Advanced Energy Reports Fourth Quarter and Full Year 2021 Results

Rhea-AI Summary

Advanced Energy Industries (AEIS) reported a record Q4 revenue of $397 million, exceeding guidance. The company's Q4 GAAP EPS was $1.05 and non-GAAP EPS reached $1.36. For the full year 2021, revenue hit $1.46 billion, a 3% increase from 2020. GAAP net income for 2021 was $134.7 million, consistent with 2020, while non-GAAP net income dropped to $183.2 million from $201.5 million. Despite supply constraints, demand remains robust with a strong pipeline for future growth.

Positive

• Record Q4 revenue of $397 million, surpassing guidance.
• Q4 non-GAAP EPS of $1.36 exceeded expectations.
• Full year revenue rose by 3% to $1.46 billion.
• Generated $34.5 million in cash flow from continuing operations in Q4.

Negative

• GAAP net income decreased slightly from $135.2 million in 2020 to $134.7 million in 2021.
• 2021 non-GAAP net income declined from $201.5 million in 2020 to $183.2 million.
• Supply constraints continue to impact business operations.

• Q4 revenue was a record $397 million, above high end of guidance range
• Q4 GAAP EPS from continuing operations was $1.05
• Q4 Non-GAAP EPS was $1.36, above the high end of guidance range
• 2021 revenue was a record $1.46 billion
• 2021 GAAP EPS from continuing operations was $3.51; non-GAAP EPS was $4.78
• 2021 cash flow from continuing operations was $141 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 fourth quarter and fiscal year ended December 31, 2021.

“We delivered strong revenue and earnings in the fourth quarter, largely due to improved availability of critical ICs,” said Steve Kelley, president and CEO of Advanced Energy. “We enter 2022 with robust demand for our industry-leading power solutions. Although our business continues to be impacted by supply constraints, our fourth quarter results demonstrate that we can respond quickly as conditions improve. With a solid pipeline of new technologies and products, Advanced Energy is well positioned for long-term profitable growth.”

Fourth Quarter Results

Sales were $396.9 million in the fourth quarter of 2021, compared with $346.1 million in the third quarter of 2021 and $371.0 million in the fourth quarter of 2020. Fourth quarter 2021 GAAP and non-GAAP gross margins were 35.2% and 35.5%, respectively. Revenue and gross margin in the fourth quarter of 2021 were impacted by partial recovery of material cost premiums.

GAAP net income from continuing operations was $39.7 million or $1.05 per diluted share in the quarter, compared with $21.0 million or $0.55 per diluted share in the prior quarter, and $41.9 million or $1.09 per diluted share a year ago.

Non-GAAP net income was $51.5 million or $1.36 per diluted share in the fourth quarter of 2021. This compares with $34.0 million or $0.89 per diluted share in the third quarter of 2021, and $57.3 million or $1.49 per diluted share in the fourth quarter of 2020.

The company generated $34.5 million of cash flow from continuing operations during the quarter, repurchased $21.5 million of common stock, and paid $3.8 million in a quarterly dividend.

Full Year 2021 Results

2021 revenue was $1.46 billion, a 3% increase from $1.42 billion in 2020. 2021 GAAP and non-GAAP gross margins were 36.6% and 37.3%, respectively

GAAP net income from continuing operations was $134.7 million or $3.51 per diluted share in 2021, compared with $135.2 million or $3.51 per diluted share in 2020.

Non-GAAP net income was $183.2 million or $4.78 per diluted share in 2021, compared to $201.5 million or $5.23 per diluted share in 2020.

The company generated $140.9 million of operating cash from continuing operations in 2021, repurchased $78.1 million of common stock and paid $15.4 million in dividends. Cash and marketable securities at ended the year were $546.7 million.

A reconciliation of non-GAAP measures is provided in the tables below.

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 is available in the company’s 2021 Annual Report on Form 10‑K.

First Quarter 2022 Guidance

Based on the company’s current view, beliefs and assumptions, guidance for the first quarter of 2022 is within the following ranges.

		Q1 2022
Revenues		$360M +/- $20M
GAAP EPS from continuing operations		$0.61 +/- $0.25
Non-GAAP EPS		$0.94 +/- $0.25

Conference Call

Management will host a conference call today, February 9, 2022 at 4:30 p.m. Eastern Time to discuss Advanced Energy’s financial results. To participate in the live conference call, please dial (877) 407-0890 approximately five 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 the company’s investors web page at ir.advancedenergy.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 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 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 four decades to perfecting power for its global customers and 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. Beginning in the second quarter of 2020, Advanced Energy’s non-GAAP measures exclude non-cash unrealized foreign currency gains or losses that result from remeasurement to functional currency long-term obligations related to pension and operating lease liabilities as the remeasurement does not represent current economic exposure and is unrelated to our overall operating performance. These long-term obligations were acquired in connection with the Artesyn acquisition and the company previously used derivatives to hedge the exposure; however, the company has determined it will no longer hedge these non-economic exposures. 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.

