AEIS - Earnings call transcript Q1 2020 | Advanced Energy Industries, Inc.

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Q1 2020 Advanced Energy Industries Earnings Conference Call. At this time all participant lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. Instructions] [Operator

go like Mok, conference Marketing Vice Relations. you. now speaker to and hand Thank Edwin today, President Please to would over the your Investor I sir. ahead, of Strategic

Edwin Mok

XXXX President our Good and operator. CFO; Vice today to First With everyone. Thank Director Paul Relations. Earnings Wasserman, Oldham, you, Call. our morning, Conference Yuval President Smith, of CEO; Advance Investor and Welcome Energy's Brian Quarter and are Executive me our

release, have you you today. find find follow not our seen at you a to press website earnings If on can our presentation discussion it ir.advanced-energy.com. also along There our slide

Before I be in will investor begin, AE conferences would I the coming mention virtually. that at mostly multi to participating months, like

As events occur, we'll make their announcements.

call to with the are today's these cause Information statements, Let risks are that materially could performance. uncertainties you contains risks on All results uncertainties guarantees is me subject filings to differ not concerning forward-looking no the and the actual SEC. based and X, that which be company aspirational and which future and of forward-looking our of remind the as should XXXX, targets, respect them. and projections today, assumes estimates, statements include and interpreted on to targets presented in May update goals Long-term today, guidance. are not any as integration obligation assumptions management's found

release between Today's slide call the reconciliations measures measures and GAAP also our and as contains non-GAAP well non-GAAP press financial contained measures. these An explanation presentation. as of are in

and Yuval With that, the let Wasserman. Yuval? our me to CEO, pass call President

Yuval Wasserman

on thank for us call. morning, this and everyone, you, Good you Edwin. Thank joining

higher midpoint managed of deliver the million quarter and their and and both In This an protect our last over main metrics. all the our of and our global guidance of has efforts that was of per our our end summary, three the our to time, share $XXX.X employees saying focus revenue of families commitments, a me which in Let by $X.XX health begin extraordinary proud non-GAAP months exceeding Energy our earnings been have our and today resulted Advanced expected the above on partners. customers' I'm widened at employees of is financial safety that guidance was range. and

you first this and an response activities give on during me unprecedented update our time. Let

as mandates. could We this everybody's early recognized together As team take and before global decisive executive systemic actions implications. rapid January, led health put long have began and to insuring ensure governments to safety an response

our and shutdown. early our Those Year preparations reopen us Lunar production New safely to ramp China factories after the allowed shortly

guidelines we and lab to innovators utilize to our solution, We product our when implemented instituted In with secured working and labs development to order and safe allowed IT our provided home and main which sophisticated access us with equipment required. home key continue from also work projects, large virtually. innovation to mini

separation and protective are structures At government our present, to protocols factories those our are beyond while with in China local due government and have implemented the are rates safety to all capacity, employees running and our facilities, our physical at of with That lower operational all own and full Within proper factories and equipment, provided Philippines above methods. restrictions. are the we Malaysia local requirements. back

effort We products to of proud to our contribute are many the this that fight pandemic.

CT analyzers. medical for equipment products like history like scanners has blood developing and supplies and power diagnostic long critical use and AE many in a designing of therapeutic

also gene science is used power supply and like in sequencing power Our vaccine instruments development. life analytical applications

increase need usage. the and semiconductor increased to part our in in the connected to driven addition, operation data data suppliers of production devices critical of resulting the demand and seeing the centers, which are In are by stay

position our of months. confidence challenges well to that been key as so in health the several as us in clear continuity as address allowed never Entering past have The lines with strength, during a to business ability role concerns in improving the play and weather this our both products safety crisis storm.

With rate beginning cash increased improved which we effective at and further debt, an Our balance is is position QX. end at lowered the sheet, the by quarter, after rate agreement a reduced well fixed an of interest swap capitalized. interest completed of the

Our strong industries. solid our demand customers the backlog and demonstrates from momentum

and a of While cases, even accelerated. believe may in the market our growth impact remain drivers in the longer on is market in term, be verticals this virus global we economy intact, our unclear, some

We Revolution. this and crisis serve and business. economy that our we customers pressure applications will essential enable fourth that and remain confident the to said, ability industrial on put That our the technologies data in industries provide that the recognize our

QX in several spending. have quarter. and during to discretionary factory ability implemented strengthened and markets to shutdowns constraints demand actions demand current sequentially revenue continuing some Government-mandated fully QX. in temporary drove further supply approach our our Taking first is Further in chain our into curtail prudent to decline issues the search limit factories the to could during a we environment, QX. Although

in We initiated share activity, which the also early opportunistic repurchase prices as declined. stopped share crisis we our

