Advanced Energy Announces First Quarter Results

Advanced Energy Announces First Quarter Results
 

  • Revenue increased 19% quarter over quarter
  • Semiconductor revenue increased 39% quarter over quarter
  • GAAP EPS from continuing operations was $0.50  
  • Non-GAAP EPS from continuing operations was $0.56
  • Ended the quarter with $184.0 million in cash

FORT COLLINS, Colo., May 02, 2016Advanced Energy Industries, Inc. (Nasdaq:AEIS) today announced financial results for the first quarter ended March 31, 2016.

“Semiconductor revenues rebounded nearly 39% from the fourth quarter, driving better-than-expected total sales and earnings per share from continuing operations,” said Yuval Wasserman, President and CEO of Advanced Energy. “Our leading position as an enabler of critical applications in high growth areas of semiconductors processing, combined with our growing service business, more than offset the temporary slowdown in our industrial applications and should allow us to continue to grow faster than the markets we serve, reflecting the advantages of our diversified model.”

First Quarter Results                               

Sales were $103.0 million compared with $86.9 million in the fourth quarter of 2015 and $109.5 million in the first quarter of 2015.

GAAP income from continuing operations, net of income taxes was $20.2 million or $0.50 per diluted share in the first quarter 2016 compared to $11.5 million or $0.28 per diluted share in the fourth quarter, and $25.7 million or $0.62 per diluted share in the first quarter 2015.

Non-GAAP income from continuing operations, net of income taxes was $22.3 million or $0.56 per diluted share in the first quarter 2016 compared to $13.0 million or $0.32 per diluted share in the fourth quarter of 2015, and $26.9 million or $0.65 per diluted share in the same period last year. A reconciliation of non-GAAP measures is provided in the tables below.

The company ended the quarter with $184.0 million in cash and marketable securities.

Discontinued Operations

The company’s financial statements for all periods presented reflect results for the continuing precision power business, with the discontinued inverter business included in discontinued operations for both the balance sheet and income statement. Further financial detail regarding the amounts related to this are available in the company’s 2015 Annual Report on Form 10-K.

Second Quarter 2016 Guidance        

Based on the company's current view, beliefs and assumptions, guidance for the second quarter of 2016 is within the following ranges:
 

  Q2 2016
Revenues $105M - $115M
Non-GAAP EPS from continuing operations $0.60  -  $0.70
Non-GAAP operating margins from continuing operations 25% - 28%
   


First Quarter 2016 Conference Call

Management will host a conference call tomorrow morning, Tuesday, May 3, 2016, at 8:30 a.m. Eastern Time to discuss Advanced Energy's financial results. Domestic callers may access this conference call by dialing 855-232-8958. International callers may access the call by dialing 315-625-6980. Participants will need to provide the operator with the Conference ID Number 82827781, which has been reserved for this call. For a replay of this teleconference, please call 855-859-2056 or 404-537-3406 and enter Conference ID Number 82827781. The replay will be available for one week following the conference call. A webcast will also be available on the company’s Investor Relations web page at http://ir.advanced-energy.com.

About Advanced Energy

Advanced Energy (Nasdaq:AEIS) is a global leader in innovative power and control technologies for high-growth, precision power solutions for thin films processes and industrial applications. Advanced Energy is headquartered in Fort Collins, Colorado, with dedicated support and service locations around the world. For more information, go to www.advanced-energy.com.

Non-GAAP Measures

This release includes GAAP and non-GAAP income and per-share earnings data and other GAAP and non-GAAP financial information. Advanced Energy’s non-GAAP measures exclude the impact of stock based compensation, amortization, restructuring, acquisition related costs, and other significant non-recurring items. For the second quarter ending June 30, 2016 guidance, the company expects stock based compensation of $1.2 million and amortization of intangibles of $1.1 million. The non-GAAP measures included in this release are not in accordance with, or an alternative for, similar measures calculated under generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Advanced Energy believes that these non-GAAP measures provide useful information to management and investors regarding financial and business trends relating to its financial condition and results of operations. Additionally, the company believes that these non-GAAP measures, in combination with its financial results calculated in accordance with GAAP, provide investors with additional perspective. Management uses these non-GAAP measures to evaluate business performance and for planning purposes. While some of the excluded items may be incurred and reflected in the company’s GAAP financial results in the foreseeable future, the company believes that the items excluded from certain non-GAAP measures do not accurately reflect the underlying performance of its continuing operations for the period in which they are incurred. The use of non-GAAP measures has limitations in that such measures do not reflect all of the amounts associated with the company’s results of operations as determined in accordance with GAAP, and these measures should only be used to evaluate the company’s results of operations in conjunction with the corresponding GAAP measures.

