ADVANCED ENERGY INDUSTRIES, INC. A Best-in-Class Industrial Growth Enterprise
DECEMBER 2020
SAFE HARBOR
The company's guidance with respect to anticipated financial results for future periods, potential future growth and profitability, future business mix, expectations regarding future market trends, future performance within specific markets and other statements herein or made on the conference call 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: (a) the effects of global macroeconomic conditions upon demand for our products and services; (b) the volatility and cyclicality of the industries the company serves, particularly the semiconductor industry; (c) delays in capital spending by end-users in our served markets; (d) the risks and uncertainties related to the acquisition and integration of Artesyn Embedded Power including the optimization and reduction of our global manufacturing sites; (e) the continuing spread of COVID-19 and its potential adverse impact on our product manufacturing, supply chain and operations; (f) the accuracy of the company's estimates related to fulfilling solar inverter product warranty and post-warranty obligations; (g) the company's ability to realize its plan to avoid additional costs after the solar inverter wind- down; (h) the accuracy of the company's assumptions on which its financial statement projections are based; (i) the impact of product price changes, which may result from a variety of factors; (j) the timing of orders received from customers; (k) the company's ability to realize benefits from cost improvement efforts including avoided costs, restructuring plans and inorganic growth; (l) the company's ability to obtain in a timely manner the materials necessary to manufacture its products; (m) unanticipated changes to management's estimates, reserves or allowances; (n) changes and adjustments to the tax expense and benefits related to the U.S. tax reform that was enacted in late 2017; and (o) the effects of U.S. government trade and export restrictions, Chinese retaliatory trade actions, and other governmental action related to tariffs upon the demand for our, and our customers', products and services and the U.S.
economy. 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 (the "SEC"). These reports and statements are available on the SEC's website at www.sec.gov. Copies may also be obtained from Advanced Energy's investor relations page at ir.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 presentation. Aspirational goals and targets discussed on the conference call or in the presentation materials should not be interpreted in any respect as guidance. The company assumes no obligation to update the information in this presentation.
Copyright © 2020 Advanced Energy | 2 |
Key Messages
POWERING THE 4TH INDUSTRIAL REVOLUTION
PURE PLAY POWER LEADER
Strategic focus on power ensuring sustainable advantages and scale
4TH INDUSTRIAL REVOLUTION
Data economy and digitization drive growth across our markets
OUTPERFORMING MARKETS
Track record of growing share, content and increasing SAM
ACCELERATING EARNINGS
Targeting earnings to grow at a 14% 3-Year CAGR, over 2X faster than revenue and ROIC of over 20%
Copyright © 2020 Advanced Energy | 3 |
Key Messages
WE ARE THE PURE PLAY POWER LEADER
AE provides precision power conversion and control solutions for a wide range of technologies and applications
Grid
Power
SEMICONDUCTOR | INDUSTRIAL & | DATA CENTER | TELECOM & |
EQUIPMENT | MEDICAL | COMPUTING | NETWORKING |
Process | Custom | Server | Radio |
Power | Power | Power | Power |
Copyright © 2020 Advanced Energy | 4 |
Secular Drivers
4TH INDUSTRIAL REVOLUTION DRIVES GROWTH ACROSS OUR 4 VERTICALS