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, non-economic foreign currency remeasurements, and other cash 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, potential future growth and profitability, future business mix, expectations regarding future market trends, future performance within specific markets 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) supply chain disruptions and component shortages that may impact the company’s ability to obtain in a timely manner the materials necessary to manufacture its products; (b) the effects of global macroeconomic conditions upon demand for our products and services; (c) the volatility and cyclicality of the industries the company serves, particularly the semiconductor industry; (d) delays in capital spending by end-users in our served markets; (e) the risks and uncertainties related to the integration of Artesyn Embedded Power including the optimization and reduction of our global manufacturing sites; (f) the continuing spread of COVID-19 and its potential adverse impact on our product manufacturing, research and development, supply chain, services and administrative operations; (g) the accuracy of the company’s estimates related to fulfilling solar inverter product warranty and post-warranty obligations; (h) the company’s ability to realize its plan to avoid additional costs after the solar inverter wind-down; (i) the accuracy of the company’s assumptions on which its financial statement projections are based; (j) the impact of product price changes, which may result from a variety of factors; (k) the timing of orders received from customers; (l) the company’s 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; and (o) the impact of political, economic and policy tensions and conflicts between China and the United States including, but not limited to, trade wars and export restrictions between the two countries, China’s national security law for Hong Kong, and China’s expansion of control over the South China Sea, 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 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,
		2021				2020				2021				2021				2020
Sales, net		$	396,930			$	370,969			$	346,093			$	1,455,954			$	1,415,826
Cost of sales			257,183				225,420				226,054				923,632				873,957
Gross profit			139,747				145,549				120,039				532,322				541,869
Gross margin %			35.2	%			39.2	%			34.7	%			36.6	%			38.3	%
Operating expenses:
Research and development			40,966				36,529				40,578				161,831				143,961
Selling, general, and administrative			48,784				42,944				48,373				191,998				188,590
Amortization of intangible assets			5,556				5,065				5,607				22,060				20,129
Restructuring expense			2,231				5,226				1,272				4,752				13,166
Total operating expenses			97,537				89,764				95,830				380,641				365,846
Operating income			42,210				55,785				24,209				151,681				176,023
Other income (expense), net			704				(6,221	)			495				(2,970	)			(17,876	)
Income from continuing operations, before income taxes			42,914				49,564				24,704				148,711				158,147
Provision for income taxes			3,187				7,703				3,657				14,004				22,996
Income from continuing operations			39,727				41,861				21,047				134,707				135,151
Income (loss) from discontinued operations, net of income taxes			(98	)			—				(37	)			73				(421	)
Net income			39,629				41,861				21,010				134,780				134,730
Income (loss) from continuing operations attributable to noncontrolling interest			(26	)			20				6				44				55
Net income attributable to Advanced Energy Industries, Inc.		$	39,655			$	41,841			$	21,004			$	134,736			$	134,675
Basic weighted-average common shares outstanding			37,672				38,280				38,183				38,143				38,314
Diluted weighted-average common shares outstanding			37,866				38,533				38,363				38,355				38,542
Earnings per share attributable to Advanced Energy Industries, Inc:
Continuing operations:
Basic earnings per share		$	1.06			$	1.09			$	0.55			$	3.53			$	3.53
Diluted earnings per share		$	1.05			$	1.09			$	0.55			$	3.51			$	3.51
Discontinued operations:
Basic earnings (loss) per share		$	—			$	—			$	—			$	—			$	(0.01	)
Diluted earnings (loss) per share		$	—			$	—			$	—			$	—			$	(0.01	)
Net income:
Basic earnings per share		$	1.05			$	1.09			$	0.55			$	3.53			$	3.52
Diluted earnings per share		$	1.05			$	1.09			$	0.55			$	3.51			$	3.50

