Advanced Energy Announces Second Quarter 2021 Results and $200 Million Share Repurchase Authorization

·17 min read
  • Q2 revenue was $361 million, meeting the guidance midpoint and up 6% from last year

  • GAAP EPS from continuing operations was $0.92

  • Non-GAAP EPS was $1.25, at midpoint of guidance and above year-ago EPS of $1.18

  • Share repurchase authorization increased to $200 million

DENVER, August 04, 2021--(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, 2021.

"We achieved year-over-year revenue and earnings growth in Q2," said Steve Kelley, president and CEO of Advanced Energy. "Although the near-term supply chain and operating environment remains challenging, demand continues to strengthen across all our markets, and we have solid visibility into 2022. We are winning with our highly-engineered, proprietary power solutions, positioning the company to deliver long-term profitable growth."

Second Quarter Results

Sales were $361.3 million in the second quarter of 2021, compared with $351.6 million in the first quarter of 2021 and $339.9 million in the second quarter of 2020.

GAAP net income from continuing operations was $35.5 million or $0.92 per diluted share in the quarter, compared with $38.4 million or $0.99 per diluted share in the prior quarter, and $29.3 million or $0.76 per diluted share a year ago.

Non-GAAP net income was $48.1 million or $1.25 per diluted share in the second quarter of 2021. This compares with $49.7 million or $1.29 per diluted share in the first quarter of 2021, and $45.4 million or $1.18 per diluted share in the second quarter of 2020.

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

The company generated $33.8 million of operating cash flow from continuing operations during the quarter, made debt principal payments of $4.4 million, repurchased $6.5 million of common stock at $90.34 per share, paid $15.1 million for the acquisition of Tegam, Inc., and paid $3.9 million in a quarterly dividend.

New Share Repurchase Authorization

On July 29 the Board of Directors increased the company’s stock repurchase authorization to $200 million.

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 2020 Annual Report on Form 10‑K.

Third Quarter 2021 Guidance

Based on the company’s current view, beliefs and assumptions, guidance for the third quarter of 2021 is within the following ranges.

Q3 2021

Revenues

$340M +/- $15M

GAAP EPS from continuing operations

$0.52 +/- $0.20

Non-GAAP EPS

$0.80 +/- $0.20

Conference Call

Management will host a conference call today, August 4, 2021 at 8:30 a.m. Eastern Time to discuss Advanced Energy’s financial results. To register for the call please use this link (www.directeventreg.com/registration/event/3998884). 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) the effects of global macroeconomic conditions upon demand for our products and services; (b) the volatility and cyclicality of the industries the company serves, particularly the semiconductor industry; (c) delays in capital spending by end-users in our served markets; (d) the risks and uncertainties related to the integration of Artesyn Embedded Power including the optimization and reduction of our global manufacturing sites; (e) the continuing spread of COVID-19 and its potential adverse impact on our product manufacturing, research and development, supply chain, services and administrative operations; (f) 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; (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

Six Months Ended

June 30,

March 31,

June 30,

2021

2020

2021

2021

2020

Sales, net

$

361,311

$

339,880

$

351,620

$

712,931

$

655,336

Cost of sales

226,278

209,576

214,117

440,395

412,801

Gross profit

135,033

130,304

137,503

272,536

242,535

37.4

%

38.3

%

39.1

%

38.2

%

37.0

%

Operating expenses:

Research and development

40,119

35,855

40,168

80,287

70,625

Selling, general, and administrative

48,110

48,174

46,731

94,841

94,165

Amortization of intangible assets

5,513

5,009

5,384

10,897

10,015

Restructuring expense

211

5,790

1,038

1,249

6,446

Total operating expenses

93,953

94,828

93,321

187,274

181,251

Operating income

41,080

35,476

44,182

85,262

61,284

Other income (expense), net

(3,662)

(1,587)

(507)

(4,169)

(5,097)

Income from continuing operations, before income taxes

37,418

33,889

43,675

81,093

56,187

Provision (benefit) for income taxes

1,876

4,610

5,284

7,160

8,510

Income from continuing operations

35,542

29,279

38,391

73,933

47,677

Income (loss) from discontinued operations, net of income taxes

(102)

(151)

310

208

(471)

Net income

35,440

29,128

38,701

74,141

47,206

Income from continuing operations attributable to noncontrolling interest

31

(16)

33

64

(1)

Net income attributable to Advanced Energy Industries, Inc.