- Leading-edgecapacity needed for AI & 5G processors
- High density memory in mobile devices & servers
- New device architectures
- Mobile Edge Computing for 5G
- High Performance Computing for analytics and automation
- Increased power density in data center server racks
5G
AI IoT
- Accelerating adoption of process automation
- Smart manufacturing
- Telemedicine, remote diagnostics and treatment
- 5G infrastructure requires ruggedized power
- High-speedconnectivity for seamless data transmission
- Importance of Interconnectivity
Copyright © 2020 Advanced Energy | 5 |
Technology Leadership
A HISTORY OF INNOVATION AND
TECHNOLOGY LEADERSHIP
RightPower
AE RightPower™: AE's technology innovation
- Transformative and holistic approach to power delivery innovation
- Enabling solutions that deliver precise electrical energy optimized for targeted applications
Copyright © 2020 Advanced Energy | 6 |
Growth Strategies
4 KEY AREAS FOR GROWTH
AE TARGETED
GROWTH STRATEGIES
GROW SHARE
Across Mission Critical,
Precision Power Verticals
Invest in INNOVATION and
Technology Leadership
Leverage Strong Financials
and Increased Scale to
Capitalize on
NEW OPPORTUNITIES
Semiconductor:
Extending Our
Leadership
Industrial & Medical:
Enabling Smart
Applications
Hyperscale:
From Fast Follower to Market Leader
Inorganic Growth:
Leveraging Scale to
Grow Scope
Copyright © 2020 Advanced Energy | 7 |
Semiconductor
SEMI: EXTENDING OUR LEADERSHIP
Track Record:
~2X
61%
13%
>2X
Outgrowing the market and
our competitors
RF Power Market Share vs. Next Competitor(1)
2020 YTD Revenue YoY Growth
10-year Semi Product Revenue CAGR(2)
AE CAGR over WFE(3)
Undisputed leadership in RF:
Most advanced matching and integration
- RF Match a fast-growing product category
- Industry-leadingcapabilities in tuning, metrology and triple-frequencies
- Extending leadership with Solid State matching technology and integrated RF system
Changing the game in RPS:
MAXstreamTM addressing customers' pain points
- Up to 60% improvement in power accuracy
- Industry's most dependable ignition
- Reliable and cost-effective small form factor
Targeting to continue to
outgrow the market
Representing SAM of $150MM
- Market share estimates by VLSI Research, based on 5-year average data from 2015 to 2019
(2) CAGR is calculated using 2020 forecast based on the mid-point of Q4 2020 guidance | Copyright © 2020 Advanced Energy | 8 |
- Comparing AE 10-year product revenue CAGR to WFE CAGR according to VLSI research
Semiconductor
POWERING THE PROCESS… AND NOW THE PLATFORM
Processes
Core AE Innovation
Technologies acquired
in last 5 years
New
$150M
NewSAM $300M
SAM
New SAM expansion
Copyright © 2020 Advanced Energy | 9 |
Hyperscale
HYPERSCALE: FROM FAST FOLLOWER TO LEADER
MARKET SHARE GAINS AT HYPERSCALE
($ in billions) | Hyperscale CAPEX(1) |
$140
$120
$100
$80 | |||||||||||||||||||||
Total Hyperscale | |||||||||||||||||||||
$60 | CAPEX | ||||||||||||||||||||
$40 | |||||||||||||||||||||
AE Customer | |||||||||||||||||||||
$20 | |||||||||||||||||||||
CAPEX | |||||||||||||||||||||
$0 | |||||||||||||||||||||
2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
GROWTH TARGETS
2X | AE Targeted SAM CAGR vs. |
Server Power Supply Market(2) | |
40-50% AE Hyperscale CAGR Target from 2017 to 2023
Add AE Data Center Computing >$100M/yr Revenue Target by 2023
OUR WINNING STRATEGIES
• | Gain share at Tier-I hyperscale customers | • Win with system-level solutions | |||
• | In an early stage of ramping initial design wins | • Best-in-class quality, operations and | |||
• | Penetrate multiple Tier-II hyperscale customers | customer relationships | |||
(1) Source: Company Reports, Morgan Stanley, Credit Suisse Research, RBC Capital Markets, Internal Estimates | Copyright © 2020 Advanced Energy | 10 | |||
