Nov 12, 2019 7:30 AM
Eastern Standard Time
FORT COLLINS, Colo.--(BUSINESS WIRE)--
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.
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.
$310M +/- $15M
GAAP EPS from continuing operations
$0.31 +/- $0.12
$0.68 +/- $0.12
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.
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.
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
Cost of sales:
Total cost of sales
Research and development
Selling, general and administrative
Amortization of intangible assets
Total operating expenses
Other income (expense), net
Income from continuing operations before income taxes
Provision (benefit) for income taxes
Income from continuing operations, net of income taxes
Income (loss) from discontinued operations, net of income taxes
Income from continuing operations attributable to non-controlling interest
Net income attributable to Advanced Energy Industries, Inc.
Basic weighted-average common shares outstanding
Diluted weighted-average common shares outstanding
Earnings per share attributable to Advanced Energy Industries, Inc:
Basic earnings per share
Diluted earnings per share
ADVANCED ENERGY INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Cash and cash equivalents
Accounts and other receivable, net
Income taxes receivable
Other current assets
Current assets of discontinued operations
Total current assets
Property and equipment, net
Operating lease right-of-use assets
Deposits and other assets
Goodwill and intangibles, net
Deferred income tax assets
Non-current assets of discontinued operations
LIABILITIES AND STOCKHOLDERS’ EQUITY
Other accrued expenses
Current portion of debt
Current portion of operating lease liability
Current liabilities of discontinued operations
Total current liabilities
Non-current liabilities of continuing operations
Non-current liabilities of discontinued operations
Advanced Energy stockholders’ equity
Total liabilities and stockholders’ equity
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
Nine Months Ended September 30,
CASH FLOWS FROM OPERATING ACTIVITIES:
Income from discontinued operations, net of income taxes
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Stock-based compensation expense
Provision for deferred income taxes
Gain on sale of central inverter service business
Net loss on disposal of assets
Changes in operating assets and liabilities, net of assets acquired
Net cash provided by operating activities from continuing operations
Net cash provided by operating activities from discontinued operations
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities
Proceeds from sale of marketable securities
Acquisitions, net of cash acquired
Issuance of notes receivable
Purchases of property and equipment
Net cash used in investing activities from continuing operations
Net cash used in investing activities from discontinued operations
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Proceeds from long-term borrowings
Payments on long-term borrowings
Purchase and retirement of common stock
Net payments related to stock-based award activities
Net cash provided by financing activities from continuing operations
Net cash provided by financing activities from discontinued operations
Net cash provided by financing activities
EFFECT OF CURRENCY TRANSLATION ON CASH
DECREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, beginning of period
CASH AND CASH EQUIVALENTS, end of period
Less cash and cash equivalents from discontinued operations
CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS, end of period
ADVANCED ENERGY INDUSTRIES, INC.
SUPPLEMENTAL INFORMATION (UNAUDITED)
Net Sales by Product Line
Telecom & Networking
Data Center Computing
Industrial & Medical
Net Sales by Geographic Region
ADVANCED ENERGY INDUSTRIES, INC.
SELECTED OTHER DATA (UNAUDITED)
Reconciliation of Non-GAAP measure - operating
expenses and operating income, excluding certain
Gross profit from continuing operations, as reported
Adjustments to gross profit:
Facility expansion and relocation costs
Non-GAAP gross profit
Operating expenses from continuing operations, as reported
Non-GAAP operating expenses
Non-GAAP operating income
Reconciliation of Non-GAAP measure - income
excluding certain items
Income from continuing operations, less noncontrolling interest, net of income taxes
Tax Cuts and Jobs Act Impact
Central inverter services business sale
Acquisition transition services
Tax effect of Non-GAAP adjustments
Non-GAAP income, net of income taxes, excluding stock-based compensation
Stock-based compensation, net of taxes
Non-GAAP income, net of income taxes
Reconciliation of Non-GAAP measure - per share
earnings excluding certain items
Diluted earnings per share from continuing operations, as reported
Add back (subtract):
per share impact of Non-GAAP adjustments, net of tax
Non-GAAP per share earnings
Reconciliation of Q4 2019 Guidance
Reconciliation of Non-GAAP earnings per share
GAAP earnings per share
Amortization of Acquisition Fair Value Adjustment in Inventory
Restructuring and other
Tax effects of excluded items
Non-GAAP earnings per share
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Source: Advanced Energy Industries, Inc.