Advanced energy reports fourth quarter and full year 2021 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, 2021. “we delivered strong revenue and earnings in the fourth quarter, largely due to improved availability of critical ics,” said steve kelley, president and ceo of advanced energy. “we enter 2022 with robust demand for our industry-leading power solutions. although our business continues to be impacted by supply constraints, our fourth quarter results demonstrate that we can respond quickly as conditions improve. with a solid pipeline of new technologies and products, advanced energy is well positioned for long-term profitable growth.” fourth quarter results sales were $396.9 million in the fourth quarter of 2021, compared with $346.1 million in the third quarter of 2021 and $371.0 million in the fourth quarter of 2020. fourth quarter 2021 gaap and non-gaap gross margins were 35.2% and 35.5%, respectively. revenue and gross margin in the fourth quarter of 2021 were impacted by partial recovery of material cost premiums. gaap net income from continuing operations was $39.7 million or $1.05 per diluted share in the quarter, compared with $21.0 million or $0.55 per diluted share in the prior quarter, and $41.9 million or $1.09 per diluted share a year ago. non-gaap net income was $51.5 million or $1.36 per diluted share in the fourth quarter of 2021. this compares with $34.0 million or $0.89 per diluted share in the third quarter of 2021, and $57.3 million or $1.49 per diluted share in the fourth quarter of 2020. the company generated $34.5 million of cash flow from continuing operations during the quarter, repurchased $21.5 million of common stock, and paid $3.8 million in a quarterly dividend. full year 2021 results 2021 revenue was $1.46 billion, a 3% increase from $1.42 billion in 2020. 2021 gaap and non-gaap gross margins were 36.6% and 37.3%, respectively gaap net income from continuing operations was $134.7 million or $3.51 per diluted share in 2021, compared with $135.2 million or $3.51 per diluted share in 2020. non-gaap net income was $183.2 million or $4.78 per diluted share in 2021, compared to $201.5 million or $5.23 per diluted share in 2020. the company generated $140.9 million of operating cash from continuing operations in 2021, repurchased $78.1 million of common stock and paid $15.4 million in dividends. cash and marketable securities at ended the year were $546.7 million. a reconciliation of non-gaap measures is provided in the tables below. 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 is available in the company’s 2021 annual report on form 10‑k. first quarter 2022 guidance based on the company’s current view, beliefs and assumptions, guidance for the first quarter of 2022 is within the following ranges. q1 2022 revenues $360m +/- $20m gaap eps from continuing operations $0.61 +/- $0.25 non-gaap eps $0.94 +/- $0.25 conference call management will host a conference call today, february 9, 2022 at 4:30 p.m. eastern time to discuss advanced energy’s financial results. to participate in the live conference call, please dial (877) 407-0890 approximately five minutes prior to the start of the meeting and an operator will connect you. international participants can dial +1 (201) 389-0918. 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 four 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 the second quarter of 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) supply chain disruptions and component shortages that may impact the company’s ability to obtain in a timely manner the materials necessary to manufacture its products; (b) the effects of global macroeconomic conditions upon demand for our products and services; (c) the volatility and cyclicality of the industries the company serves, particularly the semiconductor industry; (d) delays in capital spending by end-users in our served markets; (e) the risks and uncertainties related to the integration of artesyn embedded power including the optimization and reduction of our global manufacturing sites; (f) the continuing spread of covid-19 and its potential adverse impact on our product manufacturing, research and development, supply chain, services and administrative operations; (g) the accuracy of the company’s estimates related to fulfilling solar inverter product warranty and post-warranty obligations; (h) the company’s ability to realize its plan to avoid additional costs after the solar inverter wind-down; (i) the accuracy of the company’s assumptions on which its financial statement projections are based; (j) the impact of product price changes, which may result from a variety of factors; (k) the timing of orders received from customers; (l) the company’s ability to realize benefits from cost improvement efforts including avoided costs, restructuring plans and inorganic growth; (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.