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Advanced Energy Announces Fourth Quarter and Full Year 2016 Results
  • Q4 Revenue increased 55.8% y/y and 6.9% q/q to $135.3 million
  • Q4 GAAP EPS from continuing operations was $1.01
  • Q4 Non-GAAP EPS from continuing operations was $1.06
  • Ended the quarter with $286.7 million in cash and marketable securities

FORT COLLINS, Colo., Jan. 30, 2017 (GLOBE NEWSWIRE) -- Advanced Energy Industries, Inc. (Nasdaq:AEIS) today announced financial results for the fourth quarter and year ended December 31, 2016. The company reported fourth quarter sales of $135.3 million. Fourth quarter GAAP income from continuing operations was $40.4 million, or $1.01 per diluted share. Non-GAAP income from continuing operations was $42.6 million, or $1.06 per diluted share.

“AE had an exceptional 2016. Our powerful model generated impressive results across the board, driving significant profitability,” said Yuval Wasserman, president and CEO of Advanced Energy. “Our Semiconductor and Service revenues reached new highs, more than offsetting the fourth quarter decline in Industrial applications. We continue to expand our presence as a critical enabler by capitalizing on the build-out and expansion of important semiconductor technologies. We enter 2017 with a healthy outlook, a strong balance sheet and a variety of opportunities that we believe will take AE to the next level and move us closer to our new aspirational goals.”

Fourth Quarter Results

Sales were $135.3 million compared with $126.6 million in the third quarter of 2016 and $86.9 million in the fourth quarter of 2015.

GAAP income from continuing operations was $40.4 million or $1.01 per diluted share in the fourth quarter of 2016 compared with $29.0 million or $0.73 per diluted share in the third quarter, and $11.5 million or $0.28 per diluted share in the fourth quarter of 2015.

Non-GAAP income from continuing operations was $42.6 million or $1.06 per diluted share in the fourth quarter of 2016 compared with $30.8 million or $0.77 per diluted share in the third quarter, and $12.9 million or $0.32 per diluted share in the same period last year. A reconciliation of non-GAAP measures is provided in the tables below.

The company generated $44.4 million of operating cash from continuing operations.

Full Year 2016

Sales were $483.7 million compared with $414.8 million in 2015.

GAAP income from continuing operations was $116.9 million or $2.92 per diluted share, compared with $83.5 million or $2.03 per diluted share in 2015.

Non-GAAP income from continuing operations was $124.6 million or $3.11 per diluted share compared with $89.3 million or $2.17 per diluted share in 2015. A reconciliation of non-GAAP measures is provided in the tables below.

The company generated $126.5 million in cash from continuing operations and ended the year with $286.7 million in cash and marketable securities.

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 both the balance sheet and income statement. Further financial detail regarding the amounts related to the discontinued inverter business are available in the company’s 2015 Annual Report on Form 10-K.

First Quarter 2017 Guidance

Based on the company's current view, beliefs and assumptions, guidance for the first quarter of 2017 is within the following ranges:

  Q1 2017
Revenues   $141M - $151M  
GAAP operating margins from continuing operations 26% - 29%
GAAP EPS from continuing operations $0.84 - $0.94
Non-GAAP operating margins from continuing operations     29% - 31%
Non-GAAP EPS from continuing operations $0.90 - $1.00
   

Fourth Quarter 2016 Conference Call

Management will host a conference call tomorrow morning, Tuesday, January 31, 2017 at 8:30 a.m. Eastern Time to discuss Advanced Energy's financial results. Domestic callers may access this conference call by dialing 855-232-8958. International callers may access the call by dialing 315-625-6980. Participants will need to provide the operator with the Conference ID Number 53480474, which has been reserved for this call. For a replay of this teleconference, please call 855-859-2056 or 404-537-3406 and enter Conference ID Number 53480474. The replay will be available for one week following the conference call. A webcast will also be available on the company’s Investor Relations web page at http://ir.advanced-energy.com

About Advanced Energy

Advanced Energy (Nasdaq:AEIS) is a global leader in innovative power and control technologies for high-growth, precision power solutions for thin films processes and industrial applications. Advanced Energy is headquartered in Fort Collins, Colorado, with dedicated support and service locations around the world. For more information, go to www.advanced-energy.com

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, amortization of intangible assets and restructuring costs, as well as acquisition related costs and other non-recurring items. For the first quarter ending March 31, 2017 guidance, the company expects stock based compensation of $2.0 million and amortization of intangibles of $1.0 million. 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 and other 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 for the first quarter ending March 31, 2017, potential future progress towards our new aspirational goals, expectations regarding future market trends and the company’s future performance within specific markets (e.g., statements regarding anticipated semiconductor and industrial market growth) and other statements 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 accuracy of the company’s estimates related to fulfilling solar inverter product warranty and post-warranty obligations; (e) the company’s ability to realize its plan to avoid additional costs after the solar inverter wind-down; (f) the accuracy of the company's assumptions on which its financial statement projections are based; (g) the impact of price changes, which may result from a variety of factors; (h) the timing of orders received from customers; (i) the company’s ability to realize benefits from cost improvement efforts including avoided costs, restructuring plans and inorganic growth; (j) the company’s ability to obtain in a timely manner the materials necessary to manufacture its products; and (k) unanticipated changes to management's estimates, reserves or allowances. 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 http://ir.advanced-energy.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   Twelve Months Ended
  December 31,   September 30,   December 31,
  2016   2015   2016   2016   2015
                   
