Advanced Energy: improved gross in 4Q and full year 2005 results

Reporting results for the 4Q and fiscal year 2005, Advanced Energy president and chief executive officer Dr. Hans Betz noted on 16 February 2006 that the firm continued to improve its gross margin eve…

Reporting results for the 4Q and fiscal year 2005, Advanced Energy president and chief executive officer Dr. Hans Betz noted on 16 February 2006 that the firm continued to improve its gross margin even on relatively flat sequential sales volumes. For the 4Q 2005, sales were USD 80.4 million, 2.1% higher than the USD 78.8 million for the 3Q 2005, and down 5.2% on the USD 84.8 million in the 4Q 2004. Gross profit was USD 30.2 million, or 37.6% of sales for the 4Q 2005, compared to USD 28.9 million, or 36.7% of sales in the 3Q 2005, and USD 13.3 million, or 15.7% of sales in the 4Q 2004. The company posted income from continuing operations of USD 5.0 million in the 4Q 2005, compared to a loss of USD 4.2 million in the 3Q 2005 and a USD 23.3 million loss in the 4Q 2004. Income from continuing operations in the 4Q 2005 reflects a 21% tax rate, lower than the anticipated rate of 40% because of the mix of foreign and domestic income in the respective tax jurisdictions, allowing the use of the net operating loss carryforwards. During the 4Q 2005, Advanced Energy sold its IKOR technology assets, resulting in income from discontinued operations of USD 5.0 million. Net income from discontinued operations in the 3Q 2005 was USD 312,000 and USD 340,000 in the 4Q of 2004. Net income for the 4Q 2005 was USD 10.0 million compared to a net loss of USD 3.9 million in the 3Q 2005, and a net loss of USD 23.0 million in the 4Q 2004. The 3Q 2005 net loss included a USD 3.0 million litigation settlement, USD 2.1 million for the early retirement of the convertible debt, and a non-cash charge of USD 1.1 million for the write-off of deferred debt issuance costs. The 4Q 2004 net loss included pre-tax charges of USD 19.8 million for higher excess and obsolete inventory reserves, a change in an accounting estimate for demonstration equipment, employee severance costs, and intangible asset impairments. “Incremental operating margin above our USD 66 million break even level was approximately 44%, and we expect additional improvements throughout the year as we continue to benefit from the increasing capability of our worldwide manufacturing operations”, said Dr. Betz. Sales for fiscal year 2005 were USD 325.5 million, down 14.5% on USD 380.5 million in 2004. Net income for the year was USD 12.8 million compared to a net loss of USD 12.7 million in 2004. Net income from continuing operations was USD 3.6 million in fiscal year 2005, compared to a loss of USD 14.7 million in 2004. “During the 4Q, we made progress in further penetrating emerging opportunities in the solar market with both our DC and RF power platforms, and in flat panel display with our RF technology for a new etch application”, said Dr. Betz. “Based on improving order trends, we currently expect 1Q 2006 sales to be USD 88 million to USD 91 million. We anticipate earnings per share in the USD 0.17 to USD 0.19 range, including estimated stock-based compensation expense of USD 600,000, or USD 0.01 per diluted share after tax, due to our adoption of SFAS 123[R] in the 1Q of 2006.” Advanced Energy Industries, Inc. develops and supports manufacturing technologies for semiconductors, flat panel displays, data storage products, solar cells, architectural glass, and other advanced product applications.