Advanced Energy Industries, Inc. (AEIS Quick QuoteAEIS - Free Report) reported fourth-quarter 2021 non-GAAP earnings of $1.36 per share, beating the Zacks Consensus Estimate by 41.7%. Further, the bottom line improved 52.8% from the prior quarter but decreased 8.7% from the year-ago quarter.

Revenues of $396.9 million surpassed the Zacks Consensus Estimate of $360 million. The top line improved 7% from the year-ago quarter and 14.7% from the previous quarter.

Top-line growth was driven by strong momentum across semiconductor equipment, data center computing, and industrial and medical end markets.

However, the coronavirus-induced supply-chain constraints acted as headwinds. Further, softness in the telecom and networking markets was another concern.

End Market in Detail

Semiconductor Equipment: Revenues generated from this market grew 8.2% year over year to $179.3 million (45.2% of total revenues), driven by strong fab investments that led to a robust demand environment.

Industrial & Medical: Revenues from this market grew 5.3% year over year to $98.8 million (24.9% of revenues) in the reported quarter. Top-line growth in this market was driven by growing customer demand. Also, impressive design wins in medical, horticulture and solar cell manufacturing remained positives.

Data Center Computing: Revenues from the market were $80.1 million (20.2% of revenues), up 22.6% from the year-ago quarter. This was attributed to improved parts availability.

Telecom & Networking: Revenues generated from this market were $38.7 million (9.7% of revenues), down 16% from the prior-year quarter due to portfolio optimization actions.

Nevertheless, strong investments in 5G infrastructure, which led to growth in the company’s shipments, remained a tailwind. Also, the company’s continuous design wins were positives.

Operating Results

In the fourth quarter, non-GAAP gross profit margin was 35.5%, which contracted 400 basis points (bps) from the year-ago quarter.

Non-GAAP operating expenses were $86.1 million, up 11.9% year over year. As a percentage of revenues, the figure expanded 100 bps year over year to 21.7% in the reported quarter.

Non-GAAP operating margin was 13.8%, contracting 490 bps from the prior-year quarter.

Balance Sheet & Cash Flow

As of Dec 31, 2021, cash, cash equivalents and marketable securities were $546.7 million compared with $550.8 million on Sep 30, 2021.

Total debt was $392.7 million at fourth-quarter end, down from $397.6 million at third-quarter end.

For the fourth quarter, cash flow from operations was $34.5 million compared with $18.3 million in the third quarter.

The company made dividend payments of $3.8 million and repurchased shares worth $21.5 million in the quarter.

Guidance

For first-quarter 2022, Advanced Energy expects non-GAAP earnings of 94 cents per share (+/- 25 cents). The Zacks Consensus Estimate is pegged at $1.00 per share.

Further, the company anticipates revenues of $360 million (+/- $20 million). The Zacks Consensus Estimate for the same is projected at $360.8 million.

Zacks Rank & Stocks to Consider

Currently, Advanced Energy has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector include Bruker (BRKR Quick QuoteBRKR - Free Report) , Intuit (INTU Quick QuoteINTU - Free Report) and Zscaler (ZS Quick QuoteZS - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bruker is scheduled to release fourth-quarter 2021 results on Feb 11. It has gained 16.7% over a year. The long-term earnings growth rate for BRKR is currently projected at 20.6%.

Intuit is slated to report second-quarter fiscal 2022 results on Feb 24. It has gained 39.2% over a year. The long-term earnings growth rate for INTU is currently projected at 15.7%.

Zscaler is slated to report second-quarter fiscal 2022 results on Feb 24. It has gained 19.5% over a year. The long-term earnings growth rate for ZS is currently projected at 37.1%.