Advanced Energy Announces Third Quarter Results
Nov 02, 2015 4:05 PM Eastern Standard Time
- Revenue of
$130.8 million - GAAP earnings of
$0.40 per diluted share - Non-GAAP earnings of
$0.51 per diluted share - Ended quarter with
$199.0 million in cash and marketable securities
“Near record sales to semiconductor applications drove our strong profitability and cash generation in the third quarter,” said
Results Excluding the Inverter Business
Excluding the inverter business, sales were
Non-GAAP operating income for the business excluding inverters was
Inverters
Closing out the third quarter, inverter sales were
Non-GAAP operating loss for Inverters was
Restructuring and Tax Charges
During the quarter, the company incurred
- Restructuring charges of
$13.9 million consisting of$8.0 million for contract settlement costs,$5.6 million for severance and related costs and$0.3 million for facility closure costs; - An inventory write-down of
$3.4 million that is included in cost of sales; and - Recovery of previously impaired accounts receivable of
$4.1 million that is included in Selling, General and Administrative.
The remainder of the restructuring plan is expected to be substantially complete by year end. Total year restructuring, tax and other charges related to the wind down are anticipated to be within the expected range of
Net Income (Loss)
Net income for the third quarter of 2015 was
On a non-GAAP basis, adjusted net income for this quarter was
Fourth Quarter 2015 Guidance
Based on the company’s current view, guidance for the fourth quarter of 2015 is within the following ranges:
| Non-GAAP* | |||
| Inverters | Business Excluding Inverters | ||
| Revenues | |||
| Non-GAAP* Operating income | ( | ||
| Non-GAAP* Operating income as % of revenue | 20% to 22% | ||
| Non-GAAP EPS | |||
*Non-GAAP Operating Income excludes restructuring charges, stock based compensation, amortization of intangibles and tax release items.
Third Quarter 2015 Conference Call
Management will host a conference call tomorrow morning,
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
This release includes GAAP and non-GAAP income and per-share earnings data. 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 fourth quarter ending
Please refer to the Form 8-K regarding this release furnished today to the
Forward-Looking Statements
The company’s guidance with respect to anticipated financial results for the fourth quarter and year ending
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share data)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| 2015 | 2014 | 2015 | 2015 | 2014 | |||||||||||||||
| SALES | $ | 130,800 | $ | 143,147 | $ | 136,791 | $ | 408,709 | $ | 430,380 | |||||||||
| COST OF SALES | 77,763 | 95,204 | 96,513 | 255,650 | 277,230 | ||||||||||||||
| GROSS PROFIT | 53,037 | 47,943 | 40,278 | 153,059 | 153,150 | ||||||||||||||
| 40.5 | % | 33.5 | % | 29.4 | % | 37.4 | % | 35.6 | % | ||||||||||
| OPERATING EXPENSES: | |||||||||||||||||||
| Research and development | 11,696 | 15,074 | 14,047 | 39,985 | 44,952 | ||||||||||||||
| Selling, general and administrative | 16,484 | 20,223 | 40,546 | 78,784 | 62,782 | ||||||||||||||
| Amortization of intangible assets | 1,267 | 2,238 | 1,894 | 5,052 | 6,339 | ||||||||||||||
| Restructuring charges | 13,930 | 1,183 | 168,393 | 182,323 | 1,427 | ||||||||||||||
