ADVANCED ENERGY INDUSTRIES INC
For the period ended Sep 30, 2026. Filed Nov 2, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 2, 2026
AEIS$197.01+6.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-03.
0000927003-26-000032
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-02.
0000927003-26-000039
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 106 previous paragraphs and 108 current paragraphs.
71 unchanged; 28 reworded; 9 added; 5 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 35 previous and 36 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
On September 23, 2026, we redeemed and cancelled $0.4 million principal amount of the 2028 Notes. In connection with the note redemption and conversions, we unwound the remaining Note Hedges and Warrants prior to September 30, 2026 and received net 28 thousand shares of common stock.
Current report
Subsequent to the third quarter, on October 2, 2026, we settled conversions of and redeemed the remaining $136.4 million principal amount of the 2028 Notes in cash for the principal amount and issued 0.5 million shares of common stock for the remainder of the conversion value (other than cash in lieu of any fractional shares).
Current report
In the first nine months of 2026, demand in the Industrial and Medical market increased compared to the same period in the prior year, driven by growing demand for our products. We expect demand to continue to improve in the remainder of 2026.
Current report
For the three and nine months ended September 30, 2026, the increases in gross profit were primarily attributable to higher revenue and favorable product mix, including contributions from new products. Gross margin
Current report
increased primarily due to the impact of mix improvement, which contributed approximately 200 basis points and 240 basis points, respectively, as well as higher volume.
Current report
For the nine months ended September 30, 2026, the effective tax rate was higher than the same period in 2025 primarily due to the unwind of the remaining Note Hedges associated with the 2028 Notes, the 2028 Note Exchange completed in May 2026, as well as a non-cash tax charge associated with a 5-year extension of the Singapore tax holiday incentive.
Current report
SeeNote 12. Income Tax in Part I, Item 1 “Unaudited Consolidated Financial Statements” for information regarding our income tax provision.
Current report
On June 12, 2026, we issued a notice of redemption for the remaining outstanding principal amount of the 2028 Notes with a redemption date of September 23, 2026. On September 23, 2026, we redeemed and cancelled $0.4 million principal amount of the 2028 Notes. In connection with the note redemption and conversions, we unwound the remaining Note Hedges and Warrants prior to September 30, 2026 and received net 28 thousand shares of common stock.
Current report
Subsequent to the third quarter, on October 2, 2026, we settled conversions of and redeemed the remaining $136.4 million principal amount of the 2028 Notes in cash for the principal amount and issued 0.5 million shares of common stock for the remainder of the conversion value (other than cash in lieu of any fractional shares).
Removed paragraphs (5)
Previous report
In the first half of 2026, we believe demand in the Industrial and Medical market has returned to normalized levels after customers completed their inventory rebalancing as a result of macroeconomic conditions and supply chain disruptions from prior years. The recovery continued in the second quarter of 2026 compared to the same quarter in the previous year. We expect demand to continue to improve in the remainder of 2026.
Previous report
The increase in gross profit was largely due to the increase in revenue and mix driven by new products. Gross margin grew mainly due to improved mix, the impact of tariff refunds for 120 basis points, and higher volume.
Previous report
As of June 30, 2026, certain countries in which the Company operates have implemented or are in the process of implementing the Pillar II minimum global effective tax rate regime as put forth by the Organization for Economic Cooperation and Development (“OECD”). Specifically, the OECD released prospective “Side-by-Side” guidance in early 2026 which is generally beneficial to U.S. parented organizations but will require adoption by member countries to implement. As countries continue to make revisions to their legislation and release additional guidance with respect to the global minimum tax, we continue to monitor and evaluate any potential cash tax expenses and tax rate impacts in the countries in which we operate.
Previous report
On July 4, 2025, the One Big Beautiful Bill (“OBBB”) Act, which includes a broad range of elective tax law items available in 2025 and prescribed tax law changes in 2026, was signed into law in the United States. The Company has reflected the impact of the OBBB’s elective tax law items in its financial statements for the period ending June 30, 2026. OBBB is expected to have an overall positive effect on the GAAP and non-GAAP effective tax rate of the Company, benefiting from revisions to foreign-derived intangible income (FDII) and the foreign tax credit rules.
Previous report
As of June 30, 2026, no amounts were outstanding under the Revolving Facility, and we had $600.0 million in available funding. In addition to the available capacity on the Revolving Facility, prior to the maturity date of the Credit Agreement, we may request an increase to the financing commitments in either the Term Loan Facility or Revolving Facility by an aggregate amount not to exceed $250.0 million. Any requested increase is subject to lender approval.
Reworded paragraphs (28)
Previous wording
On June 12, 2026, we issued a notice of redemption for the remaining $136.7 million principal amount of the 2028 Notes and set a redemption date of September 23, 2026. The redemption price will equal 100% of the principal amount plus accrued and unpaid interest. Holders of the 2028 Notes that wish to convert their 2028 Notes must surrender their 2028 Notes for conversion prior to the close of business on September 22, 2026. The Company is electing to settle conversions of the 2028 Notes by paying cash in respect of the principal portion of the converted 2028 Notes and delivering shares of common stock in respect of the remainder (other than cash in lieu of any fractional share). As of the date of the redemption notice, each $1,000 principal amount of the 2028 Notes is convertible into common stock at a conversion price of approximately $137.46 (based on the Conversion Rate of 7.2747 shares of common stock per $1,000 principal amount of Notes, as adjusted). For 2028 Notes converted in connection with the redemption notice, the conversion rate will be increased by 0.0743 additional shares of common stock per $1,000 principal amount of the 2028 Notes in accordance with the applicable indenture.
