Get Cash Back and $0 Commissions + The Power of TradeStation
Advanced Energy Announces Fourth Quarter and Full Year Fiscal 2018 Results
Globe Newswire 4-Feb-2019 4:05 PM
Q4 Revenue was $154.2 million
Fiscal 2018 Revenue grew 7.1% to $718.9 million
Q4 GAAP EPS from continuing operations was $0.50
Q4 Non-GAAP EPS was $0.73
FORT COLLINS, Colo., Feb. 04, 2019 (GLOBE NEWSWIRE) -- Advanced Energy Industries, Inc. (NASDAQ:AEIS), today announced financial results for the fourth quarter and full fiscal year ended December 31, 2018.
"Despite a slower second half, we completed 2018 with record annual revenues, solid profitability and robust cash flow generation. While the semiconductor market is experiencing a cyclical downturn, we continue to see a bright future for the long term," said Yuval Wasserman, president and CEO. "We remain confident in the multiple growth drivers of our business and are focused on executing our expansion and diversification growth strategies in both the semiconductor and industrial technologies markets."
Fourth Quarter Results
Sales were $154.2 million in the fourth quarter of 2018 compared with $173.1 million in the third quarter of 2018 and $179.2 million in the fourth quarter of 2017.
GAAP net income from continuing operations was $19.2 million or $0.50 per diluted share in the fourth quarter of 2018 compared with $35.2 million or $0.90 per diluted share in the third quarter of 2018, and a loss of $29.0 million or $0.73 per share in the fourth quarter of 2017. Fourth quarter 2018 results were impacted by $3.8 million of restructuring charges. Fourth quarter 2017 results included one-time tax expenses of $6.4 million associated with the write-down of the solar inverter business and $72.9 million associated with the U.S. tax reform enacted in 2017.
Non-GAAP net income was $28.0 million or $0.73 per diluted share in the fourth quarter of 2018. This compares with $41.2 million or $1.05 per diluted share in the third quarter of 2018, and $52.4 million or $1.31 per diluted share in the fourth quarter of 2017. A reconciliation of non-GAAP measures is provided in the tables below.
The company generated $32.9 million of operating cash from continuing operations in the fourth quarter of 2018. During the quarter the company repurchased 575,469 shares for $26.1 million.
Full Year 2018 Results
Sales were $718.9 million in 2018 compared with $671.0 million in 2017, an increase of 7.1%.
GAAP net income from continuing operations was $147.1 million or $3.74 per diluted share in 2018 compared with $136.1 million or $3.39 per diluted share in 2017.
Non-GAAP net income was $172.0 million or $4.37 per diluted share in 2018 compared to $191.5 million or $4.77 per diluted share in 2017. A reconciliation of non-GAAP measures is provided in the tables below.
The company generated $151.4 million of operating cash from continuing operations in 2018 and ended the year with $351.8 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 all purposes. Further financial detail regarding the amounts related to the discontinued inverter business are available in the company's 2017 Annual Report on Form 10-K.
First Quarter 2019 Guidance
Based on the company's current view, beliefs and assumptions, its guidance for the first quarter of 2019 is within the following ranges.
Q1 2019
Revenues
$138M - $148M
GAAP EPS from continuing operations
$0.24 - $0.42
Non-GAAP EPS from continuing operations
$0.40 - $0.55
Fourth Quarter 2018 Conference Call
Management will host a conference call tomorrow morning, Tuesday, February 5, 2019 at 6:30 a.m. Mountain Time/ 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 2931549, 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 2931549. 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 ir.advanced-energy.com.
About Advanced Energy
Advanced Energy (NASDAQ:AEIS) is a global leader in the design and manufacturing of highly engineered, precision power conversion, measurement and control solutions for mission-critical applications and processes. AE's power solutions enable customer innovation in complex semiconductor and industrial manufacturing applications. With engineering know-how and responsive service and support around the globe, the company builds collaborative partnerships to meet technology advances, propel growth for its customers and innovate the future of power. Advanced Energy has devoted more than three decades to perfecting power for its global customers and is headquartered in Fort Collins, Colorado, USA. For more information, visit www.advancedenergy.com.
