- Q3 revenue was $346 million, above the midpoint of
guidance
- GAAP EPS from continuing operations was $0.55
- Non-GAAP EPS was $0.89, above the midpoint of
guidance
Advanced Energy Industries, Inc. (Nasdaq: AEIS), a global leader
in highly engineered, precision power conversion, measurement, and
control solutions, today announced financial results for the third
quarter ended September 30, 2021.
“Our third quarter results represent solid performance in a
supply-constrained environment,” said Steve Kelley, president and
CEO of Advanced Energy. “Demand for our highly engineered power
delivery systems remains extremely robust. In addition, we are very
pleased by the customer reaction to our new technologies and
products, the drivers of AE’s future revenue and profit
growth.”
Third Quarter Results
Sales were $346.1 million in the third quarter of 2021, compared
with $361.3 million in the second quarter of 2021 and $389.5
million in the third quarter of 2020.
GAAP net income from continuing operations was $21.0 million or
$0.55 per diluted share in the quarter, compared with $35.5 million
or $0.92 per diluted share in the prior quarter, and $45.6 million
or $1.18 per diluted share a year ago.
Non-GAAP net income was $34.0 million or $0.89 per diluted share
in the third quarter of 2021. This compares with $48.1 million or
$1.25 per diluted share in the second quarter of 2021, and $63.8
million or $1.66 per diluted share in the third quarter of
2020.
A reconciliation of non-GAAP measures is provided in the tables
below.
The company generated $18.3 million of cash flow from continuing
operations during the quarter, repurchased $52.6 million of common
stock at $86.93 per share, and paid $3.9 million in a quarterly
dividend.
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 is available
in the company’s 2020 Annual Report on Form 10-K.
Fourth Quarter 2021
Guidance
Based on the company’s current view, beliefs and assumptions,
guidance for the fourth quarter of 2021 is within the following
ranges.
Q4 2021
Revenues
$355M +/- $20M
GAAP EPS from continuing operations
$0.62 +/- $0.25
Non-GAAP EPS
$0.92 +/- $0.25
Conference Call
Management will host a conference call today, November 8, 2021
at 4:30 p.m. Eastern Time to discuss Advanced Energy’s financial
results. To participate in the live conference call, please dial
(877) 407-0890 approximately five minutes prior to the start of the
meeting and an operator will connect you. International
participants can dial +1 (201) 389-0918. A webcast will also be
available on the company’s investors web page at
ir.advancedenergy.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 applications for a wide range of industries including
semiconductor equipment, industrial, manufacturing,
telecommunications, data center computing and healthcare. 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 four decades to
perfecting power for its global customers and is headquartered in
Denver, Colorado, USA. For more information, visit
www.advancedenergy.com.
Advanced Energy | Precision. Power. Performance.
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. Beginning in the second quarter of 2020,
Advanced Energy’s non-GAAP measures exclude non-cash unrealized
foreign currency gains or losses that result from remeasurement to
functional currency long-term obligations related to pension and
operating lease liabilities as the remeasurement does not represent
current economic exposure and is unrelated to our overall operating
performance. These long-term obligations were acquired in
connection with the Artesyn acquisition and the company previously
used derivatives to hedge the exposure; however, the company has
determined it will no longer hedge these non-economic exposures.
The tax effect of our non-GAAP adjustments represents the
anticipated annual tax rate applied to each non-GAAP adjustment
after consideration of their respective book and tax
treatments.
