Advanced Energy Industries, Inc. (Nasdaq GM:AEIS) today
announced financial results for the third quarter ended September
30, 2010. Total sales for the third quarter were $141.0 million,
another record for the company, with earnings of $0.40 per diluted
share from continuing operations. The financials highlighted in
this release exclude results from the Aera® mass flow controller
business, which was sold to Hitachi Metals, Ltd. on October 15,
2010. Results for the quarter include a full quarter of operations
from PV Powered, Inc.
“We had another exceptional quarter with all key areas of our
business growing significantly. This record performance was
highlighted by the sixth straight quarter of growth in
semiconductor revenues, significant acceleration of our inverter
business, now 27% of sales, and strong operating leverage,” said
Dr. Hans Betz, chief executive officer. "The aggressive capacity
additions and investment in our inverter business have proven very
successful, as Advanced Energy was recently ranked #1 in the
3-phase North America solar PV inverter market, according to IMS
Research. With the diversification of Advanced Energy into high
growth power conversion markets, particularly inverters, we are
well positioned to capitalize on future opportunities and expand
our business."
Semiconductor sales rose 12.5% sequentially to $49.4 million,
representing 35.0% of total sales for the quarter. Sales to the
non-semiconductor thin film markets increased 49.8% sequentially to
$41.1 million, representing 29.2% of total sales for the quarter.
Inverter sales grew substantially to $37.4 million, or 26.5% of
total sales compared to $14.4 million in the second quarter.
Service revenue also exhibited healthy growth, increasing to $13.2
million, or 9.3% of total sales, compared to $10.7 million last
quarter.
Bookings for the third quarter reached a record $160.3 million,
increasing 17.2% compared to $136.7 million in the second quarter
of 2010. This resulted in a book-to-bill ratio of 1.14:1 for the
third quarter. Ending backlog for the third quarter increased 17.7%
sequentially to $128.5 million, compared to $109.2 million at the
end of the second quarter of 2010.
Gross margin for the third quarter was 43.1%, compared with
44.5% in the second quarter of 2010 and 31.9% in the same period
last year. The strong growth in inverter revenues this quarter
drove inverters to a larger percentage of total sales, pushing
margins down in the short-term.
Operating expenses for the third quarter increased to $38.4
million compared to $31.5 million in the second quarter in order to
support higher sales volumes, and as a result of an additional full
quarter of PV Powered expenses compared to just two months in the
second quarter. As a percent of sales, operating costs were 27.2%
compared to 31.4% of sales in the prior quarter. Operating costs
during the quarter also included $1.2 million in amortization of
acquired intangible assets related to the acquisition of PV
Powered.
Third quarter net income from continuing operations was $17.6
million or $0.40 per diluted share, compared to net income from
continuing operations of $11.5 million or $0.26 per diluted share
in the second quarter of 2010. In the same period a year ago, net
loss from continuing operations was $8.4 million or a loss of $0.20
per share.
Cash and investments were $112.4 million at the end of the third
quarter, compared to $128.9 million in the second quarter due to
investment in capital equipment as well as inventory purchases to
support our growing backlog of inverter sales.
Fourth Quarter 2010 Guidance
The Company anticipates fourth quarter 2010 results from
continuing operations, to be within the following ranges:
- Sales of $140 million to $150
million
- Gross profit of 41% to 43%
- Earnings per share of $0.36 to
$0.42
Third Quarter 2010 Conference Call
Management will host a conference call tomorrow, Monday,
November 1, 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) 771-4371. International
callers may access the call by dialing (847) 585-4405. Participants
will need to provide a conference pass code 28184917. For a replay
of this teleconference, please call (888) 843-7419 or (630)
652-3042, and enter the pass code 28184917. The replay will be
available for two weeks following the conference call. 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 fourth quarter ending December 31, 2010 and
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: 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, the ability to source materials and
manufacture products, 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
Nine Months Ended September 30, June 30,
September 30, 2010 2009 2010
2010 2009 Sales $ 140,966 $ 43,452 $ 100,107 $
310,760 $ 103,766 Cost of sales 80,276 29,597
55,548 176,304 77,244
Gross profit 60,690 13,855 44,559 134,456 26,522 43.1 % 31.9
% 44.5 % 43.3 % 25.6 % Operating expenses: Research and development
16,672 9,448 13,515 41,329 30,413 Selling, general and
administrative 20,545 9,801 17,183 49,956 27,723 Impairment of
goodwill - - - - 63,260 Amortization of intangible assets 1,177 -
767 1,944 102 Restructuring charges - 235
- - 4,370 Total
operating expenses 38,394 19,484
31,465 93,229 125,868
Income (loss) from operations 22,296 (5,629 ) 13,094 41,227 (99,346
) Other income, net 1,224 506
220 1,828 1,415 Income
(loss) from operations before income taxes 23,520 (5,123 ) 13,314
43,055 (97,931 ) Provision for income taxes 5,964
3,229 1,857 9,192
5,557 Net income (loss) from continuing operations
17,556 (8,352 ) 11,457 33,863
(103,488 ) Basic earnings (loss) per share
from continuing operations $ 0.41 $ (0.20 ) $ 0.27 $ 0.79 $ (2.47 )
Diluted earnings (loss) per share from continuing operations $ 0.40
$ (0.20 ) $ 0.26 $ 0.78 $ (2.47 )
Gain (loss) from discontinued operations, net of income
taxes 2,392 (79 ) 2,162
5,921 (740 ) Basic earnings (loss) per share
from discontinuing operations $ 0.06 $ (0.00 ) $ 0.05 $ 0.14 $
(0.02 ) Diluted earnings (loss) per share from discontinuing
operations $ 0.05 $ (0.00 ) $ 0.05 $ 0.14 $ (0.02 )
Net Income (loss) $ 19,948 $ (8,431 ) $
13,619 $ 39,784 $ (104,228 ) Basic earnings
(loss) per share $ 0.46 $ (0.20 ) $ 0.32 $ 0.93 $ (2.48 ) Diluted
earnings (loss) per share $ 0.45 $ (0.20 ) $ 0.31 $ 0.92 $ (2.48 )
Basic weighted-average common shares outstanding 43,254
42,004 42,806 42,711 41,944 Diluted weighted-average common shares
outstanding 43,849 42,004 43,327 43,293 41,944
CONDENSED
CONSOLIDATED BALANCE SHEETS (in thousands)
September 30, December 31, 2010 2009 ASSETS Current
assets: Cash and cash equivalents $ 101,566 $ 133,106 Marketable
securities 10,834 44,401 Accounts receivable, net 112,457 50,267
Inventories, net 66,691 28,567 Deferred income taxes 9,669 9,222
Income taxes receivable 4,325 - Assets held for sale 30,315 26,460
Other current assets 8,857 5,641 Total current assets
344,714 297,664 Property and equipment, net 24,732 18,687
Deposits and other 8,829 9,295 Goodwill and intangibles, net
97,068 - Deferred income tax assets, net 20,549
19,479 Total assets $ 495,892 $ 345,125 LIABILITIES
AND STOCKHOLDERS' EQUITY Current liabilities: Accounts
payable $ 36,153 $ 23,802 Other accrued expenses 37,816 24,055
Acquisition related contingent liability 38,967 - Liabilities of
business held for sale 1,992 1,477 Total current
liabilities 114,928 49,334 Long-term liabilities
43,224 17,457 Total liabilities 158,152 66,791
Stockholders' equity 337,740 278,334 Total
liabilities and stockholders' equity $ 495,892 $ 345,125
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