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Item 7. Management’s Discussion and Analysis

2024-02-12 compared with 2023-02-07 · 68 added, 78 removed, 165 unchanged (47% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This section of this Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.

Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 are not included in this Form 10-K, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

The following discussion and analysis has been prepared as an aid to understanding our financial condition and results of our operations.

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Power supplies incorporating our products are used with all manner of electronic products including mobile phones, computing and networking equipment, appliances, electronic utility meters, battery-powered tools, industrial controls, and “home-automation,” or “internet of things” applications such as networked thermostats, power strips and security devices.

We also supply high-voltage LED drivers, which are AC-DC ICs specifically designed for lighting applications that utilize light-emitting diodes, and motor-driver ICs addressing brushless DC (BLDC) motors used in refrigerators, HVAC systems, ceiling fans and other consumer-appliance and light commercial applications.

Variations of our power-supply ICs are used for high-voltage power conversion in electric vehicles (“EVs”).

We also supply high-voltage LED drivers, which are AC-DC ICs specifically designed for lighting applications that utilize light-emitting diodes, and motor-driver ICs for brushless DC (“BLDC”) motors used in consumer appliances, HVAC systems, ceiling fans and a variety of industrial applications.

We also offer high-voltage gate drivers—either standalone ICs or circuit boards containing ICs, electrical isolation components and other circuitry—used to operate high-voltage switches such as insulated-gate bipolar transistors (“IGBTs”) and silicon-carbide (“SiC”) MOSFETs.

These combinations of switches and drivers are used for power conversion in high-power applications (i.e., power levels ranging from a few kilowatts up to gigawatts) such as industrial motors, solar- and wind-power systems, electric vehicles (EVs) and high-voltage DC transmission systems.

Our net revenues were $651.1 million, $703.3 million and $488.3 million in 2022, 2021 and 2020, respectively.

The decrease in revenues in 2022 was primarily driven by the communications end-market category, in which revenues fell by 36%, reflecting lower global demand for smartphones.

More broadly, we observed a deterioration in demand as the year progressed, reflecting a range of macroeconomic and cyclical factors, including:

lower demand for products such as smartphones, computers and appliances following a period of strong demand during the COVID-19 pandemic, and a shift in consumer spending in favor of services rather than goods as the pandemic waned;

measures implemented in China to control the spread of COVID-19, which affected consumer demand in China as well as the ability of some of our customers to manufacture their products;

the impact of inflation on consumer spending;

economic downturns in local and global economies;

a build-up in the supply chain of inventory of our products, and of intermediate and finished products containing our products.

The latter effect was driven by the efforts of supply-chain participants to overcome component shortages that developed during the pandemic, with the abrupt slowdown in demand leading to oversupply of inventory.

In 2021, revenues increased by $215.0 million, reflecting the strong demand conditions then prevalent across the semiconductor industry, as well as market-share gains for our products in a broad range of applications including consumer appliances, advanced chargers for mobile devices such as smartphones, tablets and notebook computers, and a range of industrial applications including home-and-building automation, electronic utility meters, battery-operated tools and broad-based industrial applications.

These combinations of switches and drivers are used for power conversion in high-power applications (i.e., power levels ranging from approximately 100 kilowatts up to gigawatts) such as industrial motors, solar- and wind-power systems, EVs and high-voltage DC transmission systems.

Our net revenues were $444.5 million and $651.1 million in 2023 and 2022, respectively.

Revenues from all four end-market categories decreased in 2023 compared to the prior year.

We believe that demand for our products has been negatively affected by an array of macroeconomic and geopolitical factors including reduced consumer spending in response to inflation and higher interest rates, softer housing markets, weaker demand for mobile phones, general economic weakness in China, the conflicts in Ukraine and the Middle East, and a shift in consumer spending toward travel and services following a period of elevated spending on goods during the COVID-19 pandemic.

We believe these factors have exacerbated the effects of a cyclical downturn in the semiconductor industry;

such downturns are commonly experienced in our industry following periods of strong growth during which supply chain participants tend to accumulate excess inventories.

