For more information, contact:

Danny Herron
Advanced Energy Industries, Inc.
970.407.6570
danny.herron@aei.com
Annie Leschin/Vanessa Lehr
Advanced Energy Industries, Inc.
970.407.6555
ir@aei.com


Advanced Energy Announces Third Quarter 2011 Results
Revenue of $128.5 million
Results include a restructuring charge of $3.1 million
Cash increased to $155 million

FORT COLLINS, Colo., Nov. 1, 2011Advanced Energy Industries, Inc. (Nasdaq:AEIS) today announced financial results for the third quarter ended September 30, 2011. The company posted third quarter sales of $128.5 million, operating income of 8.3% of sales and diluted earnings per share from continuing operations of $0.16. On a non-GAAP basis, income generated from operations was 10.7% of sales and earnings from our continuing operations on a per share basis were $0.21. The non-GAAP measures exclude the impact of the previously-announced $3.1 million restructuring charge recorded in the third quarter. A reconciliation of non-GAAP income from operations and per share earnings is provided in the tables.

"Tenuous macroeconomic conditions coupled with continuing declines in capital equipment spending pressured our Thin Films business this quarter. We continue to see revenue growth in our Solar Energy business as orders increased and the deployment of our previously announced utility scale projects continued," said Garry Rogerson, chief executive officer. "By taking pro-active measures to re-align our resources and cost structure, Advanced Energy will be better positioned to make strategic investments that we expect will extend our leadership and improve profitability in the future. During the quarter, cash increased by $9 million as working capital declined during the quarter."

Thin Films Business Unit

Thin Films business unit sales were $76.8 million versus $103.6 million in the third quarter of 2010. On a sequential basis, Thin Films sales declined 21.1% from $97.3 million in the second quarter of 2011. Industry conditions across most of the company's thin films end markets weakened this quarter. Semiconductor equipment sales slowed as manufacturers limited purchases due to low fab utilization rates. The thin film renewables market continued to experience panel overcapacity and pricing pressure, while the flat panel display market is undergoing a pause in investment as capacity comes on line.

Solar Energy Business Unit

Solar Energy business unit sales were $51.7 million in the quarter versus $37.4 million in the same period of 2010. On a sequential basis, Solar Energy sales increased 26.7% from $40.8 million in the second quarter of 2011. Despite the solar panel industry's struggle with significant oversupply and ongoing price declines, inverter sales grew once again this quarter due to utility-scale shipments from large projects wins announced earlier this year.

Income from Continuing Operations

Income from continuing operations was $7.2 million or $0.16 per diluted share, compared to income from continuing operations of $17.6 million or $0.40 per diluted share in the same period last year. Income from continuing operations was $13.5 million or $0.31 in the second quarter of 2011. On a non-GAAP basis, excluding the impact of the restructuring charge, continuing operations generated income for the quarter of $9.3 million or $0.21 per share.

Restructuring Charge

The restructuring charge incurred in the quarter related to the restructuring plan that was announced on September 28, 2011. Under the first phase of the plan, Advanced Energy will align its engineering resources with the geographic footprint of its customer base. By localizing R&D within the major geographies it serves, the company will improve its time to market and distance to key customers, creating a more highly-focused and responsive development team. The company will also transition the manufacture of certain solar inverter subcomponents to its Shenzhen factory. This will lower product costs for its Solar Energy business worldwide and enable regional fulfillment for complete products in the growing Asian market. The anticipated savings from the restructuring are approximately $6 million annually for the first phase.

The second phase will be implemented over the next 12 to 18 months as the company reduces its cost structure, closes facilities and relocates certain functions to different regions worldwide. As a result, the company anticipates further charges in the amount of $8 to $12 million, principally for space consolidation, and another $1 million in additional severance costs over this timeframe. Once complete, these two phases of the restructuring plan, along with other cost savings initiatives and margin improvements, are expected to deliver annual savings of approximately $16 to $20 million.

Fourth Quarter 2011 Guidance

The Company anticipates fourth quarter 2011 results from continuing operations, to be within the following ranges:

  • Sales of $105 million to $120 million
  • Non-GAAP earnings per share of approximately breakeven

Third Quarter 2011 Conference Call

Management will host a conference call tomorrow, Wednesday, November 2, 2011, at 8:30 a.m. Eastern Daylight Time to discuss Advanced Energy's financial results. Domestic callers may access this conference call by dialing 800-706-7748. International callers may access the call by dialing 617-614-3473. Participants will need to provide a conference pass code 72488976. For a replay of this teleconference, please call 888-286-8010 or 617-801-6888, and enter the pass code 48571613. The replay will be available for two weeks following the conference call. A webcast will also be available on the Investor Relations web page 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-films manufacturing and solar-power generation. Founded in 1981, Advanced Energy is headquartered in Fort Collins, Colorado, with dedicated support and service locations around the world. For more information, go to www.advanced-energy.com.

