- Total revenue was $516 million, above high end of guidance
range
- Revenue in each of our end markets grew greater than 40%
year-over-year
- GAAP EPS from continuing operations was $1.99
- Non-GAAP EPS was $2.12, above the high end of guidance
range
Advanced Energy Industries, Inc. (Nasdaq: AEIS), a global leader
in highly engineered, precision power conversion, measurement, and
control solutions, today announced financial results for the third
quarter ended September 30, 2022.
“We executed exceptionally well in the third quarter, delivering
record quarterly revenue and earnings on improved supply and
manufacturing output,” said Steve Kelley, president and CEO of
Advanced Energy. “Demand for our precision power products was
strong. We believe that our solid backlog, balanced market exposure
and robust design win pipeline position Advanced Energy to continue
to outperform our markets moving forward.”
Quarter Results
Sales were $516.3 million in the third quarter of 2022, compared
with $440.9 million in the second quarter of 2022 and $346.1
million in the third quarter of 2021.
GAAP net income from continuing operations was $74.9 million or
$1.99 per diluted share in the quarter, compared with $44.8 million
or $1.19 per diluted share in the prior quarter, and $21.0 million
or $0.55 per diluted share a year ago.
Non-GAAP net income was $79.6 million or $2.12 per diluted share
in the third quarter of 2022. This compares with $54.3 million or
$1.44 per diluted share in the second quarter of 2022, and $34.0
million or $0.89 per diluted share in the third quarter of
2021.
Advanced Energy generated $65.4 million of cash flow from
continuing operations during the quarter, repurchased $2.4 million
of common stock and paid $3.8 million in a quarterly dividend.
A reconciliation of GAAP to non-GAAP measures is provided in the
tables below.
Fourth Quarter 2022 Guidance
Based on the Company’s current view, beliefs, and assumptions,
guidance for the fourth quarter of 2022 is within the following
ranges:
Q4 2022
Revenues
$470 million +/- $20 million
GAAP EPS from continuing operations
$1.18 +/- $0.25
Non-GAAP EPS
$1.55 +/- $0.25
Conference Call
Management will host a conference call today, November 1, 2022,
at 4:30 p.m. Eastern Time to discuss the third quarter financial
results. To participate in the live earnings conference call,
please dial 877-407-0890 approximately ten minutes prior to the
start of the meeting and an operator will connect you.
International participants can dial +1-201-389-0918. A webcast will
also be available on our investor web page at ir.advancedenergy.com
in the Events & Presentations section. The archived webcast
will be available approximately two hours following the end of the
live event.
About Advanced Energy
Advanced Energy Industries, Inc. (Nasdaq: AEIS) is a global
leader in the design and manufacture of highly engineered,
precision power conversion, measurement and control solutions for
mission-critical applications and processes. Advanced Energy’s
power solutions enable customer innovation in complex applications
for a wide range of industries including semiconductor equipment,
industrial production, medical and life sciences, data center
computing, networking and telecommunications. With engineering
know-how and responsive service and support for customers around
the globe, the company builds collaborative partnerships to meet
technology advances, propels growth of its customers and innovates
the future of power. Advanced Energy has devoted four decades to
perfecting power. It is headquartered in Denver, Colorado, USA. For
more information, visit www.advancedenergy.com.
Advanced Energy | Precision. Power. Performance. Trust.
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. We believe
that these non-GAAP measures provide useful information to
management and investors to evaluate business performance without
the impacts of certain non-cash charges, non-economic foreign
currency remeasurements, and other cash charges which are not part
of our usual operations. We use 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, we believe that these
non-GAAP measures, in combination with its financial results
calculated in accordance with GAAP, provide investors with
additional perspective. To gain a complete picture of all effects
on our financial results from any and all events, management does
(and investors should) rely upon the GAAP measures as well, as the
items excluded from non-GAAP measures may contribute to not
accurately reflecting the underlying performance of the company’s
continuing operations for the period in which they are incurred.
Furthermore, the use of non-GAAP measures has limitations in that
such measures do not reflect all of the amounts associated with our
results of operations as determined in accordance with GAAP, and
these measures should only be used to evaluate our results of
operations in conjunction with the corresponding GAAP measures.