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, non-economic foreign currency
remeasurements, and other cash 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, potential future growth and profitability, future business
mix, expectations regarding future market trends, 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) supply chain disruptions and component
shortages that may impact the company’s ability to obtain in a
timely manner the materials necessary to manufacture its products;
(b) the effects of global macroeconomic conditions upon demand for
our products and services; (c) the volatility and cyclicality of
the industries the company serves, particularly the semiconductor
industry; (d) delays in capital spending by end-users in our served
markets; (e) the risks and uncertainties related to the integration
of Artesyn Embedded Power including the optimization and reduction
of our global manufacturing sites; (f) the continuing spread of
COVID-19 and its potential adverse impact on our product
manufacturing, research and development, supply chain, services and
administrative operations; (g) the accuracy of the company’s
estimates related to fulfilling solar inverter product warranty and
post-warranty obligations; (h) the company’s ability to realize its
plan to avoid additional costs after the solar inverter wind-down;
(i) the accuracy of the company’s assumptions on which its
financial statement projections are based; (j) the impact of
product price changes, which may result from a variety of factors;
(k) the timing of orders received from customers; (l) the company’s
ability to realize benefits from cost improvement efforts including
avoided costs, restructuring plans and inorganic growth; (m)
unanticipated changes to management’s estimates, reserves or
allowances; (n) changes and adjustments to the tax expense and
benefits related to the U.S. tax reform that was enacted in late
2017; and (o) the impact of political, economic and policy tensions
and conflicts between China and the United States including, but
not limited to, trade wars and export restrictions between the two
countries, China’s national security law for Hong Kong, and China’s
expansion of control over the South China Sea, any of which could
negatively impact our customers’ and our presence, operations, and
financial results. 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.advancedenergy.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
Nine Months Ended
September 30,
June 30,
September 30,
2021
2020
2021
2021
2020
Sales, net
$
346,093
$
389,521
$
361,311
$
1,059,024
$
1,044,857
Cost of sales
226,054
235,736
226,278
666,449
648,537
Gross profit
120,039
153,785
135,033
392,575
396,320
34.7
%
39.5
%
37.4
%
37.1
%
37.9
%
Operating expenses:
Research and development
40,578
36,807
40,119
120,865
107,432
Selling, general, and administrative
48,373
51,481
48,110
143,214
145,646
Amortization of intangible assets
5,607
5,049
5,513
16,504
15,064
Restructuring expense
1,272
1,494
211
2,521
7,940
Total operating expenses
95,830
94,831
93,953
283,104
276,082
Operating income
24,209
58,954
41,080
109,471
120,238
Other income (expense), net
495
(6,558
)
(3,662
)
(3,674
)
(11,655
)
Income from continuing operations, before
income taxes
24,704
52,396
37,418
105,797
108,583
Provision (benefit) for income taxes
3,657
6,783
1,876
10,817
15,293
Income from continuing operations
21,047
45,613
35,542
94,980
93,290
Income (loss) from discontinued
operations, net of income taxes
(37
)
50
(102
)
171
(421
)
Net income
21,010
45,663
35,440
95,151
92,869
Income from continuing operations
attributable to noncontrolling interest
6
36
31
70
35
Net income attributable to Advanced
Energy Industries, Inc.
$
21,004
$
45,627
$
35,409
$
95,081
$
92,834
Basic weighted-average common shares
outstanding
38,183
38,325
38,389
38,296
38,322
Diluted weighted-average common shares
outstanding
38,363
38,528
38,586
38,517
38,531
Earnings per share attributable to
Advanced Energy Industries, Inc:
Continuing operations:
Basic earnings per share
$
0.55
$
1.19
$
0.93
$
2.48
$
2.43
Diluted earnings per share
$
0.55
$
1.18
$
0.92
$
2.46
$
2.42
Discontinued operations:
Basic earnings (loss) per share
$
—
$
—
$
—
$
—
$
(0.01
)
Diluted earnings (loss) per share
$
—
$
—
$
—
$
—
$
(0.01
)
Net income:
Basic earnings per share
$
0.55
$
1.19
$
0.92
$
2.48
$
2.42
Diluted earnings per share
$
0.55
$
1.19
$
0.92
$
2.47
$
2.41
ADVANCED ENERGY INDUSTRIES,
INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands)
September 30,
December 31,
2021
2020
ASSETS
Current assets:
Cash and cash equivalents
$
547,923
$
480,368
Marketable securities
2,833
2,654
Accounts and other receivable, net
220,112
235,178
Inventories
341,500
221,346
Income taxes receivable
19,005
4,804
Other current assets
32,984
35,899
Total current assets
1,164,357
980,249
Property and equipment, net
114,801
114,731
Operating lease right-of-use assets
104,179
103,858
Deposits and other assets
19,067
19,101
Goodwill and intangible assets, net
378,657
378,922
Deferred income tax assets
50,994
50,801
Total assets
$
1,832,055
$
1,647,662
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
190,228
$
125,224
Other accrued expenses
160,923
137,081
Current portion of long-term debt
20,000
17,500
Current portion of operating lease
liabilities
16,137
16,592
Total current liabilities
387,288
296,397
Long-term debt
377,597
304,546
Non-current liabilities
225,379
231,379
Long-term liabilities
602,976
535,925
Total liabilities
990,264
832,322
Advanced Energy stockholders' equity
841,120
814,739
Noncontrolling interest
671
601
Total stockholders’ equity
841,791
815,340
Total liabilities and stockholders’
equity
$
1,832,055
$
1,647,662
ADVANCED ENERGY INDUSTRIES,
INC.
CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS (UNAUDITED)
(in thousands)
Nine Months Ended September
30,
2021
2020
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income
$
95,151
$
92,869
Income (loss) from discontinued
operations, net of income taxes
171
(421
)
Income from continuing operations, net of
income taxes
94,980
93,290
Adjustments to reconcile net income to net
cash from operating activities:
Depreciation and amortization
39,225
35,433
Stock-based compensation expense
12,819
9,666
Provision for deferred income taxes
(1,404
)
(7,849
)
Discount on notes receivable
(638
)
721
Loss on disposal of assets
923
678
Changes in operating assets and
liabilities, net of assets acquired
(39,495
)
3,093
Net cash from operating activities from
continuing operations
106,410
135,032
Net cash from operating activities from
discontinued operations
(523
)
(659
)
Net cash from operating activities
105,887
134,373
CASH FLOWS FROM INVESTING
ACTIVITIES:
Net proceeds from sale of marketable
securities
—
3
Receipt (issuance) of notes receivable
802
(1,000
)
Proceeds from sale of property and
equipment
1,537
103
Purchases of property and equipment
(22,721
)
(25,232
)
Acquisitions, net of cash acquired
(18,739
)
(1,127
)
Net cash from investing activities from
continuing operations
(39,121
)
(27,253
)
Net cash from investing activities from
discontinued operations
—
—
Net cash from investing activities
(39,121
)
(27,253
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from long-term borrowings
85,000
—
Payment of debt-issuance costs
(1,350
)
—
Payments on long-term borrowings
(8,750
)
(13,125
)
Dividend payments
(11,585
)
—
Purchase and retirement of common
stock
(56,625
)
(11,579
)
Net payments related to stock-based
awards
(3,136
)
(1,451
)
Net cash from financing activities from
continuing operations
3,554
(26,155
)
Net cash from financing activities from
discontinued operations
—
—
Net cash from in financing activities
3,554
(26,155
)
EFFECT OF CURRENCY TRANSLATION ON
CASH
(2,765
)
1,571
NET CHANGE IN CASH AND CASH
EQUIVALENTS
67,555
82,536
CASH AND CASH EQUIVALENTS, beginning of
period
480,368
346,441
CASH AND CASH EQUIVALENTS, end of
period
547,923
428,977
Less cash and cash equivalents from
discontinued operations
—
—
CASH AND CASH EQUIVALENTS FROM
CONTINUING OPERATIONS, end of period
$
547,923
$
428,977
ADVANCED ENERGY INDUSTRIES,
INC.
SUPPLEMENTAL INFORMATION
(UNAUDITED)
(in thousands)
Net Sales by Product Line
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
2021
2020
2021
2021
2020
Semiconductor Equipment
$
173,441
$
167,058
$
176,671
$
530,828
$
446,107
Industrial and Medical
80,800
87,013
83,197
242,412
219,877
Data Center Computing
62,231
87,741
69,458
190,843
257,240
Telecom and Networking
29,621
47,709
31,985
94,941
121,633
Total
$
346,093
$
389,521
$
361,311
$
1,059,024
$
1,044,857
Net Sales by Geographic Region
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
2021
2020
2021
2021
2020
United States
$
139,089
$
152,503
$
139,525
$
410,212
$
389,007
North America (excluding U.S.)
