8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________________

FORM 8-K

________________________________________________

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 30, 2018

________________________________________________

Advanced Energy Industries, Inc.

(Exact name of registrant as specified in its charter)

________________________________________________

Delaware	000-26966	84-0846841
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1625 Sharp Point Drive, Fort Collins, Colorado	80525
(Address of principal executive offices)	(Zip Code)

(970) 221-4670

(Registrant's telephone number, including area code)

Not applicable

(Former name or former address, if changed since last report)

________________________________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [   ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [   ]

Item 2.02 Results of Operations and Financial Condition.

The information in this Form 8-K is furnished under “Item 2.02 Results of Operations and Financial Condition” and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

On July 30, 2018, Advanced Energy Industries, Inc. issued a press release announcing its financial results for the quarter ended June 30, 2018. A copy of the press release is furnished with this Current Report on Form 8-K as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits.

(d)	Exhibits
99.1		Press release dated July 30, 2018 by Advanced Energy Industries, Inc., reporting its financial results for the quarter ended June 30, 2018.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	/s/ Paul Oldham
Date: July 30, 2018	Paul Oldham
	Chief Financial Officer & Executive Vice President

EX-99.1

Financial News Release

Advanced Energy Announces Second Quarter 2018 Results

• Q2 Revenue increased 18.2% y/y to $196.0 million

• Q2 GAAP EPS from continuing operations was $1.17

• Q2 Non-GAAP EPS from continuing operations was $1.25

Fort Collins, Colo., July 30, 2018 - Advanced Energy Industries, Inc. (Nasdaq: AEIS), today announced financial results for the second quarter ended June 30, 2018.

“Our diversification strategy enabled us to maintain revenues at record levels this quarter as our Industrial and Service businesses reached new highs offsetting near-term delays in semiconductor memory spending,” said Yuval Wasserman, president and CEO. “Although we expect 2H revenues to be impacted by the timing of semiconductor investments, we remain confident in the multiple drivers of the semi market in the long term. In addition as we continue to expand into adjacent and new markets, and grow content in Semiconductor, we are further positioning AE for sustainable, profitable growth.”

Second Quarter Results

Sales were $196.0 million in the second quarter of 2018 compared with $195.6 million in the first quarter of 2018 and $165.9 million in the second quarter of 2017.

GAAP income from continuing operations was $46.4 million or $1.17 per diluted share in the second quarter of 2018 compared with $46.4 million or $1.16 per diluted share in the first quarter of 2018, and $45.9 million or $1.14 per diluted share in the second quarter of 2017.

Non-GAAP income from continuing operations was $49.4 million or $1.25 per diluted share in the second quarter of 2018. This compared with $53.4 million or $1.34 per diluted share in the first quarter of 2018, and $49.2 million or $1.22 per diluted share in the second quarter of 2017. A reconciliation of non-GAAP measures is provided in the tables below.

The company generated $53.0 million of operating cash from continuing operations in the second quarter of 2018. During the quarter the company repurchased approximately 407 thousand shares for $25.3 million dollars.

Discontinued Operations

The company’s financial statements for all periods presented reflect results for the continuing precision power business, with the discontinued inverter business included in discontinued operations for all purposes. Further financial detail regarding the amounts related to the discontinued inverter business are available in the company’s 2017 Annual Report on Form 10-K.

Third Quarter 2018 Guidance

Based on the company's current view, beliefs and assumptions, its guidance for the third quarter of 2018 is within the following ranges and does not incorporate any potential adjustments during the measurement period associated with U.S. tax reform.

