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 operations26% - 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 
Service19,458  15,327  18,902  73,124  63,977 
Total sales135,343  86,891  126,552  483,704  414,811 
Cost of sales:         
Product54,710  35,049  49,835  192,694  164,889 
Service9,115  9,158  10,594  37,863  33,052 
Total cost of sales63,825  44,207  60,429  230,557  197,941 
Gross profit71,518  42,684  66,123  253,147  216,870 
 52.8% 49.1% 52.2% 52.3% 52.3%
Operating expenses:         
Research and development11,121  9,437  11,293  44,445  39,551 
Selling, general and administrative20,864  16,121  19,421  77,678  66,097 
Amortization of intangible assets987  1,070  1,048  4,167  4,368 
Restructuring (benefit) expense  (117)     198 
Total operating expenses32,972  26,511  31,762  126,290  110,214 
Operating income38,546  16,173  34,361  126,857  106,656 
Other income, net81  (1,661) (55) 1,219  (1,214)
Income from continuing operations before income taxes38,627  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 taxes40,436  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 outstanding39,699  40,270  39,681  39,720  40,746 
Diluted weighted-average common shares outstanding40,029  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
ASSETSUnaudited  
    
Current assets:   
  Cash and cash equivalents$281,953  $158,443 
  Marketable securities4,737  11,986 
  Accounts receivable, net75,667  54,959 
  Inventories, net55,770  52,573 
  Income taxes receivable1,482  9,040 
  Other current assets9,324  7,868 
Current assets of discontinued operations9,401  27,608 
Total current assets438,334  322,477 
    
Property and equipment, net13,337  9,645 
    
Deposits and other1,835  1,729 
Goodwill and intangibles, net70,196  76,870 
Deferred income tax assets32,197  36,217 
Non-current assets of discontinued operations15,630  15,565 
Total assets$571,529  $462,503 
    
LIABILITIES AND STOCKHOLDERS' EQUITY   
    
Current liabilities:   
  Accounts payable$46,256  $27,246 
  Other accrued expenses35,372  40,243 
Current liabilities of discontinued operations13,419  36,481 
Total current liabilities95,047  103,970 
    
Non-current liabilities of continuing operations63,252  67,651 
Non-current liabilities of discontinued operations  21,157  27,302 
Long-term liabilities84,409  94,953 
    
Total liabilities179,456  198,923 
    
Stockholders' equity392,073  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 taxes10,506  (241,968)
Income from continuing operations, net of income taxes116,948  83,482 
    
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization7,813  8,832 
Stock-based compensation expense6,332  2,810 
Provision for deferred income taxes3,570  3,498 
Non-cash reserve for potential bad debts  5,967 
Net loss (gain) on disposal of assets319  (1,019)
Changes in operating assets and liabilities, net of assets acquired(8,461) 20,651 
Net cash provided by operating activities from continuing operations126,521  124,221 
Net cash used in operating activities from discontinued operations(7,857) (19,413)
Net cash provided by operating activities118,664  104,808 
CASH FLOWS FROM INVESTING ACTIVITIES:   
Purchases of marketable securities(763) (30,172)
Proceeds from sale of marketable securities7,884  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 operations300  (13,219)
Net cash used in investing activities from discontinued operations  (46)
Net cash used in investing activities300  (13,265)
CASH FLOWS FROM FINANCING ACTIVITIES:   
Purchase and retirement of common stock  (50,000)
Proceeds from exercise of stock options2,170  4,476 
Excess tax from stock-based compensation deduction623  (99)
Other financing activities(4) (4)
Net cash provided by (used in) financing activities from continuing operations2,789  (45,627)
Net cash used in financing activities from discontinued operations(29) (14)
Net cash provided by (used in) financing activities2,760  (45,641)
EFFECT OF CURRENCY TRANSLATION ON CASH(1,927) (1,467)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS119,797  44,435 
CASH AND CASH EQUIVALENTS, beginning of period169,720  125,285 
CASH AND CASH EQUIVALENTS, end of period289,517  169,720 
Less cash and cash equivalents from discontinued operations7,564  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 itemsThree 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 itemsThree 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 
 

            

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