Sign in

You're signed outSign in or to get full access.

AE

ADVANCED ENERGY INDUSTRIES INC (AEIS)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue of $404.6M came in toward the high end of guidance, with non-GAAP EPS of $1.23; both revenue and EPS exceeded Wall Street consensus, driven by record Data Center Computing revenue and strength in Semiconductor . Actual EPS $1.23 vs consensus $1.06*; revenue $404.6M vs consensus $392.1M*.
  • Management guided Q2 2025 revenue to $420M ± $20M and non-GAAP EPS to $1.30 ± $0.25; gross margin around 38% and OpEx rising to $99–$101M on investments and merit increases .
  • Data Center Computing revenue more than doubled YoY to a record $96.2M; Semiconductor remained robust with $222.2M, while Industrial & Medical declined amid continued destocking; late-quarter order strength suggests a bottom in Q1 .
  • Catalysts: accelerated AI hyperscale ramps, new plasma power platforms (eVoS/eVerest/NavX) with 350 cumulative qual units shipped, factory consolidation (China exit in June) to support margin expansion toward ~40% exiting 2025 despite tariff headwinds .

What Went Well and What Went Wrong

What Went Well

  • Record Data Center Computing revenue ($96.2M, +130% YoY) with multiple hyperscale design wins ramping and further growth expected in Q2 and 2H 2025 .
  • Gross margin outperformed guidance; non-GAAP GM 37.9% (+280 bps YoY) on favorable mix and improved manufacturing costs, despite initial tariff impact .
  • Strategic product momentum: “We continue to see strong customer pull for our next-generation eVoS, eVerest and NavX products,” with over “350 qualification units” shipped and initial production ramps expected in 2H 2025; strong AI data center fit (high reliability/efficiency/power density) .

What Went Wrong

  • Industrial & Medical revenue fell to $64.3M (-16% QoQ, -23% YoY) due to ongoing inventory destocking and weaker turns; management expects recovery to be tempered by tariffs/macro .
  • Tariffs introduced near-term cost headwinds; while mitigations are underway (footprint optimization, USMCA compliance, vendor qualification, pricing), management acknowledged increased costs and macro uncertainty, particularly in 2H .
  • GAAP EPS declined sequentially to $0.65 from $1.29, reflecting normalization after a Q4 one-time net tax benefit of $15.0M from legal entity restructuring .

Financial Results

Consolidated P&L and Margins (USD)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($MM)$374.2 $415.4 $404.6
GAAP Diluted EPS ($)$(0.38) $1.29 $0.65
Non-GAAP Diluted EPS ($)$0.98 $1.30 $1.23
Gross Margin % (GAAP)35.8% 37.2% 37.2%
Gross Margin % (Non-GAAP)36.3% 38.0% 37.9%
Operating Income ($MM, GAAP)$(11.0) $34.0 $30.6
Operating Margin % (Non-GAAP)10.5% 13.5% 13.5%

Notes: Q4 GAAP EPS included a one-time net tax benefit of $15.0M from legal entity restructuring .

Actuals vs Wall Street Consensus (S&P Global)

MetricConsensus*ActualResult vs Consensus
Revenue ($MM)392.1*404.6 Beat
Primary EPS ($)1.06*1.23 Beat
# of Estimates (Revenue)11*——
# of Estimates (EPS)11*——

Values marked with an asterisk (*) retrieved from S&P Global.

