- Q4 revenue was $405 million, in line with the mid-point of
guidance
- Q4 GAAP EPS from continuing operations was $1.01; Q4
Non-GAAP EPS was $1.24, above the mid-point of guidance
- 2023 revenue was $1.66 billion, with sales in the Industrial
and Medical market growing 11% to a record $474 million
- 2023 GAAP EPS from continuing operations was $3.46; 2023
Non-GAAP EPS was $4.88
- 2023 cash flow from continuing operations was a record $213
million
Advanced Energy Industries, Inc. (Nasdaq: AEIS), a global leader
in highly engineered, precision power conversion, measurement, and
control solutions, today announced financial results for the fourth
quarter and year ended December 31, 2023.
“Fourth quarter earnings were above the mid-point of guidance,
and we delivered record operating cash flow. Our full year results
included record Industrial and Medical revenue, partially
offsetting corrections in the semiconductor market,” said Steve
Kelley, president and CEO of Advanced Energy. “While we see a
sluggish market environment in the near-term, we expect demand to
strengthen as the year progresses. With strong customer interest in
our next-generation platforms and a solid design win pipeline,
Advanced Energy is well positioned for strong earnings growth as
the market recovers.”
Quarter Results
Revenue was $405.3 million in the fourth quarter of 2023,
compared with $410.0 million in the third quarter of 2023 and
$490.7 million in the fourth quarter of 2022.
GAAP net income from continuing operations was $37.9 million or
$1.01 per diluted share in the quarter, compared with $33.7 million
or $0.89 per diluted share in the prior quarter, and $45.3 million
or $1.20 per diluted share a year ago. GAAP net income included a
restructuring and impairment charge of $18.1 million as part of the
factory and cost optimization plan and a tax benefit of $25.6
million as a result of the release of a deferred tax asset
valuation allowance.
Non-GAAP net income was $46.7 million or $1.24 per diluted share
in the fourth quarter of 2023. This compares with $48.5 million or
$1.28 per diluted share in the third quarter of 2023, and $64.2
million or $1.70 per diluted share in the fourth quarter of
2022.
Advanced Energy generated a record $84.7 million in cash flow
from continuing operations during the quarter and paid $3.8 million
in quarterly dividends.
Full Year 2023 Results
2023 revenue was $1.66 billion, a 10% decrease from $1.85
billion in 2022.
GAAP net income from continuing operations was $130.7 million or
$3.46 per diluted share in 2023, compared with $201.9 million or
$5.35 per diluted share in 2022.
The company generated $213 million in cash flow from operating
activities from continuing operations in 2023, repurchased $40.0
million of common stock and paid $15.2 million in dividends. Cash
and equivalents at year end were $1.0 billion.
Also in 2023, Advanced Energy completed a private offering of
$575 million aggregate principal amount of 2.50% Convertible Senior
Notes due 2028.
Non-GAAP net income was $184.0 million or $4.88 per diluted
share in 2023. This compares with $244.8 million or $6.49 per
diluted share in 2022.
A reconciliation of GAAP and non-GAAP measures is provided in
the tables below.
First Quarter 2024 Guidance
Based on the Company’s current view, beliefs, and assumptions,
guidance is within the following ranges:
Q4 2023
Revenue
$350 million +/- $15 million
GAAP EPS from continuing operations
$0.29 +/- $0.20
Non-GAAP EPS
$0.70 +/- $0.20
Conference Call
Management will host a conference call today, February 6, 2024,
at 2:30 p.m. Eastern Time to discuss the third quarter financial
results. To participate in the live earnings conference call,
please dial 877-407-0890 approximately ten minutes prior to the
start of the meeting and an operator will connect you.
International participants can dial +1-201-389-0918. A webcast will
also be available on our investor web page at ir.advancedenergy.com
in the Events & Presentations section. The archived webcast
will be available approximately two hours following the end of the
live event.
