Advanced Energy Announces Second Quarter 2022 Results and Increased Share Repurchase Authorization
08/03/2022 - 04:05 PM
Total revenue was a record $441 million , above high end of guidance range
Semiconductor revenue was also a record and grew 30% from last year
GAAP EPS from continuing operations was $1.19
Non-GAAP EPS was $1.44 , above the high end of guidance range
Increased share repurchase authorization to $200 million
DENVER --(BUSINESS WIRE)--
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 second quarter ended June 30, 2022 .
“Second quarter financial results surpassed our expectations, largely due to improved availability of key components and good operational execution,” said Steve Kelley , president and CEO of Advanced Energy. “Customer demand remains strong, and we are pleased by the level of customer interest in our new technologies and products, the foundation of our long-term profitable growth.”
Quarter Results
Sales were $440.9 million in the second quarter of 2022, compared with $397.5 million in the first quarter of 2022 and $361.3 million in the second quarter of 2021.
GAAP net income from continuing operations was $44.8 million or $1.19 per diluted share in the quarter, compared with $36.9 million or $0.98 per diluted share in the prior quarter, and $35.5 million or $0.92 per diluted share a year ago.
Non-GAAP net income was $54.3 million or $1.44 per diluted share in the second quarter of 2022. This compares with $46.7 million or $1.24 per diluted share in the first quarter of 2022, and $48.1 million or $1.25 per diluted share in the second quarter of 2021.
Advanced Energy generated $37.6 million of cash flow from continuing operations during the quarter, repurchased $17.0 million of common stock and paid $3.8 million in a quarterly dividend.
A reconciliation of GAAP to non-GAAP measures is provided in the tables below.
Increased Share Repurchase Authorization
The Board of Directors increased the Company’s existing share repurchase authorization to $200 million .
Third Quarter 2022 Guidance
Based on the Company’s current view, beliefs, and assumptions, guidance for the third quarter of 2022 is within the following ranges:
Q3 2022
Revenues
$435 million +/- $25 million
GAAP EPS from continuing operations
$0.92 +/- $0.30
Non-GAAP EPS
$1.30 +/- $0.30
Conference Call
Management will host a conference call today, August 3, 2022 , at 4:30 p.m. Eastern Time to discuss the second 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, manufacturing, telecommunications, data center computing and healthcare. 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.
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. 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, other inflationary pressures, economic downturns, and volatility and cyclicality of the industries we serve; (c) the impact of political and geographical risks, including trade and other 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 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; (n) changes and adjustments to the tax expense and benefits related to the U.S. tax reform that was enacted in late 2017, 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
Six Months Ended
June 30 ,
March 31 ,
June 30 ,
2022
2021
2022
2022
2021
Sales, net
$
440,949
$
361,311
$
397,459
$
838,408
$
712,931
Cost of sales
278,791
226,278
253,143
531,934
440,395
Gross profit
162,158
135,033
144,316
306,474
272,536
Gross margin %
36.8
%
37.4
%
36.3
%
36.6
%
38.2
%
Operating expenses:
Research and development
48,009
40,119
43,614
91,623
80,287
Selling, general, and administrative
55,022
48,110
49,318
104,340
94,841
Amortization of intangible assets
6,523
5,513
5,509
12,032
10,897
Restructuring expense (benefit)
(161
)
211
1,218
1,057
1,249
Total operating expenses
109,393
93,953
99,659
209,052
187,274
Operating income
52,765
41,080
44,657
97,422
85,262
Other income (expense), net
3,249
(3,662
)
(842
)
2,407
(4,169
)
Income from continuing operations, before income taxes
56,014
37,418
43,815
99,829
81,093
Provision for income taxes
11,203
1,876
6,953
18,156
7,160
Income from continuing operations
44,811
35,542
36,862
81,673
73,933
Income (loss) from discontinued operations, net of income taxes
180
(102
)
(98
)
82
208
Net income
44,991
35,440
36,764
81,755
74,141
Income from continuing operations attributable to noncontrolling interest
21
31
(14
)
7
64
Net income attributable to Advanced Energy Industries, Inc.
