Advanced Energy Reports Third Quarter 2024 Results

Risks and uncertainties to which our forward-looking statements are subject include, but are not limited to: volatility and business fluctuations in the industries in which we operate; our ability to achieve design wins with new and existing customers; our ability to accurately forecast and meet customer demand; risks related to global economic conditions, such as the impact of escalating global conflicts on macroeconomic conditions, economic uncertainty, market volatility, rising interest rates, inflation, or recession; risks inherent in our international operations, including the effect of trade and export controls, political and geographical risks, the impact of tariffs on our supply or products, and fluctuations in currency exchange rates; concentration of our customer base; risks associated with breach of our information security measures; our loss of or inability to attract and retain key personnel; disruptions to our manufacturing operations or those of our customers or suppliers; risks associated with our manufacturing footprint optimization and movement of manufacturing locations for certain products; our ability to successfully identify, close, integrate and realize anticipated benefits from our acquisitions; quality issues or unanticipated costs in fulfilling our warranty obligations (including our discontinued solar inverter product line), and adequacy of our warranty reserves; our ability to enforce, protect and maintain our proprietary technology and intellectual property rights; our ability to achieve cost savings, profitability, and gross margin goals; changes to tax laws and regulations or our tax rates; changes in federal, state, local and foreign regulations, including with respect to privacy and data protection, and environmental regulation; the effect of our debt obligations and restrictive covenants on our ability to operate our business; customer price sensitivity; risks related to our unfunded pension obligations; restructuring and severance activities; legal matters, claims, investigations, and proceedings; our estimates of the fair value of intangible assets; and the potential impact of dilution related to our convertible debt, hedge, and warrant transactions.

Actual results could differ materially and adversely from those expressed in any forward-looking statements, and readers are cautioned not to place undue reliance on forward-looking statements. Factors that could contribute to these differences or prove our forward-looking statements, by hindsight, to be overly optimistic or unachievable include, but are not limited to, the risks and uncertainties listed above and 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 or provide the reasons why our actual results may differ.

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,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2024

 

 

2023

 

 

Revenue, net

 

$

374,217

 

 

$

409,991

 

 

$

364,947

 

 

$

1,066,639

 

 

$

1,250,539

 

 

Cost of revenue

 

 

240,149

 

 

 

262,650

 

 

 

237,206

 

 

 

692,001

 

 

 

801,007

 

 

Gross profit

 

 

134,068

 

 

 

147,341

 

 

 

127,741

 

 

 

374,638

 

 

 

449,532

 

 

Gross margin %

 

 

35.8

 

%

 

35.9

 

%

 

35.0

 

%

 

35.1

 

%

 

35.9

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

53,561

 

 

 

50,391

 

 

 

52,335

 

 

 

155,732

 

 

 

153,414

 

 

Selling, general, and administrative

 

 

56,237

 

 

 

55,131

 

 

 

55,013

 

 

 

166,374

 

 

 

166,102

 

 

Amortization of intangible assets

 

 

6,772

 

 

 

7,049

 

 

 

6,800

 

 

 

20,519

 

 

 

21,186

 

 

Restructuring, asset impairments, and other charges

 

 

28,546

 

 

 

4,709

 

 

 

625

 

 

 

29,416

 

 

 

8,906

 

 

Total operating expenses

 

 

145,116

 

 

 

117,280

 

 

 

114,773

 

 

 

372,041

 

 

 

349,608

 

 

Operating income (loss)

 

 

(11,048

)

 

 

30,061

 

 

 

12,968

 

 

 

2,597

 

 

 

99,924

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

11,018

 

 

 

6,396

 

 

 

12,119

 

 

 

35,782

 

 

 

14,282

 

 

Interest expense

 

 

(6,378

)

 

 

(3,780

)

 

 

(6,956

)

 

 

(20,461

)

 

 

(9,368

)

 

Other income (expense), net

 

 

(8,139

)

 

 

1,848

 

 

 

638

 

 

 

(6,122

)

 

 

1,425

 

 

Income from continuing operations, before income tax

 

 

(14,547

)

 

 

34,525

 

 

 

18,769

 

 

 

11,796

 

 

 

106,263

 

 

Income tax provision (benefit)

 

 

(400

)

 

 

874

 

 

 

3,165

 

 

 

4,552

 

 

 

13,405

 

 

Income (loss) from continuing operations

 

 

(14,147

)

 

 

33,651

 

 

 

15,604

 

 

 

7,244

 

 

 

92,858

 

 