	Q3 2018
Revenues	$160M - $170M
GAAP operating margins from continuing operations	25.2% - 27.2%
GAAP EPS from continuing operations	$0.86 - $1.00
Non-GAAP operating margins from continuing operations	27.5% - 29.5%
Non-GAAP EPS from continuing operations	$0.93 - $1.07

Second Quarter 2018 Conference Call

Management will host a conference call tomorrow morning, Tuesday, July 31, 2018 at 6:30 a.m. Mountain Time/ 8:30 a.m. Eastern Time to discuss Advanced Energy's financial results. Domestic callers may access this conference call by dialing 855-232-8958. International callers may access the call by dialing 315-625-6980. Participants will need to provide the operator with the Conference ID Number 4559567, which has been reserved for this call. For a replay of this teleconference, please call 855-859-2056 or 404-537-3406 and enter Conference ID Number 4559567. The replay will be available for one week following the conference call. A webcast will also be available on the company’s Investor Relations web page at http://ir.advanced-energy.com.

About Advanced Energy

Advanced Energy (Nasdaq: AEIS) is a global leader in innovative power and control technologies for high-growth, precision power solutions for thin films processes and industrial applications. Advanced Energy is headquartered in Fort Collins, Colorado, with dedicated support and service locations around the world. For more information, visit: www.advanced-energy.com.

Advanced Energy and the Advanced Energy logo are trademarks of Advanced Energy Industries, Inc. or one of its Affiliates in the United States and elsewhere.

Paul Oldham Advanced Energy Industries, Inc. (970) 407-6615 paul.oldham@aei.com Annie Leschin/Rhonda Bennetto Advanced Energy Industries, Inc. (970) 407-6555 ir@aei.com

Non-GAAP Measures

This release includes GAAP and non-GAAP income and per-share earnings data and other GAAP and non-GAAP financial information. Advanced Energy’s non-GAAP measures exclude the impact of non-cash related charges such as stock-based compensation and amortization of intangible assets, as well as non-recurring items such as acquisition-related costs. Additionally, the second quarter non-GAAP results exclude estimated income tax expense associated with U.S. tax reform. For the third quarter ending September 30, 2018 guidance, the company expects stock-based compensation of $2.5 million and amortization of intangibles of $1.3 million. The non-GAAP measures included in this release are not in accordance with, or an alternative for, similar measures calculated under generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Advanced Energy believes that these non-GAAP measures provide useful information to management and investors to evaluate business performance without the impacts of certain non-cash charges and other charges which are not part of the company’s usual operations. The company uses these non-GAAP measures to assess performance against business objectives, make business decisions, develop budgets, forecast future periods, assess trends and evaluate financial impacts of various scenarios. In addition, management's incentive plans include these non-GAAP measures as criteria for achievements. Additionally, the company believes that these non-GAAP measures, in combination with its financial results calculated in accordance with GAAP, provide investors with additional perspective. While some of the excluded items may be incurred and reflected in the company’s GAAP financial results in the foreseeable future, the company believes that the items excluded from certain non-GAAP measures do not accurately reflect the underlying performance of its continuing operations for the period in which they are incurred. The use of non-GAAP measures has limitations in that such measures do not reflect all of the amounts associated with the company’s results of operations as determined in accordance with GAAP, and these measures should only be used to evaluate the company’s results of operations in conjunction with the

corresponding GAAP measures. Please refer to the Form 8-K regarding this release furnished today to the Securities and Exchange Commission.

Forward-Looking Statements

The company’s guidance with respect to anticipated financial results for the third quarter ending September 30, 2018, potential future growth and profitability, our future business mix, expectations regarding future market trends and the company’s future performance within specific markets (e.g., statements regarding anticipated semiconductor and industrial market growth) and other statements herein or made on the above-announced conference call that are not historical information are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to: (a) the effects of global macroeconomic conditions upon demand for our products and services; (b) the volatility and cyclicality of the industries the company serves, particularly the semiconductor industry; (c) delays in capital spending by end-users in our served markets; (d) the accuracy of the company’s estimates related to fulfilling solar inverter product warranty and post-warranty obligations; (e) the company’s ability to realize its plan to avoid additional costs after the solar inverter wind-down; (f) the accuracy of the company's assumptions on which its financial statement projections are based; (g) the impact of product price changes, which may result from a variety of factors; (h) the timing of orders received from customers; (i) the company’s ability to realize benefits from cost improvement efforts including avoided costs, restructuring plans and inorganic growth; (j) the company’s ability to obtain in a timely manner the materials necessary to manufacture its products; (k) unanticipated changes to management's estimates, reserves or allowances; (l) changes and adjustments to the tax expense and benefits related to the recently enacted U.S. tax reform; and (m) the effects of recent U.S. government trade restrictions and other governmental action related to tariffs upon demand for our products and services and the U.S. economy. These and other risks are described in Advanced Energy's Form 10-K, Forms 10-Q and other reports and statements filed with the Securities and Exchange Commission (the “SEC”). These reports and statements are available on the SEC's website at www.sec.gov. Copies may also be obtained from Advanced Energy's investor relations page at http://ir.advanced-energy.com or by contacting Advanced Energy's investor relations at 970-407-6555. Forward-looking statements are made and based on information available to the company on the date of this press release. Aspirational goals and targets discussed on the conference call or in the presentation materials should not be interpreted in any respect as guidance. The company assumes no obligation to update the information in this press release.

