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AEIS Q3 Earnings Beat Estimates, Shares Down on Weak Q4 View
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Advanced Energy Industries (AEIS - Free Report) reported non-GAAP earnings of 98 cents per share in the third quarter of 2024, beating the Zacks Consensus Estimate by 6.52%. The bottom line declined 23.4% on a year-over-year basis.
Revenues of $374.22 million missed the Zacks Consensus Estimate by 0.09% and declined 8.7% year over year, primarily due to the weakness across Industrial, Medical and Telecom sectors.
However, revenue was up 3% sequentially led by strength in Semiconductor and Data Center Computing.
AEIS’ End Market in Detail
Semiconductor Equipment: Revenues (52.8% of total revenues) generated from the market rose 6.7% year over year to $198 million. The figure topped the Zacks Consensus Estimate by 2.98%.
Advanced Energy Industries, Inc. Price, Consensus and EPS Surprise
Sequentially, revenues increased 5%. The uptick can be attributed to accelerated deliveries driven by heightened AI demand.
AEIS reported successful design wins across its target markets. Key wins included high-density power modules for semiconductor testing and eVoS and eVerest subsystems for next-generation etch and deposition systems, which helped expand its market reach and enhanced engineering efficiency.
Industrial & Medical: Revenues (20.5% of the total revenues) from the market fell 33.3% year over year to $77 million and lagged the Zacks Consensus Estimate by 4.06%.
Soft market conditions hurt top-line growth.
Sequentially, revenues declined 3%. AEIS is experiencing strong design wins in applications, such as glass coating, test and measurement, battery production and diagnostic and therapeutic medical applications, including surgical robot systems.
Data Center Computing: Revenues (21.6% of the total revenues) from the market were $80.65 million, up 18.1% year over year. The figure missed the consensus mark by 1.37%.
Sequentially, revenues increased 11%. The upside can be attributed to heightened demand for AI infrastructure from hyperscale customers.
Telecom & Networking: Revenues (5.1% of the total revenues) generated from the market were $19.23 million, down 53.6% year over year. The figure missed the Zacks Consensus Estimate by 17.02%.
Sequentially, revenues declined 22%. The downside was primarily due to reduced infrastructure investments and high inventory levels.
Although industrial and medical revenues were slightly down, AEIS observed solid resale activity and declining inventory levels, which may soon lead to a demand recovery in these segments.
AEIS’ Operating Results
In the third quarter, the non-GAAP gross margin was 36.3%, up 20 basis points (bps) on a year-over-year basis.
Non-GAAP operating expenses were $96.9 million, down 0.4% year over year. As a percentage of revenues, the figure increased 220 bps year over year to 25.9% in the reported quarter.
The non-GAAP operating margin was 10.5%, contracting 200 bps on a year-over-year basis.
AEIS’ Balance Sheet & Cash Flow
As of Sept. 30, 2024, cash and cash equivalents were $6.57 billion compared with $9.86 million as of June 30, 2024.
In the third quarter of 2024, cash flow from operations was $35.4 million, down from $6.9 million in the second quarter of 2024.
Advanced Energy made dividend payments of $3.9 million in the reported quarter.
AEIS Initiates Q4 Guidance
For fourth-quarter 2024, Advanced Energy expects non-GAAP earnings of $1.08 per share (+/- 25 cents).
Advanced Energy anticipates revenues of $392 million (+/- $20 million).
Conclusion
Despite strong demand in the semiconductor and data center markets, weakness across the Industrial, Medical and Telecom sectors may hurt AEIS’ top line.
The company’s shares have lost 1% in the year-to-date period compared with the Zacks Computer & Technology sector’s growth of 27.6%.
Advanced Energy currently carries a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock.
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AEIS Q3 Earnings Beat Estimates, Shares Down on Weak Q4 View
Advanced Energy Industries (AEIS - Free Report) reported non-GAAP earnings of 98 cents per share in the third quarter of 2024, beating the Zacks Consensus Estimate by 6.52%. The bottom line declined 23.4% on a year-over-year basis.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Revenues of $374.22 million missed the Zacks Consensus Estimate by 0.09% and declined 8.7% year over year, primarily due to the weakness across Industrial, Medical and Telecom sectors.
