View all news

Advanced Energy Announces First Quarter 2020 Results

05/06/2020
  • Q1 revenue was $315.5 million, above the guidance midpoint of $310 million
  • Q1 GAAP EPS from continuing operations was $0.48
  • Q1 Non-GAAP EPS was $0.91, above the guidance midpoint of $0.70

DENVER--(BUSINESS WIRE)--May 6, 2020-- Advanced Energy Industries, Inc. (Nasdaq: AEIS), today announced financial results for the first quarter ended March 31, 2020.

Yuval Wasserman, president and CEO, stated, “In the midst of a global pandemic and constrained economic activity, our team executed well to deliver strong results across all our financial metrics while preserving the health and safety of our employees and meeting our customers’ needs.”

First Quarter Results

Sales were $315.5 million in the first quarter of 2020 compared with $338.3 million in the fourth quarter of 2019 and $140.7 million in the first quarter of 2019.

GAAP net income from continuing operations was $18.4 million or $0.48 per diluted share, compared with $10.5 million or $0.27 per diluted share in the prior quarter, and $15.4 million or $0.40 per diluted share in the first quarter of 2019.

Non-GAAP net income was $34.9 million or $0.91 per diluted share in the first quarter of 2020. This compares with $33.4 million or $0.87 per diluted share in the fourth quarter of 2019, and $22.4 million or $0.58 per diluted share in the first quarter of 2019.

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

The company generated $28.9 million of operating cash from continuing operations in the quarter, repurchased approximately 170,000 shares at $42.59 per share for a total of $7.2 million and made debt principal payments of $4.4 million. In addition, the company entered into a SWAP agreement following the end of the quarter to convert 85% of its variable interest rate debt into fixed interest rate debt with a total effective rate of 1.271%(1).

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 all purposes. Further financial detail regarding the amounts related to the discontinued inverter business are available in the company’s 2019 Annual Report on Form 10‑K.

Second Quarter 2020 Guidance

Based on the company’s current view, beliefs and assumptions, guidance for the second quarter of 2020 is within the following ranges.

 

Q2 2020

Revenues

$315M +/- $30M

GAAP EPS from continuing operations

$0.53 +/- $0.30

Non-GAAP EPS

$0.80 +/- $0.30

Conference Call

Management will host a conference call today, May 6, 2020 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 5728869, 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 Denver, Colorado, USA. For more information, visit www.advancedenergy.com.

Advanced Energy | Precision. Power. Performance.

(1)The effective cost of the swap consists of a fixed base rate of 0.521% plus 75 basis points. The 75 basis points could be higher pending the company maintaining certain covenant ratios.

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. 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.

Forward-Looking Statements

The company’s guidance with respect to anticipated financial results for the second quarter ending June 30, 2020, potential future growth and profitability, 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) 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 including the optimization and reduction of our global manufacturing sites; (e) the recent outbreak of Covid-19 and its potential adverse impact on our product manufacturing, research & development, supply chain, services and administrative operations; (f) the accuracy of the company’s estimates related to fulfilling solar inverter product warranty and post-warranty obligations; (g) the company’s ability to realize its plan to avoid additional costs after the solar inverter wind-down; (h) the accuracy of the company’s assumptions on which its financial statement projections are based; (i) the impact of product price changes, which may result from a variety of factors; (j) the timing of orders received from customers; (k) the company’s ability to realize benefits from cost improvement efforts including avoided costs, restructuring plans and inorganic growth; (l) the company’s ability to obtain in a timely manner the materials necessary to manufacture its products; (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 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

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

December 31,

 

 

 

2020

 

2019

 

2019

 

 

 

Unaudited

 

Unaudited

 

Unaudited

 

Sales:

 

 

 

 

 

 

 

 

 

 

Product

 

$

289,361

 

$

112,112

 

$

311,618

 

Service

 

 

26,095

 

 

28,631

 

 

26,650

 

Total sales

 

 

315,456

 

 

140,743

 

 

338,268

 

Cost of sales:

 

 

 

 

 

 

 

 

 

 

Product

 

 

191,066

 

 

