Advanced Energy Industries, Inc. (Nasdaq: AEIS), today announced
financial results for the first quarter ended March 31, 2019.
“While 2019 is a shaping up to be a challenging year for the
semiconductor market, Advanced Energy delivered solid profitability
while continuing to execute on our strategy. Mixed semi demand
profiles signal the early stage of market stabilization, and we
believe the long-term drivers for wafer fab equipment growth remain
intact setting up the potential for a recovery in 2020," said Yuval
Wasserman, president and CEO. "We continue to invest in technology
development with our customers and are focused on capitalizing on
the many growth opportunities across our served markets."
First Quarter Results
Sales were $140.7 million in the first quarter of 2019 compared
with $154.2 million in the fourth quarter of 2018 and $195.6
million in the first quarter of 2018.
GAAP net income from continuing operations was $15.4 million or
$0.40 per diluted share, compared with $19.2 million or $0.50 per
diluted share in the prior quarter, and $46.4 million or $1.16 per
diluted share in the first quarter of 2018.
Non-GAAP net income was $22.4 million or $0.58 per diluted share
in the first quarter of 2019, which included a $4.4 million
discrete tax benefit. This compares with $28.0 million or $0.73 per
diluted share in the fourth quarter of 2018, and $53.4 million or
$1.34 per diluted share in the first quarter of 2018. A
reconciliation of non-GAAP measures is provided in the tables
below.
The company generated $6.9 million of operating cash from
continuing operations in the quarter.
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 all purposes. Further financial detail regarding the
amounts related to the discontinued inverter business are available
in the company’s 2018 Annual Report on Form 10-K.
Second Quarter 2019 Guidance
Based on the company's current view, beliefs and assumptions,
its guidance for the second quarter of 2019 is within the following
ranges.
|
|
Q2 2019 |
Revenues |
|
$130M
- $140M |
GAAP EPS from
continuing operations |
|
$0.10
- $0.25 |
Non-GAAP EPS |
|
$0.25
- $0.40 |
Conference Call
Management will host a conference call tomorrow morning,
Tuesday, May 7, 2019 at 6:30 a.m. Mountain Time/ 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 5981809, which has been reserved for this call. A webcast
will also be available on the company’s Investor Relations web page
at ir.advanced-energy.com.
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.
For more information, contact:
Brian SmithAdvanced Energy(970)
407-6555brian.smith@aei.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 non-cash
related charges such as stock-based compensation and amortization
of intangible assets, as well as discontinued operations, and
non-recurring items such as acquisition-related costs and
restructuring expenses. Additionally, the first quarter non-GAAP
results exclude estimated income tax expense associated with U.S.
tax reform. 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 to evaluate business
performance without the impacts of certain non-cash charges and
other charges which are not part of the company’s usual operations.
The company uses these non-GAAP measures to assess performance
against business objectives, make business decisions, develop
budgets, forecast future periods, assess trends and evaluate
financial impacts of various scenarios. In addition, management's
incentive plans include these non-GAAP measures as criteria for
achievements. 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. 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, 2019, potential
future growth and profitability, our future business mix,
expectations regarding future market trends and the company’s
future performance within specific markets and other statements
herein or made on the above-announced conference call 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 and
services; (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 its plan to avoid additional costs
after the solar inverter wind-down; (f) the accuracy of the
company's assumptions on which its financial statement projections
are based; (g) the impact of product 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; (k) unanticipated changes to management's estimates,
reserves or allowances; (l) changes and adjustments to the tax
expense and benefits related to the U.S. tax reform that was
enacted in late 2017; and (m) the effects of recent U.S. government
trade and export restrictions, Chinese retaliatory trade actions,
and other governmental action related to tariffs upon the demand
for our, and our customers', products and services and the U.S.
