Advanced Energy Reports First Quarter 2022 Results

May 04, 2022 4:05 PM

  • Revenue was $397 million, above high end of guidance range
  • Achieved record revenue in the Semiconductor market
  • GAAP EPS from continuing operations was $0.98
  • Non-GAAP EPS was $1.24, above the high end of guidance range

DENVER--(BUSINESS WIRE)-- Advanced Energy Industries, Inc. (Nasdaq: AEIS), a global leader in highly engineered, precision power conversion, measurement, and control solutions, today announced financial results for the first quarter ended March 31, 2022.

“We delivered good results in the first quarter, largely due to strong manufacturing execution and our ability to secure additional key components,” said Steve Kelley, president and CEO of Advanced Energy. “Demand remains robust in all of our target markets. In addition, our recent acquisition of SL Power Electronics significantly improves our position in the medical and industrial markets.”

First Quarter Results

Sales were $397.5 million in the first quarter of 2022, compared with $396.9 million in the fourth quarter of 2021 and $351.6 million in the first quarter of 2021.

GAAP net income from continuing operations was $36.9 million or $0.98 per diluted share in the quarter, compared with $39.7 million or $1.05 per diluted share in the prior quarter, and $38.4 million or $0.99 per diluted share a year ago.

Non-GAAP net income was $46.7 million or $1.24 per diluted share in the first quarter of 2022. This compares with $51.5 million or $1.36 per diluted share in the fourth quarter of 2021, and $49.7 million or $1.29 per diluted share in the first quarter of 2021.

Advanced Energy generated $9.9 million of cash flow from continuing operations during the quarter, repurchased $6.6 million of common stock and paid $3.8 million in a quarterly dividend.

A reconciliation of GAAP to non-GAAP measures is provided in the tables below.

Acquisition of SL Power Electronics

On April 25, 2022, Advanced Energy completed the acquisition of SL Power Electronics for a base purchase price of $144.5 million, subject to a customary adjustment for working capital.

Second Quarter 2022 Guidance

Based on the Company’s current view, beliefs, and assumptions, guidance for the second quarter of 2022 is within the following ranges:

 

 

 

 

 

 

 

 

Q2 2022

Revenues

$395 million +/- $25 million

GAAP EPS from continuing operations

$0.65 +/- $0.30

Non-GAAP EPS

$1.05 +/- $0.30

Conference Call

Management will host a conference call today, May 4, 2022, at 4:30 p.m. Eastern Time to discuss the first quarter financial results. To participate in the live conference call, please dial 877-428-7458 approximately five minutes prior to the start of the meeting and an operator will connect you. International participants can dial 862-298-0702. A webcast will also be available on our investors web page at ir.advancedenergy.com in the Events & Presentations section. The archived webcast will be available approximately two hours following the end of the live event.

About Advanced Energy

Advanced Energy Industries, Inc. (Nasdaq: AEIS) is a global leader in the design and manufacture of highly engineered, precision power conversion, measurement and control solutions for mission-critical applications and processes. Advanced Energy’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 for customers around the globe, the company builds collaborative partnerships to meet technology advances, propels growth of its customers and innovates the future of power. Advanced Energy has devoted four decades to perfecting power. It is headquartered in Denver, Colorado, USA. For more information, visit www.advancedenergy.com.

Advanced Energy | Precision. Power. Performance.

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 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. We believe that these non-GAAP measures provide useful information to management and investors to evaluate business performance without the impacts of certain non-cash charges, non-economic foreign currency remeasurements, and other cash charges which are not part of our usual operations. We use 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, we believe that these non-GAAP measures, in combination with its financial results calculated in accordance with GAAP, provide investors with additional perspective. To gain a complete picture of all effects on our financial results from any and all events, management does (and investors should) rely upon the GAAP measures as well, as the items excluded from non-GAAP measures may contribute to not accurately reflecting the underlying performance of the company’s continuing operations for the period in which they are incurred. Furthermore, the use of non-GAAP measures has limitations in that such measures do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP, and these measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures.

