Advanced Energy Industries, Inc. AEIS reported fourth-quarter 2018 adjusted earnings of 73 cents per share, missing the Zacks Consensus Estimate by 3 cents. Also, the figure declined 44.3% on a year-over-year basis and 30.5% sequentially.
Revenues of $154.2 million missed the Zacks Consensus Estimate of $160 million but were within the company’s guided range of $150-$160 million. The top line declined 14% on a year-over-year basis.
During the quarter, the company recorded strong growth in Industrial and Service businesses, including the benefits realized from the acquisition of LumaSense Technologies.
However, near-term delays in semiconductor capital spending by a large number of manufacturers negatively impacted revenues. Also, several global factors including decelerating growth in end-market demand for semiconductor devices, digestion of equipment capacity, along with uncertainty around trade policies and global economic growth impacted results.
Despite the challenging environment, customers are pursuing new and enabling technologies that will shape the company’s future performance within specific markets.
Management plans to increase investments in new RF products and technologies, and thereby expand its market share gains in critical areas.
The company's shares have lost 25.5% in the past year compared with the industry’s decline of 8.2%.
Product revenues declined about 18.9% year over year to $125 million in the fourth quarter.
Services revenues increased 16.3% from the prior-year quarter to $29.1 million.
Non-GAAP gross profit from continuing operations was 49.4%, down 560 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 $47.5 million increased 26.8% year over year. As a percentage of sales, R&D expenses as well as selling, general and administrative costs marked an increase.
As a result, pro-forma operating margin was 18.6%, down 1550 bps year over year.
Advanced Energy Industries, Inc. Price, Consensus and EPS Surprise
Advanced Energy Industries, Inc. Price, Consensus and EPS Surprise | Advanced Energy Industries, Inc. Quote
Balance Sheet & Cash Flow
During the reported quarter, cash flow from operations was $32.9 million compared with $30.6 million in the last reported quarter. The company repurchased $26.1 million shares in the quarter.
Total cash, cash equivalents and Marketable securities were $351.8 million in the fourth quarter compared with $341.8 million in the third quarter.
For the first quarter of 2019, Advanced Energy expects revenues in the range of $138-$148 million. The corresponding Zacks Consensus Estimate is pegged at $171.7 million.
GAAP EPS is expected within 24-42 cents per share and non-GAAP EPS is anticipated in the band of 40-55 cents. The Zacks Consensus Estimate for the same is pegged at 86 cents.
Zacks Rank and Stocks to Consider
Currently, Advanced Energy carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the broader technology sector are Twitter TWTR, Lumentum Holdings LITE and HubSpot HUBS. While Twitter sports a Zacks #1 Rank (Strong Buy), Lumentum and HubSpot both carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Twitter, Lumentum and HubSpot is projected to be 22.1%, 17% and 50%, respectively.
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