- Revenue was $410 million, within the guidance range
- GAAP EPS was $0.89, above the mid-point of guidance
- Non-GAAP EPS was $1.28, above the mid-point of
guidance
- Cash flow from continuing operations was a record $73
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 third
quarter ended September 30, 2023.
“In the third quarter, we delivered sequentially higher earnings
and record operating cash flow on marginally lower revenue,” said
Steve Kelley, president and CEO of Advanced Energy. “Our solid
financial performance through the business cycle gives us the
ability to invest in new products and technologies, as well as in
improvements in manufacturing efficiency. These investments will
drive future revenue growth and market share gains.”
Third Quarter Results
Sales were $410.0 million in the third quarter of 2023, compared
with $415.5 million in the second quarter of 2023 and $516.3
million in the third quarter of 2022.
GAAP net income from continuing operations was $33.7 million or
$0.89 per diluted share in the quarter, compared with $27.5 million
or $0.73 per diluted share in the prior quarter, and $74.9 million
or $1.99 per diluted share a year ago.
Non-GAAP net income was $48.5 million or $1.28 per diluted share
in the third quarter of 2023. This compares with $41.9 million or
$1.11 per diluted share in the second quarter of 2023, and $79.6
million or $2.12 per diluted share in the third quarter of
2022.
Advanced Energy generated a record $72.7 million in cash flow
from continuing operations in the third quarter of 2023 and paid
$3.8 million in quarterly dividends.
Also in the third quarter of 2023, Advanced Energy completed a
private offering of $575 million aggregate principal amount of
2.50% Convertible Senior Notes due 2028. In conjunction with the
offering, the company repurchased $40.0 million of common stock.
Total cash on hand at the end of the quarter increased to $985.9
million.
Fourth Quarter 2023 Guidance
Based on the Company’s current view, beliefs, and assumptions,
guidance is within the following ranges:
Q4 2023
Revenue
$405 million +/- $15 million
GAAP EPS from continuing operations
$0.69 +/- $0.20
Non-GAAP EPS
$1.15 +/- $0.20
Conference Call
Management will host a conference call today, October 31, 2023,
at 4:30 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, and restructuring expenses,
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.
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
Nine Months Ended
September 30,
June 30,
September 30,
2023
2022
2023
2023
2022
Sales, net
$
409,991
$
516,274
$
415,508
$
1,250,539
$
1,354,682
Cost of sales
262,650
325,056
268,428
801,007
856,990
Gross profit
147,341
191,218
147,080
449,532
497,692
Gross margin %
35.9
%
37.0
%
35.4
%
35.9
%
36.7
%
Operating expenses:
Research and development
50,391
49,760
51,413
153,414
141,383
Selling, general, and administrative
55,131
56,716
55,613
166,102
161,056
Amortization of intangible assets
7,049
7,049
7,075
21,186
19,081
Restructuring
4,709
121
3,154
8,906
1,178
Total operating expenses
117,280
113,646
117,255
349,608
322,698
Operating income
30,061
77,572
29,825
99,924
174,994
Other income (expense), net
4,464
8,940
2,425
6,339
11,347
Income from continuing operations, before
income tax
34,525
86,512
32,250
106,263
186,341
Provision for income tax
874
11,639
4,795
13,405
29,795
Income from continuing operations
33,651
74,873
27,455
92,858
156,546
Loss from discontinued operations, net of
income tax
(930
)
(697
)
(315
)
(2,076
)
(615
)
Net income
32,721
74,176
27,140
90,782
155,931
Income from continuing operations
attributable to noncontrolling interest
—
9
—
—
16
Net income attributable to Advanced
Energy Industries, Inc.
