- Closed the acquisition of Artesyn Embedded Power on
September 10
- Q3 total revenue was $175.1 million; organic revenue was
$134.2 million, above the guidance range of $123 to $133
million
- Q3 GAAP EPS from continuing operations was $0.19
- Q3 Non-GAAP EPS was $0.54; before acquisition, non-GAAP EPS
was $0.47, also above the guidance range of $0.28 to $0.38
Advanced Energy Industries, Inc. (Nasdaq: AEIS), today announced
financial results for the third quarter ended September 30,
2019.
“We delivered a strong third quarter, with both organic revenue
and non-GAAP earnings above the high-end of our guidance ranges.
Demand for our products in the semi equipment market is improving
on increased foundry/logic investments and the beginning of
investment in memory,” said Yuval Wasserman, president and CEO. “We
closed the acquisition of Artesyn Embedded Power slightly ahead of
schedule, adding incremental revenue and non-GAAP earnings to the
third quarter. We have started the integration process and I am
pleased with our progress.”
Third Quarter Results
Sales were $175.1 million in the third quarter of 2019 compared
with $134.8 million in the second quarter of 2019 and $173.1
million in the third quarter of 2018.
GAAP net income from continuing operations was $7.3 million or
$0.19 per diluted share, compared with $23.4 million or $0.61 per
diluted share in the prior quarter, and $35.2 million or $0.90 per
diluted share in the third quarter of 2018.
Non-GAAP net income was $20.9 million or $0.54 per diluted share
in the third quarter of 2019. This compares with $17.2 million or
$0.45 per diluted share in the second quarter of 2019, and $41.2
million or $1.05 per diluted share in the third quarter of 2018.
Non-GAAP net income in the third quarter of 2019 included $2.9
million or $0.07 per diluted share earnings contribution, including
financing cost, from the acquisition of Artesyn Embedded Power.
A reconciliation of non-GAAP measures is provided in the tables
below.
The company generated $10.5 million of operating cash from
continuing operations in the quarter.
Discontinued Operations
The 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 all purposes. Further financial detail regarding the
amounts related to the discontinued inverter business are available
in the company’s 2018 Annual Report on Form 10‑K.
Fourth Quarter 2019
Guidance
Based on the company’s current view, beliefs and assumptions,
guidance for the fourth quarter of 2019 is within the following
ranges.
Q4 2019
Revenues
$310M +/- $15M
GAAP EPS from continuing
operations
$0.31 +/- $0.12
Non-GAAP EPS
$0.68 +/- $0.12
Conference Call
Management will host a conference call on Tuesday, November 12,
2019 at 6:30 a.m. Mountain Time/ 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 +1 315‑625‑6980. Participants will
need to provide the operator with Conference ID Number 2569664,
which has been reserved for this call. A webcast will also be
available on the company’s Investor Relations web page at
ir.advanced-energy.com.
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 applications for a wide range of industries including
semiconductor equipment, industrial, manufacturing,
telecommunications, data center computing and healthcare. 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
This 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 and amortization
of intangible assets, as well as discontinued operations, and
non-recurring items such as acquisition-related costs and
restructuring expenses. 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 cash 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
Statements
The company’s guidance with respect to anticipated financial
results for the fourth quarter ending December 31, 2019, potential
future growth and profitability, our future business mix,
expectations regarding future market trends and the company’s
future performance within specific markets 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
risks and uncertainties related to the acquisition and integration
of Artesyn Embedded Power; (e) the accuracy of the company’s
estimates related to fulfilling solar inverter product warranty and
post-warranty obligations; (f) the company’s ability to realize its
plan to avoid additional costs after the solar inverter wind-down;
(g) the accuracy of the company’s assumptions on which its
financial statement projections are based; (h) the impact of
product price changes, which may result from a variety of factors;
(i) the timing of orders received from customers; (j) the company’s
ability to realize benefits from cost improvement efforts including
avoided costs, restructuring plans and inorganic growth; (k) the
company’s ability to obtain in a timely manner the materials
necessary to manufacture its products; (l) unanticipated changes to
management’s estimates, reserves or allowances; (m) changes and
adjustments to the tax expense and benefits related to the U.S. tax
reform that was enacted in late 2017; and (n) the effects of U.S.
