Advanced energy announces fourth quarter and full year 2020 results
Denver--(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 fourth quarter and fiscal year ended december 31, 2020. “advanced energy delivered a strong quarter and finish to the year, driven by our outstanding execution and robust demand for our industry-leading products and solutions,” said president and ceo yuval wasserman. “during 2020, we executed our growth strategy as a pure play power leader, exceeded our synergy goals, introduced many new products across our markets, and delivered record financial results. despite operating in a challenging environment, advanced energy exits the year stronger than ever and is well-positioned to capitalize on our many growth opportunities.” fourth quarter results sales were $371.0 million in the fourth quarter of 2020, compared with $389.5 million in the third quarter of 2020 and $338.3 million in the fourth quarter of 2019. gaap net income from continuing operations was $41.9 million or $1.09 per diluted share in the quarter, compared with $45.6 million or $1.18 per diluted share in the prior quarter, and $10.5 million or $0.27 per diluted share in the fourth quarter of 2019. non-gaap net income was $57.3 million or $1.49 per diluted share in the fourth quarter of 2020. this compares with $63.8 million or $1.66 per diluted share in the third quarter of 2020, and $33.4 million or $0.87 per diluted share in the fourth quarter of 2019. a reconciliation of non-gaap measures is provided in the tables below. the company generated $67.1 million of operating cash from continuing operations during the quarter and made debt principal payments of $4.4 million. full year 2020 results sales were $1.42 billion in 2020 compared with $788.9 million in 2019, an increase of 79%. gaap net income from continuing operations was $135.2 million or $3.51 per diluted share in 2020, compared with $56.5 million or $1.47 per diluted share in 2019. non-gaap net income was $201.5 million or $5.23 per diluted share in 2020, compared to $93.9 million or $2.44 per diluted share in 2019. the company generated $202.2 million of operating cash from continuing operations in 2020 and ended the year with $483.0 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 all purposes. further financial detail regarding the amounts related to the discontinued inverter business are available in the company’s 2020 annual report on form 10-k. first quarter 2021 guidance based on the company’s current view, beliefs and assumptions, guidance for the first quarter of 2021 is within the following ranges. q1 2021 revenues $350m +/- $15m gaap eps from continuing operations $1.02 +/- $0.15 non-gaap eps $1.25 +/- $0.15 conference call management will host a conference call today, february 10, 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/3071896). 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 more than three 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 q2 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 & development, supply chain, services and administrative operations; (f) the accuracy of the company’s estimates related to fulfilling solar inverter product warranty and post-warranty obligations; (g) the company’s ability to realize its plan to avoid additional costs after the solar inverter wind-down; (h) the accuracy of the company’s assumptions on which its financial statement projections are based; (i) the impact of product price changes, which may result from a variety of factors; (j) the timing of orders received from customers; (k) the company’s ability to realize benefits from cost improvement efforts including avoided costs, restructuring plans and inorganic growth; (l) the company’s ability to obtain in a timely manner the materials necessary to manufacture its products; (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.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 (in thousands, except per share data) three months ended year ended december 31, september 30, december 31, 2020 2019 2020 2020 2019 unaudited unaudited unaudited sales, net: product $ 337,479 $ 311,618 $ 358,257 $ 1,296,867 $ 678,061 services 33,490 26,650 31,264 118,959 110,887 total sales, net 370,969 338,268 389,521 1,415,826 788,948 cost of sales: product 209,579 212,526 220,149 816,329 416,976 services 15,841 13,447 15,587 57,628 56,320 total cost of sales 225,420 225,973 235,736 873,957 473,296 gross profit 145,549 112,295 153,785 541,869 315,652 39.2 % 33.2 % 39.5 % 38.3 % 40.0 % operating expenses: research and development 36,529 33,828 36,807 143,961 101,503 selling, general