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Advanced Energy Announces First Quarter 2019 Results
Globe Newswire 6-May-2019 4:05 PM
Q1 Revenue was $140.7 million
Q1 GAAP EPS from continuing operations was $0.40
Q1 Non-GAAP EPS was $0.58
FORT COLLINS, Colo., May 06, 2019 (GLOBE NEWSWIRE) -- Advanced Energy Industries, Inc. (NASDAQ:AEIS), today announced financial results for the first quarter ended March 31, 2019.
"While 2019 is a shaping up to be a challenging year for the semiconductor market, Advanced Energy delivered solid profitability while continuing to execute on our strategy. Mixed semi demand profiles signal the early stage of market stabilization, and we believe the long-term drivers for wafer fab equipment growth remain intact setting up the potential for a recovery in 2020," said Yuval Wasserman, president and CEO. "We continue to invest in technology development with our customers and are focused on capitalizing on the many growth opportunities across our served markets."
First Quarter Results
Sales were $140.7 million in the first quarter of 2019 compared with $154.2 million in the fourth quarter of 2018 and $195.6 million in the first quarter of 2018.
GAAP net income from continuing operations was $15.4 million or $0.40 per diluted share, compared with $19.2 million or $0.50 per diluted share in the prior quarter, and $46.4 million or $1.16 per diluted share in the first quarter of 2018.
Non-GAAP net income was $22.4 million or $0.58 per diluted share in the first quarter of 2019, which included a $4.4 million discrete tax benefit. This compares with $28.0 million or $0.73 per diluted share in the fourth quarter of 2018, and $53.4 million or $1.34 per diluted share in the first quarter of 2018. A reconciliation of non-GAAP measures is provided in the tables below.
The company generated $6.9 million of operating cash from continuing operations in the quarter.
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 2018 Annual Report on Form 10-K.
Second Quarter 2019 Guidance
Based on the company's current view, beliefs and assumptions, its guidance for the second quarter of 2019 is within the following ranges.
Q2 2019
Revenues
$130M - $140M
GAAP EPS from continuing operations
$0.10 - $0.25
Non-GAAP EPS
$0.25 - $0.40
Conference Call
Management will host a conference call tomorrow morning, Tuesday, May 7, 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 5981809, which has been reserved for this 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.
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 first 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 second quarter ending June 30, 2019, potential future growth and profitability, our future business mix, expectations regarding future market trends and the company's future performance within specific markets 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
March 31,
December 31,
2019
2018
2018
Sales:
Product
$
112,112
$
171,209
$
125,039
Service
28,631
24,408
29,122
Total sales
140,743
195,617
154,161
Cost of sales:
Product
60,801
79,806
64,819
Service
14,202
12,166
14,154
Total cost of sales
75,003
91,972
78,973
Gross profit
65,740
103,645
75,188
46.7
%
53.0
%
48.8
%
Operating expenses:
Research and development
21,289
17,637
20,725
Selling, general and administrative
29,014
28,648
29,241
Amortization of intangible assets
1,973
1,257
1,816
Restructuring expense
1,673
—
3,836
Total operating expenses
53,949
47,542
55,618
Operating income
11,791
56,103
19,570
Other income (expense), net
743
26
881
Income from continuing operations before income taxes
12,534
56,129
20,451
Provision (benefit) for income taxes
(2,853
)
9,759
1,229
Income from continuing operations, net of income taxes
15,387
46,370
19,222
Income (loss) from discontinued operations, net of income taxes
(9
)
140
188
Net income
15,378
46,510
19,410
Income from continuing operations attributable to noncontrolling interest
8
31
4
Net income attributable to Advanced Energy Industries, Inc.
$
15,370
$
46,479
$
19,406
Basic weighted-average common shares outstanding
38,198
39,619
38,386
Diluted weighted-average common shares outstanding
38,426
39,995
38,595
Earnings per share attributable to Advanced Energy Industries, Inc:
Continuing operations:
Basic earnings per share
$
0.40
$
1.17
$
0.50
Diluted earnings per share
$
0.40
$
1.16
$
0.50
Discontinued operations:
Basic earnings per share
$
0.00
$
0.00
$
0.00
Diluted earnings per share
$
0.00
$
0.00
$
0.00
Net income:
Basic earnings per share
$
0.40
$
1.17
$
0.51
Diluted earnings per share
$
0.40
$
1.16
$
0.50
ADVANCED ENERGY INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
March 31,
December 31,
2019
2018
ASSETS
Unaudited
Current assets:
Cash and cash equivalents
$
351,149
$
349,301
Marketable securities
2,516
2,470
Accounts and other receivable, net
102,405
100,442
Inventories, net
99,070
97,987
Income taxes receivable
1,945
2,220
Other current assets
11,309
10,173
Current assets of discontinued operations
4,872
5,855
Total current assets
573,266
568,448
Property and equipment, net
31,058
31,269
Operating lease right-of-use assets
35,654
—
Deposits and other assets
9,378
6,874
Goodwill and intangibles, net
154,164
156,810
Deferred income tax assets
47,513
47,099
Non-current assets of discontinued operations
5,917
5,984
Total assets
$
856,950
$
816,484
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
44,028
$
39,646
Other accrued expenses
56,470
65,377
Current portion of operating lease liability
7,298
—
Current liabilities of discontinued operations
4,254
5,286
Total current liabilities
112,050
110,309
Non-current liabilities of continuing operations
112,270
88,158
Non-current liabilities of discontinued operations
10,486
10,715
Long-term liabilities
122,756
98,873
Total liabilities
234,806
209,182
Advanced Energy stockholders' equity
621,624
606,790
Noncontrolling interest
520
512
Stockholders' equity
622,144
607,302
Total liabilities and stockholders' equity
$
856,950
$
816,484
December 31, 2018 amounts are derived from the December 31, 2018 audited Consolidated Financial Statements.