Forward-Looking Statements
This release and statements we make on the above announced
conference call contain, in addition to historical information,
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Statements in this
report that are not historical information are forward-looking
statements. For example, statements relating to our beliefs,
expectations and plans are forward-looking statements, as are
statements that certain actions, conditions, or circumstances will
continue. The inclusion of words such as "anticipate," "expect,"
"estimate," "can," "may," "might," "continue," "enables," "plan,"
"intend," "should," "could," "would," "likely," "potential," or
"believe," as well as statements that events or circumstances
"will" occur or continue, indicate forward-looking statements.
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) supply
chain disruptions and component shortages that may impact our
ability to timely manufacture products and deliver to customers;
(b) the effects of global macroeconomic conditions upon demand for
our products and services, including supply chain cost increases,
other inflationary pressures, economic downturns, and volatility
and cyclicality of the industries we serve; (c) the impact of
political and geographical risks, including trade and other
international disputes, war, terrorism, or geopolitical tensions;
(d) managing backlog orders; (e) our ability to develop new
products expeditiously and be successful in the design win process;
(f) delays in capital spending by end-users in our served markets;
(g) the risks and uncertainties related to the integration of
acquired companies including SL Power Electronics; (h) the
continuing spread of COVID-19 and its potential adverse impact on
our operations; (i) our ability to avoid additional costs after the
solar inverter wind-down; (j) the accuracy of our assumptions on
which our financial statement projections are based; (k) the timing
of orders received from customers; (l) our ability to realize
benefits from cost improvement efforts including avoided costs,
restructuring plans and inorganic growth; (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, any of which could negatively
impact our customers’ and our presence, operations, and financial
results. 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.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 us 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. We assume 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,
2022
2021
2022
2022
2021
Sales, net
$
516,274
$
346,093
$
440,949
$
1,354,682
$
1,059,024
Cost of sales
325,056
226,054
278,791
856,990
666,449
Gross profit
191,218
120,039
162,158
497,692
392,575
Gross margin %
37.0
%
34.7
%
36.8
%
36.7
%
37.1
%
Operating expenses:
Research and development
49,760
40,578
48,009
141,383
120,865
Selling, general, and administrative
56,716
48,373
55,022
161,056
143,214
Amortization of intangible assets
7,049
5,607
6,523
19,081
16,504
Restructuring expense (benefit)
121
1,272
(161
)
1,178
2,521
Total operating expenses
113,646
95,830
109,393
322,698
283,104
Operating income
77,572
24,209
52,765
174,994
109,471
Other income (expense), net
8,940
495
3,249
11,347
(3,674
)
Income from continuing operations, before
income taxes
86,512
24,704
56,014
186,341
105,797
Provision for income taxes
11,639
3,657
11,203
29,795
10,817
Income from continuing operations
74,873
21,047
44,811
156,546
94,980
Income (loss) from discontinued
operations, net of income taxes
(697
)
(37
)
180
(615
)
171
Net income
74,176
21,010
44,991
155,931
95,151
Income from continuing operations
attributable to noncontrolling interest
9
6
21
16
70
Net income attributable to Advanced
Energy Industries, Inc.
