Advanced Energy Announces Third Quarter Results

Oct 31, 2016 4:05 PM Eastern Standard Time

  • Revenue increased 6.6% sequentially

  • GAAP EPS from continuing operations was $0.73

  • Non-GAAP EPS from continuing operations was $0.77

  • Ended the quarter with $249.8 million in cash and marketable securities

FORT COLLINS, Colo., Oct. 31, 2016 (GLOBE NEWSWIRE) -- Advanced Energy Industries, Inc. (Nasdaq:AEIS) today announced financial results for the third quarter ended September 30, 2016. The company reported third quarter sales of $126.6 million. Third quarter GAAP income from continuing operations was $29.0 million, or $0.73 per diluted share. Non-GAAP income from continuing operations was $30.8 million, or $0.77 per diluted share.

“After a third straight quarter of compelling top and bottom line performance driven by strength in semiconductors, flat panel display and services, 2016 is shaping up to be an impressive year for AE,” said Yuval Wasserman, president and CEO of Advanced Energy. “Our leading precision power products and services continue to be chosen by our customers to support their move to next-generation technologies such as 3DNAND and 10nm Logic. With our semiconductor business showing no signs of slowing and the diversity of our Industrial applications growing, we are getting closer to our near-term aspirational goals.”

Third Quarter Results                              

Sales were $126.6 million compared with $118.8 million in the second quarter of 2016 and $109.8 million in the third quarter of 2015.

GAAP income from continuing operations was $29.0 million or $0.73 per diluted share in the third quarter of 2016 compared to $27.3 million or $0.68 per diluted share in the second quarter, and $23.3 million or $0.56 per diluted share in the third quarter of 2015.

Non-GAAP income from continuing operations was $30.8 million or $0.77 per diluted share in the third quarter of 2016 compared to $29.2 million or $0.73 per diluted share in the second quarter, and $24.9 million or $0.60 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 $249.8 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.

Fourth Quarter 2016 Guidance        

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

  Q4 2016
Revenues $124M - $134M
GAAP operating margins from continuing operations 26% - 29%
GAAP EPS from continuing operations
 $0.70 - $0.80
Non-GAAP operating margins from continuing operations 28% - 30%
Non-GAAP EPS from continuing operations $0.75 - $0.85

Third Quarter 2016 Conference Call

Management will host a conference call tomorrow morning, Tuesday, November 1, 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 93755134, 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 93755134. 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 fourth quarter ending December 31, 2016 guidance, the company expects stock based compensation of $1.3 million and amortization of intangibles of $1.0 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  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 fourth quarter ending December 31, 2016, expectations regarding future market trends and the company’s future performance within specific markets (e.g., statements regarding anticipated semiconductor and industrial market growth) 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 Nine Months Ended
 September 30, June 30, September 30,
 2016 2015 2016 2016 2015
Product$107,650  $94,238  $100,752  $294,695  $279,270 
Service18,902  15,518  18,013  53,666  48,650 
Total sales126,552  109,756  118,765  348,361  327,920 
Cost of sales:         
Product49,835  43,770  47,334  137,984  129,840 
Service10,594  7,448  9,385  28,748  23,894 
Total cost of sales60,429  51,218  56,719  166,732  153,734 
Gross profit66,123  58,538  62,046  181,629  174,186 
 52.2% 53.3% 52.2% 52.1% 53.1%
Operating expenses:         
Research and development11,293  10,370  11,266  33,324  30,114 
Selling, general and administrative19,421  16,585  19,377  56,814  49,976 
Amortization of intangible assets1,048  1,098  1,074  3,180  3,298 
Restructuring benefit  317      315 
Total operating expenses31,762  28,370  31,717  93,318  83,703 
Operating Income34,361  30,168�� 30,329  88,311  90,483 
Other income, net(55) (722) 836  1,138  447 
Income from continuing operations before income taxes34,306  29,446  31,165  89,449  90,930 
Provision for income taxes5,268  6,133  3,911  12,937  18,938 
Income from continuing operations, net of income taxes29,038  23,313  27,254  76,512  71,992 
Income (loss) from discontinued operations, net of income taxes1,323  (6,881) 3,277  6,661  (266,743)
Net income (loss)$30,361  $16,432  $30,531  $83,173  $(194,751)
Basic weighted-average common shares outstanding39,681  41,027  39,672  39,723  40,905 
Diluted weighted-average common shares outstanding39,967  41,319  39,969  40,015  40,905 
Earnings per share:         
Continuing operations:         
Basic earnings per share$0.73  $0.57  $0.69  $1.93  $1.76 
Diluted earnings per share$0.73  $0.56  $0.68  $1.91  $1.76 
Discontinued operations:         
Basic earnings (loss) per share$0.03  $(0.17) $0.08  $0.17  $(6.52)
Diluted earnings (loss) per share$0.03  $(0.17) $0.08  $0.17  $(6.52)
Net income:         
Basic earnings (loss) per share$0.77  $0.40  $0.77  $2.09  $(4.76)
Diluted earnings (loss) per share$0.76  $0.40  $0.76  $2.08  $(4.76)