Our top ten customers, including distributors that resell to OEMs and merchant power supply manufacturers, accounted for approximately 80% and 76% of net revenues in 2023 and 2022, respectively.

In 2022, 2021 and 2020, t wo customers, which are distributors of our products, each accounted for more than 10% of our net revenues.

International sales represented approximately 98% and 96% of net revenues in 2023 and 2022, respectively.

Our business and financial performance depends significantly on worldwide economic conditions.

We face global macroeconomic challenges and risks including the effects of the conflict in Ukraine, potential risks stemming from tensions

between China and Taiwan, the COVID-19 pandemic, volatility in exchange rates, cyclical demand patterns common for our industry, inflation, tariffs and other risks associated with the global trade environment.

We face global macroeconomic challenges and risks including the effects of the conflicts in Ukraine and the Middle East, potential risks stemming from tensions between China and Taiwan and between China and Western countries, health crises such as the COVID-19 pandemic, volatility in exchange rates, cyclical demand patterns common for our industry, inflation, tariffs and other risks associated with the global trade environment.

Because our industry is intensely price-sensitive, our gross margin (gross profit divided by net revenues) is subject to change based on the relative pricing of solutions that compete with ours.

Variations in product mix, end-market mix and customer mix can also cause our gross margin to fluctuate.

Variations in product mix, end-market mix

and customer mix can also cause our gross margin to fluctuate.

Also, because we purchase a large percentage of our silicon wafers from foundries located in Japan, our gross margin is influenced by fluctuations in the exchange rate between the U.S.

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As a result, our unit costs and gross profit margin are impacted by the volume of units we produce.

Our gross profit, defined as net revenues less cost of revenues, was $366.9 million or 56% of net revenues in 2022, compared to $360.6 million or 51% of net revenues in 2021, and $243.6 million or 50% of net revenues in 2020.

Our gross margin increased in 2022 due to a combination of factors, including a more favorable end-market mix, with a greater percentage of sales coming from higher-margin market categories and manufacturing efficiencies including the benefit of higher unit volumes on our manufacturing costs per unit .

Our gross margin also increased in 2021, driven primarily by manufacturing efficiencies partially offset by an unfavorable change in end-market mix .

Total operating expenses in 2022 were $186.5 million, an increase of $0.9 million as compared to 2021 due to higher salary and related expenses driven by increased headcount and product development expenses.

These increases were partially offset by lower stock-based compensation expense related to performance-based awards .

Total operating expenses in 2021 were $185.6 million, an increase of $12.5 million as compared to 2020 due to higher salary and related expenses driven by increased headcount and annual merit increases, increased commission expense driven by increased sales and higher stock-based compensation expense related to performance-based awards .

These increases were partially offset by lower patent-litigation expenses.

Our gross profit, defined as net revenues less cost of revenues, was $229.0 million or 52% of net revenues in 2023, compared to $366.9 million or 56% of net revenues in 2022.

Our gross margin decreased in 2023 due to a combination of factors, including reduced production volumes, which impacted our manufacturing costs per unit, as well as a less favorable end-market mix, with a greater percentage of revenues coming from lower-margin end markets and applications .

Total operating expenses in 2023 were $193.9 million, an increase of $7.4 million as compared to 2022 due to:

higher stock-based compensation expenses reflecting a lower-than-usual level of such expenses in the prior year;

higher salary- and benefit-related expenses reflecting annual salary increases and higher costs associated with employee health insurance and other benefits.

Critical Accounting Policies and Estimates

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● revenue recognition;

● estimating write-downs for excess and obsolete inventory.

Our critical accounting policies are important to the portrayal of our financial condition and results of operations, and require us to make judgments and estimates about matters that are inherently uncertain.

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Such price adjustments are estimated using the expected-value method based on an analysis of actual ship-and-debit claims, at the distributor and product level, over a period of time considered adequate to account for current pricing and business trends.