government trade and export restrictions, Chinese retaliatory trade
actions, and other governmental action related to tariffs upon the
demand for our, and our customers’, products and services and the
U.S. economy. 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 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
Nine Months Ended
September 30,
June 30,
September 30,
2019
2018
2019
2019
2018
Sales:
Product
$
148,138
$
144,843
$
106,193
$
366,443
$
485,287
Service
26,989
28,239
28,617
84,237
79,444
Total sales
175,127
173,082
134,810
450,680
564,731
Cost of sales:
Product
87,536
73,019
56,113
204,450
233,778
Service
14,100
14,524
14,571
42,873
40,534
Total cost of sales
101,636
87,543
70,684
247,323
274,312
Gross profit
73,491
85,539
64,126
203,357
290,419
42.0
%
49.4
%
47.6
%
45.1
%
51.4
%
Operating expenses:
Research and development
24,546
18,451
21,840
67,675
55,283
Selling, general and administrative
36,401
25,386
27,612
93,027
78,792
Amortization of intangible assets
3,002
1,437
1,874
6,849
3,958
Restructuring expense
152
403
1,795
3,620
403
Total operating expenses
64,101
45,677
53,121
171,171
138,436
Operating income
9,390
39,862
11,005
32,186
151,983
Other income (expense), net
1,361
401
15,545
17,649
(58
)
Income from continuing operations before
income taxes
10,751
40,263
26,550
49,835
151,925
Provision (benefit) for income taxes
3,495
5,106
3,177
3,819
23,998
Income from continuing operations, net of
income taxes
7,256
35,157
23,373
46,016
127,927
Income (loss) from discontinued
operations, net of income taxes
375
(371
)
8,324
8,690
(226
)
Net income
7,631
34,786
31,697
54,706
127,701
Income from continuing operations
attributable to non-controlling interest
10
7
11
29
82
Net income attributable to Advanced
Energy Industries, Inc.
$
7,621
$
34,779
$
31,686
$
54,677
$
127,619
Basic weighted-average common shares
outstanding
38,313
38,970
38,274
38,258
39,309
Diluted weighted-average common shares
outstanding
38,489
39,195
38,462
38,457
39,594
Earnings per share attributable to
Advanced Energy Industries, Inc:
Continuing operations:
Basic earnings per share
$
0.19
$
0.90
$
0.61
$
1.20
$
3.25
Diluted earnings per share
$
0.19
$
0.90
$
0.61
$
1.20
$
3.23
Discontinued operations:
Basic earnings per share
$
0.01
$
(0.01
)
$
0.22
$
0.23
$
(0.01
)
Diluted earnings per share
$
0.01
$
(0.01
)
$
0.22
$
0.23
$
(0.01
)
Net income:
Basic earnings per
share
$
0.20
$
0.89
$
0.83
$
1.43
$
3.25
Diluted earnings per share
$
0.20
$
0.89
$
0.82
$
1.42
$
3.23
ADVANCED ENERGY INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
September 30,
December 31,
2019
2018
Unaudited
ASSETS
Current assets:
Cash and cash equivalents
$
340,402
$
349,301
Marketable securities
747
2,470
Accounts and other receivable, net
250,151
100,442
Inventories, net
240,699
97,987
Income taxes receivable
2,124
2,220
Other current assets
45,757
10,173
Current assets of discontinued
operations
84
5,855
Total current assets
879,964
568,448
Property and equipment, net
104,568
31,269
Operating lease right-of-use assets
111,193
—
Deposits and other assets
20,650
6,874
Goodwill and intangibles, net
421,801
156,810
Deferred income tax assets
56,488
47,099
Non-current assets of discontinued
operations
755
5,984
Total assets
$
1,595,419
$
816,484
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
210,647
$
39,646
Other accrued expenses
109,192
65,377
Current portion of debt
17,500
—
Current portion of operating lease
liability
17,648
—
Current liabilities of discontinued
operations
910
5,286
Total current liabilities
355,897
110,309
Long-term debt
325,769
—
Non-current liabilities of continuing
operations
252,540
88,158
Non-current liabilities of discontinued
operations
1,045
10,715
Long-term liabilities
579,354
98,873
Total liabilities
935,251
209,182
Advanced Energy stockholders’ equity
659,627
606,790
Noncontrolling interest
541
512
Stockholders’ equity
660,168
607,302
Total liabilities and stockholders’
equity
$
1,595,419
$
816,484
December 31, 2018 amounts are derived from the
December 31, 2018 audited Consolidated Financial Statements.