(in thousands)
 September 30, December 31,
 2016 2015
Current assets:   
Cash and cash equivalents$244,292  $158,443 
Marketable securities5,538  11,986 
Accounts receivable, net69,410  54,959 
Inventories, net56,025  52,573 
Deferred income tax assets6,044  6,004 
Income taxes receivable7,902  9,040 
Other current assets8,166  7,868 
Current assets of discontinued operations23,491  41,902 
Total current assets420,868  342,775 
Property and equipment, net11,988  9,645 
Deposits and other1,673  1,729 
Goodwill and intangibles, net73,796  76,870 
Deferred income tax assets30,184  30,398 
Non-current assets of discontinued operations163  1,271 
Total assets$538,672  $462,688 
Current liabilities:   
Accounts payable$37,180  $27,246 
Other accrued expenses41,070  40,357 
Current liabilities of discontinued operations17,232  36,481 
Total current liabilities95,482  104,084 
Non-current liabilities of continuing operations63,041  67,722 
Non-current liabilities of discontinued operations25,362  27,302 
Long-term liabilities88,403  95,024 
Total liabilities183,885  199,108 
Stockholders' equity354,787  263,580 
Total liabilities and stockholders' equity$538,672  $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 items Three Months Ended Nine Months Ended
  September 30, June 30, September 30,
  2016 2015 2016 2016 2015
Gross Profit from continuing operations, as reported $66,123  $58,538  $62,046  $181,629  $174,186 
Operating expenses from continuing operations, as reported 31,762  28,370  31,717  93,318  83,703 
Restructuring charges   (317)     (314)
Stock-based compensation (1,301) (733) (1,569) (4,299) (1,913)
Amortization of intangible assets (1,048) (1,098) (1,074) (3,180) (3,298)
Non-GAAP operating expenses from continuing operations 29,413  26,222  29,074  85,839  78,178 
Non-GAAP operating income from continuing operations $36,710  $32,316  $32,972  $95,790  $96,008 
Reconciliation of Non-GAAP measure - income excluding certain items Three Months Ended Nine Months Ended
  September 30, June 30, September 30,
  2016 2015 2016 2016 2015
Income from continuing operations, net of income taxes, as reported $29,038  $23,313  $27,254  $76,512  $71,992 
Restructuring charges   317      314 
Stock-based compensation 1,301  733  1,569  4,299  1,913 
Amortization of intangible assets 1,048  1,098  1,074  3,180  3,298 
Tax effect of Non-GAAP adjustments (608) (512) (711) (1,973) (1,184)
Non-GAAP income from continuing operations, net of income taxes $30,779  $24,949  $29,186  $82,018  $76,333 
Reconciliation of Non-GAAP measure - per share earnings excluding certain items Three Months Ended Nine Months Ended
  September 30, June 30, September 30,
  2016 2015 2016 2016 2015
Diluted earnings per share from continuing operations, as reported $0.73  $0.56  $0.68  $1.91  $1.76 
Add back:          
per share impact of Non-GAAP adjustments, net of tax 0.04  0.04  0.05  0.14  0.11 
Non-GAAP per share earnings from continuing operations $0.77  $0.60  $0.73  $2.05  $1.87 


Reconciliation of Q4 2016 Guidance     
  Low End  High End
Revenue $124 million  $134 million
Reconciliation of Non-GAAP operating margin     
GAAP operating margin 26%  29%
Stock-based compensation 1%  1%
Amortization of intangible assets 1%  - 
Non-GAAP operating margin 28%  30%
Reconciliation of Non-GAAP earnings per share     
GAAP earnings per share $0.70   $0.80 
Stock-based compensation 0.04   0.04 
Amortization of intangible assets 0.03   0.03 
Tax effects of excluded items (0.02)  (0.02)
Non-GAAP earnings per share $0.75   $0.85 

Tom Liguori
Advanced Energy Industries, Inc.

Annie Leschin
Advanced Energy Industries, Inc.

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Source: Advanced Energy Industries, Inc.