Advanced Energy Announces 2006 First Quarter Financial Results

Sales Up 17%, Operating Income Up 111% Compared to 2005 Fourth Quarter

Apr 26, 2006, 01:00 ET from Advanced Energy Industries, Inc.

    FORT COLLINS, Colo., April 26 /PRNewswire-FirstCall/ -- Advanced Energy
 Industries, Inc. (Nasdaq:   AEIS) today announced financial results for the
 first quarter ended March 31, 2006.
     (Logo: )
     Sales were $94.0 million for the first quarter of 2006, up 16.9%
 compared to $80.4 million in the fourth quarter of 2005, and up 14.3%
 compared to $82.2 million in the first quarter of 2005. Gross profit was
 $38.6 million, or 41.0% of sales, compared to $30.2 million, or 37.6% of
 sales for the fourth quarter of 2005, and $27.3 million, or 33.2% of sales
 in the first quarter of 2005.
     First quarter 2006 income from operations was $13.2 million, or 14.0%
 of sales, an increase of 111.3% compared to $6.2 million, or 7.8% of sales,
 in the fourth quarter of 2005. This compares to first quarter 2005 income
 from operations of $2.5 million, or 3.1% of sales. First quarter 2006
 income from operations includes $641,000 of stock-based compensation
 expense due to the adoption of SFAS 123(R). First quarter 2005 income from
 operations includes $1.3 million of restructuring charges related to
 employee severance and termination costs.
     First quarter 2006 net income was $12.8 million, or $0.28 per diluted
 share, compared to net income of $10.0 million, or $0.22 per diluted share
 in the fourth quarter of 2005, and $734,000 in the first quarter of 2005,
 or $0.02 per diluted share. First quarter 2006 net income includes a $1.4
 million gain, primarily related to the sale of equity securities, which
 favorably impacts diluted earnings per share by approximately $0.02. First
 quarter 2006 net income reflects a tax rate of 15%, which is lower than the
 Company's anticipated tax rate of 20% due to the mix of foreign and
 domestic income in the respective taxing jurisdictions and the utilization
 of the net operating loss carryforwards which had valuation allowances
 recorded against them.
     Dr. Hans Betz, president and chief executive officer of Advanced
 Energy, said, "Our first quarter performance demonstrates a strong demand
 environment for our innovative power generation solutions. The sequential
 sales increase was primarily driven by sales to the semiconductor industry.
 Shipments of our Pinnacle(R) DC power supply for use in semiconductor and
 Generation 5 flat panel display applications were at near record levels.
 Today, we announced a significant win for our Crystal(R) AC power solutions
 for a major architectural glass retrofit opportunity that is expected to
 drive increased sales to this market over the next twelve months. Outside
 of our core markets, we also marked another milestone in our objective to
 penetrate the solar cell manufacturing market, winning a new position at
 ECD Ovonics to provide process power using our Cesar(R) RF generators and
 VarioMatch(TM) matching networks."
     Dr. Betz continued, "We also continue to make significant progress in
 our financial performance. We were encouraged by the operating performance
 as our factory in Shenzhen, China is fully ramped, and gross margin this
 quarter was at its highest level in five years. Based on the continued
 strength in end market demand, we currently expect second quarter 2006
 sales to be in the range of $98 million to $102 million. We anticipate
 earnings per share in the range of $0.27 to $0.29."
     First Quarter 2006 Conference Call
     Management will host a conference call today, Wednesday, April 26, 2006
 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 7779721.
 The replay will be available through May 3, 2006. There will also be a
 webcast available on the Investor Relations webpage at
     About Advanced Energy
     Advanced Energy is a global leader in the development and support of
 technologies critical to high-technology, high-growth 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:
     This press release contains certain forward-looking statements,
 including the company's expectations with respect to Advanced Energy's
 financial results for the second quarter of 2006 as well as other matters
 discussed in this news release that are not purely historical data, are
 forward-looking statements. 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 we serve including the semiconductor capital
 equipment and flat panel display industries, the timing of orders received
 from our customers, our ability to realize cost improvement benefits from
 the manufacturing initiatives underway, unanticipated changes to our
 effective tax rate, 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. Forward-looking statements are made and
 based on information available to us on the date of this press release. We
 do not assume, and expressly disclaim, any obligation to update this
 information. These reports and statements are available on the SEC's
 website at Copies may also be obtained from Advanced Energy's
 website at 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.
     (in thousands, except per share data)
                                                     Three Months Ended
                                                    March 31,      December 31,