At time. to any time, Using and critical engage product remote allows capabilities future will the during to new and same innovation core design introductions, we programs continue our that drive this growth. our us talent activities did or wins delay not innovate

strategy power and navigate embedded of Artesyn our the evident. acquisition become especially we have of the through As benefits this crisis,

supply deliver operations disruption, management product Our time material distributed significant a were to of both our and customer to chain world-class us during global commitments. optimize allowing on able manufacturing and

continue from we accelerated these find integrate As two benefits operations. organizations realize and to synergies, we combined increasing

logic China gain in Korea, Taiwan. Demand design source contribution driven strong applications. from and turn We me mostly were products and key most continue foundry RF in remote business. our applications. with in was let saw growth growth across memory strength our across to by quarter, some the to particular with by notably, Most markets regions, augmented Demand momentum. different semiconductor wins plasma Now our

for chamber design equipment a new clean application significant top-tier a a won RPS and Our OEM.

equipment future. products fab displacing incumbent. power wafer semi our cross-selling see QX, an the we in these the first customer opportunity into addition, In We products market additional in for shipped into a embedded

supply of COVID-XX the chain, expect impact strong on to remain spite in QX. demand forward, Looking in we

During with our by Energy and gratifying our by the largest applied Advanced that and our It was excellence to customer see are recognized supplier in is industry-leading award recognized a investment materials. efforts products quarter, XXXX aftermarket service customers.

to Revenue multiple our to markets. on and Turning our medical related ship. industrial limitations last quarter. sites from down COVID-XX was ability production impacted significantly

supply was of the push future current a by environment the in the and factory capacity the majority architecture product sequential customer, to in new portion Pending expect large However, support recover the we a out a industrial by out current driven transitioning a who to is a to quarter. push decline of chain rent. revenue

serving currently power our in as in medical increase we applications demand. started for respiratory March demand equipment to integral high to are that and meaningfully diagnostic QX, During of are the supplies manufacturer

expect we continuing in medical QX, into driven increase Looking demand applications by market needs. to and industrial growth in

center sequentially Our revenue customer quarter-over-quarter. grew hyperscale over computing data from which XX% up strong demand from was on applications

further more saw While already to we impacted work were remote in into enterprise which were acceleration ramp initiatives. we computing, education going softness support and anticipating the offset COVID-XX. by seasonal than This an this QX during hyperscale quarter,

across the same technology demand At leadership. validating team QX. several job and strength on delivering during did our secured customers, the we Our hyperscale great time, design multiple and a enterprise wins next-generation

Looking in accelerated market of level the wins. elevated continue in hyperscale quarter, and expect this our demand investment we to the contribution at current design on

XG due was delays As and call, investment in networking spending networking last earnings low to with indicated and environment. in uncertain further our telecom demand remains the

OEM overall the enabler While market though, another strength the design we in to of we conditions current key driven challenging the to likely well. economy, see spot selected our and wins, data remain market as Longer of term, space spending in prior expect of see are growth quarter resumption see this as by we in future.

during We became challenges enable agility a and and our the quarter, our protecting and financially strategic we stronger on direction cash through solid brought serving with to innovating quarter our communities, excellence in validation results. us managing our solid our part initiatives. in in higher doing are market our results employees The this operational and of focused customers, the best our balance. efforts strong as pandemic. conclusion, out and crisis net overcome profitability deliver The the and to organization significant In

impact near-term of goal crisis aspirational this is $X.X XX% in long-term ROIC. over we our to the committed still over of While and $X.X unknown, revenue, are and billion over confident EPS non-GAAP

valued times. I I'd like quarter. for the to to support, speaking of during you look thank partners customers, challenging in your these forward with and shareholders, especially many upcoming our our employees

let me Paul. that, over to call the With turn

Paul Oldham

you, and good Thank morning. Yuval,

safe good echo our operations would Yuval's challenging and their family, good team's us times. quarter start efforts and delivering in financially. extraordinary was ensuring by like a everyone during me also results safety. for on This congratulations to these Let wishing while I health

environment, at strong cash margins, gross exceeded of our quarter, over we delivered up of flow end in generated As revenue XX%. a difficult improved realized the last and earnings range adjusted operating ROIC from our and annualized high guidance

