Advanced Energy(AEIS) - 2025 Q1 - Quarterly Report

Revenue and Profitability - Revenue for Q1 2025 was $404.6 million, a 23.5$327.5 million in Q1 2024[104] - Gross profit for Q1 2025 was $150.5 million, with a gross margin of 37.2$112.9 million and 34.5% in Q1 2024[107] - Operating income from continuing operations rose to $30.6 million, compared to$0.9 million in Q1 2024[103] - Non-GAAP operating income for Q1 2025 was $54.8 million, compared to$21.4 million in Q1 2024, reflecting improved operational efficiency[120] Revenue Breakdown by Segment - Semiconductor Equipment revenue increased by 23.5% to $222.2 million, driven by strong demand for leading-edge process tools[104] - Data Center Computing revenue surged by 129.6$96.2 million, attributed to increased investments in AI-driven platforms[104] - Industrial and Medical revenue decreased by 22.9% to $64.3 million due to lower demand and customer inventory rebalancing[104] - Telecom and Networking revenue slightly declined by 1.8$21.9 million, reflecting current market conditions[104] Expenses and Cost Management - Total operating expenses for Q1 2025 were $119.9 million, representing 29.6$112.0 million and 34.2% in Q1 2024[108] - Research and development expenses increased to $54.2 million (13.4$49.8 million (15.2% of revenue) in Q1 2024, driven by higher compensation and program costs[108][109] - Selling, general, and administrative expenses rose to $59.0 million (14.6$55.1 million (16.8% of revenue) in Q1 2024, primarily due to professional services costs[108][110] Cash Flow and Financial Position - Cash and cash equivalents as of March 31, 2025, totaled $723.0 million, with an additional$600.0 million available under the Revolving Facility[123] - Net cash from operating activities for continuing operations was $29.2 million in Q1 2025, significantly up from$8.0 million in Q1 2024, attributed to higher net income and favorable changes in working capital[130] - The company paid quarterly cash dividends of $0.10 per share, totaling$3.8 million during Q1 2025, with plans to maintain this dividend rate[127] - Net cash used in financing activities for Q1 2025 was $13.4 million, including$3.8 million for dividend payments and $9.1 million in net payments related to stock-based award activities[133] Debt and Taxation - The company’s only outstanding debt as of March 31, 2025, was$575.0 million in Convertible Notes with a 2.5% interest rate, maturing on September 15, 2028[125] - The effective tax rate for Q1 2025 was 16.7%, down from 23.1% in Q1 2024, primarily due to a more favorable mix of earnings[116] Future Outlook and Market Trends - Future growth is expected in the Semiconductor Equipment market, driven by megatrends such as AI and IoT[89] - The Industrial and Medical market is anticipated to gradually recover as customer inventories normalize[94] Risk Management and Accounting Estimates - The company is exposed to interest rate risk from investments and the Credit Agreement, but current debt is at a fixed 2.5% interest rate[144] - Significant accounting estimates include assessing excess and obsolete inventories and accounting for income taxes[136] - Actual results may differ materially from reported amounts due to variability in factors affecting accounting estimates[137] - The company does not engage in derivatives for trading or speculative purposes, focusing solely on risk management[143]