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
Service
18,013
17,230
16,751
34,764
33,132
Total sales
118,765
108,654
103,044
221,809
218,164
Cost of sales:
Product
47,334
43,778
40,815
88,149
86,070
Service
9,385
8,327
8,769
18,154
16,446
Total cost of sales
56,719
52,105
49,584
106,303
102,516
Gross profit
62,046
56,549
53,460
115,506
115,648
52.2
%
52.0
%
51.9
%
52.1
%
53.0
%
Operating expenses:
Research and development
11,266
9,984
10,765
22,031
19,744
Selling, general and administrative
19,377
16,684
18,016
37,393
33,391
Amortization of intangible assets
1,074
1,102
1,058
2,132
2,200
Restructuring benefit
—
—
—
—
(2
)
Total operating expenses
31,717
27,770
29,839
61,556
55,333
Operating Income
30,329
28,779
23,621
53,950
60,315
Other income, net
836
301
357
1,193
1,169
Income from continuing operations before income taxes
31,165
29,080
23,978
55,143
61,484
Provision for income taxes
3,911
6,056
3,758
7,669
12,805
Income from continuing operations, net of income taxes
27,254
23,024
20,220
47,474
48,679
Income (loss) from discontinued operations, net of income taxes
3,277
(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 outstanding
39,672
40,946
39,814
39,750
40,843
Diluted weighted-average common shares outstanding
39,969
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
ASSETS
Unaudited
Current assets:
Cash and cash equivalents
$
209,273
$
158,443
Marketable securities
5,784
11,986
Accounts receivable, net
66,162
54,959
Inventories, net
57,227
52,573
Deferred income tax assets
6,027
6,004
Income taxes receivable
1,875
9,040
Other current assets
8,978
7,868
Current assets of discontinued operations
31,517
41,902
Total current assets
386,843
342,775
Property and equipment, net
11,167
9,645
Deposits and other
1,678
1,729
Goodwill and intangibles, net
74,750
76,870
Deferred income tax assets
30,231
30,398
Non-current assets of discontinued operations
285
1,271
Total assets
$
504,954
$
462,688
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
36,951
$
27,246
Other accrued expenses
36,807
40,357
Current liabilities of discontinued operations
24,910
36,481
Total current liabilities
98,668
104,084
Non-current liabilities of continuing operations
64,370
67,722
Non-current liabilities of discontinued operations
20,104
27,302
Long-term liabilities
84,474
95,024
Total liabilities
183,142
199,108
Stockholders' equity
321,812
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 items
Three 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 reported
31,717
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 operations
29,074
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 items
Three 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 compensation
1,569
693
1,429
2,998
1,180
Amortization of intangible assets
1,074
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 items
Three 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 tax
0.05
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