Advanced Energy Industries, Inc. · NASDAQ:AEIS
Advanced Energy Industries — Investor Presentation (February 2024)
30 slides from Advanced Energy Industries's investor presentation, February 2024
Slide 1: A Best-in-Class Industrial Growth Enterprise
A Best-in-Class Industrial Growth Enterprise February 2024 1
Slide 2: Safe Harbor
SAFE HARBOR Advanced Energy Industries, Inc.’s (the “Company’s” or “Advanced Energy’s”) guidance and other statements herein or made on the earnings conference call contain, in addition to historical information, forward-looking statements within the meaning of Section 27A of the Securities Act of 1
Slide 3: Advanced Energy at a Glance
At a Glance ADVANCED ENERGY AT A GLANCE Leader in Precision Power INDUSTRIAL & SEMICONDUCTOR MEDICAL Headquartered in Denver Colorado, EQUIPMENT Advanced Energy (NASDAQ: AEIS) is a global $10.5B leader in design and manufacture of highly Combined engineered precision power conversion, SAM(1) measure
Slide 4: Precision Power Leader for the Digital Economy
Key Messages PRECISION POWER LEADER FOR THE DIGITAL ECONOMY PURE PLAY POWER LEADER OUTPERFORMING MARKETS Strategic focus on precision power ensures Track record of broadening market reach, sustainable advantage and scale growing share and adding content PROPRIETARY SOLUTIONS ACCELERATING EARNINGS Le
Slide 5: We Are the Pure Play Power Leader
Introduction WE ARE THE PURE PLAY POWER LEADER AE provides precision power conversion and control solutions for a wide range of high value and long life-cycle SEMICONDUCTOR INDUSTRIAL & DATA CENTER TELECOM & applications EQUIPMENT MEDICAL COMPUTING NETWORKING Grid Power Process Custom Server Radio P
Slide 6: A History of Innovation and Technology Leadership
Technology Leadership Angstrom-Era Precision Plasma Power A HISTORY OF INNOVATION AND TECHNOLOGY LEADERSHIP Transforms how power is delivered Strong step function Leading compared performance to Peers Next-Gen eVerest RF Generator in advanced Angstrom-Era etch Plasma Technology • Dynamic multi-level
Slide 7: Data Economy Drives Growth Across Our Verticals
Secular Drivers DATA ECONOMY DRIVES GROWTH ACROSS OUR 4 VERTICALS • Leading-edge capacity for AI & • Accelerating adoption of 5G processors process automation • Digital Transformation and IoT • Smart manufacturing drives demand in trailing-edge • Telemedicine, remote • Move to regional supply chains
Slide 8: Focus on Proprietary Designs to Accelerate Growth
Growth Strategies FOCUS ON PROPRIETARY DESIGNS TO ACCELERATE GROWTH AE TARGETED GROWTH STRATEGIES Semiconductor: Industrial & Medical: Extend Our Leadership Expand Our Portfolio of GROW SHARE Proprietary Solutions Across Mission-Critical Precision Power Verticals Invest in INNOVATION and $1.66B Tech
Slide 9: Semiconductor: Extend Our Leadership
Semiconductor SEMICONDUCTOR: EXTEND OUR LEADERSHIP MARKET LEADER WITH PROVEN TRACK RECORD MAXStreamTM Market share every year for No.1 over 10 years in Process Power and RF Power(1) eVerest 19% 10-year Semi Product Revenue CAGR (2) eVoSTM TARGET TO CONTINUE TO OUTGROW OUR MARKET AE targeted Semi rev
Slide 10: Industrial & Medical: Expand Our Portfolio of Proprietary Solutions
Industrial & Medical INDUSTRIAL & MEDICAL: EXPAND OUR PORTFOLIO OF PROPRIETARY SOLUTIONS LEVERAGE BROAD PORTFOLIO LARGE MARKET WITH WIDE ACCELERATING INVESTMENTS OF STANDARD PRODUCTS TO RANGE OF NICHE OPPORTUNITES TO DRIVE GROWTH DELIVER CUSTOM SOLUTIONS Large SAM(1) of $4.3B Engineering AC-DC RF Ge