Forward-Looking Statements

Our guidance with respect to anticipated financial results, potential future growth and profitability, guidance on possible future results, future business mix, expectations regarding future market trends, 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) supply chain disruptions and component shortages that may impact our ability to obtain in a timely manner the materials necessary to manufacture products; (b) the effects of global macroeconomic conditions upon demand for our products and services; (c) the volatility and cyclicality of the industries we serve, particularly the semiconductor industry; (d) delays in capital spending by end-users in our served markets; (e) the risks and uncertainties related to the integration of acquired companies including SL Power Electronics; (f) the continuing spread of COVID-19 and its potential adverse impact on our product manufacturing, research and development, supply chain, services and administrative operations; (g) the accuracy of our estimates related to fulfilling solar inverter product warranty and post-warranty obligations; (h) our ability to realize our plan to avoid additional costs after the solar inverter wind-down; (i) the accuracy of our assumptions on which our financial statement projections are based; (j) the impact of component or product price changes, which may result from a variety of factors; (k) the timing of orders received from customers; (l) our ability to realize benefits from cost improvement efforts including avoided costs, restructuring plans and inorganic growth; (m) unanticipated changes to management’s estimates, reserves or allowances; (n) changes and adjustments to the tax expense and benefits related to the U.S. tax reform that was enacted in late 2017; and (o) the impact of political, economic and policy tensions and conflicts between China and the United States, or between any countries in which we operate or sell products , any of which could negatively impact our customers’ and our presence, operations, and financial results. 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.advancedenergy.com or by contacting Advanced Energy’s investor relations at 970-407-6555. Forward-looking statements are made and based on information available to us 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. We assume 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

 

 

 

March 31,

 

December 31,

 

 

 

2022

 

2021

 

2021

 

Sales, net

 

$

397,459

 

 

$

351,620

 

 

$

396,930

 

 

Cost of sales

 

 

253,143

 

 

 

214,117

 

 

 

257,183

 

 

Gross profit

 

 

144,316

 

 

 

137,503

 

 

 

139,747

 

 

Gross margin %

 

 

36.3

 

%

 

39.1

 

%

 

35.2

 

%

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

43,614

 

 

 

40,168

 

 

 

40,966

 

 

Selling, general, and administrative

 

 

49,318

 

 

 

46,731

 

 

 

48,784

 

 

Amortization of intangible assets

 

 

5,509

 

 

 

5,384

 

 

 

5,556

 

 

Restructuring expense

 

 

1,218

 

 

 

1,038

 

 

 

2,231

 

 

Total operating expenses

 

 

99,659

 

 

 

93,321

 

 

 

97,537

 

 

Operating income

 

 

44,657

 

 

 

44,182

 

 

 

42,210

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense), net

 

 

(842

)

 

 

(507

)

 

 

704

 

 

Income from continuing operations, before income taxes

 

 

43,815

 

 

 

43,675

 

 

 

42,914

 

 

Provision for income taxes

 

 

6,953

 

 

 

5,284

 

 

 

3,187

 

 

Income from continuing operations

 

 

36,862

 

 

 

38,391

 

 

 

39,727

 

 

Income (loss) from discontinued operations, net of income taxes

 

 

(98

)

 

 

310

 

 

 

(98

)

 

Net income

 

 

36,764

 

 

 

38,701

 

 

 

39,629

 

 

Income (loss) from continuing operations attributable to noncontrolling interest

 

 

(14

)

 

 

33

 

 

 

(26

)

 

Net income attributable to Advanced Energy Industries, Inc.

 

$

36,778

 

 

$

38,668

 

 

$

39,655

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted-average common shares outstanding

 

 

37,549

 

 

 

38,328

 

 

 

37,672

 

 

Diluted weighted-average common shares outstanding

 

 

37,770

 

 

 

38,583

 

 

 

37,866

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Advanced Energy Industries, Inc:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations:

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.98

 

 

$

1.00

 

 

$

1.06

 

 

Diluted earnings per share

 

$

0.98

 

 

$

0.99

 

 

$

1.05

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations:

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share

 

$

 

 

$

0.01

 

 

$

 

 

Diluted earnings (loss) per share

 

$

 

 

$

0.01

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income:

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.98

 

 

$

1.01

 

 

$

1.05

 

 

Diluted earnings per share

 

$

0.97

 

 

$

1.00

 

 

$

1.05

 

 

 

ADVANCED ENERGY INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands)

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

 

2022

 

2021

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

521,236

 

$

544,372

Marketable securities

 

 

2,282

 

 

2,296

Accounts and other receivable, net

 

 

248,732

 

 

237,227

Inventories

 

 

360,801

 

 

338,410

Other current assets

 

 

41,429

 

 

39,929

Total current assets

 

 

1,174,480

 

 

1,162,234

 

 

 

 

 

 

 

Property and equipment, net

 

 

117,287

 

 

114,830

Operating lease right-of-use assets

 

 

101,581

 

 

101,769

Deposits and other assets

 

 

27,175

 

 

19,669

Goodwill and intangible assets, net

 

 

365,101

 

 

371,596

Deferred income tax assets

 

 

46,734

 

 

47,242

Total assets

 