$
44,970
$
35,409
$
36,778
$
81,748
$
74,077
Basic weighted-average common shares outstanding
37,520
38,389
37,549
37,535
38,359
Diluted weighted-average common shares outstanding
37,710
38,586
37,770
37,754
38,589
Earnings per share attributable to Advanced Energy Industries, Inc :
Continuing operations:
Basic earnings per share
$
1.19
$
0.93
$
0.98
$
2.18
$
1.93
Diluted earnings per share
$
1.19
$
0.92
$
0.98
$
2.16
$
1.91
Discontinued operations:
Basic earnings (loss) per share
$
—
$
—
$
—
$
—
$
0.01
Diluted earnings (loss) per share
$
—
$
—
$
—
$
—
$
0.01
Net income:
Basic earnings per share
$
1.20
$
0.92
$
0.98
$
2.18
$
1.93
Diluted earnings per share
$
1.19
$
0.92
$
0.97
$
2.17
$
1.92
ADVANCED ENERGY INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
June 30 ,
December 31 ,
2022
2021
ASSETS
Current assets:
Cash and cash equivalents
$
372,685
$
544,372
Accounts and other receivable, net
270,839
237,227
Inventories
395,866
338,410
Other current assets
48,126
42,225
Total current assets
1,087,516
1,162,234
Property and equipment, net
126,793
114,830
Operating lease right-of-use assets
104,191
101,769
Deposits and other assets
29,644
19,669
Goodwill and intangible assets, net
482,663
371,596
Deferred income tax assets
47,267
47,242
Total assets
$
1,878,074
$
1,817,340
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
197,870
$
193,708
Other accrued expenses
154,240
140,645
Current portion of long-term debt
20,000
20,000
Current portion of operating lease liabilities
16,911
15,843
Total current liabilities
389,021
370,196
Long-term debt
363,001
372,733
Other long-term liabilities
201,172
202,915
Long-term liabilities
564,173
575,648
Total liabilities
953,194
945,844
Advanced Energy stockholders' equity
924,228
870,851
Noncontrolling interest
652
645
Total stockholders’ equity
924,880
871,496
Total liabilities and stockholders’ equity
$
1,878,074
$
1,817,340
ADVANCED ENERGY INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(in thousands)
Six Months Ended June 30 ,
2022
2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
81,755
$
74,141
Less: income from discontinued operations, net of income taxes
82
208
Income from continuing operations, net of income taxes
81,673
73,933
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization
28,877
25,744
Stock-based compensation expense
8,986
9,145
Provision for deferred income taxes
(1,977
)
(1,663
)
Loss on disposal of assets
374
446
Changes in operating assets and liabilities, net of assets acquired
(70,392
)
(19,539
)
Net cash from operating activities from continuing operations
47,541
88,066
Net cash from operating activities from discontinued operations
55
(377
)
Net cash from operating activities
47,596
87,689
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment
(25,476
)
(14,203
)
Acquisitions, net of cash acquired
(145,779
)
(18,686
)
Net cash from investing activities
(171,255
)
(32,889
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term borrowings
(10,000
)
(8,750
)
Dividend payments
(7,595
)
(7,728
)
Purchase and retirement of common stock
(23,578
)
(6,503
)
Net payments related to stock-based awards
(1,667
)
(3,258
)
Net cash from financing activities
(42,840
)
(26,239
)
EFFECT OF CURRENCY TRANSLATION ON CASH
(5,188
)
(1,753
)
NET CHANGE IN CASH AND CASH EQUIVALENTS
(171,687
)
26,808
CASH AND CASH EQUIVALENTS, beginning of period
544,372
480,368
CASH AND CASH EQUIVALENTS, end of period
$
372,685
$
507,176
ADVANCED ENERGY INDUSTRIES, INC.