ADVANCED ENERGY INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share data)

	Three Months Ended									Six Months Ended
	June 30,						March 31,			June 30,
	2018			2017			2018			2018			2017
Sales:
Product	$	169,235		$	143,288		$	171,209		$	340,444		$	272,115
Service	26,797			22,584			24,408			51,205			43,108
Total sales	196,032			165,872			195,617			391,649			315,223
Cost of sales:
Product	80,953			66,491			79,806			160,759			126,608
Service	13,844			12,240			12,166			26,010			22,643
Total cost of sales	94,797			78,731			91,972			186,769			149,251
Gross profit	101,235			87,141			103,645			204,880			165,972
	51.6		%	52.5		%	53.0		%	52.3		%	52.7		%
Operating expenses:
Research and development	19,195			14,610			17,637			36,832			27,113
Selling, general and administrative	24,758			23,790			28,648			53,406			45,888
Amortization of intangible assets	1,264			974			1,257			2,521			1,936
Total operating expenses	45,217			39,374			47,542			92,759			74,937
Operating income	56,018			47,767			56,103			112,121			91,035
Other income (expense), net	(485		)	(83		)	26			(459		)	(3,291		)
Income from continuing operations before income taxes	55,533			47,684			56,129			111,662			87,744
Provision for income taxes	9,133			1,811			9,759			18,892			6,430
Income from continuing operations, net of income taxes	46,400			45,873			46,370			92,770			81,314
Income from discontinued operations, net of income taxes	5			179			140			145			2,273
Net income	46,405			46,052			46,510			92,915			83,587
Income from continuing operations attributable to noncontrolling interest	44			—			31			75			—
Net income attributable to Advanced Energy Industries, Inc.	$	46,361		$	46,052		$	46,479		$	92,840		$	83,587
Basic weighted-average common shares outstanding	39,349			39,849			39,619			39,484			39,793
Diluted weighted-average common shares outstanding	39,603			40,250			39,995			39,807			40,212
Earnings per share attributable to Advanced Energy Industries, Inc:
Continuing operations:
Basic earnings per share	$	1.18		$	1.15		$	1.17		$	2.35		$	2.04
Diluted earnings per share	$	1.17		$	1.14		$	1.16		$	2.33		$	2.02
Discontinued operations:
Basic earnings per share	$	0.00		$	0.00		$	0.00		$	0.00		$	0.06
Diluted earnings per share	$	0.00		$	0.00		$	0.00		$	0.00		$	0.06
Net income:
Basic earnings per share	$	1.18		$	1.16		$	1.17		$	2.35		$	2.10
Diluted earnings per share	$	1.17		$	1.14		$	1.16		$	2.33		$	2.08

