Advanced Energy (AEIS) Q2 Earnings Beat, Revenues Fall Y/Y
Advanced Energy Industries, Inc. AEIS delivered second-quarter 2023 non-GAAP earnings of $1.11 per share, beating the Zacks Consensus Estimate by 3.7%. The bottom line declined 22.9% on a year-over-year basis.
Revenues of $415.5 million surpassed the Zacks Consensus Estimate of $414 million. The top line decreased 5.8% year over year.
Softness across Semiconductor Equipment and Data Center Computing markets led to a year-over-year decline in the top line.
Nevertheless, strong momentum across the Industrial and Medical and Telecom and Networking end markets was a positive.
Advanced Energy Industries, Inc. Price, Consensus and EPS Surprise
Advanced Energy Industries, Inc. price-consensus-eps-surprise-chart | Advanced Energy Industries, Inc. Quote
End Market in Detail
Semiconductor Equipment: Revenues generated from the market fell 24.3% year over year to $173.2 million (41.7% of the total revenues). The figure missed the Zacks Consensus Estimate of $192 million.
Nevertheless, the growing requirement for high-voltage equipment in implant applications was a positive.
Industrial & Medical: Revenues from the market grew 21.6% year over year to $127.6 million (30.7% of the total revenues) in the reported quarter. The figure topped the Zacks Consensus Estimate of $109 million. Top-line growth in the market was driven by growing design wins in industrial and medical applications.
Data Center Computing: Revenues from the market were $59.1 million (14.2% of the total revenues), down 14.6% from the year-ago quarter’s level. The figure missed the Zacks Consensus Estimate of $70 million. Weakness among enterprise customers was a concern.
Telecom & Networking: Revenues generated from the market were $55.7 million (13.4% of the total revenues), up 46.3% from the prior-year quarter’s level. The figure beat the Zacks Consensus Estimate of $41.2 million. This was driven by improved component availability.
Operating Results
In the second quarter, GAAP gross margin was 35.4%, which contracted 140 basis points (bps) year over year. The non-GAAP gross margin was 35.6%, down 150 bps from the year-ago quarter’s level.
Non-GAAP operating expenses were $98.5 million, up 4.6% year over year. As a percentage of revenues, the figure expanded 230 bps year over year to 23.7% in the reported quarter.
The non-GAAP operating margin was 11.9%, contracting 390 bps from the prior-year quarter’s level.
Balance Sheet & Cash Flow
As of Jun 30, 2023, cash and cash equivalents were $455.2 million compared with $461.7 million as of Mar 31, 2023.
Total debt was $363.5 million at the end of second quarter, down from $368.4 million at the first quarter’s end.
For the second quarter, cash flow from operations was $23.6 million, lower than $31.9 million in the first quarter.
Advanced Energy made dividend payments of $3.8 million in the reported quarter.
Guidance
For third-quarter 2023, Advanced Energy expects non-GAAP earnings of $1.13 per share (+/- 20 cents). The Zacks Consensus Estimate is pegged at $1.24 per share.
Advanced Energy anticipates revenues of $415 million (+/- $15 million). The Zacks Consensus Estimate for the same is pegged at $434.03 million.
Zacks Rank & Stocks to Consider
Currently, Advanced Energy has a Zacks Rank #3 (Hold).
Investors interested in the broader technology sector can consider some better-ranked stocks like CACI International CACI and BILL Holdings, Inc. BILL, carrying a Zacks Rank #2 (Buy), and NetEase NTES, sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
CACI is set to report its fourth-quarter fiscal 2023 results on Aug 9. The Zacks Consensus Estimate for CACI’s earnings is pegged at $4.85 per share, implying growth of 6.83% from the year-ago quarter’s reported figure. CACI shares have gained 18.9% in the year-to-date period.
BILL Holdings is set to report its fourth-quarter fiscal 2023 results on Aug 17. The Zacks Consensus Estimate for BILL’s earnings is pegged at 41 cents per share. BILL shares have gained 3% in the year-to-date period.
NetEase is scheduled to report second-quarter 2023 results on Aug 24. The Zacks Consensus Estimate for NTES’ earnings is pegged at $1.33 per share, suggesting an increase of 9.02% from the prior-year quarter’s reported figure. NTES shares have gained 49% in the year-to-date period.
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