(2) Source: Omdia AC-DC and DC-DC Merchant Power Supplies Market Report, 2020 edition, Internal estimates | |||||
Hyperscale
AE TECHNOLOGY LEADERSHIP ENABLES STRONG COMPETITIVE ADVANTAGES
INDUSTRY-LEADING POWER CONVERSION EFFICIENCY
Peak Conversion Efficiency
98%
96% Best
94% Good
MainstreamHyperscale
requirements
- AE among the first to demonstrate 98% efficiency
- Increased efficiency crucial in reducing electricity costs of data center
POWER DENSITY
LEADERSHIP
Competitor X
Competitor Y
AE
Up to 30% smaller(1)
than competition's
- Density leadership at 75 Watt/in3 by integrating components
- Enabling high-power, high efficiency design in the smallest form factor
- More real estate for server components
SYSTEM LEVEL SOLUTIONS
WITH ADVANCED CAPABILITIES
Communication,
Monitoring & Control
PSU PSU PSU
BBU BBU BBU
Add 29% content outside of PSU
(does not include BBU)
- A rack-level power system solution housing PSUs and/or BBUs(2)
- Enables analytics, network functions, direct control and monitoring of rack power and back up batteries
- Internal estimates
- PSU = Power Supply Units; BBU = Battery Backup Units
Copyright © 2020 Advanced Energy | 11 |
Industrial & Medical
INDUSTRIAL & MEDICAL: ENABLING SMART APPLICATIONS
FAVORABLE MARKET TREND | LEADERSHIP IN | |
IN "SMART EVERYTHING" | CONFIGURABLE | |
Industry 4.0 Market(1)
($ in billions)
$150
$100
$50
$0
2016 | 2019 | 2022 | 2024 |
GLOBAL CHANNEL AS A
GROWTH ENGINE
Key
Accounts
Named
Accounts
Regional
Accounts
- Industry 4.0 related investments expected to grow at a 16.9% 2019-24 CAGR(1)
- Digital transformation and smart everything
- AE leading the way with AI/ML based controls, digital functionalities and IoT integration
- Configurable is A highly flexible platform using existing off the shelf modules to create custom solutions
- Accelerates time to market by enabling quick customization
- AE is market leadership with 35% share(2)
- Optimized global channel to drive scale in coverage and increases efficiency
- AE becomes trusted supplier to our partners
- Accelerate cross selling, grow design win funnel and drive profitable revenue growth
- Source: Markets and Markets Industry 4.0 Market Report, December 2019
- Internal estimates
Copyright © 2020 Advanced Energy | 12 |
Telecom & Networking
TELECOM & NETWORKING: TARGETING 5G INFRASTRUCTURE
FAVORABLE MARKET
GROWTH TREND
Wireless infrastructure Spend(1)
($ in billions) $40
GROWTH
STRATEGY
• | Ramp current programs with key Tier 1 |
networking customers | |
• | Win new designs in 5G radio power for |
both macro cells and small cells |
Powering many of the largest wireless
networks across the world
High reliability
ruggedized power supply
for the harshest of
environments
$30
$20
$10
$0
5G at 33% CAGR
WHY WE WIN
2019 | 2020 | 2021 | 2022 | 2023 |
- Growth returning to wireless infrastructure with 5G launch
- Increased capacity demand driven by expanding use cases
- Leading reputation in high density, rugged power supplies for outdoor radio applications
- Secured significant 5G design wins across all leading base station OEMs
- Deep application knowledge and 20+ years of customer intimacy
(1) Source: Omdia Mobile Infrastructure Market forecast, 3Q20 Update | Copyright © 2020 Advanced Energy | 13 |
Inorganic Growth
INORGANIC GROWTH: LEVERAGING SCALE TO GROW SCOPE
Track Record
Deployed $534M adding >$750M of pro forma revenue(1)
Well-Defined
Acquisition Criteria
- Pure Play Power
- Expand SAM, portfolio, Technology
- Synergistic with current Organization
Building a Solid Funnel
- Plenty of opportunities in the large and fragmented power market
- Extend our efforts in 4th Industrial Revolution