The reserve for ship and debit claims increased by $11.6 million between December 31, 2022 and December 31, 2021, primarily due to higher inventory levels held by distributors and expected ship and debit claims related to such inventory.

Historically, actual price adjustments for ship and debit claims relative to those estimated when determining the transaction price have not materially differed.

The reserve for ship-and-debit

claims decreased by $17.2 million between December 31, 2023 and December 31, 2022, primarily due to lower inventory levels held by distributors.

Historically, actual price adjustments for ship-and-debit claims have not materially differed from those estimated when determining the transaction price.

To the extent future ship-and-debit claims significantly exceed amounts estimated, there could be a material impact on our revenues and results of operations.

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Historically, these distributor stock rotation returns have not been material.

Estimating write-downs for excess and obsolete inventory

The bulk of our inventory is held in wafers, which combined with the fungibility of our products across customers and applications results in a lower risk of obsolescence.

We routinely monitor the quality of our on-hand wafers to ensure that performance remains unchanged over time.

When evaluating the adequacy of our provision for excess and obsolete inventory, we identify excess and obsolete products and also analyze historical usage, forecasted demand, current economic trends and historical write-offs .

This write-down is reflected as a reduction to inventory in the consolidated balance sheets and an increase in cost of revenues in our consolidated statements of income.

If actual market conditions are less favorable than our assumptions, we may be required to take additional write-downs, which could adversely impact our cost of revenues and operating results.

Historically, these write-downs have not been material.

Results of Operations

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Income before income taxes

Provision for income taxes

Provision (benefit) for income taxes

Comparison of Years Ended December 31, 2023 and 2022

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Net revenues consist of revenues from product sales, which are calculated net of returns and allowances.

In 2022, revenues decreased by $52.1 million as compared to 2021, primarily driven by the communications end-market category reflecting lower global demand for smartphones.

We observed a deterioration in demand across other end markets as the year progressed, reflecting a range of macroeconomic and cyclical factors as described above.

In 2021, revenues increased by $215.0 million compared to 2020 reflecting the strong demand conditions then prevalent across the semiconductor industry, as well as market-share gains for our products in a broad range of applications including consumer appliances, advanced chargers for mobile devices such as smartphones, tablets and notebook computers, and a range of industrial applications including home-and-building automation, electronic utility meters, battery-operated tools and broad-based industrial applications .

Revenues from all four end-market categories decreased in 2023 compared to the prior year.

We believe these factors have exacerbated the effects of a cyclical downturn in the semiconductor industry;

such downturns are commonly experienced in our industry following periods of strong growth during which supply chain participants tend to accumulate excess inventories.

Our approximate net revenue mix by end-markets served in 2023, 2022 and 2021 is as follows:

Communications

Sales to customers outside of the United States were $625.6 million, $686.0 million and $477.3 million in 2022, 2021 and 2020, respectively, representing 96% of net revenues in 2022, and 98% of net revenues in both 2021 and 2020.

Sales to customers outside of the United States were $435.9 million and $625.6 million in 2023 and 2022, respectively, representing 98% and 96% of net revenues in 2023 and 2022, respectively.

Although power supplies using our products are designed and distributed worldwide, most of these power supplies are manufactured by our customers in Asia.

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Honestar Technologies Co., Ltd.

Salcomp Group

* Total customer revenue was less than 10% of net revenues.

No other customers accounted for 10% or more of net revenues during these years.

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(dollars in millions)

Our gross margin increased in 2022 as compared to 2021 due to a combination of factors, including a more favorable end-market mix, with a greater percentage of sales coming from higher-margin market categories and manufacturing efficiencies including the benefit of higher unit volumes on our manufacturing costs per unit.

Our gross margin increased in 2021 as compared to 2020 as manufacturing efficiencies were partially offset by an unfavorable change in end-market mix.

Our gross margin decreased in 2023 as compared to 2022 due to a combination of factors, including a less favorable end-market mix, with a greater percentage of revenues coming from lower-margin end markets and applications and reduced production volumes, which impacted our manufacturing costs per unit.