Advanced Energy | Precision. Power. Performance.
For more information, contact:
Brian Smith Advanced Energy (970) 407-6555 brian.smith@aei.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 and amortization of intangible assets, as well as discontinued operations, and non-recurring items such as acquisition-related costs and restructuring expenses. Additionally, the fourth quarter non-GAAP results exclude estimated income tax expense associated with U.S. tax reform. 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 and investors 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 first quarter ending March 31, 2019, potential future growth and profitability, our future business mix, expectations regarding future market trends and the company's future performance within specific markets (e.g., statements regarding anticipated semiconductor and industrial market growth) and other statements herein or made on the above-announced conference call 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 product 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; (k) unanticipated changes to management's estimates, reserves or allowances; (l) changes and adjustments to the tax expense and benefits related to the U.S. tax reform that was enacted in late 2017; and (m) the effects of recent U.S. government trade and export restrictions, Chinese retaliatory trade actions, and other governmental action related to tariffs upon the demand for our, and our customers', products and services and the U.S. economy. 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.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
Year Ended
December 31,
September 30,
December 31,
2018
2017
2018
2018
2017
Sales:
Product
$
125,039
$
154,172
$
144,843
$
610,326
$
578,650
Service
29,122
25,042
28,239
108,566
92,362
Total sales
154,161
179,214
173,082
718,892
671,012
Cost of sales:
Product
64,819
68,833
73,019
298,597
267,587
Service
14,154
12,206
14,524
54,688
47,044
Total cost of sales
78,973
81,039
87,543
353,285
314,631
Gross profit
75,188
98,175
85,539
365,607
356,381
48.8
%
54.8
%
49.4
%
50.9
%
53.1
%
Operating expenses:
Research and development
20,725
16,257
18,451
76,008
57,999
Selling, general and administrative
29,241
22,682
25,386
108,033
93,262
Amortization of intangible assets
1,816
1,174
1,437
5,774
4,350
Restructuring expense
3,836
—
403
4,239
—
Total operating expenses
55,618
40,113
45,677
194,054
155,611
Operating income
19,570
58,062
39,862
171,553
200,770
Other income (expense), net
881
559
401
823
(2,579
)
Income from continuing operations before income taxes
20,451
58,621
40,263
172,376
198,191
Provision (benefit) for income taxes
1,229
87,628
5,106
25,227
62,090
Income from continuing operations, net of income taxes
19,222
(29,007
)
35,157
147,149
136,101
Income (loss) from discontinued operations, net of income taxes
188
(583
)
(371
)
(38
)
1,760
Net income
19,410
(29,590
)
34,786
147,111
137,861
Income from continuing operations attributable to noncontrolling interest
4
—
7
86
—
Net income attributable to Advanced Energy Industries, Inc.
