For more information, contact:
Advanced Energy Industries, Inc.
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Cathy Kawakami,
Advanced Energy Industries, Inc.
970.407.6732
cathy.kawakami@aei.com |
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Advanced Energy Reports Third Quarter 2005 Results
Sales Down 12 Percent Year-Over-Year, Gross Margin Higher By 5 Percent as Operational Improvement Continues
FORT COLLINS, Colo., Oct. 19—Advanced Energy Industries, Inc. (Nasdaq: AEIS) today reported financial results for the third quarter ended September 30, 2005.
(Logo: http://www.newscom.com/cgi-bin/prnh/20030825/AEISLOGO ) For the 2005 third quarter, sales were $82.0 million, down 6.2 percent compared to second quarter 2005 sales of $87.4 million, and down 12.4 percent from third quarter 2004 sales of $93.6 million. Third quarter 2005 gross margin improved to 37.0 percent of sales compared to 36.7 percent of sales in the second quarter of 2005, and 31.8 percent of sales in the third quarter of 2004. Operating income was $2.5 million for the third quarter of 2005, compared to $5.5 million in the second quarter of 2005, and $1.9 million in the third quarter of 2004. Third quarter 2005 operating income includes a $3.0 million litigation settlement charge. The net loss for the 2005 third quarter was $3.9 million, or $0.10 per share. Third quarter net loss includes the previously mentioned $3.0 million litigation settlement, $2.1 million related to the early retirement of the convertible debt, and a non-cash charge of $1.1 million related to the write-off of deferred debt issuance costs. The third quarter of 2005 net loss includes a tax provision of $1.6 million on pretax income earned outside of the United States. The company is unable to provide a tax benefit from its U.S. tax-loss carryforwards until it has demonstrated sustained profitability in the United States. Pretax losses were incurred in the third quarter of 2005 in the United States primarily due to the litigation settlement and debt costs detailed above. Second quarter 2005 net income was $5.9 million, or $0.18 per diluted share. Second quarter 2005 income from continuing operations was $3.3 million, or $0.10 per diluted share. Included in the second quarter 2005 income from continuing operations was an after-tax gain from the sale of certain marketable securities of $1.1 million. The third quarter 2004 net loss was $1.1 million, or $0.03 per share. Revenue for the nine months ended September 30, 2005 was $255.5 million compared to $306.9 million for the first nine months of 2004. Net income from continuing operations for the 2005 nine-month period was $147,000, or $0.00 per diluted share, compared to net income for the 2004 nine-month period of $10.3 million, or $0.31 per diluted share. During the third quarter of 2005, the Company completed a public offering of 11.5 million shares. The net proceeds to the Company totaled $105.7 million, which were used toward the redemption of the Company's convertible subordinated notes. The redemption was completed during third quarter of 2005. Dr. Hans Betz, president and chief executive officer, said, "We were pleased that our operating performance improved despite the lower revenue caused principally by soft demand from the semiconductor equipment customer base. These operational improvements, combined with the recently completed financing and redemption of the convertible debt, have improved our balance sheet as we generated $5.4 million of cash from operations. Our factory in Shenzhen, China is fully operational and we are well positioned for further improvements in capability and capacity. "Our innovative product portfolio continues to be validated across existing and emerging end markets through additional design wins on an array of technology platforms. We continue to focus on profitable growth opportunities that best leverage our differentiated technology and global infrastructure in the markets we currently serve, and beyond," said Dr. Betz. "We expect the soft demand environment for semiconductor equipment to continue in the near term. We anticipate fourth quarter 2005 revenue in the $75 million to $80 million range, and earnings per share in the range of $0.05 to $0.07," said Dr. Betz. Third Quarter Conference Call Management will host a conference call today, Wednesday, October 19, 2005 at 5:00 pm Eastern 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 706-645-9291, and enter the pass code 9139998. The replay will be available through Wednesday, October 26, 2005. There will also be a webcast available at www.advanced-energy.com. About Advanced Energy Advanced Energy is a global leader in the development and support of technologies critical to high-technology manufacturing processes used in the production of semiconductors, flat panel displays, data storage products, solar cells, architectural glass, and other advanced product applications. Leveraging a diverse product portfolio and technology leadership, Advanced