Please refer to the Form 8-K regarding this release furnished today to the Securities and Exchange Commission.

Forward-Looking Statements

The company’s guidance with respect to anticipated financial results for the second quarter ending June 30, 2016, expectations regarding future market trends and the company’s future performance within specific markets and other statements that are not historical information are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to: (a) the effects of global macroeconomic conditions upon demand for our products; (b) the volatility and cyclicality of the industries the company serves, particularly the semiconductor industry; (c) delays in capital spending by end-users in our served markets; (d) the accuracy of the company’s estimates related to fulfilling solar inverter product warranty and post-warranty obligations; (e) the company’s ability to realize on its plan to avoid additional costs after the solar inverter wind-down; (f) the accuracy of the company's estimates and assumptions on which its financial statement projections are based; (g) the impact of price changes, which may result  from a variety of factors; (h) the timing of orders received from customers; (i) the company’s ability to realize benefits from cost improvement efforts including avoided costs, restructuring plans and inorganic growth; (j) the company’s ability to obtain in a timely manner the materials necessary to manufacture its products; and (k) unanticipated changes to management's estimates, reserves or allowances. These and other risks are described in Advanced Energy's Form 10-K, Forms 10-Q and other reports and statements filed with the Securities and Exchange Commission (the “SEC”). These reports and statements are available on the SEC's website at www.sec.gov. Copies may also be obtained from Advanced Energy's investor relations page at http://ir.advanced-energy.com or by contacting Advanced Energy's investor relations at 970-407-6555. Forward-looking statements are made and based on information available to the company on the date of this press release. Aspirational goals and targets discussed on the conference call or in the presentation materials should not be interpreted in any respect as guidance. The company assumes no obligation to update the information in this press release.
 

ADVANCED ENERGY INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share data)
 
  Three Months Ended
  March 31,   December 31,
  2016   2015   2015
           
SALES:          
Product $ 86,293     $ 93,608     $ 71,564  
Service 16,751     15,902     15,327  
Total sales 103,044     109,510     86,891  
COST OF SALES:          
Product 40,815     42,292     35,029  
Service 8,769     8,119     9,178  
Total cost of sales 49,584     50,411     44,207  
GROSS PROFIT 53,460     59,099     42,684  
  51.9 %   54.0 %   49.1 %
OPERATING EXPENSES:          
Research and development 10,765     9,760     9,437  
Selling, general and administrative 18,016     16,707     16,121  
Amortization of intangible assets 1,058     1,098     1,070  
Restructuring (benefit) charges     (2 )   (117 )
Total operating expenses 29,839     27,563     26,511  
OPERATING INCOME 23,621     31,536     16,173  
OTHER (EXPENSE) INCOME, NET 357     868     (1,661 )
Income from continuing operations before income taxes 23,978     32,404     14,512  
Provision for income taxes 3,758     6,749     3,022  
INCOME FROM CONTINUING OPERATIONS, NET OF INCOME TAXES 20,220     25,655     11,490  
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES 2,061     (4,379 )   24,775  
NET INCOME (LOSS) $ 22,281     $ 21,276     $ 36,265  
           
Basic weighted-average common shares outstanding 39,814     40,740     40,270  
Diluted weighted-average common shares outstanding 40,100     41,129     40,601  
           
EARNINGS PER SHARE:          
           
CONTINUING OPERATIONS:          
BASIC EARNINGS PER SHARE $ 0.51     $ 0.63     $ 0.29  
DILUTED EARNINGS PER SHARE $ 0.50     $ 0.62     $ 0.28  
           
DISCONTINUED OPERATIONS:          
BASIC EARNINGS (LOSS) PER SHARE $ 0.05     $ (0.11 )   $ 0.62  
DILUTED EARNINGS (LOSS) PER SHARE $ 0.05     $ (0.11 )   $ 0.61  
           