$
19,406
$
(29,590
)
$
34,779
$
147,025
$
137,861
Basic weighted-average common shares outstanding
38,386
39,642
38,970
39,081
39,754
Diluted weighted-average common shares outstanding
38,595
40,051
39,195
39,352
40,176
Earnings per share attributable to Advanced Energy Industries, Inc:
Continuing operations:
Basic earnings per share
$
0.50
$
(0.73
)
$
0.90
$
3.76
$
3.42
Diluted earnings per share
$
0.50
$
(0.73
)
$
0.90
$
3.74
$
3.39
Discontinued operations:
Basic earnings per share
$
0.00
$
(0.01
)
$
(0.01
)
$
0.00
$
0.04
Diluted earnings per share
$
0.00
$
(0.01
)
$
(0.01
)
$
0.00
$
0.04
Net income:
Basic earnings per share
$
0.51
$
(0.75
)
$
0.89
$
3.76
$
3.47
Diluted earnings per share
$
0.50
$
(0.75
)
$
0.89
$
3.74
$
3.43
ADVANCED ENERGY INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
December 31,
December 31,
2018
2017
ASSETS
Unaudited
Current assets:
Cash and cash equivalents
$
349,301
$
407,283
Marketable securities
2,470
3,104
Accounts and other receivable, net
100,442
87,429
Inventories, net
97,987
78,450
Income taxes receivable
2,220
1,295
Other current assets
10,173
8,129
Current assets of discontinued operations
5,855
9,535
Total current assets
568,448
595,225
Property and equipment, net
31,269
17,795
Deposits and other assets
6,874
3,051
Goodwill and intangibles, net
156,810
87,311
Deferred income tax assets
47,099
18,841
Non-current assets of discontinued operations
5,984
11,085
Total assets
$
816,484
$
733,308
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
39,646
$
48,177
Other accrued expenses
65,377
50,092
Current liabilities of discontinued operations
5,286
7,850
Total current liabilities
110,309
106,119
Non-current liabilities of continuing operations
88,158
91,271
Non-current liabilities of discontinued operations
10,715
15,277
Long-term liabilities
98,873
106,548
Total liabilities
209,182
212,667
Advanced Energy stockholders' equity
606,790
520,641
Noncontrolling interest
512
—
Stockholders' equity
607,302
520,641
Total liabilities and stockholders' equity
$
816,484
$
733,308
December 31, 2017 amounts are derived from the December 31, 2017 audited Consolidated Financial Statements.
ADVANCED ENERGY INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands)
Years Ended December 31,
2018
2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
147,111
$
137,861
Income from discontinued operations, net of income taxes
(38
)
1,760
Income from continuing operations, net of income taxes
147,149
136,101
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
13,592
9,424
Stock-based compensation expense
9,703
12,549
Provision for deferred income taxes
5,618
28,765
Loss on foreign exchange hedge
—
3,489
Net loss on disposal of assets
481
122
Changes in operating assets and liabilities, net of assets acquired
(25,116
)
(494
)
Net cash provided by operating activities from continuing operations
151,427
189,956
Net cash used in operating activities from discontinued operations
(156
)
(7,255
)
Net cash provided by operating activities
151,271
182,701
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities
(95
)
(107
)
Proceeds from sale of marketable securities
589
1,903
Acquisitions, net of cash acquired
(93,756
)
(17,347
)
Purchase of foreign exchange hedge
—
(3,489
)
Purchases of property and equipment
(20,330
)
(9,042
)
Net cash used in investing activities from continuing operations
(113,592
)
(28,082
)
Net cash used in investing activities from discontinued operations
—
—
Net cash used in investing activities
(113,592
)
(28,082
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase and retirement of common stock
(95,125
)
(29,993
)
Net payments related to stock-based award activities
(2,009
)
(1,314
)
Net cash used in financing activities from continuing operations
(97,134
)
(31,307
)
Net cash used in financing activities from discontinued operations
