Advanced Energy Industries, Inc. (Nasdaq:AEIS) today announced
financial results for the first quarter ended March 31, 2017. The
company reported first quarter sales of $149.4 million. First
quarter GAAP income from continuing operations was $35.4 million,
or $0.88 per diluted share. Non-GAAP income from continuing
operations was $41.9 million, or $1.04 per diluted share.
“Our financial performance this quarter continued to reach new
highs, with increases in Semiconductor and Service revenues and a
sizable rebound in Industrial applications,” said Yuval Wasserman,
president and CEO of Advanced Energy. “In total, our business
performed significantly better than last year’s first quarter due
to our operational leverage and robust business model. With our
continuous innovation and resulting design wins, we are benefiting
from our customers’ success in next-generation technologies. Our
strong balance sheet is allowing us to pursue a number of
opportunities for future growth and profitability.”
First Quarter ResultsSales were $149.4 million
compared with $135.3 million in the fourth quarter of 2016 and
$103.0 million in the first quarter of 2016.
GAAP income from continuing operations was $35.4 million or
$0.88 per diluted share in the first quarter of 2017 compared with
$40.4 million or $1.01 per diluted share in the prior quarter, and
$20.2 million or $0.50 per diluted share in the first quarter of
2016.
Non-GAAP income from continuing operations was $41.9 million or
$1.04 per diluted share in the first quarter of 2017 compared with
$42.6 million or $1.06 per diluted share in the prior quarter, and
$22.1 million or $0.55 per diluted share in the same period last
year. A reconciliation of non-GAAP measures is provided in the
tables below.
The company generated $42.7 million of operating cash from
continuing operations.
Discontinued OperationsThe 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 both the balance
sheet and income statement. Further financial detail regarding the
amounts related to the discontinued inverter business are available
in the company’s 2016 Annual Report on Form 10-K.
Second Quarter 2017 GuidanceBased on the
company's current view, beliefs and assumptions, guidance for the
second quarter of 2017 is within the following ranges:
|
|
Q2 2017 |
Revenues |
|
$150M - $160M |
GAAP operating margins
from continuing operations |
|
28% -
30% |
GAAP EPS from
continuing operations |
|
$0.96
- $1.06 |
Non-GAAP operating
margins from continuing operations |
|
30% -
32% |
Non-GAAP EPS from
continuing operations |
|
$1.00
- $1.10 |
First Quarter 2017 Conference CallManagement
will host a conference call tomorrow morning, Tuesday, May 2, 2017
at 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 7189971, which has been
reserved for this call. For a replay of this teleconference, please
call 855-859-2056 or 404-537-3406 and enter Conference ID Number
7189971. The replay will be available for one week following the
conference call. A webcast will also be available on the company’s
Investor Relations web page at http://ir.advanced-energy.com.
About Advanced EnergyAdvanced Energy (Nasdaq:
AEIS) is a global leader in innovative power and control
technologies for high-growth, precision power solutions for thin
films processes and industrial applications. 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.