$
32,721
$
74,167
$
27,140
$
90,782
$
155,915
Basic weighted-average common shares
outstanding
37,575
37,379
37,573
37,541
37,482
Diluted weighted-average common shares
outstanding
37,854
37,630
37,803
37,842
37,725
Earnings per share attributable to
Advanced Energy Industries, Inc:
Continuing operations:
Basic earnings per share
$
0.90
$
2.00
$
0.73
$
2.47
$
4.18
Diluted earnings per share
$
0.89
$
1.99
$
0.73
$
2.45
$
4.15
Discontinued operations:
Basic loss per share
$
(0.02
)
$
(0.02
)
$
(0.01
)
$
(0.06
)
$
(0.02
)
Diluted loss per share
$
(0.02
)
$
(0.02
)
$
(0.01
)
$
(0.05
)
$
(0.02
)
Net income:
Basic earnings per share
$
0.87
$
1.98
$
0.72
$
2.42
$
4.16
Diluted earnings per share
$
0.86
$
1.97
$
0.72
$
2.40
$
4.13
ADVANCED ENERGY INDUSTRIES,
INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands)
September 30,
December 31,
2023
2022
ASSETS
Current assets:
Cash and cash equivalents
$
985,931
$
458,818
Accounts and other receivables, net
270,348
300,683
Inventories
364,003
376,012
Other current assets
53,191
53,001
Total current assets
1,673,473
1,188,514
Property and equipment, net
161,671
148,462
Operating lease right-of-use assets
98,591
100,177
Other assets
110,027
84,056
Goodwill and intangible assets, net
449,924
470,959
Total assets
$
2,493,686
$
1,992,168
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
140,320
$
170,467
Other accrued expenses
137,015
185,805
Current portion of long-term debt
20,000
20,000
Current portion of operating lease
liabilities
17,477
16,771
Total current liabilities
314,812
393,043
Long-term debt
899,848
353,262
Other long-term liabilities
178,155
179,596
Long-term liabilities
1,078,003
532,858
Total liabilities
1,392,815
925,901
Total stockholders' equity
1,100,871
1,066,267
Total liabilities and stockholders’
equity
$
2,493,686
$
1,992,168
ADVANCED ENERGY INDUSTRIES,
INC.
CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS (UNAUDITED)
(in thousands)
Nine Months Ended September
30,
2023
2022
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income
$
90,782
$
155,931
Less: loss from discontinued operations,
net of income tax
(2,076
)
(615
)
Income from continuing operations, net of
income tax
92,858
156,546
Adjustments to reconcile net income to net
cash from operating activities:
Depreciation and amortization
49,764
44,433
Stock-based compensation
22,813
15,008
Benefit for deferred income tax
(996
)
(2,496
)
Loss on disposal and sale of assets
394
(4,058
)
Changes in operating assets and
liabilities, net of assets acquired
(36,593
)
(96,451
)
Net cash from operating activities from
continuing operations
128,240
112,982
Net cash from operating activities from
discontinued operations
(3,307
)
(81
)
Net cash from operating activities
124,933
112,901
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of investments
(3,447
)
—
Purchases of property and equipment
(46,782
)
(39,507
)
Acquisitions, net of cash acquired
—
(145,779
)
Net cash from investing activities
(50,229
)
(185,286
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from long-term borrowings
575,000
—
Payment of fees for long-term
borrowings
(12,985
)
—
Payments on long-term borrowings
(15,000
)
(15,000
)
Dividend payments
(11,422
)
(11,407
)
Payment for purchase of note hedges
(115,000
)
—
Proceeds from sale of warrants
74,865
—
Purchase and retirement of common
stock
(40,000
)
(25,955
)
Net payments related to stock-based
awards
(1,254
)
(1,411
)
Net cash from financing activities
454,204
(53,773
)
EFFECT OF CURRENCY TRANSLATION ON
CASH
(1,795
)
(9,161
)
NET CHANGE IN CASH AND CASH
EQUIVALENTS
527,113
(135,319
)
CASH AND CASH EQUIVALENTS, beginning of
period
458,818
544,372
CASH AND CASH EQUIVALENTS, end of
period
$
985,931
$
409,053
ADVANCED ENERGY INDUSTRIES,
INC.
