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Advanced Energy Reports First Quarter 2024 Results

  • Revenue was $327.5 million, below guidance
  • GAAP EPS from continuing operations was $0.15, within the guidance range
  • Non-GAAP EPS was $0.58, within the guidance range

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 first quarter ended March 31, 2024.

“Early signs of improving demand give us confidence that the first quarter was a trough for the year and that through the remainder of 2024, revenue will improve with meaningfully higher profitability driven by our actions to expand gross margins and control spending,” said Steve Kelley, president and CEO of Advanced Energy. “Looking forward, I believe that broad customer acceptance of our new products and technologies will drive share gains as our markets recover.”

Quarter Results

Revenue was $327.5 million in the first quarter of 2024, compared with $405.3 million in the fourth quarter of 2023 and $425.0 million in the first quarter of 2023.

GAAP net income from continuing operations was $5.8 million or $0.15 per diluted share in the quarter, compared with $37.9 million or $1.01 per diluted share in the prior quarter, and $31.8 million or $0.84 per diluted share a year ago.

Non-GAAP net income was $21.9 million or $0.58 per diluted share in the first quarter of 2024. This compares with $46.7 million or $1.24 per diluted share in the fourth quarter of 2023, and $47.0 million or $1.24 per diluted share in the first quarter of 2023.

Advanced Energy generated $8.0 million in cash flow from continuing operations during the quarter and paid $3.8 million in quarterly dividends.

A reconciliation of GAAP and non-GAAP measures is provided in the tables below.

Second Quarter 2024 Guidance

Based on the Company’s current view, beliefs, and assumptions, guidance is within the following ranges:

 

Q2 2024

Revenue

$ 350 million +/- $20 million

GAAP EPS from continuing operations

$0.25 +/- $0.25

Non-GAAP EPS

$0.73 +/- $0.25

Conference Call

Management will host a conference call today, May 1, 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 prepared 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

 

 

March 31,

December 31,

 

 

2024

2023

2023

Revenue, net

 

$

327,475

 

$

425,040

 

$

405,271

 

Cost of revenue

 

 

214,646

 

 

269,929

 

 

262,405

 

Gross profit

 

 

112,829

 

 

155,111

 

 

142,866

 

Gross margin %

 

 

34.5

%

 

36.5

%

 

35.3

%

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

 

49,836

 

 

51,610

 

 

49,025

 

Selling, general, and administrative

 

 

55,124

 

 

55,358

 

 

54,932

 

Amortization of intangible assets

 

 

6,947

 

 

7,062

 

 

7,068

 

Restructuring, asset impairments, and other charges

 

 

245

 

 

1,043

 

 

18,071

 

Total operating expenses

 

 

112,152

 

 

115,073

 

 

129,096

 

Operating income

 

 

677

 

 

40,038

 

 

13,770

 

 

 

 

 

 

 

 

 

Interest income

 

 

12,645

 

 

3,585

 

 

12,810

 

Interest expense

 

 

(7,127

)

 

(2,730

)

 

(7,198

)

Other income (expense), net

 

 

1,379

 

 

(1,405

)

 

(3,184

)

Income from continuing operations, before income tax

 

 

7,574

 

 

39,488

 

 

16,198

 

Income tax provision (benefit)

 

 

1,787

 

 

7,736

 

 

(21,693

)

Income from continuing operations

 

 

5,787

 

 

31,752

 

 

37,891

 

Loss from discontinued operations, net of income tax

 

 

(571

)

 

(831

)

 

(389

)

Net income

 

$

5,216

 

$

30,921

 

$

37,502

 

 

 

 

 

 

 

 

 

Basic weighted-average common shares outstanding

 

 

37,359

 

 

37,475

 

 

37,297

 

Diluted weighted-average common shares outstanding

 

 

37,687

 

 

37,757

 

 

37,585

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Advanced Energy Industries, Inc:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations:

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.15

 

$

0.85

 

$

1.02

 

Diluted earnings per share

 

$

0.15

 

$

0.84

 

$

1.01

 

 

 

 

 

 

 

 

 

Discontinued operations:

 

 

 

 

 

 

 

Basic loss per share

 

$

(0.02

)

$

(0.02

)

$

(0.01

)

Diluted loss per share

 

$

(0.02

)

$

(0.02

)

$

(0.01

)

 

 

 

 

 

 

 

 

Net income:

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.14

 

$

0.83

 

$

1.01

 

Diluted earnings per share

 

$

0.14

 

$

0.82

 

$

1.00

 

ADVANCED ENERGY INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands)

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

 

 

2024

 

 

 

2023

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,017,780

 

$

1,044,556

Accounts receivables, net

 

 

247,510

 

 

 

282,430

 

Inventories

 