Research and development expenses.

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Headcount (at period end)

R&D expenses increased in 2022 compared to 2021 due to higher salary and related expenses driven by increased headcount, increased equipment-related expenses and product-development costs partially offset by decreased stock-based compensation expense related to performance-based awards.

R&D expenses increased in 2021 compared to 2020 due to higher salary and related expenses driven by increased headcount and annual merit increases, higher stock-based compensation expense related to performance-based awards and increased equipment-related expenses .

R&D expenses increased in 2023 compared to 2022 primarily due to increased stock-based compensation expense, higher salaries and related expenses due to annual salary increases and increased equipment-related expenses, partially offset by lower product development costs.

Sales and marketing expenses.

Sales and marketing (S&M) expenses consist primarily of employee-related expenses, including salaries and stock-based compensation, and commissions to sales representatives, as well as

amortization of acquired intangible assets and facilities expenses, including expenses associated with our regional sales and support offices.

Sales and marketing (“S&M”) expenses consist primarily of employee-related expenses, including salaries and stock-based compensation, and commissions to sales representatives, as well as amortization of acquired intangible assets and facilities expenses, including expenses associated with our regional sales and support offices.

The following table compares sales and marketing expenses for the years ended December 31, 2023, 2022 and 2021:

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Headcount (at period end)

S&M expenses increased in 2022 compared to 2021 due to higher salary and related expenses from the expansion of headcount and increases in travel and trade shows.

These increases were partially offset by decreased commissions expense and lower stock-based compensation expense primarily related to performance-based awards.

S&M expenses increased in 2021 as compared to 2020 due to increased commissions expense driven by increased sales, higher salary and related expenses from the expansion of headcount, and higher stock-based compensation expense primarily related to performance-based awards.

S&M expenses increased in 2023 compared to 2022 primarily due to higher salaries and related expenses, increased travel and trade show expenses, and increased stock-based compensation expense.

These increases were partially offset by decreased commissions expense.

General and administrative expenses.

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Headcount (at period end)

G&A expenses decreased in 2022 due to lower stock-based compensation expense related to performance-based awards and lower patent-litigation expenses.

G&A expenses increased in 2021 due to higher stock-based compensation expense related to performance-based awards partially offset by lower patent-litigation expenses .

G&A expenses increased in 2023 primarily due to higher salaries and related expenses driven by increased headcount and increased stock-based compensation expense related to performance-based awards.

These increases were partially offset by recovery of bad debt and lower professional services expenses.

Other operating expenses, net.

Other operating expenses, net was $1.1 million in fiscal 2022.

This amount consisted of a $2.9 million expense stemming from the settlement of our litigation with Opticurrent LLC (refer to Note 13, Legal Proceedings and Contingencies , in our Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K ), offset by receipt of a $1.7 million distribution related to the bankruptcy liquidation of SemiSouth Laboratories, Inc.’s of which we were a creditor as a result of investments made in SemiSouth in 2011.

This amount consisted of a $2.9 million expense resulting from the settlement of our litigation with Opticurrent LLC on May 16, 2022, in which we agreed to pay Opticurrent $2.9 million to end all outstanding legal disputes, partially offset by receipt of a $1.7 million distribution related to the bankruptcy liquidation of SemiSouth Laboratories, Inc., of which we were a creditor as a result of investments made in SemiSouth in 2011.

Other income .

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Other income increased in 2023 due primarily to an increase in interest income resu lting from higher yields earned on our investments .

Other income decreased in 2021 due primarily to lower interest income, as lower yields earned on our cash and investments more than offset the impact of higher cash and investment balances .

Provision for income taxes.

Provision (benefit) for income taxes.

Provision for income taxes represents federal, state and foreign taxes.