ADVANCED ENERGY INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands)
Three Months Ended March 31,
2019
2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
15,378
$
46,510
Income (loss) from discontinued operations, net of income taxes
(9
)
140
Income from continuing operations, net of income taxes
15,387
46,370
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
4,181
2,861
Stock-based compensation expense
3,199
4,494
Net loss on disposal of assets
6
138
Changes in operating assets and liabilities, net of assets acquired
(15,269
)
(18,978
)
Net cash provided by operating activities from continuing operations
6,855
34,885
Net cash used in operating activities from discontinued operations
(1,409
)
(1,784
)
Net cash provided by operating activities
5,446
33,101
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash acquired
—
(6,072
)
Purchases of property and equipment
(2,436
)
(3,923
)
Net cash used in investing activities from continuing operations
(2,436
)
(9,995
)
Net cash used in investing activities from discontinued operations
—
—
Net cash used in investing activities
(2,436
)
(9,995
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase and retirement of common stock
—
(12,750
)
Net payments related to stock-based award activities
(1,707
)
(4,032
)
Net cash used in financing activities from continuing operations
(1,707
)
(16,782
)
Net cash used in financing activities from discontinued operations
—
—
Net cash used in financing activities
(1,707
)
(16,782
)
EFFECT OF CURRENCY TRANSLATION ON CASH
(566
)
167
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
737
6,491
CASH AND CASH EQUIVALENTS, beginning of period
354,552
415,037
CASH AND CASH EQUIVALENTS, end of period
355,289
421,528
Less cash and cash equivalents from discontinued operations
4,140
7,654
CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS, end of period
$
351,149
$
413,874
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,
2019
2018
2018
Gross profit from continuing operations, as reported
$
65,740
$
103,645
$
75,188
Adjustments to gross profit:
Stock-based compensation
233
351
166
Facility expansion and relocation costs
170
—
354
Acquisition-related costs
—
—
411
Non-GAAP gross profit
66,143
103,996
76,119
Operating expenses from continuing operations, as reported
53,949
47,542
55,618
Adjustments:
Amortization of intangible assets
(1,973
)
(1,257
)
(1,816
)
Stock-based compensation
(2,966
)
(4,143
)
(2,077
)
Acquisition-related costs
(1,511
)
(350
)
(416
)
Facility expansion and relocation costs
(74
)
(476
)
—
Restructuring charges
(1,673
)
—
(3,836
)
Non-GAAP operating expenses
45,752
41,316
47,473
Non-GAAP operating income
$
20,391
$
62,680
$
28,646
Reconciliation of Non-GAAP measure - operating expenses and operating income, excluding certain items
Three Months Ended
March 31,
December 31,
2019
2018
2018
Gross profit from continuing operations, as reported
46.7
%
53.0
%
48.8
%
Adjustments to gross profit:
Stock-based compensation
0.2
0.2
0.1
Facility expansion and relocation costs
0.1
—
0.2
Acquisition-related costs
—
—
0.3
Non-GAAP gross profit
47.0
53.2
49.4
Operating expenses from continuing operations, as reported
38.3
24.3
36.1
Adjustments:
Amortization of intangible assets
(1.4
)
(0.6
)
(1.2
)
Stock-based compensation
(2.0
)
(2.1
)
(1.3
)
Acquisition-related costs
(1.1
)
(0.2
)
(0.3
)
Facility expansion and relocation costs
(0.1
)
(0.2
)
—
Restructuring charges
(1.2
)
—
(2.5
)
Non-GAAP operating expenses
32.5
21.2
30.8
Non-GAAP operating income
14.5
%
32.0
%
18.6
%
Reconciliation of Non-GAAP measure - income excluding certain items
Three Months Ended
March 31,
December 31,
2019
2018
2018
Income from continuing operations, less noncontrolling interest, net of income taxes
$
15,379
$
46,339
$
19,218
Adjustments:
Amortization of intangible assets
1,973
1,257
1,816
Acquisition-related costs
1,511
350
827
Facility expansion and relocation costs
244
476
354
Restructuring charges
1,673
—
3,836
Tax Cuts and Jobs Act Impact
—
1,853
1,452
Tax effect of Non-GAAP adjustments
(851
)
(309
)
(1,198
)
Non-GAAP income, net of income taxes, excluding stock-based compensation
19,929
49,966
26,305
Stock-based compensation, net of taxes
2,463
3,460
1,705
Non-GAAP income, net of income taxes
$
22,392
$
53,426
$
28,010
Reconciliation of Non-GAAP measure - per share earnings excluding certain items
Three Months Ended
March 31,
December 31,
2019
2018
2018
Diluted earnings per share from continuing operations, as reported
$
0.40
$
1.16
$
0.50
Add back:
per share impact of Non-GAAP adjustments, net of tax