ADVANCED ENERGY INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

	June 30,		December 31,
	2018		2017
ASSETS	Unaudited
Current assets:
Cash and cash equivalents	$	432,999	$	407,283
Marketable securities	3,146		3,104
Accounts and other receivable, net	106,302		87,429
Inventories, net	109,834		78,450
Income taxes receivable	3,290		1,295
Other current assets	7,263		8,129
Current assets of discontinued operations	7,979		9,535
Total current assets	670,813		595,225
Property and equipment, net	24,148		17,795
Deposits and other assets	3,670		3,051
Goodwill and intangibles, net	86,928		87,311
Deferred income tax assets	38,419		18,841
Non-current assets of discontinued operations	11,080		11,085
Total assets	$	835,058	$	733,308
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	58,028	$	48,177
Other accrued expenses	67,823		50,092
Current liabilities of discontinued operations	6,478		7,850
Total current liabilities	132,329		106,119
Non-current liabilities of continuing operations	94,475		91,271
Non-current liabilities of discontinued operations	12,738		15,277
Long-term liabilities	107,213		106,548
Total liabilities	239,542		212,667
Advanced Energy stockholders’ equity	595,010		520,641
Noncontrolling interest	506		—
Stockholders' equity	595,516		520,641
Total liabilities and stockholders' equity	$	835,058	$	733,308

December 31, 2017 amounts are derived from the December 31, 2017 audited Consolidated Financial Statements.

ADVANCED ENERGY INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(in thousands)

	Six Months Ended June 30,
	2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	92,915		$	83,587
Income from discontinued operations, net of income taxes	145			2,273
Income from continuing operations, net of income taxes	92,770			81,314
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	5,917			4,219
Stock-based compensation expense	6,437			7,254
Provision for deferred income taxes	(96		)	—
Loss on foreign exchange hedge	—			3,489
Net loss on disposal of assets	158			65
Changes in operating assets and liabilities, net of assets acquired	(17,282		)	10,272
Net cash provided by operating activities from continuing operations	87,904			106,613
Net cash used in operating activities from discontinued operations	(2,450		)	(6,396		)
Net cash provided by operating activities	85,454			100,217
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities	(91		)	(19		)
Proceeds from sale of marketable securities	4			723
Restricted Cash	—			(17,732		)
Acquisitions, net of cash acquired	(9,072		)	—
Purchase of foreign exchange hedge	—			(3,489		)
Purchases of property and equipment	(9,426		)	(3,408		)
Net cash used in investing activities from continuing operations	(18,585		)	(23,925		)
Net cash used in investing activities from discontinued operations	—			—
Net cash used in investing activities	(18,585		)	(23,925		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase and retirement of common stock	(38,059		)	—
Net payments related to stock-based award activities	(2,576		)	(1,874		)
Net cash used in financing activities from continuing operations	(40,635		)	(1,874		)
Net cash used in financing activities from discontinued operations	—			—
Net cash used in financing activities	(40,635		)	(1,874		)
EFFECT OF CURRENCY TRANSLATION ON CASH	(1,160		)	1,216
INCREASE IN CASH AND CASH EQUIVALENTS	25,074			75,634
CASH AND CASH EQUIVALENTS, beginning of period	415,037			289,517
CASH AND CASH EQUIVALENTS, end of period	440,111			365,151
Less cash and cash equivalents from discontinued operations	7,112			6,214
CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS, end of period	$	432,999		$	358,937

ADVANCED ENERGY INDUSTRIES, INC.

SELECTED OTHER DATA (UNAUDITED)

(in thousands)

Reconciliation of Non-GAAP measure - operating expenses and operating income, excluding certain items	Three Months Ended									Six Months Ended
	June 30,						March 31,			June 30,
	2018			2017			2018			2018			2017
Gross profit from continuing operations, as reported	$	101,235		$	87,141		$	103,645		$	204,880		$	165,972
Adjustments to gross profit:
Stock-based compensation	149			379			351			500			714
Facility expansion and relocation costs	249			—			—			249			—
Non-GAAP gross profit from continuing operations	101,633			87,520			103,996			205,629			166,686
Operating expenses from continuing operations, as reported	45,217			39,374			47,542			92,759			74,937
Adjustments:
Stock-based compensation	(1,794		)	(3,477		)	(4,143		)	(5,937		)	(6,540		)
Amortization of intangible assets	(1,264		)	(974		)	(1,257		)	(2,521		)	(1,936		)
Acquisition-related costs	(255		)	(150		)	(350		)	(605		)	(150		)
Facility expansion and relocation costs	(13		)	—			(476		)	(489		)	—
Non-GAAP operating expenses from continuing operations	41,891			34,773			41,316			83,207			66,311
Non-GAAP operating income from continuing operations	$	59,742		$	52,747		$	62,680		$	122,422		$	100,375