ADVANCED ENERGY INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands)
		December 31,			December 31,
		2021			2020
ASSETS
Current assets:
Cash and cash equivalents		$	544,372		$	480,368
Marketable securities			2,296			2,654
Accounts and other receivable, net			237,227			235,178
Inventories			338,410			221,346
Income taxes receivable			10,768			4,804
Other current assets			29,161			35,899
Total current assets			1,162,234			980,249
Property and equipment, net			114,830			114,731
Operating lease right-of-use assets			101,769			103,858
Deposits and other assets			19,669			19,101
Goodwill and intangible assets, net			371,596			378,922
Deferred income tax assets			47,242			50,801
Total assets		$	1,817,340		$	1,647,662
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	193,708		$	125,224
Other accrued expenses			140,666			137,081
Current portion of long-term debt			20,000			17,500
Current portion of operating lease liabilities			15,843			16,592
Total current liabilities			370,217			296,397
Long-term debt			372,733			304,546
Non-current liabilities			202,894			231,379
Long-term liabilities			575,627			535,925
Total liabilities			945,844			832,322
Advanced Energy stockholders' equity			870,851			814,739
Noncontrolling interest			645			601
Total stockholders’ equity			871,496			815,340
Total liabilities and stockholders’ equity		$	1,817,340		$	1,647,662

ADVANCED ENERGY INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (in thousands)
		Year Ended December 31,
		2021				2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	134,780			$	134,730
Less: income (loss) from discontinued operations, net of income taxes			73				(421	)
Income from continuing operations, net of income taxes			134,707				135,151
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization			52,893				47,770
Stock-based compensation expense			15,739				12,272
Provision for deferred income taxes			1,326				(622	)
Discount on notes receivable			(638	)			721
Loss on disposal of assets			1,496				1,296
Changes in operating assets and liabilities, net of assets acquired			(64,609	)			5,571
Net cash from operating activities from continuing operations			140,914				202,159
Net cash from operating activities from discontinued operations			(669	)			(923	)
Net cash from operating activities			140,245				201,236
CASH FLOWS FROM INVESTING ACTIVITIES:
Net proceeds from sale of marketable securities			—				3
Receipt (issuance) of notes receivable			3,050				(1,000	)
Proceeds from sale of assets			3,060				116
Purchases of property and equipment			(31,877	)			(36,483	)
Acquisitions, net of cash acquired			(21,535	)			(5,476	)
Net cash from investing activities from continuing operations			(47,302	)			(42,840	)
Net cash from investing activities from discontinued operations			—				—
Net cash from investing activities			(47,302	)			(42,840	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings			85,000				-
Payment of debt-issuance costs			(1,350	)			-
Payments on long-term borrowings			(13,750	)			(17,500	)
Dividend payments			(15,385	)			—
Purchase and retirement of common stock			(78,125	)			(11,630	)
Net payments related to stock-based awards			(1,762	)			(482	)
Net cash from financing activities from continuing operations			(25,372	)			(29,612	)
Net cash from financing activities from discontinued operations			—				—
Net cash from in financing activities			(25,372	)			(29,612	)
EFFECT OF CURRENCY TRANSLATION ON CASH			(3,567	)			5,143
NET CHANGE IN CASH AND CASH EQUIVALENTS			64,004				133,927
CASH AND CASH EQUIVALENTS, beginning of period			480,368				346,441
CASH AND CASH EQUIVALENTS, end of period			544,372				480,368
Less cash and cash equivalents from discontinued operations			—				—
CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS, end of period		$	544,372			$	480,368

ADVANCED ENERGY INDUSTRIES, INC. SUPPLEMENTAL INFORMATION (UNAUDITED) (in thousands)
Net Sales by Product Line		Three Months Ended									Year Ended
		December 31,						September 30,			December 31,
		2021			2020			2021			2021			2020
Semiconductor Equipment		$	179,346		$	165,757		$	173,441		$	710,174		$	611,864
Industrial and Medical			98,764			93,769			80,800			341,176			313,646
Data Center Computing			80,081			65,299			62,231			270,924			322,539
Telecom and Networking			38,739			46,144			29,621			133,680			167,777
Total		$	396,930		$	370,969		$	346,093		$	1,455,954		$	1,415,826

Net Sales by Geographic Region		Three Months Ended									Year Ended
		December 31,						September 30,			December 31,
		2021			2020			2021			2021			2020
United States		$	151,100		$	141,957		$	139,089		$	561,312		$	530,965
North America (excluding U.S.)			27,100			41,144			24,708			104,167			156,856
Asia			163,598			144,505			135,838			597,830			606,893
Europe			49,305			41,919			44,838			179,056			117,989
Other			5,827			1,444			1,620			13,589			3,123
Total		$	396,930		$	370,969		$	346,093		$	1,455,954		$	1,415,826

