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Annie Leschin/Brooke Deterline
StreetSmart Investor Relations
415.775.1788 / ir@aei.com
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Advanced Energy Announces 2007 Second Quarter Financial Results
Fort Collins, Colo., July 25, 2007– Advanced Energy Industries, Inc. (Nasdaq GM: AEIS) today announced financial results for the second quarter ended June 30, 2007. Sales were $103.0 million for the second quarter of 2007, a decrease of 1.5% from $104.6 million in the second quarter of 2006, and a sequential decline of 4.0% compared to $107.3 million in the first quarter of 2007.
Gross margin for the second quarter was 43.6%, up from 42.8% in the second quarter of 2006, and down from 45.0% in the first quarter of 2007 due to lower revenues, and the transition of manufacturing from Stolberg, Germany to China.
Net income for the second quarter of 2007 was $11.7 million, or $0.25 per diluted share, a 35.7% decrease compared to $18.2 million, or $0.40 per diluted share in the second quarter of 2006. This was primarily due to an increase in research and development spending and the change in the effective tax rate from 11% in 2006 to 35% in 2007. Net income also decreased 8.0% from $12.7 million, or $0.28 in the first quarter of 2007, due to lower revenues. The first quarter of 2007 included a restructuring charge of $2.8 million related to the closure of the Company’s Stolberg, Germany facility.
"Second quarter revenues came in at the low end of our guidance as we began to experience the impacts of a decline in our business as demand from the semiconductor capital equipment industry was lower than previously anticipated. As a result, earnings came in lower than expected and gross margins were lower due to the costs associated with the transition of production from Stolberg, Germany to China, which will be complete by the end of the year. We increased our R&D spending in the quarter which was driven by several strategic initiatives that are in process. However, we experienced strong growth from our non-semi business, which was up 11% sequentially, and dampened the effect of the down semi revenues for the quarter." said Dr. Hans Betz, president and chief executive officer of Advanced Energy. "As we look ahead, we remain highly confident in our growth strategy, including our current product pipeline, our excellent position in our markets and our future growth opportunities."
Third Quarter 2007 Guidance
The Company anticipates third quarter 2007 results to be within the following ranges:
- Sales of $95 million to $100 million.
- Earnings per share of $0.19 to $0.22.
Second Quarter 2007 Conference Call
Management will host a conference call today, Wednesday, July 25, 2007 at 5:00 pm eastern daylight time to discuss Advanced Energy's financial results. You may access this conference call by dialing (888)-713-4717. International callers may access the call by dialing (706)-679-7720. For a replay of this teleconference, please call (800)-642-1687 or (706) 645-9291, and enter the passcode 7322751. The replay will be available through July 27, 2007. There will also be a webcast available on the Investor Relations webpage at http://ir.advanced-energy.com.
About Advanced Energy
Advanced Energy is a global leader in the development and support of technologies critical to thin film deposition manufacturing processes used in the production of semiconductors, flat panel displays, data storage products, solar cells, architectural glass, and other advanced product applications. Advanced Energy is a publicly held company traded on the Nasdaq Global Market under the symbol AEIS. For more information, please visit our corporate website: www.advanced-energy.com.
The Company’s expectations with respect to financial results for the third quarter of 2007 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, 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 Six Months Ended
June 30, March 31, June 30,
2007 2006 2007 2007 2006
Sales $103,049 $104,571 $107,323 $210,372 $198,521
Cost of sales 58,094 59,811 59,014 117,108 115,211
Gross profit 44,955 44,760 48,309 93,264 83,310
Operating expenses:
Research and
development 12,911 10,804 12,035 24,946 21,263
Selling, general
and administrative 15,414 14,241 15,218 30,632 28,646
Amortization of
intangible assets 202 453 324 526 930
Restructuring
charges 158 31 2,792 2,950 60
Total operating
expenses 28,685 25,529 30,369 59,054 50,899
Income from operations 16,270 19,231 17,940 34,210 32,411
Other income, net 1,505 741 1,554 3,059 2,574
Income from continuing
operations before
income taxes 17,775 19,972 19,494 37,269 34,985
Provision for income
taxes (6,108) (1,947) (6,823) (12,931) (4,199)
Income from continuing
operations 11,667 18,025 12,671 24,338 30,786
Gain on sale of
discontinued assets - 138 - - 138
Income from discontinued
operations - 138 - - 138
Net income $11,667 $18,163 $12,671 $24,338 $30,924
Net income per basic share
Income from continuing
operations $0.26 $0.40 $0.28 $0.54 $0.69
Income from discontinued
operations $- $- $- $- $-
Basic earnings per share $0.26 $0.41 $0.28 $0.54 $0.69
Net income per diluted
share
Income from continuing
operations $0.25 $0.40 $0.28 $0.53 $0.68
Income from discontinued
operations $- $- $- $- $-
Diluted earnings per
share $0.25 $0.40 $0.28 $0.53 $0.69
Basic weighted-average
common shares
outstanding 45,161 44,704 44,941 45,051 44,638
Diluted weighted-average
common shares
outstanding 45,992 45,108 45,636 45,834 45,098
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
June 30, December 31,
2007 2006
ASSETS
Current assets:
Cash and cash equivalents $73,080 $58,240
Marketable securities 105,407 85,978
Accounts receivable, net 73,491 74,794
Inventories, net 56,896 52,778
Deferred income taxes 22,692 24,434
Other current assets 4,463 4,503
Total current assets 336,029 300,727
Property and equipment, net 30,659 33,571
Deposits and other 8,105 2,640
Goodwill and intangibles, net 64,404 65,584
Customer service equipment, net 617 832
Deferred income tax assets, net 3,897 8,549
Total assets $443,711 $411,903
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $16,656 $16,310
Other accrued expenses 34,324 36,619
Total current liabilities 50,980 52,929
Long-term liabilities 9,643 3,184
Total liabilities 60,623 56,113
Stockholders' equity 383,088 355,790
Total liabilities and stockholders' equity $443,711 $411,903