ADVANCED ENERGY INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (in
thousands)
Nine Months Ended September
30,
2019
2018
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income
$
54,706
$
127,701
Income from discontinued operations, net
of income taxes
8,690
(226
)
Income from continuing operations, net of
income taxes
46,016
127,927
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
15,301
9,488
Stock-based compensation expense
5,053
7,461
Provision for deferred income taxes
2,825
—
Gain on sale of central inverter service
business
(14,804
)
—
Net loss on disposal of assets
104
167
Changes in operating assets and
liabilities, net of assets acquired
(25,637
)
(26,560
)
Net cash provided by operating activities
from continuing operations
28,858
118,483
Net cash provided by operating activities
from discontinued operations
317
(4,550
)
Net cash provided by operating
activities
29,175
113,933
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of marketable securities
—
(93
)
Proceeds from sale of marketable
securities
1,742
6
Acquisitions, net of cash acquired
(365,798
)
(93,801
)
Issuance of notes receivable
(2,800
)
—
Purchases of property and equipment
(15,681
)
(16,586
)
Net cash used in investing activities from
continuing operations
(382,537
)
(110,474
)
Net cash used in investing activities from
discontinued operations
—
—
Net cash used in investing activities
(382,537
)
(110,474
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net Proceeds from long-term borrowings
347,486
—
Payments on long-term borrowings
(4,375
)
—
Purchase and retirement of common
stock
—
(69,021
)
Net payments related to stock-based award
activities
(714
)
(2,636
)
Net cash provided by financing activities
from continuing operations
342,397
(71,657
)
Net cash provided by financing activities
from discontinued operations
—
—
Net cash provided by financing
activities
342,397
(71,657
)
EFFECT OF CURRENCY TRANSLATION ON
CASH
(3,185
)
(722
)
DECREASE IN CASH AND CASH
EQUIVALENTS
(14,150
)
(68,920
)
CASH AND CASH EQUIVALENTS, beginning of
period
354,552
415,037
CASH AND CASH EQUIVALENTS, end of
period
340,402
346,117
Less cash and cash equivalents from
discontinued operations
—
7,444
CASH AND CASH EQUIVALENTS FROM
CONTINUING OPERATIONS, end of period
$
340,402
$
338,673
ADVANCED ENERGY INDUSTRIES, INC.
SUPPLEMENTAL INFORMATION (UNAUDITED) (in thousands)
Net Sales by Product Line
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
2019
2018
2019
2019
2018
Semiconductor Equipment
$
96,426
$
119,969
$
90,058
$
277,911
$
426,380
Telecom & Networking
10,016
—
—
10,016
—
Data Center Computing
13,498
—
—
13,498
—
Industrial & Medical
55,187
53,113
44,752
149,255
138,351
Total
$
175,127
$
173,082
$
134,810
$
450,680
$
564,731
Net Sales by Geographic Region
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
2019
2018
2019
2019
2018
North America
$
83,632
$
85,728
$
61,393
$
203,531
$
295,567
Asia
66,157
61,691
50,962
175,554
198,020
Europe
25,008
25,538
22,092
70,526
70,802
Other Countries
330
125
363
1,069
342
Total
$
175,127
$
173,082
$
134,810
$
450,680
$
564,731
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
Nine Months Ended
September 30,
June 30,
September 30,
2019
2018
2019
2019
2018
Gross profit from continuing operations,
as reported
$
73,491
$
85,539
$
64,126
$
203,357
$
290,419
Adjustments to gross profit:
Stock-based compensation
77
76
55
365
576
Facility expansion and relocation
costs
1,342
725
150
1,662
974
Acquisition-related costs
1,506
158
—
1,506
158
Non-GAAP gross profit
76,416
86,498
64,331
206,890
292,127
Operating expenses from continuing
operations, as reported
64,101
45,677
53,121
171,171
138,436
Adjustments:
Amortization of intangible assets