Loss from discontinued operations, net of income tax

 

 

(758

)

 

 

(930

)

 

 

(575

)

 

 

(1,904

)

 

 

(2,076

)

 

Net income (loss)

 

$

(14,905

)

 

$

32,721

 

 

$

15,029

 

 

$

5,340

 

 

$

90,782

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted-average common shares outstanding

 

 

37,532

 

 

 

37,575

 

 

 

37,474

 

 

 

37,455

 

 

 

37,541

 

 

Diluted weighted-average common shares outstanding

 

 

37,532

 

 

 

37,854

 

 

 

37,777

 

 

 

37,785

 

 

 

37,842

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share attributable to Advanced Energy Industries, Inc:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share

 

$

(0.38

)

 

$

0.90

 

 

$

0.42

 

 

$

0.19

 

 

$

2.47

 

 

Diluted earnings (loss) per share

 

$

(0.38

)

 

$

0.89

 

 

$

0.41

 

 

$

0.19

 

 

$

2.45

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic loss per share

 

$

(0.02

)

 

$

(0.02

)

 

$

(0.02

)

 

$

(0.05

)

 

$

(0.06

)

 

Diluted loss per share

 

$

(0.02

)

 

$

(0.02

)

 

$

(0.02

)

 

$

(0.05

)

 

$

(0.05

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

(0.40

)

 

$

0.87

 

 

$

0.40

 

 

$

0.14

 

 

$

2.42

 

 

Diluted earnings per share

 

$

(0.40

)

 

$

0.86

 

 

$

0.40

 

 

$

0.14

 

 

$

2.40

 

 

 

ADVANCED ENERGY INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands)

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

2024

 

 

2023

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

657,288

 

$

1,044,556

Accounts receivables, net

 

 

259,399

 

 

282,430

Inventories

 

 

377,740

 

 

336,137

Other current assets

 

 

51,281

 

 

48,771

Total current assets

 

 

1,345,708

 

 

1,711,894

 

 

 

 

 

 

 

Property and equipment, net

 

 

181,875

 

 

167,665

Operating lease right-of-use assets

 

 

86,003

 

 

95,432

Other assets

 

 

134,948

 

 

136,448

Goodwill and intangible assets, net

 

 

444,326

 

 

445,318

Total assets

 

$

2,192,860

 

$

2,556,757

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

133,006

 

$

141,850

Other accrued expenses

 

 

140,142

 

 

156,254

Current portion of long-term debt

 

 

 

 

20,000

Current portion of operating lease liabilities

 

 

18,360

 

 

17,744

Total current liabilities

 

 

291,508

 

 

335,848

 

 

 

 

 

 

 

Long-term debt

 

 

564,000

 

 

895,679

Other long-term liabilities

 

 

172,960

 

 

181,048

Long-term liabilities

 

 

736,960

 

 

1,076,727

 

 

 

 

 

 

 

Total liabilities

 

 

1,028,468

 

 

1,412,575

 

 

 

 

 

 

 

Total stockholders' equity

 

 

1,164,392

 

 

1,144,182

Total liabilities and stockholders’ equity

 

$

2,192,860

 

$

2,556,757

 

ADVANCED ENERGY INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

(in thousands)

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

2024

 

 

2023

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income

 

$

5,340

 

 

$

90,782

 

Less: loss from discontinued operations, net of income tax

 

 

(1,904

)

 

 

(2,076

)

Income from continuing operations, net of income tax

 

 

7,244

 

 

 

92,858

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

Depreciation and amortization

 

 

51,824

 

 

 

49,764

 

Stock-based compensation

 

 

34,303

 

 

 

22,813

 

Amortization of debt issuance costs and debt discount

 

 

3,036

 

 

 

378

 

Deferred income tax benefit

 

 

305

 

 

 

(996

)

Other

 

 

1,041

 

 

 

394

 

Changes in operating assets and liabilities, net of assets acquired

 

 

(47,503

)

 

 

(36,971

)

Net cash from operating activities from continuing operations

 

 

50,250

 

 

 

128,240

 

Net cash from operating activities from discontinued operations

 

 

(2,191

)

 

 

(3,307

)

Net cash from operating activities

 

 

48,059

 

 

 

124,933

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Purchases of long-term investments

 

 

(2,698

)

 

 

(3,447

)

Purchases of property and equipment

 

 

(44,045

)

 

 

(46,782

)

Acquisitions, net of cash acquired

 

 

(13,762

)

 

 

 

Net cash from investing activities

 