Segment Revenue (USD)

SegmentQ1 2024Q4 2024Q1 2025
Semiconductor Equipment ($MM)$179.9 $226.8 $222.2
Industrial & Medical ($MM)$83.4 $76.8 $64.3
Data Center Computing ($MM)$41.9 $88.7 $96.2
Telecom & Networking ($MM)$22.3 $23.1 $21.9
Total Revenue ($MM)$327.5 $415.4 $404.6

KPIs and Operating Metrics

KPIQ3 2024Q4 2024Q1 2025
Cash from Operations ($MM)$35.4 $82.7 $29.2
Adjusted EBITDA ($MM)—$67 $65
CapEx ($MM)$13.0 (approx, per Q4 commentary) $13.0 $13.9
Inventory Days143 126 132
DSO (Days)62 57 62
DPO (Days)50 50 56
Net Cash ($MM)—$157 $158
Dividends Paid ($MM)$3.9 $3.8 $3.8
Share Repurchases ($MM)$1.8 $1.8 $0.9 in Q1; $22.7 (Apr 1–29)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($MM)Q1 2025$392 ± $20 Actual $404.6 Beat vs guidance high end
Non-GAAP EPS ($)Q1 2025$1.03 ± $0.25 Actual $1.23 Beat vs guidance high end
GAAP EPS ($)Q1 2025$0.48 ± $0.25 Actual $0.65 Beat
Revenue ($MM)Q2 2025—$420 ± $20 New
GAAP EPS ($)Q2 2025—$0.74 ± $0.25 New
Non-GAAP EPS ($)Q2 2025—$1.30 ± $0.25 New
Gross Margin % (non-GAAP)Q2 2025—~38% New
OpEx ($MM, non-GAAP)Q2 2025—$99–$101 New
Other Income ($MM)Q2 2025—≈ $1 New
Tax Rate (non-GAAP)Q2 2025~19% for balance of 2025 ~19% Maintained
FY25 CapEx (% of revenue)FY 2025>4% prior target 5–6% (raised) Raised
Dividend per shareQ2 2025$0.10, record date May 24 $0.10, record date May 26 Record date updated

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
AI/Data CenterRecord product revenue; hyperscale ramps; robust demand Record product revenue; continued strong demand into 2025 Record $96M; sequential growth expected in Q2 and 2H; visibility into 2025; capacity investments Strengthening
Plasma Power Products (eVoS/eVerest/NavX)Launches; strong eval activity; modular architecture benefits >250 qualification units shipped by year-end >350 cumulative qual units; initial ramps in 2H 2025; stronger traction across advanced logic and DRAM Accelerating
Supply Chain/ManufacturingFactory consolidation driving margins; term loan repaid 15-to-5 factory plan; margin tailwind; modular design reduces cycles Last China factory closing in June; broad footprint (Malaysia/Philippines/Mexico) Consolidation progressing
Tariffs/MacroCited risk factors generally Monitoring, not embedded in guidance yet Mitigation plans (footprint, USMCA, vendor qualification, pricing); manageable within margin model; macro uncertainty persists Managed headwind
Industrial & MedicalSequential declines; destocking; cash generation Flat QoQ; bottoming signals; distribution inventory normalization Weaker Q1; late-quarter order rebound; expected sequential growth Q2, tempered by tariffs Stabilizing
Tax/Regulatory—Non-GAAP tax rate ~14.3% in Q4 on discrete items Q1 non-GAAP tax 15.8%; moving to ~19% for rest of 2025 (Pillar 2) Increasing
R&D ExecutionNew products; modular architecture compresses cycles 35 new platform products launched in 2024 Heavy ongoing R&D investment; modular design enabling customized solutions quickly Sustained investment

Management Commentary

  • “First quarter results were at the higher end of our guidance, highlighting growth in our new data center programs and continued strength in semiconductor.” — Steve Kelley, CEO .
  • “Our improvements in operational efficiency drove better-than-expected gross margin… closure of our last China factory later this quarter… expected to drive further gross margin improvement in the second half.” — Steve Kelley .
  • “We expect Q2 gross margin to be around 38%… and Q2 non-GAAP EPS to be $1.30 ± $0.25.” — Paul Oldham, CFO .
  • “Multiple hyperscale design wins are ramping to volume in 2025… new products… are a good fit for power-hungry AI data centers.” — Steve Kelley .
  • “We have cumulatively shipped over 350 qualification units… initial production ramps to start in the second half of this year, followed by more significant growth in 2026.” — Steve Kelley .