$XXX credit. are net issuance cash million the of our balance our line million positive company's debt ability liquidity even sheet unused access and cash, The $XXX with solid after to last in and year

of variable locking the addition, payments early fixed majority In historically in converted QX, rate interest low we to lower debt balance of our X.XX%, rate in the term. of a effective for the

quarter, the on putting which to was on make month track our to I to target. accretive continue we Artesyn XX Phase us of Finally, goals solidly this progress achieve integration, our XX ahead great

revenue a and results, some was million QX. with prior telecom supply turn pro XXXX for due and grew our and to year-over-year, a to declines centers related forma production semi let Now including COVID-XX quarter partially data medical periods, offset me and On QX QX Artesyn and revenue basis, million, make networking. down in Total revenue by I'll of comments quarter in quarter then from X.X% on the full $XXX.X in of growth strong industrial constraints. first last $XXX.X and financial

organic Artesyn, to year-over-year grew sequentially million. X% revenue Excluding $XXX.X and about XX%

the production COVID-XX quarterly related our reduced impact implied in QX and our chain call. total XX% our our last on revenue as approximately we supply restrictions government during facilities by

an logic memory by our strong grew semiconductor from to Revenue XX% up QX year-over-year. year-over-year, revenue foundry X% million, semi strong with On revenue very vertical was a investment. in basis, organic from for quarter Turning increased up and market. demand fourth XX% and $XXX

our up year while forma a with basis, substantially XX% semi last in revenue in medical On year-over-year, of approximately quarter. million from COVID-XX. utilization and was and on quarter to basis, and $XX $XX service capacity revenue Europe, some due XX% and industrial Revenue year-over-year. pro markets XX% from was lower XX% constraints from product from our On service million, semi down last declined XX.X% the revenue U.S. centers a was fab combined down sequentially last

a product results into quarter. weakness industrial customer, the government-imposed million, of combination pushout constraints, was future of continued a a quarters, in transition by of Data computing from strong were Philippine orders prior out COVID sectors, related several a our results in industrial the The up XX% $XX particularly facility. of large our resulting macro production revenue and center in

revenues a quarter. pro $XX by recent declined as million, On revenues OEM design and conditions Telecom persisted. was revenue basis, investments forma XX% challenging about hyperscale the prior increased demand pro XX% market networking telecom down our year-over-year and forma year-over-year, were On up a and basis, driven wins. from XX.X%

factory. investment $X.X the quarter expansion strategic continue acquisition-related was charges Primarily costs. and and future in of will million included the in relocation approximately million sales not for million facility to Cost acquisition-related related $X.X quarters. costs of Malaysia margin the $X.X our in of Gross Most of XX.X%.

basis, items. and mix, costs sale material lower from was product other generally of a XX.X%. margins favorable benefited margin On gross lower non-GAAP Gross cost

significant we largely and costs experience did and in benefits production incremental quarter. COVID-related our as addition, offset In disruptions not local the expenses government

QX do transition were continue $X.X nearly of expenses Expenses million, million of compensation benefits quarter. expenses. $X.X into million. intangibles of million in down GAAP operating restructuring last amortization, expect QX. we operating million not million of included and these Non-GAAP and $X stock $X However, $XX.X expenses from charges, to $XX.X acquisition-related million were $X

quarter programs of controlling while spending customers, strategy technology was our the with company. primarily strategic critical execute operating margin investing to and products GAAP combined in down Non-GAAP $X.X expense in XX.X%, from expense operating continue synergies driving We in the other R&D RF last for million was of last and nonoperating of was million, included quarter million $X.X margin interest expense. $X.X lower total Other the XX.X% up X.X%. was quarter, revenue. from despite discretionary

forward. $X.X expense Given We million range swap recorded savings in to our to interest per expect to what million of going and $X transaction, total XX.X%. in expense quarter the of $X about we be $X.X we compared GAAP other million expense QX or paid tax

million the benefited XX.X% and of Our was non-GAAP income. by or $X international mix tax was expense

in optimizing by basis, from quarter operations ago. QX, approximately on GILTI allow $X.XX to and our GAAP lower the significant a In to on to impact year. going provision, rate expected forward. from from continuing GAAP XX% X% taxes of XX% were per $X.XX, in XX% the last quarter earnings be incorporating up resulting progress On made diluted These a we actions international revenue combined lower and last Artesyn addition, XXX our for during company. the and points share lower was last $X.XX $X.XX year per compared $X.X tax of to earnings Non-GAAP share earnings quarter basis us between up $X.XX and tax non-GAAP across

contribute results. to consolidated I to mentioned, our acquisition the continued As Artesyn

have As $XX of million. that we taken of of we result annualized QX, over actions believe the will synergies end in