economy. 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 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, |
|
2019 |
|
2018 |
|
2018 |
Sales: |
|
|
|
|
|
Product |
$ |
112,112 |
|
|
$ |
171,209 |
|
|
$ |
125,039 |
|
Service |
28,631 |
|
|
24,408 |
|
|
29,122 |
|
Total
sales |
140,743 |
|
|
195,617 |
|
|
154,161 |
|
Cost of sales: |
|
|
|
|
|
Product |
60,801 |
|
|
79,806 |
|
|
64,819 |
|
Service |
14,202 |
|
|
12,166 |
|
|
14,154 |
|
Total
cost of sales |
75,003 |
|
|
91,972 |
|
|
78,973 |
|
Gross profit |
65,740 |
|
|
103,645 |
|
|
75,188 |
|
|
46.7 |
% |
|
53.0 |
% |
|
48.8 |
% |
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
Research
and development |
21,289 |
|
|
17,637 |
|
|
20,725 |
|
Selling,
general and administrative |
29,014 |
|
|
28,648 |
|
|
29,241 |
|
Amortization of intangible assets |
1,973 |
|
|
1,257 |
|
|
1,816 |
|
Restructuring expense |
1,673 |
|
|
— |
|
|
3,836 |
|
Total
operating expenses |
53,949 |
|
|
47,542 |
|
|
55,618 |
|
Operating income |
11,791 |
|
|
56,103 |
|
|
19,570 |
|
Other
income (expense), net |
743 |
|
|
26 |
|
|
881 |
|
Income from continuing
operations before income taxes |
12,534 |
|
|
56,129 |
|
|
20,451 |
|
Provision (benefit) for
income taxes |
(2,853 |
) |
|
9,759 |
|
|
1,229 |
|
Income from continuing
operations, net of income taxes |
15,387 |
|
|
46,370 |
|
|
19,222 |
|
Income (loss) from
discontinued operations, net of income taxes |
(9 |
) |
|
140 |
|
|
188 |
|
Net
income |
15,378 |
|
|
46,510 |
|
|
19,410 |
|
Income from continuing
operations attributable to noncontrolling interest |
8 |
|
|
31 |
|
|
4 |
|
Net income
attributable to Advanced Energy Industries, Inc. |
$ |
15,370 |
|
|
$ |
46,479 |
|
|
$ |
19,406 |
|
|
|
|
|
|
|
Basic weighted-average
common shares outstanding |
38,198 |
|
|
39,619 |
|
|
38,386 |
|
Diluted
weighted-average common shares outstanding |
38,426 |
|
|
39,995 |
|
|
38,595 |
|
|
|
|
|
|
|
Earnings per share attributable to Advanced Energy
Industries, Inc: |
|
|
|
|
|
|
|
|
Continuing operations: |
|
|
|
|
|
Basic
earnings per share |
$ |
0.40 |
|
|
$ |
1.17 |
|
|
$ |
0.50 |
|
Diluted
earnings per share |
$ |
0.40 |
|
|
$ |
1.16 |
|
|
$ |
0.50 |
|
|
|
|
|
|
|
Discontinued operations: |
|
|
|
|
|
Basic
earnings per share |
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
Diluted
earnings per share |
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
|
|
|
|
|
Net income: |
|
|
|
|
|
Basic earnings per share |
$ |
0.40 |
|
|
$ |
1.17 |
|
|
$ |
0.51 |
|
Diluted earnings per share |
$ |
0.40 |
|
|
$ |
1.16 |
|
|
$ |
0.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
ADVANCED ENERGY INDUSTRIES,
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(in thousands)
|
March 31, |
|
December 31, |
|
2019 |
|
2018 |
ASSETS |
Unaudited |
|
|
|
|
|
|
Current assets: |
|
|
|
Cash and cash
equivalents |
$ |
351,149 |
|
|
$ |
349,301 |
|
Marketable securities |
2,516 |
|
|
2,470 |
|
Accounts
and other receivable, net |
102,405 |
|
|
100,442 |
|
Inventories, net |
99,070 |
|
|
97,987 |
|
Income
taxes receivable |
1,945 |
|
|
2,220 |
|
Other
current assets |
11,309 |
|
|
10,173 |
|
Current
assets of discontinued operations |
4,872 |
|
|
5,855 |
|
Total current
assets |
573,266 |
|
|
568,448 |
|
|
|
|
|
Property and equipment,
net |
31,058 |
|
|
31,269 |
|
Operating lease
right-of-use assets |
35,654 |
|
|
— |
|
|
|
|
|
Deposits and other
assets |
9,378 |
|
|
6,874 |
|
Goodwill and
intangibles, net |
154,164 |
|
|
156,810 |
|
Deferred income tax
assets |
47,513 |
|
|
47,099 |
|
Non-current assets of
discontinued operations |
5,917 |
|
|
5,984 |
|
Total assets |
$ |
856,950 |
|
|
$ |
816,484 |
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
44,028 |
|
|
$ |
39,646 |
|
Other
accrued expenses |
56,470 |
|
|
65,377 |
|
Current
portion of operating lease liability |
7,298 |
|
|
— |
|
Current
liabilities of discontinued operations |
4,254 |
|
|
5,286 |
|
Total current
liabilities |
112,050 |
|
|
110,309 |
|
|
|
|
|
Non-current liabilities of continuing operations |
112,270 |
|
|
88,158 |
|
Non-current liabilities of discontinued operations |
10,486 |
|
|
10,715 |
|
Long-term
liabilities |
122,756 |
|
|
98,873 |
|
|
|
|
|
Total liabilities |
234,806 |
|
|
209,182 |
|
|
|
|
|
Advanced Energy
stockholders’ equity |
621,624 |
|
|
606,790 |
|
Noncontrolling
interest |
520 |
|
|
512 |
|
Stockholders'
equity |
622,144 |
|
|
607,302 |
|
Total liabilities and
stockholders' equity |
$ |
856,950 |
|
|
$ |
816,484 |
|
|
|
|
|
|
|
|
|
December 31, 2018 amounts are derived from the
December 31, 2018 audited Consolidated Financial Statements.
