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Danny Herron
Advanced Energy Industries, Inc.
Annie Leschin/Vanessa Lehr
Advanced Energy Industries, Inc.

Advanced Energy Announces First Quarter Results
  • Revenue of $105.8 million
  • Generated $29.4 million in cash (excluding share repurchases)
  • Repurchased nearly 2.0 million shares (at an average price of $11.09 per share for an aggregate purchase of $21.9 million)
  • Total annual restructuring cost savings of $26 million

FORT COLLINS, Colo., April, 2012—Advanced Energy Industries, Inc. (Nasdaq:AEIS) today announced financial results for the first quarter ended March 31, 2012. The company posted first quarter sales of $105.8 million compared to $112.5 million in the fourth quarter of 2011 and $137.7 million in the first quarter of 2011. Income from continuing operations was $0.8 million or $0.02 per diluted share. On a non-GAAP basis, income from continuing operations was $2.4 million and earnings per diluted share from continuing operations was $0.06. The non-GAAP measures exclude the impact of $2.6 million in restructuring charges recorded in the first quarter. A reconciliation of non-GAAP income from continuing operations and earnings per share is provided in the tables. We ended the quarter with $150.7 million in cash and investments, having generated $29.4 million of cash during the quarter excluding the share repurchase of $21.9 million.

"Exiting the first quarter we further reduced our cost structure and lowered our breakeven in both our Thin Films and Solar Energy business units," said Garry Rogerson, chief executive officer. "With most of the immediate cost reductions behind us and programs in place to better utilize our cash, we are moving ahead with the next stage of our strategic plan to improve manufacturing costs and accelerate long-term, profitable revenue growth. We remain optimistic about our growth prospects, which coupled with our ongoing cost reduction efforts should improve profitability and deliver value to our shareholders." 

Thin Films Business Unit

Thin Films sales increased 11.0% to $60.4 million in the first quarter of 2012 from $54.4 million in the fourth quarter of 2011, due to strong sales to the semiconductor market. Year-over-year, Thin Films sales declined 39.7%, from $100.1 million in the first quarter of 2011.

Solar Energy Business Unit                                                             

Solar Energy sales were $45.4 million in the seasonally weak first quarter, a decrease of 21.8% from $58.1 million in the fourth quarter. On a year-over-year basis Solar Energy sales increased 20.9% from $37.6 million due to large scale deployments in North America.

Income/Loss from Continuing Operations

Income from continuing operations for the first quarter was $0.8 million or $0.02 per diluted share, compared to income from continuing operations of $18.8 million or $0.43 per diluted share in the same period last year and loss from continuing operations of $2.6 million or $0.06 per diluted share in the fourth quarter of 2011. On a non-GAAP basis, excluding the impact of the restructuring charge, income from continuing operations was $2.4 million or $0.06 per diluted share up from $0.5 million or $0.01 per diluted share in the fourth quarter of 2011.

Restructuring Charge

The company incurred $2.6 million in charges this quarter related to the restructuring plan that was announced on September 28, 2011. During the quarter the company exited certain facilities, implemented its redesigned compensation plan and made further progress on the transfer of manufacturing of certain solar inverter subcomponents to its Shenzhen, China factory, resulting in annualized savings of approximately $14 million.

The remainder of the restructuring plan is expected to be implemented over the next 6 to 12 months as the company further reduces its cost structure, closes facilities, and relocates other functions to different regions worldwide. As a result, the company anticipates further charges in the amount of $2 to $6 million, principally for space consolidation, and another $1 million in additional severance costs over this timeframe. Once complete, the restructuring plan, along with other cost savings initiatives and margin improvements, is currently expected to deliver annual savings in excess of $30 million, well ahead of our original plan.

Second Quarter 2012 Guidance                                                                                  

The company anticipates second quarter 2012 results from continuing operations to be within the following ranges:

  •   Sales of $114 million to $120 million
  •   Non-GAAP per share earnings of $0.11 to $0.14

First Quarter 2012 Conference Call

Management will host a conference call tomorrow, Tuesday, May 1, 2012, at 8:30 a.m. Eastern Daylight Time to discuss Advanced Energy's financial results. Domestic callers may access this conference call by dialing 866-770-7120. International callers may access the call by dialing 617-213-8065. Participants will need to provide conference pass code 87964812. For a replay of this teleconference, please call 888-286-8010 or 617-801-6888, and enter the pass code 73483609. The replay will be available for two weeks following the conference call. A webcast will also be available on the Investor Relations web page at

About Advanced Energy

Advanced Energy is a global leader in reliable power conversion solutions used in thin-film plasma manufacturing and solar energy generation. Founded in 1981, Advanced Energy is headquartered in Fort Collins, Colorado with dedicated support and service locations around the world. For more information, go to

This release includes GAAP and non-GAAP operating income and per share earnings data. These 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 regarding financial and business trends relating to its financial condition and results of operations. Additionally, the company believes that these non-GAAP measures, in combination with its financial results calculated in accordance with GAAP, provides investors with additional perspective. . While some of these 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 they do not reflect all of the amounts associated with its 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.

For additional information on the items excluded from one or more of its non-GAAP financial measures, refer to the Form 8-K regarding this release furnished today to the Securities and Exchange Commission.

