AEIS
$58.96
Advanced Energy
($.18)
(.30%)
Earnings Details
1st Quarter March 2018
Monday, April 30, 2018 4:05:00 PM
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Summary

Advanced Energy Misses

Advanced Energy (AEIS) reported 1st Quarter March 2018 earnings of $1.27 per share on revenue of $195.6 million. The consensus earnings estimate was $1.33 per share on revenue of $187.7 million. The Earnings Whisper number was $1.35 per share. Revenue grew 31.0% on a year-over-year basis.

The company said it expects second quarter non-GAAP earnings of $1.30 to $1.40 per share on revenue of $193.0 million to $207.0 million. The current consensus earnings estimate is $1.32 per share on revenue of $189.0 million for the quarter ending June 30, 2018.

Advanced Energy Industries Inc offers power conversion products for direct current, pulsed DC mid-frequency, high voltage, and radio frequency power supplies, matching networks, RF instrumentation, and PCM as well as thermal instrumentation products.

Results
Reported Earnings
$1.27
Earnings Whisper
$1.35
Consensus Estimate
$1.33
Reported Revenue
$195.6 Mil
Revenue Estimate
$187.7 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Advanced Energy Announces First Quarter 2018 Results

  • Q1 Revenue increased 31.0% y/y and 9.2% q/q to $195.6 million
  • Q1 GAAP EPS from continuing operations was $1.16
  • Q1 Non-GAAP EPS from continuing operations was $1.34

FORT COLLINS, Colo., April 30, 2018 (GLOBE NEWSWIRE) -- Advanced Energy Industries, Inc. (Nasdaq:AEIS), today announced financial results for the first quarter ended March 31, 2018.

“Carrying on the momentum seen in 2017, first quarter semiconductor revenue again reached record levels while our Industrial business soared to new historical highs due to the rapid adoption of our advanced technology and expanding geographical presence,” said Yuval Wasserman, president and CEO of Advanced Energy. “Our diversification strategy is working - producing strong results - as we continue to execute on our strategic plan towards our aspirational goals. We believe our strong balance sheet provides the flexibility required to acquire new products and technologies and return value to shareholders.”

First Quarter Results

Sales were $195.6 million in the first quarter of 2018 compared with $179.2 million in the fourth quarter of 2017 and $149.4 million in the first quarter of 2017.

GAAP income from continuing operations was $46.4 million or $1.16 per diluted share in the first quarter of 2018 compared with a loss from continuing operations of $29.0 million or $0.73 per diluted share in the fourth quarter of 2017, and income from continuing operations of $35.4 million or $0.88 per diluted share in the first quarter of 2017.

Non-GAAP income from continuing operations was $53.4 million or $1.34 per diluted share in the first quarter of 2018. This compared with $52.4 million or $1.31 per diluted share in the fourth quarter of 2017, and $41.9 million or $1.04 per diluted share in the first quarter of 2017. A reconciliation of non-GAAP measures is provided in the tables below.

The company generated $34.9 million of operating cash from continuing operations in the first quarter of 2018.

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 2017 Annual Report on Form 10-K.

Second Quarter 2018 Guidance

Based on the company's current view, beliefs and assumptions, its guidance for the second quarter of 2018 is within the following ranges and does not incorporate any potential adjustments during the measurement period associated with U.S. tax reform.

   
  Q2 2018
Revenues $193M - $207M
GAAP operating margins from continuing operations 29.0% - 31.0%
GAAP EPS from continuing operations $1.23 - $1.33
Non-GAAP operating margins from continuing operations 31.0% - 33.0%
Non-GAAP EPS from continuing operations $1.30 - $1.40
   

First Quarter 2018 Conference Call

Management will host a conference call tomorrow morning, Tuesday, May 1, 2018 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 315-625-6980. Participants will need to provide the operator with the Conference ID Number 3792517, 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 3792517. 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 http://ir.advanced-energy.com

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 www.advanced-energy.com

Advanced Energy and the Advanced Energy logo are trademarks of Advanced Energy Industries, Inc. or one of its Affiliates in the United States and elsewhere.

