- Q1 revenue was $315.5 million, above the guidance midpoint
of $310 million
- Q1 GAAP EPS from continuing operations was $0.48
- Q1 Non-GAAP EPS was $0.91, above the guidance midpoint of
$0.70
Advanced Energy Industries, Inc. (Nasdaq: AEIS), today announced
financial results for the first quarter ended March 31, 2020.
Yuval Wasserman, president and CEO, stated, “In the midst of a
global pandemic and constrained economic activity, our team
executed well to deliver strong results across all our financial
metrics while preserving the health and safety of our employees and
meeting our customers’ needs.”
First Quarter Results
Sales were $315.5 million in the first quarter of 2020 compared
with $338.3 million in the fourth quarter of 2019 and $140.7
million in the first quarter of 2019.
GAAP net income from continuing operations was $18.4 million or
$0.48 per diluted share, compared with $10.5 million or $0.27 per
diluted share in the prior quarter, and $15.4 million or $0.40 per
diluted share in the first quarter of 2019.
Non-GAAP net income was $34.9 million or $0.91 per diluted share
in the first quarter of 2020. This compares with $33.4 million or
$0.87 per diluted share in the fourth quarter of 2019, and $22.4
million or $0.58 per diluted share in the first quarter of
2019.
A reconciliation of non-GAAP measures is provided in the tables
below.
The company generated $28.9 million of operating cash from
continuing operations in the quarter, repurchased approximately
170,000 shares at $42.59 per share for a total of $7.2 million and
made debt principal payments of $4.4 million. In addition, the
company entered into a SWAP agreement following the end of the
quarter to convert 85% of its variable interest rate debt into
fixed interest rate debt with a total effective rate of
1.271%(1).
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 2019 Annual Report on Form 10‑K.
Second Quarter 2020
Guidance
Based on the company’s current view, beliefs and assumptions,
guidance for the second quarter of 2020 is within the following
ranges.
Q2 2020
Revenues
$315M +/- $30M
GAAP EPS from continuing operations
$0.53 +/- $0.30
Non-GAAP EPS
$0.80 +/- $0.30
Conference Call
Management will host a conference call today, May 6, 2020 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 5728869, 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 Denver, Colorado, USA. For more information, visit
www.advancedenergy.com.
Advanced Energy | Precision. Power. Performance.
(1) The effective cost of the swap
consists of a fixed base rate of 0.521% plus 75 basis points. The
75 basis points could be higher pending the company maintaining
certain covenant ratios.
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 second quarter ending June 30, 2020, potential
future growth and profitability, future business mix, expectations
regarding future market trends, 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 including
the optimization and reduction of our global manufacturing sites;
(e) the recent outbreak of Covid-19 and its potential adverse
impact on our product manufacturing, research & development,
supply chain, services and administrative operations; (f) the
accuracy of the company’s estimates related to fulfilling solar
inverter product warranty and post-warranty obligations; (g) the
company’s ability to realize its plan to avoid additional costs
after the solar inverter wind-down; (h) the accuracy of the
company’s assumptions on which its financial statement projections
are based; (i) the impact of product price changes, which may
result from a variety of factors; (j) the timing of orders received
from customers; (k) the company’s ability to realize benefits from
cost improvement efforts including avoided costs, restructuring
plans and inorganic growth; (l) the company’s ability to obtain in
a timely manner the materials necessary to manufacture its
products; (m) unanticipated changes to management’s estimates,
reserves or allowances; (n) changes and adjustments to the tax
expense and benefits related to the U.S. tax reform that was
enacted in late 2017; and (o) 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
(in thousands, except per share
data)
Three Months Ended
March 31,
December 31,
2020
2019
2019
Unaudited
Unaudited
Unaudited
Sales:
Product
$
289,361
$
112,112
$
311,618
Service
26,095
28,631
26,650
Total sales
315,456
140,743
338,268
Cost of sales:
Product
191,066
60,801
212,526
Service
12,159
14,202
13,447
Total cost of sales
203,225
75,003
225,973
Gross profit
112,231
65,740
112,295
35.6
%
46.7
%
33.2
%
Operating expenses:
Research and development
34,770
21,289
33,828
Selling, general and administrative
45,991
29,014
49,528
Amortization of intangible assets
5,006
1,973
5,319
Restructuring expense
656
1,673
1,418
Total operating expenses
86,423
53,949
90,093
Operating income
25,808
11,791
22,202
Other income (expense), net
(3,510)
743
(4,843)
Income from continuing operations before
income taxes
22,298
12,534
17,359
Provision (benefit) for income taxes
3,900
(2,853)
6,880
Income from continuing operations, net of
income taxes
18,398
15,387
10,479
Income (loss) from discontinued
operations, net of income taxes
(320)
(9)
(210)
Net income
18,078
15,378
10,269
Income from continuing operations
attributable to non-controlling interest
15
8
5
Net income attributable to Advanced
Energy Industries, Inc.