Non-GAAP MeasuresThis 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, amortization of intangible assets and restructuring
costs, as well as acquisition related costs and other non-recurring
items. For the second quarter ending June 30, 2017 guidance, the
company expects stock based compensation of $1.6 million and
amortization of intangibles of $1.0 million. 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 StatementsThe company’s
guidance with respect to anticipated financial results for the
second quarter ending June 30, 2017, potential future growth and
profitability, our future business mix, expectations regarding
future market trends and the company’s future performance within
specific markets (e.g., statements regarding anticipated
semiconductor and industrial market growth) 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 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; and (k) 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 (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
http://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, |
|
2017 |
|
2016 |
|
2016 |
|
|
|
|
|
|
Sales: |
|
|
|
|
|
Product |
$ |
128,827 |
|
|
$ |
86,293 |
|
|
$ |
115,885 |
|
Service |
20,524 |
|
|
16,751 |
|
|
19,458 |
|
Total
sales |
149,351 |
|
|
103,044 |
|
|
135,343 |
|
Cost of sales: |
|
|
|
|
|
Product |
60,117 |
|
|
40,815 |
|
|
54,710 |
|
Service |
10,403 |
|
|
8,769 |
|
|
9,115 |
|
Total
cost of sales |
70,520 |
|
|
49,584 |
|
|
63,825 |
|
Gross profit |
78,831 |
|
|
53,460 |
|
|
71,518 |
|
|
52.8 |
% |
|
51.9 |
% |
|
52.8 |
% |
Operating
expenses: |
|
|
|
|
|
Research
and development |
12,503 |
|
|
10,765 |
|
|
11,121 |
|
Selling,
general and administrative |
22,098 |
|
|
18,016 |
|
|
20,864 |
|
Amortization of intangible assets |
962 |
|
|
1,058 |
|
|
987 |
|
Total
operating expenses |
35,563 |
|
|
29,839 |
|
|
32,972 |
|
Operating income |
43,268 |
|
|
23,621 |
|
|
38,546 |
|
Other
(expense) income, net |
(3,208 |
) |
|
357 |
|
|
81 |
|
Income from continuing
operations before income taxes |
40,060 |
|
|
23,978 |
|
|
38,627 |
|
Provision for income
taxes |
4,619 |
|
|
3,758 |
|
|
(1,809 |
) |
Income from continuing
operations, net of income taxes |
35,441 |
|
|
20,220 |
|
|
40,436 |
|
Income from
discontinued operations, net of income taxes |
2,094 |
|
|
2,061 |
|
|
3,845 |
|
Net
income |
$ |
37,535 |
|
|
$ |
22,281 |
|
|
$ |
44,281 |
|
|
|
|
|
|
|
Basic weighted-average
common shares outstanding |
39,738 |
|
|
39,814 |
|
|
39,699 |
|
Diluted
weighted-average common shares outstanding |
40,179 |
|
|
40,100 |
|
|
40,029 |
|
|
|
|
|
|
|
Earnings per
share: |
|
|
|
|
|
|
|
|
|
|
|
Continuing operations: |
|
|
|
|
|
Basic
earnings per share |
$ |
0.89 |
|
|
$ |
0.51 |
|
|
$ |
1.02 |
|
Diluted
earnings per share |
$ |
0.88 |
|
|
$ |
0.50 |
|
|
$ |
1.01 |
|
|
|
|
|
|
|
Discontinued operations: |
|
|
|
|
|
Basic
earnings per share |
$ |
0.05 |
|
|
$ |
0.05 |
|
|
$ |
0.10 |
|
Diluted
earnings per share |
$ |
0.05 |
|
|
$ |
0.05 |
|
|
$ |
0.10 |
|
|
|
|
|
|
|
Net income: |
|
|
|
|
|
Basic earnings per share |
$ |
0.94 |
|
|
$ |
0.56 |
|
|
$ |
1.12 |
|
Diluted earnings per share |
$ |
0.93 |
|
|
$ |
0.56 |
|
|
$ |
1.11 |
|
ADVANCED ENERGY INDUSTRIES,
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(in thousands)
|
March 31, |
|
December 31, |
|
2017 |
|
2016 |
ASSETS |
Unaudited |
|
|
|
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
317,949 |
|
|
$ |
281,953 |
|
Marketable securities |
4,761 |
|
|
4,737 |
|
Accounts
receivable, net |
76,844 |
|
|
75,667 |
|
Inventories, net |
64,626 |
|
|
55,770 |
|
Income
taxes receivable |
1,095 |
|
|
1,482 |
|
Other
current assets |
9,359 |
|
|
9,324 |
|
Current
assets of discontinued operations |
8,177 |
|
|
9,401 |
|
Total current
assets |
482,811 |
|
|
438,334 |
|
|
|
|
|
Property and equipment,
net |
13,795 |
|
|
13,337 |
|
|
|
|
|
Deposits and other |
2,056 |
|
|
1,835 |
|
Goodwill and
intangibles, net |
69,938 |
|
|
70,196 |
|
Deferred income tax
assets |
32,280 |
|
|
32,197 |
|
Non-current assets of
discontinued operations |
15,631 |
|
|
15,630 |
|
Total assets |
$ |
616,511 |
|
|
$ |
571,529 |
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
50,192 |
|
|
$ |
46,255 |
|
Other
accrued expenses |
37,932 |
|
|
35,372 |
|
Current
liabilities of discontinued operations |
10,987 |
|
|
13,419 |
|
Total current
liabilities |
99,111 |
|
|
95,046 |
|
|
|
|
|
Non-current liabilities of continuing operations |
63,444 |
|
|
63,252 |
|
Non-current liabilities of discontinued operations |
19,630 |
|
|
21,157 |
|
Long-term
liabilities |
83,074 |
|
|
84,409 |
|
|
|
|
|
Total liabilities |
182,185 |
|
|
179,455 |
|
|
|
|
|
Stockholders'
equity |
434,326 |
|
|
392,074 |
|
Total liabilities and
stockholders' equity |
$ |
616,511 |
|
|
$ |
571,529 |
|
|
|
|
|
December 31, 2016 amounts are derived from the December 31, 2016
audited Consolidated Financial Statements.
