Advanced Energy Industries, Inc.

Greetings and welcome to the Advanced Energy fourth quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Edwin Mock, Senior Vice President of Strategic Marketing and Investor Relations. Please go ahead.

Thank you, operator. Good afternoon, everyone. Welcome to the Advanced Energy Fourth Quarter 2025 Earnings Conference Call. With me today are Steve Kelly, our President and CEO, and Paul Oldham, our Executive Vice President and CFO. You can find today's press release and earnings presentation on our website at ir.advancedenergy.com. Before we begin, let me remind you that today's call contains four looking statements. They are subject to risks and uncertainties that could cause actual results to differ materially and are not guarantee of future performance. Information concerning these risks can be found in our SEC filings. All four looking statements are based on management estimates as of today, February 10th, 2026, and a company assumes no obligation to update them. Any targets beyond the current quarter 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. Detailed reconciliation between our GAAP and non-GAAP results can be found in today's press release. With that, let me pass the call to our President and CEO, Steve Kelly.

Thanks, Edwin. Good afternoon, everyone, and thanks for joining the call. We finished a very successful 2025 with a strong fourth quarter. Revenue of nearly $490 million was at the high end of our guidance. Strengthening demand in the semiconductor, industrial, and medical markets drove the outperformance. As expected, we also had another record quarter in data center. Gross margin came in just shy of 40%, our best performance in five years. Earnings per share of nearly $2 also beat guidance. For 2025, we grew total revenue over 20%, increased earnings per share by over 70%, and significantly improved our gross and operating margins. We also delivered record operating cash flow. Our strong financial performance underscores the benefits of our diversification strategy, our focus on execution, and the leverage in our model. We deploy our best-in-class technologies across multiple high-value markets, allowing us to deliver healthy revenue, profitability, and cash flow through market cycles. In 2025, we grew revenue in two of our three target markets. Data center computing revenue more than doubled year on year and increased sequentially in every quarter of 2025. Hyperscalers have adopted our customized power solutions in a variety of AI rack applications. Semiconductor revenue grew 6% year-on-year to the second highest level in company history. New products began contributing incremental revenue in 2025 as some of our design wins moved into early production. Although industrial medical revenue declined year-on-year, we were encouraged by three quarters of sequential revenue growth after reaching a bottom in the first quarter. We expect growth to continue in 2026 as many customers and distributors have worked through excess inventories. We also think that our design wind pipeline will drive share gain moving forward. In 2025, we maintained a solid cadence of new product introductions with 26 new product launches across our markets. In addition, we spun off many custom products. In semiconductor, we continue to receive very positive feedback on the best-in-class performance of our Everest, EVOS, and NavX technologies. At the leading edge, These technologies are delivering meaningful improvements in yield and throughput. In addition to our many confirmed design wins, there are a number of development projects currently underway which should convert to wins in 2026. In addition to our success in plasma power, we have also made progress winning key system power slots for semiconductor equipment. with multiple wins ramping to volume this year. In data center, our 2025 wins are going into volume production this year. Working closely with key customers, we are developing new technologies and products for next generation AI data centers. We are also engaging with a second wave of cloud and enterprise customers, largely with modified versions of our standard technology platforms. Through the prolonged inventory correction in the industrial medical market, we continue to invest in new products, customization capabilities, digital marketing, and distributor partnerships. Now that the market is recovering, we can leverage those investments to gain share. In operations, we expanded capacity in the Philippines and in Mexico, enabling us to support the continued growth in data center demand. We also completed the fit-up of our new Thailand factory, which is expected to deliver more than $1 billion in annual revenue generating capacity once it's fully built out. Through solid execution, including the closure of our last China factory, we expanded gross margin by 240 basis points. Despite ongoing tariff headwinds, we are well positioned to move gross margin above 40% in 2026. Now let me provide some fourth quarter commentary. In semiconductor, fourth quarter revenue grew sequentially well ahead of plan. In data center computing, fourth quarter revenue increased sequentially to a new record driven by AI data center investment. And in industrial medical, revenue grew 10% sequentially in return to year-over-year growth after multiple quarters of decline. Bookings, backlog, and resales were up. Channel inventory was down. We believe that the market environment for advanced energy has largely normalized. In Q4, we secured important design wins in factory automation, medical imaging, and electrosurgery applications. Now I'd like to provide our view on 2026. Entering the year, we see positive demand trends across all of our target markets. In addition, we expect that multiple new wins will ramp to production in 2026, driving growth across the portfolio. In semiconductor, stronger customer forecasts are increasing our confidence in a strong second half. In addition, we expect new product revenue to grow over the course of 2026. These forecasts are underpinned by downstream investments in advanced logic and memory capacity. In data center, we now project full year revenue to grow more than 30%. Our modular technology blocks, strong design team, and development speed are key enablers of growth in this market. In the industrial and medical market, We expect demand to continue to improve over the next few quarters. Production revenue from several wins in factory automation and defense should enable us to outgrow the market. In total, we project that our 2026 revenue will grow in the high teens after 21% growth in 2025. Let me finish with some closing thoughts. Advanced Energy designs and manufactures precision power solutions for demanding high-value applications across multiple markets. Our market diversification strategy, coupled with aggressive investment, is enabling us to capture upsides across our markets and deliver more consistent financial results. We've steadily increased our R&D and marketing spending over the last few years. building a strong portfolio of new products, gaining new customers, and growing our design wind pipeline. We have more than doubled the output of our Philippines and Mexico factories. In addition, we've built a new flagship factory in Thailand. Finally, with a strong balance sheet, we will continue to pursue inorganic growth to improve scale and to broaden our technology portfolio. With market tailwinds in 2026, strong demand for our new products, expanding margins, and a solid balance sheet, we are confident that we can meet or exceed the long-term financial goals presented at our 2024 Analyst Day. Paul will now provide detailed financial information.