AEIS
$50.93
Advanced Energy
($.23)
(.45%)
Earnings Details
4th Quarter December 2018
Monday, February 04, 2019 4:05:00 PM
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Summary

Advanced Energy Misses

Advanced Energy (AEIS) reported 4th Quarter December 2018 earnings of $0.78 per share on revenue of $154.2 million. The consensus earnings estimate was $0.76 per share on revenue of $155.7 million. The Earnings Whisper number was $0.79 per share. Revenue fell 14.0% compared to the same quarter a year ago.

The company said it expects first quarter earnings of $0.40 to $0.55 per share on revenue of $138.0 million to $148.0 million. The current consensus earnings estimate is $0.64 per share on revenue of $162.2 million for the quarter ending March 31, 2019.

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
$0.78
Earnings Whisper
$0.79
Consensus Estimate
$0.76
Reported Revenue
$154.2 Mil
Revenue Estimate
$155.7 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Advanced Energy Announces Fourth Quarter and Full Year Fiscal 2018 Results

  • Q4 Revenue was $154.2 million
  • Fiscal 2018 Revenue grew 7.1% to $718.9 million
  • Q4 GAAP EPS from continuing operations was $0.50
  • Q4 Non-GAAP EPS was $0.73

FORT COLLINS, Colo., Feb. 04, 2019 (GLOBE NEWSWIRE) -- Advanced Energy Industries, Inc. (Nasdaq: AEIS), today announced financial results for the fourth quarter and full fiscal year ended December 31, 2018.

"Despite a slower second half, we completed 2018 with record annual revenues, solid profitability and robust cash flow generation. While the semiconductor market is experiencing a cyclical downturn, we continue to see a bright future for the long term," said Yuval Wasserman, president and CEO. "We remain confident in the multiple growth drivers of our business and are focused on executing our expansion and diversification growth strategies in both the semiconductor and industrial technologies markets."

Fourth Quarter Results

Sales were $154.2 million in the fourth quarter of 2018 compared with $173.1 million in the third quarter of 2018 and $179.2 million in the fourth quarter of 2017.

GAAP net income from continuing operations was $19.2 million or $0.50 per diluted share in the fourth quarter of 2018 compared with $35.2 million or $0.90 per diluted share in the third quarter of 2018, and a loss of $29.0 million or $0.73 per share in the fourth quarter of 2017. Fourth quarter 2018 results were impacted by $3.8 million of restructuring charges. Fourth quarter 2017 results included one-time tax expenses of $6.4 million associated with the write-down of the solar inverter business and $72.9 million associated with the U.S. tax reform enacted in 2017.

Non-GAAP net income was $28.0 million or $0.73 per diluted share in the fourth quarter of 2018. This compares with $41.2 million or $1.05 per diluted share in the third quarter of 2018, and $52.4 million or $1.31 per diluted share in the fourth quarter of 2017. A reconciliation of non-GAAP measures is provided in the tables below.

The company generated $32.9 million of operating cash from continuing operations in the fourth quarter of 2018. During the quarter the company repurchased 575,469 shares for $26.1 million.

Full Year 2018 Results

Sales were $718.9 million in 2018 compared with $671.0 million in 2017, an increase of 7.1%.

GAAP net income from continuing operations was $147.1 million or $3.74 per diluted share in 2018 compared with $136.1 million or $3.39 per diluted share in 2017.

Non-GAAP net income was $172.0 million or $4.37 per diluted share in 2018 compared to $191.5 million or $4.77 per diluted share in 2017. A reconciliation of non-GAAP measures is provided in the tables below.

The company generated $151.4 million of operating cash from continuing operations in 2018 and ended the year with $351.8 million in cash and marketable securities.

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.

First Quarter 2019 Guidance

Based on the company's current view, beliefs and assumptions, its guidance for the first quarter of 2019 is within the following ranges.

