- Revenue of $128.5 million
- Results include a restructuring charge of $3.1
million
- Cash increased to $155 million
Advanced Energy Industries, Inc. (Nasdaq:AEIS) today announced
financial results for the third quarter ended September 30, 2011.
The company posted third quarter sales of $128.5 million, operating
income of 8.3% of sales and diluted earnings per share from
continuing operations of $0.16. On a non-GAAP basis, income
generated from operations was 10.7% of sales and earnings from our
continuing operations on a per share basis were $0.21. The non-GAAP
measures exclude the impact of the previously-announced $3.1
million restructuring charge recorded in the third quarter. A
reconciliation of non-GAAP income from operations and per share
earnings is provided in the tables.
"Tenuous macroeconomic conditions coupled with continuing
declines in capital equipment spending pressured our Thin Films
business this quarter. We continue to see revenue growth in our
Solar Energy business as orders increased and the deployment of our
previously announced utility scale projects continued," said Garry
Rogerson, chief executive officer. "By taking pro-active measures
to re-align our resources and cost structure, Advanced Energy will
be better positioned to make strategic investments that we expect
will extend our leadership and improve profitability in the future.
During the quarter, cash increased by $9 million as working capital
declined during the quarter."
Thin Films Business
Unit
Thin Films business unit sales were $76.8 million versus $103.6
million in the third quarter of 2010. On a sequential basis, Thin
Films sales declined 21.1% from $97.3 million in the second quarter
of 2011. Industry conditions across most of the company's thin
films end markets weakened this quarter. Semiconductor equipment
sales slowed as manufacturers limited purchases due to low fab
utilization rates. The thin film renewables market continued to
experience panel overcapacity and pricing pressure, while the flat
panel display market is undergoing a pause in investment as
capacity comes on line.
Solar Energy Business Unit
Solar Energy business unit sales were $51.7 million in the
quarter versus $37.4 million in the same period of 2010. On a
sequential basis, Solar Energy sales increased 26.7% from $40.8
million in the second quarter of 2011. Despite the solar panel
industry's struggle with significant oversupply and ongoing price
declines, inverter sales grew once again this quarter due to
utility-scale shipments from large projects wins announced earlier
this year.
Income from Continuing Operations
Income from continuing operations was $7.2 million or $0.16 per
diluted share, compared to income from continuing operations of
$17.6 million or $0.40 per diluted share in the same period last
year. Income from continuing operations was $13.5 million or $0.31
in the second quarter of 2011. On a non-GAAP basis, excluding the
impact of the restructuring charge, continuing operations generated
income for the quarter of $9.3 million or $0.21 per share.
Restructuring Charge
The restructuring charge incurred in the quarter related to the
restructuring plan that was announced on September 28, 2011. Under
the first phase of the plan, Advanced Energy will align its
engineering resources with the geographic footprint of its customer
base. By localizing R&D within the major geographies it serves,
the company will improve its time to market and distance to key
customers, creating a more highly-focused and responsive
development team. The company will also transition the manufacture
of certain solar inverter subcomponents to its Shenzhen factory.
This will lower product costs for its Solar Energy business
worldwide and enable regional fulfillment for complete products in
the growing Asian market. The anticipated savings from the
restructuring are approximately $6 million annually for the first
phase.
The second phase will be implemented over the next 12 to 18
months as the company reduces its cost structure, closes facilities
and relocates certain functions to different regions worldwide. As
a result, the company anticipates further charges in the amount of
$8 to $12 million, principally for space consolidation, and another
$1 million in additional severance costs over this timeframe. Once
complete, these two phases of the restructuring plan, along with
other cost savings initiatives and margin improvements, are
expected to deliver annual savings of approximately $16 to $20
million.
Fourth Quarter 2011 Guidance
The Company anticipates fourth quarter 2011 results from
continuing operations, to be within the following ranges:
- Sales of $105 million to $120 million
- Non-GAAP earnings per share of approximately breakeven
Third Quarter 2011 Conference Call
Management will host a conference call tomorrow, Wednesday,
November 2, 2011, at 8:30 a.m. Eastern Daylight Time to discuss
Advanced Energy's financial results. Domestic callers may access
this conference call by dialing 800-706-7748. International callers
may access the call by dialing 617-614-3473. Participants will need
to provide a conference pass code 72488976. For a replay of this
teleconference, please call 888-286-8010 or 617-801-6888, and enter
the pass code 48571613. 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 is a global leader in innovative power and
control technologies for high-growth, thin-films manufacturing and
solar-power generation. Founded in 1981, 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.
