AEIS
$71.08
Advanced Energy
$.71
1.01%
Earnings Details
2nd Quarter June 2017
Monday, July 31, 2017 4:05:13 PM
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Summary

Advanced Energy Beats

Advanced Energy (AEIS) reported 2nd Quarter June 2017 earnings of $1.21 per share on revenue of $165.9 million. The consensus earnings estimate was $1.08 per share on revenue of $155.7 million. The Earnings Whisper number was $1.10 per share. Revenue grew 39.7% on a year-over-year basis.

The company said it expects third quarter non-GAAP earnings of $1.10 to $1.20 per share on revenue of $160.0 million to $170.0 million. The current consensus earnings estimate is $0.99 per share on revenue of $152.0 million for the quarter ending September 30, 2017.

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
$1.21
Earnings Whisper
$1.10
Consensus Estimate
$1.08
Reported Revenue
$165.9 Mil
Revenue Estimate
$155.7 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Advanced Energy Announces Second Quarter 2017 Results

Q2 Revenue increased 40% y/y and 11% q/q to $165.9 million

-- Q2 GAAP EPS from continuing operations was $1.14

-- Q2 Non-GAAP EPS from continuing operations was $1.22

Advanced Energy Industries, Inc. (AEIS), today announced financial results for the second quarter ended June 30, 2017. The company reported second quarter sales of $165.9 million. Second quarter GAAP income from continuing operations was $45.9 million, or $1.14 per diluted share. Non-GAAP income from continuing operations was $49.2 million, or $1.22 per diluted share.

"Building on our continuous innovation, early stage engagement with customers and operational excellence led to outstanding results this quarter," said Yuval Wasserman, president and CEO. "The complexity of advanced processing technologies is driving increased power content, fueling our record semiconductor growth. Our industrial business continues to grow, aided by new applications and the expansion of our addressable market. With strong cash generation, we are executing on our acquisition strategy and making headway on our aspirational goals."

Second Quarter Results

Sales were $165.9 million compared with $149.4 million in the first quarter of 2017 and $118.8 million in the second quarter of 2016.

GAAP income from continuing operations was $45.9 million or $1.14 per diluted share in the second quarter of 2017 compared with $35.4 million or $0.88 per diluted share in the prior quarter, and $27.3 million or $0.68 per diluted share in the second quarter of 2016.

Non-GAAP income from continuing operations was $49.2 million or $1.22 per diluted share in the second quarter of 2017 compared with $41.9 million or $1.04 per diluted share in the prior quarter, and $29.2 million or $0.73 per diluted share in the same period last year. A reconciliation of non-GAAP measures is provided in the tables below.

The company generated $64.0 million of operating cash from continuing operations.

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 both the balance sheet and income statement. Further financial detail regarding the amounts related to the discontinued inverter business are available in the company’s 2016 Annual Report on Form 10-K.

Third Quarter 2017 Guidance

Based on the company’s current view, beliefs and assumptions, guidance for the third quarter of 2017 is within the following ranges:

Q3 2017
Revenues
$160M - $170M
GAAP operating margins from continuing operations
27% - 29%
GAAP EPS from continuing operations
$1.02 - $1.12
Non-GAAP operating margins from continuing operations
30% - 32%
Non-GAAP EPS from continuing operations
$1.10 - $1.20

Second Quarter 2017 Conference Call

Management will host a conference call tomorrow morning, Tuesday, August 1, 2017 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 42118693, 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 42118693. 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 (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.