Slide 11: Data Center Computing: Target High-Value Applications
Data Center Computing DATA CENTER COMPUTING: TARGET HIGH-VALUE APPLICATIONS GROWING INVESTMENTS AI DRIVES HIGH-VALUE CONTENT AE TECHOLOGY LEADERSHIP (units in millions) 98% Cloud Server Units(1) Industry-Leading 14.0 96% Best Power Conversion 94% Efficiency 12.0 Good 10.0 Mainstream 8.0 2-5X Power C
Slide 12: Telecom & Networking: Target 5G Infrastructure
Telecom & Networking TELECOM & NETWORKING: TARGET 5G INFRASTRUCTURE 5G INFRASTRUCTURE MARKET GROWTH Powering many of the largest wireless networks across the world GROWTH TREND STRATEGY Mobile Radio Access Network Market (1) • Win proprietary designs in 5G radio High reliability ruggedized power ($
Slide 13: Inorganic Growth: Grow Scope and Leveraging Scale
Inorganic Growth INORGANIC GROWTH: GROW SCOPE AND LEVERAGING SCALE Acquired Electrostatic Acquired Embedded Business Power Business Strong Track Record 2014 2014 2018 2018 2020 2022 Deployed >$700M adding ~$800M of Core AE 2014 2017 2018 2019 2021 pro forma revenue(1) Thyro Acquired Power Control Mo
Slide 14: Q4 2023 Financial Highlights
Recent Results Q4 2023 FINANCIAL HIGHLIGHTS REVENUE NON-GAAP GROSS MARGIN(1) OPERATING CASH FLOW(2) $405 million 35.7% $85 million Down 1% Q/Q Down 40 bps Q/Q Record & Up 16% Q/Q NON-GAAP EPS(1) NON-GAAP OP MARGIN(1) TOTAL CASH(3) $1.24 12.3% $1.045 billion Down 3% Q/Q Down 10 bps Q/Q Net Cash of $1
Slide 15: Backlog at Normalized Levels
Backlog BACKLOG AT NORMALIZED LEVELS BACKLOG REMAINS ELEVATED BACKLOG NORMALIZED AS LEADTIMES IMPROVED • Total backlog at the end of Q4 2023 was $407 million, down $1,200 54% Y/Y and down 21% Q/Q • Mainly driven by customers reducing orders for out quarter $1,000 Backlog deliveries on improved lead
Slide 16: Growing Revenue and Earnings Through Cycles
Earnings Growth GROWING REVENUE AND EARNINGS THROUGH CYCLES MORE BALANCED REVENUE MIX OVER TIME BENEFITS OF DIVERSIFICATION Revenue and Non-GAAP EPS ($ in millions) ($ per share) • Revenue growth driven by a combination of $2,000 $8.00 organic and inorganic growth • Increased diversification into mu
Slide 17: Solid Execution Enabled Us to Achieve Long-Term Targets
Financial Framework SOLID EXECUTION ENABLED US TO ACHIEVE LONG-TERM TARGETS FROM 2020 ANALYST EVENT 2H 2022 PERFORMANCE ASPIRATIONAL LONG-TERM 2H’22 UPDATE GOALS VISION RUN-RATE Ahead of our Total Revenue ($M) $1,650 $2,500 $2,014 3-year plan Acquired Revenue ($M) - ~$500 ~$95 Solid Progress ~300bps
Slide 18: Capital Allocation Plan
Capital Allocation CAPITAL ALLOCATION PLAN Allocation of Free Cash Flow Capital Allocation Track Record GROWTH THROUGH STRATEGIC ACQUISITIONS: ~75% • M&A Engine with a disciplined process 2014 to 2023 (Cumulative) • Solid track record in deploying capital to value creating acquisitions • Building a
Slide 19: Convertible Note Enables Flexibility for Growth
Balance Sheet CONVERTIBLE NOTE ENABLES FLEXIBILITY FOR GROWTH CURRENT CAPITALIZATION USE OF PROCEEDS ($ in millions) Current Leverage(3) Maturity / Coupon 12/31/23 (x Adj. EBITDA) Expiration(4) Cash $1,044.6 STRATEGIC ACQUISITIONS Term Loan A due 2026 $355.0 1.4x SOFR + 75 Sep-26 *SWAP fixed portion
Slide 20: Strong Performance Through Cycles
