Advanced Energy Announces Third Quarter 2022 Results

Rhea-AI Summary

Advanced Energy Industries, Inc. (Nasdaq: AEIS) announced third quarter 2022 revenue of $516 million, exceeding guidance and increasing 40% year-over-year. GAAP EPS rose to $1.99, and non-GAAP EPS was $2.12. The company’s strong performance was attributed to improved supply and manufacturing output, with a solid backlog supporting future growth. Cash flow from continuing operations was $65.4 million, with a $2.4 million stock repurchase and $3.8 million in dividends paid. Guidance for Q4 2022 anticipates revenue between $470 million and $490 million.

Positive

• Total revenue of $516 million exceeded guidance and increased by 40% year-over-year.
• GAAP EPS of $1.99 and non-GAAP EPS of $2.12 surpassed the high end of guidance.
• Cash flow from continuing operations was $65.4 million.
• Company repurchased $2.4 million of common stock and paid $3.8 million in dividends.

Negative

• Fourth quarter 2022 guidance projects revenue between $470 million and $490 million, which is lower than Q3 revenues.

• Total revenue was $516 million, above high end of guidance range
• Revenue in each of our end markets grew greater than 40% year-over-year
• GAAP EPS from continuing operations was $1.99
• Non-GAAP EPS was $2.12, above the high end of 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 third quarter ended September 30, 2022.

“We executed exceptionally well in the third quarter, delivering record quarterly revenue and earnings on improved supply and manufacturing output,” said Steve Kelley, president and CEO of Advanced Energy. “Demand for our precision power products was strong. We believe that our solid backlog, balanced market exposure and robust design win pipeline position Advanced Energy to continue to outperform our markets moving forward.”

Quarter Results

Sales were $516.3 million in the third quarter of 2022, compared with $440.9 million in the second quarter of 2022 and $346.1 million in the third quarter of 2021.

GAAP net income from continuing operations was $74.9 million or $1.99 per diluted share in the quarter, compared with $44.8 million or $1.19 per diluted share in the prior quarter, and $21.0 million or $0.55 per diluted share a year ago.

Non-GAAP net income was $79.6 million or $2.12 per diluted share in the third quarter of 2022. This compares with $54.3 million or $1.44 per diluted share in the second quarter of 2022, and $34.0 million or $0.89 per diluted share in the third quarter of 2021.

Advanced Energy generated $65.4 million of cash flow from continuing operations during the quarter, repurchased $2.4 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.

Fourth Quarter 2022 Guidance

Based on the Company’s current view, beliefs, and assumptions, guidance for the fourth quarter of 2022 is within the following ranges:

		Q4 2022
Revenues		$470 million +/- $20 million
GAAP EPS from continuing operations		$1.18 +/- $0.25
Non-GAAP EPS		$1.55 +/- $0.25

Conference Call

Management will host a conference call today, November 1, 2022, at 4:30 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. 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												Nine Months Ended
		September 30,								June 30,				September 30,
		2022				2021				2022				2022				2021
Sales, net		$	516,274			$	346,093			$	440,949			$	1,354,682			$	1,059,024
Cost of sales			325,056				226,054				278,791				856,990				666,449
Gross profit			191,218				120,039				162,158				497,692				392,575
Gross margin %			37.0		%		34.7		%		36.8		%		36.7		%		37.1		%
Operating expenses:
Research and development			49,760				40,578				48,009				141,383				120,865
Selling, general, and administrative			56,716				48,373				55,022				161,056				143,214
Amortization of intangible assets			7,049				5,607				6,523				19,081				16,504
Restructuring expense (benefit)			121				1,272				(161	)			1,178				2,521
Total operating expenses			113,646				95,830				109,393				322,698				283,104
Operating income			77,572				24,209				52,765				174,994				109,471
Other income (expense), net			8,940				495				3,249				11,347				(3,674	)
Income from continuing operations, before income taxes			86,512				24,704				56,014				186,341				105,797
Provision for income taxes			11,639				3,657				11,203				29,795				10,817
Income from continuing operations			74,873				21,047				44,811				156,546				94,980
Income (loss) from discontinued operations, net of income taxes			(697	)			(37	)			180				(615	)			171
Net income			74,176				21,010				44,991				155,931				95,151
Income from continuing operations attributable to noncontrolling interest			9				6				21				16				70
Net income attributable to Advanced Energy Industries, Inc.		$	74,167			$	21,004			$	44,970			$	155,915			$	95,081
Basic weighted-average common shares outstanding			37,379				38,183				37,520				37,482				38,296
Diluted weighted-average common shares outstanding			37,630				38,363				37,710				37,725				38,517
Earnings per share attributable to Advanced Energy Industries, Inc:
Continuing operations:
Basic earnings per share		$	2.00			$	0.55			$	1.19			$	4.18			$	2.48
Diluted earnings per share		$	1.99			$	0.55			$	1.19			$	4.15			$	2.46
Discontinued operations:
Basic earnings (loss) per share		$	(0.02	)		$	—			$	—			$	(0.02	)		$	—
Diluted earnings (loss) per share		$	(0.02	)		$	—			$	—			$	(0.02	)		$	—
Net income:
Basic earnings per share		$	1.98			$	0.55			$	1.20			$	4.16			$	2.48
Diluted earnings per share		$	1.97			$	0.55			$	1.19			$	4.13			$	2.47