ADVANCED ENERGY INDUSTRIES,
INC.CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS(in thousands)
|
Three Months Ended March 31, |
|
2019 |
|
2018 |
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
Net
income |
$ |
15,378 |
|
|
$ |
46,510 |
|
Income
(loss) from discontinued operations, net of income taxes |
(9 |
) |
|
140 |
|
Income
from continuing operations, net of income taxes |
15,387 |
|
|
46,370 |
|
|
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
4,181 |
|
|
2,861 |
|
Stock-based compensation expense |
3,199 |
|
|
4,494 |
|
Net loss
on disposal of assets |
6 |
|
|
138 |
|
Changes
in operating assets and liabilities, net of assets acquired |
(15,269 |
) |
|
(18,978 |
) |
Net cash
provided by operating activities from continuing operations |
6,855 |
|
|
34,885 |
|
Net cash
used in operating activities from discontinued operations |
(1,409 |
) |
|
(1,784 |
) |
Net cash
provided by operating activities |
5,446 |
|
|
33,101 |
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
Acquisitions, net of cash acquired |
— |
|
|
(6,072 |
) |
Purchases
of property and equipment |
(2,436 |
) |
|
(3,923 |
) |
Net cash
used in investing activities from continuing operations |
(2,436 |
) |
|
(9,995 |
) |
Net cash
used in investing activities from discontinued operations |
— |
|
|
— |
|
Net cash
used in investing activities |
(2,436 |
) |
|
(9,995 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
Purchase
and retirement of common stock |
— |
|
|
(12,750 |
) |
Net
payments related to stock-based award activities |
(1,707 |
) |
|
(4,032 |
) |
Net cash
used in financing activities from continuing operations |
(1,707 |
) |
|
(16,782 |
) |
Net cash
used in financing activities from discontinued operations |
— |
|
|
— |
|
Net cash
used in financing activities |
(1,707 |
) |
|
(16,782 |
) |
EFFECT OF
CURRENCY TRANSLATION ON CASH |
(566 |
) |
|
167 |
|
INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS |
737 |
|
|
6,491 |
|
CASH AND CASH
EQUIVALENTS, beginning of period |
354,552 |
|
|
415,037 |
|
CASH AND CASH
EQUIVALENTS, end of period |
355,289 |
|
|
421,528 |
|
Less cash and
cash equivalents from discontinued operations |
4,140 |
|
|
7,654 |
|
CASH AND CASH
EQUIVALENTS FROM CONTINUING OPERATIONS, end of period |
$ |
351,149 |
|
|
$ |
413,874 |
|
|
|
|
|
|
|
|
|
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, |
|
2019 |
|
2018 |
|
2018 |
Gross profit from
continuing operations, as reported |
$ |
65,740 |
|
|
$ |
103,645 |
|
|
$ |
75,188 |
|
Adjustments to gross
profit: |
|
|
|
|
|
Stock-based compensation |
233 |
|
|
351 |
|
|
166 |
|
Facility
expansion and relocation costs |
170 |
|
|
— |
|
|
354 |
|
Acquisition-related costs |
— |
|
|
— |
|
|
411 |
|
Non-GAAP gross
profit |
66,143 |
|
|
103,996 |
|
|
76,119 |
|
|
|
|
|
|
|
Operating expenses from
continuing operations, as reported |
53,949 |
|
|
47,542 |
|
|
55,618 |
|
Adjustments: |
|
|
|
|
|
Amortization of intangible assets |
(1,973 |
) |
|
(1,257 |
) |
|
(1,816 |
) |
Stock-based compensation |
(2,966 |
) |
|
(4,143 |
) |
|
(2,077 |
) |
Acquisition-related costs |
(1,511 |
) |
|
(350 |
) |
|
(416 |
) |
Facility
expansion and relocation costs |
(74 |
) |
|
(476 |
) |
|
— |
|
Restructuring charges |
(1,673 |
) |
|
— |
|
|
(3,836 |
) |
Non-GAAP operating
expenses |
45,752 |
|
|
41,316 |
|
|
47,473 |
|
Non-GAAP operating
income |
$ |
20,391 |
|
|