In solidly QX, the about to earnings, per revenues in some $X.XX verticals, of including acquisition in Artesyn's non-GAAP expense share accretive lower sequentially of addition, financing. despite the adding interest remains

accretion over to $X.XX we we believe While are from the on share earnings target. ahead XX will to of quarter-to-quarter different level achieve revenue to per product due our of and accretion of mix, track our XX month fluctuate

were Turning quarter from $XXX securities million, marketable the $X.X and improved Inventory net were the were depreciation to operations on million million with We of capital million DPO. $XXX payment on amortization million, $XX is and balance to increased with debt days XX flow the X.X debt, were and the was X.X still the cash We term by five discussed the days. $X.X cash ended of up $XX.X quarter from last of ended was principal of a million days debt expenditures two earlier. up QX. significantly, years for $X interest I decreased Receivables DSO as loan. days now Payables our Total days after $XXX Note XX% remaining million. $X fixed from million bank XX Capital working $X.X quarter low and Operating quarter. rate representing that continuing with X.XX% has million, effective cost, and very an of turns million. times. sheet.

addition, are debt covenants gives on an not gross us In debt, operating our leverage, debt based which net wide envelope. extremely

our investments exited million $X.X per to share. average repurchase weather financial an spent stock to price position, which shares a continue also make to strong we the XXX,XXX execute our of $XX.XX in allow very us at QX, strategy. should and quarter During the we the needed of critical to Overall, current crisis

demonstrated, As margins continue us we have cash generate to flow. model our playbook non-GAAP to should operating allow and robust and solid financial

center the guidance. by see to semiconductor continue broadly. markets to strengthening turn me let In Now telecom in data offset industrial and term, weakness near our demand partially and in markets we

chain related factories ongoing However, supply challenges. by and we by COVID be particularly Philippines government-imposed our in continue capacity expect revenue impacted Malaysia to and to constraints,

we be depending on minus the flat supply government to $XXX primarily and result, at or estimate level of $XX a As constraints. million restrictions about of revenues million, plus the chain QX impact in

customers. based the programs We increased XX% gross and to to higher freight expediting up COVID-related expected production be together key margins expenses. mix XX% expect Operating to disruptions on spending with on strategic expenses in slightly costs, to be are accelerate and R&D increased range and

expect non-GAAP plus we per $X.XX. result, a $X.XX As or earnings share, minus at

challenging delivered financial QX. results environment, we In summary, despite in a operating and strong

on goals We Artesyn the liquidity schedule, and or our model. double projected we on integration to ahead are is was is of a EPS and current exceed the strategy excellent up of year-over-year, the operating of and trend have The quarter. in executing our track robust achieve synergy acquisition, last continue Artesyn growth. in this quarters each Since our digits two earnings closing to non-GAAP accelerating of

with environment challenges, Looking few is current limited. visibility forward, the the to operating over next and continues create quarters COVID-XX very the

the competencies and we run. confident and opportunities invested targeted data achieve on in industries the benefit Despite near-term challenges, are these However, deliver we capital. over goals, believe And to to we growth return from time accelerate and and demand earnings are be markets our support have the near-term the resources that strong. aspirational that will capability we continues long top-tier economy

Now questions. take we will your Operator?

Operator

the from [Operator Quinn from of first comes & Instructions] Bolton question Company. line Our Needham

is open. line Your now

Quinn Bolton

results, gross got back questions. so, if a Hey, operational? guys, you are the of then facilities? congratulations Malaysia. utilization And margin to the on couple I've the now the on of of sort side. with what those start follow-up constraints factories capacity especially Are nice I wanted those and mentioned getting out in you And government-imposed Philippines

Yuval Wasserman

are full in at factories and the Malaysia the Philippines the yet ramping, Quinn, capacity. not

We government-imposed and But labors, restriction have related terms capacity. mainly by ramping. doing full We're employees the full we at of great capacity government. China number Unlike a our headcount factories of per directives to are are we're local at direct don't following imitation, in long following factory. that not it's and we

Quinn Bolton

full you quarter? toward And end Or Yuval, capacity by that the government. think can get back sort the you the of of do is

Yuval Wasserman

know. don't We

As know, it you dynamic. is

working operate. at from both with that local is have we by the are the authorities. same the or closely that health required we general the governments, the time, make federal and need governments compliance all support very get we We like that sure We But to We that world Singapore, around a dynamic. the us governments we can't have see going back to maximize though there. don't Things ability to even local is the factory allow places to some predict our contagion to happen. are coming what's

but but ramping both full sites yet. in are visibility, limited we not capacity have at We