$
18,063
$
15,370
$
10,264
Basic weighted-average common shares
outstanding
38,358
38,198
38,341
Diluted weighted-average common shares
outstanding
38,570
38,426
38,554
Earnings per share attributable to
Advanced Energy Industries, Inc:
Continuing operations:
Basic earnings per share
$
0.48
$
0.40
$
0.27
Diluted earnings per share
$
0.48
$
0.40
$
0.27
Discontinued operations:
Basic earnings per share
$
(0.01)
$
—
$
(0.01)
Diluted earnings per share
$
(0.01)
$
—
$
(0.01)
Net income:
Basic earnings per share
$
0.47
$
0.40
$
0.27
Diluted earnings per share
$
0.47
$
0.40
$
0.27
ADVANCED ENERGY INDUSTRIES,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands)
March 31,
December 31,
2020
2019
ASSETS
Current assets:
Cash and cash equivalents
$
352,540
$
346,441
Marketable securities
2,490
2,614
Accounts and other receivable, net
214,360
246,564
Inventories, net
235,299
230,019
Income taxes receivable
1,245
4,245
Other current assets
55,268
36,825
Current assets of discontinued
operations
23
30
Total current assets
861,225
866,738
Property and equipment, net
105,592
108,109
Operating lease right-of-use assets
110,034
105,404
Deposits and other assets
21,544
22,287
Goodwill and intangibles, net
380,628
386,943
Deferred income tax assets
43,258
42,656
Non-current assets of discontinued
operations
269
269
Total assets
$
1,522,550
$
1,532,406
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
167,442
$
170,671
Other accrued expenses
99,459
112,935
Current portion of debt
17,500
17,500
Current portion of operating lease
liability
18,284
18,312
Current liabilities of discontinued
operations
1,089
914
Total current liabilities
303,774
320,332
Long-term debt
317,285
321,527
Non-current liabilities of continuing
operations
214,880
212,400
Non-current liabilities of discontinued
operations
653
887
Long-term liabilities
532,818
534,814
Total liabilities
836,592
855,146
Advanced Energy stockholders’ equity
685,397
676,714
Noncontrolling interest
561
546
Stockholders’ equity
685,958
677,260
Total liabilities and stockholders’
equity
$
1,522,550
$
1,532,406
ADVANCED ENERGY INDUSTRIES,
INC.
CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS
(in thousands)
Three Months Ended March
31,
2020
2019
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income
$
18,078
$
15,378
Loss from discontinued operations, net of
income taxes
(320)
(9)
Income from continuing operations, net of
income taxes
18,398
15,387
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
11,616
4,181
Stock-based compensation expense
3,048
3,199
Provision for deferred income taxes
(1,265)
(649)
Discount on notes receivable
721
—
Net loss on disposal of assets
173
6
Changes in operating assets and
liabilities, net of assets acquired
(3,751)
(15,269)
Net cash provided by operating activities
from continuing operations
28,940
6,855
Net cash used in operating activities from
discontinued operations
(418)
(1,409)
Net cash provided by operating
activities
28,522
5,446
CASH FLOWS FROM INVESTING
ACTIVITIES:
Proceeds from sale of property and
equipment
10
—
Issuance of notes receivable
(1,000)
—
Purchases of property and equipment
(6,134)
(2,436)
Net cash used in investing activities from
continuing operations
(7,124)
(2,436)
Net cash used in investing activities from
discontinued operations
—
—
Net cash used in investing activities
(7,124)
(2,436)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Payments on long-term borrowings
(4,375)
—
Purchase and retirement of common
stock
(7,248)
—
Net payments related to stock-based award
activities
(2,171)
(1,707)
Net cash used in financing activities from
continuing operations
(13,794)
(1,707)
Net cash used in financing activities from
discontinued operations
—
—
Net cash used in financing activities
(13,794)
(1,707)
EFFECT OF CURRENCY TRANSLATION ON
CASH
(1,505)
(566)
INCREASE IN CASH AND CASH
EQUIVALENTS
6,099
737
CASH AND CASH EQUIVALENTS, beginning of
period
346,441
354,552
CASH AND CASH EQUIVALENTS, end of
period
352,540
355,289
Less cash and cash equivalents from
discontinued operations
—
4,140
CASH AND CASH EQUIVALENTS FROM
CONTINUING OPERATIONS, end of period
$
352,540
$
351,149
ADVANCED ENERGY INDUSTRIES,
INC.