| Total operating expenses | 43,377 | 38,718 | 224,880 | 306,144 | 115,500 | ||||||||||||||
| OPERATING INCOME (LOSS) | 9,660 | 9,225 | (184,602 | ) | (153,085 | ) | 37,650 | ||||||||||||
| OTHER (EXPENSE) INCOME, NET | (867 | ) | (618 | ) | 154 | 354 | (689 | ) | |||||||||||
| Income (loss) before income taxes | 8,793 | 8,607 | (184,448 | ) | (152,731 | ) | 36,961 | ||||||||||||
| (Benefit) provision for income taxes | (7,639 | ) | (3,695 | ) | 48,012 | 42,020 | (702 | ) | |||||||||||
| NET INCOME (LOSS) | $ | 16,432 | $ | 12,302 | $ | (232,460 | ) | $ | (194,751 | ) | $ | 37,663 | |||||||
| Basic weighted-average common shares outstanding | 41,027 | 39,998 | 40,946 | 40,905 | 40,450 | ||||||||||||||
| Diluted weighted-average common shares outstanding | 41,319 | 40,470 | 40,946 | 40,905 | 41,102 | ||||||||||||||
| EARNINGS PER SHARE: | |||||||||||||||||||
| BASIC EARNINGS PER SHARE | $ | 0.40 | $ | 0.31 | $ | (5.68 | ) | $ | (4.76 | ) | $ | 0.93 | |||||||
| DILUTED EARNINGS PER SHARE | $ | 0.40 | $ | 0.30 | $ | (5.68 | ) | $ | (4.76 | ) | $ | 0.92 | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
| 2015 | 2014 | ||||||
| ASSETS | UNAUDITED | ||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 184,296 | $ | 125,285 | |||
| Marketable securities | 14,708 | 3,083 | |||||
| Accounts receivable, net | 90,755 | 124,150 | |||||
| Inventories, net | 71,712 | 95,082 | |||||
| Deferred income tax assets | 13,767 | 14,011 | |||||
| Income taxes receivable | 5,955 | 5,555 | |||||
| Other current assets | 12,224 | 9,588 | |||||
| Total current assets | 393,417 | 376,754 | |||||
| Property and equipment, net | 12,519 | 28,976 | |||||
| Deposits and other | 1,540 | 2,052 | |||||
| 80,078 | 250,403 | ||||||
| Deferred income tax assets | 26,107 | 26,384 | |||||
| Total assets | $ | 513,661 | $ | 684,569 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 50,117 | $ | 53,040 | |||
| Other accrued expenses | 92,622 | 59,530 | |||||
| Total current liabilities | 142,739 | 112,570 | |||||
| Long-term liabilities | 95,553 | 97,034 | |||||
| Total liabilities | 238,292 | 209,604 | |||||
| Stockholders' equity | 275,369 | 474,965 | |||||
| Total liabilities and stockholders' equity | $ | 513,661 | $ | 684,569 | |||
*
SEGMENT INFORMATION (UNAUDITED)
(in thousands)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| 2015 | 2014 | 2015 | 2015 | 2014 | |||||||||||||||
| SALES: | |||||||||||||||||||
| Precision Power Products | $ | 107,851 | $ | 91,192 | $ | 104,610 | $ | 318,300 | $ | 255,896 | |||||||||
| Inverters | 22,949 | 51,955 | 32,181 | 90,409 | 174,484 | ||||||||||||||
| Total Sales | $ | 130,800 | $ | 143,147 | $ | 136,791 | $ | 408,709 | $ | 430,380 | |||||||||
| OPERATING INCOME (LOSS): | |||||||||||||||||||
| Precision Power Products | $ | 30,600 | $ | 22,882 | $ | 28,632 | $ | 90,335 | $ | 64,455 | |||||||||
| Inverters | (7,010 | ) | (12,474 | ) | (44,841 | ) | (61,097 | ) | (25,378 | ) | |||||||||
| Total segment operating income (loss) | 23,590 | 10,408 | (16,209 | ) | 29,238 | 39,077 | |||||||||||||
| Restructuring charges | (13,930 | ) | (1,183 | ) | (168,393 | ) | (182,323 | ) | (1,427 | ) | |||||||||
| Other (expense) income, net | (867 | ) | (618 | ) | 154 | 354 | (689 | ) | |||||||||||