Discipline and Value Creation
- Analytical and deliberate
- Accretive with first year
- Target ROIC > 10%
- Pro-formaannualized revenue
- EPS accretion based on non-GAAP measures as defined by our synergy targets
Copyright © 2020 Advanced Energy | 14 |
Value Creation
ESG INITIATIVES ARE INCORPORATED ACROSS
OUR BUSINESS AND OUR PRODUCTS
ENVRIONMENTAL | SOCIAL | GOVERNANCE | |||||
• | Energy efficient products | • Empowering our community | • | Supply chain human rights | |||
• | Energy efficient operations | • Scholarships and | • | Employee development | |||
• | Recycling | educational improvement | and training | ||||
• Volunteerism | • | Diverse Board | |||||
Copyright © 2020 Advanced Energy 15 |
Performance
DELIVERING RECORD FINANCIAL PERFORMANCE
REVENUE | GROSS PROFIT | NON-GAAP OP INCOME | ||
NON-GAAP EPS | CASH FLOW | |
($ in millions)
$300
$200
$100
$0
($ in millions)
$140
$120
$100
$80
$60
$40
$20
$0
($ in millions)
$60
$40
$20
$0
($ per share)
$1.50
$1.00
$0.50
$0.00
($ in millions) $70
$60
$50
$40
$30
$20
$10
$0
Q1'19 | Q2'19 | Q3'19 | Q4'19 | Q1'20 | Q2'20 | Q3'20 | Q1'19 | Q2'19 | Q3'19 | Q4'19 | Q1'20 | Q2'20 | Q3'20 |
Q1'19 | Q2'19 | Q3'19 | Q4'19 | Q1'20 | Q2'20 | Q3'20 | Q1'19 | Q2'19 | Q3'19 | Q4'19 | Q1'20 | Q2'20 | Q3'20 |
Copyright © 2020 Advanced Energy | 16 |
Platform for growth
TARGETING GROWTH ABOVE OUR MARKETS
$2.2B$2.1B
Combined SAM
$9.0 billion
$1.5B
$3.2B
SAM GROWTH
PROFILE
Faster than
WFE
2X Server
TAM Growth
GDP+
Stable
Growth
5-year SAM
CAGR OF 4-5%
AE REVENUE CAGR
TARGETS
>1.2X WFE CAGR
Add >$100M Annual
Revenue by 2023
>2X GDP CAGR
100 bps above market CAGR
AE Growth
CAGR of 8-9%
Portfolio Optimization
Net CAGR of 5-6%
GROWTH
DRIVERS
Extend our
Leadership
Win in
Hyperscale
Smart
Applications
5G & DC
Networking
Copyright © 2020 Advanced Energy | 17 |
Platform for growth
ACCELERATING EARNINGS GROWTH
$7.50 | |||||
+$0.20-$0.25 | 3-Year | ||||
Aspirational | |||||
+$1.15-$1.25 | Portfolio | Non-GAAP | |||
EPS Goal(2) | |||||
Optimization | |||||
+$1.20-$1.30 | AE Growth | ||||
Strategies | |||||
+$0.20-$0.25 | Market | ||||
Growth | |||||
$4.62 | Remaining | Target >50% earnings growth | |||
Synergies | |||||
A 3-year EPS CAGR of 14%(3) | |||||
L4Q NON- | or >2X revenue growth rate | ||||
GAAP EPS(1) |
(1) | Last 4 quarters reported non-GAAP EPS through Q3 2020 | Copyright © 2020 Advanced Energy | 18 |
(2) | This figure represents our aspirational goal and is not to be treated as guidance |
- 3-yearCAGR based on mid point of Q4 2020 guidance and 3-year aspirational non-GAAP EPS goal of over $7.50
Long-term Vision
3-YEAR ASPIRATIONAL GOALS AND A LONG-TERM VISION
Revenue
Non-GAAP
Operating Margins
Non-GAAP EPS
ROIC
3-YEAR
ASPIRATIONAL
GOALS
$1,650
21%
$7.50
23%
LONG-TERM
ORGANIC FINANCIAL
FRAMEWORK
5-6% Net CAGR
OPEX at ½ rev. CAGR 35-45% incr. margins
>2.0X revenue CAGR
Maintain >20%
INORGANIC
GROWTH
ASSUMPTIONS
Add ~$500M
>10% acquired
margins
Accretive in
Year 1
Targeted ROIC
at >10%
LONG-TERM
VISION
(6-8 YEARS)
$2,500
21%
$12.00
>20%
CLEAR ROADMAP FOR CREATING LONG-TERM SHAREHOLDER VALUE
Copyright © 2020 Advanced Energy | 19 |
Capital Allocation
CAPITAL ALLOCATION PLAN
Capital Allocation Track Record
2014 to Q3'20 Total
Total Acquisitions | |
Free Cash Flow | $534M |
$754M | |
Total Capital | |
Return $212M | |
28% of FCF |
Allocation of Free Cash Flow
Growth Capital
75%Return
25%
Strong Balance Sheet
supports continued inorganic growth
GROWTH: ~75%
- M&A Engine with a disciplined process
- Building a solid funnel
- Maintain gross debt leverage at 1.0-1.5x, and comfortable raising to 2.5X
- Ample liquidity with an unused LOC of $150M and accordion of $250M
SHARE REPURCHASE: ~15%