$

1,832,358

 

$

1,817,340

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

183,085

 

$

193,708

Other accrued expenses

 

 

144,592

 

 

140,645

Current portion of long-term debt

 

 

20,000

 

 

20,000

Current portion of operating lease liabilities

 

 

15,718

 

 

15,843

Total current liabilities

 

 

363,395

 

 

370,196

 

 

 

 

 

 

 

Long-term debt

 

 

367,868

 

 

372,733

Other long-term liabilities

 

 

199,776

 

 

202,915

Long-term liabilities

 

 

567,644

 

 

575,648

 

 

 

 

 

 

 

Total liabilities

 

 

931,039

 

 

945,844

 

 

 

 

 

 

 

Advanced Energy stockholders' equity

 

 

900,688

 

 

870,851

Noncontrolling interest

 

 

631

 

 

645

Total stockholders’ equity

 

 

901,319

 

 

871,496

Total liabilities and stockholders’ equity

 

$

1,832,358

 

$

1,817,340

 

ADVANCED ENERGY INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

(in thousands)

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

2022

 

2021

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income

 

$

36,764

 

 

$

38,701

 

Less: income (loss) from discontinued operations, net of income taxes

 

 

(98

)

 

 

310

 

Income from continuing operations, net of income taxes

 

 

36,862

 

 

 

38,391

 

 

 

 

 

 

 

 

Adjustments to reconcile net income to net cash from operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

13,888

 

 

 

12,721

 

Stock-based compensation expense

 

 

3,928

 

 

 

5,701

 

Provision for deferred income taxes

 

 

(1,060

)

 

 

(5

)

Loss on disposal of assets

 

 

276

 

 

 

275

 

Changes in operating assets and liabilities, net of assets acquired

 

 

(43,981

)

 

 

(2,819

)

Net cash from operating activities from continuing operations

 

 

9,913

 

 

 

54,264

 

Net cash from operating activities from discontinued operations

 

 

(92

)

 

 

(185

)

Net cash from operating activities

 

 

9,821

 

 

 

54,079

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Proceeds from sale of assets

 

 

 

 

 

6

 

Purchases of property and equipment

 

 

(13,075

)

 

 

(8,817

)

Acquisitions, net of cash acquired

 

 

(600

)

 

 

(3,604

)

Net cash from investing activities

 

 

(13,675

)

 

 

(12,415

)

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Payments on long-term borrowings

 

 

(5,000

)

 

 

(4,375

)

Dividend payments

 

 

(3,789

)

 

 

(3,854

)

Purchase and retirement of common stock

 

 

(6,594

)

 

 

 

Net payments related to stock-based awards

 

 

(2,430

)

 

 

(4,214

)

Net cash from in financing activities

 

 

(17,813

)

 

 

(12,443

)

 

 

 

 

 

 

 

EFFECT OF CURRENCY TRANSLATION ON CASH

 

 

(1,469

)

 

 

321

 

 

 

 

 

 

 

 

NET CHANGE IN CASH AND CASH EQUIVALENTS

 

 

(23,136

)

 

 

29,542

 

CASH AND CASH EQUIVALENTS, beginning of period

 

 

544,372

 

 

 

480,368

 

CASH AND CASH EQUIVALENTS, end of period

 

$

521,236

 

 

$

509,910

 

 

ADVANCED ENERGY INDUSTRIES, INC.

SUPPLEMENTAL INFORMATION (UNAUDITED)

(in thousands)

 

 

 

 

 

 

 

 

 

 

Net Sales by Product Line

 

Three Months Ended

 

 

March 31,

 

December 31,

 

 

2022

 

2021

 

2021

Semiconductor Equipment

 

$

202,957

 

$

180,716

 

$

179,346

Industrial and Medical

 

 

82,898

 

 

78,415

 

 

98,764

Data Center Computing

 

 

76,238

 

 

59,154

 

 

80,081

Telecom and Networking

 

 

35,366

 

 

33,335

 

 

38,739

Total

 

$

397,459

 

$

351,620

 

$

396,930

Net Sales by Geographic Region

 

Three Months Ended

 

 

March 31,

 

December 31,

 

 

2022

 

2021

 

2021

United States

 

$

158,742

 

$

131,598

 

$

151,100

North America (excluding U.S.)

 

 

23,979

 

 

26,247

 

 

27,100

Asia

 

 

162,047

 

 

149,591

 

 

163,598

Europe

 

 

46,665

 

 

40,422

 

 

49,305

Other

 

 

6,026

 

 

3,762

 

 

5,827

Total

 

$

397,459

 

$

351,620

 

$

396,930

 

ADVANCED ENERGY INDUSTRIES, INC.