SUPPLEMENTAL INFORMATION
(UNAUDITED)
(in thousands)
Net Sales by Product Line
Three Months Ended
March 31,
December 31,
2020
2019
2019
Semiconductor Equipment
$
133,625
$
91,437
$
125,108
Industrial & Medical
61,979
49,306
96,736
Data Center Computing
86,183
—
77,940
Telecom & Networking
33,669
—
38,484
Total
$
315,456
$
140,743
$
338,268
Net Sales by Geographic Region
Three Months Ended
March 31,
December 31,
2020
2019
2019
North America
$
164,331
$
58,506
$
172,697
Asia
110,975
58,435
117,559
Europe
39,136
23,426
47,264
Other Countries
1,014
376
748
Total
$
315,456
$
140,743
$
338,268
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,
2020
2019
2019
Gross profit from continuing operations,
as reported
$
112,231
$
65,740
$
112,295
Adjustments to gross profit:
Stock-based compensation
222
233
160
Facility expansion and relocation
costs
1,543
170
2,229
Acquisition-related costs
5,141
—
6,784
Non-GAAP gross profit
119,137
66,143
121,468
Non-GAAP gross margin
37.8%
47.0%
35.9%
Operating expenses from continuing
operations, as reported
86,423
53,949
90,093
Adjustments:
Amortization of intangible assets
(5,006)
(1,973)
(5,319)
Stock-based compensation
(2,826)
(2,966)
(2,115)
Acquisition-related costs
(2,836)
(1,511)
(2,562)
Facility expansion and relocation
costs
(385)
(74)
(651)
Restructuring charges
(656)
(1,673)
(1,418)
Non-GAAP operating expenses
74,714
45,752
78,028
Non-GAAP operating income
$
44,423
$
20,391
$
43,440
Non-GAAP operating margin
14.1%
14.5%
12.8%
Reconciliation of Non-GAAP measure -
income excluding certain items
Three Months Ended
March 31,
December 31,
2020
2019
2019
Income from continuing operations, less
noncontrolling interest, net of income taxes
$
18,383
$
15,379
$
10,474
Adjustments:
Amortization of intangible assets
5,006
1,973
5,319
Acquisition-related costs
7,977
1,511
9,346
Facility expansion and relocation
costs
1,928
244
2,879
Restructuring charges
656
1,673
1,418
Central inverter services business
sale
—
—
1,067
Tax effect of Non-GAAP adjustments
(1,370)
(851)
1,195
Non-GAAP income, net of income taxes,
excluding stock-based compensation
32,580
19,929
31,698
Stock-based compensation, net of taxes
2,363
2,463
1,740
Non-GAAP income, net of income taxes
$
34,943
$
22,392
$
33,438
Reconciliation of Non-GAAP measure -
per share earnings excluding certain items
Three Months Ended
March 31,
December 31,
2020
2019
2019
Diluted earnings per share from continuing
operations, as reported
$
0.48
$
0.40
$
0.27
Add back (subtract):
per share impact of Non-GAAP adjustments,
net of tax
0.43
0.18
0.60
Non-GAAP per share earnings
$
0.91
$
0.58
$
0.87
Reconciliation of Q2 2020
Guidance
Low End
High End
Revenue
$285 million
$345 million
Reconciliation of Non-GAAP earnings per
share
GAAP earnings per share
$
0.23
$
0.83
Stock-based compensation
0.07
0.07
Amortization of intangible assets
0.14
0.14
Restructuring and other
0.10
0.10
Tax effects of excluded items
(0.04)
(0.04)
Non-GAAP earnings per share
$
0.50
$
1.10
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200506005322/en/
For more information, contact:
Brian Smith Advanced Energy (970) 407‑6555
brian.smith@aei.com
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