About Advanced Energy
Advanced Energy Industries, Inc. (Nasdaq: AEIS) is a global
leader in the design and manufacture of highly engineered,
precision power conversion, measurement and control solutions for
mission-critical applications and processes. Advanced Energy’s
power solutions enable customer innovation in complex applications
for a wide range of industries including semiconductor equipment,
industrial production, medical and life sciences, data center
computing, networking, and telecommunications. With engineering
know-how and responsive service and support for customers around
the globe, the company builds collaborative partnerships to meet
technology advances, propels growth of its customers and innovates
the future of power. Advanced Energy has devoted four decades to
perfecting power. It is headquartered in Denver, Colorado, USA. For
more information, visit www.advancedenergy.com.
Advanced Energy | Precision. Power. Performance. Trust.
Non-GAAP Measures
This release includes GAAP and non-GAAP income and per-share
earnings data and other GAAP and non-GAAP financial information.
The non-GAAP results presented below exclude the impact of non-cash
related charges, such as stock-based compensation, amortization of
intangible assets, and long-term unrealized foreign exchange gains
and losses. In addition, we exclude discontinued operations and
other non-recurring items such as acquisition-related costs,
facility expansion and related costs, restructuring, asset
impairments, and other charges, as they are not indicative of
future performance. The tax effect of our non-GAAP adjustments
represents the anticipated annual tax rate applied to each non-GAAP
adjustment after consideration of their respective book and tax
treatments. In addition, the tax effect also includes a discrete
tax benefit associated with the release of a portion of our
deferred tax asset valuation allowance.
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. We believe that these non-GAAP
measures provide useful information to management and investors to
evaluate business performance without the impacts of certain
non-cash charges, non-economic foreign currency remeasurements, and
other cash charges which are not part of our usual operations. We
use 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, we believe that these non-GAAP measures, in
combination with its financial results calculated in accordance
with GAAP, provide investors with additional perspective. To gain a
complete picture of all effects on our financial results from any
and all events, management does (and investors should) rely upon
the GAAP measures as well, as the items excluded from non-GAAP
measures may contribute to not accurately reflecting the underlying
performance of the company’s continuing operations for the period
in which they are incurred. Furthermore, the use of non-GAAP
measures has limitations in that such measures do not reflect all
of the amounts associated with our results of operations as
determined in accordance with GAAP, and these measures should only
be used to evaluate our results of operations in conjunction with
the corresponding GAAP measures.
Forward-Looking Statements
This release and statements we make on the above announced
conference call contain, in addition to historical information,
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Statements in this
report that are not historical information are forward-looking
statements. For example, statements relating to our beliefs,
expectations and plans are forward-looking statements, as are
statements that certain actions, conditions, or circumstances will
continue. The inclusion of words such as "anticipate," "expect,"
"estimate," "can," "may," "might," "continue," "enables," "plan,"
"intend," "should," "could," "would," "likely," "potential," or
"believe," as well as statements that events or circumstances
"will" occur or continue, indicate forward-looking statements.
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) supply
chain disruptions and component shortages that may impact our
ability to timely manufacture products and deliver to customers;
(b) the effects of global macroeconomic conditions upon demand for
our products and services, including supply chain cost increases,
inflationary pressures, economic downturns, and volatility and
cyclicality of the industries we serve; (c) the impact of political
and geographical risks, including trade and export regulations,
other effects of international disputes, war, terrorism, or
geopolitical tensions; (d) managing backlog orders; (e) our ability
to develop new products expeditiously and be successful in the
design win process; (f) delays in capital spending by end-users in
our served markets; (g) the risks and uncertainties related to the
integration of acquired companies including SL Power Electronics;
(h) the continuing spread of COVID-19 and its potential adverse
impact on our operations; (i) our ability to avoid additional costs
and lawsuits after the solar inverter wind-down; (j) the accuracy
of our assumptions on which our financial statement projections are
based; (k) the timing of orders received from customers; (l) our
ability to realize benefits from cost improvement efforts including
avoided costs, restructuring plans and inorganic growth; (m)
unanticipated changes to management’s estimates, reserves or
allowances; and (n) changes and adjustments to the tax expense and
benefits related to the U.S. tax law changes, any of which could
negatively impact our customers’ and our presence, operations, and
financial results. 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.advancedenergy.com or by contacting
Advanced Energy’s investor relations at 970-407-6555.