ADVANCED ENERGY INDUSTRIES,
INC.CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS(in thousands)
|
Three Months Ended March 31, |
|
2017 |
|
2016 |
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
Net
income |
$ |
37,535 |
|
|
$ |
22,281 |
|
Income
from discontinued operations, net of income taxes |
2,094 |
|
|
2,061 |
|
Income
from continuing operations, net of income taxes |
35,441 |
|
|
20,220 |
|
|
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
1,987 |
|
|
2,043 |
|
Stock-based compensation expense |
3,398 |
|
|
1,429 |
|
Loss on
foreign exchange hedge |
3,489 |
|
|
— |
|
Net loss
on disposal of assets |
65 |
|
|
213 |
|
Changes
in operating assets and liabilities, net of assets acquired |
(1,721 |
) |
|
(11,307 |
) |
Net cash
provided by operating activities from continuing operations |
42,659 |
|
|
12,598 |
|
Net cash
used in operating activities from discontinued operations |
(2,453 |
) |
|
(741 |
) |
Net cash
provided by operating activities |
40,206 |
|
|
11,857 |
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
Purchases
of marketable securities |
— |
|
|
(114 |
) |
Proceeds
from sale of marketable securities |
1 |
|
|
4,471 |
|
Purchase
of foreign exchange hedge |
(3,489 |
) |
|
— |
|
Purchases
of property and equipment |
(1,392 |
) |
|
(1,338 |
) |
Net cash
(used in) provided by investing activities from continuing
operations |
(4,880 |
) |
|
3,019 |
|
Net cash
used in investing activities from discontinued operations |
— |
|
|
— |
|
Net cash
(used in) provided by investing activities |
(4,880 |
) |
|
3,019 |
|
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
Proceeds
from exercise of stock options |
(1,692 |
) |
|
1,128 |
|
Other
financing activities |
4 |
|
|
(1 |
) |
Net cash
(used in) provided by financing activities from continuing
operations |
(1,688 |
) |
|
1,127 |
|
Net cash
used in financing activities from discontinued operations |
— |
|
|
(24 |
) |
Net cash
(used in) provided by financing activities |
(1,688 |
) |
|
1,103 |
|
EFFECT OF
CURRENCY TRANSLATION ON CASH |
1,133 |
|
|
(489 |
) |
INCREASE IN
CASH AND CASH EQUIVALENTS |
34,771 |
|
|
15,490 |
|
CASH AND CASH
EQUIVALENTS, beginning of period |
289,517 |
|
|
169,720 |
|
CASH AND CASH
EQUIVALENTS, end of period |
324,288 |
|
|
185,210 |
|
Less cash and
cash equivalents from discontinued operations |
6,339 |
|
|
8,910 |
|
CASH AND CASH
EQUIVALENTS FROM CONTINUING OPERATIONS, end of period |
$ |
317,949 |
|
|
$ |
176,300 |
|
December 31, 2016 amounts are derived from the December 31, 2016
audited Consolidated Financial Statements.