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(dollars in millions)

Provision for income taxes

Provision (benefit) for income taxes

Effective tax rate

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federal income-tax rates of 21% due to the geographic distribution of our world-wide earnings in lower tax jurisdictions, the impact of federal research tax credits and the recognition of excess tax benefits related to share-based compensation.

Additionally, in 2022 and 2021, our effective tax rate was favorably impacted by a discrete item associated with the release of an unrecognized tax benefit.

These benefits were offset by U.S.

Additionally, in 2023 and 2022, our effective tax rate was favorably impacted by the geographic distribution of our world-wide earnings in lower-tax jurisdictions and federal research tax credits.

In 2023, the rate was further favorably impacted by the release of $7.6 million of reserves related to federal uncertain tax positions as the statute of limitations for review of these positions expired.

These benefits were partially offset by U.S.

tax on foreign income, known as global intangible low-taxed income.

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Income earned in other foreign jurisdictions was not material.

We have not been granted any incentivized tax rates and do not

operate under any tax holidays in any jurisdiction.

We have not been granted any incentivized tax rates and do not operate under tax holidays in any jurisdiction.

For additional details, refer to Note 11, Provision for Income Taxes , in our Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.

Liquidity and Capital Resources

We had $353.8 million in cash, cash equivalents and short-term marketable securities at December 31, 2022 compared to $530.4 million at December 31, 2021 and $449.2 million at December 31, 2020.

As of December 31, 2022, 2021 and 2020, we had working capital, defined as current assets less current liabilities, of approximately $466.7 million, $614.5 million and $538.7 million, respectively.

We have a Credit Agreement with Wells Fargo Bank, National Association (the "Credit Agreement") that provides us with a $75.0 million revolving line of credit to use for general corporate purposes with a $20.0 million sub-limit for the issuance of standby and trade letters of credit.

The Credit Agreement was amended on June 7, 2021, to provide an alternate borrowing rate as a replacement for LIBOR and extend the termination date from April 30, 2022 to June 7, 2026, with all other terms remaining the same.

We had $311.6 million in cash, cash equivalents and short-term marketable securities at December 31, 2023 compared to $353.8 million at December 31, 2022.

As of December 31, 2023 and 2022, we had working capital, defined as current assets less current liabilities, of approximately $462.7 million and $466.7 million, respectively.

The Credit Agreement was amended on June 7, 2021, to provide an alternate borrowing rate as a replacement for LIBOR and extend the termination date from April 30, 2022 to

June 7, 2026, with all other terms remaining the same.

The Credit Agreement was amended with an effective date of June 28, 2023 to include the Secured Overnight Financing Rates (“SOFR”) as interest rate benchmark rates, with all other terms remaining the same.

Our ability to borrow under the revolving line of credit is conditioned upon our compliance with specified covenants, including reporting and financial covenants, primarily a minimum liquidity measure and a debt to earnings ratio, with which we are currently in compliance.

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Cash from Operating Activities

Our operating activities generated cash of $215.3 million, $230.9 million and $125.6 million in the years ended December 31, 2022, 2021 and 2020, respectively.

Our operating activities generated cash of $65.8 million and $215.3 million in the years ended December 31, 2023 and 2022, respectively.

We generate cash primarily from operating activities in the ordinary course of business.

In 2023, our net income was $55.7 million, we also incurred $35.2 million of depreciation, $28.5 million of stock-based compensation and $2.2 million of intangibles amortization partially offset by a $9.2 million increase in deferred income taxes.

Sources of cash also included a $6.6 million decrease in accounts receivable.

These sources of cash were partially offset by a $27.7 million increase in inventories due to softening demand during the year, a $18.2 million decrease in taxes payable and accrued liabilities, a $5.4 million decrease in accounts payable (excluding payables related to property and equipment) due to timing of payments and a $1.2 million increase in prepaid expenses and other assets.

In 2022, our net income was $170.9 million, which included non-cash expenses of $34.9 million of depreciation, $22.4 million of stock-based compensation, $3.3 million for amortization of premium on marketable securities, $2.4 million of intangibles amortization and a $2.6 million decrease in deferred income taxes.

