Advanced Energy Announces Second Quarter Results

Aug 01, 2016 4:18 PM Eastern Standard Time

  • Revenue increased 15.3% sequentially

  • GAAP EPS from continuing operations was $0.68

  • Non-GAAP EPS from continuing operations was $0.73

  • Ended the quarter with $215.1 million in cash and marketable securities

FORT COLLINS, Colo., Aug. 01, 2016 (GLOBE NEWSWIRE) -- Advanced Energy Industries, Inc. (Nasdaq:AEIS) today announced financial results for the second quarter ended June 30, 2016. The company reported second quarter sales of $118.8 million. Second quarter GAAP income from continuing operations was $27.3 million, or $0.68 per diluted share. Non-GAAP income from continuing operations was $29.2 million, or $0.73 per diluted share.

“The second quarter exceeded our expectations on the top and bottom line with record contributions from our Semiconductor and Service businesses and a rebound in our Industrial markets,” said Yuval Wasserman, president and CEO of Advanced Energy. “Our current performance is a direct result of the adoption of our recent design wins in next-generation 3D enabling technologies to volume production. With our advantageous financial model, we are progressing towards our aspirational goals.”

Second Quarter Results                            

Sales were $118.8 million compared with $103.0 million in the first quarter of 2016 and $108.7 million in the second quarter of 2015.

GAAP income from continuing operations, net of income taxes was $27.3 million or $0.68 per diluted share in the second quarter of 2016 compared to $20.2 million or $0.50 per diluted share in the first quarter, and $23.0 million or $0.56 per diluted share in the second quarter of 2015.

Non-GAAP income from continuing operations, net of income taxes was $29.2 million or $0.73 per diluted share in the second quarter of 2016 compared to $22.1 million or $0.55 per diluted share in the first quarter, and $24.4 million or $0.59 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 $215.1 million in cash and marketable securities.

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 both the balance sheet and income statement. Further financial detail regarding the amounts related to the discontinued inverter business are available in the company’s 2015 Annual Report on Form 10-K.

Third Quarter 2016 Guidance          

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

    Q3 2016
Revenues   $116M - $126M
GAAP operating margins from continuing operations   25% - 28%
GAAP EPS from continuing operations   $0.65 - $0.76
Non-GAAP operating margins from continuing operations   27% - 30%
Non-GAAP EPS from continuing operations   $0.70 - $0.80

Second Quarter 2016 Conference Call

Management will host a conference call tomorrow morning, Tuesday, August 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 49515744, 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 49515744. 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

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

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, amortization of intangible assets and restructuring costs, as well as acquisition related costs and other non-recurring items. For the third quarter ending September 30, 2016 guidance, the company expects stock based compensation of $1.2 million and amortization of intangibles of $1.1 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 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. 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 third quarter ending September 30, 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 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 accuracy of the company’s estimates related to fulfilling solar inverter product warranty and post-warranty obligations; (e) the company’s ability to realize its plan to avoid additional costs after the solar inverter wind-down; (f) the accuracy of the company's 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 Copies may also be obtained from Advanced Energy's investor relations page at 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.

(in thousands, except per share data)
 Three Months Ended Six Months Ended
 June 30, March 31, June 30,
 2016 2015 2016 2016 2015
Product$100,752  $91,424  $86,293  $187,045  $185,032 
Service18,013  17,230  16,751  34,764  33,132 
Total sales118,765  108,654  103,044   221,809   218,164 
Cost of sales:         
Product47,334  43,778  40,815  88,149  86,070 
Service9,385  8,327  8,769  18,154  16,446 
Total cost of sales56,719  52,105  49,584  106,303  102,516 
Gross profit62,046  56,549  53,460  115,506  115,648 
 52.2% 52.0% 51.9% 52.1% 53.0%
Operating expenses:         
Research and development11,266  9,984  10,765  22,031  19,744 
Selling, general and administrative19,377  16,684  18,016  37,393  33,391 
Amortization of intangible assets1,074  1,102  1,058  2,132  2,200 
Restructuring benefit        (2)
Total operating expenses31,717  27,770  29,839  61,556  55,333 
Operating Income30,329  28,779  23,621  53,950  60,315 
Other income, net836  301  357  1,193  1,169 
Income from continuing operations before income taxes31,165  29,080  23,978  55,143  61,484 
Provision for income taxes3,911  6,056  3,758  7,669  12,805 
Income from continuing operations, net of income taxes27,254  23,024  20,220  47,474  48,679 
Income (loss) from discontinued operations, net of income taxes3,277  (255,483) 2,061  5,338  (259,862)
Net income (loss)$30,531  $(232,459) $22,281  $52,812  $(211,183)
Basic weighted-average common shares outstanding39,672  40,946  39,814  39,750  40,843 
Diluted weighted-average common shares outstanding39,969  41,253  40,100  40,046  41,192 
Earnings per share:         
Continuing operations:         
Basic earnings per share$0.69  $0.56  $0.51  $1.19  $1.19 
Diluted earnings per share$0.68  $0.56  $0.50  $1.19  $1.18 
Discontinued operations:         
Basic earnings (loss) per share$0.08  $(6.24) $0.05  $0.13  $(6.36)
Diluted earnings (loss) per share$0.08  $(6.24) $0.05  $0.13  $(6.36)
Net income:         
Basic earnings (loss) per share$0.77  $(5.68) $0.56  $1.33  $(5.17)
Diluted earnings (loss) per share$0.76  $(5.68) $0.56  $1.32  $(5.17)