60,801

 

 

212,526

 

Service

 

 

12,159

 

 

14,202

 

 

13,447

 

Total cost of sales

 

 

203,225

 

 

75,003

 

 

225,973

 

Gross profit

 

 

112,231

 

 

65,740

 

 

112,295

 

 

 

 

35.6

%

 

46.7

%

 

33.2

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

34,770

 

 

21,289

 

 

33,828

 

Selling, general and administrative

 

 

45,991

 

 

29,014

 

 

49,528

 

Amortization of intangible assets

 

 

5,006

 

 

1,973

 

 

5,319

 

Restructuring expense

 

 

656

 

 

1,673

 

 

1,418

 

Total operating expenses

 

 

86,423

 

 

53,949

 

 

90,093

 

Operating income

 

 

25,808

 

 

11,791

 

 

22,202

 

Other income (expense), net

 

 

(3,510)

 

 

743

 

 

(4,843)

 

Income from continuing operations before income taxes

 

 

22,298

 

 

12,534

 

 

17,359

 

Provision (benefit) for income taxes

 

 

3,900

 

 

(2,853)

 

 

6,880

 

Income from continuing operations, net of income taxes

 

 

18,398

 

 

15,387

 

 

10,479

 

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

 

 

(320)

 

 

(9)

 

 

(210)

 

Net income

 

 

18,078

 

 

15,378

 

 

10,269

 

Income from continuing operations attributable to non-controlling interest

 

 

15

 

 

8

 

 

5

 

Net income attributable to Advanced Energy Industries, Inc.

 

$

18,063

 

$

15,370

 

$

10,264

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted-average common shares outstanding

 

 

38,358

 

 

38,198

 

 

38,341

 

Diluted weighted-average common shares outstanding

 

 

38,570

 

 

38,426

 

 

38,554

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Advanced Energy Industries, Inc:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations:

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.48

 

$

0.40

 

$

0.27

 

Diluted earnings per share

 

$

0.48

 

$

0.40

 

$

0.27

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations:

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

(0.01)

 

$

 

$

(0.01)

 

Diluted earnings per share

 

$

(0.01)

 

$

 

$

(0.01)

 

 

 

 

 

 

 

 

 

 

 

 

Net income:

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.47

 

$

0.40

 

$

0.27

 

Diluted earnings per share

 

$

0.47

 

$

0.40

 

$

0.27

 

ADVANCED ENERGY INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

 

2020

 

2019

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

352,540

 

$

346,441

Marketable securities

 

 

2,490

 

 

2,614

Accounts and other receivable, net

 

 

214,360

 

 

246,564

Inventories, net

 

 

235,299

 

 

230,019

Income taxes receivable

 

 

1,245

 

 

4,245

Other current assets

 

 

55,268

 

 

36,825

Current assets of discontinued operations

 

 

23

 

 

30

Total current assets

 

 

861,225

 

 

866,738

 

 

 

 

 

 

 

Property and equipment, net

 

 

105,592

 

 

108,109

Operating lease right-of-use assets

 

 

110,034

 

 

105,404

 

 

 

 

 

 

 

Deposits and other assets

 

 

21,544

 

 

22,287

Goodwill and intangibles, net

 

 

380,628

 

 

386,943

Deferred income tax assets

 

 

43,258

 

 

42,656

Non-current assets of discontinued operations

 

 

269

 

 

269

Total assets

 

$

1,522,550

 

$

1,532,406

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

167,442

 

$

170,671

Other accrued expenses

 

 

99,459

 

 

112,935

Current portion of debt

 

 

17,500

 

 

17,500

Current portion of operating lease liability

 

 

18,284

 

 

18,312

Current liabilities of discontinued operations

 

 

1,089

 

 

914

Total current liabilities

 

 

303,774

 

 

320,332

 

 

 

 

 

 

 

Long-term debt

 

 

317,285

 

 

321,527

Non-current liabilities of continuing operations

 

 

214,880

 

 

212,400

Non-current liabilities of discontinued operations

 

 

653

 

 

887

Long-term liabilities

 

 

