Advanced Energy Announces Second Quarter 2022 Results and Increased Share Repurchase Authorization

Rhea-AI Summary

Advanced Energy Industries reported record revenues of $441 million for Q2 2022, exceeding guidance. Semiconductor revenue grew 30% year-over-year. GAAP EPS from continuing operations was $1.19, while Non-GAAP EPS was $1.44, also above expectations. The company increased its share repurchase authorization to $200 million, intending to enhance shareholder value. Cash flow from continuing operations reached $37.6 million. Q3 2022 guidance includes revenues of $435 million +/- $25 million and GAAP EPS of $0.92 +/- $0.30.

Positive

• Record total revenue of $441 million, above guidance.
• 30% growth in semiconductor revenue year-over-year.
• GAAP EPS increased to $1.19, up from $0.98 in the previous quarter.
• Increased share repurchase authorization to $200 million, enhancing shareholder value.
• Strong cash flow from continuing operations of $37.6 million.

Negative

• None.

• 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.

FAQ

What were Advanced Energy Industries' Q2 2022 earnings per share (EPS)?

GAAP EPS from continuing operations was $1.19, while Non-GAAP EPS was $1.44.

How much did Advanced Energy increase its share repurchase authorization to?

The share repurchase authorization was increased to $200 million.

What is the revenue guidance for Advanced Energy in Q3 2022?

The guidance for Q3 2022 revenues is $435 million +/- $25 million.

What was the total revenue for Advanced Energy in Q2 2022?

Total revenue for Q2 2022 was a record $441 million.

How much cash flow did Advanced Energy generate from continuing operations in Q2 2022?

Advanced Energy generated $37.6 million of cash flow from continuing operations.