Advanced Energy Announces 2006 Second Quarter Financial Results

Revenue increases 11%, net income increases 42% over prior quarter;

Operating income up 46% sequentially

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

    FORT COLLINS, Colo., July 26 /PRNewswire-FirstCall/ -- Advanced Energy
 Industries, Inc. (Nasdaq:   AEIS) today announced financial results for the
 second quarter ended June 30, 2006.
     Sales were $104.6 million for the second quarter of 2006, up 11.3%
 compared to $94.0 million for the first quarter of 2006, and up 24.2%
 compared to $84.2 million in the second quarter of 2005. Gross profit was
 $44.8 million, or 42.8% of sales, in the second quarter of 2006, compared
 to $38.6 million, or 41.0% of sales, in the first quarter of 2006, and
 $30.6 million, or 36.4% of sales, in the second quarter of 2005.
     Second quarter 2006 income from operations was $19.2 million, or 18.4%
 of sales, an increase of 45.9% compared to $13.2 million, or 14.0% of sales
 in the first quarter of 2006. This compares to second quarter 2005 income
 from operations of $5.0 million, or 6.0% of sales. Second quarter 2005
 income from operations includes $1.1 million of restructuring charges.
     Second quarter 2006 net income was $18.2 million, or $0.40 per diluted
 share, up 42.3% compared to net income of $12.8 million, or $0.28 per
 diluted share in the first quarter of 2006, and $5.9 million, or $0.18 per
 diluted share in the second quarter of 2005.
     Revenue for the six months ended June 30, 2006 was $198.5 million
 compared to $166.3 million for the first six months of 2005. Net income for
 the first six months of 2006 was $30.9 million, or $0.69 per diluted share,
 compared to $6.7 million, or $0.20 per diluted share for the first six
 months of 2005.
     Dr. Hans Betz, president and chief executive officer of Advanced
 Energy, said, "Sales to semiconductor, flat panel display and architectural
 glass customers drove much of the second quarter demand with double-digit
 sequential growth in all three of these core markets. Unit sales of our
 Pinnacle DC power conversion system, a long-time market leader for a range
 of PVD applications in our core markets, reached an all-time record level.
 The recent announcements of power system orders from three solar panel
 manufacturers further demonstrate our success in leveraging our product
 portfolio across core and emerging market opportunities."
     Dr. Betz continued, "The results of our second quarter exceeded our
 target financial performance. We delivered 43 percent incremental operating
 margins for every revenue dollar above $60 million. These are goals that
 we've been driving toward for the past twelve months, and I thank Advanced
 Energy's employees for their major contributions and successful execution
 of these critical corporate objectives. We continue to focus on further
 improving our financial performance and expanding our market presence in
 profitable growth areas."
     Third Quarter 2006 Guidance
     The Company anticipates third quarter sales in the range of $102
 million to $106 million, and earnings per share in the range of $0.34 to
 $0.37, assuming a 12% effective tax rate.
     Second Quarter 2006 Conference Call
     Management will host a conference call today, Wednesday, July 26, 2006
 at 5:00 pm Eastern 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 2629324.
 The replay will be available through August 2, 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 Global 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 third quarter of 2006 as well as other matters
 discussed in this news release that are not purely historical data.
 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, and unanticipated changes to our effective tax rate.
 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 . Copies may also be obtained from Advanced
 Energy's website at or by contacting Advanced
 Energy's investor relations at 970-221-4670. Forward-looking statements are
 made and based on information available to us on the date of this press
 release. The company assumes no obligation to update the information in
 this press release.
     (in thousands, except per share data)
                                    Three Months Ended       Six Months Ended
                                     June 30,     March 31,      June 30,
                                  2006     2005     2006      2006      2005
     Sales                      $104,571  $84,163  $93,950  $198,521  $166,339
     Cost of sales                59,811   53,517   55,400   115,211   108,371
     Gross profit                 44,760   30,646   38,550    83,310    57,968
     Operating expenses:
       Research and
        development               10,804   10,220   10,459    21,263    20,475
       Selling, general and
        administrative            14,241   13,814   14,405    28,646    26,539
       Amortization of
        intangible assets            453      518      477       930     1,065
       Restructuring charges          31    1,068       29        60     2,330
          Total operating
           expenses               25,529   25,620   25,370    50,899    50,409
     Income from operations       19,231    5,026   13,180    32,411     7,559
     Other income (expense),
      net                            741     (719)   1,833     2,574    (2,806)
     Income from continuing
      operations before income
      taxes                       19,972    4,307   15,013    34,985     4,753
     Provision for income taxes   (1,947)  (1,430)  (2,252)   (4,199)   (1,959)
     Income from continuing
      operations                  18,025    2,877   12,761    30,786     2,794
     Gain on sale of
      discontinued assets            138    2,645       --       138     2,645
     Results of discontinued
      operations                      --      427       --        --     1,244
     Provision for income taxes       --       --       --        --        --
     Income from discontinued
      operations                     138    3,072       --       138     3,889
     Net income                  $18,163   $5,949  $12,761   $30,924    $6,683
     Net income per basic share
       Income from continuing
        operations                 $0.40    $0.09    $0.29     $0.69     $0.09
       Income from discontinued
        operations                 $0.00    $0.09      $--     $0.00     $0.12
       Basic earnings per share    $0.41    $0.18    $0.29     $0.69     $0.20
     Net income per diluted
       Income from continuing
        operations                 $0.40    $0.09    $0.28     $0.68     $0.08
       Income from discontinued
        operations                 $0.00    $0.09      $--       $--     $0.12
       Diluted earnings per share  $0.40    $0.18    $0.28     $0.69     $0.20
     Basic weighted-average
      common shares outstanding   44,704   32,797   44,571    44,638    32,776
     Diluted weighted-average
      common shares outstanding   45,108   33,094   45,004    45,098    32,986
     (in thousands)
                                                   June 30,        December 31,
                                                     2006              2005
     Current assets:
          Cash and cash equivalents                 $50,837           $52,874
          Marketable securities                      43,175             6,811
          Accounts receivable, net                   77,719            68,992
          Inventories                                59,822            56,199
          Other current assets                        4,170             6,773
     Total current assets                           235,723           191,649
     Property and equipment, net                     35,461            39,294
     Deposits and other                               1,784             3,808
     Goodwill and intangibles, net                   69,360            69,843
     Customer service equipment, net                  1,632             2,407
     Deferred income tax assets, net                  5,339             3,116
     Total assets                                  $349,299          $310,117
     Current liabilities:
          Trade accounts payable                    $22,283           $22,028
          Other accrued expenses                     26,975            23,977
          Current portion of capital
           leases and senior borrowings               1,136             2,011
     Total current liabilities                       50,394            48,016
     Long-term liabilities:
         Capital leases and senior
          borrowings                                  1,982             2,179
         Other long-term liabilities                  1,280             2,492
     Total long-term liabilities                      3,262             4,671
     Total liabilities                               53,656            52,687
     Stockholders' equity                           295,643           257,430
     Total liabilities and stockholders'
      equity                                       $349,299          $310,117

SOURCE Advanced Energy Industries, Inc.