SUPPLEMENTAL INFORMATION (UNAUDITED)
(in thousands)
Net Sales by Product Line
Three Months Ended
Six Months Ended
June 30 ,
March 31 ,
June 30 ,
2022
2021
2022
2022
2021
Semiconductor Equipment
$
228,797
$
176,671
$
202,957
$
431,754
$
357,387
Industrial and Medical
104,951
83,197
82,898
187,849
161,612
Data Center Computing
69,161
69,458
76,238
145,399
128,612
Telecom and Networking
38,040
31,985
35,366
73,406
65,320
Total
$
440,949
$
361,311
$
397,459
$
838,408
$
712,931
Net Sales by Geographic Region
Three Months Ended
Six Months Ended
June 30 ,
March 31 ,
June 30 ,
2022
2021
2022
2022
2021
United States
$
174,293
$
139,525
$
158,742
$
333,035
$
271,123
North America (excluding U.S. )
31,824
26,112
23,979
55,803
52,359
Asia
180,181
148,803
162,047
342,228
298,394
Europe
49,851
44,491
46,665
96,516
84,913
Other
4,800
2,380
6,026
10,826
6,142
Total
$
440,949
$
361,311
$
397,459
$
838,408
$
712,931
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 ,
2022
2021
2022
2022
2021
Gross profit from continuing operations, as reported
$
162,158
$
135,033
$
144,316
$
306,474
$
272,536
Adjustments to gross profit:
Stock-based compensation
402
215
231
633
565
Facility expansion, relocation costs and other
1,187
1,997
1,284
2,471
3,835
Acquisition-related costs
64
84
(502
)
(438
)
92
Non-GAAP gross profit
163,811
137,329
145,329
309,140
277,028
Non-GAAP gross margin
37.1
%
38.0
%
36.6
%
36.9
%
38.9
%
Operating expenses from continuing operations, as reported
109,393
93,953
99,659
209,052
187,274
Adjustments:
Amortization of intangible assets
(6,523
)
(5,513
)
(5,509
)
(12,032
)
(10,897
)
Stock-based compensation
(4,656
)
(3,229
)
(3,697
)
(8,353
)
(8,580
)
Acquisition-related costs
(4,159
)
(2,328
)
(1,668
)
(5,827
)
(4,356
)
Facility expansion, relocation costs and other
—
(63
)
—
—
(114
)
Restructuring charges
161
(211
)
(1,218
)
(1,057
)
(1,249
)
Non-GAAP operating expenses
94,216
82,609
87,567
181,783
162,078
Non-GAAP operating income
$
69,595
$
54,720
$
57,762
$
127,357
$
114,950
Non-GAAP operating margin
15.8
%
15.1
%
14.5
%
15.2
%
16.1
%
Reconciliation of Non-GAAP measure - income excluding certain items
Three Months Ended
Six Months Ended
June 30 ,
March 31 ,
June 30 ,
2022
2021
2022
2022
2021
Income from continuing operations, less non-controlling interest, net of income taxes
$
44,790
$
35,511
$
36,876
$
81,666
$
73,869
Adjustments:
Amortization of intangible assets
6,523
5,513
5,509
12,032
10,897
Acquisition-related costs
4,223
2,412
1,166
5,389
4,448
Facility expansion, relocation costs, and other
1,187
2,060
1,284
2,471
3,949
Restructuring charges
(161
)
211
1,218
1,057
1,249
Unrealized foreign currency (gain) loss
(5,569
)
885
(1,285
)
(6,854
)
(1,317
)
Acquisition-related costs and other included in other income (expense), net
85
899
—
85
986
Tax effect of non-GAAP adjustments
(752
)
(2,043
)
(1,069
)
(1,821
)
(3,327
)
Non-GAAP income, net of income taxes, excluding stock-based compensation
50,326
45,448
43,699
94,025
90,754
Stock-based compensation, net of taxes
3,946
2,636
3,025
6,971
6,998
Non-GAAP income, net of income taxes
$
54,272
$
48,084
$
46,724
$
100,996
$
97,752
ADVANCED ENERGY INDUSTRIES, INC.
SELECTED OTHER DATA (UNAUDITED)
Reconciliation of non-GAAP measure - per share earnings excluding certain items
Three Months Ended
Six Months Ended
June 30 ,
March 31 ,
June 30 ,
2022
2021
2022
2022
2021
Diluted earnings per share from continuing operations, as reported
$
1.19
$
0.92
$
0.98
$
2.16
$
1.91
Add back:
Per share impact of non-GAAP adjustments, net of tax
0.25
0.33
0.26
0.52
0.62
Non-GAAP per share earnings
$
1.44
$
1.25
$
1.24
$
2.68
$
2.53
Reconciliation of Q3 2022 Guidance
Low End
High End
Revenue
$410 million
$460 million
Reconciliation of non-GAAP earnings per share
GAAP earnings per share
$
0.62
$
1.22
Stock-based compensation
0.15
0.15
Amortization of intangible assets
0.19
0.19
Restructuring and other
0.11
0.11
Tax effects of excluded items
(0.07
)
(0.07
)
Non-GAAP earnings per share
$
1.00
$
1.60
View source version on businesswire.com : https://www.businesswire.com/news/home/20220803005783/en/
Edwin Mok
Advanced Energy Industries, Inc.
970-407-6555
ir@aei.com
Source: Advanced Energy Industries, Inc.