$

35,409

$

29,144

$

38,668

$

74,077

$

47,207

Basic weighted-average common shares outstanding

38,389

38,294

38,328

38,359

38,326

Diluted weighted-average common shares outstanding

38,586

38,458

38,583

38,589

38,525

Earnings per share attributable to Advanced Energy Industries, Inc:

Continuing operations:

Basic earnings per share

$

0.93

$

0.77

$

1.00

$

1.93

$

1.24

Diluted earnings per share

$

0.92

$

0.76

$

0.99

$

1.91

$

1.24

Discontinued operations:

Basic earnings (loss) per share

$

$

$

0.01

$

0.01

$

(0.01)

Diluted earnings (loss) per share

$

$

$

0.01

$

0.01

$

(0.01)

Net income:

Basic earnings per share

$

0.92

$

0.76

$

1.01

$

1.93

$

1.23

Diluted earnings per share

$

0.92

$

0.76

$

1.00

$

1.92

$

1.23

ADVANCED ENERGY INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands)

June 30,

December 31,

2021

2020

ASSETS

Current assets:

Cash and cash equivalents

$

507,176

$

480,368

Marketable securities

2,828

2,654

Accounts and other receivable, net

243,353

235,178

Inventories

296,739

221,346

Income taxes receivable

15,075

4,804

Other current assets

38,815

35,899

Total current assets

1,103,986

980,249

Property and equipment, net

115,160

114,731

Operating lease right-of-use assets

101,419

103,858

Deposits and other assets

18,646

19,101

Goodwill and intangible assets, net

385,125

378,922

Deferred income tax assets

51,896

50,801

Total assets

$

1,776,232

$

1,647,662

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

206,723

$

125,224

Other accrued expenses

137,633

137,081

Current portion of long-term debt

17,500

17,500

Current portion of operating lease liabilities

15,540

16,592

Total current liabilities

377,396

296,397

Long-term debt

296,045

304,546

Non-current liabilities

226,185

231,379

Long-term liabilities

522,230

535,925

Total liabilities

899,626

832,322

Advanced Energy stockholders' equity

875,941

814,739

Noncontrolling interest

665

601

Total stockholders’ equity

876,606

815,340

Total liabilities and stockholders’ equity

$

1,776,232

$

1,647,662

ADVANCED ENERGY INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

(in thousands)

Six Months Ended June 30,

2021

2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

74,141

$

47,206

Income (loss) from discontinued operations, net of income taxes

208

(471)

Income from continuing operations, net of income taxes

73,933

47,677

Adjustments to reconcile net income to net cash from operating activities:

Depreciation and amortization

25,744

23,196

Stock-based compensation expense

9,145

5,885

Provision for deferred income taxes

(1,663)

(1,439)

Discount on notes receivable

721

Loss on disposal of assets

446

231

Changes in operating assets and liabilities, net of assets acquired

(19,539)

(8,711)

Net cash from operating activities from continuing operations

88,066

67,560

Net cash from operating activities from discontinued operations

(377)

(586)

Net cash from operating activities

87,689

66,974

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of marketable securities

(167)

Issuance of notes receivable

(1,000)

Proceeds from sale of property and equipment

29

69

Purchases of property and equipment

(14,232)

(13,391)

Acquisitions, net of cash acquired

(18,686)

Net cash from investing activities from continuing operations

(32,889)

(14,489)

Net cash from investing activities from discontinued operations

Net cash from investing activities

(32,889)

(14,489)

CASH FLOWS FROM FINANCING ACTIVITIES:

Payments on long-term borrowings

(8,750)

(8,750)

Dividend payments

(7,728)

Purchase and retirement of common stock

(6,503)

(7,248)

Net payments related to stock-based awards

(3,258)

(1,392)

Net cash from financing activities from continuing operations

(26,239)

(17,390)

Net cash from financing activities from discontinued operations

Net cash from in financing activities

(26,239)

(17,390)

EFFECT OF CURRENCY TRANSLATION ON CASH

(1,753)

(899)

NET CHANGE IN CASH AND CASH EQUIVALENTS

26,808

34,196

CASH AND CASH EQUIVALENTS, beginning of period

480,368

346,441

CASH AND CASH EQUIVALENTS, end of period

507,176

380,637

Less cash and cash equivalents from discontinued operations

CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS, end of period

$

507,176

$

380,637

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,

2021

2020

2021

2021

2020

Semiconductor Equipment

$

176,671

$

145,424

$

180,716

$

357,387

$

279,049

Industrial and Medical

83,197

70,886

78,415

161,612

132,865

Data Center Computing

69,458

83,316

59,154

128,612

169,499

Telecom and Networking

31,985

40,254

33,335

65,320

73,923

Total

$

361,311

$

339,880

$

351,620

$

712,931

$

655,336

Net Sales by Geographic Region

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

2021

2020

2021

2021

2020

United States

$

139,525

$

119,808

$

131,598

$

271,123

$

236,505

North America (excluding United States)