(in thousands)
 June 30, December 31,
 2016 2015
Current assets:   
Cash and cash equivalents$209,273  $158,443 
Marketable securities5,784  11,986 
Accounts receivable, net66,162  54,959 
Inventories, net57,227  52,573 
Deferred income tax assets6,027  6,004 
Income taxes receivable1,875  9,040 
Other current assets8,978  7,868 
Current assets of discontinued operations31,517  41,902 
Total current assets386,843  342,775 
Property and equipment, net11,167  9,645 
Deposits and other1,678  1,729 
Goodwill and intangibles, net74,750  76,870 
Deferred income tax assets30,231  30,398 
Non-current assets of discontinued operations285  1,271 
Total assets$504,954  $462,688 
Current liabilities:   
Accounts payable$36,951  $27,246 
Other accrued expenses36,807  40,357 
Current liabilities of discontinued operations24,910  36,481 
Total current liabilities98,668  104,084 
Non-current liabilities of continuing operations64,370  67,722 
Non-current liabilities of discontinued operations20,104  27,302 
Long-term liabilities84,474  95,024 
Total liabilities183,142  199,108 
Stockholders' equity321,812  263,580 
Total liabilities and stockholders' equity$504,954  $462,688 

December 31, 2015 amounts are derived from the December 31, 2015 audited Consolidated Financial Statements.


(in thousands)
Reconciliation of Non-GAAP measure - operating expenses and operating income, excluding certain itemsThree Months Ended Six Months Ended
 June 30, March 31, June 30,
 2016 2015 2016 2016 2015
Gross Profit from continuing operations, as reported$62,046  $56,549  $53,460  $115,506  $115,648 
Operating expenses from continuing operations, as reported31,717  27,770  29,839  61,556  55,333 
Restructuring charges        2 
Stock-based compensation(1,569) (693) (1,429) (2,998) (1,180)
Amortization of intangible assets(1,074) (1,102) (1,058) (2,132) (2,200)
Non-GAAP operating expenses from continuing operations29,074  25,975  27,352  56,426  51,955 
Non-GAAP operating income from continuing operations$32,972  $30,574  $26,108  $59,080  $63,693 
Reconciliation of Non-GAAP measure - income excluding certain itemsThree Months Ended Six Months Ended
 June 30, March 31, June 30,
 2016 2015 2016 2016 2015
Income from continuing operations, net of income taxes, as reported$27,254  $23,024  $20,220  $47,474  $48,679 
Restructuring charges        (2)
Stock-based compensation1,569  693  1,429  2,998  1,180 
Amortization of intangible assets1,074  1,102  1,058  2,132  2,200 
Tax effect of non-GAAP adjustments(711) (375) (655) (1,366) (673)
Non-GAAP income from continuing operations, net of income taxes$29,186  $24,444  $22,052  $51,238  $51,384 
Reconciliation of Non-GAAP measure - per share earnings excluding certain itemsThree Months Ended Six Months Ended
 June 30, March 31, June 30,
 2016 2015 2016 2016 2015
Diluted earnings per share from continuing operations, as reported$0.68  $0.56  $0.50  $1.19  $1.18 
Add back:         
per share impact of Non-GAAP adjustments, net of tax0.05  0.03  0.05  0.09  0.07 
Non-GAAP per share earnings from continuing operations$0.73  $0.59  $0.55  $1.28  $1.25 

Reconciliation of Q3 2016 Guidance    
  Low End High End
Revenue $116 million $126 million
Reconciliation of Non-GAAP operating margin    
GAAP operating margin 25% 28%
Stock-based compensation 1% 1%
Amortization of intangible assets 1% 1%
Non-GAAP operating margin 27% 30%
Reconciliation of Non-GAAP earnings per share    
GAAP earnings per share $0.65  $0.76 
Stock-based compensation 0.03  0.03 
Amortization of intangible assets 0.03  0.03 
Tax effects of excluded items (0.01) (0.02)
Non-GAAP earnings per share $0.70  $0.80 
Tom Liguori
Advanced Energy Industries, Inc.

Annie Leschin
Advanced Energy Industries, Inc.

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Source: Advanced Energy Industries, Inc.