Sales:                  
Product $ 115,885     $ 71,564     $ 107,650     $ 410,580     $ 350,834  
Service 19,458     15,327     18,902     73,124     63,977  
Total sales 135,343     86,891     126,552     483,704     414,811  
Cost of sales:                  
Product 54,710     35,049     49,835     192,694     164,889  
Service 9,115     9,158     10,594     37,863     33,052  
Total cost of sales 63,825     44,207     60,429     230,557     197,941  
Gross profit 71,518     42,684     66,123     253,147     216,870  
  52.8 %   49.1 %   52.2 %   52.3 %   52.3 %
Operating expenses:                  
Research and development 11,121     9,437     11,293     44,445     39,551  
Selling, general and administrative 20,864     16,121     19,421     77,678     66,097  
Amortization of intangible assets 987     1,070     1,048     4,167     4,368  
Restructuring (benefit) expense     (117 )           198  
Total operating expenses 32,972     26,511     31,762     126,290     110,214  
Operating income 38,546     16,173     34,361     126,857     106,656  
Other income, net 81     (1,661 )   (55 )   1,219     (1,214 )
Income from continuing operations before income taxes 38,627     14,512     34,306     128,076     105,442  
Provision for income taxes (1,809 )   3,022     5,268     11,128     21,960  
Income from continuing operations, net of income taxes 40,436     11,490     29,038     116,948     83,482  
Income (loss) from discontinued operations, net of income taxes   3,845     24,775     1,323     10,506     (241,968 )
Net income (loss) $ 44,281     $ 36,265     $ 30,361     $ 127,454     $ (158,486 )
                   
Basic weighted-average common shares outstanding 39,699     40,270     39,681     39,720     40,746  
Diluted weighted-average common shares outstanding 40,029     40,601     39,967     40,031     41,077  
                   
Earnings per share:                  
Continuing operations:                  
Basic earnings per share $ 1.02     $ 0.29     $ 0.73     $ 2.94     $ 2.05  
Diluted earnings per share $ 1.01     $ 0.28     $ 0.73     $ 2.92     $ 2.03  
                   
Discontinued operations:                  
Basic earnings (loss) per share $ 0.10     $ 0.62     $ 0.03     $ 0.26     $ (5.94 )
Diluted earnings (loss) per share $ 0.10     $ 0.61     $ 0.03     $ 0.26     $ (5.94 )
                   
Net income:                  
Basic earnings (loss) per share $ 1.12     $ 0.90     $ 0.77     $ 3.21     $ (3.89 )
Diluted earnings (loss) per share $ 1.11     $ 0.89     $ 0.76     $ 3.18     $ (3.89 )
                                       
                                       

ADVANCED ENERGY INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

       
  December 31,   December 31,
  2016   2015
ASSETS Unaudited    
       
Current assets:      
  Cash and cash equivalents $ 281,953     $ 158,443  
  Marketable securities 4,737     11,986  
  Accounts receivable, net 75,667     54,959  
  Inventories, net 55,770     52,573  
  Income taxes receivable 1,482     9,040  
  Other current assets 9,324     7,868  
Current assets of discontinued operations 9,401     27,608  
Total current assets 438,334     322,477  
       
Property and equipment, net 13,337     9,645  
       
Deposits and other 1,835     1,729  
Goodwill and intangibles, net 70,196     76,870  
Deferred income tax assets 32,197     36,217  
Non-current assets of discontinued operations 15,630     15,565  
Total assets $ 571,529     $ 462,503  
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
       
Current liabilities:      
  Accounts payable $ 46,256     $ 27,246  
  Other accrued expenses 35,372     40,243  
Current liabilities of discontinued operations 13,419     36,481  
Total current liabilities 95,047     103,970  
       
Non-current liabilities of continuing operations 63,252     67,651  
Non-current liabilities of discontinued operations   21,157     27,302  
Long-term liabilities 84,409     94,953  
       
Total liabilities 179,456     198,923  
       
Stockholders' equity 392,073     263,580  
Total liabilities and stockholders' equity $ 571,529     $ 462,503  
       

December 31, 2015 amounts are derived from the December 31, 2015 audited Consolidated Financial Statements.