532,818

 

 

534,814

 

 

 

 

 

 

 

Total liabilities

 

 

836,592

 

 

855,146

 

 

 

 

 

 

 

Advanced Energy stockholders’ equity

 

 

685,397

 

 

676,714

Noncontrolling interest

 

 

561

 

 

546

Stockholders’ equity

 

 

685,958

 

 

677,260

Total liabilities and stockholders’ equity

 

$

1,522,550

 

$

1,532,406

ADVANCED ENERGY INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(in thousands)

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

2020

 

2019

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income

 

$

18,078

 

$

15,378

Loss from discontinued operations, net of income taxes

 

 

(320)

 

 

(9)

Income from continuing operations, net of income taxes

 

 

18,398

 

 

15,387

 

 

 

 

 

 

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

11,616

 

 

4,181

Stock-based compensation expense

 

 

3,048

 

 

3,199

Provision for deferred income taxes

 

 

(1,265)

 

 

(649)

Discount on notes receivable

 

 

721

 

 

Net loss on disposal of assets

 

 

173

 

 

6

Changes in operating assets and liabilities, net of assets acquired

 

 

(3,751)

 

 

(15,269)

Net cash provided by operating activities from continuing operations

 

 

28,940

 

 

6,855

Net cash used in operating activities from discontinued operations

 

 

(418)

 

 

(1,409)

Net cash provided by operating activities

 

 

28,522

 

 

5,446

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Proceeds from sale of property and equipment

 

 

10

 

 

Issuance of notes receivable

 

 

(1,000)

 

 

Purchases of property and equipment

 

 

(6,134)

 

 

(2,436)

Net cash used in investing activities from continuing operations

 

 

(7,124)

 

 

(2,436)

Net cash used in investing activities from discontinued operations

 

 

 

 

Net cash used in investing activities

 

 

(7,124)

 

 

(2,436)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Payments on long-term borrowings

 

 

(4,375)

 

 

Purchase and retirement of common stock

 

 

(7,248)

 

 

Net payments related to stock-based award activities

 

 

(2,171)

 

 

(1,707)

Net cash used in financing activities from continuing operations

 

 

(13,794)

 

 

(1,707)

Net cash used in financing activities from discontinued operations

 

 

 

 

Net cash used in financing activities

 

 

(13,794)

 

 

(1,707)

EFFECT OF CURRENCY TRANSLATION ON CASH

 

 

(1,505)

 

 

(566)

INCREASE IN CASH AND CASH EQUIVALENTS

 

 

6,099

 

 

737

CASH AND CASH EQUIVALENTS, beginning of period

 

 

346,441

 

 

354,552

CASH AND CASH EQUIVALENTS, end of period

 

 

352,540

 

 

355,289

Less cash and cash equivalents from discontinued operations

 

 

 

 

4,140

CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS, end of period

 

$

352,540

 

$

351,149

ADVANCED ENERGY INDUSTRIES, INC.

SUPPLEMENTAL INFORMATION (UNAUDITED)

(in thousands)

 

 

 

 

 

 

 

 

 

 

Net Sales by Product Line

 

Three Months Ended

 

 

March 31,

 

December 31,

 

 

2020

 

2019

 

2019

Semiconductor Equipment

 

$

133,625

 

$

91,437

 

$

125,108

Industrial & Medical

 

 

61,979

 

 

49,306

 

 

96,736

Data Center Computing

 

 

86,183

 

 

 

 

77,940

Telecom & Networking

 

 

33,669

 

 

 

 

38,484

Total

 

$

315,456

 

$

140,743

 

$

338,268

 

 

 

 

 

 

 

 

 

 

Net Sales by Geographic Region

 

Three Months Ended

 

 

March 31,

 

December 31,

 

 

2020

 

2019

 

2019

North America

 

$

164,331

 

$

58,506

 

$

172,697

Asia

 

 

110,975

 

 

58,435

 

 

117,559

Europe

 

 

39,136

 

 

23,426

 

 

47,264

Other Countries

 

 

1,014

 

 

376

 

 

748

Total

 

$

315,456

 

