Advanced Energy Reports Fourth Quarter and Full Year 2022 Results

Rhea-AI Summary

Advanced Energy Industries, Inc. (Nasdaq: AEIS) reported strong financial results for Q4 2022, with revenue of $491 million, exceeding guidance. Q4 GAAP EPS was $1.20, and Non-GAAP EPS was $1.70. For the year, revenue hit a record $1.85 billion, a 27% increase from 2021. GAAP EPS for 2022 was $5.35, while Non-GAAP EPS reached $6.49. Cash flow from continuing operations was $184 million. The company anticipates lower Q1 2023 revenue estimates of $415 million due to a semiconductor market downturn, despite a promising pipeline of new products.

Positive

• Record revenue of $1.85 billion in 2022, a 27% increase from 2021.
• Q4 Non-GAAP EPS of $1.70, above guidance mid-point.
• Generated $184 million cash flow from operations in 2022.
• Strong demand across all markets contributing to financial performance.

Negative

• Q4 revenue decreased from $516.3 million in Q3 2022 to $491 million.
• Q1 2023 guidance suggests revenue drop to $415 million due to semiconductor market decline.

• Q4 revenue was $491 million, above the high end of guidance
• Q4 GAAP EPS from continuing operations was $1.20; Q4 Non-GAAP EPS was $1.70, above the mid-point of guidance
• 2022 revenue was a record $1.85 billion, with each end market up 20% or more
• 2022 GAAP EPS from continuing operations was $5.35; 2022 Non-GAAP EPS was a record $6.49
• 2022 cash flow from continuing operations was $184 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 year ended December 31, 2022.

“We delivered strong financial results in the fourth quarter, taking advantage of improved component availability and solid manufacturing execution,” said Steve Kelley, president and CEO of Advanced Energy. “For the full year, we achieved record revenue and earnings, thanks to strong demand in all of our markets and improved execution across the company. Although we expect lower revenue in the near-term due to a downturn in the semiconductor equipment market, we anticipate a record level of design-in activity, leveraging our strong pipeline of technology-leading products.”

Quarter Results

Sales were $490.7 million in the fourth quarter of 2022, compared with $516.3 million in the third quarter of 2022 and $396.9 million in the fourth quarter of 2021.

GAAP net income from continuing operations was $45.3 million or $1.20 per diluted share in the quarter, compared with $74.9 million or $1.99 per diluted share in the prior quarter, and $39.7 million or $1.05 per diluted share a year ago.

Non-GAAP net income was $64.2 million or $1.70 per diluted share in the fourth quarter of 2022. This compares with $79.6 million or $2.12 per diluted share in the third quarter of 2022, and $51.5 million or $1.36 per diluted share in the fourth quarter of 2021.

Advanced Energy generated $70.7 million of cash flow from continuing operations during the quarter, repurchased $0.7 million of common stock and paid $3.8 million in a quarterly dividend.

Full Year 2022 Results

2022 revenue was a record $1.85 billion, a 27% increase from $1.46 billion in 2021.

GAAP net income from continuing operations was a record $201.9 million or $5.35 per diluted share in 2022, compared with $134.7 million or $3.51 per diluted share in 2021.

Non-GAAP net income was a record $244.8 million or $6.49 per diluted share in 2022, compared to $183.2 million or $4.78 per diluted share in 2021.

The company generated $183.7 million of operating cash from continuing operations in 2022, repurchased $26.6 million of common stock and paid $15.2 million in dividends. Cash and equivalents including long-term marketable securities at ended the year were $460.9 million.

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

First Quarter 2023 Guidance

Based on the Company’s current view, beliefs, and assumptions, guidance for the first quarter of 2023 is within the following ranges:

	Q1 2023
Revenues	$415 million +/- $20 million
GAAP EPS from continuing operations	$0.76 +/- $0.25
Non-GAAP EPS	$1.10 +/- $0.25