This release includes non-GAAP operating, net income and
earnings per share data. These non-GAAP measures are not in
accordance with, or an alternative for, 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, provides investors with
additional perspective. The Company further 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, even though some of these
excluded items may be incurred and reflected in the Company's GAAP
financial results in the foreseeable future. The use of non-GAAP
measures have limitations in that they do not reflect all of the
amounts associated with its 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.
For additional information on the items excluded from one or
more of its non-GAAP financial measures, refer to the Form 8-K
regarding this release furnished today to the Securities and
Exchange Commission.
Forward-Looking Language
The Company's expectations with respect to guidance to financial
results for the fourth quarter ending December 31, 2011 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
continuation of RPS (renewable portfolio standards), the timing and
availability of incentives and grant programs in the US and Europe
related to the renewable energy market, renewable energy project
delays resulting from solar panel price declines and increased
competition in the solar inverter equipment market, the timing of
orders received from customers, the company's ability to realize
benefits from cost improvement efforts and any restructuring plans;
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.
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, |
|
2011 |
2010 |
2011 |
2011 |
2010 |
|
|
|
|
|
|
SALES |
$ 128,498 |
$ 140,966 |
$ 138,154 |
$ 404,304 |
$ 310,760 |
COST OF SALES |
79,651 |
80,276 |
82,777 |
238,035 |
176,304 |
GROSS PROFIT |
48,847 |
60,690 |
55,377 |
166,269 |
134,456 |
|
38.0% |
43.1% |
40.1% |
41.1% |
43.3% |
OPERATING EXPENSES: |
|
|
|
|
|
Research and development |
17,592 |
16,672 |
17,137 |
50,591 |
41,329 |
Selling, general and administrative |
16,473 |
20,545 |
20,001 |
57,379 |
49,955 |
Restructuring charges |
3,119 |
|
|
3,119 |
|
Amortization of intangible assets |
989 |
1,177 |
921 |
2,831 |
1,945 |
Total operating expenses |
38,173 |
38,394 |
38,059 |
113,920 |
93,229 |
|
|
|
|
|
|
Operating income |
10,674 |
22,296 |
17,318 |
52,349 |
41,227 |
|
|
|
|
|
|
Other income (loss), net |
(259) |
1,224 |
92 |
496 |
1,828 |
Income from continuing operations before
income taxes |
10,415 |
23,520 |
17,410 |
52,845 |
43,055 |
Provision for income taxes |
3,244 |
5,964 |
3,898 |
13,396 |
9,192 |
INCOME FROM CONTINUING OPERATIONS, NET OF
INCOME TAXES |
7,171 |
17,556 |
13,512 |
39,449 |
33,863 |
|
|
|
|
|
|
Income (loss) from discontinued operations,
net of income taxes |
(579) |
2,392 |
74 |
(365) |
5,921 |
|
|
|
|
|
|
NET INCOME |
$ 6,592 |
$ 19,948 |
$ 13,586 |
$ 39,084 |
$ 39,784 |
|
|
|
|
|
|
Basic weighted-average common shares
outstanding |
43,535 |
43,254 |
43,571 |
43,515 |
42,711 |
Diluted weighted-average common shares
outstanding |
43,819 |
43,849 |
44,187 |
44,056 |
43,293 |
|
|
|
|
|
|
EARNINGS PER SHARE: |
|
|
|
|
|
CONTINUING OPERATIONS: |
|
|
|
|
|
BASIC EARNINGS PER SHARE |
$ 0.16 |
$ 0.41 |
$ 0.31 |
$ 0.91 |
$ 0.79 |
DILUTED EARNINGS PER SHARE |
$ 0.16 |
$ 0.40 |
$ 0.31 |
$ 0.90 |
$ 0.78 |
|
|
|
|
|
|
DISCONTINUED OPERATIONS |
|
|
|
|
|
BASIC EARNINGS PER SHARE |
$ (0.01) |
$ 0.06 |
$ 0.00 |
$ (0.01) |
$ 0.14 |
DILUTED EARNINGS PER SHARE |
$ (0.01) |
$ 0.05 |
$ 0.00 |
$ (0.01) |
$ 0.14 |
|
|
|
|
|
|
NET INCOME: |
|
|
|
|
|
BASIC EARNINGS PER