ADVANCED ENERGY INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)

   
  Years Ended December 31,
  2016   2015
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net income (loss) $ 127,454     $ (158,486 )
Income (loss) from discontinued operations, net of income taxes 10,506     (241,968 )
Income from continuing operations, net of income taxes 116,948     83,482  
       
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 7,813     8,832  
Stock-based compensation expense 6,332     2,810  
Provision for deferred income taxes 3,570     3,498  
Non-cash reserve for potential bad debts     5,967  
Net loss (gain) on disposal of assets 319     (1,019 )
Changes in operating assets and liabilities, net of assets acquired (8,461 )   20,651  
Net cash provided by operating activities from continuing operations 126,521     124,221  
Net cash used in operating activities from discontinued operations (7,857 )   (19,413 )
Net cash provided by operating activities 118,664     104,808  
CASH FLOWS FROM INVESTING ACTIVITIES:      
Purchases of marketable securities (763 )   (30,172 )
Proceeds from sale of marketable securities 7,884     21,095  
Acquisitions, net of cash acquired     (128 )
Purchases of property and equipment (6,821 )   (4,014 )
Net cash provided by (used in) investing activities from continuing operations 300     (13,219 )
Net cash used in investing activities from discontinued operations     (46 )
Net cash used in investing activities 300     (13,265 )
CASH FLOWS FROM FINANCING ACTIVITIES:      
Purchase and retirement of common stock     (50,000 )
Proceeds from exercise of stock options 2,170     4,476  
Excess tax from stock-based compensation deduction 623     (99 )
Other financing activities (4 )   (4 )
Net cash provided by (used in) financing activities from continuing operations 2,789     (45,627 )
Net cash used in financing activities from discontinued operations (29 )   (14 )
Net cash provided by (used in) financing activities 2,760     (45,641 )
EFFECT OF CURRENCY TRANSLATION ON CASH (1,927 )   (1,467 )
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 119,797     44,435  
CASH AND CASH EQUIVALENTS, beginning of period 169,720     125,285  
CASH AND CASH EQUIVALENTS, end of period 289,517     169,720  
Less cash and cash equivalents from discontinued operations 7,564     11,277  
CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS, end of period   $ 281,953     $ 158,443  
 

December 31, 2015 amounts are derived from the December 31, 2015 audited Consolidated Financial Statements.


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   Twelve Months Ended
  December 31,   September 30,   December 31,
    2016       2015       2016       2016       2015  
                   
Gross Profit from continuing operations, as reported $   71,518     $   42,684     $   66,123     $   253,147     $   216,870  
Operating expenses from continuing operations, as reported   32,972       26,511       31,762       126,290       110,214  
Adjustments:                  
Restructuring charges         117                   (197 )
Stock-based compensation   (2,033 )     (897 )     (1,301 )     (6,332 )     (2,810 )
Amortization of intangible assets   (987 )     (1,070 )     (1,048 )     (4,167 )     (4,368 )
Non-GAAP operating expenses from continuing operations   29,952       24,661       29,413       115,791       102,839  
Non-GAAP operating income from continuing operations $   41,566     $   18,023     $   36,710     $   137,356     $   114,031  
                                       
   
Reconciliation of Non-GAAP measure - income excluding certain items Three Months Ended   Twelve Months Ended
  December 31,   September 30,   December 31,
    2016       2015       2016       2016       2015  
                   
Income from continuing operations, net of income taxes, as reported   $   40,436     $   11,490     $   29,038     $   116,948     $   83,482  
Adjustments:                  
Restructuring charges         (117 )                 197  
Stock-based compensation   2,033       897       1,301       6,332       2,810  
Amortization of intangible assets   987       1,070       1,048       4,167       4,368  
Tax effect of Non-GAAP adjustments   (881 )     (406 )     (608 )     (2,854 )     (1,589 )
Non-GAAP income from continuing operations, net of income taxes $   42,575     $   12,934     $   30,779     $   124,593     $   89,268  
                                       
   
Reconciliation of Non-GAAP measure - per share earnings excluding certain items Three Months Ended   Twelve Months Ended
  December 31,   September 30,   December 31,
    2016       2015       2016       2016       2015  
                   
Diluted earnings per share from continuing operations, as reported $   1.01     $   0.28     $   0.73     $   2.92     $   2.03  
Add back:                  
per share impact of Non-GAAP adjustments, net of tax   0.05       0.04       0.04       0.19       0.14  
Non-GAAP per share earnings from continuing operations $   1.06     $   0.32     $   0.77     $   3.11     $   2.17  
                                       

 

         
Reconciliation of Q1 2017 Guidance        
    Low End   High End
         
Revenue   $141 million   $151 million
         
Reconciliation of Non-GAAP operating margin        
GAAP operating margin   26 %   29 %
Stock-based compensation   2 %   1 %
Amortization of intangible assets   1 %   1 %
Non-GAAP operating margin               29 %             31 %
         
Reconciliation of Non-GAAP earnings per share        
GAAP earnings per share   $ 0.84     $ 0.94  
Stock-based compensation   0.05     0.05  
Amortization of intangible assets   0.03     0.03  
Tax effects of excluded items   (0.02 )   (0.02 )
Non-GAAP earnings per share   $ 0.90     $ 1.00  
 
CONTACTS:
Tom Liguori
Advanced Energy Industries, Inc.
970.407.6570
Tom.liguori@aei.com

Annie Leschin
Advanced Energy Industries, Inc.
970.407.6555
ir@aei.com

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Advanced Energy Industries, Inc.