Energy creates solutions that maximize process impact, improve productivity and lower the cost of ownership for its customers. This portfolio includes a comprehensive line of technology solutions in power, flow, thermal management, and plasma and ion beam sources for original equipment manufacturers (OEMs) and end-users around the world. Advanced Energy operates in regional centers in North America, Asia and Europe and offers global sales and support through direct offices, representatives and distributors. Founded in 1981, Advanced Energy is a publicly held company traded on the Nasdaq National Market under the symbol AEIS. For more information, please visit our corporate website: www.advanced-energy.com. Safe Harbor Statement This press release contains certain forward-looking statements, including the company's expectations with respect to Advanced Energy's financial results for the fourth quarter of 2005. 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 semiconductor, semiconductor capital equipment and flat panel display industries, Advanced Energy's ongoing ability to develop new products in a highly competitive industry characterized by increasingly rapid technological changes, and other risks described in Advanced Energy's Form 10- K, Forms 10-Q and other reports and statements, as 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 970-221-4670. 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, June 30, September 30,
2005 2004 2005 2005 2004
Sales $81,975 $93,550 $87,386 $255,501 $306,906
Cost of sales 51,635 63,810 55,338 164,038 201,790
Gross profit 30,340 29,740 32,048 91,463 105,116
Operating expenses:
Research and
development 10,537 12,576 11,016 32,568 38,795
Selling, general and
administrative 13,600 14,382 13,993 40,494 42,273
Amortization of
intangible assets 504 1,092 518 1,569 3,387
Restructuring charges 210 (165) 1,068 2,540 242
Litigation settlement 3,000 -- -- 3,000 --
Total operating
expenses 27,851 27,885 26,595 80,171 84,697
Income from operations 2,489 1,855 5,453 11,292 20,419
Other expense, net (4,796) (1,994) (719) (7,602) (5,566)
(Loss) income from
continuing operations
before income taxes (2,307) (139) 4,734 3,690 14,853
Provision for income taxes (1,584) (997) (1,430) (3,543) (4,595)
(Loss) income from
continuing operations (3,891) (1,136) 3,304 147 10,258
Gain on sale of
discontinued assets -- -- 2,645 2,645 --
Provision for income taxes -- -- -- -- --
Income from discontinued
operations -- -- 2,645 2,645 --
Net (loss) income $(3,891) $(1,136) $5,949 $2,792 $10,258
Net (loss) income per
basic share
(Loss) income from
continuing operations $(0.10) $(0.03) $0.10 $0.00 $0.31
Income from discontinued
operations -- -- 0.08 0.08 --
Basic (loss) earnings per
share $(0.10) $(0.03) $0.18 $0.08 $0.31
Net (loss) income per
diluted share
(Loss) income from
continuing operations $(0.10) $(0.03) $0.10 $0.00 $0.31
Income from discontinued
operations -- -- 0.08 0.08 --
Diluted (loss) earnings per
share $(0.10) $(0.03) $0.18 $0.08 $0.31
Basic weighted-average
common shares outstanding 38,366 32,674 32,797 34,639 32,633
Diluted weighted-average
common shares outstanding 38,366 32,674 33,094 34,932 33,233
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
September 30, December 31,
2005 2004
ASSETS
Current assets:
Cash and cash equivalents $51,824 $38,404
Marketable securities 4,032 69,578
Accounts receivable, net 72,094 72,053
Inventories, net 55,849 73,224
Other current assets 2,221 6,140
Total current assets 186,020 259,399
Property and equipment, net 41,347 44,746
Deposits and other 4,559 6,468
Goodwill and intangibles, net 71,832 80,308
Customer service equipment, net 2,754 2,968
Deferred debt issuance costs, net -- 2,086
Deferred income tax assets, net 1,748 --
Total assets $308,260 $395,975
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $25,470 $17,683
Other accrued expenses 27,889 28,615
Current portion of capital
leases and senior borrowings 2,440 3,726
Accrued interest payable on
convertible subordinated notes -- 2,460
Total current liabilities 55,799 52,484
Long-term liabilities:
Capital leases and senior
borrowings 2,788 4,679
Deferred income tax liabilities,
net -- 3,709
Convertible subordinated notes
payable -- 187,718
Other long-term liabilities 2,173 2,407
Total long-term liabilities 4,961 198,513
Total liabilities 60,760 250,997
Stockholders' equity 247,500 144,978
Total liabilities and stockholders'
equity $308,260 $395,975
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Nine Months Ended September 30,
2005 2004
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES $37,865 $(7,053)
NET CASH PROVIDED BY INVESTING
ACTIVITIES 63,558 8,712
NET CASH USED IN FINANCING ACTIVITIES (86,028) (4,515)
EFFECT OF CURRENCY TRANSLATION ON
CASH (1,975) (82)
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 13,420 (2,938)
CASH AND EQUIVALENTS, beginning of
period 38,404 41,522
CASH AND EQUIVALENTS, end of period $51,824 $38,584
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