 

361,337

 

 

 

336,137

 

Other current assets

 

 

44,990

 

 

 

48,771

 

Total current assets

 

 

1,671,617

 

 

 

1,711,894

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

175,453

 

 

 

167,665

 

Operating lease right-of-use assets

 

 

106,167

 

 

 

95,432

 

Other assets

 

 

135,627

 

 

 

136,448

 

Goodwill and intangible assets, net

 

 

435,224

 

 

 

445,318

 

Total assets

 

$

2,524,088

 

 

$

2,556,757

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

137,934

 

 

$

141,850

 

Other accrued expenses

 

 

123,009

 

 

 

156,254

 

Current portion of long-term debt

 

 

20,000

 

 

 

20,000

 

Current portion of operating lease liabilities

 

 

17,049

 

 

 

17,744

 

Total current liabilities

 

 

297,992

 

 

 

335,848

 

 

 

 

 

 

 

 

Long-term debt

 

 

891,495

 

 

 

895,679

 

Other long-term liabilities

 

 

191,718

 

 

 

181,048

 

Long-term liabilities

 

 

1,083,213

 

 

 

1,076,727

 

 

 

 

 

 

 

 

Total liabilities

 

 

1,381,205

 

 

 

1,412,575

 

 

 

 

 

 

 

 

Total stockholders' equity

 

 

1,142,883

 

 

 

1,144,182

 

Total liabilities and stockholders’ equity

 

$

2,524,088

 

 

$

2,556,757

 

ADVANCED ENERGY INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

(in thousands)

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

2024

 

2023

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income

 

$

5,216

 

 

$

30,921

 

Less: loss from discontinued operations, net of income tax

 

 

(571

)

 

 

(831

)

Income from continuing operations, net of income tax

 

 

5,787

 

 

 

31,752

 

 

 

 

 

 

 

 

Adjustments to reconcile net income to net cash from operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

16,952

 

 

 

16,523

 

Stock-based compensation

 

 

11,005

 

 

 

6,801

 

Amortization of debt issuance costs and debt discount

 

 

816

 

 

 

128

 

Deferred income tax benefit

 

 

(9

)

 

 

(617

)

Loss (gain) on disposal and sale of assets

 

 

(7

)

 

 

115

 

Unrealized gain on investment

 

 

(441

)

 

 

 

Changes in operating assets and liabilities, net of assets acquired

 

 

(26,110

)

 

 

(22,822

)

Net cash from operating activities from continuing operations

 

 

7,993

 

 

 

31,880

 

Net cash from operating activities from discontinued operations

 

 

(710

)

 

 

(2,069

)

Net cash from operating activities

 

 

7,283

 

 

 

29,811

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Purchases of long-term investments

 

 

(2,092

)

 

 

 

Purchases of property and equipment

 

 

(16,629

)

 

 

(16,210

)

Net cash from investing activities

 

 

(18,721

)

 

 

(16,210

)

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Payments on long-term borrowings

 

 

(5,000

)

 

 

(5,000

)

Dividend payments

 

 

(3,810

)

 

 

(3,814

)

Net payments related to stock-based awards

 

 

(5,327

)

 

 

(1,991

)

Net cash from financing activities

 

 

(14,137

)

 

 

(10,805

)

 

 

 

 

 

 

 

EFFECT OF CURRENCY TRANSLATION ON CASH

 

 

(1,201

)

 

 

51

 

 

 

 

 

 

 

 

NET CHANGE IN CASH AND CASH EQUIVALENTS

 

 

(26,776

)

 

 

2,847

 

CASH AND CASH EQUIVALENTS, beginning of period

 

 

1,044,556

 

 

 

458,818

 

CASH AND CASH EQUIVALENTS, end of period

 

$

1,017,780

 

 

$

461,665

 

ADVANCED ENERGY INDUSTRIES, INC.

SUPPLEMENTAL INFORMATION (UNAUDITED)

(in thousands)

 

 

 

 

 

 

 

 

 

 

Net Revenue by Market

 

Three Months Ended

 

 

March 31,

 

December 31,

 

 

2024

 

2023

 

2023

Semiconductor Equipment

 

$

179,903

 

$

194,209

 

$

191,375

Industrial and Medical

 

 

83,418

 

 

123,020

 

 

108,600

Data Center Computing

 

 

41,902

 

 

59,659

 

 

62,853

Telecom and Networking

 

 

22,252

 

 

48,152

 

 

42,443

Total

 

$

327,475

 

$

425,040

 

$

405,271

 

 

 

 

 

 

 

 

 

 

Net Revenue by Geographic Region

 

Three Months Ended

 

 

March 31,

 

December 31,

 

 

2024

 

2023

 

2023

North America

 

$

134,079

 