   
  Q1 2019
Revenues $138M - $148M
GAAP EPS from continuing operations $0.24 - $0.42
Non-GAAP EPS from continuing operations $0.40 - $0.55
   

Fourth Quarter 2018 Conference Call

Management will host a conference call tomorrow morning, Tuesday, February 5, 2019 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 2931549, 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 2931549. 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 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 semiconductor and industrial manufacturing applications. 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 Fort Collins, Colorado, USA. For more information, visit www.advancedenergy.com.

Advanced Energy | Precision. Power. Performance.

For more information, contact:

Brian Smith
Advanced Energy
(970) 407-6555
brian.smith@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 discontinued operations, and non-recurring items such as acquisition-related costs and restructuring expenses. Additionally, the fourth quarter non-GAAP results exclude estimated income tax expense associated with U.S. tax reform. 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 first quarter ending March 31, 2019, 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; (l) changes and adjustments to the tax expense and benefits related to the U.S. tax reform that was enacted in late 2017; and (m) the effects of recent 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 (UNAUDITED)
(in thousands, except per share data)

 Three Months Ended Year Ended
 December 31, September 30, December 31,
 2018 2017 2018 2018 2017
Sales:         
Product$125,039  $154,172  $144,843  $610,326  $578,650 
Service29,122  25,042  28,239  108,566  92,362 
Total sales154,161  179,214  173,082  718,892  671,012 
Cost of sales:         
Product64,819  68,833  73,019  298,597  267,587 
Service14,154  12,206  14,524  54,688  47,044 
Total cost of sales78,973  81,039  87,543  353,285  314,631 
Gross profit75,188  98,175  85,539  365,607  356,381 
 48.8% 54.8% 49.4% 50.9% 53.1%
Operating expenses:         
Research and development20,725  16,257  18,451  76,008  57,999 
Selling, general and administrative29,241  22,682  25,386  108,033  93,262 
Amortization of intangible assets1,816  1,174  1,437  5,774  4,350 
Restructuring expense3,836    403  4,239   
Total operating expenses55,618  40,113  45,677  194,054  155,611 
Operating income19,570  58,062  39,862  171,553  200,770 
Other income (expense), net881  559  401  823  (2,579)
Income from continuing operations before income taxes20,451  58,621  40,263  172,376  198,191 
Provision (benefit) for income taxes1,229  87,628  5,106  25,227  62,090 
Income from continuing operations, net of income taxes19,222  (29,007) 35,157  147,149  136,101 
Income (loss) from discontinued operations, net of income taxes188  (583) (371) (38) 1,760 
Net income19,410  (29,590) 34,786  147,111  137,861 
Income from continuing operations attributable to noncontrolling interest4    7  86   
Net income attributable to Advanced Energy Industries, Inc.$19,406  $(29,590) $34,779  $147,025  $137,861 
          
Basic weighted-average common shares outstanding38,386  39,642  38,970  39,081  39,754 
Diluted weighted-average common shares outstanding38,595  40,051  39,195  39,352  40,176 
          
Earnings per share attributable to Advanced Energy Industries, Inc:      
          
Continuing operations:         
Basic earnings per share$0.50  $(0.73) $0.90  $3.76  $3.42 
Diluted earnings per share$0.50  $(0.73) $0.90  $3.74  $3.39 
          
Discontinued operations:         
Basic earnings per share$0.00  $(0.01) $(0.01) $0.00  $0.04 
Diluted earnings per share$0.00  $(0.01) $(0.01) $0.00  $0.04 
          
Net income:         
Basic earnings per share$0.51  $(0.75) $0.89  $3.76  $3.47 
Diluted earnings per share$0.50  $(0.75) $0.89  $3.74  $3.43 
                    

