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CST: 15/09/2019 05:38:40   

Advanced Energy Announces Fourth Quarter and Full Year Fiscal 2018 Results

222 Days ago

  • 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 0.23     2.04     0.15     0.63     1.38  
Non-GAAP per share earnings $ 0.73     $ 1.31     $ 1.05     $ 4.37     $ 4.77  
                                       


Reconciliation of Q1 2019 Guidance      
  Low End   High End
       
Revenue $138.0 million   $148.0 million
       
Reconciliation of Non-GAAP earnings per share      
GAAP earnings per share $ 0.24     $ 0.42  
Stock-based compensation 0.13     0.10  
Amortization of intangible assets 0.05     0.05  
Restructuring and other 0.01     0.01  
Tax effects of excluded items (0.03 )   (0.03 )
Non-GAAP earnings per share $ 0.40     $ 0.55  

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