- Target to return capital to shareholders with an opportunistic share repurchase program
- Target to offset dilution over time
DIVIDEND PROGRAM: ~10%
- Initiation of quarterly dividend program, starting in Q1 2020
- Financial strength and scale supports an ongoing dividend
- Supported by strong cash flow
- Initial yield at ~0.4% with room to increase in the future
Copyright © 2020 Advanced Energy | 20 |
Aspirational Goals
THREE-YEAR ASPIRATIONAL GOALS
Generate &
Deploy Cash
Aspirational Goals(1) :
• Revenue: | $1.65B |
- Non-GAAPEPS(2) : $7.50
• ROIC(3) : | > 23% |
- Please note that hypothetical scenarios regarding revenue growth, EBITDA, EPS, (GAAP or non-GAAP), ROIC, cash generation, acquisitions, aspirational goals and targets and similar statements illustrate various possible outcomes of our different strategies if they are successful. These hypothetical scenarios and illustrations should not be treated as forecasts or projections or financial guidance. We cannot assure you that we will be able to accomplish any of these goals, metrics or opportunities at any point in the future (if at all), all of which are subject to significant risks and uncertainties. Long-term targets generally reflect a 3-4 year time frame, depending on the timing of the semi recovery.
- Refer to the non-GAAP reconciliation for additional detail.
- ROIC calculated as Non-GAAP Operating Income After Tax divided by Invested Capital, which is defined as Total Assets less Cash, Payables, Accrued Expenses
Grow &
Diversify
Drive Strong
Profitability
Copyright © 2020 Advanced Energy | 21 |
Key Messages
POWERING THE 4TH INDUSTRIAL REVOLUTION
PURE PLAY POWER LEADER
Strategic focus on power ensuring sustainable advantages and scale
4TH INDUSTRIAL REVOLUTION
Data economy and digitization drive growth across our markets
OUTPERFORMING MARKETS
Track record of growing share, content and increasing SAM
ACCELERATING EARNINGS
Targeting earnings growth at over 2X faster than revenue and an ROIC of over 20%
Copyright © 2020 Advanced Energy | 22 |
THANK YOU
Copyright © 2020 Advanced Energy
NON-GAAP MEASURES
- Advanced Energy's non-GAAP measures exclude the impact of non-cash related charges such as stock-based compensation and amortization of intangible assets, as well as discontinued operations, minority interest, and non-recurring items such as acquisition- related costs and restructuring expenses. The non-GAAP measures are not in accordance with, or an alternative for, similar measures calculated under 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 to evaluate business performance without the impacts of certain non-cash charges and other charges which are not part of the company's usual operations. The company uses these non-GAAP measures to assess performance against business objectives, make business decisions, develop budgets, forecast future periods, assess trends and evaluate financial impacts of various scenarios. In addition, management's incentive plans include these non-GAAP measures as criteria for achievements. Additionally, the company believes that these non-GAAP measures, in combination with its financial results calculated in accordance with GAAP, provide investors with additional perspective. While some of the excluded items may be incurred and reflected in the company's GAAP financial results in the foreseeable future, the company 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. The use of non-GAAP measures has limitations in that such measures do not reflect all of the amounts associated with the company's 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. Please refer to the Form 8-K regarding this presentation furnished today to the Securities and Exchange Commission.