and administrative 42,944 49,528 51,481 188,590 142,555 amortization of intangible assets 5,065 5,319 5,049 20,129 12,168 restructuring expense 5,226 1,418 1,494 13,166 5,038 total operating expenses 89,764 90,093 94,831 365,846 261,264 operating income 55,785 22,202 58,954 176,023 54,388 other income (expense), net (6,221 ) (4,843 ) (6,558 ) (17,876 ) 12,806 income from continuing operations, before income taxes 49,564 17,359 52,396 158,147 67,194 provision (benefit) for income taxes 7,703 6,880 6,783 22,996 10,699 income from continuing operations 41,861 10,479 45,613 135,151 56,495 income (loss) from discontinued operations, net of income taxes — (210 ) 50 (421 ) 8,480 net income 41,861 10,269 45,663 134,730 64,975 income from continuing operations attributable to noncontrolling interest 20 5 36 55 34 net income attributable to advanced energy industries, inc. $ 41,841 $ 10,264 $ 45,627 $ 134,675 $ 64,941 basic weighted-average common shares outstanding 38,280 38,341 38,325 38,314 38,281 diluted weighted-average common shares outstanding 38,533 38,554 38,528 38,542 38,495 earnings per share attributable to advanced energy industries, inc: continuing operations: basic earnings per share $ 1.09 $ 0.27 $ 1.19 $ 3.53 $ 1.47 diluted earnings per share $ 1.09 $ 0.27 $ 1.18 $ 3.51 $ 1.47 discontinued operations: basic earnings (loss) per share $ — $ (0.01 ) $ — $ (0.01 ) $ 0.22 diluted earnings (loss) per share $ — $ (0.01 ) $ — $ (0.01 ) $ 0.22 net income: basic earnings per share $ 1.09 $ 0.27 $ 1.19 $ 3.52 $ 1.70 diluted earnings per share $ 1.09 $ 0.27 $ 1.19 $ 3.50 $ 1.69 advanced energy industries, inc. condensed consolidated balance sheets (in thousands) december 31, december 31, 2020 2019 assets current assets: cash and cash equivalents $ 480,368 $ 346,441 marketable securities 2,654 2,614 accounts and other receivable, net 235,178 246,564 inventories 221,346 230,019 income taxes receivable 5,778 4,245 other current assets 35,899 36,855 total current assets 981,223 866,738 property and equipment, net 114,731 108,109 operating lease right-of-use assets 103,858 105,404 deposits and other assets 19,101 22,556 goodwill and intangible assets, net 378,922 386,943 deferred income tax assets 50,801 42,656 total assets $ 1,648,636 $ 1,532,406 liabilities and stockholders’ equity current liabilities: accounts payable $ 125,224 $ 170,671 other accrued expenses 138,055 113,849 current portion of long-term debt 17,500 17,500 current portion of operating lease liabilities 16,592 18,312 total current liabilities 297,371 320,332 long-term debt 304,546 321,527 non-current liabilities 231,379 213,287 long-term liabilities 535,925 534,814 total liabilities 833,296 855,146 advanced energy stockholders' equity 814,739 676,714 noncontrolling interest 601 546 total stockholders’ equity 815,340 677,260 total liabilities and stockholders’ equity $ 1,648,636 $ 1,532,406 advanced energy industries, inc. condensed consolidated statement of cash flows (in thousands) year ended december 31, 2020 2019 cash flows from operating activities: net income $ 134,730 $ 64,975 income (loss) from discontinued operations, net of income taxes (421 ) 8,480 income from continuing operations, net of income taxes 135,151 56,495 adjustments to reconcile net income to net cash provided by operating activities: depreciation and amortization 47,770 26,147 stock-based compensation expense 12,272 7,327 provision (benefit) for deferred income taxes (622 ) 1,015 gain on sale of central inverter service business — (14,795 ) discount on notes receivable 721 1,100 net loss on disposal of assets 1,296 700 changes in operating assets and liabilities, net of assets acquired 5,571 (30,090 ) net cash from operating activities from continuing operations 202,159 47,899 net cash from operating activities from discontinued operations (923 ) 493 net cash from operating activities 201,236 48,392 cash flows from investing activities: proceeds from sale of marketable securities 3 1,742 acquisitions, net of cash acquired (5,476 ) (366,101 ) issuance of notes receivable (1,000 ) (4,300 ) proceeds from sale of property and equipment 116 — purchases of property and equipment (36,483 ) (25,188 ) net cash from investing activities from continuing operations (42,840 ) (393,847 ) net cash from investing activities from discontinued operations — — net cash from investing activities (42,840 ) (393,847 ) cash flows from financing activities: net proceeds from long-term borrowings — 347,486 payments on long-term borrowings (17,500 ) (8,750 ) purchase and retirement of common stock (11,630 ) — net receipts (payments) related