$
74,167
$
21,004
$
44,970
$
155,915
$
95,081
Basic weighted-average common shares
outstanding
37,379
38,183
37,520
37,482
38,296
Diluted weighted-average common shares
outstanding
37,630
38,363
37,710
37,725
38,517
Earnings per share attributable to
Advanced Energy Industries, Inc:
Continuing operations:
Basic earnings per share
$
2.00
$
0.55
$
1.19
$
4.18
$
2.48
Diluted earnings per share
$
1.99
$
0.55
$
1.19
$
4.15
$
2.46
Discontinued operations:
Basic earnings (loss) per share
$
(0.02
)
$
—
$
—
$
(0.02
)
$
—
Diluted earnings (loss) per share
$
(0.02
)
$
—
$
—
$
(0.02
)
$
—
Net income:
Basic earnings per share
$
1.98
$
0.55
$
1.20
$
4.16
$
2.48
Diluted earnings per share
$
1.97
$
0.55
$
1.19
$
4.13
$
2.47
ADVANCED ENERGY INDUSTRIES,
INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands)
September 30,
December 31,
2022
2021
ASSETS
Current assets:
Cash and cash equivalents
$
409,053
$
544,372
Accounts and other receivable, net
307,018
237,227
Inventories
409,422
338,410
Other current assets
56,289
42,225
Total current assets
1,181,782
1,162,234
Property and equipment, net
136,502
114,830
Operating lease right-of-use assets
102,226
101,769
Deposits and other assets
33,364
19,669
Goodwill and intangible assets, net
475,033
371,596
Deferred income tax assets
45,148
47,242
Total assets
$
1,974,055
$
1,817,340
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
219,770
$
193,708
Other accrued expenses
176,886
140,645
Current portion of long-term debt
20,000
20,000
Current portion of operating lease
liabilities
16,299
15,843
Total current liabilities
432,955
370,196
Long-term debt
358,132
372,733
Other long-term liabilities
193,020
202,915
Long-term liabilities
551,152
575,648
Total liabilities
984,107
945,844
Advanced Energy stockholders' equity
989,287
870,851
Noncontrolling interest
661
645
Total stockholders’ equity
989,948
871,496
Total liabilities and stockholders’
equity
$
1,974,055
$
1,817,340
ADVANCED ENERGY INDUSTRIES,
INC.
CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS (UNAUDITED)
(in thousands)
Nine Months Ended September
30,
2022
2021
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income
$
155,931
$
95,151
Less: income (loss) from discontinued
operations, net of income taxes
(615
)
171
Income from continuing operations, net of
income taxes
156,546
94,980
Adjustments to reconcile net income to net
cash from operating activities:
Depreciation and amortization
44,433
39,225
Stock-based compensation expense
15,008
12,819
Provision for deferred income taxes
(2,496
)
(1,404
)
Discount on notes receivable
—
(638
)
(Gain) loss on disposal and sale of
assets
(4,058
)
923
Changes in operating assets and
liabilities, net of assets acquired
(96,451
)
(39,495
)
Net cash from operating activities from
continuing operations
112,982
106,410
Net cash from operating activities from
discontinued operations
(81
)
(523
)
Net cash from operating activities
112,901
105,887
CASH FLOWS FROM INVESTING
ACTIVITIES:
Receipt of notes receivable
—
802
Purchases of property and equipment
(39,507
)
(21,184
)
Acquisitions, net of cash acquired
(145,779
)
(18,739
)
Net cash from investing activities
(185,286
)
(39,121
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from long-term borrowings
—
85,000
Payment of debt-issuance costs
—
(1,350
)
Payments on long-term borrowings
(15,000
)
(8,750
)
Dividend payments
(11,407
)
(11,585
)
Purchase and retirement of common
stock
(25,955
)
(56,625
)
Net payments related to stock-based
awards
(1,411
)
(3,136
)
Net cash from financing activities
(53,773
)
3,554
EFFECT OF CURRENCY TRANSLATION ON
CASH
(9,161
)
(2,765
)
NET CHANGE IN CASH AND CASH
EQUIVALENTS
(135,319
)
67,555
CASH AND CASH EQUIVALENTS, beginning of
period
544,372
480,368
CASH AND CASH EQUIVALENTS, end of
period
$
409,053
$
547,923
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,
2022
2021
2022
2022
2021
Semiconductor Equipment
$
266,600
$
173,441
$
228,797
$
698,354
$
530,828
Industrial and Medical
119,587
80,800
104,951
307,436
242,412
Data Center Computing
87,542
62,231
69,161
232,941
190,843
Telecom and Networking
42,545
29,621
38,040
115,951
94,941
Total
$
516,274
$
346,093
$
440,949
$
1,354,682
$
1,059,024
Net Sales by Geographic Region
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
2022
2021
2022
2022
2021
United States
$
197,205
$
139,089
$
174,293
$
530,240
$
410,212
North America (excluding U.S.)