Q&A Highlights

  • Semi outlook and outperformance: Management sees WFE ~0–5% YoY and expects AEIS semi revenue to grow ~10% YoY, driven by leading-edge etch intensity and new platform adoption; action concentrated in advanced logic and DRAM .
  • Tariffs: Direct exposure limited; mitigations via manufacturing footprint (Malaysia/Philippines/Mexico), USMCA compliance, supply chain adjustments, and pricing; tariff costs contemplated in outlook .
  • Gross margin trajectory: Despite tariffs, margin goals unchanged; approaching ~40% exiting 2025 on factory consolidation, mix from new products, and volume leverage (~100 bps per +$50M quarterly revenue) .
  • Data Center capacity and visibility: Strong visibility through 2025; increased CapEx to support high-power infrastructure; potential to deliver higher quarterly DC revenue as ramps progress .
  • Industrial & Medical: Destocking continues (distribution inventories down ~14% QoQ); orders rebounded late in Q1; recovery expected to begin in Q2 but pace tempered by tariffs; M&A likely targeted in I&M as valuations normalize .

Estimates Context

  • Q1 2025 results versus consensus: Revenue $404.6M vs $392.1M*, EPS $1.23 vs $1.06*; both represent clear beats likely driven by AI data center ramps and leading-edge semi demand . Values marked with an asterisk (*) retrieved from S&P Global.
  • With Q2 2025 guidance above prior expectations and margin resilience despite tariffs, sell-side models may need to lift near-term revenue and EPS, particularly for Data Center and maintain higher tax rate assumptions (~19%) .

Key Takeaways for Investors

  • AEIS delivered a clean beat on revenue and EPS, underpinned by AI-driven Data Center momentum and robust leading-edge Semi demand; execution on cost and mix offset initial tariff headwinds .
  • Near-term setup positive: Q2 guide implies sequential growth with ~38% GM and higher OpEx for growth investments; management raised FY25 CapEx to 5–6% to capture hyperscale ramps .
  • Margin roadmap intact: China factory exit by June plus mix shift from next-gen plasma platforms supports approach toward ~40% GM exiting 2025 despite tariffs .
  • I&M is likely at/near a trough; sequential improvement expected from Q2, with M&A remaining a strategic lever to build critical mass and accelerate recovery .
  • Strategic product cycle: eVoS/eVerest/NavX design-in momentum (>350 qual units) sets the stage for 2H 2025 initial ramps and more pronounced 2026 growth; ASP uplift expected vs prior-gen products .
  • Dividend remains at $0.10, with an updated record date of May 26 (prior press release cited May 24), and opportunistic buybacks executed amid market volatility in April ($22.7M) .
  • Watch points: Tariff evolution and macro visibility in 2H, OpEx cadence ($1–2M QoQ increases), tax rate reset (~19%), and continued execution on DC capacity and factory consolidation .

Appendix: Additional Data

Balance Sheet Highlights (Q1 2025 vs Q4 2024)

MetricQ4 2024Q1 2025
Cash & Equivalents ($MM)$722.1 $723.0
Total Assets ($MM)$2,261.9 $2,302.2
Total Liabilities ($MM)$1,055.3 $1,067.8
Long-term Debt ($MM)$564.7 $565.4
Stockholders’ Equity ($MM)$1,203.1 $1,230.3

Dividend Declaration

  • Quarterly cash dividend of $0.10 per share payable on June 6, 2025; updated record date May 26, 2025 (earlier release cited May 24) .

Non-GAAP Adjustments (Q1 2025)

  • Excluded items include stock-based compensation, amortization of intangibles, facility/infrastructure/transition costs, restructuring and asset impairment charges, and unrealized FX gains/losses; tax effects applied to excluded items per non-GAAP policy .