SHARE |
$ 0.15 |
$ 0.46 |
$ 0.31 |
$ 0.90 |
$ 0.93 |
DILUTED EARNINGS PER
SHARE |
$ 0.15 |
$ 0.45 |
$ 0.31 |
$ 0.89 |
$ 0.92 |
|
|
|
|
|
|
|
|
|
ADVANCED ENERGY INDUSTRIES,
INC. |
|
|
CONDENSED CONSOLIDATED BALANCE
SHEETS |
|
|
(in thousands) |
|
|
|
|
|
|
September
30, |
December
31, |
|
2011 |
2010 |
ASSETS |
UNAUDITED |
AUDITED |
|
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 132,253 |
$ 130,914 |
Marketable securities |
22,669 |
9,640 |
Accounts receivable, net |
132,048 |
119,893 |
Inventories, net |
92,822 |
77,593 |
Deferred income taxes |
7,689 |
7,510 |
Income taxes receivable |
6,570 |
6,061 |
Other current assets |
12,393 |
10,156 |
Total current assets |
406,444 |
361,767 |
|
|
|
Property and equipment, net |
40,837 |
34,569 |
|
|
|
Deposits and other |
8,868 |
8,874 |
Goodwill and intangibles, net |
92,105 |
96,781 |
Deferred income tax assets, net |
5,176 |
3,166 |
Total assets |
$ 553,430 |
$ 505,157 |
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
Accounts payable |
$ 50,559 |
$ 56,185 |
Other accrued expenses |
45,999 |
46,140 |
Total current liabilities |
96,558 |
102,325 |
|
|
|
Long-term liabilities |
31,775 |
28,864 |
|
|
|
Total liabilities |
128,333 |
131,189 |
|
|
|
Stockholders' equity |
425,097 |
373,968 |
Total liabilities and stockholders'
equity |
$ 553,430 |
$ 505,157 |
|
|
|
ADVANCED ENERGY INDUSTRIES,
INC. |
|
|
|
|
|
SEGMENT INFORMATION
(UNAUDITED) |
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
Nine Months
Ended |
|
September
30, |
June 30, |
September
30, |
|
2011 |
2010 |
2011 |
2011 |
2010 |
SALES: |
|
|
|
|
|
Thin Films |
$ 76,764 |
$ 103,616 |
$ 97,331 |
$ 274,194 |
$ 256,736 |
Solar Energy |
51,734 |
37,350 |
40,823 |
130,110 |
54,024 |
Total Sales |
128,498 |
140,966 |
138,154 |
404,304 |
310,760 |
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME: |
|
|
|
|
|
Thin Films |
$ 16,015 |
|
$ 20,042 |
$ 60,881 |
|
Solar Energy |
1,259 |
|
321 |
4,092 |
|
Total segment operating income |
17,274 |
|
20,363 |
64,973 |
|
Corporate expenses |
(6,600) |
|
(3,045) |
(12,624) |
|
Other income, net |
(259) |
|
92 |
496 |
|
Income from continuing operations before
income taxes |
$ 10,415 |
|
$ 17,410 |
$ 52,845 |
|
|
|
|
|
|
|
|
|
ADVANCED ENERGY INDUSTRIES,
INC. |
|
SELECTED OTHER DATA
(UNAUDITED) |
|
(in thousands) |
|
|
|
Reconciliation of Non-GAAP measure -
income from operations without restructuring charge |
Three Months
Ended |
|
September 30, |
|
2011 |
|
|
Operating Income, as reported |
$ 10,674 |
Add back: |
|
Restructuring charge |
3,119 |
Income from operations without resturcturing
charge |
$ 13,793 |
|
|
|
|
Reconciliation of Non-GAAP measure -
income without restructuring charge |
Three Months
Ended |
|
September 30, |
|
2011 |
|
|
Income from continuing operations, net of
tax, as reported |
$ 7,171 |
Add back: |
|
Restructuring charge, net of tax
benefit |
2,136 |
Income without restructuring charge |
$ 9,307 |
|
|
|
|
|
|
Reconciliation of Non-GAAP measure -
per share earnings from continuing operations without restructuring
charge |
Three Months
Ended |
|
September 30, |
|
2011 |
|
|
Diluted earnings per share from continuing
operations, as reported |
$ 0.16 |
Add back: |
|
per share impact of restructuring charge,
net of tax benefit |
0.05 |
Per share earnings from continuing operations
without restructuring charge |
$ 0.21 |
|
|
CONTACT: Danny Herron
Advanced Energy Industries, Inc.
970.407.6570
danny.herron@aei.com
Annie Leschin/Vanessa Lehr
Advanced Energy Industries, Inc.
970.407.6555
ir@aei.com
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