ADVANCED ENERGY INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands)
		September 30,			December 31,
		2022			2021
ASSETS
Current assets:
Cash and cash equivalents		$	409,053		$	544,372
Accounts and other receivable, net			307,018			237,227
Inventories			409,422			338,410
Other current assets			56,289			42,225
Total current assets			1,181,782			1,162,234
Property and equipment, net			136,502			114,830
Operating lease right-of-use assets			102,226			101,769
Deposits and other assets			33,364			19,669
Goodwill and intangible assets, net			475,033			371,596
Deferred income tax assets			45,148			47,242
Total assets		$	1,974,055		$	1,817,340
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	219,770		$	193,708
Other accrued expenses			176,886			140,645
Current portion of long-term debt			20,000			20,000
Current portion of operating lease liabilities			16,299			15,843
Total current liabilities			432,955			370,196
Long-term debt			358,132			372,733
Other long-term liabilities			193,020			202,915
Long-term liabilities			551,152			575,648
Total liabilities			984,107			945,844
Advanced Energy stockholders' equity			989,287			870,851
Noncontrolling interest			661			645
Total stockholders’ equity			989,948			871,496
Total liabilities and stockholders’ equity		$	1,974,055		$	1,817,340

ADVANCED ENERGY INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (in thousands)
		Nine Months Ended September 30,
		2022				2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	155,931			$	95,151
Less: income (loss) from discontinued operations, net of income taxes			(615	)			171
Income from continuing operations, net of income taxes			156,546				94,980
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization			44,433				39,225
Stock-based compensation expense			15,008				12,819
Provision for deferred income taxes			(2,496	)			(1,404	)
Discount on notes receivable			—				(638	)
(Gain) loss on disposal and sale of assets			(4,058	)			923
Changes in operating assets and liabilities, net of assets acquired			(96,451	)			(39,495	)
Net cash from operating activities from continuing operations			112,982				106,410
Net cash from operating activities from discontinued operations			(81	)			(523	)
Net cash from operating activities			112,901				105,887
CASH FLOWS FROM INVESTING ACTIVITIES:
Receipt of notes receivable			—				802
Purchases of property and equipment			(39,507	)			(21,184	)
Acquisitions, net of cash acquired			(145,779	)			(18,739	)
Net cash from investing activities			(185,286	)			(39,121	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings			—				85,000
Payment of debt-issuance costs			—				(1,350	)
Payments on long-term borrowings			(15,000	)			(8,750	)
Dividend payments			(11,407	)			(11,585	)
Purchase and retirement of common stock			(25,955	)			(56,625	)
Net payments related to stock-based awards			(1,411	)			(3,136	)
Net cash from financing activities			(53,773	)			3,554
EFFECT OF CURRENCY TRANSLATION ON CASH			(9,161	)			(2,765	)
NET CHANGE IN CASH AND CASH EQUIVALENTS			(135,319	)			67,555
CASH AND CASH EQUIVALENTS, beginning of period			544,372				480,368
CASH AND CASH EQUIVALENTS, end of period		$	409,053			$	547,923

ADVANCED ENERGY INDUSTRIES, INC. SUPPLEMENTAL INFORMATION (UNAUDITED) (in thousands)
Net Sales by Product Line		Three Months Ended									Nine Months Ended
		September 30,						June 30,			September 30,
		2022			2021			2022			2022			2021
Semiconductor Equipment		$	266,600		$	173,441		$	228,797		$	698,354		$	530,828
Industrial and Medical			119,587			80,800			104,951			307,436			242,412
Data Center Computing			87,542			62,231			69,161			232,941			190,843
Telecom and Networking			42,545			29,621			38,040			115,951			94,941
Total		$	516,274		$	346,093		$	440,949		$	1,354,682		$	1,059,024
Net Sales by Geographic Region		Three Months Ended									Nine Months Ended
		September 30,						June 30,			September 30,
		2022			2021			2022			2022			2021
United States		$	197,205		$	139,089		$	174,293		$	530,240		$	410,212
North America (excluding U.S.)			40,910			24,708			31,824			96,713			77,067
Asia			215,401			135,838			180,181			557,629			434,232
Europe			61,456			44,838			49,851			157,972			129,751
Other			1,302			1,620			4,800			12,128			7,762
Total		$	516,274		$	346,093		$	440,949		$	1,354,682		$	1,059,024

