy exploration and a slowdown in infrastructure projects due to the pandemic. However, high power has its own attractive verticals with strong long-term growth prospects including renewable energy, long distance DC transmission, and electric transportation.

Our gate drivers are in use today in electric buses and locomotives and are in testing at several automotive OEMs and Tier 1 suppliers for drivetrain and charging applications in next generation electric