Embarks on a new chapter as a highly
diversified premier power conversion company with global presence
and scale across critical technologies and markets
Advanced Energy Industries, Inc. (Nasdaq: AEIS), a global leader
in highly engineered, precision power conversion, measurement and
control solutions, today announced that it has completed the
previously announced acquisition of Artesyn Embedded Technologies’
Embedded Power business. With this highly strategic acquisition,
Advanced Energy becomes a highly diversified, pure play power house
with a global platform for accelerated earnings growth.
“Today marks a new chapter for Advanced Energy as we embark on
the next phase of our diversification and growth strategy by adding
broad sets of markets and industry-leading technologies. With
integration efforts already started, the new AE management team,
with the addition of Dana Huth who leads the Artesyn Embedded Power
business, is well prepared to deliver long-term, profitable and
sustainable growth,” said Yuval Wasserman, president and CEO of
Advanced Energy.
Strategic benefits of this acquisition include:
- Creates a premier global power conversion company with
enabling critical power technologies and over $1.3 billion in
annual revenue, based on 2018 combined historical results.
- Triples AE’s addressable market to $7.5 billion by
adding new attractive growth verticals in hyperscale data center,
5G wireless, industrial and medical technologies.
- Solid strategic fit with highly complementary
technologies, product portfolios and core competencies in highly
engineered, application-specific power solutions for key OEMs in
demanding applications.
- Accelerates earnings growth, driving projected
annualized accretion of over $0.80 per share in 18-24 months and
targeting to reach long-term accretion of over $1.50 per share, on
a non-GAAP basis.
- Creates significant financial value with a purchase
price of approximately 5x synergy-adjusted EBITDA, with a path to
future margin expansion, additional cost savings and de-levering to
create long-term shareholder value.
“We are encouraged by the positive reaction to this acquisition
by both the market and our customers. The added capabilities and
expertise of the Artesyn team will allow AE to better meet our
customers’ needs,” added Wasserman.
“On behalf of the entire Artesyn Embedded Power team, we are
excited to be playing a key role in this new chapter for Advanced
Energy,” said Dana Huth. “I look forward to leading the Artesyn
Embedded Power organization as together with Advanced Energy, we
create a premier power conversion company developing power
solutions that our customers depend on for mission-critical
applications.”
Under the terms of the share purchase agreement, the total
consideration for this acquisition was approximately $400 million.
Advanced Energy paid approximately $375 million in cash at closing
and assumed approximately $25 million in net liabilities, including
estimated adjustments for net working capital and acquired
cash.
In conjunction with this transaction, AE completed the
previously-announced credit financing, consisting of $350.0 million
of a senior unsecured term loan A facility and an untapped $150.0
million senior unsecured revolving facility, before any fees, led
by Bank of America, N.A., with commitments from HSBC Bank USA,
N.A., Bank of the West and Citibank, N.A.
The acquisition of Artesyn Embedded Power is expected to be
immediately accretive to earnings on a non-GAAP basis and generate
over $20 million of annualized synergies within 18-24 months and
$40 million of total synergies long-term. In 2018, revenues for
Artesyn Embedded Power were approximately $593 million and adjusted
EBITDA was approximately $55 million. AE’s guidance for the third
quarter of 2019 provided on August 5, 2019, did not reflect any
revenue or profit contribution from this transaction. Management
intends to provide more detail on the forward-looking benefits of
this acquisition when it announces financial results for the third
quarter.
For more information, visit
www.advancedenergy.com/ArtesynJoinsAE.
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 semiconductor and industrial manufacturing applications.
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 more than three
decades to perfecting power for its global customers and is
headquartered in Fort Collins, Colorado, USA. For more information,
visit www.advancedenergy.com.
Advanced Energy | Precision. Power. Performance.
Non-GAAP Measures
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, minority interest, and non-recurring items such as
acquisition-related costs and restructuring expenses. The non-GAAP
measures 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.
Artesyn Embedded Power’s adjusted financial measures, including
Adjusted EBITDA, Adjusted Operating Income and Adjusted Operating
Margins, exclude the impact of non-cash related charges such as
amortization of intangible assets, as well as restructuring
expenses, one-time optimization and integration expenses, other
income and deductions, management fees to private equity owners of
Artesyn, and other non-cash charges. Advanced Energy and Artesyn
believe that Artesyn Embedded Power's adjusted financial measures
are relevant and useful information for the companies and investors
to evaluate Artesyn Embedded Power’s past performance and
enterprise value, without the impacts of certain non-cash charges
and other charges which are not part of the company’s usual
operations. Expected synergies and projected earnings accretion
stated above are projections based on combination of Advanced
Energy’s non-GAAP financial measures and Artesyn Embedded Power’s
adjusted financial measures. Neither Advanced Energy nor Artesyn
has begun a reconciliation of Artesyn Embedded Power’s adjusted
financial measures to Advanced Energy’s non-GAAP measures, and
therefore cannot quantify the differences, which may be material.
In addition, Advanced Energy will account for the acquisition under
the purchase method of accounting, which could result in a new
valuation for the assets and liabilities of Artesyn Embedded Power.
Advanced Energy will not be preparing any pro forma information for
the acquisition and financing until the reconciliation and
valuation estimates have been prepared.
Forward-looking Language
Certain statements in this press release, including, without
limitation, statements regarding the transaction between Advanced
Energy and Artesyn Embedded Technologies, future financial and
operating results, benefits and synergies of the transaction,
future opportunities for the combined company and the statements
about Advanced Energy’s future expectations, beliefs, goals, plans,
or prospects 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. Any statements that are not statements
of historical fact (including statements containing the words
"will," "projects," "intends," "believes," "plans," "anticipates,"
"expects," "estimates," “aspire,” "forecasts," "continues" and
similar expressions) should also be considered to be
forward-looking statements. There are a number of important factors
that could cause actual results or events to differ materially from
those indicated by such forward-looking statements, including: (1)
the ability of Advanced Energy to successfully integrate Artesyn’s
Embedded Power operations and employees; (2) unexpected costs,
charges or expenses resulting from the transaction; (3) the ability
to realize anticipated synergies and cost savings; (4) the ability
to realize the projected revenue, addressable market, synergy,
earnings, EPS, margin expansion, cost savings and de-levering
estimates and goals as described above and in the May 14, 2019
investor presentation; (5) competition from larger and more
established companies in Artesyn’s markets; (6) Advanced Energy’s
ability to successfully grow the Artesyn Embedded Power business;
(7) potential adverse reactions or changes to business
relationships resulting from the announcement or completion of the
transaction; (8) the retention of key employees; and (9)
legislative, regulatory and economic developments, including
changing business conditions in the semiconductor industry and
industrial markets overall and the economy in general as well as
financial performance and expectations of Advanced Energy’s and
Artesyn’s existing and prospective customers. 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.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. The
company assumes no obligation to update the information in this
press release.
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version on businesswire.com: https://www.businesswire.com/news/home/20190910005995/en/
Brian Smith Advanced Energy Industries, Inc. (970) 407-6555
ir@aei.com
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