For more information, contact:
Tom Liguori
Annie Leschin
Advanced Energy Industries, Inc.
Advanced Energy Industries, Inc.
(970) 232-8096
(970) 407-6555
Tom.Liguori@aei.com
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. For the third quarter ending September 30, 2017 guidance, the company expects stock based compensation of $3.3 million and amortization of intangibles of $1.0 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 third quarter ending September 30, 2017, 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 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; and (k) unanticipated changes to management’s estimates, reserves or allowances. 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
Six Months Ended
June 30,
March 31,
June 30,
2017
2016
2017
2017
2016
Sales:
Product
$
143,288
$
100,752
$
128,827
$
272,115
$
187,045
Service
22,584
18,013
20,524
43,108
34,764
Total sales
165,872
118,765
149,351
315,223
221,809
Cost of sales:
Product
66,491
47,334
60,117
126,608
88,149
Service
12,240
9,385
10,403
22,643
18,154
Total cost of sales
78,731
56,719
70,520
149,251
106,303
Gross profit
87,141
62,046
78,831
165,972
115,506
52.5
%
52.2
%
52.8
%
52.7
%
52.1
%
Operating expenses:
Research and development
14,610
11,266
12,503
27,113
22,031
Selling, general and administrative
23,790
19,377
22,098
45,888
37,393
Amortization of intangible assets
974
1,074
962
1,936
2,132
Total operating expenses
39,374
31,717
35,563
74,937
61,556
Operating income
47,767
30,329
43,268
91,035
53,950
Other (expense) income, net
(83
)
836
(3,208
)
(3,291
)
1,193
Income from continuing operations before income taxes
47,684
31,165
40,060
87,744
55,143
Provision for income taxes
1,811
3,911
4,619
6,430
7,669
Income from continuing operations, net of income taxes
45,873
27,254
35,441
81,314
47,474
Income from discontinued operations, net of income taxes 179
3,277
2,094
2,273
5,338
Net income
$
46,052
$
30,531
$
37,535
$
83,587
$
52,812
Basic weighted-average common shares outstanding
39,849
39,672
39,738
39,793
39,750
Diluted weighted-average common shares outstanding
40,250
39,969
40,179
40,212
40,046
Earnings per share:
Continuing operations:
Basic earnings per share
$
1.15
$
0.69
$
0.89
$
2.04
$
1.19
Diluted earnings per share
$
1.14
$
0.68
$
0.88
$
2.02
$
1.19
Discontinued operations:
Basic earnings per share
$
0.00
$
0.08
$
0.05
$
0.06
$
0.13
Diluted earnings per share
$
0.00
$
0.08
$
0.05
$
0.06
$
0.13
Net income:
Basic earnings per share
$
1.16
$
0.77
$
0.94
$
2.10
$
1.33
Diluted earnings per share
$
1.14
$
0.76
$
0.93
$
2.08
$
1.32

ADVANCED ENERGY INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

June 30,
December 31,
2017
2016
ASSETS
Unaudited
Current assets:
Cash and cash equivalents
$
358,937
$
281,953
Restricted cash
17,732
--
Marketable securities
4,096
4,737
Accounts receivable, net
60,791
75,667
Inventories, net
75,557
55,770
Income taxes receivable
2,047
1,482
Other current assets
9,930
9,324
Current assets of discontinued operations
8,058
9,401
Total current assets
537,148
438,334
Property and equipment, net
14,537
13,337
Deposits and other
2,046
1,835
Goodwill and intangibles, net
71,405
70,196
Deferred income tax assets
32,328
32,197
Non-current assets of discontinued operations
15,631
15,630
Total assets
$
673,095
$
571,529
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
49,430
$
46,255
Other accrued expenses
45,815
35,372
Current liabilities of discontinued operations
9,185
13,419
Total current liabilities
104,430
95,046
Non-current liabilities of continuing operations
65,037
63,252
Non-current liabilities of discontinued operations
18,240
21,157
Long-term liabilities
83,277
84,409
Total liabilities
187,707
179,455
Stockholders’ equity
485,388
392,074
Total liabilities and stockholders’ equity
$
673,095
$
571,529

December 31, 2016 amounts are derived from the December 31, 2016 audited Consolidated Financial Statements.

ADVANCED ENERGY INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(in thousands)

Six Months Ended June 30,
2017
2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
83,587
$
52,812
Income from discontinued operations, net of income taxes
2,273
5,338
Income from continuing operations, net of income taxes
81,314
47,474
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
4,219
4,045
Stock-based compensation expense
7,254
2,998
Loss on foreign exchange hedge
3,489
--
Net loss on disposal of assets
65
213
Changes in operating assets and liabilities, net of assets acquired
10,272
(6,646
)
Net cash provided by operating activities from continuing operations
106,613
48,084
Net cash used in operating activities from discontinued operations
(6,396
)
(4,563
)
Net cash provided by operating activities
100,217
43,521
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities
(19
)
(745
)
Proceeds from sale of marketable securities
723
6,921
Restricted Cash
(17,732
)
--
Purchase of foreign exchange hedge
(3,489
)
--
Purchases of property and equipment
(3,408
)
(2,865
)
Net cash (used in) provided by investing activities from continuing operations
(23,925
)
3,311
Net cash used in investing activities from discontinued operations
--
--
Net cash (used in) provided by investing activities
(23,925
)
3,311
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options
(1,877
)
1,621
Other financing activities
3
(2
)
Net cash (used in) provided by financing activities from continuing operations
(1,874
)
1,619
Net cash used in financing activities from discontinued operations
--
(24
)
Net cash (used in) provided by financing activities
(1,874
)
1,595
EFFECT OF CURRENCY TRANSLATION ON CASH
1,216
(729
)
INCREASE IN CASH AND CASH EQUIVALENTS
75,634
47,698
CASH AND CASH EQUIVALENTS, beginning of period
289,517
169,720
CASH AND CASH EQUIVALENTS, end of period
365,151
217,418
Less cash and cash equivalents from discontinued operations
6,214
8,145
CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS, end of period
$
358,937
$
209,273