(3,002
)
(1,437
)
(1,874
)
(6,849
)
(3,958
)
Stock-based compensation
(840
)
(948
)
(883
)
(4,688
)
(6,885
)
Acquisition-related costs
(6,398
)
(705
)
(1,531
)
(9,440
)
(1,310
)
Facility expansion and relocation
costs
(223
)
(29
)
—
(297
)
(518
)
Restructuring charges
(152
)
(403
)
(1,795
)
(3,620
)
(403
)
Non-GAAP operating expenses
53,486
42,155
47,038
146,277
125,362
Non-GAAP operating income
$
22,930
$
44,343
$
17,293
$
60,613
$
166,765
Reconciliation of Non-GAAP measure -
operating expenses and operating income, excluding certain
items
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
2019
2018
2019
2019
2018
Gross profit from continuing operations,
as reported
42.0
%
49.4
%
47.6
%
45.1
%
51.4
%
Adjustments to gross profit:
Stock-based compensation
—
—
—
0.1
0.1
Facility expansion and relocation
costs
0.8
0.5
0.1
0.4
0.2
Acquisition-related costs
0.8
0.1
—
0.3
—
Non-GAAP gross profit
43.6
50.0
47.7
45.9
51.7
Operating expenses from continuing
operations, as reported
36.6
26.4
39.4
38.0
24.5
Adjustments:
Amortization of intangible assets
(1.7
)
(0.8
)
(1.4
)
(1.5
)
(0.7
)
Stock-based compensation
(0.5
)
(0.6
)
(0.7
)
(1.0
)
(1.2
)
Acquisition-related costs
(3.7
)
(0.4
)
(1.1
)
(2.1
)
(0.2
)
Facility expansion and relocation
costs
(0.1
)
—
—
(0.1
)
(0.1
)
Restructuring charges
(0.1
)
(0.2
)
(1.3
)
(0.8
)
(0.1
)
Non-GAAP operating expenses
30.5
24.4
34.9
32.5
22.2
Non-GAAP operating income
13.1
%
25.6
%
12.8
%
13.4
%
29.5
%
Reconciliation of Non-GAAP measure -
income excluding certain items
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
2019
2018
2019
2019
2018
Income from continuing operations, less
noncontrolling interest, net of income taxes
$
7,246
$
35,150
$
23,362
$
45,987
$
127,845
Adjustments:
Amortization of intangible assets
3,002
1,437
1,874
6,849
3,958
Acquisition-related costs
7,904
863
1,531
10,946
1,468
Facility expansion and relocation
costs
1,565
754
150
1,959
1,492
Restructuring charges
152
403
1,795
3,620
403
Tax Cuts and Jobs Act Impact
—
2,398
—
—
4,251
Central inverter services business
sale
—
—
(14,804
)
(14,804
)
—
Acquisition transition services
(29
)
—
—
(29
)
—
Tax effect of Non-GAAP adjustments
326
(598
)
2,536
2,011
(1,145
)
Non-GAAP income, net of income taxes,
excluding stock-based compensation
20,166
40,407
16,444
56,539
138,272
Stock-based compensation, net of taxes
702
779
722
3,887
5,716
Non-GAAP income, net of income taxes
$
20,868
$
41,186
$
17,166
$
60,426
$
143,988
Reconciliation of Non-GAAP measure -
per share earnings excluding certain items
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
2019
2018
2019
2019
2018
Diluted earnings per share from continuing
operations, as reported
$
0.19
$
0.90
$
0.61
$
1.20
$
3.23
Add back (subtract):
per share impact of Non-GAAP adjustments,
net of tax
0.35
0.15
(0.16
)
0.37
0.41
Non-GAAP per share earnings
$
0.54
$
1.05
$
0.45
$
1.57
$
3.64
ADVANCED ENERGY INDUSTRIES, INC.
SELECTED OTHER DATA (UNAUDITED) (in thousands)
Reconciliation of Q4 2019
Guidance
Low End
High End
Revenue
$295 million
$325 million
Reconciliation of Non-GAAP earnings per
share
GAAP earnings per share
$
0.19
$
0.43
Stock-based compensation
0.06
0.05
Amortization of intangible assets
0.14
0.14
Amortization of Acquisition Fair Value
Adjustment in Inventory
0.10
0.13
Restructuring and other
0.11
0.08
Tax effects of excluded items
(0.04
)
(0.03
)
Non-GAAP earnings per share
$
0.56
$
0.80
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191112005433/en/
Brian Smith Advanced Energy (970) 407-6555
brian.smith@aei.com
Advanced Energy Industries (NASDAQ:AEIS)
Historical Stock Chart
From Jun 2024 to Jul 2024
Advanced Energy Industries (NASDAQ:AEIS)
Historical Stock Chart
From Jul 2023 to Jul 2024