Advanced Energy Industries, Inc. recently announced financial results for the third quarter ended September 30, 2015. The company reported third quarter sales of $130.8 million compared with $136.8 million in the second quarter of 2015 and $143.1 million in the third quarter of 2014. Net income was $16.4 million or $0.40 per diluted share. Non-GAAP adjusted net income was $21.1 million or $0.51 per diluted share. A reconciliation of non-GAAP adjusted net income and earnings per share is provided in the tables below. The company ended the quarter with $199.0 million in cash and marketable securities, a sequential increase of $15.8 million.
“Near record sales to semiconductor applications drove our strong profitability and cash generation in the third quarter,” said Yuval Wasserman, President and CEO of Advanced Energy. “We expect the fourth quarter slowdown in the semiconductor capital equipment market to be slightly offset by sales to our industrial applications. With the wind down of the inverter business nearly complete, we are excited at the opportunities ahead for our industry-leading technology in an expanding number of Precision Power applications.”
Results Excluding the Inverter Business
Excluding the inverter business, sales were $107.9 million in the third quarter of 2015, above the second quarter’s sales of $104.6 million and up 18.3% from $91.2 million in the third quarter of 2014. Sales to the semiconductor market increased sequentially, while industrial sales were roughly flat.Non-GAAP operating income for the business excluding inverters was $32.4 million, or 30.1% of sales.
Closing out the third quarter, inverter sales were $22.9 million, down from $32.2 million in the second quarter, and down 55.8% from $52.0 million in the third quarter of 2014.Non-GAAP operating loss for Inverters was $7.5 million.
Restructuring and Tax Charges
During the quarter, the company incurred $13.2 million in charges related to the wind down of the inverter business that was announced on June 29, 2015. These include:
– Restructuring charges of $13.9 million consisting of $8.0 million for contract settlement costs, $5.6 million for severance and related costs and $0.3 million for facility closure costs;
– An inventory write-down of $3.4 million that is included in cost of sales; and
– Recovery of previously impaired accounts receivable of $4.1 million that is included in Selling, General and Administrative.
The remainder of the restructuring plan is expected to be substantially complete by year end. Total year restructuring, tax and other charges related to the wind down are anticipated to be within the expected range of $260 million to $290 million. Cash costs for the wind down are expected to be $20 million to $30 million in 2015. The total year 2015 GAAP tax expense is currently anticipated to range from zero to a slight tax benefit.
Net Income (Loss)
Net income for the third quarter of 2015 was $16.4 million or $0.40 per diluted share, compared with a net loss of $232.5 million or $5.68 per diluted share in the second quarter, and net income of $12.3 million or $0.30 per diluted share in the third quarter 2014.On a non-GAAP basis, adjusted net income for this quarter was $21.1 million or $0.51 per diluted share as compared to $17.7 million or $0.43 per diluted share in the second quarter of 2015, and $16.9 million or $0.42 per diluted share in the same period last year.