For more information, contact:
Lawrence D. Firestone
Advanced Energy Industries, Inc.
970.407.6570
lawrence.firestone@aei.com
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Annie Leschin/Vanessa Lehr
Advanced Energy Industries, Inc.
970.407.6555
ir@aei.com
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Advanced Energy Announces Fourth Quarter and Full Year 2008 Financial Results
Fort Collins, Colo., February 23, 2009—Advanced Energy Industries, Inc. (Nasdaq GM: AEIS) today announced financial results for the fourth quarter and year ended December 31, 2008. Sales for the fourth quarter of 2008 were $67.5 million, representing a 19.5% decline from $83.8 million in the same quarter a year ago and a 20.1% decline from $84.5 million in the third quarter of 2008. The weak economy affected all of our markets, led by semiconductor equipment, which experienced a revenue decrease of 20.2% sequentially. Our book to bill ratio for the quarter was 0.7:1.
Sales to our non-semiconductor markets represented 48.3% of total sales for the quarter, driven by continued strength from the solar market, which represented 23.6% of total sales. Service revenues were 18.4% of total sales, down 20.5% sequentially, primarily due to softness in the semiconductor market, where the majority of our installed base resides.
Gross margin for the fourth quarter was 27.2%, down from 39.1% in the fourth quarter of 2007, and 41.7% in the third quarter of 2008. Margins were lower due to a $5.1 million charge to cost of goods sold for excess and obsolete inventory, which impacted gross margin by 7.6%, as well as lower revenues and the resulting lower absorption of manufacturing overhead.
We reduced operating expenses 15.7% sequentially in the quarter, as we implemented additional cost reduction measures including discretionary spending controls, global shutdown weeks during the holiday season and workforce reductions.
During the fourth quarter of 2008, we also recorded a non-cash charge of $18.0 million, or $0.43 per share, for income taxes related to a valuation allowance against our deferred tax assets. This resulted in a net loss for the fourth quarter of 2008 of $19.0 million, or $0.45 per diluted share, compared to net income of $4.2 million, or $0.09 per diluted share, in the fourth quarter of 2007. Net income also decreased sequentially from $5.4 million, or $0.13 per diluted share, in the third quarter of 2008.
For the full year 2008, sales were $328.9 million, a 14.5% decrease from $384.7 million in 2007. The primary driver of the reduction in sales was a 39.0% drop in revenues to the semiconductor equipment market, partially offset by a 118.7% increase in revenues to the solar market. Net loss from continuing operations for 2008 was $1.8 million, or $0.04 per diluted share, compared to net income of $34.4 million, or $0.75 per diluted share, in 2007. During 2008, we generated $24.7 million in cash from operations to end the year with $180.1 million in cash, cash equivalents and investments, including auction rate securities of $30.4 million.
“In 2008, non-semiconductor revenue grew faster and became a larger part of total revenue. In an otherwise difficult environment during the year, our strategy of targeting a diverse group of markets for our leading power conversion technology proved to be effective,” said Hans Betz, president and CEO. “Though overall revenues declined year-over-year, we doubled our solar revenue, grew our services business and introduced successful new products such as the Solaron® 500KW inverter, while maintaining a healthy balance sheet with a strong cash position. As the year ended with extremely challenging economic conditions across all industries and very limited visibility, we took quick, decisive action to implement major cost reductions.
Going forward, we continue to see a weak economic outlook that may persist for some time. We will take additional cost reduction measures in the future as needed to drive our breakeven point even lower and address further deterioration in our markets. We remain focused on our core market and technology initiatives to ensure Advanced Energy is well positioned to take market share during the downturn and is poised for tremendous leverage when our markets recover.”
First Quarter 2009 Guidance
The Company anticipates first quarter 2009 results to be within the following ranges:
- Sales of $30.0 million to $36.0 million
- Loss per share of $0.46 to $0.53
Fourth Quarter 2008 Conference Call
Management will host a conference call today, Monday, February 23, 2009 at 5:00 pm Eastern Standard 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 816-650-2836. Participants will need to provide a conference passcode 85170369. For a replay of this teleconference, please call 800-642-1687 or 706-645-9291, and enter the passcode 85170369. The replay will be available through 12:00 a.m. Eastern Standard Time, February 25, 2009. 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 first quarter ended March 31, 2009 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 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.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Twelve Months
Three Months Ended Ended
------------------ -------------
December 31, December 31,
------------ ------------
2008 2007 2008 2007
---- ---- ---- ----
Sales $67,525 $83,836 $328,918 $384,699
Cost of sales 49,128 51,017 204,136 221,890
------ ------ ------- -------
Gross profit 18,397 32,819 124,782 162,809
Operating expenses:
Research and development 13,424 12,510 54,952 50,393
Selling, general and
administrative 9,513 16,075 52,273 62,179
Amortization of intangible
assets 257 218 946 1,010
Restructuring charges 1,898 (219) 3,487 3,287
----- ---- ----- -----
Total operating
expenses 25,092 28,584 111,658 116,869
Income (loss) from operations (6,695) 4,235 13,124 45,940
Other income, net 553 1,443 2,883 4,810
--- ----- ----- -----
Income (loss) from continuing
operations before income taxes (6,142) 5,678 16,007 50,750
Provision for income taxes 12,835 1,512 17,786 16,389
------ ----- ------ ------
Net income (loss) $(18,977) $4,166 $(1,779) $34,361
======== ====== ======= =======
Basic earnings (loss) per share $(0.45) $0.09 $(0.04) $0.76
Diluted earnings (loss) per share $(0.45) $0.09 $(0.04) $0.75
Basic weighted-average common
shares outstanding 41,832 45,274 42,537 45,156
Diluted weighted-average common
shares outstanding 41,832 45,758 42,537 45,704
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, December 31,
2008 2007
---- ----
ASSETS
Current assets:
Cash and cash equivalents $116,448 $94,588
Marketable securities 33,266 110,676
Accounts receivable, net 56,549 61,545
Inventories, net 46,659 50,532
Deferred income taxes 13,253 23,696
Other current assets 5,324 6,932
----- -----
Total current assets 271,499 347,969
Property and equipment, net 31,322 30,912
Long-term investments 30,401 1,483
Deposits and other 7,505 5,562
Goodwill and intangibles, net 72,918 67,768
Customer service equipment, net 23 1,236
Deferred income tax assets, net 6,969 4,098
----- -----
Total assets $420,637 $459,028
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $8,005 $12,424
Other accrued expenses 23,928 29,590
------ ------
Total current liabilities 31,933 42,014
Long-term liabilities 12,155 9,953
------ -----
Total liabilities 44,088 51,967
Stockholders' equity 376,549 407,061
------- -------
Total liabilities and stockholders' equity $420,637 $459,028
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SOURCE Advanced Energy Industries, Inc. -0- 02/23/2009
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