$

180,942

 

$

187,240

Asia

 

 

151,943

 

 

179,183

 

 

169,700

Europe

 

 

40,553

 

 

62,566

 

 

47,501

Other

 

 

900

 

 

2,349

 

 

830

Total

 

$

327,475

 

$

425,040

 

$

405,271

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

 

 

March 31,

 

December 31,

 

 

2024

 

2023

 

2023

Gross profit from continuing operations, as reported

 

$

112,829

 

 

$

155,111

 

 

$

142,866

 

Adjustments to gross profit:

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

829

 

 

 

383

 

 

 

472

 

Facility expansion, relocation costs and other

 

 

1,308

 

 

 

957

 

 

 

1,146

 

Acquisition-related costs

 

 

44

 

 

 

53

 

 

 

44

 

Non-GAAP gross profit

 

 

115,010

 

 

 

156,504

 

 

 

144,528

 

Non-GAAP gross margin

 

 

35.1

%

 

 

36.8

%

 

 

35.7

%

 

 

 

 

 

 

 

 

 

 

Operating expenses from continuing operations, as reported

 

 

112,152

 

 

 

115,073

 

 

 

129,096

 

Adjustments:

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

(6,947

)

 

 

(7,062

)

 

 

(7,068

)

Stock-based compensation

 

 

(10,176

)

 

 

(6,418

)

 

 

(7,716

)

Acquisition-related costs

 

 

(1,266

)

 

 

(878

)

 

 

(1,372

)

Restructuring, asset impairments, and other charges

 

 

(245

)

 

 

(1,043

)

 

 

(18,071

)

Non-GAAP operating expenses

 

 

93,518

 

 

 

99,672

 

 

 

94,869

 

Non-GAAP operating income

 

$

21,492

 

 

$

56,832

 

 

$

49,659

 

Non-GAAP operating margin

 

 

6.6

%

 

 

13.4

%

 

 

12.3

%

Reconciliation of Non-GAAP measure - income excluding certain items

 

Three Months Ended

 

 

March 31,

 

December 31,

 

 

2024

 

2023

 

2023

Income from continuing operations, less non-controlling interest, net of income tax

 

$

5,787

 

 

$

31,752

 

 

$

37,891

 

Adjustments:

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

6,947

 

 

 

7,062

 

 

 

7,068

 

Acquisition-related costs

 

 

1,310

 

 

 

931

 

 

 

1,416

 

Facility expansion, relocation costs, and other

 

 

1,308

 

 

 

957

 

 

 

1,146

 

Restructuring, asset impairments, and other charges

 

 

245

 

 

 

1,043

 

 

 

18,071

 

Unrealized foreign currency loss (gain)

 

 

(1,757

)

 

 

1,053

 

 

 

2,728

 

Tax effect of non-GAAP adjustments, including certain discrete tax benefits

 

 

(622

)

 

 

(1,121

)

 

 

(28,030

)

Non-GAAP income, net of income tax, excluding stock-based compensation

 

 

13,218

 

 

 

41,677

 

 

 

40,290

 

Stock-based compensation, net of tax

 

 

8,694

 

 

 

5,304

 

 

 

6,387

 

Non-GAAP income, net of income tax

 

$

21,912

 

 

$

46,981

 

 

$

46,677

 

ADVANCED ENERGY INDUSTRIES, INC.

SELECTED OTHER DATA (UNAUDITED)

 

 

 

 

 

 

 

 

 

 

Reconciliation of non-GAAP measure - per share earnings excluding certain items

 

Three Months Ended

 

 

March 31,

 

December 31,

 

 

2024

 

2023

 

2023

Diluted earnings per share from continuing operations, as reported

 

$

0.15

 

$

0.84

 

$

1.01

Add back:

 

 

 

 

 

 

 

 

 

Per share impact of non-GAAP adjustments, net of tax

 

 

0.43

 

 

0.40

 

 

0.23

Non-GAAP earnings per share

 

$

0.58

 

$

1.24

 

$

1.24

Reconciliation of Q2 2024 Guidance

Low End

High End

 

Revenue

 

$330 million

 

$370 million

 

Reconciliation of non-GAAP earnings per share

 

 

 

 

GAAP earnings per share

$

0.00

 

$

0.50

 

Stock-based compensation

 

0.29

 

 

0.29

 

Amortization of intangible assets

 

0.19

 

 

0.19

 

Restructuring, asset impairments, and other charges

 

0.10

 

 

0.10

 

Tax effects of excluded items

 

(0.10

)

 

(0.10

)

Non-GAAP earnings per share

$

0.48

 

$

0.98

 

 

Contacts

Andrew Huang

Advanced Energy Industries, Inc.

970-407-6555

ir@aei.com

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