Advanced Energy Reports First Quarter 2024 Results

About this update from Advanced Energy Industries, Inc.

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 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 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 View source version on businesswire.com : https://www.businesswire.com/news/home/20240501087346/en/ Andrew Huang Advanced Energy Industries, Inc. 970-407-6555 [email protected] Source: Advanced Energy Industries, Inc.

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