40,910
24,708
31,824
96,713
77,067
Asia
215,401
135,838
180,181
557,629
434,232
Europe
61,456
44,838
49,851
157,972
129,751
Other
1,302
1,620
4,800
12,128
7,762
Total
$
516,274
$
346,093
$
440,949
$
1,354,682
$
1,059,024
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,
2022
2021
2022
2022
2021
Gross profit from continuing operations,
as reported
$
191,218
$
120,039
$
162,158
$
497,692
$
392,575
Adjustments to gross profit:
Stock-based compensation
454
218
402
1,087
783
Facility expansion, relocation costs and
other
1,662
1,357
1,187
4,133
5,192
Acquisition-related costs
66
3,259
64
(372
)
3,351
Non-GAAP gross profit
193,400
124,873
163,811
502,540
401,901
Non-GAAP gross margin
37.5
%
36.1
%
37.1
%
37.1
%
38.0
%
Operating expenses from continuing
operations, as reported
113,646
95,830
109,393
322,698
283,104
Adjustments:
Amortization of intangible assets
(7,049
)
(5,607
)
(6,523
)
(19,081
)
(16,504
)
Stock-based compensation
(5,568
)
(3,456
)
(4,656
)
(13,921
)
(12,036
)
Acquisition-related costs
(1,150
)
(1,768
)
(4,159
)
(6,977
)
(6,124
)
Facility expansion, relocation costs and
other
—
(98
)
—
—
(212
)
Restructuring charges
(121
)
(1,272
)
161
(1,178
)
(2,521
)
Non-GAAP operating expenses
99,758
83,629
94,216
281,541
245,707
Non-GAAP operating income
$
93,642
$
41,244
$
69,595
$
220,999
$
156,194
Non-GAAP operating margin
18.1
%
11.9
%
15.8
%
16.3
%
14.7
%
Reconciliation of Non-GAAP measure -
income excluding certain items
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
2022
2021
2022
2022
2021
Income from continuing operations, less
non-controlling interest, net of income taxes
$
74,864
$
21,041
$
44,790
$
156,530
$
94,910
Adjustments:
Amortization of intangible assets
7,049
5,607
6,523
19,081
16,504
Acquisition-related costs
1,216
5,027
4,223
6,605
9,475
Facility expansion, relocation costs, and
other
1,662
1,455
1,187
4,133
5,404
Restructuring charges
121
1,272
(161
)
1,178
2,521
Unrealized foreign currency (gain)
loss
(6,169
)
(2,092
)
(5,569
)
(13,023
)
(3,409
)
Acquisition-related costs and other
included in other income (expense), net
(4,685
)
(79
)
85
(4,600
)
907
Tax effect of non-GAAP adjustments
855
(1,036
)
(752
)
(966
)
(4,363
)
Non-GAAP income, net of income taxes,
excluding stock-based compensation
74,913
31,195
50,326
168,938
121,949
Stock-based compensation, net of taxes
4,697
2,811
3,946
11,668
9,809
Non-GAAP income, net of income taxes
$
79,610
$
34,006
$
54,272
$
180,606
$
131,758
ADVANCED ENERGY INDUSTRIES,
INC.
SELECTED OTHER DATA (UNAUDITED)
Reconciliation of non-GAAP measure -
per share earnings excluding certain items
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
2022
2021
2022
2022
2021
Diluted earnings per share from continuing
operations, as reported
$
1.99
$
0.55
$
1.19
$
4.15
$
2.46
Add back:
Per share impact of non-GAAP adjustments,
net of tax
0.13
0.34
0.25
0.64
0.96
Non-GAAP per share earnings
$
2.12
$
0.89
$
1.44
$
4.79
$
3.42
Reconciliation of Q4 2022
Guidance
Low End
High End
Revenue
$450 million
$490 million
Reconciliation of non-GAAP earnings per
share
GAAP earnings per share
$
0.93
$
1.43
Stock-based compensation
0.16
0.16
Amortization of intangible assets
0.19
0.19
Restructuring and other
0.09
0.09
Tax effects of excluded items
(0.07
)
(0.07
)
Non-GAAP earnings per share
$
1.30
$
1.80
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221101006008/en/
Edwin Mok Advanced Energy Industries, Inc. 970-407-6555
ir@aei.com
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