This release includes non-GAAP operating, net income and earnings per share data. These non-GAAP measures are not in accordance with, or an alternative for, 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 regarding financial and business trends relating to its financial condition and results of operations. Additionally, the Company believes that these non-GAAP measures, in combination with its financial results calculated in accordance with GAAP, provides investors with additional perspective. The Company further 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, even though some of these excluded items may be incurred and reflected in the Company's GAAP financial results in the foreseeable future. The use of non-GAAP measures have limitations in that they do not reflect all of the amounts associated with its 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.

For additional information on the items excluded from one or more of its non-GAAP financial measures, refer to the Form 8-K regarding this release furnished today to the Securities and Exchange Commission.

Forward-Looking Language

The Company's expectations with respect to guidance to financial results for the fourth quarter ending December 31, 2011 and statements 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: the effects of global macroeconomic conditions upon demand for our products, the volatility and cyclicality of the industries the company serves, particularly the semiconductor industry, the continuation of RPS (renewable portfolio standards), the timing and availability of incentives and grant programs in the US and Europe related to the renewable energy market, renewable energy project delays resulting from solar panel price declines and increased competition in the solar inverter equipment market, the timing of orders received from customers, the company's ability to realize benefits from cost improvement efforts and any restructuring plans; the ability to source materials and manufacture products, 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.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. 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             Nine Months Ended
                                 ----------------------------------  ----------------------
                                      September 30,       June 30,        September 30,
                                 ----------------------  ----------  ----------------------
                                    2011        2010        2011        2011        2010
                                 ----------  ----------  ----------  ----------  ----------
  SALES                           $ 128,498   $ 140,966   $ 138,154   $ 404,304   $ 310,760
  COST OF SALES                      79,651      80,276      82,777     238,035     176,304
                                 ----------  ----------  ----------  ----------  ----------
  GROSS PROFIT                       48,847      60,690      55,377     166,269     134,456
                                      38.0%       43.1%       40.1%       41.1%       43.3%
  OPERATING EXPENSES:
   Research and development          17,592      16,672      17,137      50,591      41,329
   Selling, general and
    administrative                   16,473      20,545      20,001      57,379      49,955
   Restructuring charges              3,119                               3,119
   Amortization of intangible
    assets                              989       1,177         921       2,831       1,945
                                 ----------  ----------  ----------  ----------  ----------
     Total operating expenses        38,173      38,394      38,059     113,920      93,229
                                 ----------  ----------  ----------  ----------  ----------
  Operating income                   10,674      22,296      17,318      52,349      41,227

   Other income (loss), net           (259)       1,224          92         496       1,828
                                 ----------  ----------  ----------  ----------  ----------
  Income from continuing
   operations before income
   taxes                             10,415      23,520      17,410      52,845      43,055
  Provision for income taxes          3,244       5,964       3,898      13,396       9,192
                                 ----------  ----------  ----------  ----------  ----------
  INCOME FROM CONTINUING
   OPERATIONS, NET OF INCOME
   TAXES                              7,171      17,556      13,512      39,449      33,863
  Income (loss) from
   discontinued operations, net
   of income taxes                    (579)       2,392          74       (365)       5,921
                                 ----------  ----------  ----------  ----------  ----------

  NET INCOME                        $ 6,592    $ 19,948    $ 13,586    $ 39,084    $ 39,784
                                 ==========  ==========  ==========  ==========  ==========
  Basic weighted-average common
   shares outstanding                43,535      43,254      43,571      43,515      42,711
  Diluted weighted-average
   common shares outstanding         43,819      43,849      44,187      44,056      43,293
  EARNINGS PER SHARE:
   CONTINUING OPERATIONS:
     BASIC EARNINGS PER SHARE        $ 0.16      $ 0.41      $ 0.31      $ 0.91      $ 0.79
     DILUTED EARNINGS PER SHARE      $ 0.16      $ 0.40      $ 0.31      $ 0.90      $ 0.78
   DISCONTINUED OPERATIONS
     BASIC EARNINGS PER SHARE      $ (0.01)      $ 0.06      $ 0.00    $ (0.01)      $ 0.14
     DILUTED EARNINGS PER SHARE    $ (0.01)      $ 0.05      $ 0.00    $ (0.01)      $ 0.14
   NET INCOME:
     BASIC EARNINGS PER SHARE        $ 0.15      $ 0.46      $ 0.31      $ 0.90      $ 0.93
     DILUTED EARNINGS PER SHARE      $ 0.15      $ 0.45      $ 0.31      $ 0.89      $ 0.92

