Advanced Energy Industries has announced financial results for the third quarter ended September 30, 2007. Sales were $90.5 million for the third quarter of 2007, consistent with the company's revised guidance given on August 30, 2007. This represented a decrease of 16.0 percent from $107.7 million in the third quarter of 2006, and a sequential decline of 12.1 percent compared to $103.0 million in the second quarter of 2007.
Gross margin for the third quarter was 40.6 percent, down from 43.7 percent in the third quarter of 2006, and down from 43.6 percent in the second quarter of 2007. This was primarily due to lower revenues, an additional charge of $2.2 million to cost of goods sold, and costs related to the transition of manufacturing from Stolberg, Germany to China. The additional charges were related to a change in the estimate of warranty expense for two products, which resulted in a 2.4 percent reduction in gross margin. The company also incurred a net charge of $1.4 million related to a foreign exchange loss during the quarter, as the Yen and Euro strengthened relative to the US dollar. Net income for the third quarter of 2007 was $5.9 million, or $0.13 per diluted share, compared to $17.0 million, or $0.38 per diluted share in the third quarter of 2006, and $11.7 million or $0.25 in the second quarter of 2007.
"Our revenue was in line with our pre announcement due to the weakness in the semiconductor equipment market," said Dr. Hans Betz, president and chief executive officer of Advanced Energy. "The gross margin did not meet our objective due to the increased warranty expense. In the near term we expect to see continued softness in the semiconductor equipment and flat panel display markets with modest growth in our other markets. We made additional progress in the strategic diversification of our business notably with the successful introduction of our Solaron inverter product line."