—
—
Net cash used in financing activities
(97,134
)
(31,307
)
EFFECT OF CURRENCY TRANSLATION ON CASH
(1,030
)
2,208
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(60,485
)
125,520
CASH AND CASH EQUIVALENTS, beginning of period
415,037
289,517
CASH AND CASH EQUIVALENTS, end of period
354,552
415,037
Less cash and cash equivalents from discontinued operations
5,251
7,754
CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS, end of period
$
349,301
$
407,283
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,
2018
2017
2018
2018
2017
Gross profit from continuing operations, as reported
$
75,188
$
98,175
$
85,539
$
365,607
$
356,381
Adjustments to gross profit:
Stock-based compensation
166
346
76
742
1,394
Facility transition and relocation costs
354
—
725
1,328
—
Acquisition-related costs
411
—
158
569
—
Non-GAAP gross profit
76,119
98,521
86,498
368,246
357,775
Operating expenses from continuing operations, as reported
55,618
40,113
45,677
194,054
155,611
Adjustments:
Amortization of intangible assets
(1,816
)
(1,174
)
(1,437
)
(5,774
)
(4,350
)
Stock-based compensation
(2,077
)
(1,496
)
(948
)
(8,961
)
(11,155
)
Acquisition-related costs
(416
)
—
(705
)
(1,726
)
(150
)
Facility expansion and relocation costs
—
—
(29
)
(518
)
—
Restructuring charges
(3,836
)
—
(403
)
(4,239
)
—
Non-GAAP operating expenses
47,473
37,443
42,155
172,836
139,956
Non-GAAP operating income
$
28,646
$
61,078
$
44,343
$
195,410
$
217,819
Reconciliation of Non-GAAP measure - operating expenses and operating income, excluding certain items
Three Months Ended
Year Ended
December 31,
September 30,
December 31,
2018
2017
2018
2018
2017
Gross profit from continuing operations, as reported
48.8
%
54.8
%
49.4
%
50.9
%
53.1
%
Adjustments to gross profit:
Stock-based compensation
0.1
0.2
—
0.1
0.2
Facility transition and relocation costs
0.2
—
0.5
0.1
—
Acquisition-related costs
0.3
—
0.1
0.1
—
Non-GAAP gross profit
49.4
55.0
50.0
51.2
53.3
Operating expenses from continuing operations, as reported
36.1
22.4
26.4
27.0
23.2
Adjustments:
Amortization of intangible assets
(1.2
)
(0.7
)
(0.8
)
(0.8
)
(0.6
)
Stock-based compensation
(1.3
)
(0.8
)
(0.6
)
(1.3
)
(1.8
)
Acquisition-related costs
(0.3
)
—
(0.4
)
(0.2
)
—
Facility expansion and relocation costs
—
—
—
(0.1
)
—
Restructuring charges
(2.5
)
—
(0.2
)
(0.6
)
—
Non-GAAP operating expenses
30.8
20.9
24.4
24.0
20.8
Non-GAAP operating income
18.6
%
34.1
%
25.6
%
27.2
%
32.5
%
Reconciliation of Non-GAAP measure - income excluding certain items
Three Months Ended
Year Ended
December 31,
September 30,
December 31,
2018
2017
2018
2018
2017
Income from continuing operations, less noncontrolling interest, net of income taxes
$
19,218
$
(29,007
)
$
35,150
$
147,063
$
136,101
Adjustments:
Amortization of intangible assets
1,816
1,174
1,437
5,774
4,350
Stock-based compensation
2,243
1,842
1,024
9,703
12,549
Acquisition-related costs
827
—
863
2,295
150
Facility expansion and relocation costs
354
—
754
1,846
—
Restructuring charges
3,836
—
403
4,239
—
Nonrecurring tax (benefit) expense associated with inverter business
—
6,357
—
—
(33,837
)
Loss on foreign exchange hedge
—
—
—
—
3,489
Incremental expense associated with start-up of the Asia regional headquarters
—
—
—
—
1,133
Tax Cuts and Jobs Act Impact
1,452
72,867
2,398
5,703
72,867
Tax effect of Non-GAAP adjustments
(1,736
)
(813
)
(843
)
(4,626
)
(5,264
)
Non-GAAP income, net of income taxes
$
28,010
$
52,420
$
41,186
$
171,997
$
191,538
Reconciliation of Non-GAAP measure - per share earnings excluding certain items
Three Months Ended
Year Ended
December 31,
September 30,
December 31,
2018
2017
2018
2018
2017
Diluted earnings per share from continuing operations, as reported
$
0.50
$
(0.73
)
$
0.90
$
3.74
$
3.39
Add back:
per share impact of Non-GAAP adjustments, net of tax