 

(60,505

)

 

 

(50,229

)

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Proceeds from long-term borrowings

 

 

 

 

 

575,000

 

Payment of fees for long-term borrowings

 

 

(105

)

 

 

(12,985

)

Payments on long-term borrowings

 

 

(355,000

)

 

 

(15,000

)

Dividend payments

 

 

(11,529

)

 

 

(11,422

)

Payment for purchase of note hedges

 

 

 

 

 

(115,000

)

Proceeds from sale of warrants

 

 

 

 

 

74,865

 

Purchase and retirement of common stock

 

 

(1,770

)

 

 

(40,000

)

Net payments related to stock-based awards

 

 

(6,029

)

 

 

(1,254

)

Net cash from financing activities

 

 

(374,433

)

 

 

454,204

 

 

 

 

 

 

 

 

EFFECT OF CURRENCY TRANSLATION ON CASH

 

 

(389

)

 

 

(1,795

)

 

 

 

 

 

 

 

NET CHANGE IN CASH AND CASH EQUIVALENTS

 

 

(387,268

)

 

 

527,113

 

CASH AND CASH EQUIVALENTS, beginning of period

 

 

1,044,556

 

 

 

458,818

 

CASH AND CASH EQUIVALENTS, end of period

 

$

657,288

 

 

$

985,931

 

 

ADVANCED ENERGY INDUSTRIES, INC.

SUPPLEMENTAL INFORMATION (UNAUDITED)

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Revenue by Market

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

June 30,

 

September 30,

 

 

2024

 

2023

 

2024

 

2024

 

2023

Semiconductor Equipment

 

$

197,497

 

$

185,033

 

$

188,321

 

$

565,721

 

$

552,419

Industrial and Medical

 

 

76,837

 

 

115,226

 

 

79,104

 

 

239,359

 

 

365,849

Data Center Computing

 

 

80,653

 

 

68,286

 

 

72,964

 

 

195,519

 

 

187,021

Telecom and Networking

 

 

19,230

 

 

41,446

 

 

24,558

 

 

66,040

 

 

145,250

Total

 

$

374,217

 

$

409,991

 

$

364,947

 

$

1,066,639

 

$

1,250,539

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Revenue by Geographic Region

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

June 30,

 

September 30,

 

 

2024

 

2023

 

2024

 

2024

 

2023

North America

 

$

175,691

 

$

184,783

 

$

172,794

 

$

482,564

 

$

537,241

Asia

 

 

163,212

 

 

178,190

 

 

151,955

 

 

467,110

 

 

543,871

Europe

 

 

34,892

 

 

46,088

 

 

39,813

 

 

115,258

 

 

164,867

Other

 

 

422

 

 

930

 

 

385

 

 

1,707

 

 

4,560

Total

 

$

374,217

 

$

409,991

 

$

364,947

 

$

1,066,639

 

$

1,250,539

 

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,

 

 

2024

 

 

2023

 

 

2024

 

 

2024

 

 

2023

 

Gross profit from continuing operations, as reported

 

$

134,068

 

 

$

147,341

 

 

$

127,741

 

 

$

374,638

 

 

$

449,532

 

Adjustments to gross profit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

1,046

 

 

 

615

 

 

 

1,056

 

 

 

2,931

 

 

 

1,587

 

Facility expansion, relocation costs and other

 

 

868

 

 

 

171

 

 

 

161

 

 

 

2,337

 

 

 

1,188

 

Acquisition-related costs

 

 

 

 

 

44

 

 

 

(57

)

 

 

(13

)

 

 

194

 

Non-GAAP gross profit

 

 

135,982

 

 

 

148,171

 

 

 

128,901

 

 

 

379,893

 

 

 

452,501

 

Non-GAAP gross margin

 

 

36.3

%

 

 

36.1

%

 

 

35.3

%

 

 

35.6

%

 

 

36.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses from continuing operations, as reported

 

 

145,116

 

 

 

117,280

 

 

 

114,773

 

 

 

372,041

 

 

 

349,608

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

(6,772

)

 

 

(7,049

)

 

 

(6,800

)

 

 

(20,519

)

 

 

(21,186

)

Stock-based compensation

 

 

(10,868

)

 

 

(7,460

)

 

 

(10,328

)

 

 

(31,372

)

 

 

(21,226

)

Acquisition-related costs

 

 

(1,581

)

 

 

(611

)

 

 

(1,934

)

 

 

(4,781

)

 

 

(2,654

)