Conference Call

Management will host a conference call today, February 8, 2023, at 4:30 p.m. Eastern Time to discuss the fourth quarter and full year 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, inflationary pressures, economic downturns, and volatility and cyclicality of the industries we serve; (c) the impact of political and geographical risks, including trade and export regulations, other effects of international disputes, war, terrorism, or geopolitical tensions; (d) managing backlog orders; (e) our ability to develop new products expeditiously and be successful in the design win process; (f) delays in capital spending by end-users in our served markets; (g) the risks and uncertainties related to the integration of acquired companies including SL Power Electronics; (h) the continuing spread of COVID-19 and its potential adverse impact on our operations; (i) our ability to avoid additional costs and lawsuits after the solar inverter wind-down; (j) the accuracy of our assumptions on which our financial statement projections are based; (k) the timing of orders received from customers; (l) our ability to realize benefits from cost improvement efforts including avoided costs, restructuring plans and inorganic growth; (m) unanticipated changes to management’s estimates, reserves or allowances; and (n) changes and adjustments to the tax expense and benefits related to the U.S. tax law changes, any of which could negatively impact our customers’ and our presence, operations, and financial results. These and other risks are described in Advanced Energy’s Form 10-K, Forms 10-Q and other reports and statements filed with the Securities and Exchange Commission (the “SEC”). These reports and statements are available on the SEC’s website at www.sec.gov. Copies may also be obtained from Advanced Energy’s investor relations page at ir.advancedenergy.com or by contacting Advanced Energy’s investor relations at 970-407-6555. Forward-looking statements are made and based on information available to us on the date of this press release. Aspirational goals and targets discussed on the conference call or in the presentation materials should not be interpreted in any respect as guidance. We assume no obligation to update the information in this press release.

ADVANCED ENERGY INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except per share data)
		Three Months Ended												Year Ended
		December 31,								September 30,				December 31,
		2022				2021				2022				2022				2021
Sales, net		$	490,740			$	396,930			$	516,274			$	1,845,422			$	1,455,954
Cost of sales			312,926				257,183				325,056				1,169,916				923,632
Gross profit			177,814				139,747				191,218				675,506				532,322
Gross margin %			36.2		%		35.2		%		37.0		%		36.6		%		36.6		%
Operating expenses:
Research and development			49,637				40,966				49,760				191,020				161,831
Selling, general, and administrative			57,407				48,784				56,716				218,463				191,998
Amortization of intangible assets			7,033				5,556				7,049				26,114				22,060
Restructuring expense			5,636				2,231				121				6,814				4,752
Total operating expenses			119,713				97,537				113,646				442,411				380,641
Operating income			58,101				42,210				77,572				233,095				151,681
Other income (expense), net			(2,701	)			704				8,940				8,646				(2,970	)
Income from continuing operations, before income taxes			55,400				42,914				86,512				241,741				148,711
Provision for income taxes			10,055				3,187				11,639				39,850				14,004
Income from continuing operations			45,345				39,727				74,873				201,891				134,707
Income (loss) from discontinued operations, net of income taxes			(1,600	)			(98	)			(697	)			(2,215	)			73
Net income			43,745				39,629				74,176				199,676				134,780
Income from continuing operations attributable to noncontrolling interest			—				(26	)			9				16				44
Net income attributable to Advanced Energy Industries, Inc.		$	43,745			$	39,655			$	74,167			$	199,660			$	134,736
Basic weighted-average common shares outstanding			37,405				37,672				37,379				37,463				38,143
Diluted weighted-average common shares outstanding			37,683				37,866				37,630				37,721				38,355
Earnings per share attributable to Advanced Energy Industries, Inc:
Continuing operations:
Basic earnings per share		$	1.21			$	1.06			$	2.00			$	5.39			$	3.53
Diluted earnings per share		$	1.20			$	1.05			$	1.99			$	5.35			$	3.51
Discontinued operations:
Basic earnings (loss) per share		$	(0.04	)		$	—			$	(0.02	)		$	(0.06	)		$	—
Diluted earnings (loss) per share		$	(0.04	)		$	—			$	(0.02	)		$	(0.06	)		$	—
Net income:
Basic earnings per share		$	1.17			$	1.05			$	1.98			$	5.33			$	3.53
Diluted earnings per share		$	1.16			$	1.05			$	1.97			$	5.29			$	3.51