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												Nine Months Ended
		September 30,								June 30,				September 30,
		2022				2021				2022				2022				2021
Gross profit from continuing operations, as reported		$	191,218			$	120,039			$	162,158			$	497,692			$	392,575
Adjustments to gross profit:
Stock-based compensation			454				218				402				1,087				783
Facility expansion, relocation costs and other			1,662				1,357				1,187				4,133				5,192
Acquisition-related costs			66				3,259				64				(372	)			3,351
Non-GAAP gross profit			193,400				124,873				163,811				502,540				401,901
Non-GAAP gross margin			37.5	%			36.1	%			37.1	%			37.1	%			38.0	%
Operating expenses from continuing operations, as reported			113,646				95,830				109,393				322,698				283,104
Adjustments:
Amortization of intangible assets			(7,049	)			(5,607	)			(6,523	)			(19,081	)			(16,504	)
Stock-based compensation			(5,568	)			(3,456	)			(4,656	)			(13,921	)			(12,036	)
Acquisition-related costs			(1,150	)			(1,768	)			(4,159	)			(6,977	)			(6,124	)
Facility expansion, relocation costs and other			—				(98	)			—				—				(212	)
Restructuring charges			(121	)			(1,272	)			161				(1,178	)			(2,521	)
Non-GAAP operating expenses			99,758				83,629				94,216				281,541				245,707
Non-GAAP operating income		$	93,642			$	41,244			$	69,595			$	220,999			$	156,194
Non-GAAP operating margin			18.1	%			11.9	%			15.8	%			16.3	%			14.7	%

Reconciliation of Non-GAAP measure - income excluding certain items		Three Months Ended												Nine Months Ended
		September 30,								June 30,				September 30,
		2022				2021				2022				2022				2021
Income from continuing operations, less non-controlling interest, net of income taxes		$	74,864			$	21,041			$	44,790			$	156,530			$	94,910
Adjustments:
Amortization of intangible assets			7,049				5,607				6,523				19,081				16,504
Acquisition-related costs			1,216				5,027				4,223				6,605				9,475
Facility expansion, relocation costs, and other			1,662				1,455				1,187				4,133				5,404
Restructuring charges			121				1,272				(161	)			1,178				2,521
Unrealized foreign currency (gain) loss			(6,169	)			(2,092	)			(5,569	)			(13,023	)			(3,409	)
Acquisition-related costs and other included in other income (expense), net			(4,685	)			(79	)			85				(4,600	)			907
Tax effect of non-GAAP adjustments			855				(1,036	)			(752	)			(966	)			(4,363	)
Non-GAAP income, net of income taxes, excluding stock-based compensation			74,913				31,195				50,326				168,938				121,949
Stock-based compensation, net of taxes			4,697				2,811				3,946				11,668				9,809
Non-GAAP income, net of income taxes		$	79,610			$	34,006			$	54,272			$	180,606			$	131,758

ADVANCED ENERGY INDUSTRIES, INC. SELECTED OTHER DATA (UNAUDITED)
Reconciliation of non-GAAP measure - per share earnings excluding certain items		Three Months Ended									Nine Months Ended
		September 30,						June 30,			September 30,
		2022			2021			2022			2022			2021
Diluted earnings per share from continuing operations, as reported		$	1.99		$	0.55		$	1.19		$	4.15		$	2.46
Add back:
Per share impact of non-GAAP adjustments, net of tax			0.13			0.34			0.25			0.64			0.96
Non-GAAP per share earnings		$	2.12		$	0.89		$	1.44		$	4.79		$	3.42

Reconciliation of Q4 2022 Guidance
		Low End				High End
Revenue		$450 million				$490 million
Reconciliation of non-GAAP earnings per share
GAAP earnings per share		$	0.93			$	1.43
Stock-based compensation			0.16				0.16
Amortization of intangible assets			0.19				0.19
Restructuring and other			0.09				0.09
Tax effects of excluded items			(0.07	)			(0.07	)
Non-GAAP earnings per share		$	1.30			$	1.80

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20221101006008/en/

Edwin Mok

Advanced Energy Industries, Inc.

970-407-6555

ir@aei.com

Source: Advanced Energy Industries, Inc.

FAQ

What were Advanced Energy's Q3 2022 earnings results?

In Q3 2022, Advanced Energy reported revenues of $516 million with GAAP EPS of $1.99 and non-GAAP EPS of $2.12.

What is the revenue guidance for Advanced Energy in Q4 2022?

The revenue guidance for Q4 2022 is between $470 million and $490 million.

How much cash flow did Advanced Energy generate in Q3 2022?

Advanced Energy generated $65.4 million in cash flow from continuing operations in Q3 2022.

What was the year-over-year revenue growth for Advanced Energy in Q3 2022?

Advanced Energy's revenue grew by over 40% year-over-year in Q3 2022.

How much stock did Advanced Energy repurchase in Q3 2022?

Advanced Energy repurchased $2.4 million of its common stock in Q3 2022.