26,112

29,952

26,247

52,359

77,586

Asia

148,803

170,753

149,591

298,394

281,728

Europe

44,491

19,048

40,422

84,913

58,184

Other Countries

2,380

319

3,762

6,142

1,333

Total

$

361,311

$

339,880

$

351,620

$

712,931

$

655,336

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,

2021

2020

2021

2021

2020

Gross profit from continuing operations, as reported

$

135,033

$

130,304

$

137,503

$

272,536

$

242,535

Adjustments to gross profit:

Stock-based compensation

215

156

350

565

378

Facility expansion, relocation costs and other

1,997

970

1,838

3,835

2,513

Acquisition-related costs

84

215

8

92

5,356

Non-GAAP gross profit

137,329

131,645

139,699

277,028

250,782

Non-GAAP gross margin

38.0%

38.7%

39.7%

38.9%

38.3%

Operating expenses from continuing operations, as reported

93,953

94,828

93,321

187,274

181,251

Adjustments:

Amortization of intangible assets

(5,513)

(5,009)

(5,384)

(10,897)

(10,015)

Stock-based compensation

(3,229)

(2,681)

(5,351)

(8,580)

(5,507)

Acquisition-related costs

(2,328)

(2,978)

(2,028)

(4,356)

(5,383)

Facility expansion, relocation costs and other

(63)

(539)

(51)

(114)

(1,355)

Restructuring charges

(211)

(5,790)

(1,038)

(1,249)

(6,446)

Non-GAAP operating expenses

82,609

77,831

79,469

162,078

152,545

Non-GAAP operating income

$

54,720

$

53,814

$

60,230

$

114,950

$

98,237

Non-GAAP operating margin

15.1%

15.8%

17.1%

16.1%

15.0%

Reconciliation of Non-GAAP measure - income excluding certain items

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

2021

2020

2021

2021

2020

Income from continuing operations, less non-controlling interest, net of income taxes

$

35,511

$

29,295

$

38,358

$

73,869

$

47,678

Adjustments:

Amortization of intangible assets

5,513

5,009

5,384

10,897

10,015

Acquisition-related costs

2,412

3,193

2,036

4,448

10,739

Facility expansion, relocation costs and other

2,060

1,509

1,889

3,949

3,868

Restructuring charges

211

5,790

1,038

1,249

6,446

Unrealized foreign currency (gain) loss

885

1,058

(2,202)

(1,317)

1,058

Acquisition-related and other costs included in other income (expense), net

899

87

986

Tax effect of Non-GAAP adjustments

(2,043)

(2,595)

(1,284)

(3,327)

(3,965)

Non-GAAP income, net of income taxes, excluding stock-based compensation

45,448

43,259

45,306

90,754

75,839

Stock-based compensation, net of taxes

2,636

2,170

4,362

6,998

4,533

Non-GAAP income, net of income taxes

$

48,084

$

45,429

$

49,668

$

97,752

$

80,372

Reconciliation of Non-GAAP measure - per share earnings excluding certain items

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

2021

2020

2021

2021

2020

Diluted earnings per share from continuing operations, as reported

$

0.92

$

0.76

$

0.99

$

1.91

$

1.24

Add back (subtract):

Per share impact of Non-GAAP adjustments, net of tax

0.33

0.42

0.30

0.62

0.85

Non-GAAP per share earnings

$

1.25

$

1.18

$

1.29

$

2.53

$

2.09

Quarterly results may not sum to year to date due to rounding

Reconciliation of Q3 2021 Guidance

Low End

High End

Revenue

$325 million

$355 million

Reconciliation of Non-GAAP earnings per share

GAAP earnings per share

$

0.32

$

0.72

Stock-based compensation

0.11

0.11

Amortization of intangible assets

0.13

0.13

Restructuring and other

0.08

0.08

Tax effects of excluded items

(0.04)

(0.04)

Non-GAAP earnings per share

$

0.60

$

1.00

View source version on businesswire.com: https://www.businesswire.com/news/home/20210804005424/en/

Contacts

For more information, contact:
Brian Smith
Advanced Energy
(970) 407‑6555
brian.smith@aei.com

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