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Advanced Energy Announces Second Quarter Results

  • Revenue increased 15.3% sequentially

  • GAAP EPS from continuing operations was $0.68

  • Non-GAAP EPS from continuing operations was $0.73

  • Ended the quarter with $215.1 million in cash and marketable securities

FORT COLLINS, Colo., Aug. 01, 2016 (GLOBE NEWSWIRE) -- Advanced Energy Industries, Inc. (Nasdaq:AEIS) today announced financial results for the second quarter ended June 30, 2016. The company reported second quarter sales of $118.8 million. Second quarter GAAP income from continuing operations was $27.3 million, or $0.68 per diluted share. Non-GAAP income from continuing operations was $29.2 million, or $0.73 per diluted share.

“The second quarter exceeded our expectations on the top and bottom line with record contributions from our Semiconductor and Service businesses and a rebound in our Industrial markets,” said Yuval Wasserman, president and CEO of Advanced Energy. “Our current performance is a direct result of the adoption of our recent design wins in next-generation 3D enabling technologies to volume production. With our advantageous financial model, we are progressing towards our aspirational goals.”

Second Quarter Results

Sales were $118.8 million compared with $103.0 million in the first quarter of 2016 and $108.7 million in the second quarter of 2015.

GAAP income from continuing operations, net of income taxes was $27.3 million or $0.68 per diluted share in the second quarter of 2016 compared to $20.2 million or $0.50 per diluted share in the first quarter, and $23.0 million or $0.56 per diluted share in the second quarter of 2015.

Non-GAAP income from continuing operations, net of income taxes was $29.2 million or $0.73 per diluted share in the second quarter of 2016 compared to $22.1 million or $0.55 per diluted share in the first quarter, and $24.4 million or $0.59 per diluted share in the same period last year. A reconciliation of non-GAAP measures is provided in the tables below.

The company ended the quarter with $215.1 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 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 2015 Annual Report on Form 10-K.

Third Quarter 2016 Guidance

Based on the company's current view, beliefs and assumptions, guidance for the third quarter of 2016 is within the following ranges:

Q3 2016
Revenues $116M - $126M
GAAP operating margins from continuing operations 25% - 28%
GAAP EPS from continuing operations $0.65 - $0.76
Non-GAAP operating margins from continuing operations 27% - 30%
Non-GAAP EPS from continuing operations $0.70 - $0.80

Second Quarter 2016 Conference Call

Management will host a conference call tomorrow morning, Tuesday, August 2, 2016, at 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 49515744, 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 49515744. 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.

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, amortization of intangible assets and restructuring costs, as well as acquisition related costs and other non-recurring items. For the third quarter ending September 30, 2016 guidance, the company expects stock based compensation of $1.2 million and amortization of intangibles of $1.1 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 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, 2016, expectations regarding future market trends and the company’s future performance within specific markets and other statements 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,
2016 2015 2016 2016 2015
Sales:
Product$100,752 $91,424 $86,293 $187,045 $185,032
Service18,013 17,230 16,751 34,764 33,132
Total sales118,765 108,654 103,044 221,809 218,164
Cost of sales:
Product47,334 43,778 40,815 88,149 86,070
Service9,385 8,327 8,769 18,154 16,446
Total cost of sales56,719 52,105 49,584 106,303 102,516
Gross profit62,046 56,549 53,460 115,506 115,648
52.2% 52.0% 51.9% 52.1% 53.0%
Operating expenses:
Research and development11,266 9,984 10,765 22,031 19,744
Selling, general and administrative19,377 16,684 18,016 37,393 33,391
Amortization of intangible assets1,074 1,102 1,058 2,132 2,200
Restructuring benefit (2)
Total operating expenses31,717 27,770 29,839 61,556 55,333
Operating Income30,329 28,779 23,621 53,950 60,315
Other income, net836 301 357 1,193 1,169
Income from continuing operations before income taxes31,165 29,080 23,978 55,143 61,484
Provision for income taxes3,911 6,056 3,758 7,669 12,805
Income from continuing operations, net of income taxes27,254 23,024 20,220 47,474 48,679
Income (loss) from discontinued operations, net of income taxes3,277 (255,483) 2,061 5,338 (259,862)
Net income (loss)$30,531 $(232,459) $22,281 $52,812 $(211,183)
Basic weighted-average common shares outstanding39,672 40,946 39,814 39,750 40,843
Diluted weighted-average common shares outstanding39,969 41,253 40,100 40,046 41,192
Earnings per share:
Continuing operations:
Basic earnings per share$0.69 $0.56 $0.51 $1.19 $1.19
Diluted earnings per share$0.68 $0.56 $0.50 $1.19 $1.18
Discontinued operations:
Basic earnings (loss) per share$0.08 $(6.24) $0.05 $0.13 $(6.36)
Diluted earnings (loss) per share$0.08 $(6.24) $0.05 $0.13 $(6.36)
Net income:
Basic earnings (loss) per share$0.77 $(5.68) $0.56 $1.33 $(5.17)
Diluted earnings (loss) per share$0.76 $(5.68) $0.56 $1.32 $(5.17)


