Advanced Energy Industries, Inc.

Good day, ladies and gentlemen, and thank you for joining us for this Advanced Energy First Quarter 2022 Earnings Conference Call. As a reminder, all phone participants are in a listen-only mode, but later you will have the opportunity to ask questions during our question and answer session. Also, please be aware that today's meeting is being recorded. To get us started with opening remarks and introductions, I am pleased to turn the floor over to Vice President of Strategic Marketing and Investor Relations, Mr. Edwin Mock.

Thank you, Operator. Good afternoon, everyone. Welcome to Advanced Energy's first quarter 2022 earnings conference call. With me today are Steve Kelly, our President and CEO, and Paul Oldham, our Executive Vice President and CFO. 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 earnings slide presentation. Before I begin, I'd like to mention that we will be participating at several investor conferences in the coming months. 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 guarantees of future performance. Information concerning these risks can be found in our SCC filings. All forward-looking statements are based on management estimates as of today, May 4th, 2022, and the company assumed no obligation to update them. Medium-term targets and long-term aspiration goals presented today should not be interpreted as guidance. On today's call, our financial results are presented on a non-GAAP financial basis unless otherwise specified. Exclued from non-GAAP results are stock compensation, amortization, acquisition-related costs, restructuring expenses, and unrealized foreign exchange gains or losses. A detailed reconciliation 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 Kelly.

Thank you, Edwin. Good afternoon, everyone, and thanks for joining the call. First quarter revenue and earnings per share exceeded guidance, largely due to good manufacturing execution and our ability to secure additional key components. Our shipments into the semiconductor market were particularly strong. Demand is robust across all of our target markets, and our order book is at an all-time high. To mitigate the impact of a dynamic supply environment, we will continue to maintain full staffing levels at all of our factories, so that we can react quickly when scarce components become available. We will also continue to purchase components on the open market at a premium when we can't find those components through normal channels. And finally, we will continue to address intractable supply issues through alternative sourcing and redesigns. This aggressive approach to staffing, procurement, and component qualification is paying off in the form of higher shipments to our customers over the last six months. There are significant incremental costs associated with our mitigation efforts, but we think our approach makes sense for Advanced Energy and for our customers. And I would like to thank our customers for partnering with us to absorb some of those incremental costs. Although we spend a lot of time talking about parts shortages, let me assure you that our primary focus continues to be the development of new technologies and products which provide value to our customers. These technologies and products are critical to our future revenue growth and financial performance. In the first quarter, we launched differentiated products into multiple markets grew our opportunity funnel, and won designs in many proprietary applications. In addition, we recently completed the acquisition of SL Power Electronics, expanding our product portfolio and broadening our customer base in the medical and industrial markets. Now I'll provide more color on the operating environment. In the first quarter, we overcame a number of COVID-related manufacturing challenges, including an Omicron wave in Malaysia and a regional shutdown in Shenzhen. The operations team's quick response to the changing environment allowed us to exceed our quarterly production goal despite the COVID headwinds. To mitigate supply issues, we continue to qualify alternative ICs and, where necessary, redesign entire circuit boards. Customers are partnering with us in these efforts, and we are grateful for their support. I would also like to note that most of our suppliers are keeping up with our demand, despite the challenging supply environment, and their performance is much appreciated. Now I'll provide further color for each of our target markets. In the first quarter, revenue from semiconductor customers exceeded $200 million, a new milestone for the company. We expect sales into the semiconductor market to grow sequentially in the second quarter and to continue growing in the second half of the year. Given that outlook, we are confident that AE can grow semiconductor sales faster than the overall wafer fab equipment market in 2022. We are making good progress developing technologies and products for applications such as dielectric etch, remote plasma source, and panel packaging. These efforts represent upside opportunity for advanced energy and will help drive long-term revenue and market share growth for the company. In the industrial medical market, first quarter revenue grew year on year. Demand is strong, and our order book increased in the first quarter. We secured a number of important industrial and medical design slots in the first quarter, with notable wins in electrosurgery, life science, test and measurement, and vehicle charging applications. During the first quarter, we launched the LCM4000, a high-efficiency, high-density power delivery system particularly well-suited for indoor farming and large-scale commercial lighting applications. This highly differentiated solution will enable our customers to reduce both installation costs and operating costs. Keen customer interest in the LCM4000 has already resulted in several large orders. Now I'd like to touch on our recent acquisition of SL Power, which we believe makes Advanced Energy a top tier player in the medical power market. We like the medical market. because it offers steady secular growth, long product life cycles, and sticky proprietary designs. Medical customers demand highly reliable solutions built on certified lines with custom features. SL Power is a well-known supplier of customized power solutions for leading medical device and equipment makers. Roughly 75% of their revenue is derived from sole source products. And its portfolio of low-power medical products dovetails nicely with Advanced Energy's high-power solutions. With almost no product overlap, we see a lot of opportunity for cross-selling. Now, concluding the market commentary, our revenues in the data center computing, telecom, and networking markets were up year on year. We see continued strong demand in all of these markets. In summary, as demonstrated over the last six months, we are gaining momentum as a company. Our operating tempo is good, our new products are gaining traction, and our team is energized. With a strong focus on innovation, new product development, and customer satisfaction. Advanced Energy is well positioned to deliver sustained, profitable growth in the coming years. Paul will now review our financial results and provide detailed guidance.