$ |
62,680 |
|
|
$ |
28,646 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Non-GAAP measure - operating expenses and operating income,
excluding certain items |
Three Months Ended |
|
March 31, |
|
December 31, |
|
2019 |
|
2018 |
|
2018 |
Gross profit from
continuing operations, as reported |
|
46.7 |
% |
|
|
53.0 |
% |
|
|
48.8 |
% |
Adjustments to gross
profit: |
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
0.2 |
|
|
|
0.2 |
|
|
|
0.1 |
|
Facility
expansion and relocation costs |
|
0.1 |
|
|
|
— |
|
|
|
0.2 |
|
Acquisition-related costs |
|
— |
|
|
|
— |
|
|
|
0.3 |
|
Non-GAAP gross
profit |
|
47.0 |
|
|
|
53.2 |
|
|
|
49.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses from
continuing operations, as reported |
|
38.3 |
|
|
|
24.3 |
|
|
|
36.1 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
(1.4 |
) |
|
|
(0.6 |
) |
|
|
(1.2 |
) |
Stock-based compensation |
|
(2.0 |
) |
|
|
(2.1 |
) |
|
|
(1.3 |
) |
Acquisition-related costs |
|
(1.1 |
) |
|
|
(0.2 |
) |
|
|
(0.3 |
) |
Facility
expansion and relocation costs |
|
(0.1 |
) |
|
|
(0.2 |
) |
|
|
— |
|
Restructuring charges |
|
(1.2 |
) |
|
|
— |
|
|
|
(2.5 |
) |
Non-GAAP operating
expenses |
|
32.5 |
|
|
|
21.2 |
|
|
|
30.8 |
|
Non-GAAP operating
income |
|
14.5 |
% |
|
|
32.0 |
% |
|
|
18.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Non-GAAP measure - income excluding certain items |
Three Months Ended |
|
March 31, |
|
December 31, |
|
2019 |
|
2018 |
|
2018 |
Income from continuing
operations, less noncontrolling interest, net of income taxes |
$ |
15,379 |
|
|
$ |
46,339 |
|
|
$ |
19,218 |
|
Adjustments: |
|
|
|
|
|
Amortization of intangible assets |
1,973 |
|
|
1,257 |
|
|
1,816 |
|
Acquisition-related costs |
1,511 |
|
|
350 |
|
|
827 |
|
Facility
expansion and relocation costs |
244 |
|
|
476 |
|
|
354 |
|
Restructuring charges |
1,673 |
|
|
— |
|
|
3,836 |
|
Tax Cuts
and Jobs Act Impact |
— |
|
|
1,853 |
|
|
1,452 |
|
Tax
effect of Non-GAAP adjustments |
(851 |
) |
|
(309 |
) |
|
(1,198 |
) |
Non-GAAP income, net of
income taxes, excluding stock-based compensation |
19,929 |
|
|
49,966 |
|
|
26,305 |
|
Stock-based
compensation, net of taxes |
2,463 |
|
|
3,460 |
|
|
1,705 |
|
Non-GAAP income, net of
income taxes |
$ |
22,392 |
|
|
$ |
53,426 |
|
|
$ |
28,010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Non-GAAP measure - per share earnings excluding certain
items |
Three Months Ended |
|
March 31, |
|
December 31, |
|
2019 |
|
2018 |
|
2018 |
Diluted earnings per
share from continuing operations, as reported |
$ |
0.40 |
|
|
$ |
1.16 |
|
|
$ |
0.50 |
|
Add back: |
|
|
|
|
|
per share
impact of Non-GAAP adjustments, net of tax |
0.18 |
|
|
0.18 |
|
|
0.23 |
|
Non-GAAP per share
earnings |
$ |
0.58 |
|
|
$ |
1.34 |
|
|
$ |
0.73 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Q2 2019 Guidance |
|
|
|
|
Low End |
|
High End |
|
|
|
|
Revenue |
$130 million |
|
$140 million |
|
|
|
|
Reconciliation
of Non-GAAP earnings per share |
|
|
|
GAAP earnings per
share |
$ |
0.10 |
|
|
$ |
0.25 |
|
Stock-based compensation |
0.06 |
|
|
0.06 |
|
Amortization of intangible assets |
0.05 |
|
|
0.05 |
|
Restructuring and other |
0.08 |
|
|
0.07 |
|
Tax
effects of excluded items |
(0.04 |
) |
|
(0.03 |
) |
Non-GAAP
earnings per share |
$ |
0.25 |
|
|
$ |
0.40 |
|
|
|
|
|
|
|
|
|
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