Advanced Energy Industries, Inc. Q2 2010 Earnings Call Transcript

Advanced Energy Industries, Inc. Q2 2010 Earnings Call Transcript
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Advanced Energy Industries, Inc. (AEIS)

Q2 2010 Earnings Call

July 23, 2010 8:30 AM ET


Annie Leschin – Investor Relations

Hans Betz – Chief Executive Officer

Larry Firestone – Executive Vice President and CFO


Bill Ong – Merriman

Colin Rusch – Thinkequity

Edwin Mok – Needham & Company

Kate Kotlarsky – Goldman Sachs

Paul Thomas– Bank of America/Merrill Lynch

Timothy Arcuri – Citi

CJ Muse – Barclays Capital

Neal Waggoner – Stephens

Weston Twigg – Pacific Crest Securities



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Good morning, ladies and gentlemen. And welcome to Advanced Energy Second Quarter 2010 Conference Call. All lines have been placed on mute to prevent background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions)

Thank you. I will now turn the call over to Annie Leschin. You may begin the conference.

Annie Leschin

Thank you, operator, and good morning, everyone. Thank you for joining us this morning on our second quarter 2010 earnings conference call. With me today is Hans Betz, Chief Executive Officer; and Larry Firestone, Executive Vice President and CFO, both of whom will present prepared remarks.

By now you should have received a copy of the earnings press release that was issued last night, we also issued a press release announcing the divestiture of our core business last evening, for a copy of either release please visit our website at or contact us at 970-407-4670.

Let me begin by saying during the quarter Advanced Energy will be participating in the Pacific Crest Growth Conference in Vail, Colorado on August 9th, the Deutsche Bank 2010 Technology Conference in San Francisco from September 14th to 16th and the ThinkEquity Growth Conference in New York from September 15th and 16th. We’ll make additional announcements as other events occur.

I would like to remind everyone that except for historical financial information contained herein the matters discussed in this conference call contain certain forward-looking statements subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements.

Statements that include the terms believe, expect, plans, objectives, estimates, anticipates, intends, targets, or the like should be viewed as forward-looking and therefore uncertain. Such risks and uncertainties include, but are not limited to, the volatility and cyclicality of the industries we serve, the timing of orders received from our customers, and unanticipated changes in our estimates, reserves, or allowances. These and other risks are described in Form 10-K and 10-Q and other reports filed with the SEC.

In addition, we assume no obligation to update the information that we provide you during this conference call, including the third quarter guidance provided during this call and in our press release dated today. Guidance will not be updated after today’s call until our next scheduled quarterly financial release.

I now like to turn the call over to Hans Betz, CEO of Advanced Energy.

Hans Betz

Good morning, everyone, and thank you for joining us. This is a very exciting time for at Advanced Energy. We are seeing the results of our strategic efforts as the acquisition, divestiture and product line expansion lie perfectly with the improvement in market conditions.

We took two very significant strategic steps in the second quarter with the addition of PV Powered and we yesterday announced divestiture of our Aera Flow Controller business. First, laid out in 2005 our long-term vision of establishing AE as the premier supplier of power conversion devices has taken a giant leap forward this quarter.

The combination of these transitions has set the stage for AE to drive significant growth in all of its existing markets as well as new markets and we are even more focused on power conversion.

Advanced Energy is currently the market leader in power conversion for thin-film markets that we serve. Now in combination with PV Powered we host the number two market position in the fast growing U.S. inverter markets. Based on the momentum we are seeing in the inverter pipeline for the second half of 2010, the lead position is definitely within reach.

Exceeding 2011, our goal is to become number one in the three phase U.S. inverter markets and to continue to increase our market decision in Europe and other geographies as we expand our footprint throughout the globe.

We have taken the first step (inaudible) with our first acquisition in several years PV Powered. That acquisition was accretive in the first quarter of compliance operations. We’re also extending to take advantage of several regional opportunities in various markets.

In the inverter markets we see Ontario, Canada as an area of opportunity with its healthy exceeding turf. We have already incorporated a Canadian subsidiary in Canada and will be working with a contract manufacturer to position AE to satisfy the local content requirements to serve the Ontario markets.

We’re also opening a sales and service office in Singapore to support our OEM key customers with announced factory relocations to Singapore. As our book business for Solaron is beyond our current capacity as we anticipate shipping at levels of 130 Solaron per quarter for the second half of the year. We’re expanding our Solaron factory capacity in Fort Collins, Colorado by adding a second shift.

In Korea, we have expanded our sales and service operations to include manufacturing to serve the market locally for Korean OEMs and end users, to satisfy the local content requirements in Korea.

In addition to the strategic initiatives I just mentioned, I’m extremely pleased to announce the results of another outstanding quarter financially at Advanced Energy. But we exceeded our topline guidance and met the high-end of our earnings guidance.

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