ADVANCED ENERGY INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

 December 31, December 31,
 2018 2017
ASSETSUnaudited  
    
Current assets:   
Cash and cash equivalents$349,301  $407,283 
Marketable securities2,470  3,104 
Accounts and other receivable, net100,442  87,429 
Inventories, net97,987  78,450 
Income taxes receivable2,220  1,295 
Other current assets10,173  8,129 
Current assets of discontinued operations5,855  9,535 
Total current assets568,448  595,225 
    
Property and equipment, net31,269  17,795 
    
Deposits and other assets6,874  3,051 
Goodwill and intangibles, net156,810  87,311 
Deferred income tax assets47,099  18,841 
Non-current assets of discontinued operations5,984  11,085 
Total assets$816,484  $733,308 
    
LIABILITIES AND STOCKHOLDERS' EQUITY   
    
Current liabilities:   
Accounts payable$39,646  $48,177 
Other accrued expenses65,377  50,092 
Current liabilities of discontinued operations5,286  7,850 
Total current liabilities110,309  106,119 
    
Non-current liabilities of continuing operations88,158  91,271 
Non-current liabilities of discontinued operations10,715  15,277 
Long-term liabilities98,873  106,548 
    
Total liabilities209,182  212,667 
    
Advanced Energy stockholders’ equity606,790  520,641 
Noncontrolling interest512   
Stockholders' equity607,302  520,641 
Total liabilities and stockholders' equity$816,484  $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)

 Years Ended December 31,
 2018 2017
CASH FLOWS FROM OPERATING ACTIVITIES:   
Net income$147,111  $137,861 
Income from discontinued operations, net of income taxes(38) 1,760 
Income from continuing operations, net of income taxes147,149  136,101 
    
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization13,592  9,424 
Stock-based compensation expense9,703  12,549 
Provision for deferred income taxes5,618  28,765 
Loss on foreign exchange hedge  3,489 
Net loss on disposal of assets481  122 
Changes in operating assets and liabilities, net of assets acquired(25,116) (494)
Net cash provided by operating activities from continuing operations151,427  189,956 
Net cash used in operating activities from discontinued operations(156) (7,255)
Net cash provided by operating activities151,271  182,701 
CASH FLOWS FROM INVESTING ACTIVITIES:   
Purchases of marketable securities(95) (107)
Proceeds from sale of marketable securities589  1,903 
Acquisitions, net of cash acquired(93,756) (17,347)
Purchase of foreign exchange hedge  (3,489)
Purchases of property and equipment(20,330) (9,042)
Net cash used in investing activities from continuing operations(113,592) (28,082)
Net cash used in investing activities from discontinued operations   
Net cash used in investing activities(113,592) (28,082)
CASH FLOWS FROM FINANCING ACTIVITIES:   
Purchase and retirement of common stock(95,125) (29,993)
Net payments related to stock-based award activities(2,009) (1,314)
Net cash used in financing activities from continuing operations(97,134) (31,307)
Net cash used in financing activities from discontinued operations   
Net cash used in financing activities(97,134) (31,307)
EFFECT OF CURRENCY TRANSLATION ON CASH(1,030) 2,208 
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS(60,485) 125,520 
CASH AND CASH EQUIVALENTS, beginning of period415,037  289,517 
CASH AND CASH EQUIVALENTS, end of period354,552  415,037 
Less cash and cash equivalents from discontinued operations5,251  7,754 
CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS, end of period$349,301  $407,283 
        

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 Year Ended
 December 31, September 30, December 31,
 2018 2017 2018 2018 2017
Gross profit from continuing operations, as reported$75,188  $98,175  $85,539  $365,607  $356,381 
Adjustments to gross profit:         
Stock-based compensation166  346  76  742  1,394 
Facility transition and relocation costs354    725  1,328   
Acquisition-related costs411    158  569   
Non-GAAP gross profit76,119  98,521  86,498  368,246  357,775 
          