December 31, 2016 amounts are derived from the December 31, 2016 audited Consolidated Financial Statements.

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
Six Months Ended
June 30,
March 31,
June 30,
2017
2016
2017
2017
2016
Gross Profit from continuing operations, as reported
$
87,141
$
62,046
$
78,831
$
165,972
$
115,506
Operating expenses from continuing operations, as reported
39,374
31,717
35,563
74,937
61,556
Adjustments:
Stock-based compensation
(3,856
)
(1,569
)
(3,398
)
(7,254
)
(2,998
)
Amortization of intangible assets
(974
)
(1,074
)
(962
)
(1,936
)
(2,132
)
Acquisition-related costs
(150
)
--
--
(150
)
--
Non-GAAP operating expenses from continuing operations
34,394
29,074
31,203
65,597
56,426
Non-GAAP operating income from continuing operations
$
52,747
$
32,972
$
47,628
$
100,375
$
59,080
Reconciliation of Non-GAAP measure - operating expenses and operating income, excluding certain items
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
2017
2016
2017
2017
2016
Gross Profit from continuing operations, as reported
52.5 %
52.2 %
52.8 %
52.7 %
52.1 %
Operating expenses from continuing operations, as reported
23.7
26.7
23.8
23.8
27.8
Adjustments:
Stock-based compensation
(2.3 )
(1.4 )
(2.3 )
(2.3 )
(1.3 )
Amortization of intangible assets
(0.6 )
(0.9 )
(0.6 )
(0.6 )
(1.0 )
Acquisition-related costs
(0.1 )
--
--
--
--
Non-GAAP operating expenses from continuing operations
20.7
24.4
20.9
20.9
25.5
Non-GAAP operating income from continuing operations
31.8 %
27.8 %
31.9 %
31.8 %
26.6 %
Reconciliation of Non-GAAP measure - income excluding certain items
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
2017
2016
2017
2017
2016
Income from continuing operations, net of income taxes, as reported
$
45,873
$
27,254
$
35,441
$
81,314
$
47,474
Adjustments:
Stock-based compensation
3,856
1,569
3,398
7,254
2,998
Amortization of intangible assets
974
1,074
962
1,936
2,132
Loss on foreign exchange hedge
--
--
3,489
3,489
--
Acquisition-related costs
150
--
--
150
--
Tax effect of Non-GAAP adjustments
(1,629
)
(711
)
(1,396
)
(3,025
)
(1,366
)
Non-GAAP income from continuing operations, net of income taxes
$
49,224
$
29,186
$
41,894
$
91,118
$
51,238
Reconciliation of Non-GAAP measure - per share earnings excluding certain items
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
2017
2016
2017
2017
2016
Diluted earnings per share from continuing operations, as reported
$
1.14
$
0.68
$
0.88
$
2.02
$
1.19
Add back:
per share impact of Non-GAAP adjustments, net of tax
0.08
0.05
0.16
0.25
0.09
Non-GAAP per share earnings from continuing operations
$
1.22
$
0.73
$
1.04
$
2.27
$
1.28
Reconciliation of Q3 2017 Guidance
Low End
High End
Revenue
$160 million
$170 million
Reconciliation of Non-GAAP operating margin
GAAP operating margin
27
%
29
%
Stock-based compensation
2
%
2
%
Amortization of intangible assets
1
%
1
%
Non-GAAP operating margin
30
%
32
%
Reconciliation of Non-GAAP earnings per share
GAAP earnings per share
$
1.02
$
1.12
Stock-based compensation
0.08
0.08
Amortization of intangible assets
0.03
0.03
Tax effects of excluded items
(0.03
)
(0.03
)
Non-GAAP earnings per share
$
1.10
$
1.20

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