Advanced Energy Industries, Inc. (Nasdaq GM: AEIS) today
announced financial results for the second quarter ended June 30,
2010. Total sales for the second quarter were $115.2 million,
representing an all-time high for the company in a single quarter
and producing earnings of $0.31 per diluted share. The results
highlighted in this release include our Aera® mass flow controller
business that is currently being divested, as well as the inclusion
of two months of operating results from PV Powered.
“We had an outstanding second quarter, with $154 million in
bookings and $115 million in revenue, including PV Powered and the
flow business. As our semiconductor revenues continued to grow, the
semiconductor industry demonstrated its momentum again this
quarter,” said Dr. Hans Betz, chief executive officer.
"Our recent acquisition of PV Powered contributed significantly
to our higher inverter revenues and backlog, which we anticipate
will provide momentum for the second half of 2010. PV Powered also
contributed to our bottom line, delivering a profitable second
quarter ahead of expectations and making the acquisition
immediately accretive. The addition of this excellent team and
product line to our Solaron inverter business positions us to forge
ahead and take the leading position in the US market for inverters
and expand worldwide.”
"Additionally, today we announced that we are divesting our flow
business. We see this move as a crucial part of our corporate
strategy to focus the company on becoming the market leader in
power conversion and capitalize on future growth
opportunities.”
Semiconductor sales rose 9.9% sequentially to $53.5 million,
representing 46.4% of total sales for the quarter. Sales to the
non-semiconductor thin film markets increased 87.2% sequentially to
$35.9 million, representing 31.2% of total sales for the quarter.
Inverter sales grew substantially with the addition of PV Powered
to $14.4 million to 12.5% of total sales compared to $2.3 million
in the first quarter. Service revenue was flat sequentially at
$11.4 million, representing 9.9% of total sales for the
quarter.
Bookings for the second quarter, including $15.3 million for the
mass flow controller business, hit a record of $154.3 million, or a
60.0% increase, compared to $96.7 million in the first quarter of
2010, resulting in a book-to-bill ratio of 1.34:1 for the second
quarter. Ending backlog for the second quarter increased 52.0%
sequentially to $123.6 million, including $14.4 million for the
flow business, compared to $81.3 million at the end of the first
quarter of 2010.
Advanced Energy also announced that it has entered into an
agreement to sell its flow business, related product lines and all
related assets including the real property in Japan to Hitachi
Metals, Ltd. for $44 million in cash, subject to an adjustment
based on inventory balance at closing. The company anticipates this
transaction will close in the third quarter of 2010 subject to
satisfaction of customary closing conditions.
As a result of this transaction, the financial results for our
flow business will be recorded in discontinued operations on a net
basis beginning with the second quarter 2010. These amounts are
revenue of $15.1 million, gross profit of $5.3 million, operating
expenses of $1.7 million and net income of $2.2 million, or $0.05
per diluted share in the quarter ended June 30, 2010. Comparable
results for the flow business for the second quarter of 2009 were
revenues of $3.7 million, gross profit of $0.6 million, operating
expenses of $1.3 million and a net loss of $0.4 million, or
$0.01 per diluted share. For comparative purposes, the financial
results discussed below assume the adjustments for the divestiture
have been made.
Excluding the flow business, sales for the second quarter of
2010 increased 43.6% to $100.1 million from $69.7 million in the
first quarter of 2010, and up substantially from $31.9 million in
the second quarter of 2009.
Gross margin for the second quarter was 44.5%, compared with
41.9% in the first quarter of 2010, as a result of higher revenues
and leverage from overhead absorption. This compares to gross
margin of 22.8% in the same period last year.
Operating expenses for the second quarter increased to $31.5
million. This increase was significantly driven by the addition of
approximately two months of operating costs associated with the
acquisition of PV Powered, including an additional $767,000 of
amortization of acquired intangible assets.
Second quarter net income from continuing operations was $11.5
million or $0.26 per diluted share, compared to net income from
continuing operations of $4.9 million or $0.11 per diluted share in
the first quarter of 2010. In the same period a year ago, net loss
from continuing operations was $16.0 million or a loss of $0.38 per
share.
Cash, cash equivalents and investments were $128.9 million at
the end of the second quarter, versus $163.4 million in the first
quarter reflecting the $35 million payment for the PV Powered
acquisition.
Third Quarter 2010 Guidance
The Company anticipates third quarter 2010 results from
continuing operations, without revenues from the flow business, to
be within the following ranges:
- Sales of $130.0 million to
$140.0 million
- Earnings per share of $0.36 to
$0.44
Announcement of Agreement to Sell Aera Flow Controller and
Related Product Lines to Hitachi Metals, Ltd.
This earnings release should be read in conjunction with our
press release regarding the sale of the Aera flow business
transaction dated July 21, 2010.
Second Quarter 2010 Conference Call
Management will host a conference call tomorrow, Thursday July
22, 2010, at 8:30 a.m. Eastern Daylight Time to discuss Advanced
Energy's financial results. Domestic callers may access this
conference call by dialing (888) 713-4717. International callers
may access the call by dialing (816) 650-2836. Participants will
need to provide a conference pass code 86106130. For a replay of
this teleconference, please call (800) 642-1687 or (706) 645-9291,
and enter the pass code 86106130. The replay will be available
through 12:00 a.m. Eastern Daylight Time, July 24, 2010. A webcast
will also be available on the 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, thin-film
manufacturing and solar-power generation. 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.
Forward-Looking Language
The Company’s expectations with respect to guidance to financial
results for the third quarter ending September 30, 2010 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: the effects of global macroeconomic conditions upon
demand for our products, the volatility and cyclicality of the
industries the company serves, particularly the semiconductor
industry, the timing of orders received from customers, the
company's ability to realize cost improvement benefits, and
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. These reports
and statements are available on the SEC's website at www.sec.gov.