$

140,743

 

$

338,268

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,

 

 

2020

 

2019

 

2019

Gross profit from continuing operations, as reported

 

$

112,231

 

$

65,740

 

$

112,295

Adjustments to gross profit:

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

222

 

 

233

 

 

160

Facility expansion and relocation costs

 

 

1,543

 

 

170

 

 

2,229

Acquisition-related costs

 

 

5,141

 

 

 

 

6,784

Non-GAAP gross profit

 

 

119,137

 

 

66,143

 

 

121,468

Non-GAAP gross margin

 

 

37.8%

 

 

47.0%

 

 

35.9%

 

 

 

 

 

 

 

 

 

 

Operating expenses from continuing operations, as reported

 

 

86,423

 

 

53,949

 

 

90,093

Adjustments:

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

(5,006)

 

 

(1,973)

 

 

(5,319)

Stock-based compensation

 

 

(2,826)

 

 

(2,966)

 

 

(2,115)

Acquisition-related costs

 

 

(2,836)

 

 

(1,511)

 

 

(2,562)

Facility expansion and relocation costs

 

 

(385)

 

 

(74)

 

 

(651)

Restructuring charges

 

 

(656)

 

 

(1,673)

 

 

(1,418)

Non-GAAP operating expenses

 

 

74,714

 

 

45,752

 

 

78,028

Non-GAAP operating income

 

$

44,423

 

$

20,391

 

$

43,440

Non-GAAP operating margin

 

 

14.1%

 

 

14.5%

 

 

12.8%

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP measure - income excluding certain items

 

Three Months Ended

 

 

March 31,

 

December 31,

 

 

2020

 

2019

 

2019

Income from continuing operations, less noncontrolling interest, net of income taxes

 

$

18,383

 

$

15,379

 

$

10,474

Adjustments:

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

5,006

 

 

1,973

 

 

5,319

Acquisition-related costs

 

 

7,977

 

 

1,511

 

 

9,346

Facility expansion and relocation costs

 

 

1,928

 

 

244

 

 

2,879

Restructuring charges

 

 

656

 

 

1,673

 

 

1,418

Central inverter services business sale

 

 

 

 

 

 

1,067

Tax effect of Non-GAAP adjustments

 

 

(1,370)

 

 

(851)

 

 

1,195

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

 

 

32,580

 

 

19,929

 

 

31,698

Stock-based compensation, net of taxes

 

 

2,363

 

 

2,463

 

 

1,740

Non-GAAP income, net of income taxes

 

$

34,943

 

$

22,392

 

$

33,438

 

 

 

 

 

 

 

 

 

 

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

 

Three Months Ended

 

 

March 31,

 

December 31,

 

 

2020

 

2019

 

2019

Diluted earnings per share from continuing operations, as reported

 

$

0.48

 

$

0.40

 

$

0.27

Add back (subtract):

 

 

 

 

 

 

 

 

 

per share impact of Non-GAAP adjustments, net of tax

 

 

0.43

 

 

0.18

 

 

0.60

Non-GAAP per share earnings

 

$

0.91

 

$

0.58

 

$

0.87

 

 

 

 

 

 

 

Reconciliation of Q2 2020 Guidance

 

 

 

 

 

 

 

 

Low End

 

High End

 

 

 

 

 

 

 

Revenue

 

$285 million

 

$345 million

 

 

 

 

 

 

 

Reconciliation of Non-GAAP earnings per share

 

 

 

 

 

 

GAAP earnings per share

 

$

0.23

 

$

0.83

Stock-based compensation

 

 

0.07

 

 

0.07

Amortization of intangible assets

 

 

0.14

 

 

0.14

Restructuring and other

 

 

0.10

 

 

0.10

Tax effects of excluded items

 

 

(0.04)

 

 

(0.04)

Non-GAAP earnings per share

 

$

0.50

 

$

1.10

 

For more information, contact:

Brian Smith
Advanced Energy
(970) 407‑6555
brian.smith@aei.com

Source: Advanced Energy Industries, Inc.

Multimedia Files:

Categories: Press Releases
View all news