Earnings Key Messages Growth STRONG PERFORMANCE THROUGH CYCLES • Good execution in 2023 ‒ Revenue of $1.66 billion down 10% Y/Y, non-GAAP(1) EPS of $4.88, record operating cash flow of $213 million ‒ 2023 benefited from our diversification strategy, with revenue performance significantly improved fr
Slide 21: Precision Power Leader for the Digital Economy
Key Messages PRECISION POWER LEADER FOR THE DIGITAL ECONOMY PURE PLAY POWER LEADER OUTPERFORMING MARKETS Strategic focus on precision power ensures Track record of broadening market reach, sustainable advantage and scale growing share and adding content PROPRIETARY SOLUTIONS ACCELERATING EARNINGS Le
Slide 22: Thank You
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Slide 23: Environment, Social and Governance
ESG and Sustainability ENVIRONMENT, SOCIAL AND GOVERNANCE ENVIRONMENT SOCIAL GOVERNANCE ▪ Inventing Energy Efficient Products ▪ Empowering Our People ▪ Enabling Effective Management COMMITMENTS ▪ Implementing Energy Efficient Operations ▪ Engaging with Our Communities ▪ Enhancing Transparency ▪ Redu
Slide 24: Q1 2024 Guidance
Q1 2024 GUIDANCE ($ in millions, except per share data) Guidance Revenue $350 +/- $15 GAAP EPS from continuing operations $0.29 +/- $0.20 Non-GAAP(1) EPS $0.70 +/- $0.20 (1) Detailed explanations of non-GAAP financials and reconciliations of GAAP to non-GAAP financials can be found at the end of thi
Slide 25: Quarterly Non-GAAP Financials
QUARTERLY NON-GAAP FINANCIALS(1) (figures in $ millions, except percentage and EPS) All figures from Continuing Operations 2021 2021 2021 2021 2022 2022 2022 2022 2023 2023 2023 2023 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Backlog 405.7 534.7 771.4 927.8 1,012.4 1,166.5 1,093.0 875.3 755.9 644.7 514.5 4
Slide 26: Non-GAAP Measures
NON-GAAP MEASURES Advanced Energy’s non-GAAP measures exclude the impact of non-cash related charges such as stock-based compensation, amortization of intangible assets, and long-term unrealized foreign exchange gains and losses, as well as discontinued operations, and non-recurring items such as ac
Slide 27: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION ($ in thousands, except percentage and $ per share) Copyright © 2024 Advanced Energy 27
Slide 28: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION ($ in thousands, except percentage and $ per share) Reconciliation of Non-GAAP measure - operating expenses and operating income, excluding certain items Year Ended December 31, 2015 2016 2017 2018 2019 2020 2021 2022 2023 Gross profit from continuing operations, as reported
Slide 29: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION ($ in thousands, except percentage and $ per share) Reconciliation of Non-GAAP measure - income excluding certain items Year Ended December 31, 2015 2016 2017 2018 2019 2020 2021 2022 2023 Income from continuing operations, less non-controlling interest, net of income taxes $
Slide 30: Q1 2024 Reconciliation of GAAP to Non-GAAP Guidance
Q1 2024 RECONCILIATION OF GAAP TO NON-GAAP GUIDANCE ($ in millions, except per share data) Low End Midpoint High End Revenue $335 $350 $365 Reconciliation of Non-GAAP EPS GAAP EPS $ 0.09 $ 0.29 $ 0.49 Stock-based compensation 0.24 0.24 0.24 Amortization of intangible assets 0.19 0.19 0.19 Restructur
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