Quinn Bolton

be sense able in COVID-related be of down of that's will point sounds And in us midpoint, on June about costs. mix, like margin, XXX that's might splits that the Paul for gross then XXX between the how give some factors second you to some It some points the basis various Wondering quarter. margins the looks basis higher quarter? Understood. like the at if

Paul Oldham

a that part Certainly, offset QX, plus costs the most benefit. did in some Yes. of bit quarter good benefit basically see are of mentioned, question, support don't from the both first a costs. It's in we Quinn. is little COVID-related it. our costs increasing And as you we those Those local anticipate

quarter. couple the a is that's generally that had But cost items portion other of So we One sale first a items. decrease. favorable other fair of of in

fall some Mix are just You always there. have to primary factor. trees we expect pullback small quarter, will a And see to don't expect the so in same the items. the direction those

Quinn Bolton

Yuval. Understood. stronger-than-expected point, of And you worried much for very level high Are will in capacity tough business into tell a least at June lastly then the digestion be has business maintain Data think, or what output. half? for I this quarters, the you just about it as looks it at the half? center second the at past sort in that data into been, center all data of strong Or again of strong like fairly or second look is looks like center to couple

Yuval Wasserman

Quinn. question, good So

think from two forces. I benefiting we're driving

started one, in first previous all quarter. contributing the which The

from fastest-growing business. drives realizing that recent acceleration to relying in in Internet, to these data expect wins translated hyperscale the on is demand, the months. design increasing centers. design realized in right right And new working And we have for We of a now investments wins, in the XX XX the see now are home, only is worked data usage not saw the and especially surge continue revenue. continuing. part to the we of design we hyperscale of to Hyperscale wins design the that And last we on wins

Quinn Bolton

Thank you.

Yuval Wasserman

Thank you.

Operator

Citi. line from question comes the Our next Amanda Scarnati from of

now line Your is open.

Amanda Scarnati

pace? of mean question. think you that's clarify morning, that think of of just center on happening this pull-in sort to Or demand that's kind acceleration. data want good that Hi, hyperscale I you by a and you what off of sort Do is demand? just picking an that of accelerated additional just do

Yuval Wasserman

Amanda. that, increase added the of perspective, increase it's applications demand and some Internet in It's earlier, capacity in We said as our I and continue, that will of hyperscalers on see tremendous from traffic believe demand. We a significant coins. don't we're demand capacity, are it's more seeing the very add believe adding to we fulfill usage large

Amanda Scarnati

helping industrial get you of industrial in you for did overall the designs of large benefit COVID down was crisis. in medical division? How growth Okay. highlighted see are from And that you and side the the kind business, med-tech But then second much mentioned that that segment the And the that XX%, a bolster demand of on to contract. have a the do quarter supporting quarter? and med-tech you you continuing like on

Yuval Wasserman

So it's question, a great Amanda.

believe and The and of and million to demand huge that demand market large what science It's right as saw is growing. have, surge believe a created a in Our ventilators multiyear life go building ventilators. We there of inventory we in for is the surge this that business is into small, medical power a be growing. don't $XX know, we still I going that call a but ventilators, you We demand question from above demand. specifically build supplies us. now

continue to of like but area term, is Another gene focus area we attributes testing, right analytical expect elective now is technologies the and it has believe has that life some be It specifically a even to of is science require analytical everything that grow. in pushed medical affected growth tools, In to additional high the area assume an business medical procedures to increasing could that and vaccine short with sequencing science still and is more that The of more in we activities It's going bit. life to that us. demand are sequencing cosmetic more little be in gene development we as operate procedures in. area that what out the tools. and be we and related we going general, do growing, to small, is the is there think for

Amanda Scarnati

And local benefits government the what received you authorities. just in some continue clarify don't had mentioned last that the question from you some why and them Can were? current to I those then benefits And environment? you expect Great. you is

Paul Oldham

And Yes. China, like the that. took we I'll and some things saw holding They're based. were of hit A cases, time of impact lot them, of the of sort from virus. abatement, they contributions of some some some variety was social rent of forms. saw which In say, a early cost with we

And so programs have those through. basically worked

that's So other anticipate why don't we seeing benefits.

If you look massive the things which be at furloughs. in been that don't coming companies the companies or either of stream they have some large benefit or passed large U.S., on largely should now, having layoffs that aren't

So that doesn't fit us.

so see you other than real as the benefit And which payments, are timing deferred, tax of don't any we being some know.

So we the that But of been some see our operations across that's to we've feel able as why it relief. to this get Obviously, through. continues we worldwide roll temporary. impact fortunate

Amanda Scarnati

you. Great, thank

Paul Oldham

Thank you.