Tom McGimpsey
Advanced Energy Industries, Inc.
(970) 407-6326
tom.mcgimpsey@aei.com
Rhonda Bennetto
Advanced Energy Industries, Inc.
(970) 407-6555
ir@aei.com

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 non-recurring items such as acquisition-related costs. Additionally, the first quarter non-GAAP results exclude estimated income tax expense associated with U.S. tax reform. For the second quarter ending June 30, 2018 guidance, the company expects stock-based compensation of $2.7 million and amortization of intangibles of $1.4 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 second quarter ending June 30, 2018, potential future growth and profitability, our future business mix, 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 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 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 product 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; (k) unanticipated changes to management's estimates, reserves or allowances; and (l) changes and adjustments to the tax expense and benefits related to the recently enacted U.S. tax reform. 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 http://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 (UNAUDITED)
(in thousands, except per share data)
 
 Three Months Ended
 March 31, December 31,
 2018 2017 2017
      
Sales:     
Product$171,209  $128,827  $154,172 
Service24,408  20,524  25,042 
Total sales195,617  149,351  179,214 
Cost of sales:     
Product79,806  60,117  68,833 
Service12,166  10,403  12,206 
Total cost of sales91,972  70,520  81,039 
Gross profit103,645  78,831  98,175 
 53.0% 52.8% 54.8%
Operating expenses:           
Research and development17,637  12,503  16,257 
Selling, general and administrative28,648  22,098  22,682 
Amortization of intangible assets1,257  962  1,174 
Total operating expenses47,542  35,563  40,113 
Operating income56,103  43,268  58,062 
Other income (expense), net26  (3,208) 559 
Income from continuing operations before income taxes56,129  40,060  58,621 
Provision for income taxes9,759  4,619  87,628 
Income (loss) from continuing operations, net of income taxes46,370  35,441  (29,007)
Income (loss) from discontinued operations, net of income taxes140  2,094  (583)
Net income (loss)46,510  37,535  (29,590)
Income from continuing operations attributable to noncontrolling interest31     
Net income (loss) attributable to Advanced Energy Industries, Inc.$46,479  $37,535  $(29,590)
      
Basic weighted-average common shares outstanding39,619  39,738  39,642 
Diluted weighted-average common shares outstanding39,995  40,179  40,051 
            
Earnings per share attributable to Advanced Energy Industries, Inc:           
            
Continuing operations:           
Basic earnings (loss) per share$1.17  $0.89  $(0.73)
Diluted earnings (loss) per share$1.16  $0.88  $(0.73)
            
Discontinued operations:           
Basic earnings (loss) per share$0.00  $0.05  $(0.01)
Diluted earnings (loss) per share$0.00  $0.05  $(0.01)
      
Net income:     
Basic earnings (loss) per share$1.17  $0.94  $(0.75)
Diluted earnings (loss) per share$1.16  $0.93  $(0.75)
            
            


ADVANCED ENERGY INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
 March 31, December 31,
 2018 2017
ASSETSUnaudited  
    
Current assets:   
Cash and cash equivalents$413,874  $407,283 
Marketable securities3,197  3,104 
Accounts and other receivable, net116,900  87,429 
Inventories, net96,842  78,450 
Income taxes receivable2,226  1,295 
Other current assets7,895  8,129 
Current assets of discontinued operations9,638  9,535 
Total current assets650,572  595,225 
    
Property and equipment, net20,706  17,795 
    
Deposits and other assets4,207  3,051 
Goodwill and intangibles, net88,351  87,311 
Deferred income tax assets38,741  18,841 
Non-current assets of discontinued operations11,084  11,085 
Total assets$813,661  $733,308 
    
LIABILITIES AND STOCKHOLDERS' EQUITY   
    
Current liabilities:   
Accounts payable$61,328  $48,177 
Other accrued expenses58,034  50,092 
Current liabilities of discontinued operations7,272  7,850 
Total current liabilities126,634  106,119 
    
Non-current liabilities of continuing operations95,539  91,271 
Non-current liabilities of discontinued operations14,279  15,277 
Long-term liabilities109,818  106,548 
    
Total liabilities236,452  212,667 
    
Advanced Energy stockholders’ equity576,747  520,641 
Noncontrolling interest462   
Stockholders' equity577,209  520,641 
Total liabilities and stockholders' equity$813,661  $733,308 
    
December 31, 2017 amounts are derived from the December 31, 2017 audited Consolidated Financial Statements.
 
 


ADVANCED ENERGY INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
 
 Three Months Ended March 31,
 2018 2017
CASH FLOWS FROM OPERATING ACTIVITIES:   
Net income$46,510  $37,535 
Income from discontinued operations, net of income taxes140  2,094 
Income from continuing operations, net of income taxes46,370  35,441 
    