Copyright © 2020 Advanced Energy | 24 |
NON-GAAP RECONCILIATION
Twelve months ended December 31, | |||||||||||
2016 | 2017 | 2018 | 2019 | ||||||||
Revenue | $ | 483.7 | $ | 671.0 | $ | 718.9 | $ | 788.9 | |||
GAAP Operating Income | $ | 126.9 | $ | 200.8 | $ | 171.6 | $ | 54.4 | |||
Add back: | |||||||||||
Restructuring Charges | - | - | 4.2 | 5.0 | |||||||
Acquisition-related Costs | - | 0.2 | 2.3 | 20.3 | |||||||
Stock-based Compensation | 6.3 | 12.5 | 9.7 | 7.3 | |||||||
Amortization of Intangible Assets | 4.2 | 4.4 | 5.8 | 12.2 | |||||||
Facility Transition and Relocation Costs | - | - | 1.8 | 4.8 | |||||||
Non-GAAP Operating Income | $ | 137.4 | $ | 217.8 | $ | 195.4 | $ | 104.0 | |||
Non-GAAP Operating Margin % of Revenue | 28.4% | 32.5% | 27.2% | 13.2% |
Twelve months ended December 31, | |||||||||||||
2016 | 2017 | 2018 | 2019 | ||||||||||
GAAP Income from Continuing Operations | $ | 116.9 | $ | 136.1 | $ | 147.1 | $ | 56.5 | |||||
Add back: | |||||||||||||
Restructuring Charges | - | - | 4.2 | 5.0 | |||||||||
Acquisition-related Costs | - | 0.2 | 2.3 | 20.3 | |||||||||
Stock-based Compensation | 6.3 | 12.5 | 9.7 | 7.3 | |||||||||
Amortization of Intangible Assets | 4.2 | 4.4 | 5.8 | 12.2 | |||||||||
Loss on Foreign Exchange Hedge | - | 3.5 | - | - | |||||||||
Facility Transition and Relocation Costs | - | - | 1.8 | 4.8 | |||||||||
Incremental Expense Associated with Start-up of the Asia Regional Headquarters | - | 1.1 | - | - | |||||||||
Nonrecurring Tax (Benefit) Expense Associated with Inverter Business | - | (33.8) | - | - | |||||||||
Central inverter services business sale | - | - | - | (13.7) | |||||||||
Tax Cuts and Jobs Act Impact | - | 72.9 | 5.7 | - | |||||||||
Tax Effect of Non-GAAP Adjustments | (2.9) | (5.3) | (4.6) | 1.5 | |||||||||
Non-GAAP Net Income | $ | 124.6 | $ | 191.5 | $ | 172.0 | $ | 93.9 | |||||
Share Outstanding (Millions) | 40.0 | 40.2 | 39.4 | 38.5 | |||||||||
Non-GAAP EPS | $ | 3.11 | $ | 4.77 | $ | 4.37 | $ | 2.44 | |||||
Copyright © 2020 Advanced Energy | 25 |
NON-GAAP RECONCILIATION
Reconciliation of Non-GAAP measure | |||||||||||||
- operating expenses and operating | |||||||||||||
income, excluding certain items | Three Months Ended | Nine Months Ended | |||||||||||
September 30, | June 30, | September 30, | |||||||||||
2020 | 2019 | 2020 | 2020 | 2019 | |||||||||
Gross profit from continuing operations, | |||||||||||||
as reported | $ | 153,785 | $ 73,491 | $ | 130,304 | $ 396,320 | $ | 203,357 | |||||
Adjustments to gross profit: | |||||||||||||
Stock-based compensation | 67 | 77 | 156 | 445 | 365 | ||||||||
Facility expansion, relocation costs and | |||||||||||||
other | 1,095 | 1,342 | 970 | 3,608 | 1,662 | ||||||||
Acquisition-related costs | - | 1,506 | 215 | 5,356 | 1,506 | ||||||||
Non-GAAP gross profit | 154,947 | 76,416 | 131,645 | 405,729 | 206,890 | ||||||||
Non-GAAP gross margin | 39.8% | 43.6% | 38.7% | 38.8% | 45.9% | ||||||||
Operating expenses from continuing | |||||||||||||
operations, as reported | 94,831 | 64,101 | 94,828 | 276,082 | 171,171 | ||||||||
Adjustments: | |||||||||||||
Amortization of intangible assets | (5,049) | (3,002) | (5,009) | (15,064) | (6,849) | ||||||||
Stock-based compensation | (3,714) | (840) | (2,681) | (9,221) | (4,688) | ||||||||
Acquisition-related costs | (5,214) | (6,398) | (2,978) | (10,597) | (9,440) | ||||||||
Facility expansion, relocation costs and | |||||||||||||
other | (415) | (223) | (539) | (1,770) | (297) | ||||||||