Operator

the of from question comes from Our Sankar & Company. line Krish next Cowen

now open. is line Your

Krish Sankar

constraints. Yeah, folks moment has of my actually function two I chain actually commentary two the been have this Or link same is that of foot the for key kind Is from have in is that is control hi, that Philippines everyone's thanks output? chain supply orders? just i.e., taking and regarding weakest a Malaysia whole question. exposure, impacting or many the you had the components one them. the there Yuval, geographic of

Yuval Wasserman

slowly Year, Chinese everybody very when dynamic. of At back the started it's Krish, So after go New to work. beginning right to the

shutdown. practically suppliers a close to and to go business. to You could that back long see were And like took the them area, it are recover Hubei in time that epicenter, Wuhan,

global. and is broad supply Our chain

of Artesyn and specific our teams managing very some in also addition did management that to commitment quickly broad chain us of a So other's to region to we our the supply combining managed exceed and reason help that the the back two to combined of use world and being chain very network. flexible needed the chain the operation to are there's the and deliver very address, and that we allow us shipment had because we job with And Hubei strength go supply supply was of each Wuhan be complex combined supply these business The the now nimble. and chain teams together a terms AE to phenomenal exception redundancies, combined which no and customers supply products teams. team of chain

or network day-by-day parts. specific there's suppliers it, and It's, we of deliver. So call no to a help I'll needed area specific managing that

Krish Sankar

That's any semi missed I don't And give or right. dollar All follow-up color a Paul. terms it. then to you you equipment know on about did of quarter, the how in in all. for revenues either good if think insight sequentially numbers? I June

Paul Oldham

all that in Yes. revenue that said. issues across today. continue predict expect is did didn't to say environment. and of see markets four because the you've a what We ability we're side, healthy it's just deliver strengthen the chain business demand the But to supply difficult all on on we to based say It's our we would to across the

Yuval Wasserman

demand is that not of very of demand. the I It's very is capacity to our said my demand It's And a semi as strong. demand. remarks, the a in in strong. question on Chris, question deliver

Paul Oldham

that's chain, important. supply the And

Yuval Wasserman

right? chain, supply it's And

Krish Sankar

just that the falls limited. is there could that going demand Got right strong. follow-up on one when any to now, second that to the But supply downstream but it. And shake excess No just I visibility last how knows demand could customers, I then, your ask risk is Yuval, a thing demand an still question, end down risk Because it's half? that equipment having right? opposite the supply cliff, inventory, in if the environment, semi constrained out. be if point. is given pretty half up it's the OEMs a is understand off slows constrained if one and second Any that

Yuval Wasserman

the continued demand you don't that tell I We second the is through forecast strong QX. half. can All and is

and We operation. agile have nimble an extremely

it do know perspective, our to that changes We for it. For very We've how years. effectively. know done We do how and mix. can to to respond volume quickly in we

others. So is going our comparison we in at look through you look And guidance guidance, and deliver. very general to demand strong perspective, our continue our our strong in from and to peers at QX, is if to plan

Operator

question from KeyBanc the comes next Capital. of Twigg Our from Weston line

Your now line open. is

Weston Twigg

just I question strength because center on a increase, I of Actually, follow-up between confused perspective you think supply like, I catch in how certainly segments be good to walk us in didn't thanks. you industrial through, little was heard down? for data might thought semi demand telecom I'm but you up Hi, a get which or challenges. because, up if And would segment build got from and industrial heard But that maybe could I the the Medical. I last and terms revenue some for guidance do so by data example, outlook I on wanted semi and offset wondering center. and

I don't don't be or know. or know down going you help. if think just that color additional, So But would up directional you it's means to maybe

Yuval Wasserman

So largely general we related growth if industrial, centers. with see right first segments, we if that just growing We is growth of we data market And medical don't COVID-XX. I now, strength mentioned the you we right? look have last the that, data hyperscale. aspect and serve life in hyperscale sciences, faster to in in semi, see you see of as verticals supplies. our have all, look from with And at answer, in weakness the is power We We due center, industrial, to mainly macroeconomical general forces. than see that other coming

case flat not a that showing they was So we to specifically and future our a architecture mentioned pushed new continuing customer if any within from panel QX those they of for industrial as decided adopt out revenue area that see we strength. quarters. you unique and to prepare single The look solar large ramp market at display,

that push earnings as decline, we in other Does Right? especially was is the question, a see but that And that as we and The that a that a telecom quarters. telecom disappeared, that expect turn So we see as your surprise area not said two Wes? the last a we to networking. don't out. revenue call, answer last about down

Weston Twigg

Yes. That's helpful.