ADVANCED ENERGY INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands)
		December 31,			December 31,
		2022			2021
ASSETS
Current assets:
Cash and cash equivalents		$	458,818		$	544,372
Accounts and other receivable, net			300,683			237,227
Inventories			376,012			338,410
Other current assets			53,001			42,225
Total current assets			1,188,514			1,162,234
Property and equipment, net			148,462			114,830
Operating lease right-of-use assets			100,177			101,769
Other assets			84,056			66,911
Goodwill and intangible assets, net			470,959			371,596
Total assets		$	1,992,168		$	1,817,340
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	170,467		$	193,708
Other accrued expenses			185,805			140,645
Current portion of long-term debt			20,000			20,000
Current portion of operating lease liabilities			16,771			15,843
Total current liabilities			393,043			370,196
Long-term debt			353,262			372,733
Other long-term liabilities			179,596			202,915
Long-term liabilities			532,858			575,648
Total liabilities			925,901			945,844
Advanced Energy Industries, Inc. stockholders' equity			1,066,267			870,851
Noncontrolling interest			—			645
Total stockholders’ equity			1,066,267			871,496
Total liabilities and stockholders’ equity		$	1,992,168		$	1,817,340

ADVANCED ENERGY INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (in thousands)
		Year Ended December 31,
		2022				2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	199,676			$	134,780
Less: income (loss) from discontinued operations, net of income taxes			(2,215	)			73
Income from continuing operations, net of income taxes			201,891				134,707
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization			60,296				52,893
Stock-based compensation expense			19,849				15,739
Provision for deferred income taxes			(5,736	)			1,326
Discount on notes receivable			—				(638	)
(Gain) loss on disposal and sale of assets			(3,962	)			1,496
Changes in operating assets and liabilities, net of assets acquired			(88,607	)			(64,609	)
Net cash from operating activities from continuing operations			183,731				140,914
Net cash from operating activities from discontinued operations			(144	)			(669	)
Net cash from operating activities			183,587				140,245
CASH FLOWS FROM INVESTING ACTIVITIES:
Receipt of notes receivable			—				3,050
Purchases of property and equipment			(58,885	)			(28,817	)
Acquisitions, net of cash acquired			(149,387	)			(21,535	)
Net cash from investing activities			(208,272	)			(47,302	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings			—				85,000
Payment of debt-issuance costs			—				(1,350	)
Payments on long-term borrowings			(20,000	)			(13,750	)
Dividend payments			(15,204	)			(15,385	)
Purchase and retirement of common stock			(26,635	)			(78,125	)
Net payments related to stock-based awards			(26	)			(1,762	)
Net cash from financing activities			(61,865	)			(25,372	)
EFFECT OF CURRENCY TRANSLATION ON CASH			996				(3,567	)
NET CHANGE IN CASH AND CASH EQUIVALENTS			(85,554	)			64,004
CASH AND CASH EQUIVALENTS, beginning of period			544,372				480,368
CASH AND CASH EQUIVALENTS, end of period		$	458,818			$	544,372

ADVANCED ENERGY INDUSTRIES, INC. SUPPLEMENTAL INFORMATION (UNAUDITED) (in thousands)
Net Sales by Market		Three Months Ended									Year Ended
		December 31,						September 30,			December 31,
		2022			2021			2022			2022			2021
Semiconductor Equipment		$	232,455		$	179,346		$	266,600		$	930,809		$	710,174
Industrial and Medical			119,327			98,764			119,587			426,763			341,176
Data Center Computing			94,525			80,081			87,542			327,466			270,924
Telecom and Networking			44,433			38,739			42,545			160,384			133,680
Total		$	490,740		$	396,930		$	516,274		$	1,845,422		$	1,455,954

Net Sales by Geographic Region		Three Months Ended									Year Ended
		December 31,						September 30,			December 31,
		2022			2021			2022			2022			2021
North America		$	230,461		$	178,200		$	238,115		$	857,490		$	665,479
Asia			197,368			163,598			215,401			754,997			597,830
Europe			61,146			49,305			61,456			219,119			179,056
Other			1,765			5,827			1,302			13,816			13,589
Total		$	490,740		$	396,930		$	516,274		$	1,845,422		$	1,455,954