Forward-Looking Language

The company's expectations with respect to guidance to financial results for the second quarter ending June 30, 2012, anticipated cost savings and restructuring activities and other statements 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: 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 continuation of RPS (renewable portfolio standards), the timing and availability of incentives and grant programs in North America and Europe related to the renewable energy market, renewable energy project delays resulting from solar panel price declines and increased competition in the solar inverter equipment market, the timing of orders received from customers, the company's ability to realize benefits from cost improvement efforts and any restructuring plans, the ability to source materials and manufacture products, 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 Copies may also be obtained from Advanced Energy's website at 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.

(in thousands, except per share data)     
                                                    Three Months Ended 
                                                    March 31,        December 31,
                                                    2012       2011       2011
SALES                                               $ 105,787  $ 137,652  $ 112,49
COST OF SALES                                    66,043     75,607     73,607
GROSS PROFIT                                      39,744     62,045     38,888
                                                                37.6%      45.1%      34.6%
Research and development                       15,115     15,862     14,393
Selling, general and administrative             20,059     20,905     22,343
Restructuring charges                               2,575      --         4,229
Amortization of intangible assets               1,372      921        1,021
Total operating expenses                         39,121     37,688     41,986
Operating income (loss)                             623        24,357     (3,098)
Other income, net                                        411        663        721
Income (loss) from continuing operations before income taxes
                                                                  1,034      25,020     (2,377)
Provision for income taxes                          268        6,254      218
                                                                     766        18,766     (2,595)
Income (loss) from discontinued operations, net of income taxes   
                                                                   303        140        (175)
NET INCOME (LOSS)                                   $ 1,069    $ 18,906   $ (2,770)
Basic weighted-average common shares outstanding          
                                                                      40,781     43,440     43,316
Diluted weighted-average common shares outstanding
                                                                     41,292     44,133     43,546
BASIC EARNINGS PER SHARE                     $ 0.02     $ 0.43  $ (0.06)
DILUTED EARNINGS PER SHARE                  $ 0.02     $ 0.43  $ (0.06)
BASIC EARNINGS PER SHARE                     $ 0.01     $ 0.00  $ (0.00)
DILUTED EARNINGS PER SHARE                  $ 0.01     $ 0.00  $ (0.00)
BASIC EARNINGS PER SHARE                     $ 0.03     $ 0.44  $ (0.06)
DILUTED EARNINGS PER SHARE                  $ 0.03     $ 0.43  $ (0.06)
(in thousands)     
                                                     March 31,      December 31,        
                                                     2012           2011 *       
Current assets:     
Cash and cash equivalents            $ 125,418      $ 117,639       
Marketable securities                            25,325         25,567       
Accounts receivable, net                    103,414        132,485       
Inventories, net                                     83,164         80,283       
Deferred income taxes                            9,011          9,014       
Income taxes receivable                       14,863         13,826       
Other current assets                             10,730         11,672       
Total current assets                             371,925        390,486       
Property and equipment, net                   41,247         42,338       
Deposits and other                                   9,031          8,959       
Goodwill and intangibles, net                   88,581         89,953       
Deferred income tax assets, net               1,706          1,642       
Total assets                                           $ 512,490      $ 533,378       
Current liabilities:     
Accounts payable                                     $ 38,225       $ 44,828       
Other accrued expenses                            40,389         46,416       
Total current liabilities                                   78,614         91,244       
Long-term liabilities                                       44,324         34,795       
Total liabilities                                               122,938        126,039       
Stockholders' equity                                      389,552        407,339       
Total liabilities and stockholders' equity      $ 512,490      $ 533,378       
* December 31, 2011 amounts are derived from the December 31, 2011 audited Consolidated Financial Statements.     
(in thousands)     
                                                     Three Months Ended 
                                                     March 31,           December 31,
                                                     2012     2011       2011
Thin Films                                 $ 60,390 $ 100,099  $ 54,420
Total Sales                                  105,787  137,652    112,495
Thin Films                                           $ 3,167  $ 24,824   $ 7,360
Solar Energy                                            493      2,512      231
Total segment operating income            3,660    27,336     7,591
Corporate expenses                              (462)    (2,979)    (6,460)
Restructuring charges                             (2,575)  --         (4,229)
Other income, net                                    411      663        721
Income (loss) from continuing operations before income taxes       
                                                       $ 1,034  $ 25,020   $ (2,377)
(in thousands)     
Reconciliation of Non-GAAP measure - income from operations
without restructuring charge                                         Three Months Ended          
                                                                                                March 31,         
Operating Income (loss), as reported                                           $ 623         
Add back:
Restructuring charge                                                                       2,575         
Income from operations without restructuring charge                 $ 3,198         
Reconciliation of Non-GAAP measure - income from continuing operations without restructuring charge                                                                            Three Months Ended          
                                                                                             March 31,         
Income (loss) from continuing operations, net of tax, as reported    $ 766         
Add back:     
Restructuring charge, net of tax benefit                                            1,651         
Income from continuing operations, net of tax without restructuring charge
                                                                                                         $ 2,417         
Reconciliation of Non-GAAP measure - per share earnings from
continuing operations without restructuring charge               Three Months Ended         
                                                                                                                  March 31,         
Diluted earnings per share from continuing operations, as reported                $ 0.02         
Add back:     
per share impact of restructuring charge, net of tax benefit                               0.04         
Per share earnings from continuing operations without restructuring charge  $ 0.06