  ADVANCED ENERGY
   INDUSTRIES, INC.
  CONDENSED CONSOLIDATED
   BALANCE SHEETS
  (in thousands)
                               September   December
                                 30,         31,
                                 2011        2010
                              ----------  ----------
  ASSETS                       UNAUDITED   AUDITED
  Current assets:
   Cash and cash equivalents   $ 132,253   $ 130,914
   Marketable securities          22,669       9,640
   Accounts receivable, net      132,048     119,893
   Inventories, net               92,822      77,593
   Deferred income taxes           7,689       7,510
   Income taxes receivable         6,570       6,061
   Other current assets           12,393      10,156
                              ----------  ----------
  Total current assets           406,444     361,767
  Property and equipment,
   net                            40,837      34,569
  Deposits and other               8,868       8,874
  Goodwill and intangibles,
   net                            92,105      96,781
  Deferred income tax
   assets, net                     5,176       3,166
                              ----------  ----------
  Total assets                 $ 553,430   $ 505,157
                              ==========  ==========
  LIABILITIES AND
   STOCKHOLDERS' EQUITY
  Current liabilities:
   Accounts payable             $ 50,559    $ 56,185
   Other accrued expenses         45,999      46,140
                              ----------  ----------
  Total current liabilities       96,558     102,325

  Long-term liabilities           31,775      28,864
                              ----------  ----------
  Total liabilities              128,333     131,189

  Stockholders' equity           425,097     373,968
                              ----------  ----------
  Total liabilities and
   stockholders' equity        $ 553,430   $ 505,157
                              ==========  ==========

  ADVANCED ENERGY
   INDUSTRIES, INC.
  SEGMENT INFORMATION
   (UNAUDITED)
  (in thousands)

                                 Three Months Ended            Nine Months Ended
                          --------------------------------  ----------------------
                              September 30,       June 30,       September 30,
                          ---------------------  ---------  ----------------------
                             2011       2010        2011       2011        2010
                          ---------  ----------  ---------  ----------  ----------
  SALES:
   Thin Films              $ 76,764   $ 103,616   $ 97,331   $ 274,194   $ 256,736
   Solar Energy              51,734      37,350     40,823     130,110      54,024
                          ---------  ----------  ---------  ----------  ----------
     Total Sales            128,498     140,966    138,154     404,304     310,760
                          =========  ==========  =========  ==========  ==========

  OPERATING INCOME:
  Thin Films               $ 16,015               $ 20,042    $ 60,881
  Solar Energy                1,259                    321       4,092
                          ---------              ---------  ----------
  Total segment
   operating income          17,274                 20,363      64,973
  Corporate expenses        (6,600)                (3,045)    (12,624)
  Other income, net           (259)                     92         496
                          ---------              ---------  ----------
  Income from continuing
   operations before
   income taxes            $ 10,415               $ 17,410    $ 52,845
                          =========              =========  ==========

  ADVANCED ENERGY INDUSTRIES, INC.
  SELECTED OTHER DATA (UNAUDITED)
  (in thousands)

  Reconciliation of Non-GAAP measure - income      Three
   from operations                                Months
  without restructuring charge                     Ended
                                                 ---------
                                                 September
                                                    30,
                                                    2011
                                                 ---------
  Operating Income, as reported                   $ 10,674
  Add back:
   Restructuring charge                              3,119
                                                 ---------
  Income from operations without resturcturing
   charge                                         $ 13,793
                                                 =========

                                                   Three
  Reconciliation of Non-GAAP measure - income     Months
   without restructuring charge                    Ended
                                                 ---------
                                                 September
                                                    30,
                                                    2011
                                                 ---------
  Income from continuing operations, net of
   tax, as reported                                $ 7,171
  Add back:
   Restructuring charge, net of tax benefit          2,136
                                                 ---------
  Income without restructuring charge              $ 9,307
                                                 =========

  Reconciliation of Non-GAAP measure - per
   share earnings from                             Three
  continuing operations without restructuring     Months
   charge                                          Ended
                                                 ---------
                                                 September
                                                    30,
                                                    2011
                                                 ---------
  Diluted earnings per share from continuing
   operations, as reported                          $ 0.16
  Add back:
   per share impact of restructuring charge,
    net of tax benefit                                0.05
                                                 ---------
  Per share earnings from continuing operations
   without restructuring charge                     $ 0.21
                                                 =========