Advanced Energy Reports Fourth Quarter and Full Year 2022 Results

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

 





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