Forward-looking statements are made and based on information
available to us 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. We assume 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,
2023
2022
2023
2023
2022
Revenue, net
$
405,271
$
490,740
$
409,991
$
1,655,810
$
1,845,422
Cost of revenue
262,405
312,926
262,650
1,063,412
1,169,916
Gross profit
142,866
177,814
147,341
592,398
675,506
Gross margin %
35.3
%
36.2
%
35.9
%
35.8
%
36.6
%
Operating expenses:
Research and development
49,025
49,637
50,391
202,439
191,020
Selling, general, and administrative
54,932
57,407
55,131
221,034
218,463
Amortization of intangible assets
7,068
7,033
7,049
28,254
26,114
Restructuring, asset impairments, and
other charges
18,071
5,636
4,709
26,977
6,814
Total operating expenses
129,096
119,713
117,280
478,704
442,411
Operating income
13,770
58,101
30,061
113,694
233,095
Interest income
12,810
2,656
6,396
27,092
4,147
Interest expense
(7,198)
(2,442)
(3,780)
(16,566)
(7,325)
Other income (expense), net
(3,184)
(2,915)
1,848
(1,759)
11,824
Income from continuing operations, before
income tax
16,198
55,400
34,525
122,461
241,741
Income tax provision (benefit)
(21,693)
10,055
874
(8,288)
39,850
Income from continuing operations
37,891
45,345
33,651
130,749
201,891
Loss from discontinued operations, net of
income tax
(389)
(1,600)
(930)
(2,465)
(2,215)
Net income
37,502
43,745
32,721
128,284
199,676
Income from continuing operations
attributable to noncontrolling interest
—
—
—
—
16
Net income attributable to Advanced
Energy Industries, Inc.
$
37,502
$
43,745
$
32,721
$
128,284
$
199,660
Basic weighted-average common shares
outstanding
37,297
37,405
37,575
37,480
37,463
Diluted weighted-average common shares
outstanding
37,585
37,683
37,854
37,750
37,721
Earnings per share attributable to
Advanced Energy Industries, Inc:
Continuing operations:
Basic earnings per share
$
1.02
$
1.21
$
0.90
$
3.49
$
5.39
Diluted earnings per share
$
1.01
$
1.20
$
0.89
$
3.46
$
5.35
Discontinued operations:
Basic loss per share
$
(0.01)
$
(0.04)
$
(0.02)
$
(0.07)
$
(0.06)
Diluted loss per share
$
(0.01)
$
(0.04)
$
(0.02)
$
(0.07)
$
(0.06)
Net income:
Basic earnings per share
$
1.01
$
1.17
$
0.87
$
3.42
$
5.33
Diluted earnings per share
$
1.00
$
1.16
$
0.86
$
3.40
$
5.29
ADVANCED ENERGY INDUSTRIES,
INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands)
December 31,
December 31,
2023
2022
ASSETS
Current assets:
Cash and cash equivalents
$
1,044,556
$
458,818
Accounts and other receivables, net
282,430
300,683
Inventories
336,137
376,012
Other current assets
48,771
53,001
Total current assets
1,711,894
1,188,514
Property and equipment, net
167,665
148,462
Operating lease right-of-use assets
95,432
100,177
Other assets
136,448
84,056
Goodwill and intangible assets, net
445,318
470,959
Total assets
$
2,556,757
$
1,992,168
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
141,850
$
170,467
Other accrued expenses
156,254
185,805
Current portion of long-term debt
20,000
20,000
Current portion of operating lease
liabilities
17,744
16,771
Total current liabilities
335,848
393,043
Long-term debt
895,679
353,262
Other long-term liabilities
181,048
179,596
Long-term liabilities
1,076,727
532,858
Total liabilities
1,412,575
925,901
Total stockholders' equity
1,144,182
1,066,267
Total liabilities and stockholders’
equity
$
2,556,757
$
1,992,168
ADVANCED ENERGY INDUSTRIES,
INC.
CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS (UNAUDITED)
(in thousands)
Year Ended December
31,
2023
2022
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income
$
128,284
$
199,676
Less: loss from discontinued operations,
net of income tax
(2,465
)
(2,215
)
Income from continuing operations, net of
income tax
130,749
201,891
Adjustments to reconcile net income to net
cash from operating activities:
Depreciation and amortization
66,533
60,296
Stock-based compensation
31,001
19,849
Deferred income tax benefit
(33,940
)
(5,736
)
Loss (gain) on disposal and sale of
assets
439
(3,962
)
Changes in operating assets and
liabilities, net of assets acquired
18,143
(88,607
)
Net cash from operating activities from
continuing operations
212,925
183,731
Net cash from operating activities from
discontinued operations
(3,988
)
(144
)
Net cash from operating activities
208,937
183,587
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of long-term investments
(3,746
)
—
Purchases of property and equipment
(61,005
)
(58,885
)
Acquisitions, net of cash acquired
—
(149,387
)
Net cash from investing activities
(64,751
)
(208,272
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from long-term borrowings
575,000
—
Payment of fees for long-term
borrowings
(13,880
)
—
Payments on long-term borrowings
(20,000
)
(20,000
)
Dividend payments
(15,222
)
(15,204
)
Payment for purchase of note hedges
(115,000
)
—
Proceeds from sale of warrants
74,865
—
Purchase and retirement of common
stock
(40,000
)
(26,635
)
Net payments related to stock-based
awards
(79
)
(26
)
Net cash from financing activities
445,684
(61,865
)
EFFECT OF CURRENCY TRANSLATION ON
CASH
(4,132
)
996
NET CHANGE IN CASH AND CASH
EQUIVALENTS
585,738
(85,554
)
CASH AND CASH EQUIVALENTS, beginning of
period
458,818
544,372
CASH AND CASH EQUIVALENTS, end of
period
$
1,044,556
$
458,818
ADVANCED ENERGY INDUSTRIES,
INC.
SUPPLEMENTAL INFORMATION
(UNAUDITED)
(in thousands)
Net Revenue by Market
Three Months Ended
Year Ended
December 31,
September 30,
December 31,
2023
2022
2023
2023
2022
Semiconductor Equipment
$
191,375
$
232,455
$
185,033
$
743,794
$
930,809
Industrial and Medical
108,600
119,327
115,226
474,449
426,763
Data Center Computing
62,853
94,525
68,286
249,874
327,466
Telecom and Networking
42,443
44,433
41,446
187,693
160,384
Total
$
405,271
$
490,740
$
409,991
$
1,655,810
$
1,845,422
Net Revenue by Geographic
Region
Three Months Ended
Year Ended
December 31,
September 30,
December 31,
2023
2022
2023
2023
2022
North America
$
187,240
$
230,461
$
184,783
$
724,481
$
857,490
Asia
169,700
197,368
178,190
713,571
754,997
Europe
47,501
61,146
46,088
212,368
219,119
Other
830
1,765
930
5,390
13,816
Total
$
405,271
$
490,740
$
409,991
$
1,655,810
$
1,845,422
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
Year Ended
December 31,
September 30,
December 31,
2023
2022
2023
2023
2022
Gross profit from continuing operations,
as reported
$
142,866
$
177,814
$
147,341
$
592,398
$
675,506
Adjustments to gross profit:
Stock-based compensation
472
391
615
2,059
1,478
Facility expansion, relocation costs and
other
1,146
1,162
171
2,334