SUPPLEMENTAL INFORMATION
(UNAUDITED)
(in thousands)
Net Sales by Market
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
2023
2022
2023
2023
2022
Semiconductor Equipment
$
185,033
$
266,600
$
173,177
$
552,419
$
698,354
Industrial and Medical
115,226
119,587
127,603
365,849
307,436
Data Center Computing
68,286
87,542
59,076
187,021
232,941
Telecom and Networking
41,446
42,545
55,652
145,250
115,951
Total
$
409,991
$
516,274
$
415,508
$
1,250,539
$
1,354,682
Net Sales by Geographic Region
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
2023
2022
2023
2023
2022
North America
$
184,783
$
238,115
$
171,516
$
537,241
$
626,953
Asia
178,190
215,401
186,498
543,871
557,629
Europe
46,088
61,456
56,213
164,867
157,972
Other
930
1,302
1,281
4,560
12,128
Total
$
409,991
$
516,274
$
415,508
$
1,250,539
$
1,354,682
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
Nine Months Ended
September 30,
June 30,
September 30,
2023
2022
2023
2023
2022
Gross profit from continuing operations,
as reported
$
147,341
$
191,218
$
147,080
$
449,532
$
497,692
Adjustments to gross profit:
Stock-based compensation
615
454
589
1,587
1,087
Facility expansion, relocation costs and
other
171
1,662
60
1,188
4,133
Acquisition-related costs
44
66
97
194
(372
)
Non-GAAP gross profit
148,171
193,400
147,826
452,501
502,540
Non-GAAP gross margin
36.1
%
37.5
%
35.6
%
36.2
%
37.1
%
Operating expenses from continuing
operations, as reported
117,280
113,646
117,255
349,608
322,698
Adjustments:
Amortization of intangible assets
(7,049
)
(7,049
)
(7,075
)
(21,186
)
(19,081
)
Stock-based compensation
(7,460
)
(5,568
)
(7,348
)
(21,226
)
(13,921
)
Acquisition-related costs
(611
)
(1,150
)
(1,165
)
(2,654
)
(6,977
)
Restructuring and other
(4,898
)
(121
)
(3,154
)
(9,095
)
(1,178
)
Non-GAAP operating expenses
97,262
99,758
98,513
295,447
281,541
Non-GAAP operating income
$
50,909
$
93,642
$
49,313
$
157,054
$
220,999
Non-GAAP operating margin
12.4
%
18.1
%
11.9
%
12.6
%
16.3
%
Reconciliation of Non-GAAP measure -
income excluding certain items
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
2023
2022
2023
2023
2022
Income from continuing operations, less
non-controlling interest, net of income tax
$
33,651
$
74,864
$
27,455
$
92,858
$
156,530
Adjustments:
Amortization of intangible assets
7,049
7,049
7,075
21,186
19,081
Acquisition-related costs
655
1,216
1,262
2,848
6,605
Facility expansion, relocation costs, and
other
171
1,662
60
1,188
4,133
Restructuring and other
4,898
121
3,154
9,095
1,178
Unrealized foreign currency gain
(1,604
)
(6,169
)
(2,266
)
(2,817
)
(13,023
)
Acquisition-related costs and other
included in other income (expense), net
(1,516
)
(4,685
)
—
(1,516
)
(4,600
)
Tax effect of non-GAAP adjustments
(1,101
)
855
(1,051
)
(3,273
)
(966
)
Non-GAAP income, net of income tax,
excluding stock-based compensation
42,203
74,913
35,689
119,569
168,938
Stock-based compensation, net of tax
6,299
4,697
6,191
17,794
11,668
Non-GAAP income, net of income tax
$
48,502
$
79,610
$
41,880
$
137,363
$
180,606
ADVANCED ENERGY INDUSTRIES,
INC.
SELECTED OTHER DATA (UNAUDITED)
Reconciliation of non-GAAP measure -
per share earnings excluding certain items
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
2023
2022
2023
2023
2022
Diluted earnings per share from continuing
operations, as reported
$
0.89
$
1.99
$
0.73
$
2.45
$
4.15
Add back:
Per share impact of non-GAAP adjustments,
net of tax
0.39
0.13
0.38
1.18
0.64
Non-GAAP earnings per share
$
1.28
$
2.12
$
1.11
$
3.63
$
4.79
Reconciliation of Q4 2023
Guidance
Low End
High End
Revenue
$390 million
$420 million
Reconciliation of non-GAAP earnings per
share
GAAP earnings per share
$
0.49
$
0.89
Stock-based compensation
0.20
0.20
Amortization of intangible assets
0.19
0.19
Restructuring and other
0.17
0.17
Tax effects of excluded items
(0.10
)
(0.10
)
Non-GAAP earnings per share
$
0.95
$
1.35
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231031022831/en/
Andrew Huang Advanced Energy Industries, Inc. 970-407-6555
ir@aei.com
Advanced Energy Industries (NASDAQ:AEIS)
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