Advanced Energy Announces Record Revenues and Inverter Sales for the Third Quarter 2010
Advanced Energy Industries, Inc. announced financial results for the third quarter ended September 30, 2010. Total sales for the third quarter were $141.0 million, another record for the company, with earnings of $0.40 per diluted share from continuing operations. The financials highlighted in this release exclude results from the Aera® mass flow controller business, which was sold to Hitachi Metals, Ltd. on October 15, 2010. Results for the quarter include a full quarter of operations from PV Powered, Inc.
"We had another exceptional quarter with all key areas of our business growing significantly. This record performance was highlighted by the sixth straight quarter of growth in semiconductor revenues, significant acceleration of our inverter business, now 27% of sales, and strong operating leverage," said Dr. Hans Betz, Chief Executive Officer. "The aggressive capacity additions and investment in our inverter business have proven very successful, as Advanced Energy was recently ranked #1 in the 3-phase North America solar PV inverter market, according to IMS Research. With the diversification of Advanced Energy into high growth power conversion markets, particularly inverters, we are well positioned to capitalize on future opportunities and expand our business."
Semiconductor sales rose 12.5% sequentially to $49.4 million, representing 35.0% of total sales for the quarter. Sales to the non-semiconductor thin film markets increased 49.8% sequentially to $41.1 million, representing 29.2% of total sales for the quarter. Inverter sales grew substantially to $37.4 million, or 26.5% of total sales compared to $14.4 million in the second quarter. Service revenue also exhibited healthy growth, increasing to $13.2 million, or 9.3% of total sales, compared to $10.7 million last quarter.
Bookings for the third quarter reached a record $160.3 million, increasing 17.2% compared to $136.7 million in the second quarter of 2010. This resulted in a book-to-bill ratio of 1.14:1 for the third quarter. Ending backlog for the third quarter increased 17.7% sequentially to $128.5 million, compared to $109.2 million at the end of the second quarter of 2010.
Gross margin for the third quarter was 43.1%, compared with 44.5% in the second quarter of 2010 and 31.9% in the same period last year. The strong growth in inverter revenues this quarter drove inverters to a larger%age of total sales, pushing margins down in the short-term.
Operating expenses for the third quarter increased to $38.4 million compared to $31.5 million in the second quarter in order to support higher sales volumes, and as a result of an additional full quarter of PV Powered expenses compared to just two months in the second quarter. As a% of sales, operating costs were 27.2% compared to 31.4% of sales in the prior quarter. Operating costs during the quarter also included $1.2 million in amortization of acquired intangible assets related to the acquisition of PV Powered.
Third quarter net income from continuing operations was $17.6 million or $0.40 per diluted share, compared to net income from continuing operations of $11.5 million or $0.26 per diluted share in the second quarter of 2010. In the same period a year ago, net loss from continuing operations was $8.4 million or a loss of $0.20 per share.
Cash and investments were $112.4 million at the end of the third quarter, compared to $128.9 million in the second quarter due to investment in capital equipment as well as inventory purchases to support our growing backlog of inverter sales.