| Income (loss) before income taxes | $ | 8,793 | $ | 8,607 | $ | (184,448 | ) | $ | (152,731 | ) | $ | 36,961 | |||||||
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 | |||||||||||||||||
| 2015 | 2014 | 2015 | 2015 | 2014 | |||||||||||||||
| Gross Profit, as reported | $ | 53,037 | $ | 47,943 | $ | 40,278 | $ | 153,059 | $ | 153,150 | |||||||||
| Operating expenses, as reported | 43,377 | 38,718 | 224,880 | 306,144 | 115,500 | ||||||||||||||
| Adjustments: | |||||||||||||||||||
| Restructuring charges | (13,930 | ) | (1,183 | ) | (168,393 | ) | (182,323 | ) | (1,427 | ) | |||||||||
| Acquisition-related costs | — | (60 | ) | — | — | (790 | ) | ||||||||||||
| Stock-based compensation | (803 | ) | (1,488 | ) | (853 | ) | (2,245 | ) | (4,747 | ) | |||||||||
| Amortization of intangible assets | (1,267 | ) | (2,238 | ) | (1,894 | ) | (5,052 | ) | (6,339 | ) | |||||||||
| Nonrecurring inventory impairment | (3,375 | ) | — | (14,994 | ) | (18,369 | ) | — | |||||||||||
| Nonrecurring accounts receivable impairment, net of recoveries | 4,068 | — | (17,661 | ) | (13,593 | ) | — | ||||||||||||
| Nonrecurring executive severance | — | — | — | — | (867 | ) | |||||||||||||
| Non-GAAP operating expenses | 28,070 | 33,749 | 21,085 | 84,562 | 101,330 | ||||||||||||||
| Non-GAAP operating income | $ | 24,967 | $ | 14,194 | $ | 19,193 | $ | 68,497 | $ | 51,820 | |||||||||
| Reconciliation of Non-GAAP measure - income excluding certain items | Three Months Ended | Nine Months Ended | |||||||||||||||||
| 2015 | 2014 | 2015 | 2015 | 2014 | |||||||||||||||
| Income (loss), net of tax, as reported | $ | 16,432 | $ | 12,302 | $ | (232,460 | ) | $ | (194,751 | ) | $ | 37,663 | |||||||
| Adjustments, net of tax | |||||||||||||||||||
| Restructuring charges | 12,927 | 1,102 | 167,063 | 179,990 | 1,327 | ||||||||||||||
| Acquisition-related costs | — | 56 | — | — | 718 | ||||||||||||||
| Stock-based compensation | 746 | 1,385 | 792 | 2,085 | 4,309 | ||||||||||||||
| Amortization of intangible assets | 1,175 | 2,084 | 1,757 | 4,687 | 5,778 | ||||||||||||||
| Nonrecurring tax items | (9,499 | ) | — | 50,272 | 40,773 | — | |||||||||||||
| Nonrecurring accounts receivable impairment, net of recoveries | (3,775 | ) | — | 16,389 | 12,614 | — | |||||||||||||
| Nonrecurring inventory impairment | 3,132 | — | 13,914 | 17,046 | — | ||||||||||||||
| Nonrecurring executive severance | — | — | — | — | 800 | ||||||||||||||
| Non-GAAP income, net of tax | $ | 21,138 | $ | 16,929 | $ | 17,727 | $ | 62,444 | $ | 50,595 | |||||||||
| *Note: The impact of the non-tax deductible goodwill impairment recorded in our second quarter exaggerated our income tax rate resulting in significant book tax expense as compared to our pre-tax book loss. Therefore for preparation of our non-GAAP information we have applied an estimated normalized tax rate of 7.2%, which is consistent with our pre-restructuring Q1 tax rate in order to tax effect the non-GAAP items above. Additionally, we assessed the tax impact of this one-time event by applying this estimated tax rate to our “book operating income excluding restructuring” in order to arrive at our Q3 estimated non-GAAP non-recurring tax add-back of ( |
| Reconciliation of Non-GAAP measure - per share earnings excluding certain items | Three Months Ended | Nine Months Ended | |||||||||||||||||