Copies may also be obtained from Advanced Energy's website at
www.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. The company assumes no obligation to update the
information in this press release.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED) (in thousands, except per share data)
Three Months Ended Six Months
Ended June 30, March 31, June 30,
2010 2009 2010 2010 2009
Sales $ 100,107 $ 31,898 $ 69,687 $ 169,794 $ 60,996 Cost of sales
55,548 24,616
40,480
96,028 47,644 Gross profit
44,559 7,282 29,207 73,766 13,352 44.5 % 22.8 % 41.9 % 43.4 % 21.9
% Operating expenses: Research and development 13,515 10,308 11,143
24,658 20,965 Selling, general and administrative 17,183 9,359
12,228 29,411 17,923 Impairment of goodwill - - - - 63,260
Amortization of intangible assets 767 - - 767 102 Restructuring
charges - 739 - -
4,135 Total operating expenses 31,465
20,406 23,371 54,836
106,384 Income (loss) from operations
13,094 (13,124 ) 5,836 18,930 (93,032 ) Other income, net
220 627 386 606
909 Income (loss) from operations before income taxes
13,314 (12,497 ) 6,222 19,536 (92,123 ) Provision (benefit) for
income taxes 1,857 3,110 1,371
3,228 2,602 Net income (loss)
from continuing operations $ 11,457 $ (15,607 ) $ 4,851
$ 16,308 $ (94,725 ) Basic earnings (loss) per
share $ 0.27 $ (0.37 ) $ 0.12 $ 0.38 $ (2.26 ) Diluted earnings
(loss) per share $ 0.26 $ (0.37 ) $ 0.11 $ 0.38 $ (2.26 )
Basic weighted-average common shares outstanding 42,806 41,948
42,074 42,440 41,915 Diluted weighted-average common shares
outstanding 43,327 41,948 42,680 43,004 41,915
GAIN (LOSS) FROM DISCONTINUED OPERATIONS, NET OF
INCOME TAXES $ 2,162 $ (427 ) $ 1,366 $ 3,529
$ (1,072 ) BASIC EARNINGS (LOSS) PER SHARE $ 0.05 $ (0.01 )
$ 0.03 $ 0.08 $ (0.03 ) DILUTED EARNINGS (LOSS) PER SHARE $ 0.05 $
(0.01 ) $ 0.03 $ 0.08 $ (0.03 )
NET INCOME (LOSS) $ 13,619 $ (16,034 ) $ 6,217 $
19,836 $ (95,797 ) BASIC EARNINGS (LOSS) PER SHARE $
0.32 $ (0.38 ) $ 0.15 $ 0.47 $ (2.29 ) DILUTED EARNINGS (LOSS) PER
SHARE $ 0.31 $ (0.38 ) $ 0.15 $ 0.46 $ (2.29 ) BASIC
WEIGHTED—AVERAGE COMMON SHARES OUTSTANDING 42,806 41,948 42,074
42,440 41,915 DILUTED WEIGHTED—AVERAGE COMMON SHARES OUTSTANDING
43,327 41,948 42,680 43,004 41,915
CONDENSED CONSOLIDATED
BALANCE SHEETS (in thousands) June 30,
December 31, 2010 2009 ASSETS Current assets: Cash
and cash equivalents $ 116,795 $ 133,106 Marketable securities
12,066 44,401 Accounts receivable, net 75,175 50,267 Inventories,
net 54,515 28,567 Deferred income taxes 9,183 9,223 Income taxes
receivable 3,245 - Assets held for sale 32,276 26,460 Other current
assets 7,532 5,641 Total current assets 310,787
297,665 Property and equipment, net 22,244 18,687
Deposits and other 8,814 9,295 Goodwill and intangibles, net 98,139
- Deferred income tax assets, net 20,268 19,479 Total
assets $ 460,252 $ 345,126 LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $
35,549 $ 23,802 Other accrued expenses 30,750 24,055 PVP Contingent
liability 38,967 - Liabilities of business held for sale
1,493 1,477 Total current liabilities 106,759 49,335
Long-term liabilities 42,860 17,457 Total
liabilities 149,619 66,791 Stockholders' equity
310,633 278,335 Total liabilities and stockholders' equity $
460,252 $ 345,126
RECONCILIATION OF CONSOLIDATED
STATEMENTS OF OPERATIONS (LOSS) FOR DISCONTINUED OPERATIONS
(in thousands) March 31, 2010
June 30, 2010 Consolidated
DiscontinuedOperations
Adjusted Q12010
Consolidated
DiscontinuedOperations
Adjusted Q22010
Total sales $ 81,552 $ 11,865 $ 69,687 $ 115,191 $ 15,084 $ 100,107
Cost of sales 48,444 7,964 40,480 65,302 9,754 55,548
Gross
profit 33,108 3,901 29,207 49,889 5,330 44,559 OPERATING
EXPENSES: R&D 11,590 447 11,143 13,959 444 13,515 Selling,
general and administrative 13,283 1,054 12,228 18,342 1,159 17,183
Intangible amortization 122 122 - 891 124 767 Total Operating
Expenses 24,995 1,623 23,371 33,192 1,727 31,465
Operating
Income 8,113 2,278 5,836 16,697
3,603 13,094 Other Income (Expense) 386 - 386 220 -
220
Pre-tax income 8,499 2,278 6,222
16,917 3,603 13,314 Provision for income taxes
2,282 911 1,371 3,299 1,442 1,857
Net Income $ 6,217
$ 1,367 $ 4,851 $ 13,618 $ 2,161 $
11,457 Diluted Earnings per Share $ 0.15 $
0.03 $ 0.11 $ 0.31 $ 0.05 $ 0.26
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