to stock-based award activities (482 ) 104 net cash from financing activities from continuing operations (29,612 ) 338,840 net cash from financing activities from discontinued operations — — net cash from in financing activities (29,612 ) 338,840 effect of currency translation on cash 5,143 (1,496 ) net change in cash and cash equivalents 133,927 (8,111 ) cash and cash equivalents, beginning of period 346,441 354,552 cash and cash equivalents, end of period 480,368 346,441 less cash and cash equivalents from discontinued operations — — cash and cash equivalents from continuing operations, end of period $ 480,368 $ 346,441 advanced energy industries, inc. supplemental information (unaudited) (in thousands) net sales by product line three months ended year ended december 31, september 30, december 31, 2020 2019 2020 2020 2019 semiconductor equipment $ 165,757 $ 125,108 $ 167,058 $ 611,864 $ 403,018 industrial & medical 93,769 96,736 87,013 313,646 245,992 data center computing 65,299 77,940 87,741 322,539 91,438 telecom & networking 46,144 38,484 47,709 167,777 48,500 total $ 370,969 $ 338,268 $ 389,521 $ 1,415,826 $ 788,948 net sales by geographic region three months ended year ended december 31, september 30, december 31, 2020 2019 2020 2020 2019 north america $ 183,101 $ 172,697 $ 190,629 $ 687,814 $ 373,634 asia 144,505 117,559 180,660 606,893 295,155 europe 41,919 47,264 17,886 117,990 119,427 other countries 1,444 748 346 3,129 732 total $ 370,969 $ 338,268 $ 389,521 $ 1,415,826 $ 788,948 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, 2020 2019 2020 2020 2019 gross profit from continuing operations, as reported $ 145,549 $ 112,295 $ 153,785 $ 541,869 $ 315,652 adjustments to gross profit: stock-based compensation 122 160 67 567 525 facility expansion, relocation costs and other 741 2,229 1,095 4,349 3,891 acquisition-related costs 25 6,784 — 5,381 8,290 non-gaap gross profit 146,437 121,468 154,947 552,166 328,358 non-gaap gross margin 39.5 % 35.9 % 39.8 % 39.0 % 41.6 % operating expenses from continuing operations, as reported 89,764 90,093 94,831 365,846 261,264 adjustments: amortization of intangible assets (5,065 ) (5,319 ) (5,049 ) (20,129 ) (12,168 ) stock-based compensation (2,483 ) (2,115 ) (3,714 ) (11,705 ) (6,803 ) acquisition-related costs 387 (2,562 ) (5,214 ) (10,209 ) (12,002 ) facility expansion, relocation costs and other (443 ) (651 ) (415 ) (2,213 ) (948 ) restructuring charges (5,226 ) (1,418 ) (1,494 ) (13,166 ) (5,038 ) non-gaap operating expenses 76,934 78,028 78,945 308,424 224,305 non-gaap operating income $ 69,503 $ 43,440 $ 76,002 $ 243,742 $ 104,053 non-gaap operating margin 18.7 % 12.8 % 19.5 % 17.2 % 13.2 % reconciliation of non-gaap measure - income excluding certain items three months ended year ended december 31, september 30, december 31, 2020 2019 2020 2020 2019 income from continuing operations, less non-controlling interest, net of income taxes $ 41,841 $ 10,474 $ 45,577 $ 135,096 $ 56,461 adjustments: amortization of intangible assets 5,065 5,319 5,049 20,129 12,168 acquisition-related costs (362 ) 9,346 5,214 15,590 20,292 facility expansion, relocation costs and other 1,184 2,879 1,510 6,562 4,838 restructuring charges 5,226 1,418 1,494 13,166 5,038 unrealized foreign currency (gain) loss 3,786 — 3,540 8,384 — acquisition-related and other costs included in other income (expense), net 90 — 625 716 (29 ) central inverter services business sale — 1,067 — — (13,737 ) tax effect of non-gaap adjustments (1,532 ) 1,195 (2,115 ) (7,611 ) 3,206 non-gaap income, net of income taxes, excluding stock-based compensation 55,298 31,698 60,894 192,032 88,237 stock-based compensation, net of taxes 1,993 1,740 2,892 9,418 5,627 non-gaap income, net of income taxes $ 57,291 $ 33,438 $ 63,786 $ 201,450 $ 93,864 reconciliation of non-gaap measure - per share earnings excluding certain items three months ended year ended december 31, september 30, december 31, 2020 2019 2020 2020 2019 diluted earnings per share from continuing operations, as reported $ 1.09 $ 0.27 $ 1.18 $ 3.51 $ 1.47 add back (subtract): per share impact of non-gaap adjustments, net of tax 0.40 0.60 0.48 1.72 0.97 non-gaap per share earnings $ 1.49 $ 0.87 $ 1.66 $ 5.23 $ 2.44 reconciliation of q1 2021 guidance low end high end revenue $335 million $365 million reconciliation of non-gaap earnings per share gaap earnings per share $ 0.87 $ 1.17 stock-based compensation 0.08 0.08 amortization of intangible assets 0.13 0.13 restructuring and other 0.05 0.05 tax effects of excluded items (0.03 ) (0.03 ) non-gaap earnings per share $ 1.10 $ 1.40