SELECTED OTHER DATA (UNAUDITED)

(in thousands)

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP measure - operating expenses and operating income, excluding certain items

 

Three Months Ended

 

March 31,

 

December 31,

 

 

2022

 

2021

 

2021

Gross profit from continuing operations, as reported

 

$

144,316

 

 

$

137,503

 

 

$

139,747

 

Adjustments to gross profit:

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

231

 

 

 

350

 

 

 

(19

)

Facility expansion, relocation costs and other

 

 

1,284

 

 

 

1,838

 

 

 

997

 

Acquisition-related costs

 

 

(502

)

 

 

8

 

 

 

234

 

Non-GAAP gross profit

 

 

145,329

 

 

 

139,699

 

 

 

140,959

 

Non-GAAP gross margin

 

 

36.6

%

 

 

39.7

%

 

 

35.5

%

 

 

 

 

 

 

 

 

 

 

Operating expenses from continuing operations, as reported

 

 

99,659

 

 

 

93,321

 

 

 

97,537

 

Adjustments:

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

(5,509

)

 

 

(5,384

)

 

 

(5,556

)

Stock-based compensation

 

 

(3,697

)

 

 

(5,351

)

 

 

(2,939

)

Acquisition-related costs

 

 

(1,668

)

 

 

(2,028

)

 

 

(679

)

Facility expansion, relocation costs and other

 

 

 

 

 

(51

)

 

 

(17

)

Restructuring charges

 

 

(1,218

)

 

 

(1,038

)

 

 

(2,231

)

Non-GAAP operating expenses

 

 

87,567

 

 

 

79,469

 

 

 

86,115

 

Non-GAAP operating income

 

$

57,762

 

 

$

60,230

 

 

$

54,844

 

Non-GAAP operating margin

 

 

14.5

%

 

 

17.1

%

 

 

13.8

%

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP measure - income excluding certain items

 

Three Months Ended

 

March 31,

 

December 31,

 

 

2022

 

2021

 

2021

Income from continuing operations, less non-controlling interest, net of income taxes

 

$

36,876

 

 

$

38,358

 

 

$

39,753

 

Adjustments:

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

5,509

 

 

 

5,384

 

 

 

5,556

 

Acquisition-related costs

 

 

1,166

 

 

 

2,036

 

 

 

913

 

Facility expansion, relocation costs, and other

 

 

1,284

 

 

 

1,889

 

 

 

1,014

 

Restructuring charges

 

 

1,218

 

 

 

1,038

 

 

 

2,231

 

Unrealized foreign currency (gain) loss

 

 

(1,285

)

 

 

(2,202

)

 

 

(134

)

Acquisition-related costs and other included in other income (expense), net

 

 

 

 

 

87

 

 

 

(3,093

)

Tax effect of non-GAAP adjustments

 

 

(1,069

)

 

 

(1,284

)

 

 

3,017

 

Non-GAAP income, net of income taxes, excluding stock-based compensation

 

 

43,699

 

 

 

45,306

 

 

 

49,257

 

Stock-based compensation, net of taxes

 

 

3,025

 

 

 

4,362

 

 

 

2,233

 

Non-GAAP income, net of income taxes

 

$

46,724

 

 

$

49,668

 

 

$

51,490

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of non-GAAP measure - per share earnings excluding certain items

 

Three Months Ended

 

 

March 31,

 

December 31,

 

 

2022

 

2021

 

2021

Diluted earnings per share from continuing operations, as reported

 

$

0.98

 

$

0.99

 

$

1.05

Add back:

 

 

 

 

 

 

 

 

 

Per share impact of non-GAAP adjustments, net of tax

 

 

0.26

 

 

0.30

 

 

0.31

Non-GAAP per share earnings

 

$

1.24

 

$

1.29

 

$

1.36

 

Reconciliation of Q2 2022 Guidance

Low End

High End

 

Revenue

 

$370 million

 

$420 million

 

Reconciliation of non-GAAP earnings per share

 

 

 

 

GAAP earnings per share

$

0.35

 

$

0.95

 

Stock-based compensation

 

0.15

 

 

0.15

 

Amortization of intangible assets

 

0.14

 

 

0.14

 

Restructuring and other

 

0.19

 

 

0.19

 

Tax effects of excluded items

 

(0.08

)

 

(0.08

)

Non-GAAP earnings per share

$

0.75

 

$

1.35

 

 

Edwin Mok
Advanced Energy Industries, Inc.
970-407-6555
ir@aei.com

Source: Advanced Energy Industries, Inc.

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