Sources of cash also included a $19.9 million decrease in accounts receivable and $7.3 million decrease in prepaid expenses and other assets.

Sources of cash also included a $19.9 million decrease in accounts receivable and a $7.3 million decrease in prepaid expenses and other assets.

These sources of cash were partially offset by a $36.2 million increase in inventories due to softening demand during the year and a $3.8 million decrease in accounts payable (excluding payables related to property and equipment) due to timing of payments and a $5.2 million decrease in taxes payable and accrued liabilities.

In 2021, our net income was $164.4 million, which included non-cash expenses of $37.6 million of stock-based compensation, $31.5 million of depreciation and $3.5 million of intangibles amortization.

Sources of cash also included a $4.1 million increase in accounts payable (excluding payables related to property and equipment) due to timing of payments, a $4.3 million decrease in prepaid expenses and other assets and a $3.6 million decrease in inventories.

These sources of cash were partially offset by a $13.2 million increase in deferred income taxes, a $5.5 million increase in accounts receivable due to increased shipments and a $4.1 million decrease in taxes payable and accrued liabilities.

In 2020, our net income was $71.2 million, which included non-cash expenses of $30.9 million of stock-based compensation, $23.7 million of depreciation and $4.4 million of intangibles amortization.

Sources of cash also included a $9.1 million decrease in prepaid expenses and other assets, primarily driven by taxes refunded , a $5.7 million increase in accounts payable (excluding payables related to property and equipment) and a $4.1 million increase in taxes payable and accrued liabilities, in each case due to the timing of payments.

These sources of cash were partially offset by an $11.3 million increase in accounts receivable due to increased shipments and the timing of collections, a $12.5 million increase in inventories, reflecting impact of a market slowdown during the first half of the year and higher inventory levels to support anticipated future demand.

Cash from Investing Activities

Our investing activities in the year ended December 31, 2023 resulted in a $14.2 million net use of cash, consisting primarily of $20.9 million for purchases of property and equipment, primarily production-related machinery and equipment, partially offset by $6.7 million from sales and maturities of marketable securities, net of purchases.

Our investing activities in the year ended December 31, 2022 generated $78.3 million of cash, consisting primarily of $116.3 million from sales and maturities of marketable securities, net of purchases, and proceeds of $1.2 million from the sale of an office building, partially offset by $39.2 million for purchases of property and equipment, primarily production-related machinery and equipment.

Our investing activities in the year ended December 31, 2021 resulted in a $232.8 million net use of cash, consisting primarily of $185.6 million for purchases of marketable securities, net of sales and maturities, and $47.3 million

for purchases of property and equipment, primarily machinery and equipment for use in the manufacture of our products, as well as construction of an office building in Switzerland.

Our investing activities in the year ended December 31, 2020 resulted in a $28.3 million net use of cash, consisting primarily of $41.7 million from purchases of marketable securities, net of sales and maturities, and $70.6 million for purchases of property and equipment, primarily machinery and equipment for use in the manufacture of our products and a building for our design center in Germany.

Cash from Financing Activities

Our financing activities in the year ended December 31, 2023, resulted in a $93.0 million net use of cash.

Financing activities consisted primarily of $311.1 million for the repurchase of our common stock and $41.5 million for the payment of dividends to stockholders, partially offset by proceeds of $6.2 million from the issuance of common stock, including the exercise of employee stock options and issuance of shares through our employee stock purchase plan.

Financing activities consisted primarily of $55.3 million for the repurchase of our common stock and $44.0 million for the payment of dividends to stockholders, partially offset by proceeds of $6.2 million from the issuance of common stock through our employee stock purchase plan.

Our financing activities in the year ended December 31, 2022, resulted in a $346.4 million net use of cash.

Our financing activities in the year ended December 31, 2020, resulted in a net use of $17.2 million of cash.