Reconciliation of Non-GAAP measure - operating expenses and operating income, excluding certain items	Three Months Ended						Six Months Ended
	June 30,				March 31,		June 30,
	2018		2017		2018		2018		2017
Gross profit from continuing operations, as reported	51.6	%	52.5	%	53.0	%	52.3	%	52.7	%
Adjustments to gross profit:
Stock-based compensation	0.1		0.3		0.2		0.1		0.2
Facility expansion and relocation costs	0.1		—		—		0.1		—
Non-GAAP gross profit from continuing operations	51.8		52.8		53.2		52.5		52.9
Operating expenses from continuing operations, as reported	23.1		23.7		24.3		23.7		23.8
Adjustments:
Stock-based compensation	(1.1	)	(2.0	)	(2.1	)	(1.6	)	(2.1	)
Amortization of intangible assets	(0.6	)	(0.6	)	(0.6	)	(0.6	)	(0.6	)
Acquisition-related costs	(0.1	)	(0.1	)	(0.2	)	(0.2	)	—
Facility expansion and relocation costs	—		—		(0.2	)	(0.1	)	—
Non-GAAP operating expenses from continuing operations	21.3		21.0		21.2		21.2		21.1
Non-GAAP operating income from continuing operations	30.5	%	31.8	%	32.0	%	31.3	%	31.8	%

Reconciliation of Non-GAAP measure - income excluding certain items	Three Months Ended									Six Months Ended
	June 30,						March 31,			June 30,
	2018			2017			2018			2018			2017
Income from continuing operations, less noncontrolling interest, net of income taxes	$	46,356		$	45,873		$	46,339		$	92,695		$	81,314
Adjustments:
Stock-based compensation	1,943			3,856			4,494			6,437			7,254
Amortization of intangible assets	1,264			974			1,257			2,521			1,936
Loss on foreign exchange hedge	—			—			—			—			3,489
Acquisition-related costs	255			150			350			605			150
Facility expansion and relocation costs	262			—			476			738			—
Tax Cuts and Jobs Act Impact	—			—			1,853			1,853			—
Tax effect of Non-GAAP adjustments	(704		)	(1,629		)	(1,343		)	(2,047		)	(3,025		)
Non-GAAP income from continuing operations, net of income taxes	$	49,376		$	49,224		$	53,426		$	102,802		$	91,118

Reconciliation of Non-GAAP measure - per share earnings excluding certain items	Three Months Ended						Six Months Ended
	June 30,				March 31,		June 30,
	2018		2017		2018		2018		2017
Diluted earnings per share from continuing operations, as reported	$	1.17	$	1.14	$	1.16	$	2.33	$	2.02
Add back:
per share impact of Non-GAAP adjustments, net of tax	0.08		0.08		0.18		0.25		0.25
Non-GAAP per share earnings from continuing operations	$	1.25	$	1.22	$	1.34	$	2.58	$	2.27

Reconciliation of Q3 2018 Guidance
	Low End			High End
Revenue	$160 million			$170 million
Reconciliation of Non-GAAP operating margin
GAAP operating margin	25.2		%	27.2		%
Stock-based compensation	1.5		%	1.6		%
Amortization of intangible assets	0.8		%	0.7		%
Non-GAAP operating margin	27.5		%	29.5		%
Reconciliation of Non-GAAP earnings per share
GAAP earnings per share	$	0.86		$	1.00
Stock-based compensation	0.06			0.06
Amortization of intangible assets	0.03			0.03
Tax effects of excluded items	(0.02		)	(0.02		)
Non-GAAP earnings per share	$	0.93		$	1.07