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Advanced Energy Announces Fourth Quarter Results

Feb 01, 2016 4:05 PM Eastern Standard Time

  • Q4 Revenue and Non-GAAP operating income met expectations
  • 2015 Revenues increase 13% y/y
  • 2015 EPS from continuing operations increased 20% y/y
  • Inverter wind down complete and results included in discontinued operations
  • Completed $50M accelerated share repurchase

FORT COLLINS, Colo., Feb. 01, 2016 (GLOBE NEWSWIRE) -- Advanced Energy Industries, Inc. (Nasdaq:AEIS) today announced financial results for the fourth quarter and the year ended December 31, 2015.

“2015 was a year of many accomplishments. Semiconductor revenues reached record highs and we achieved double digit growth in revenues, operating income and EPS from continuing operations. All this, despite the industry-wide pause in sales to semiconductor applications in the fourth quarter, which was offset in part by counter-seasonal service sales and the ongoing diversity of our industrial applications,” said Yuval Wasserman, President and CEO of Advanced Energy. “With the wind down of inverters now complete, we turn our focus to addressing the growing number of critical applications for our precision power products and technologies. Our continuing strong cash generation is enabling us to pursue these opportunities while simultaneously repurchasing shares and returning value to our shareholders.”

$ millions 2014  2015 % Change
Revenue$367.3 $414.8  13%
Operating Income              $86.1 $106.7  24%
Operating Margin 23.4% 25.7% 
    

Fourth Quarter Results

Sales were $86.9 million compared with $109.8 million in the third quarter of 2015 and $110.2 million in the fourth quarter of 2014.

GAAP income from continuing operations, net of income taxes, was $11.5 million or $0.28 per diluted share in the fourth quarter 2015 compared to $23.3 million or $0.56 per diluted share in the third quarter, and $23.3 million or $0.57 per diluted share in the fourth quarter 2014.

Non-GAAP income from continuing operations, net of income taxes, was $13.0 million or $0.32 per diluted share in the fourth quarter 2015 compared to $25.0 million or $0.61 per diluted share in the third quarter of 2015, and $26.2 million or $0.64 per diluted share in the same period last year. A reconciliation of non-GAAP measures is provided in the tables below.

The company ended the quarter with $170.4 million in cash and marketable securities, a sequential decrease of $23 million, after utilizing $50 million for the accelerated stock repurchase launched in the fourth quarter.

Discontinued Operations

As a result of the completion of the wind down of the solar inverter business, 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 both the balance sheet and income statement. Further financial detail regarding the amounts related to this will be available in the company’s 2015 Annual Report on Form 10-K.

First Quarter 2016 Guidance

Based on the company's current view, beliefs and assumptions, guidance for the first quarter of 2016 is within the following ranges:

 Q1 2016 
Revenues$90M  -  $100M
Non-GAAP EPS from continuing operations      $0.40  -  $0.50
Non-GAAP operating margin23% - 25%
  

Fourth Quarter 2015 Conference Call

Management will host a conference call tomorrow morning, Tuesday, February 2, 2016, 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 14100053, 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 14100053. 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 Energy

Advanced 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 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 restructuring charges, acquisition-related costs, stock based compensation and amortization of intangibles and tax release items. For the first quarter ending March 31, 2016 guidance, the company expects stock based compensation of $1.1 million and amortization of intangibles of $1.2 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 regarding financial and business trends relating to its financial condition and results of operations. 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. Management uses these non-GAAP measures to evaluate business performance and for planning purposes. 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 first quarter ending March 31, 2016, expectations regarding future market trends and the company’s future performance within specific markets and other statements 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; (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 on its plan to avoid additional costs after the Solar inverter wind-down; (f) the accuracy of the company's estimates and 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 Twelve Months Ended
 December 31, September 30, December 31,
 2015 2014 2015 2015 2014
          
SALES$86,891  $110,163  $109,756  $414,811  $367,333 
COST OF SALES44,207  53,620  51,218  197,941  179,273 
GROSS PROFIT42,684  56,543  58,538  216,870  188,060 
 49.1% 51.3% 53.3% 52.3% 51.2%
OPERATING EXPENSES:                   
Research and development9,437  9,728  10,370  39,551  36,915 
Selling, general and administrative16,121  15,959  16,585  66,097  58,549 
Amortization of intangible assets1,070  1,384  1,098  4,368  4,998 
Restructuring (benefit) charges(117) 863  317  198  1,507 
Total operating expenses26,511  27,934  28,370  110,214  101,969 
OPERATING INCOME16,173  28,609  30,168  106,656  86,091 
OTHER (EXPENSE) INCOME, NET(1,661) 241  (722) (1,214) (86)
Income from continuing operations before income taxes14,512  28,850  29,446  105,442  86,005 
Provision for income taxes3,022  5,538  6,133  21,960  16,510 
INCOME FROM CONTINUING OPERATIONS, NET OF INCOME TAXES11,490  23,312  23,313  83,482  69,495 
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES24,775  (13,993) (6,881) (241,968) (22,513)
NET INCOME (LOSS)$36,265  $9,319  $16,432  $(158,486) $46,982 
                    
