Advanced Energy Industries Inc Q1 2025 Earnings Call Transcript

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

Question: Brian Chin - Stifel - Analyst : Hi there, good afternoon. Good work, and, thanks for letting us ask a few questions. Maybe firstly, and I apologize if I missed this, but are you, is your underlying view for the semi equipment market for kind of flattish WSE? And if that's the case or if you revised that, do you, how would you contextualize your 10% growth outlook, level of outperformance. I guess this would also imply a second half semi cap revenues roughly similar to the first half. I guess I'll stop there with that first question.

Question: Brian Chin - Stifel - Analyst : Got it. Thanks, Steve. And then my follow up. One, can you give us a sense of, I don't know if it's advanced logic, maybe Nan where you're starting to see that initial production ramp of the new, plasma process power products in the second half of the year, and then, is it possible in any way that to kind of bracket the potential tariff when you could see in the back half of the year, I know it's sort of difficult at at this stage, but just if you have any additional thoughts on that.

Question: Brian Chin - Stifel - Analyst : Thanks that's a really good call. And then maybe the other part, the front end of that was just the, what device that markets where you're seeing, probably contributing to that that big step up in Q1, 350 unit shipments up to 250 in the prior quarter is is it advanced logic is it N flash or any any color you can provide there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 8:30PM, AEIS.OQ - Q1 2025 Advanced Energy Industries Inc Earnings Call

Question: Brian Chin - Stifel - Analyst : Okay. Great. Thank you.

Question: Scott Graham - Seaport Research - Analyst : Hey, good afternoon and well done, very nice quarter. I have a couple of questions though, certainly, the one is, piggyback onto the prior question is you're gaining share against WFE in total, but do you think you're also gaining share within the power sleeve of WFE?

Question: Scott Graham - Seaport Research - Analyst : Okay, thank you for that. And just a quick on the IM, although maybe not so quick, but you know that business has been really problematic for you guys now for a number of successive quarters and the industrial economy is probably going to get a little weaker as I think you've pointed out with some caution there. I, I'm just wondering what are the steps you need to take here? It seems like, I think we've talked about this before. You really need an acquisition there to gain some critical mass cause it seems like you've got a lot of business, but in a lot of very small niche type of markets and just very, those are types of markets that, can easily be stock at any time and they have been. So what's, what is the plan there to start to improve that business? I know your orders were better. But it is an acquisition really the key to getting that business, and more plate appearances with customers? Is there something internal you need to do in I&M to kind of reverse the fortune there?

Question: Scott Graham - Seaport Research - Analyst : Right. Okay. Thanks a lot. I appreciate it.

Question: Robert Mertens - TD Cowen - Analyst : Hi, this is Robert Mertens on the line, on behalf of Chris. Thank you for taking my questions. Maybe just, a quick follow up in the industrial and medical markets, March seemed like a little bit weaker than maybe expected exiting last year and I know that business can be a bit lumpy on a quarterly basis, but looking into the second half of this year, are you seeing any sort of changing in customer purchasing patterns within the market that give you confidence in the second half recovery, or is it really primarily based on seeing some of the inventory drawn down through your distributor network. Any color that would be helpful.

Question: Steve Barger - KeyBanc Capital Markets - Analyst : Alright thanks. Really great to see the Evos and Everest performance and I'm just trying to think about what high volume production could look like, you said you've shipped 350 units cumulatively through one maybe that ends up at 500 or 600 or whatever for this year, but does that double as you go into high volume production or is it more than a double? How have programs like that worked in the past?

Question: Steve Barger - KeyBanc Capital Markets - Analyst : Yeah that's excellent color thanks. Are those strictly for newly built tools or are there upgrade potential applications? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 8:30PM, AEIS.OQ - Q1 2025 Advanced Energy Industries Inc Earnings Call

Question: Steve Barger - KeyBanc Capital Markets - Analyst : Understood and then a quick one on data center you talked about growth in 2 and then again in the two half. I'm just curious about visibility of demand. Does that extend into 2026 with this kind of momentum? And is there an upside limit to capacity as you stand today? Or could you deliver $125 million a quarter or $150 million a quarter if demand was there?

Question: Steve Barger - KeyBanc Capital Markets - Analyst : That's great thanks very much.

Question: Mark Miller - Benchmark - Analyst : Congrats on the quarter. Thank you for the question. I'm just wondering, in your backlog, what does the margin profile look like? You're kind of guiding the flat margins but improvements in the second half. Is that based on the backlog and the second question or part of the question is in terms of the design ones do these products have above corporate average margins?

Question: Mark Miller - Benchmark - Analyst : At one point you were talking about maybe by the end of the year that we'd be in a trajectory towards 40% margins or is that still possible or is still the visibility is still not there?

Question: Mark Miller - Benchmark - Analyst : Thank you.

Question: Chris Grenga - Needham & Co. - Analyst : Hi, good afternoon, this is, Chris Gring going on for Jim. With respect to the plans for the Thailand facility, have the tariffs changed on the margin or incrementally any, anything with respect to those plans, In either the timing or the capacity plan for that site.

Question: Chris Grenga - Needham & Co. - Analyst : Great. And you'd mentioned the success you've seen early success you've seen with the micro site with Mauser do you see any incremental impact, either on selling or the amount of inventory held versus you know an arrangement where there is no micro site as more of these micro sites are added in in the future?

Question: Chris Grenga - Needham & Co. - Analyst : Thanks very much.

Question: Duksun Jang - Bank of America - Analyst : Hi, good afternoon. Thanks for taking the question. Going back to semis, I know you said you don't see a lot of direct impact from tariffs, but are you seeing any indirect impact? I think a lot of your customers are, or they've expressed pull-ins from customers, particularly in China, in anticipation of the tariffs. So I'm curious if you're seeing any impact of that. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 8:30PM, AEIS.OQ - Q1 2025 Advanced Energy Industries Inc Earnings Call

Question: Duksun Jang - Bank of America - Analyst : Got it. And then one follow-up on gross margin as well. So in the near term for the rest of the year, I think the story is pretty clear. You have a lot of tailwinds. But looking into '26, what would be some of the drivers that would lead us to think that there's still a lot of runway beyond the 40% mark?

Question: Duksun Jang - Bank of America - Analyst : Understood. And then, one last one, if I may, on the optic side in Q2, I think you say you're progressing much better than you're going at half the rate of revenue target. But at the same time, I think you also mentioned last quarter that oppics in general grows at half the rate of revenue. So should we expect the pace to pick up in the second half, or how should we think about the full year opics?

Question: Duksun Jang - Bank of America - Analyst : Got it. Thank you.

Question: Robert Mason - Baird - Analyst : Yes, good evening, and nice work on the quarter. I just wanted to circle back to the I&M segment real quick, just make sure I have my arms around, the step down we saw there, as well as maybe how can that can start to recover. Steve, does do you draw any distinction between the industrial piece and the medical piece just in terms of what you're seeing out of customer activity at this point?

Question: Robert Mason - Baird - Analyst : I see. Is there any dynamic happening in that I&M where, products of end of life and you know the design wins the next design win that you're on just hasn't ramped yet, or is this solely a function, the step down just solely a function of active, product volumes being lower.

Question: Robert Mason - Baird - Analyst : I see, very good, thank you.

Question: Scott Graham - Seaport Research - Analyst : Yeah, hi, I, thank you for taking the question. Just to follow ups. The first is maybe on tariffs. You guys are always very transparent about what's going on, your operating expenses, what have you. Is there anything more you can give us on tariffs in terms of, percentage cost of sales that, are affected and then we could apply the tariffs from there. Could you, is it poly you could tell us the impact in the first quarter we could extrapolate from there but just maybe a little bit more to go on.

Question: Scott Graham - Seaport Research - Analyst : Okay, all right, understood. And then the only other question I had is again on the INM business in the past you've talked about, the declines in sales and you've kind of sized what you thought was the approximate destocking impact. Could you do that again this quarter, of the decline that we saw this quarter, how much of that would you say was the destocking?

Question: Scott Graham - Seaport Research - Analyst : Okay, you mean sequential growth?

Question: Robert Mason - Baird - Analyst : Very helpful. Thanks a lot. Appreciate it.