Energy Efficiency

Diversification Drives Q2 Revenues Higher at Advanced Energy

Advanced Energy Industries, Inc. announced financial results for the second quarter ended June 30, 2014. The company reported second quarter sales of $146.3 million compared with $140.9 million in the first quarter of 2014 and $139.7 million in the second quarter of 2013. Net income was $10.6 million or $0.26 per diluted share. On a non-GAAP basis, net income was $15.5 million or $0.38 per diluted share. A reconciliation of non-GAAP net income and earnings per share is provided in the tables below. Based on the current mix of profits between precision power products and inverters, the effective tax rate was approximately 7.7%. The company ended the quarter with $130.2 million in cash and marketable securities, an increase of $7.5 million over last quarter, which included a $25 million repurchase of outstanding shares and the repayment of a revolving line of credit in the amount of $11.6 million.

“Even with a downturn in semiconductors, our diversification into a variety of precision power applications drove revenues higher sequentially and generated cash in the quarter,” said Garry Rogerson, CEO of Advanced Energy. “While recent changes in the solar industry have dampened expectations for large utility scale projects, we are taking immediate action to address this overhang. The transition of our inverter manufacturing to Shenzhen and our new organizational structure with a product line focus should provide increased resource flexibility and cost savings.

"Our strong cash generation of $200 million in the last 3 years is enabling us to invest in product lines that fit our model and diversify our portfolio, while returning value to our shareholders. The business model we have put in place is driving continued success through cyclical peaks and troughs and we remain focused on cash generation, revenue acceleration and margin expansion,” Rogerson continued.

Precision Power products sales were $81.8 million in the second quarter of 2014, a 1.3% decrease from $82.9 million in the first quarter of 2014 and a 14.1% increase from $71.7 million in the second quarter of 2013. The diversification of our precision products largely offset the sequential decline in semiconductors, with particular strength in industrial applications.

Inverter sales were $64.5 million in the second quarter of 2014, up 11.0% from $58.1 million in the first quarter of 2014, and down 5.2% from $68.0 million in the second quarter of 2013. Revenues rebounded from first quarter with strong shipments of our new products.

Net income for the second quarter was $10.6 million or $0.26 per diluted share, including approximately $0.5 million of acquisition-related expenses, compared with net income of $14.7 million or $0.35 per diluted share in the first quarter of 2014, and a net loss of $9.8 million or $0.24 per diluted share in the same period last year. On a non-GAAP basis, adjusted net income this quarter decreased to $15.5 million or $0.38 per diluted share from $18.1 million or $0.43 per diluted share in the first quarter of 2014, and increased from $13.9 million or $0.35 per diluted share in the same period last year.

"Pending the resolution of the tariff, we expect inverters to continue to be pressured. Based on this, guidance is within the following ranges: Sales of $130 million to $140 million; Earnings per share of $0.22 to $0.30, excluding restructuring charges; and Non-GAAP earnings per share of $0.30 to $0.38," Rogerson concluded.

Advanced Energy Industries Inc.
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