However, revenue was up 3% sequentially led by strength in Semiconductor and Data Center Computing.
AEIS’ End Market in Detail
Semiconductor Equipment: Revenues (52.8% of total revenues) generated from the market rose 6.7% year over year to $198 million. The figure topped the Zacks Consensus Estimate by 2.98%.
Advanced Energy Industries, Inc. Price, Consensus and EPS Surprise
Advanced Energy Industries, Inc. price-consensus-eps-surprise-chart | Advanced Energy Industries, Inc. Quote
Sequentially, revenues increased 5%. The uptick can be attributed to accelerated deliveries driven by heightened AI demand.
AEIS reported successful design wins across its target markets. Key wins included high-density power modules for semiconductor testing and eVoS and eVerest subsystems for next-generation etch and deposition systems, which helped expand its market reach and enhanced engineering efficiency.
Industrial & Medical: Revenues (20.5% of the total revenues) from the market fell 33.3% year over year to $77 million and lagged the Zacks Consensus Estimate by 4.06%.
Soft market conditions hurt top-line growth.
Sequentially, revenues declined 3%. AEIS is experiencing strong design wins in applications, such as glass coating, test and measurement, battery production and diagnostic and therapeutic medical applications, including surgical robot systems.
Data Center Computing: Revenues (21.6% of the total revenues) from the market were $80.65 million, up 18.1% year over year. The figure missed the consensus mark by 1.37%.
Sequentially, revenues increased 11%. The upside can be attributed to heightened demand for AI infrastructure from hyperscale customers.
Telecom & Networking: Revenues (5.1% of the total revenues) generated from the market were $19.23 million, down 53.6% year over year. The figure missed the Zacks Consensus Estimate by 17.02%.
Sequentially, revenues declined 22%. The downside was primarily due to reduced infrastructure investments and high inventory levels.
Although industrial and medical revenues were slightly down, AEIS observed solid resale activity and declining inventory levels, which may soon lead to a demand recovery in these segments.
AEIS’ Operating Results
In the third quarter, the non-GAAP gross margin was 36.3%, up 20 basis points (bps) on a year-over-year basis.
Non-GAAP operating expenses were $96.9 million, down 0.4% year over year. As a percentage of revenues, the figure increased 220 bps year over year to 25.9% in the reported quarter.
The non-GAAP operating margin was 10.5%, contracting 200 bps on a year-over-year basis.
AEIS’ Balance Sheet & Cash Flow
As of Sept. 30, 2024, cash and cash equivalents were $6.57 billion compared with $9.86 million as of June 30, 2024.
In the third quarter of 2024, cash flow from operations was $35.4 million, down from $6.9 million in the second quarter of 2024.
Advanced Energy made dividend payments of $3.9 million in the reported quarter.
AEIS Initiates Q4 Guidance
For fourth-quarter 2024, Advanced Energy expects non-GAAP earnings of $1.08 per share (+/- 25 cents).
Advanced Energy anticipates revenues of $392 million (+/- $20 million).
Conclusion
Despite strong demand in the semiconductor and data center markets, weakness across the Industrial, Medical and Telecom sectors may hurt AEIS’ top line.
The company’s shares have lost 1% in the year-to-date period compared with the Zacks Computer & Technology sector’s growth of 27.6%.
Advanced Energy currently carries a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock.
Stocks to Consider
Shopify (SHOP - Free Report) , Arista Networks (ANET - Free Report) and Blackline (BL - Free Report) are some better-ranked stocks that investors can consider in the broader sector. Each stock presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shopify shares have risen 2.7% year to date. SHOP is set to report its third-quarter 2024 results on Nov. 12.
Arista Networks shares have rallied 68.2% year to date. ANET is set to report its third-quarter 2024 results on Nov. 7.
Blackline shares have lost 10.1% year to date. BL is set to report its third-quarter 2024 results on Nov. 7.