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization2,861  1,987 
Stock-based compensation expense4,494  3,398 
Loss on foreign exchange hedge  3,489 
Net loss on disposal of assets138  65 
Changes in operating assets and liabilities, net of assets acquired(18,978) (1,721)
Net cash provided by operating activities from continuing operations34,885  42,659 
Net cash used in operating activities from discontinued operations(1,784) (2,453)
Net cash provided by operating activities33,101  40,206 
CASH FLOWS FROM INVESTING ACTIVITIES:   
Acquisitions, net of cash acquired(6,072)  
Purchase of foreign exchange hedge  (3,489)
Purchases of property and equipment(3,923) (1,391)
Net cash used in investing activities from continuing operations(9,995) (4,880)
Net cash used in investing activities from discontinued operations   
Net cash used in investing activities(9,995) (4,880)
CASH FLOWS FROM FINANCING ACTIVITIES:   
Purchase and retirement of common stock(12,750)  
Net payments related to stock-based award activities(4,032) (1,688)
Net cash used in financing activities from continuing operations(16,782) (1,688)
Net cash used in financing activities from discontinued operations   
Net cash used in financing activities(16,782) (1,688)
EFFECT OF CURRENCY TRANSLATION ON CASH167  1,133 
INCREASE IN CASH AND CASH EQUIVALENTS6,491  34,771 
CASH AND CASH EQUIVALENTS, beginning of period415,037  289,517 
CASH AND CASH EQUIVALENTS, end of period421,528  324,288 
Less cash and cash equivalents from discontinued operations7,654  6,339 
CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS, end of period$413,874  $317,949 
        
        


ADVANCED ENERGY INDUSTRIES, INC.
SELECTED OTHER DATA (UNAUDITED)
(in thousands)
 
Reconciliation of Non-GAAP measure - operating expenses and operating income, excluding certain itemsThree Months Ended
 March 31, December 31,
 2018 2017 2017
Gross profit from continuing operations, as reported$103,645  $78,831  $98,175 
Operating expenses from continuing operations, as reported47,542  35,563  40,113 
Adjustments:     
Stock-based compensation(4,494) (3,398) (1,842)
Amortization of intangible assets(1,257) (962) (1,174)
Acquisition-related costs(350)    
Facility expansion and relocation costs(476)    
Non-GAAP operating expenses from continuing operations40,965  31,203  37,097 
Non-GAAP operating income from continuing operations$62,680  $47,628  $61,078 
            
            


Reconciliation of Non-GAAP measure - operating expenses and operating income, excluding certain itemsThree Months Ended
 March 31, December 31,
 2018 2017 2017
Gross profit from continuing operations, as reported53.0% 52.8% 54.8%
Operating expenses from continuing operations, as reported24.3  23.8  22.4 
Adjustments:        
Stock-based compensation(2.3) (2.3) (1.0)
Amortization of intangible assets(0.6) (0.6) (0.7)
Acquisition-related costs(0.2)    
Facility expansion and relocation costs(0.2)    
Non-GAAP operating expenses from continuing operations21.0  20.9  20.7 
Non-GAAP operating income from continuing operations32.0% 31.9% 34.1%
         
         


Reconciliation of Non-GAAP measure - income excluding certain itemsThree Months Ended
 March 31, December 31,
 2018 2017 2017
Income (loss) from continuing operations, less noncontrolling interest, net of income taxes$46,339  $35,441  $(29,007)
Adjustments:     
Stock-based compensation4,494  3,398  1,842 
Amortization of intangible assets1,257  962  1,174 
Loss on foreign exchange hedge  3,489   
Acquisition-related costs350     
Facility expansion and relocation costs476     
Nonrecurring tax (benefit) expense associated with inverter business    6,357 
Tax Cuts and Jobs Act Impact1,853    72,867 
Tax effect of Non-GAAP adjustments(1,343) (1,396) (813)
Non-GAAP income from continuing operations, net of income taxes$53,426  $41,894  $52,420 
            
            


Reconciliation of Non-GAAP measure - per share earnings excluding certain itemsThree Months Ended
 March 31, December 31,
 2018 2017 2017
Diluted earnings (loss) per share from continuing operations, as reported$1.16  $0.88  $(0.73)
Add back:     
per share impact of Non-GAAP adjustments, net of tax0.18  0.16  2.04 
Non-GAAP per share earnings from continuing operations$1.34  $1.04  $1.31 
            
            


Reconciliation of Q2 2018 Guidance   
 Low End High End
    
Revenue   
 $193M $207M
Reconciliation of Non-GAAP operating margin   
GAAP operating margin29.0% 31.0%
Stock-based compensation1.3% 1.3%
Amortization of intangible assets0.7% 0.7%
Non-GAAP operating margin  31.0% 
 33.0% 
    
Reconciliation of Non-GAAP earnings per share   
GAAP earnings per share$1.23 $1.33
Stock-based compensation$0.05 $0.05
Amortization of intangible assets$0.04 $0.04
Tax effects of excluded items$(0.02) $(0.02)
Non-GAAP earnings per share$1.30 $1.40

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Source: Advanced Energy Industries, Inc.