Oct 31, 2023 4:05 PM
Eastern Standard Time
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 third quarter ended September 30, 2023.
“In the third quarter, we delivered sequentially higher earnings and record operating cash flow on marginally lower revenue,” said Steve Kelley, president and CEO of Advanced Energy. “Our solid financial performance through the business cycle gives us the ability to invest in new products and technologies, as well as in improvements in manufacturing efficiency. These investments will drive future revenue growth and market share gains.”
Third Quarter Results
Sales were $410.0 million in the third quarter of 2023, compared with $415.5 million in the second quarter of 2023 and $516.3 million in the third quarter of 2022.
GAAP net income from continuing operations was $33.7 million or $0.89 per diluted share in the quarter, compared with $27.5 million or $0.73 per diluted share in the prior quarter, and $74.9 million or $1.99 per diluted share a year ago.
Non-GAAP net income was $48.5 million or $1.28 per diluted share in the third quarter of 2023. This compares with $41.9 million or $1.11 per diluted share in the second quarter of 2023, and $79.6 million or $2.12 per diluted share in the third quarter of 2022.
Advanced Energy generated a record $72.7 million in cash flow from continuing operations in the third quarter of 2023 and paid $3.8 million in quarterly dividends.
Also in the third quarter of 2023, Advanced Energy completed a private offering of $575 million aggregate principal amount of 2.50% Convertible Senior Notes due 2028. In conjunction with the offering, the company repurchased $40.0 million of common stock. Total cash on hand at the end of the quarter increased to $985.9 million.
Fourth Quarter 2023 Guidance
Based on the Company’s current view, beliefs, and assumptions, guidance is within the following ranges:
$405 million +/- $15 million
GAAP EPS from continuing operations
$0.69 +/- $0.20
$1.15 +/- $0.20
Management will host a conference call today, October 31, 2023, at 4:30 p.m. Eastern Time to discuss the third quarter financial results. To participate in the live earnings conference call, please dial 877-407-0890 approximately ten minutes prior to the start of the meeting and an operator will connect you. International participants can dial +1-201-389-0918. A webcast will also be available on our investor 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 production, medical and life sciences, data center computing, networking, and telecommunications. 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. Trust.
This release includes GAAP and non-GAAP income and per-share earnings data and other GAAP and non-GAAP financial information. The non-GAAP results presented below exclude the impact of non-cash related charges, such as stock-based compensation, amortization of intangible assets, and long-term unrealized foreign exchange gains and losses. In addition, we exclude discontinued operations and other non-recurring items such as acquisition-related costs, facility expansion and related costs, and restructuring expenses, as they are not indicative of future performance. The tax effect of our non-GAAP adjustments represents the anticipated annual tax rate applied to each non-GAAP adjustment after consideration of their respective book and tax treatments.
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.
This release and statements we make on the above announced conference call contain, in addition to historical information, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements in this report that are not historical information are forward-looking statements. For example, statements relating to our beliefs, expectations and plans are forward-looking statements, as are statements that certain actions, conditions, or circumstances will continue. The inclusion of words such as "anticipate," "expect," "estimate," "can," "may," "might," "continue," "enables," "plan," "intend," "should," "could," "would," "likely," "potential," or "believe," as well as statements that events or circumstances "will" occur or continue, indicate forward-looking statements. 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 timely manufacture products and deliver to customers; (b) the effects of global macroeconomic conditions upon demand for our products and services, including supply chain cost increases, inflationary pressures, economic downturns, and volatility and cyclicality of the industries we serve; (c) the impact of political and geographical risks, including trade and export regulations, other effects of international disputes, war, terrorism, or geopolitical tensions; (d) managing backlog orders; (e) our ability to develop new products expeditiously and be successful in the design win process; (f) delays in capital spending by end-users in our served markets; (g) the risks and uncertainties related to the integration of acquired companies including SL Power Electronics; (h) the continuing spread of COVID-19 and its potential adverse impact on our operations; (i) our ability to avoid additional costs and lawsuits after the solar inverter wind-down; (j) the accuracy of our assumptions on which our financial statement projections are based; (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; and (n) changes and adjustments to the tax expense and benefits related to the U.S. tax law changes, 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
Nine Months Ended
Cost of sales
Gross margin %
Research and development
Selling, general, and administrative
Amortization of intangible assets
Total operating expenses
Other income (expense), net
Income from continuing operations, before income tax
Provision for income tax
Income from continuing operations
Loss from discontinued operations, net of income tax
Income from continuing operations attributable to noncontrolling 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
Basic loss per share
Diluted loss per share
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Cash and cash equivalents
Accounts and other receivables, net
Other current assets
Total current assets
Property and equipment, net
Operating lease right-of-use assets
Goodwill and intangible assets, net
LIABILITIES AND STOCKHOLDERS’ EQUITY
Other accrued expenses
Current portion of long-term debt
Current portion of operating lease liabilities
Total current liabilities
Other long-term liabilities
Total stockholders' equity
Total liabilities and stockholders’ equity
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30,
CASH FLOWS FROM OPERATING ACTIVITIES:
Less: loss from discontinued operations, net of income tax
Income from continuing operations, net of income tax
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization
Benefit for deferred income tax
Loss on disposal and sale of assets
Changes in operating assets and liabilities, net of assets acquired
Net cash from operating activities from continuing operations
Net cash from operating activities from discontinued operations
Net cash from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments
Purchases of property and equipment
Acquisitions, net of cash acquired
Net cash from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings
Payment of fees for long-term borrowings
Payments on long-term borrowings
Payment for purchase of note hedges
Proceeds from sale of warrants
Purchase and retirement of common stock
Net payments related to stock-based awards
Net cash from financing activities
EFFECT OF CURRENCY TRANSLATION ON CASH
NET CHANGE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, beginning of period
CASH AND CASH EQUIVALENTS, end of period
SUPPLEMENTAL INFORMATION (UNAUDITED)
Net Sales by Market
Industrial and Medical
Data Center Computing
Telecom and Networking
Net Sales by Geographic Region
SELECTED OTHER DATA (UNAUDITED)
Reconciliation of Non-GAAP measure - operating expenses and operating income, excluding certain items
Gross profit from continuing operations, as reported
Adjustments to gross profit:
Facility expansion, relocation costs and other
Non-GAAP gross profit
Non-GAAP gross margin
Operating expenses from continuing operations, as reported
Restructuring and other
Non-GAAP operating expenses
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Reconciliation of Non-GAAP measure - income excluding certain items
Income from continuing operations, less non-controlling interest, net of income tax
Facility expansion, relocation costs, and other
Unrealized foreign currency gain
Acquisition-related costs and other included in other income (expense), net
Tax effect of non-GAAP adjustments
Non-GAAP income, net of income tax, excluding stock-based compensation
Stock-based compensation, net of tax
Non-GAAP income, net of income tax
Reconciliation of non-GAAP measure - per share earnings excluding certain items
Diluted earnings per share from continuing operations, as reported
Per share impact of non-GAAP adjustments, net of tax
Non-GAAP earnings per share
Reconciliation of Q4 2023 Guidance
Reconciliation of non-GAAP earnings per share
GAAP earnings per share
Tax effects of excluded items
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Advanced Energy Industries, Inc.
Source: Advanced Energy Industries, Inc.