For more information, contact:
Advanced Energy Announces 2008 Third Quarter Financial Results Driven by Record Solar Revenues
Fort Collins, Colo., October 22, 2008 – Advanced Energy Industries, Inc. (Nasdaq GM: AEIS) today announced financial results for the third quarter ended September 30, 2008. Sales for the third quarter of 2008 were $84.5 million, which represented a 6.6% decline from $90.5 million in the same quarter a year ago and a 4.0% decline from $88.0 million in the second quarter of 2008. The decrease was attributed mainly to weakening global economic conditions and continued challenges in the semiconductor capital equipment market. Our book to bill ratio for the quarter was 0.92:1, with an ending backlog of $48.9 million.
Despite the overall decline in revenue, sales to non-semiconductor markets grew 11% sequentially to 48% of total sales for the quarter. Non-semiconductor performance was driven by sales to the solar market, which represented 23% of total revenue, and sales to the flat panel display market, which were also strong at 11% of total sales. Service sales grew to 18% of total revenue, as customers evaluated the benefits of making near-term investments versus extending the life of their existing equipment with upgrades and maintenance during these challenging economic times.
Gross margin for the third quarter was 41.7%, up from 40.6% in the third quarter of 2007, and 40.1% in the second quarter of 2008, due principally to a more favorable product mix.
Net income for the third quarter of 2008 was $5.4 million, or $0.13 per diluted share, compared to $5.9 million, or $0.13 per diluted share, in the third quarter of 2007. Net income also decreased sequentially from $5.9 million or $0.14 per diluted share in the second quarter of 2008.
“Sales to the solar market reached their highest levels yet, and were once again key to the success of our quarterly results, aided by strength in sales to the flat panel display market and our service business. We continued to build out our non-semiconductor businesses with new products such as our recently announced 500KW Solaron inverter. The expansion of this product portfolio will allow us to penetrate larger inverter installations, including utilities and solar farms. Overall, we were pleased with our performance in the third quarter, especially in light of the particularly challenging economic environment,” said Dr. Hans Betz, president and chief executive officer of Advanced Energy. “Unfortunately, the distressed economic conditions are impacting all markets and have led us to guide lower revenues and earnings for the fourth quarter. We will, however, take important steps to manage costs in order to maintain a healthy business, while investing in key products and markets to position the company for future opportunities.”
Fourth Quarter 2008 Guidance
The Company anticipates fourth quarter 2008 results to be within the following ranges:
• Sales of $66 million to $72 million.
• Earnings per share of ($0.05) to $0.01
Third Quarter 2008 Conference Call
Management will host a conference call today, Wednesday, October 22, 2008 at 5:00 pm Eastern Daylight Time to discuss Advanced Energy's financial results. Domestic callers may access this conference call by dialing 888-713-4717. International callers may access the call by dialing 706-634-7937. Participants will need to provide a conference passcode 68332373. For a replay of this teleconference, please call 800-642-1687 or 706-645-9291, and enter the passcode 68332373. The replay will be available through 12:00 a.m. Eastern Daylight Time, October 24, 2008. A webcast will also be available on the Investor Relations webpage at http://ir.advanced-energy.com.
About Advanced Energy
Advanced Energy® is a global leader in innovative power and control technologies for high-growth, thin-film manufacturing and solar power generation. Specifically, AE targets solar grid-tie inverters, solar cells, semiconductors, flat panel displays, data storage products, architectural glass and other advanced applications.
The Company’s expectations with respect to financial results for the fourth quarter of 2008 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: the volatility and cyclicality of the industries the company serves, particularly the semiconductor industry, the timing of orders received from customers, the company's ability to realize cost improvement benefits from the global operations initiatives underway, and 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. These reports and statements are available on the SEC's website at www.sec.gov. Copies may also be obtained from Advanced Energy's website at www.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. The company assumes no obligation to update the information in this press release.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
Sales $84,510 $90,492 $261,393 $300,863
Cost of sales 49,249 53,765 155,008 170,873
Gross profit 35,261 36,727 106,385 129,990
Research and development 14,681 12,937 41,528 37,883
Selling, general and
administrative 14,337 15,537 42,760 46,169
Amortization of intangible assets 223 201 689 727
Restructuring charges 522 556 1,589 3,505
Total operating expenses 29,763 29,231 86,566 88,284
Income from operations 5,498 7,496 19,819 41,706
Other income, net 429 308 2,330 3,367
Income from continuing operations
before income taxes 5,927 7,804 22,149 45,073
Provision for income taxes (558) (1,948) (4,951) (14,879)
Net income $5,369 $5,856 $17,198 $30,194
Basic earnings per share $0.13 $0.13 $0.40 $0.67
Diluted earnings per share $0.13 $0.13 $0.40 $0.66
Basic weighted-average common
shares outstanding 41,787 45,248 42,773 45,117
Diluted weighted-average common
shares outstanding 42,201 45,761 43,183 45,696
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
September 30, December 31,
Cash and cash equivalents $81,232 $94,588
Marketable securities 53,687 110,676
Accounts receivable, net 65,582 64,188
Inventories, net 53,637 50,532
Deferred income taxes 13,747 23,696
Other current assets 4,037 4,289
Total current assets 271,922 347,969
Property and equipment, net 29,819 30,912
Long-term investments 33,307 1,483
Deposits and other 5,869 5,562
Goodwill and intangibles, net 68,587 67,768
Customer service equipment, net 1,223 1,236
Deferred income tax assets, net 19,292 4,098
Total assets $430,019 $459,028
LIABILITIES AND STOCKHOLDERS'
Trade accounts payable $14,431 $12,424
Other accrued expenses 28,584 29,590
Total current liabilities 43,015 42,014
Long-term liabilities 9,109 9,953
Total liabilities 52,124 51,967
Stockholders' equity 377,895 407,061
Total liabilities and stockholders' equity $430,019 $459,028
SOURCE Advanced Energy Industries, Inc.