                                                2006        2005        2005
     Sales                                    $93,950     $82,176     $80,387
     Cost of sales                             55,400      54,854      50,196
     Gross profit                              38,550      27,322      30,191
     Operating expenses:
          Research and development             10,459      10,255       9,635
          Selling, general and
           administrative                      14,405      12,725      13,671
          Amortization of intangible
           assets                                 477         547         481
          Restructuring charges                    29       1,262         166
               Total operating expenses        25,370      24,789      23,953
     Income from operations                    13,180       2,533       6,238
     Other income (expense), net                1,833      (2,087)        123
     Income from continuing operations
      before income taxes                      15,013         446       6,361
     Provision for income taxes                (2,252)       (529)     (1,330)
     Income (loss) from continuing
      operations                               12,761         (83)      5,031
     Gain on sale of discontinued assets           --          --       5,210
     Results of discontinued operations            --         817        (216)
     Provision for income taxes                    --          --          --
     Income from discontinued operations           --         817       4,994
     Net income                               $12,761        $734     $10,025
     Net income (loss) per basic share
     Income (loss) from continuing
      operations                                $0.29         $--       $0.11
     Income from discontinued operations          $--       $0.02       $0.11
     Basic earnings per share                   $0.29       $0.02       $0.23
     Net income (loss) per diluted share
     Income (loss) from continuing
      operations                                $0.28         $--       $0.11
     Income from discontinued operations          $--       $0.02       $0.11
     Diluted earnings per share                 $0.28       $0.02       $0.22
     Basic weighted-average common shares
      outstanding                              44,571      32,755      44,416
     Diluted weighted-average common
      shares outstanding                       45,004      32,878      44,902
     (in thousands)
                                                  March 31,        December 31,
                                                     2006              2005
     Current assets:
          Cash and cash equivalents                 $67,965           $52,874
          Marketable securities                       8,815             6,811
          Accounts receivable, net                   72,240            68,992
          Inventories                                55,940            56,199
          Other current assets                        4,700             6,773
     Total current assets                           209,660           191,649
     Property and equipment, net                     37,502            39,294
     Deposits and other                               1,877             3,808
     Goodwill and intangibles, net                   69,716            69,843
     Customer service equipment, net                  1,848             2,407
     Deferred income tax assets, net                  5,059             3,116
     Total assets                                  $325,662          $310,117
     Current liabilities:
          Trade accounts payable                    $21,567           $22,028
          Other accrued expenses                     23,928            23,977
          Current portion of capital
           leases and senior borrowings               1,601             2,011
     Total current liabilities                       47,096            48,016
     Long-term liabilities:
         Capital leases and senior
          borrowings                                  2,028             2,179
         Other long-term liabilities                  2,556             2,492
     Total long-term liabilities                      4,584             4,671
     Total liabilities                               51,680            52,687
     Stockholders' equity                           273,982           257,430
     Total liabilities and stockholders' equity    $325,662          $310,117
     (in thousands)
                                                  Three Months Ended March 31,
                                                      2006              2005
      ACTIVITIES                                    $14,767           $18,140
     NET CASH USED IN INVESTING ACTIVITIES             (728)           (3,355)
      FINANCING ACTIVITIES                              879            (1,051)
     EFFECT OF CURRENCY TRANSLATION ON CASH             173              (772)
     INCREASE IN CASH AND CASH EQUIVALENTS           15,091            12,962
     CASH AND EQUIVALENTS, beginning of period       52,874            38,404
     CASH AND EQUIVALENTS, end of period            $67,965           $51,366

SOURCE Advanced Energy Industries, Inc.