Advanced Energy Industries, Inc.

Thank you for standing by. Welcome to the Advanced Energy Industry's first quarter 2021 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Edwin Locke, Vice President of Strategic Marketing and Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone. Welcome to Advanced Energy's first quarter 2021 earnings conference call. With me today are Steve Kelly, our president and CEO, Paul Odom, our executive vice president and CFO, and Brian Smith, our director of investor relations. If you have not seen our earnings press release, you can find it on our website at ir.advancedenergy.com. There you'll also find the Q1 slide presentation. Before I begin, I'd like to mention that Advanced Energy will be presenting at several investor conferences in the coming months. As events occur, we will make the announcement. Let me remind you that today's call contains four looking statements that are subject to risks and uncertainties that could cause actual results to differ materially and are not guaranteed of future performance. Information concerning these risks and uncertainties is in our SEC filing. All forward-looking statements are based on management's estimates as of today, May 5th, 2021, and the company assumes no obligation to update them. Long-term targets presented today, including our aspirational goals and long-term vision goals, should not be interpreted as guidance. On today's call, our financial results will be presented on a non-GAAP financial basis unless otherwise specified. Excluded from our non-GAAP results are amortization, stock compensation, integration and transition costs, unrealized foreign exchange gains or losses, and restructuring items. A detailed recommendation between GAAP and non-GAAP measures can be found in today's press release. With that, let me pass the call to our President and CEO, Steve Kell.

Thank you, Edwin, and good morning, everyone. Thanks for joining the call today. First quarter of revenue was $352 million. We had record sales into the semiconductor market, where we are benefiting from our leadership position and process power delivery systems. We entered the second quarter with a record order backlog. Demand is increasing across all of our target markets, and we continue to win new design slots at an impressive rate as customers adopt our industry-leading products. In the short term, our most pressing tactical challenge continues to be dealing with constraints in the supply chain, particularly shortages of certain integrated circuits. These constraints limited our upside in the first quarter, as we forecasted. Our second quarter guidance also incorporates the impact of these constraints. However, given the proprietary nature of most of our products, we believe that nearly all of the demand which we can't satisfy in the second quarter will shift into the second half of the year. Also, we expect that the actions that we took in the first quarter to address choke points in the supply chain will begin to have a positive impact in the third quarter. Now we'd like to provide additional color for each of our target markets. In the semiconductor market, we generated record revenues in the first quarter, growing 35% year-on-year and 9% sequentially. This strong growth was driven by higher demand for our process power delivery systems and key enabling technology for advanced etch and deposition processes. We've maintained our leadership position in the process power market by working closely with our customers and by continuously innovating. Advanced Energy's technology and products enable our customers to improve yields, increase throughput, reduce cost, and lower power consumption. Over the past year, we have launched a series of next-generation products into the market. Our latest high-powered RF generators, our unique EVOS plasma system, and our Maxstream RPF system are all highly differentiated and are currently being evaluated by our customers. We believe that these next-generation products will drive market share gains for advanced energy in the coming years. In the first quarter, we won multiple design slots at major OEMs for both etch and ALD platforms. In addition to winds and process power, our traditional area of strength, we also secured winds for artisan-branded embedded power products. To summarize, we expect that 2021 will be a record year for sales into the semiconductor market. And we are bullish about 2022 and beyond, given our strong lineup of differentiated next generation products. Now we'll move to the industrial and medical markets, where our revenue was up 27% year on year. In industrial applications, we saw strength in flat panel display, battery production, carbon fiber manufacturing, and horticulture. In medical, demand for diagnostic and life science applications began to improve during the quarter. Looking forward, We expect the industrial and medical markets to strengthen through the course of the year due to improving economic conditions as well as increased acceptance of our new products into a wide variety of applications. In the first quarter, we confirmed that our Ascent MS platform has been designed into multiple solar cell manufacturing applications. In addition, our Thyro A-plus power controller has been incorporated into a flat-panel manufacturing application. Moving to the data center computing market, revenues were down in the first quarter, as expected, due primarily to ongoing inventory digestion by specific hyperscale customers. Looking forward, we see increased demand in the second quarter, followed by a strong uptick in demand in the second half of the year. We continue to make good progress on new product qualifications and expect to have additional tier one hyperscale customers later this year. We want another board-mounted 48-volt DC-to-DC design in the first quarter and continue to focus on 48-volt server opportunities. Now I'll shift to the telecom and networking market, where first quarter revenue was down sequentially and roughly flat year on year. Our first quarter revenue reflected the full impact of portfolio actions we executed in late 2020. Moving forward, We expect to grow revenue by targeting higher-end applications where we can differentiate. We are focused on 5G infrastructure, and in the first quarter, won two critical 5G design slots at a leading telecom OEM. In closing, I'd like to share some personal observations. Since joining Advanced Energy in March, I've visited most of our North American manufacturing and development sites and spoken face-to-face with many members of the team. My general takeaways from those initial meetings are, first, that we have a high level of employee engagement. And second, that we have some excellent engineers and scientists at Advanced Energy who foster a culture of technical excellence. In my first 60 days, I've also had the opportunity to meet the two of our largest customers and channel partners. Our customers have a genuine appreciation for Advanced Energy's technologies, products, and services. They know the company well, since our technical teams work closely together during new product development cycles. To grow our business, we will focus on continuously improving our customer value proposition. We need to deliver industry-leading technologies and products in a timely fashion with best-in-class quality, reliability, and service levels. We have a strong balance sheet and will deploy capital where it makes strategic and financial sense for the company. The power supply industry is highly fragmented, and we think that supplier consolidation will benefit both Advanced Energy and our customers. In conclusion, I am delighted to be part of the Advanced Energy team. We are targeting the right markets. We have a strong lineup of differentiated products, and we have a great culture. We are focused on accelerating revenue and earnings growth and are on track to meet or exceed our aspirational goals in longer-term financial targets. Paul will now review our financial results and provide detailed guidance.