Facility expansion, relocation costs and other

 

 

(488

)

 

 

 

 

 

 

 

 

(488

)

 

 

 

Restructuring, asset impairments, and other charges

 

 

(28,546

)

 

 

(4,898

)

 

 

(625

)

 

 

(29,416

)

 

 

(9,095

)

Non-GAAP operating expenses

 

 

96,861

 

 

 

97,262

 

 

 

95,086

 

 

 

285,465

 

 

 

295,447

 

Non-GAAP operating income

 

$

39,121

 

 

$

50,909

 

 

$

33,815

 

 

$

94,428

 

 

$

157,054

 

Non-GAAP operating margin

 

 

10.5

%

 

 

12.4

%

 

 

9.3

%

 

 

8.9

%

 

 

12.6

%

 

ADVANCED ENERGY INDUSTRIES, INC.

SELECTED OTHER DATA (UNAUDITED)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP measure - Income excluding certain items

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

June 30,

 

September 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2024

 

 

2023

 

Income (loss) from continuing operations, less non-controlling interest, net of income tax

 

$

(14,147

)

 

$

33,651

 

 

$

15,604

 

 

$

7,244

 

 

$

92,858

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

6,772

 

 

 

7,049

 

 

 

6,800

 

 

 

20,519

 

 

 

21,186

 

Acquisition-related costs

 

 

1,581

 

 

 

655

 

 

 

1,877

 

 

 

4,768

 

 

 

2,848

 

Facility expansion, relocation costs, and other

 

 

1,356

 

 

 

171

 

 

 

161

 

 

 

2,825

 

 

 

1,188

 

Restructuring, asset impairments, and other charges

 

 

28,546

 

 

 

4,898

 

 

 

625

 

 

 

29,416

 

 

 

9,095

 

Unrealized foreign currency loss (gain)

 

 

3,993

 

 

 

(1,604

)

 

 

(1,545

)

 

 

691

 

 

 

(2,817

)

Other costs included in other income (expense), net

 

 

3,665

 

 

 

(1,516

)

 

 

 

 

 

3,665

 

 

 

(1,516

)

Tax effect of non-GAAP adjustments, including certain discrete tax benefits

 

 

(4,172

)

 

 

(1,101

)

 

 

(498

)

 

 

(5,292

)

 

 

(3,273

)

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

 

 

27,594

 

 

 

42,203

 

 

 

23,024

 

 

 

63,836

 

 

 

119,569

 

Stock-based compensation, net of tax

 

 

9,412

 

 

 

6,299

 

 

 

8,993

 

 

 

27,099

 

 

 

17,794

 

Non-GAAP income, net of income tax

 

$

37,006

 

 

$

48,502

 

 

$

32,017

 

 

$

90,935

 

 

$

137,363

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP measure - Weighted-average common shares adjusted for stock awards

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

June 30,

 

September 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2024

 

 

2023

 

Diluted weighted-average common shares outstanding

 

 

37,532

 

 

 

37,854

 

 

 

37,777

 

 

 

37,785

 

 

 

37,842

 

Dilutive effect of stock awards

 

 

360

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP diluted weighted-average common shares outstanding

 

 

37,892

 

 

 

37,854

 

 

 

37,777

 

 

 

37,785

 

 

 

37,842

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

June 30,

 

 

September 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2024

 

 

2023

Diluted earnings (loss) per share from continuing operations, as reported

 

$

(0.38

)

 

$

0.89

 

$

0.41

 

$

0.19

 

$

2.45

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

1.36

 

 

 

0.39

 

 

0.44

 

 

2.22

 

 

1.18

Non-GAAP earnings per share

 

$

0.98

 

 

$

1.28

 

$

0.85

 

$

2.41

 

$

3.63

 

ADVANCED ENERGY INDUSTRIES, INC.

SELECTED OTHER DATA (UNAUDITED)

 

 

 

 

 

 

 

Reconciliation of Q4 2024 Guidance

Low End

High End

 

Revenue

 

$372 million

 

$412 million

 

Reconciliation of non-GAAP earnings per share

 

 

 

 

GAAP earnings per share

$

0.18

 

$

0.76

 

Stock-based compensation

 

0.31

 

 

0.30

 

Amortization of intangible assets

 

0.19

 

 

0.18

 

Restructuring, asset impairments, and other charges

 

0.29

 

 

0.21

 

Tax effects of excluded items

 

(0.14

)

 

(0.12

)

Non-GAAP earnings per share

$

0.83

 

$

1.33

 


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