Restructuring charges | (1,494) | (152) | (5,790) | (7,940) | (3,620) | ||||||||
Non-GAAP operating expenses | 78,945 | 53,486 | 77,831 | 231,490 | 146,277 | ||||||||
Non-GAAP operating income | $ | 76,002 | $ 22,930 | $ | 53,814 | $ 174,239 | $ | 60,613 | |||||
Non-GAAP operating margin | 19.5% | 13.1% | 15.8% | 16.7% | 13.4% |
Reconciliation of Non-GAAP measure - | |||||||||||||
income excluding certain items | Three Months Ended | Nine Months Ended | |||||||||||
September 30, | June 30, | September 30, | |||||||||||
2020 | 2019 | 2020 | 2020 | 2019 | |||||||||
Income from continuing operations, less | |||||||||||||
noncontrolling interest, net of income taxes | $ 45,577 | $ | 7,246 | $ 29,295 | $ | 93,255 | $ | 45,987 | |||||
Adjustments: | |||||||||||||
Amortization of intangible assets | 5,049 | 3,002 | 5,009 | 15,064 | 6,849 | ||||||||
Acquisition-related costs(1) | 5,565 | 7,875 | 3,193 | 16,304 | 10,917 | ||||||||
Facility expansion, relocation costs and | |||||||||||||
other(2) | 1,784 | 1,565 | 1,509 | 5,652 | 1,959 | ||||||||
Restructuring charges | 1,494 | 152 | 5,790 | 7,940 | 3,620 | ||||||||
Unrealized foreign currency (gain) loss | 3,540 | - | 1,058 | 4,598 | - | ||||||||
Central inverter services business sale | - | - | - | - | (14,804) | ||||||||
Tax effect of Non-GAAP adjustments | (2,115) | 326 | (2,595) | (6,080) | 2,011 | ||||||||
Non-GAAP income, net of income taxes, | |||||||||||||
excluding stock-based compensation | 60,894 | 20,166 | 43,259 | 136,733 | 56,539 | ||||||||
Stock-based compensation, net of taxes | 2,892 | 702 | 2,170 | 7,425 | 3,887 | ||||||||
Non-GAAP income, net of income taxes | $ 63,786 | $ | 20,868 | $ 45,429 | $ | 144,158 | $ | 60,426 |
- For the three and nine months ended September 30, 2020, and 2019, Acquisition-related costs include an expense of $351 and a gain of $29, respectively, which was recognized in Other income (expense), net.
- For the three and nine months ended September 30, 2020 and 2019, Facility expansion, relocation costs and other includes a $274 noncash fixed asset write-off, which was recognized in Other income (expense), net.
Reconciliation of Non-GAAP measure - per | ||||||||||||||
share earnings excluding certain items | Three Months Ended | Nine Months Ended | ||||||||||||
September 30, | June 30, | September 30, | ||||||||||||
2020 | 2019 | 2020 | 2020 | 2019 | ||||||||||
Diluted earnings per share from continuing | ||||||||||||||
operations, as reported | $ | 1.18 | $ | 0.19 | $ | 0.76 | $ | 2.42 | $ | 1.20 | ||||
Add back (subtract): | ||||||||||||||
Per share impact of Non-GAAP adjustments, | ||||||||||||||
net of tax | 0.48 | 0.35 | 0.42 | 1.32 | 0.37 | |||||||||
Non-GAAP per share earnings | $ | 1.66 | $ | 0.54 | $ | 1.18 | $ | 3.74 | $ | 1.57 |
Copyright © 2020 Advanced Energy | 26 |
RECONCILIATION OF Q4 2020 GUIDANCE
Low End | High End | ||
Revenue | $340M | - | $380M |
Reconciliation of non-GAAP* earnings per share | |||
GAAP earnings per share | $0.82 | - | $1.24 |
Stock-based compensation | $0.08 | - | $0.08 |
Amortization of intangible assets | $0.13 | - | $0.13 |
Restructuring and other | $0.11 | - | $0.09 |
Tax effects of excluded items | -$0.04 | - | -$0.04 |
Non-GAAP* earnings per share | $1.10 | - | $1.50 |
Copyright © 2020 Advanced Energy | 27 |
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AE - Advanced Energy Industries Inc. published this content on 19 December 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 December 2020 13:18:04 UTC