NET INCOME:          
BASIC EARNINGS PER SHARE $ 0.56     $ 0.52     $ 0.90  
DILUTED EARNINGS PER SHARE $ 0.56     $ 0.52     $ 0.89  


 

ADVANCED ENERGY INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
  March 31,   December 31,
  2016   2015
ASSETS UNAUDITED    
       
Current assets:      
Cash and cash equivalents $ 176,300     $ 158,443  
Marketable securities 7,664     11,986  
Accounts receivable, net 67,091     54,959  
Inventories, net 57,592     52,573  
Deferred income tax assets 6,035     6,004  
Income taxes receivable 439     9,040  
Other current assets 9,207     7,868  
Current assets of discontinued operations 33,354     41,902  
Total current assets 357,682     342,775  
       
Property and equipment, net 10,675     9,645  
       
Deposits and other 1,716     1,729  
Goodwill and intangibles, net 77,362     76,870  
Deferred income tax assets 30,355     30,398  
Non-current assets of discontinued operations 497     1,271  
Total assets $ 478,287     $ 462,688  
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
       
Current liabilities:      
Accounts payable $ 35,886     $ 27,246  
Other accrued expenses 34,832     40,357  
Current liabilities of discontinued operations 28,203     36,481  
Total current liabilities 98,921     104,084  
       
Non-current liabilities of continuing operations 63,079     67,722  
Non-current liabilities of discontinued operations 27,062     27,302  
Long-term liabilities 90,141     95,024  
       
Total liabilities 189,062     199,108  
       
Stockholders' equity 289,225     263,580  
Total liabilities and stockholders' equity $ 478,287     $ 462,688  
       

* December 31, 2015 amounts are derived from the December 31, 2015 audited Consolidated Financial Statements.

 

ADVANCED ENERGY INDUSTRIES, INC.
SELECTED OTHER DATA (UNAUDITED)
(in thousands)
 
Reconciliation of Non-GAAP measure - operating expenses and
operating income, excluding certain items
  Three Months Ended
    March 31,   December 31,
    2016   2015   2015
             
Gross Profit from continuing operations, as reported   $ 53,460     $ 59,099     $ 42,684  
Operating expenses from continuing operations, as reported   29,839     27,563     26,511  
Adjustments:            
Restructuring charges       2     117  
Stock-based compensation   (1,429 )   (487 )   (897 )
Amortization of intangible assets   (1,058 )   (1,098 )   (1,070 )
Non-GAAP operating expenses from continuing operations   27,352     25,980     24,661  
Non-GAAP operating income from continuing operations   $ 26,108     $ 33,119     $ 18,023  

 

Reconciliation of Non-GAAP measure - income excluding
certain items
    Three Months Ended
      March 31,   December 31,
      2016   2015   2015
               
Income from continuing operations, net of income taxes, as
reported
    $ 20,220     $ 25,655     $ 11,490  
Adjustments, net of tax              
Restructuring charges         (2 )   (93 )
Stock-based compensation     1,205     386     710  
Amortization of intangible assets     892     870     847  
Non-GAAP income from continuing operations, net of income
taxes
    $ 22,317     $ 26,909     $ 12,954  

 

Reconciliation of Non-GAAP measure - per share earnings
excluding certain items
  Three Months Ended
    March 31,   December 31,
    2016   2015   2015
                 
Diluted earnings per share from continuing operations, as reported   $ 0.50     $ 0.62     $ 0.28  
Add back:                
per share impact of Non-GAAP adjustments, net of tax   0.06     0.03       0.04  
Non-GAAP per share earnings from continuing operations   $ 0.56     $ 0.65     $ 0.32  

About Advanced Energy

Advanced Energy (Nasdaq: AEIS) is a global leader in the design and manufacturing of highly engineered, precision power conversion, measurement and control solutions for mission-critical applications and processes. AE’s power solutions enable customer innovation in complex semiconductor and industrial manufacturing applications. With engineering know-how and responsive service and support around the globe, the company builds collaborative partnerships to meet technology advances, propel growth for its customers and innovate the future of power. Advanced Energy has devoted more than three decades to perfecting power for its global customers and is headquartered in Fort Collins, Colorado, USA. For more information, visit www.advancedenergy.com

Advanced Energy | Precision. Power. Performance.

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