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, |
|
2017 |
|
2016 |
|
2016 |
|
|
|
|
|
|
Gross Profit from
continuing operations, as reported |
$ |
78,831 |
|
|
$ |
53,460 |
|
|
$ |
71,518 |
|
Operating expenses from
continuing operations, as reported |
35,563 |
|
|
29,839 |
|
|
32,972 |
|
Adjustments: |
|
|
|
|
|
Stock-based compensation |
(3,398 |
) |
|
(1,429 |
) |
|
(2,033 |
) |
Amortization of intangible assets |
(962 |
) |
|
(1,058 |
) |
|
(987 |
) |
Non-GAAP operating
expenses from continuing operations |
31,203 |
|
|
27,352 |
|
|
29,952 |
|
Non-GAAP operating
income from continuing operations |
$ |
47,628 |
|
|
$ |
26,108 |
|
|
$ |
41,566 |
|
Reconciliation
of Non-GAAP measure - income excluding certain items |
Three Months Ended |
|
March 31, |
|
December 31, |
|
2017 |
|
2016 |
|
2016 |
|
|
|
|
|
|
Income from continuing
operations, net of income taxes, as reported |
$ |
35,441 |
|
|
$ |
20,220 |
|
|
$ |
40,436 |
|
Adjustments: |
|
|
|
|
|
Stock-based compensation |
3,398 |
|
|
1,429 |
|
|
2,033 |
|
Amortization of intangible assets |
962 |
|
|
1,058 |
|
|
987 |
|
Loss on
foreign exchange hedge |
3,489 |
|
|
— |
|
|
— |
|
Tax
effect of Non-GAAP adjustments |
(1,396 |
) |
|
(655 |
) |
|
(881 |
) |
Non-GAAP income from
continuing operations, net of income taxes |
$ |
41,894 |
|
|
$ |
22,052 |
|
|
$ |
42,575 |
|
Reconciliation
of Non-GAAP measure - per share earnings excluding certain
items |
Three Months Ended |
|
March 31, |
|
December 31, |
|
2017 |
|
2016 |
|
2016 |
|
|
|
|
|
|
Diluted earnings per
share from continuing operations, as reported |
$ |
0.88 |
|
|
$ |
0.50 |
|
|
$ |
1.01 |
|
Add back: |
|
|
|
|
|
per share
impact of Non-GAAP adjustments, net of tax |
0.16 |
|
|
0.05 |
|
|
0.05 |
|
Non-GAAP per share
earnings from continuing operations |
$ |
1.04 |
|
|
$ |
0.55 |
|
|
$ |
1.06 |
|
Reconciliation
of Q2 2017 Guidance |
|
|
|
|
|
|
Low End |
|
High End |
|
|
|
|
|
Revenue |
|
$150 million |
|
$160 million |
|
|
|
|
|
Reconciliation
of Non-GAAP operating margin |
|
|
|
|
GAAP operating
margin |
|
28 |
% |
|
30 |
% |
Stock-based compensation |
|
1 |
% |
|
1 |
% |
Amortization of intangible assets |
|
1 |
% |
|
1 |
% |
Non-GAAP
operating margin |
|
30 |
% |
|
32 |
% |
|
|
|
|
|
Reconciliation
of Non-GAAP earnings per share |
|
|
|
|
GAAP earnings per
share |
|
$ |
0.96 |
|
|
$ |
1.06 |
|
Stock-based compensation |
|
0.04 |
|
|
0.04 |
|
Amortization of intangible assets |
|
0.02 |
|
|
0.02 |
|
Tax
effects of excluded items |
|
(0.02 |
) |
|
(0.02 |
) |
Non-GAAP
earnings per share |
|
$ |
1.00 |
|
|
$ |
1.10 |
|
CONTACTS:
Tom Liguori
Advanced Energy Industries, Inc.
970.407.6570
Tom.liguori@aei.com
Annie Leschin
Advanced Energy Industries, Inc.
970.407.6555
ir@aei.com
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