together. of Just it kind putting all

Paul Oldham

is little I those revenue a think the ready broadly have customer But chasing didn't comes is who's about, at big areas specific there's issues going the toward In where But all little issues shipments to compared to that's project. and speaking, get because by it's end, visibility lot we to a area we a supply end take isn't pretty quarter. move we'll where end. of talked the to down of But product down and demand. a up sort probably a at one a to right we'll our good up swings of demand few guidance difficult specific get we little more. who the probably be There's And it lot. weaker, to less which in as to strong, stuff of areas around demand others give of current a Things not good... we're this markets the lot each guidance. why a It's but dollars kind are flat no million that's

Yuval Wasserman

COVID-XX general, the environment related chip. environment of the our the to bill all And ability in create due of uncertainty to another in to

Weston Twigg

helpful color. That's very Okay.

why margin surprised your good was reasons still. EPS what So midpoint. us it. question upside the One to if far But guidance why that so you in drive so could so had what heard understand was really it help little with bit high? I'm I I'm other strongly didn't struggling above good QX appreciate some the hear you to earnings. wondering profile I and I just a

Paul Oldham

those Yes. neutral, And end, forecast. we in It's to talked big think would cost. were In say have upside straight I One recall, basis much we you we'd about our if there's couple points I we really expected call, to things. that's XXX question. a thought COVID XX the a pretty of of our a good is

number a sale other That a little were mix. contributed. semi for then bit And had was In I items, We which cost but material, none had of good general, good all of finally, which said, we also favorable. items, was of of us. like pretty

higher better of some of so of in that's and than more a areas, to I synergies. we some global disruptions you of a our thought the the talked little previously. could, there's other all QX And factories balance guidance the lower running that a there's we costs of one leverage that's and integration because as saw. benefit see if actually And on other about to product because in ability and midpoint despite integration contributor. than we than organization starting are and guidance, look that had And mix the the we the positives maybe activities actually the the thing material well. we it's QX within But that's was the why at

Yuval Wasserman

drives integration of continue. additional Artesyn faster synergies than realize with So margins as growth we and will planned that

acquisition EPS recall, was that pursuing to an pursue pieces our digit. As double the you it. earnings we're saw you And this growth growth, accelerated was behind and earnings

plan, executing plan. the we're on that's So and the

Weston Twigg

you. makes That Thank sense. right. All

Yuval Wasserman

you. Thank

Operator

Our line Raymond next question the from of comes Molchanov Pavel from James.

now is open. line Your

Pavel Molchanov

the taking Thanks for question.

lockdown any had deliveries or in accepting your other the kind as your have product? Have headwind. the your Philippines manufacturing them that of operations lockdown in main related referenced labor prevented of curtailments from You Luzon, of customers

Paul Oldham

telecom customers, been don't talk talked say, our product I people networking kind of issues, would way get of and in some demand. our we We But the in products. about have customers, specific markets been generally to But the as Pavel. others finding in call, about. have across the talked Obviously, general, a slower. that been pulling about outside They've Yes. is we pulling

try So no chain pushing to or things very to ship us specific on have how products with channels working general, and but resolve customers as and been been to pulling flexible have this to and get supply we comments, be where in time.

by areas, I event global these where needs to as people Look, product this have it And data supported to economy, quickly together broadly, been a a in it possible. is to from get China try think be quarter to working as event. the

Pavel Molchanov

huge ago companies of quarter, say buyback one buyback, $X a but that a few did very six not you Okay. But might have planet, obviously, very, the months the now. of I repurchasing on mentioned you million bit Understood. then shares not in are the amount. some little And is

So I'm curious decision? stimulated that what kind of

Paul Oldham

Yes.

went little price thing, beat through on Artesyn very attractive. like we're were things we the going. where better was And share felt this acquisition. obviously, a had We into the we As

opportunistic triggered it program. So an

the in two months or as the or However, mean, But time environment every a in felt evolved, the it's the and been making. I it day it long last weeks like months. easily like events quickly, evolved seems happening pretty

thought as prudent and rapidly, And more to we unfold repurchase to it we was the to hold stop back saw so events on that. start

changing is balance as see at solid back where and the on or sheet, changing let's that least Pavel, go. program world's know, rapidly, at We and time the you have but opportunistic pull things a our is view

Pavel Molchanov

guys. you thank Stay for Okay, that. thanks safe

Paul Oldham

you. Thank

Operator

from Our Hosseini question comes SIG. of Mehdi line from next the

now open. Your is line

Mehdi Hosseini

my late. for apologies, and Thanks taking joined sir. Yes, I question

may So $X.XX is be taxes. my to is questions Of it $X.XX to accretion some that repeat. like pulled due lower seems in, of the being $X.XX

I revenue So how to was and cost should of accretion also it the to remember, and associated a about playing? synergies, better from remaining pulled the $X.XX, $X.XX with Artesyn. big chunk come both top I also follow-up. the accretion announced, is in, was line going synergies, think dynamics And that I a then have I the want of understand how And are cost synergies those

Paul Oldham

Yes.

