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Advanced Energy (AEIS) Q3 Earnings & Revenues Beat Estimates

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Advanced Energy Industries, Inc. (AEIS - Free Report) reported third-quarter 2018 adjusted earnings of $1.05 per share, outpacing the Zacks Consensus Estimate by 5 cents. However, the figure declined 12% on a year-over-year basis and 16% sequentially.

Also, revenues of $173.1 million beat the Zacks Consensus Estimate of $166 million and surpassed the company’s guided range of $160-$170 million. However, the top line declined 2% year over year.
 

During the quarter, the company registered strong growth in Industrial and Service businesses, which included the benefits realized from the acquisition of LumaSense Technologies. The buyout contributed $5.6 million in revenues in the reported quarter. However, near-term delays in semiconductor memory spending by a large number of manufacturers negatively impacted revenues.

The company's shares have lost 34.4% on a year-to-date basis compared with the the industry’s decline of 17.4%.



Revenue Details

Product revenues declined about 5% year over year to $144.8 million in the third quarter.

Services revenues increased 16.5% to $28.2 million from the prior-year quarter.

Operating Results

Non-GAAP gross profit from continuing operations was 50%, down 240 basis points (bps) from the year-ago quarter. This decline was primarily due to high facility transition and relocation costs.

Non-GAAP operating expenses of $42.2 million increased 16.6% year over year. As a percentage of sales, R&D expenses as well as selling, general and administrative expenses increased.

As a result, pro-forma operating margin was 25.6%, down 630 bps year over year.

Balance Sheet & Cash Flow

During the reported quarter, cash flow from operations was $30.6 million compared with $53 million in the previous quarter. The company repurchased $31 million of shares in the quarter.

Total cash, cash equivalents and Marketable securities were $341.8 million in the third quarter compared with $436.1 million last quarter.

Fourth-Quarter Guidance

Management expects the fourth quarter to be impacted by the continued slowdown in semiconductor capital spending. The industrial market is also expected to witness lower activity due to seasonality.

For the fourth quarter, Advanced Energy expects revenues in the range of $150-$160 million. The Zacks Consensus Estimate is pegged at $166.17 million. GAAP operating margin is expected in the range of 12.8-17.5% while non-GAAP operating margin is anticipated to be 20-22%.

GAAP EPS is expected within 48 cents to 66 cents per share while non-GAAP EPS is anticipated in the band of 70 cents to 80 cents. The Zacks Consensus Estimate is pegged at $1.

Zacks Rank and Stocks to Consider

Advanced Energy currently carries a Zacks Rank #3 (Hold).

A few stocks worth considering in the broader Computer and Technology sector are Intel Corporation (INTC - Free Report) , Twilio Inc. (TWLO - Free Report) and Vishay Intertechnology, Inc. (VSH - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Intel, Twilio and Vishay is projected to be 8.42%, 9% and 9.16%, respectively.

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