ADVANCED ENERGY INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
2016 2015
ASSETSUnaudited
Current assets:
Cash and cash equivalents$209,273 $158,443
Marketable securities5,784 11,986
Accounts receivable, net66,162 54,959
Inventories, net57,227 52,573
Deferred income tax assets6,027 6,004
Income taxes receivable1,875 9,040
Other current assets8,978 7,868
Current assets of discontinued operations31,517 41,902
Total current assets386,843 342,775
Property and equipment, net11,167 9,645
Deposits and other1,678 1,729
Goodwill and intangibles, net74,750 76,870
Deferred income tax assets30,231 30,398
Non-current assets of discontinued operations285 1,271
Total assets$504,954 $462,688
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$36,951 $27,246
Other accrued expenses36,807 40,357
Current liabilities of discontinued operations24,910 36,481
Total current liabilities98,668 104,084
Non-current liabilities of continuing operations64,370 67,722
Non-current liabilities of discontinued operations20,104 27,302
Long-term liabilities84,474 95,024
Total liabilities183,142 199,108
Stockholders' equity321,812 263,580
Total liabilities and stockholders' equity$504,954 $462,688

December 31, 2015 amounts are derived from the December 31, 2015 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 itemsThree Months Ended Six Months Ended
June 30, March 31, June 30,
2016 2015 2016 2016 2015
Gross Profit from continuing operations, as reported$62,046 $56,549 $53,460 $115,506 $115,648
Operating expenses from continuing operations, as reported31,717 27,770 29,839 61,556 55,333
Adjustments:
Restructuring charges 2
Stock-based compensation(1,569) (693) (1,429) (2,998) (1,180)
Amortization of intangible assets(1,074) (1,102) (1,058) (2,132) (2,200)
Non-GAAP operating expenses from continuing operations29,074 25,975 27,352 56,426 51,955
Non-GAAP operating income from continuing operations$32,972 $30,574 $26,108 $59,080 $63,693
Reconciliation of Non-GAAP measure - income excluding certain itemsThree Months Ended Six Months Ended
June 30, March 31, June 30,
2016 2015 2016 2016 2015
Income from continuing operations, net of income taxes, as reported$27,254 $23,024 $20,220 $47,474 $48,679
Adjustments:
Restructuring charges (2)
Stock-based compensation1,569 693 1,429 2,998 1,180
Amortization of intangible assets1,074 1,102 1,058 2,132 2,200
Tax effect of non-GAAP adjustments(711) (375) (655) (1,366) (673)
Non-GAAP income from continuing operations, net of income taxes$29,186 $24,444 $22,052 $51,238 $51,384
Reconciliation of Non-GAAP measure - per share earnings excluding certain itemsThree Months Ended Six Months Ended
June 30, March 31, June 30,
2016 2015 2016 2016 2015
Diluted earnings per share from continuing operations, as reported$0.68 $0.56 $0.50 $1.19 $1.18
Add back:
per share impact of Non-GAAP adjustments, net of tax0.05 0.03 0.05 0.09 0.07
Non-GAAP per share earnings from continuing operations$0.73 $0.59 $0.55 $1.28 $1.25


Reconciliation of Q3 2016 Guidance
Low End High End
Revenue $116 million $126 million
Reconciliation of Non-GAAP operating margin
GAAP operating margin 25% 28%
Stock-based compensation 1% 1%
Amortization of intangible assets 1% 1%
Non-GAAP operating margin 27% 30%
Reconciliation of Non-GAAP earnings per share
GAAP earnings per share $0.65 $0.76
Stock-based compensation 0.03 0.03
Amortization of intangible assets 0.03 0.03
Tax effects of excluded items (0.01) (0.02)
Non-GAAP earnings per share $0.70 $0.80

CONTACTS: Tom Liguori Advanced Energy Industries, Inc. 970.407.6570 Tom.liguori@aei.com Annie Leschin Advanced Energy Industries, Inc. 970.407.6555 ir@aei.com

Source:Advanced Energy Industries, Inc.