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 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 year ended december 31, september 30, december 31, 2021 2020 2021 2021 2020 sales, net $ 396,930 $ 370,969 $ 346,093 $ 1,455,954 $ 1,415,826 cost of sales 257,183 225,420 226,054 923,632 873,957 gross profit 139,747 145,549 120,039 532,322 541,869 gross margin % 35.2 % 39.2 % 34.7 % 36.6 % 38.3 % operating expenses: research and development 40,966 36,529 40,578 161,831 143,961 selling, general, and administrative 48,784 42,944 48,373 191,998 188,590 amortization of intangible assets 5,556 5,065 5,607 22,060 20,129 restructuring expense 2,231 5,226 1,272 4,752 13,166 total operating expenses 97,537 89,764 95,830 380,641 365,846 operating income 42,210 55,785 24,209 151,681 176,023 other income (expense), net 704 (6,221 ) 495 (2,970 ) (17,876 ) income from continuing operations, before income taxes 42,914 49,564 24,704 148,711 158,147 provision for income taxes 3,187 7,703 3,657 14,004 22,996 income from continuing operations 39,727 41,861 21,047 134,707 135,151 income (loss) from discontinued operations, net of income taxes (98 ) — (37 ) 73 (421 ) net income 39,629 41,861 21,010 134,780 134,730 income (loss) from continuing operations attributable to noncontrolling interest (26 ) 20 6 44 55 net income attributable to advanced energy industries, inc. $ 39,655 $ 41,841 $ 21,004 $ 134,736 $ 134,675 basic weighted-average common shares outstanding 37,672 38,280 38,183 38,143 38,314 diluted weighted-average common shares outstanding 37,866 38,533 38,363 38,355 38,542 earnings per share attributable to advanced energy industries, inc: continuing operations: basic earnings per share $ 1.06 $ 1.09 $ 0.55 $ 3.53 $ 3.53 diluted earnings per share $ 1.05 $ 1.09 $ 0.55 $ 3.51 $ 3.51 discontinued operations: basic earnings (loss) per share $ — $ — $ — $ — $ (0.01 ) diluted earnings (loss) per share $ — $ — $ — $ — $ (0.01 ) net income: basic earnings per share $ 1.05 $ 1.09 $ 0.55 $ 3.53 $ 3.52 diluted earnings per share $ 1.05 $ 1.09 $ 0.55 $ 3.51 $ 3.50 advanced energy industries, inc. condensed consolidated balance sheets (unaudited) (in thousands) december 31, december 31, 2021 2020 assets current assets: cash and cash equivalents $ 544,372 $ 480,368 marketable securities 2,296 2,654 accounts and other receivable, net 237,227 235,178 inventories 338,410 221,346 income taxes receivable 10,768 4,804 other current assets 29,161 35,899 total current assets 1,162,234 980,249 property and equipment, net 114,830 114,731 operating lease right-of-use assets 101,769 103,858 deposits and other assets 19,669 19,101 goodwill and intangible assets, net 371,596 378,922 deferred income tax assets 47,242 50,801 total assets $ 1,817,340 $ 1,647,662 liabilities and stockholders’ equity current liabilities: accounts payable $ 193,708 $ 125,224 other accrued expenses 140,666 137,081 current portion of long-term debt 20,000 17,500 current portion of operating lease liabilities 15,843 16,592 total current liabilities 370,217 296,397 long-term debt 372,733 304,546 non-current liabilities 202,894 231,379 long-term liabilities 575,627 535,925 total liabilities 945,844 832,322 advanced energy stockholders' equity 870,851 814,739 noncontrolling interest 645 601 total stockholders’ equity 871,496 815,340 total liabilities and stockholders’ equity $ 1,817,340 $ 1,647,662 advanced energy industries, inc. condensed consolidated statement of cash flows (unaudited) (in thousands) year ended december 31, 2021 2020 cash flows from operating activities: net income $ 134,780 $ 134,730 less: income (loss) from discontinued operations, net of income taxes 73 (421 ) income from continuing operations, net of income taxes 134,707 135,151 adjustments to reconcile net income to net cash from operating activities: depreciation and amortization 52,893 47,770 stock-based compensation expense 15,739 12,272 provision for deferred income taxes 1,326 (622 ) discount on notes receivable (638 ) 721 loss on disposal of assets 1,496 1,296 changes in operating assets and liabilities, net of assets acquired (64,609 ) 5,571 net cash from operating activities from continuing operations 140,914 202,159 net cash from operating activities from discontinued operations (669 ) (923 ) net cash from operating activities 140,245 201,236 cash flows from investing activities: net proceeds from sale of marketable securities — 3 receipt (issuance) of notes receivable 3,050 (1,000 ) proceeds from sale of assets 3,060 116 purchases of property and equipment (31,877 ) (36,483 ) acquisitions, net of cash acquired (21,535 ) (5,476 ) net cash from investing activities from continuing operations (47,302 ) (42,840 ) net cash from investing activities from discontinued operations — — net cash from investing activities (47,302 ) (42,840 ) cash flows from financing activities: proceeds from long-term borrowings 85,000 - payment of debt-issuance costs (1,350 ) - payments on long-term borrowings (13,750 ) (17,500 ) dividend payments (15,385 ) — purchase and retirement of common stock (78,125 ) (11,630 ) net payments related to stock-based awards (1,762 ) (482 ) net cash from financing activities from continuing operations (25,372 ) (29,612 ) net cash from financing activities from discontinued operations — — net cash from in financing activities (25,372 ) (29,612 ) effect of currency translation on cash (3,567 ) 5,143 net change in cash and cash equivalents 64,004 133,927 cash and cash equivalents, beginning of period 480,368 346,441 cash and cash equivalents, end of period 544,372 480,368 less cash and cash equivalents from discontinued operations — — cash and cash equivalents from continuing operations, end of period $ 544,372 $ 480,368 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, 2021 2020 2021 2021 2020 semiconductor equipment $ 179,346 $ 165,757 $ 173,441 $ 710,174 $ 611,864 industrial and medical 98,764 93,769 80,800 341,176 313,646 data center computing 80,081 65,299 62,231 270,924 322,539 telecom and networking 38,739 46,144 29,621 133,680 167,777 total $ 396,930 $ 370,969 $ 346,093 $ 1,455,954 $ 1,415,826 net sales by geographic region three months ended year ended december 31, september 30, december 31, 2021 2020 2021 2021 2020 united states $ 151,100 $ 141,957 $ 139,089 $ 561,312 $ 530,965 north america (excluding u.s.) 27,100 41,144 24,708 104,167 156,856 asia 163,598 144,505 135,838 597,830 606,893 europe 49,305 41,919 44,838 179,056 117,989 other 5,827 1,444 1,620 13,589 3,123 total $ 396,930 $ 370,969 $ 346,093 $ 1,455,954 $ 1,415,826 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, 2021 2020 2021 2021 2020 gross profit from continuing operations, as reported $ 139,747 $ 145,549 $ 120,039 $ 532,322 $ 541,869 adjustments to gross profit: stock-based compensation (19 ) 122 218 764 567 facility expansion, relocation costs and other 997 741 1,357 6,189 4,349 acquisition-related costs 234 25 3,259 3,585 5,381 non-gaap gross profit 140,959 146,437 124,873 542,860 552,166 non-gaap gross margin 35.5 % 39.5 % 36.1 % 37.3 % 39.0 % operating expenses from continuing operations, as reported 97,537 89,764 95,830 380,641 365,846 adjustments: amortization of intangible assets (5,556 ) (5,065 ) (5,607 ) (22,060 ) (20,129 ) stock-based compensation (2,939 ) (2,483 ) (3,456 ) (14,975 ) (11,705 ) acquisition-related costs (679 ) 387 (1,768 ) (6,803 ) (10,209 ) facility expansion, relocation costs and other (17 ) (443 ) (98 ) (229 ) (2,213 ) restructuring charges (2,231 ) (5,226 ) (1,272 ) (4,752 ) (13,166 ) non-gaap operating expenses 86,115 76,934 83,629 331,822 308,424 non-gaap operating income $ 54,844 $ 69,503 $ 41,244 $ 211,038 $ 243,742 non-gaap operating margin 13.8 % 18.7 % 11.9 % 14.5 % 17.2 % reconciliation of non-gaap measure - income excluding certain items three months ended year ended december 31, september 30, december 31, 2021 2020 2021 2021 2020 income from continuing operations, less non-controlling interest, net of income taxes $ 39,753 $ 41,841 $ 21,041 $ 134,663 $ 135,096 adjustments: amortization of intangible assets 5,556 5,065 5,607 22,060 20,129 acquisition-related costs 913 (362 ) 5,027 10,388 15,590 facility expansion, relocation costs, and other 1,014 1,184 1,455 6,418 6,562 restructuring charges 2,231 5,226 1,272 4,752 13,166 unrealized foreign currency (gain) loss (134 ) 3,786 (2,092 ) (3,543 ) 8,384 acquisition-related costs and other included in other income (expense), net (3,093 ) 90 (79 ) (2,186 ) 716 tax effect of non-gaap adjustments 3,017 (1,532 ) (1,036 ) (1,346 ) (7,611 ) non-gaap income, net of income taxes, excluding stock-based compensation 49,257 55,298 31,195 171,206 192,032 stock-based compensation, net of taxes 2,233 1,993 2,811 12,042 9,418 non-gaap income, net of income taxes $ 51,490 $ 57,291 $ 34,006 $ 183,248 $ 201,450 reconciliation of non-gaap measure - per share earnings excluding certain items three months ended year ended december 31, september 30, december 31, 2021 2020 2021 2021 2020 diluted earnings per share from continuing operations, as reported $ 1.05 $ 1.09 $ 0.55 $ 3.51 $ 3.51 add back (subtract): per share impact of non-gaap adjustments, net of tax 0.31 0.40 0.34 1.27 1.72 non-gaap per share earnings $ 1.36 $ 1.49 $ 0.89 $ 4.78 $ 5.23 quarterly results may not sum to year to date due to rounding low end high end revenue $340 million $380 million reconciliation of non-gaap earnings per share gaap earnings per share $ 0.36 $ 0.86 stock-based compensation 0.11 0.11 amortization of intangible assets 0.15 0.15 restructuring and other 0.13 0.13 tax effects of excluded items (0.06 ) (0.06 ) non-gaap earnings per share $ 0.69 $ 1.19
