Advanced Energy explores solar inverter business sale

FORT COLLINS – Advanced Energy Industries Inc. (NASDAQ: AEIS) is exploring a sale of its solar inverter business, which saw flagging sales in the second and third quarters.

The Fort Collins-based solar inverter maker is considering “strategic alternatives” for the business, including a sale, joint venture, partnership or licensing, according to a company filing Monday with the Securities and Exchange Commission. Another alternative could include “additional product line optimization and rationalization,” Advanced Energy said.

Advanced Energy shares gained less than 1 percent to close at $22.89. The company made the filing after the market closed Monday.

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“As part of our annual strategic planning process, we reviewed our entire business to determine the best portfolio mix to achieve our strategic objectives and build shareholder value,” CEO Yuval Wasserman said in a statement. “We concluded that the solar inverter business as currently configured required a review of our strategic alternatives to capitalize on its strong product portfolio and customer relationships.”

Advanced Energy said it planned to continue offering its inverter products and services and supporting its customers, but cautioned that a transaction involving the business could go forward in the future. The company said it would not comment further.

Advanced Energy’s third-quarter solar business sales totaled $52 million, down from the $67.5 million in the third quarter of last year. Advanced Energy executives blamed uncertainty in the U.S. utility-scale solar market surrounding tariffs on Chinese solar panels. Analysts questioned the company on how difficult or easy exiting the solar business would be.

“We’re not happy with the performance of our inverter product line,” Wasserman told analysts during the third-quarter earnings call. “We’re not sitting on our hands right now and a huge effort is being put in place to increase the profitability of our inverter product line.”

In the second quarter, the company’s solar business posted $64.5 million, down from $68 million during the same period a year earlier.

The company said Monday it expects to record an inventory charge of between $10 and $14 million in the fourth quarter. The non-cash inventory charge will reduce net income and earnings per share for the fourth quarter and for 2014.

The possibility of a sale of its inverter business follows resignations of three of the company’s executives this year: CEO Garry Rogerson, CFO Danny Herron and solar-unit president Gordon Tredger. The company also confirmed employee layoffs earlier this year.

Despite a struggling solar business, sales generated by the company’s precision-power business soared during the third quarter to $91.2 million on strong semiconductor sales from $75.4 million in the third quarter of last year.

Advanced Energy earned a $12.3 million profit during the third quarter, up from $700,000 during the same period a year earlier when it reported a $22.4 million restructuring charge.