Financing activities consisted primarily of $25.1 million for the payment of dividends to stockholders and $2.6 million for the repurchase of our common stock, partially offset by proceeds of $10.5 million from the issuance of common stock, including the exercise of employee stock options and the issuance of shares through our employee stock purchase plan.

In October 2019, our board of directors raised the cash dividends per share with the declaration of five cash dividends, consisting of (a) a dividend of $0.01 per share to be paid to stockholders of record at the end of the fourth quarter in 2019, that was in addition to the dividend of $0.085 per share to be paid to stockholders of record at the end of the fourth quarter in 2019 previously declared by the board in January 2019, and (b) a dividend of $0.095 per share to be paid to stockholders of record at the end of each quarter in 2020.

In April 2020, our board of directors raised the cash dividends with the declaration of three cash dividends of $0.105 per share (in lieu of the $0.095 per share previously announced in October 2019) to be paid to stockholders of record at the end of each of the second, third and fourth quarter in 2020.

In July 2020, our board of directors raised the cash dividends further with the declaration of two cash dividends of $0.11 per share (in lieu of the $0.105 per share announced in April 2020) to be paid to stockholders of record at the end of each of the third and fourth quarter in 2020.

In January 2021, our board of directors raised the quarterly cash dividend by an additional $0.02 per share with the declaration of four cash dividends of $0.13 per share to be paid to stockholders of record at the end of each quarter in 2021.

In October 2021, our board of directors raised the quarterly cash dividend with the declaration of five cash dividends of $0.15 per share (the first in lieu of the $0.13 per share announced in January 2021) to be paid to stockholders of record at the end of the fourth quarter in 2021 and at the end of each quarter in 2022.

In January 2022, our board of directors raised the quarterly cash dividend an additional $0.03 per share with the declaration of four cash dividends of $0.18 per share (in lieu of the $0.15 per share announced in October 2021) to be paid to stockholders of record at the end of each quarter in 2022.

In January 2022, our board of directors declared dividends of $0.18 per share to be paid to stockholders of record at the end of each quarter in 2022.

In February 2023, our board of directors raised the cash dividend with the declaration of four cash dividends of $0.19 per share to be paid to stockholders of record at the end of each quarter in 2023.

In October 2023, our board of directors raised the cash dividend with the declaration of five cash dividends of $0.20 per share to be paid to stockholders of record at the end of the fourth quarter in 2023 (in lieu of the $0.19 per share announced in February 2023) and at the end of each quarter in 2024.

The declaration of any future cash dividend is at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, business conditions and other factors, as well as a determination that cash dividends are in the best interest of our stockholders.

Stock Repurchases

Over the years our board of directors has authorized the use of funds to repurchase shares of our common stock, including $80.0 million in October 2018, $50.0 million in both April and October 2021, $100.0 million in January 2022, $50.0 million in February 2022, $75.0 million in April 2022 and $100.0 million in October 2022 with repurchases to be

executed according to pre-defined price/volume guidelines.

In 2020, we repurchased 63 thousand shares for approximately $2.6 million.

In 2021, we repurchased 0.9 million shares for approximately $73.9 million.

Over the years our board of directors has authorized the use of funds to repurchase shares of our common stock, including $100.0 million in January 2022, $50.0 million in February 2022, $75.0 million in April 2022 and $100.0 million in October 2022 with repurchases to be executed according to pre-defined price/volume guidelines.

In 2022, we repurchased 3.8 million shares for $311.1 million, leaving $81.3 million in funds authorized as of December 31, 2022.

In 2023, we repurchased 0.8 million shares for $55.3 million, leaving $26.0 million in funds authorized as of December 31, 2023.

Authorization of future stock repurchase programs is at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements and business conditions as well as other factors.

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Cash paid for property and equipment in the year ended December 31, 2023 was $20.9 million.

As of December 31, 2022, we had non-cancelable commitments of $1.1 million for the purchase of property and equipment.

We expect capital expenditures in fiscal 2024 to be primarily for machinery and equipment for use in the manufacture of our products to support future growth.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis