Advanced Energy Industries Inc at Morgan Stanley Technology, Media & Telecom Conference Transcript

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

Question: Shane Brett - Morgan Stanley Research - Analyst : Okay, So lets get started. So Steve, for those in the audience who may not be familiar with the Advanced Energy story, can you provide a quick snapshot of the company and its major end markets?

Question: Shane Brett - Morgan Stanley Research - Analyst : Got it. And then, so you also recently hosted an Analyst Day where you laid out some long-term targets. Can you share kind of the high-level takeaways that what you really want to get across to investors on that day?

Question: Shane Brett - Morgan Stanley Research - Analyst : And on some of the financial targets?

Question: Shane Brett - Morgan Stanley Research - Analyst : And so I'll just start with semiconductor. So you guys expect flat for WFE but kind of outperformance on top of that. Could you kind of talk to us about some of the customer conversations that underlie that view of flat WFE. And then what is the kind of drivers that are pushing you guys to outperform versus that assumption?

Question: Shane Brett - Morgan Stanley Research - Analyst : Then sort of on the second half ramp, so eVerest and eVoS, can you share to the audience, what are the -- what are these products going into the conversations that you're having with customers. In my perspection of semi-sub components, it's a very sticky business, but you guys are very confident on these share gains. Can you share to us where this confidence comes from?

Question: Shane Brett - Morgan Stanley Research - Analyst : So I guess, that would be -- as we sort of move on to the etch and deposition intensive, semiconductor architectures, you guys are kind of exposed to the right markets on top of that, market share gains of these new products.

Question: Shane Brett - Morgan Stanley Research - Analyst : Got it. Great. So I kind of want to hear about how do you think about your customers' inventory right now and your lead times. The kind of background to this question is-- so you saw the beat in December quarter. I would assume there may be some within lead time orders. How do you kind of think about the dynamic of where is the risk of the upside from many customers being a little bit more positive than you think?

Question: Shane Brett - Morgan Stanley Research - Analyst : Got it. And then sort of the surprise for me in the March quarter was just a pickup in NAND upgrade related demand. Could you kind of share your position on how you guys are in NAND? And if there is kind of a broad memory versus foundry logic split for the business, that would also be helpful.

Question: Shane Brett - Morgan Stanley Research - Analyst : Got it. So moving on to data center. So for some of the audience that may not be familiar, could you kind of just remind us of the data center -- the products that you sell to data center and the sort of role you play in the sort of AI data center build-out trend?

Question: Shane Brett - Morgan Stanley Research - Analyst : And I would assume your customers have become very demanding over the last two years with kind of the technology requirements that they need?

Question: Shane Brett - Morgan Stanley Research - Analyst : And your outlook for this year is for that data center demand to be remain pretty robust through the year?

Question: Shane Brett - Morgan Stanley Research - Analyst : Just on -- next on Industrial and Medical. So at your last earnings, you spoke of customers and industries continue to sort of work down inventories, but also comment on our expectations for growth in as early as Q2? How much intent do you think your IM customers have? And sort of how should we think about your visibility towards this kind of Q2 recovery?

Question: Shane Brett - Morgan Stanley Research - Analyst : Got it. So you're taking your medicine, hopefully from Q3, we'll have a nice recovery. Where are the kind of end markets where you've had the design wins in '23 and '24, so that once we start recovering, we'll see sort of a big pickup in -- hopefully a big pickup in demand?

Question: Shane Brett - Morgan Stanley Research - Analyst : Got it. I don't want to put you on the spot, but on tariff impacts. How should we think about that? Has it impacted your business yet? Are there sort of any preliminary thoughts from Advanced Energy at the moment?

Question: Shane Brett - Morgan Stanley Research - Analyst : And I guess this does also tie into some manufacturing optimizations that you're doing? If I'm correct, you're exiting China by June this year. Can you talk about kind of how you're going about this optimization? And the tariff does impact on any of that kind of thought process?

Question: Shane Brett - Morgan Stanley Research - Analyst : Better. I think the comment on the cost structure might be a good segue into financials. So Paul, the gross margin improvement is a pretty big message from the company at the Analyst Day. Can you try to just remind us about these gross margin goals, the progress you're seeing so far and kind of the bridge from here? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 06, 2025 / 5:15PM, AEIS.OQ - Advanced Energy Industries Inc at Morgan Stanley Technology, Media & Telecom Conference

Question: Shane Brett - Morgan Stanley Research - Analyst : Got it. And just last question for me before I pass it over to the audience is on priorities on capital allocation.

Question: Shane Brett - Morgan Stanley Research - Analyst : With that, I'd like to open it to the audience. Unidentified Participant I had a really quick question about product stickiness. I think with a lot of silicon products when we get your design win. Data center, hyperscale, whatever, through a lot of their engineering talent software, hardware. And once you have your product deployed in data centers, it's pretty difficult for someone else to come in and kind of entrench you. I'm wondering if you could speak a little bit about once you win that design win, is there a stickiness kind of with your product? What's the differentiating factor coming from? How does it affect retention and long-term adoption? And if it doesn't come from the stickiness of that design win, where does it come from?

Question: Shane Brett - Morgan Stanley Research - Analyst : Do you have any other questions? Unidentified Participant So particularly for the goal of gaining share in the semiconductor segment, can you remind us roughly where -- how do you measure the share today? Where are you at today? And what's kind of like the magnitude of that uplift? And do you quantify like how many points you can grow faster than the market?

Question: Shane Brett - Morgan Stanley Research - Analyst : Thanks, that brings us to our time. Thank you, Steve. Thank you, Paul. Thanks for joining our conference.