Advanced Energy Industries Inc at Bank of America Global Technology Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Doug Johnson - Bank of America Merrill Lynch - Analyst : Awesome. I guess we can get started with some quick overview of the company for those unfamiliar. Could you walk us through the story of AE, the your role in power conversion systems as well as some of the top growth drivers.

Question: Doug Johnson - Bank of America Merrill Lynch - Analyst : Understood. I guess you briefly touched upon your last earnings, but could you just help us go through what went well in the quarter, maybe what went a little bit worse than expected ?

Question: Doug Johnson - Bank of America Merrill Lynch - Analyst : Sure. On that last point, just because a lot of the semiconductor companies that we cover for exposed to the same end markets deepen pointing out a recovery starting the second half. So what's helping you kind of outgrow those peers and have that visibility ?

Question: Doug Johnson - Bank of America Merrill Lynch - Analyst : On semis market specifically, I guess you just said that this year is looking to be flattish from last year. But over the long term, you've kind of outlined this market to grow beyond WFE. So what's going to help you outgrow in the future?

Question: Doug Johnson - Bank of America Merrill Lynch - Analyst : Where are we in your semi equipment cycle today? Because a lot of your customers have already started reporting better numbers, some outlook for recovery. So how should we think about growth for you guys?

Question: Doug Johnson - Bank of America Merrill Lynch - Analyst : I did want to touch upon the last point that you just mentioned on conductor versus dielectric etch . I think your competitor has said that they expect to gain share next year as a result of now coming back? And obviously, you also have content in them, but wouldn't that be sort of a headwind for you to outgrow WFE again in the coming years?

Question: Doug Johnson - Bank of America Merrill Lynch - Analyst : Can we talk a little bit more about the competitive dynamics. What gives you the any advantages over your competitors? How are you differentiated?

Question: Doug Johnson - Bank of America Merrill Lynch - Analyst : Before we get into some of these other end markets, you've been increasingly talking about the eVos and eVerest pipelines. Could you just give us a quick description of what they do ? How are they differentiated are both against your competitors, but also against your prior generation products?

Question: Doug Johnson - Bank of America Merrill Lynch - Analyst : Understood. We can move on to the industrial and medical portion of the business here. You've said that it's a largely fragmented market. You have the largest share of the three largest distributors. But what's really helping you grow beyond the industry and gain share here?

Question: Doug Johnson - Bank of America Merrill Lynch - Analyst : Sure. On the inventory digestion, kind of and portion of this market, I mean, you've been getting hit along with some of the other peers unfortunately, but you are seeing a recovery in the second half. Is this typically what you've been seeing in the last cycles as well? And do you see this cycle sort of behave differently than prior cycles?

Question: Doug Johnson - Bank of America Merrill Lynch - Analyst : Then in a sense when that digestion period ends, you said five to six cycles or quarters. Should we expect the magnitude of the recovery to go beyond the prior run rate of, say $100 million , $10 million , $20 million a quarter ?

Question: Doug Johnson - Bank of America Merrill Lynch - Analyst : Understood. And data center computing. You're expecting a big recovery in the next quarter. And I think there was a customer push out from Q1 to Q2 . Besides that, what else should we looking at? Should we be looking at for growth drivers during the next couple of quarters?

Question: Doug Johnson - Bank of America Merrill Lynch - Analyst : And also, I think over the last couple of days, especially within [video], talking about 100,000 GPU cluster servers coming to life as soon as next year? Are you also seeing that type of magnitude of increasing your business?

Question: Doug Johnson - Bank of America Merrill Lynch - Analyst : But in the last couple of minutes we have I did want to touch on gross margins.

Question: Doug Johnson - Bank of America Merrill Lynch - Analyst : A big part of your story as of late, you've had some headwinds last year, but some of that has already normalized by the first half. You're still expecting another 250 to 300 basis points in the second half and then over 40% over the long term. So what would be some of the remaining puts and takes into gross margins?

Question: Doug Johnson - Bank of America Merrill Lynch - Analyst : Understood. The last ten seconds I have. Your capital allocation strategy. You've also announced a possible offer to acquire XP power. If that deal does not go through what would be your next strategy in mind? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 05, 2024 / 9:00PM, AEIS.OQ - Advanced Energy Industries Inc at Bank of America Global Technology Conference

Question: Doug Johnson - Bank of America Merrill Lynch - Analyst : Sounds good. Well, thanks, Paul.