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,
		2021				2020				2021				2021				2020
Gross profit from continuing operations, as reported		$	139,747			$	145,549			$	120,039			$	532,322			$	541,869
Adjustments to gross profit:
Stock-based compensation			(19	)			122				218				764				567
Facility expansion, relocation costs and other			997				741				1,357				6,189				4,349
Acquisition-related costs			234				25				3,259				3,585				5,381
Non-GAAP gross profit			140,959				146,437				124,873				542,860				552,166
Non-GAAP gross margin			35.5	%			39.5	%			36.1	%			37.3	%			39.0	%
Operating expenses from continuing operations, as reported			97,537				89,764				95,830				380,641				365,846
Adjustments:
Amortization of intangible assets			(5,556	)			(5,065	)			(5,607	)			(22,060	)			(20,129	)
Stock-based compensation			(2,939	)			(2,483	)			(3,456	)			(14,975	)			(11,705	)
Acquisition-related costs			(679	)			387				(1,768	)			(6,803	)			(10,209	)
Facility expansion, relocation costs and other			(17	)			(443	)			(98	)			(229	)			(2,213	)
Restructuring charges			(2,231	)			(5,226	)			(1,272	)			(4,752	)			(13,166	)
Non-GAAP operating expenses			86,115				76,934				83,629				331,822				308,424
Non-GAAP operating income		$	54,844			$	69,503			$	41,244			$	211,038			$	243,742
Non-GAAP operating margin			13.8	%			18.7	%			11.9	%			14.5	%			17.2	%

Reconciliation of Non-GAAP measure - income excluding certain items		Three Months Ended												Year Ended
		December 31,								September 30,				December 31,
		2021				2020				2021				2021				2020
Income from continuing operations, less non-controlling interest, net of income taxes		$	39,753			$	41,841			$	21,041			$	134,663			$	135,096
Adjustments:
Amortization of intangible assets			5,556				5,065				5,607				22,060				20,129
Acquisition-related costs			913				(362	)			5,027				10,388				15,590
Facility expansion, relocation costs, and other			1,014				1,184				1,455				6,418				6,562
Restructuring charges			2,231				5,226				1,272				4,752				13,166
Unrealized foreign currency (gain) loss			(134	)			3,786				(2,092	)			(3,543	)			8,384
Acquisition-related costs and other included in other income (expense), net			(3,093	)			90				(79	)			(2,186	)			716
Tax effect of non-GAAP adjustments			3,017				(1,532	)			(1,036	)			(1,346	)			(7,611	)
Non-GAAP income, net of income taxes, excluding stock-based compensation			49,257				55,298				31,195				171,206				192,032
Stock-based compensation, net of taxes			2,233				1,993				2,811				12,042				9,418
Non-GAAP income, net of income taxes		$	51,490			$	57,291			$	34,006			$	183,248			$	201,450

Reconciliation of non-GAAP measure - per share earnings excluding certain items		Three Months Ended									Year Ended
		December 31,						September 30,			December 31,
		2021			2020			2021			2021			2020
Diluted earnings per share from continuing operations, as reported		$	1.05		$	1.09		$	0.55		$	3.51		$	3.51
Add back (subtract):
Per share impact of non-GAAP adjustments, net of tax			0.31			0.40			0.34			1.27			1.72
Non-GAAP per share earnings		$	1.36		$	1.49		$	0.89		$	4.78		$	5.23
Quarterly results may not sum to year to date due to rounding

Reconciliation of Q1 2022 Guidance
		Low End				High End
Revenue		$340 million				$380 million
Reconciliation of non-GAAP earnings per share
GAAP earnings per share		$	0.36			$	0.86
Stock-based compensation			0.11				0.11
Amortization of intangible assets			0.15				0.15
Restructuring and other			0.13				0.13
Tax effects of excluded items			(0.06	)			(0.06	)
Non-GAAP earnings per share		$	0.69			$	1.19

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220209005924/en/

Edwin Mok

Advanced Energy Industries, Inc.

(970) 407-6555

ir@aei.com

Source: Advanced Energy Industries, Inc.

FAQ

What were Advanced Energy Industries' Q4 2021 financial results?

Advanced Energy Industries reported Q4 2021 revenue of $397 million with a GAAP EPS of $1.05 and non-GAAP EPS of $1.36.

How did AEIS perform in 2021 compared to 2020?

In 2021, AEIS achieved a record revenue of $1.46 billion, a 3% increase from $1.42 billion in 2020.

What is the first quarter 2022 guidance for AEIS?

For Q1 2022, AEIS projects revenues of $360 million, with GAAP EPS estimated at $0.61 and non-GAAP EPS at $0.94.

What was AEIS's cash flow from continuing operations in Q4 2021?

AEIS generated $34.5 million in cash flow from continuing operations during Q4 2021.

Did AEIS repurchase any stock in 2021?

Yes, AEIS repurchased $78.1 million of common stock in 2021.