Basic weighted-average common shares outstanding40,270  40,329  41,027  40,746  40,420 
Diluted weighted-average common shares outstanding40,601  40,757  41,319  41,077  41,034 
                    
EARNINGS PER SHARE:                   
                    
CONTINUING OPERATIONS:                   
BASIC EARNINGS PER SHARE$0.29  $0.58  $0.57  $2.05  $1.72 
DILUTED EARNINGS PER SHARE$0.28  $0.57  $0.56  $2.03  $1.69 
                    
DISCONTINUED OPERATIONS:                   
BASIC EARNINGS (LOSS) PER SHARE$0.62  $(0.35) $(0.17) $(5.94) $(0.56)
DILUTED EARNINGS (LOSS) PER SHARE$0.61  $(0.35) $(0.17) $(5.94) $(0.56)
                    
NET INCOME:                   
BASIC EARNINGS PER SHARE$0.90  $0.23  $0.40  $(3.89) $1.16 
DILUTED EARNINGS PER SHARE$0.89  $0.23  $0.40  $(3.89) $1.14 


ADVANCED ENERGY INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
 December 31, December 31,
 2015 2014
ASSETSUNAUDITED  
    
Current assets:   
Cash and cash equivalents$158,443  $121,401 
Marketable securities11,986  3,083 
Accounts receivable, net54,959  79,053 
Inventories, net52,573  46,092 
Deferred income tax assets6,441  14,011 
Income taxes receivable8,719  14,472 
Other current assets7,538  6,146 
Current assets of discontinued operations41,902  92,495 
Total current assets342,561  376,753 
    
Property and equipment, net9,645  9,759 
    
Deposits and other1,729  1,666 
Goodwill and intangibles, net76,870  84,186 
Deferred income tax assets21,395  23,637 
Non-current assets of discontinued operations18,849  188,567 
Total assets$471,049  $684,568 
    
LIABILITIES AND STOCKHOLDERS' EQUITY   
    
Current liabilities:   
Accounts payable$27,246  $24,541 
Other accrued expenses40,357  29,459 
Current liabilities of discontinued operations38,140  58,568 
Total current liabilities105,743  112,568 
    
Non-current liabilities of continuing operations75,130  78,361 
Non-current liabilities of discontinued operations27,302  18,674 
Long-term liabilities102,432  97,035 
    
Total liabilities208,175  209,603 
    
Stockholders' equity262,874  474,965 
Total liabilities and stockholders' equity$471,049  $684,568 
    

* December 31, 2014 amounts are derived from the December 31, 2014 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 itemsThree Months Ended Twelve Months Ended
 December 31, September 30, December 31,
 2015 2014 2015 2015 2014
          
Gross Profit from continuing operations, as reported$42,684  $56,543  $58,538  $216,870  $188,060 
Operating expenses from continuing operations, as reported26,511  27,934  28,370  110,214  101,969 
Adjustments:                   
Restructuring charges117  (863) (317) (197) (1,507)
Acquisition-related costs—  —  —  —  (730)
Stock-based compensation(897) (1,316) (733) (2,810) (3,712)
Amortization of intangible assets(1,070) (1,384) (1,098) (4,368) (4,998)
Nonrecurring executive severance—  —  —  —  (867)
Non-GAAP operating expenses from continuing operations24,661  24,371  26,222  102,839  90,155 
Non-GAAP operating income from continuing operations$18,023  $32,172  $32,316  $114,031  $97,905 
                    
                    
Reconciliation of Non-GAAP measure -                    
 income excluding certain itemsThree Months Ended Twelve Months Ended
 December 31, September 30, December 31,
 2015 2014 2015 2015 2014
          
Income from continuing operations, net of income taxes, as reported$11,490  $23,312  $23,313  $83,482  $69,495 
Adjustments, net of tax                   
Restructuring charges(93) 697  251  156  1,218 
Acquisition-related costs—  —  —  —  590 
Stock-based compensation710  1,064  580  2,225  2,999 
Amortization of intangible assets847  1,118  870  3,459  4,039 
Nonrecurring executive severance—  —  —  —  701 
Non-GAAP income from continuing operations, net of income taxes$12,954  $26,191  $25,014  $89,322  $79,042 
                    
                    
Reconciliation of Non-GAAP measure -                    
per share earnings excluding certain                    
itemsThree Months Ended Twelve Months Ended
 December 31, September 30, December 31,
 2015 2014 2015 2015 2014
          
Diluted earnings per share from continuing operations, as reported$0.28  $0.57  $0.56  $2.03  $1.69 
Add back:         
per share impact of Non-GAAP adjustments, net of tax0.04  0.07  0.05  0.14  0.24 
Non-GAAP per share earnings from continuing operations$0.32  $0.64  $0.61  $2.17  $1.93 
                    

 

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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Source: Advanced Energy Industries, Inc.

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