Operating expenses from continuing operations, as reported55,618  40,113  45,677  194,054  155,611 
Adjustments:         
Amortization of intangible assets(1,816) (1,174) (1,437) (5,774) (4,350)
Stock-based compensation(2,077) (1,496) (948) (8,961) (11,155)
Acquisition-related costs(416)   (705) (1,726) (150)
Facility expansion and relocation costs    (29) (518)  
Restructuring charges(3,836)   (403) (4,239)  
Non-GAAP operating expenses47,473  37,443  42,155  172,836  139,956 
Non-GAAP operating income$28,646  $61,078  $44,343  $195,410  $217,819 
                    


Reconciliation of Non-GAAP measure - operating expenses and operating income, excluding certain itemsThree Months Ended Year Ended
 December 31, September 30, December 31,
 2018 2017 2018 2018 2017
Gross profit from continuing operations, as reported48.8% 54.8% 49.4% 50.9% 53.1%
Adjustments to gross profit:         
Stock-based compensation0.1  0.2    0.1  0.2 
Facility transition and relocation costs0.2    0.5  0.1   
Acquisition-related costs0.3    0.1  0.1   
Non-GAAP gross profit49.4  55.0  50.0  51.2  53.3 
          
Operating expenses from continuing operations, as reported36.1  22.4  26.4  27.0  23.2 
Adjustments:         
Amortization of intangible assets(1.2) (0.7) (0.8) (0.8) (0.6)
Stock-based compensation(1.3) (0.8) (0.6) (1.3) (1.8)
Acquisition-related costs(0.3)   (0.4) (0.2)  
Facility expansion and relocation costs      (0.1)  
Restructuring charges(2.5)   (0.2) (0.6)  
Non-GAAP operating expenses30.8  20.9  24.4  24.0  20.8 
Non-GAAP operating income18.6% 34.1% 25.6% 27.2% 32.5%
               


Reconciliation of Non-GAAP measure - income excluding certain itemsThree Months Ended Year Ended
 December 31, September 30, December 31,
 2018 2017 2018 2018 2017
Income from continuing operations, less noncontrolling interest, net of income taxes$19,218  $(29,007) $35,150  $147,063  $136,101 
Adjustments:         
Amortization of intangible assets1,816  1,174  1,437  5,774  4,350 
Stock-based compensation2,243  1,842  1,024  9,703  12,549 
Acquisition-related costs827    863  2,295  150 
Facility expansion and relocation costs354    754  1,846   
Restructuring charges3,836    403  4,239   
Nonrecurring tax (benefit) expense associated with inverter business  6,357      (33,837)
Loss on foreign exchange hedge        3,489 
Incremental expense associated with start-up of the Asia regional headquarters        1,133 
Tax Cuts and Jobs Act Impact1,452  72,867  2,398  5,703  72,867 
Tax effect of Non-GAAP adjustments(1,736) (813) (843) (4,626) (5,264)
Non-GAAP income, net of income taxes$28,010  $52,420  $41,186  $171,997  $191,538 
                    


Reconciliation of Non-GAAP measure - per share earnings excluding certain itemsThree Months Ended Year Ended
 December 31, September 30, December 31,
 2018 2017 2018 2018 2017
Diluted earnings per share from continuing operations, as reported$0.50  $(0.73) $0.90  $3.74  $3.39 
Add back:         
per share impact of Non-GAAP adjustments, net of tax0.23  2.04  0.15  0.63  1.38 
Non-GAAP per share earnings$0.73  $1.31  $1.05  $4.37  $4.77 
                    


Reconciliation of Q1 2019 Guidance   
 Low End High End
    
Revenue$138.0 million $148.0 million
    
Reconciliation of Non-GAAP earnings per share   
GAAP earnings per share$0.24  $0.42 
Stock-based compensation0.13  0.10 
Amortization of intangible assets0.05  0.05 
Restructuring and other0.01  0.01 
Tax effects of excluded items(0.03) (0.03)
Non-GAAP earnings per share$0.40  $0.55 

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Source: Advanced Energy Industries, Inc.