5,295
Acquisition-related costs
44
73
44
238
(299
)
Non-GAAP gross profit
144,528
179,440
148,171
597,029
681,980
Non-GAAP gross margin
35.7
%
36.6
%
36.1
%
36.1
%
37.0
%
Operating expenses from continuing
operations, as reported
129,096
119,713
117,280
478,704
442,411
Adjustments:
Amortization of intangible assets
(7,068
)
(7,033
)
(7,049
)
(28,254
)
(26,114
)
Stock-based compensation
(7,716
)
(4,450
)
(7,460
)
(28,942
)
(18,371
)
Acquisition-related costs
(1,372
)
(1,660
)
(611
)
(4,026
)
(8,637
)
Facility expansion, relocation costs and
other
—
—
(189
)
(189
)
—
Restructuring, asset impairments, and
other charges
(18,071
)
(5,636
)
(4,709
)
(26,977
)
(6,814
)
Non-GAAP operating expenses
94,869
100,934
97,262
390,316
382,475
Non-GAAP operating income
$
49,659
$
78,506
$
50,909
$
206,713
$
299,505
Non-GAAP operating margin
12.3
%
16.0
%
12.4
%
12.5
%
16.2
%
Reconciliation of Non-GAAP measure -
income excluding certain items
Three Months Ended
Year Ended
December 31,
September 30,
December 31,
2023
2022
2023
2023
2022
Income from continuing operations, less
non-controlling interest, net of income tax
$
37,891
$
45,345
$
33,651
$
130,749
$
201,875
Adjustments:
Amortization of intangible assets
7,068
7,033
7,049
28,254
26,114
Acquisition-related costs
1,416
1,733
655
4,264
8,338
Facility expansion, relocation costs, and
other
1,146
1,162
360
2,523
5,295
Restructuring, asset impairments, and
other charges
18,071
5,636
4,709
26,977
6,814
Unrealized foreign currency gain
2,728
5,378
(1,604
)
(89
)
(7,645
)
Acquisition-related costs and other
included in other income (expense), net
—
(3,817
)
(1,516
)
(1,516
)
(8,417
)
Tax effect of non-GAAP adjustments,
including certain discrete tax benefits
(28,030
)
(2,042
)
(1,101
)
(31,303
)
(3,008
)
Non-GAAP income, net of income tax,
excluding stock-based compensation
40,290
60,428
42,203
159,859
229,366
Stock-based compensation, net of tax
6,387
3,776
6,299
24,181
15,444
Non-GAAP income, net of income tax
$
46,677
$
64,204
$
48,502
$
184,040
$
244,810
ADVANCED ENERGY INDUSTRIES,
INC.
SELECTED OTHER DATA (UNAUDITED)
Reconciliation of non-GAAP measure -
per share earnings excluding certain items
Three Months Ended
Year Ended
December 31,
September 30,
December 31,
2023
2022
2023
2023
2022
Diluted earnings per share from continuing
operations, as reported
$
1.01
$
1.20
$
0.89
$
3.46
$
5.35
Add back:
Per share impact of non-GAAP adjustments,
net of tax
0.23
0.50
0.39
1.42
1.14
Non-GAAP earnings per share
$
1.24
$
1.70
$
1.28
$
4.88
$
6.49
Reconciliation of Q1 2024
Guidance
Low End
High End
Revenue
$335 million
$365 million
Reconciliation of non-GAAP earnings per
share
GAAP earnings per share
$
0.09
$
0.49
Stock-based compensation
0.24
0.24
Amortization of intangible assets
0.19
0.19
Restructuring, asset impairments, and
other charges
0.06
0.06
Tax effects of excluded items
(0.08
)
(0.08
)
Non-GAAP earnings per share
$
0.50
$
0.90
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240206704744/en/
Andrew Huang Advanced Energy Industries, Inc. 970-407-6555
ir@aei.com
Advanced Energy Industries (NASDAQ:AEIS)
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