Let if answer can your I me Mehdi. question, see

first XX that to months. said we the we XX So expected of accretion in $X.X

right, And tax maybe have out we you're gotten benefit. right, taxes. a of $X.X, You're some is the from $X.XX probably

basis, of was its and that's obviously quarter, positive own It's is we over contributes. it is said Last on itself $X.XX profitable. Obviously, So Artesyn accretion. contribution. just positive

it $X.XX way. the includes accretion. said quarter, by was we That financing This the cost,

we and million. implemented you of look net annualized $XX synergies we if it's that, if at also talked And identified So accretion, a you will. have about that about

goal to XX way XX So in well we on again, month and a had to that. we're our the time frame, $XX million

those are synergies. Now annualized

But not happen. are right That's run actions $XX they're identified, we're quarter rate of ramping million taken, the year. a those $XX in going are up a we're now. to that's So that million to

said, at level. result certainly, is from we're on faster we've that made of improvements as So kind track synergies base those contributing derive math I think those a achieve to we've the clear of implemented than Artesyn There's you a and the can data goals points that expected.

get Now And supplies order of a surface almost I not of say think but this it's beginning, that possible. a we million amount, of hundreds cross-selling. large some is said sort what We've would it's did scratching very auxiliary market we pilot it's a that, that sort $XX of the and the with. power units. is the for kind order, is first market of

So there, there's more small but it's at to this come point. very

Yuval Wasserman

vertical. the customer taking during this specifically cross-selling. case, cross-sell we strategy Every In working much we immediately. done forward. we vertical in having Mehdi, move Analyst start for we equipment need from in So another talked one almost cross-selling axillary of succeeded it applications, to fulfill contribution that's to power managed before. And our managed supplies our faster this made products than first the on We in to plan a acquisition semiconductor the due specific And we've about that unique block Day, and history. fab wafer to moving to building

Mehdi Hosseini

so Thanks Okay. for much all details. the

follow-up. by year the in driven you or It out? have quick different focusing you One, Just how agree any your June for I if you, And you end want see half like quarter you operating the and and maybe foundry margin? desire first did on see and color any or provide memory seems markets the two is semi-cap, on margin, playing later logic back then thoughts? to detail coming are some do gross different for you

Paul Oldham

talk Yuval Yes. I'll will the take about question the guidance and market.

margins this be we that we we than lower So little to do benefits quarter noted Those we are offset gross that's those we that costs XX% see because expect the quarter. don't We And COVID see XX%. to expect quarter. net said did also both largely last increasing, this that costs. a costs and benefits increased

customers. things higher environment where get product with around, expediting to other and we're come this as to well that costs freight just As constantly move trying and

can expected to didn't the break On So or pretty we it per probably you $X.X we derive that minus margins, $X.X, share, to see but plus we margins, down operating said operating exactly close.

Yuval Wasserman

drivers market correct. maybe basically assumption logic with of saw a bit That's memory. the to of is We foundry lot end-user consensus. And your loaded little in investment a related front-end

that the really a demand see very strong, I As and now very general, strong. strength remarks, in lot through Taiwan. vertical in prepared we demand we going of And from my we And mentioned right Korea, from China and semi QX. is saw coming the

agree your I assumptions. So I think with

Mehdi Hosseini

much so wish thanks and a health. Thanks Great, you guys.

Yuval Wasserman

you. Thank

Paul Oldham

you thank you. much very Thank committed

Operator

further questions. remarks. to for this would the At time, I back call to no over turn showing I'm like Yuval closing

Yuval Wasserman

joining for everyone, thanks, Well, us today.

spite of times. great strength interesting In are expect we the to We making this through QX we're that, strong a through We're really continuing see excited challenging delivered of living because quarter in healthy EPS QX. and to progress in meet have safe for joining ROIC. goals and more week. strategic a greater billion or non-GAAP revenue, greater our $X.X than EPS, exceed than and of XX% $X.X us, than aspirational and Thanks

Operator

call. and conference you Thank participating. Ladies gentlemen, concludes this for today's

now disconnect. may You

Advanced Energy Industries (AEIS) 6 May 202020 Q1 Earnings call transcript