24,708
38,126
26,112
77,067
115,712
Asia
135,838
180,660
148,803
434,232
462,388
Europe
44,838
17,886
44,491
129,751
76,070
Other
1,620
346
2,380
7,762
1,680
Total
$
346,093
$
389,521
$
361,311
$
1,059,024
$
1,044,857
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
Nine Months Ended
September 30,
June 30,
September 30,
2021
2020
2021
2021
2020
Gross profit from continuing operations,
as reported
$
120,039
$
153,785
$
135,033
$
392,575
$
396,320
Adjustments to gross profit:
Stock-based compensation
218
67
215
783
445
Facility expansion, relocation costs and
other
1,357
1,095
1,997
5,192
3,608
Acquisition-related costs
3,259
—
84
3,351
5,356
Non-GAAP gross profit
124,873
154,947
137,329
401,901
405,729
Non-GAAP gross margin
36.1
%
39.8
%
38.0
%
38.0
%
38.8
%
Operating expenses from continuing
operations, as reported
95,830
94,831
93,953
283,104
276,082
Adjustments:
Amortization of intangible assets
(5,607
)
(5,049
)
(5,513
)
(16,504
)
(15,064
)
Stock-based compensation
(3,456
)
(3,714
)
(3,229
)
(12,036
)
(9,221
)
Acquisition-related costs
(1,768
)
(5,214
)
(2,328
)
(6,124
)
(10,597
)
Facility expansion, relocation costs and
other
(98
)
(415
)
(63
)
(212
)
(1,770
)
Restructuring charges
(1,272
)
(1,494
)
(211
)
(2,521
)
(7,940
)
Non-GAAP operating expenses
83,629
78,945
82,609
245,707
231,490
Non-GAAP operating income
$
41,244
$
76,002
$
54,720
$
156,194
$
174,239
Non-GAAP operating margin
11.9
%
19.5
%
15.1
%
14.7
%
16.7
%
Reconciliation of Non-GAAP measure -
income excluding certain items
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
2021
2020
2021
2021
2020
Income from continuing operations, less
non-controlling interest, net of income taxes
$
21,041
$
45,577
$
35,511
$
94,910
$
93,255
Adjustments:
Amortization of intangible assets
5,607
5,049
5,513
16,504
15,064
Acquisition-related costs
5,027
5,214
2,412
9,475
15,953
Facility expansion, relocation costs, and
other
1,455
1,510
2,060
5,404
5,378
Restructuring charges
1,272
1,494
211
2,521
7,940
Unrealized foreign currency (gain)
loss
(2,092
)
3,540
885
(3,409
)
4,598
Acquisition-related costs and other
included in other income (expense), net
(79
)
625
899
907
625
Tax effect of non-GAAP adjustments
(1,036
)
(2,115
)
(2,043
)
(4,363
)
(6,080
)
Non-GAAP income, net of income taxes,
excluding stock-based compensation
31,195
60,894
45,448
121,949
136,733
Stock-based compensation, net of taxes
2,811
2,892
2,636
9,809
7,425
Non-GAAP income, net of income taxes
$
34,006
$
63,786
$
48,084
$
131,758
$
144,158
Reconciliation of non-GAAP measure -
per share earnings excluding certain items
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
2021
2020
2021
2021
2020
Diluted earnings per share from continuing
operations, as reported
$
0.55
$
1.18
$
0.92
$
2.46
$
2.42
Add back (subtract):
Per share impact of non-GAAP adjustments,
net of tax
0.34
0.48
0.33
0.96
1.32
Non-GAAP per share earnings
$
0.89
$
1.66
$
1.25
$
3.42
$
3.74
Quarterly results may not sum to year to
date due to rounding
Reconciliation of Q4 2021
Guidance
Low End
High End
Revenue
$335 million
$375 million
Reconciliation of non-GAAP earnings per
share
GAAP earnings per share
$
0.37
$
0.87
Stock-based compensation
0.11
0.11
Amortization of intangible assets
0.14
0.14
Restructuring and other
0.10
0.10
Tax effects of excluded items
(0.05
)
(0.05
)
Non-GAAP earnings per share
$
0.67
$
1.17
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211108005936/en/
Brian Smith Advanced Energy (970) 407-6555
brian.smith@aei.com
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