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,
		2022				2021				2022				2022				2021
Gross profit from continuing operations, as reported		$	177,814			$	139,747			$	191,218			$	675,506			$	532,322
Adjustments to gross profit:
Stock-based compensation			391				(19	)			454				1,478				764
Facility expansion, relocation costs and other			1,162				997				1,662				5,295				6,189
Acquisition-related costs			73				234				66				(299	)			3,585
Non-GAAP gross profit			179,440				140,959				193,400				681,980				542,860
Non-GAAP gross margin			36.6	%			35.5	%			37.5	%			37.0	%			37.3	%
Operating expenses from continuing operations, as reported			119,713				97,537				113,646				442,411				380,641
Adjustments:
Amortization of intangible assets			(7,033	)			(5,556	)			(7,049	)			(26,114	)			(22,060	)
Stock-based compensation			(4,450	)			(2,939	)			(5,568	)			(18,371	)			(14,975	)
Acquisition-related costs			(1,660	)			(679	)			(1,150	)			(8,637	)			(6,803	)
Facility expansion, relocation costs and other			—				(17	)			—				—				(229	)
Restructuring charges			(5,636	)			(2,231	)			(121	)			(6,814	)			(4,752	)
Non-GAAP operating expenses			100,934				86,115				99,758				382,475				331,822
Non-GAAP operating income		$	78,506			$	54,844			$	93,642			$	299,505			$	211,038
Non-GAAP operating margin			16.0	%			13.8	%			18.1	%			16.2	%			14.5	%

Reconciliation of Non-GAAP measure - income excluding certain items		Three Months Ended												Year Ended
		December 31,								September 30,				December 31,
		2022				2021				2022				2022				2021
Income from continuing operations, less non-controlling interest, net of income taxes		$	45,345			$	39,753			$	74,864			$	201,875			$	134,663
Adjustments:
Amortization of intangible assets			7,033				5,556				7,049				26,114				22,060
Acquisition-related costs			1,733				913				1,216				8,338				10,388
Facility expansion, relocation costs, and other			1,162				1,014				1,662				5,295				6,418
Restructuring charges			5,636				2,231				121				6,814				4,752
Unrealized foreign currency (gain) loss			5,378				(134	)			(6,169	)			(7,645	)			(3,543	)
Acquisition-related costs and other included in other (income) expense, net			(3,817	)			(3,093	)			(4,685	)			(8,417	)			(2,186	)
Tax effect of non-GAAP adjustments			(2,042	)			3,017				855				(3,008	)			(1,346	)
Non-GAAP income, net of income taxes, excluding stock-based compensation			60,428				49,257				74,913				229,366				171,206
Stock-based compensation, net of taxes			3,776				2,233				4,697				15,444				12,042
Non-GAAP income, net of income taxes		$	64,204			$	51,490			$	79,610			$	244,810			$	183,248

ADVANCED ENERGY INDUSTRIES, INC. SELECTED OTHER DATA (UNAUDITED)
Reconciliation of non-GAAP measure - per share earnings excluding certain items		Three Months Ended									Year Ended
		December 31,						September 30,			December 31,
		2022			2021			2022			2022			2021
Diluted earnings per share from continuing operations, as reported		$	1.20		$	1.05		$	1.99		$	5.35		$	3.51
Add back:
Per share impact of non-GAAP adjustments, net of tax			0.50			0.31			0.13			1.14			1.27
Non-GAAP earnings per share		$	1.70		$	1.36		$	2.12		$	6.49		$	4.78

Reconciliation of Q1 2023 Guidance
		Low End				High End
Revenue		$395 million				$435 million
Reconciliation of non-GAAP earnings per share
GAAP earnings per share		$	0.51			$	1.01
Stock-based compensation			0.17				0.17
Amortization of intangible assets			0.19				0.19
Restructuring and other			0.04				0.04
Tax effects of excluded items			(0.06	)			(0.06	)
Non-GAAP earnings per share		$	0.85			$	1.35

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230208005835/en/

Andrew Huang

Advanced Energy Industries, Inc.

970-407-6555

ir@aei.com

Source: Advanced Energy Industries, Inc.

FAQ

What were Advanced Energy's Q4 2022 earnings results for AEIS?

Advanced Energy reported Q4 2022 revenue of $491 million, with GAAP EPS at $1.20 and Non-GAAP EPS at $1.70.

What is the revenue guidance for Advanced Energy in Q1 2023?

The guidance for Q1 2023 revenue is between $395 million and $435 million, with an expected GAAP EPS of $0.76.

How did Advanced Energy perform financially in 2022?

In 2022, Advanced Energy achieved a record revenue of $1.85 billion and GAAP EPS of $5.35.

What were Advanced Energy's cash flow results for 2022?

Advanced Energy generated $184 million in cash flow from continuing operations in 2022.

What challenges does Advanced Energy expect in 2023?

The company anticipates lower revenue due to a downturn in the semiconductor equipment market.