| 2015 | 2014 | 2015 | 2015 | 2014 | |||||||||||||||
| Diluted earnings per share, as reported | $ | 0.40 | $ | 0.30 | $ | (5.68 | ) | $ | (4.76 | ) | $ | 0.92 | |||||||
| Add back: | |||||||||||||||||||
| per share impact of Non-GAAP adjustments, net of tax | 0.11 | 0.12 | 6.11 | 6.27 | 0.31 | ||||||||||||||
| Non-GAAP per share earnings | $ | 0.51 | $ | 0.42 | $ | 0.43 | $ | 1.51 | $ | 1.23 | |||||||||
OTHER SELECTED DATA (UNAUDITED)
Based on the decision by the Company to exit the inverter segment in a wind-down of operations commencing effective
| Reconciliation of Non-GAAP measure - Revenue & operating income excluding certain items | Three months ended | Nine months ended | |||||||||||||||||||||
| As reported | Amounts related to Inverter | Amounts excluding Inverter | As reported | Amounts related to Inverter | Amounts excluding Inverter | ||||||||||||||||||
| Revenues | $ | 130,800 | $ | 22,949 | $ | 107,851 | $ | 408,709 | $ | 90,409 | $ | 318,300 | |||||||||||
| Operating income (loss) as reported | $ | 9,660 | $ | (20,940 | ) | $ | 30,600 | $ | (153,085 | ) | $ | (239,934 | ) | $ | 86,849 | ||||||||
| Adjustments | |||||||||||||||||||||||
| Restructuring charges | 13,930 | 13,930 | — | 182,323 | 182,323 | — | |||||||||||||||||
| Acquisition-related costs | — | — | — | — | — | — | |||||||||||||||||
| Stock-based compensation | 803 | 66 | 737 | 2,245 | 326 | 1,919 | |||||||||||||||||
| Nonrecurring tax items | — | — | — | — | — | — | |||||||||||||||||
| Nonrecurring inventory impairment | 3,375 | 3,375 | — | 18,369 | 18,369 | — | |||||||||||||||||
| Nonrecurring accounts receivable impairment, net of recoveries | (4,068 | ) | (4,068 | ) | — | 13,593 | 13,593 | — | |||||||||||||||
| Amortization of intangible assets | 1,267 | 169 | 1,098 | 5,052 | 1,755 | 3,297 | |||||||||||||||||
| Non-GAAP Operating income (loss) | $ | 24,967 | $ | (7,468 | ) | $ | 32,435 | $ | 68,497 | $ | (23,568 | ) | $ | 92,065 | |||||||||
| Reconciliation of Non-GAAP measure - Revenue & operating income excluding certain items | Three months ended | Nine months ended | |||||||||||||||||||||
| As reported | Amounts related to Inverter | Amounts excluding Inverter | As reported | Amounts related to Inverter | Amounts excluding Inverter | ||||||||||||||||||
| Revenues | $ | 143,147 | $ | 51,955 | $ | 91,192 | $ | 430,380 | $ | 174,484 | $ | 255,896 | |||||||||||
| Operating income (loss) as reported | $ | 9,225 | $ | (11,394 | ) | $ | 20,619 | $ | 37,650 | $ | (19,616 | ) | $ | 57,266 | |||||||||
| Adjustments | |||||||||||||||||||||||
| Restructuring charges | 1,183 | 1,183 | — | 1,427 | 1,372 | 55 | |||||||||||||||||
| Acquisition-related costs | 60 | — | 60 | 790 | — | 790 | |||||||||||||||||
| Stock-based compensation | 1,488 | 327 | 1,161 | 4,747 | 1,054 | 3,693 | |||||||||||||||||
| Amortization of intangible assets | 2,238 | 883 | 1,355 | 6,339 | 3,108 | 3,231 | |||||||||||||||||
| Nonrecurring executive severance | — | — | — | 867 | — | 867 | |||||||||||||||||
| Non-GAAP Operating income (loss) | $ | 14,194 | $ | (9,001 | ) | $ | 23,195 | $ | 51,820 | $ | (14,082 | ) | $ | 65,902 | |||||||||
CONTACTS:Source:Tom Liguori Advanced Energy Industries, Inc. 970.407.6570 Tom.liguori@aei.comAnnie Leschin Advanced Energy Industries, Inc. 970.407.6555 ir@aei.com