Current wording
On June 12, 2026, we issued a notice of redemption for the remaining outstanding principal amount of the 2028 Notes with a redemption date of September 23, 2026. Holders electing conversion were required to surrender their 2028 Notes prior to the close of business on September 22, 2026. The Company elected to settle conversions of the 2028 Notes through payment of cash for the principal portion and delivery of shares of common stock for the excess conversion value. For 2028 Notes converted in connection with the redemption notice, the conversion rate was increased by 0.0743 shares per $1,000 principal amount.
Previous wording
Our business and results of operations continue to be influenced by a dynamic global trade, geopolitical, and supply chain environment. We continue to monitor developments related to tariffs and trade policy. In addition, heightened geopolitical instability, including the conflicts in the Middle East, has contributed to volatility in energy markets, disruptions to global shipping, and broader macroeconomic uncertainty. Increased demand relative to supply for AI-related equipment and semiconductors is extending lead times and increasing prices of certain components, impacting both timing of some customer demand and many of our suppliers. We continue to take actions to procure strategic supply of materials and endeavor to recover increased costs through pricing actions. While these factors were not material to our results in the current quarter, they could become material in future periods and adversely affect our costs such as higher energy and supply chain costs, as well as negatively impact our ability to sell our products and provide services.
Current wording
Our business and results of operations continue to be influenced by a dynamic global trade, geopolitical, and supply chain environment. Overall growth has been driven primarily by investments in AI-related equipment, semiconductor capacity and capability, and economic recovery and inventory normalization in industrial and medical markets. At the same time, we are monitoring developments related to tariffs and trade policy. In addition, heightened geopolitical instability, including the conflicts in the Middle East, has contributed to volatility in energy markets, disruptions to global shipping, and broader macroeconomic uncertainty. Increased demand relative to supply for AI-related equipment and semiconductors is extending lead times and increasing prices of certain components, impacting both timing of some customer demand and many of our suppliers. We are taking actions to procure strategic supply of materials and endeavor to recover increased costs through pricing actions.
Previous wording
Our portfolio of power conversion and related products sold into this market includes plasma power, high-voltage power, system power, and adjacent sensing solutions. Our plasma power solutions are used to create plasma-based etch and deposition processes. Our semiconductor market products are incorporated into a wide range of applications, including dry etch and strip, deposition, ion implant, inspection and metrology, thermal, epitaxy, and back-end test and packaging.
Current wording
Our portfolio of power conversion and related products sold into this market includes plasma power, high-voltage power, system power, and adjacent sensing solutions. Our plasma power solutions are used to create plasma-based etch and deposition processes. Our semiconductor market products are incorporated into a wide range of applications, including dry etch and strip, deposition, ion implantation, inspection and metrology, rapid thermal processing, epitaxy, and back-end test and packaging.
Previous wording
In the first half of 2026, the Semiconductor Equipment market continued to grow due to demand for leading-edge devices in logic and memory used in AI applications, driving growing demand for our products. We expect these market conditions to continue in the remainder of the year.
Current wording
In the first nine months of 2026, the Semiconductor Equipment market continued to grow due to demand for leading-edge devices in logic and memory, driving growing demand for our products. We expect these market conditions to continue in the remainder of the year.
Previous wording
Our products are designed into data center server and storage systems and are also used by cloud service providers and their partners in their custom designed server racks and power shelves.
Current wording
Our AC-DC and DC-DC power conversion products are designed into data center server and storage systems and are also used by hyperscale and their partners.
Previous wording
Due to increased investments in AI applications by leading hyperscale customers, revenue in the Data Center Computing market increased in the first half of 2026 compared to the same period in the previous year.
Current wording
Due to increased investments in AI applications by leading hyperscale customers along with adoption of our next generation high power solutions, revenue in the Data Center Computing market increased in the first nine months of 2026 compared to the same period in the previous year, and we expect this trend to continue in the remainder of 2026.
Previous wording
End market demand in the Telecom and Networking market remained stable in the first half of 2026, with growth primarily driven by demand in AI-related applications. We expect this trend to continue for the remainder of 2026.
Current wording
End market demand in the Telecom and Networking market increased in the first nine months of 2026 compared to the same period in the previous year, with growth primarily driven by demand in AI-related applications. We expect this trend to continue for the remainder of 2026.
Previous wording
Semiconductor Equipment revenue for the three and six months ended June 30, 2026 increased compared to the same periods in 2025 on strengthening equipment demand driven by investments in AI.
Current wording
Semiconductor Equipment revenue for the three and nine months ended September 30, 2026 increased compared to the same periods in 2025 on strengthening equipment demand for leading-edge processes.
Previous wording
The increases in Data Center Computing revenue for the three and six months ended June 30, 2026, compared to the same periods in 2025 were due to increased AI investments by leading hyperscale customers and incremental growth associated with design wins secured previously.
Current wording
The increases in Data Center Computing revenue for the three and nine months ended September 30, 2026, compared to the same periods in 2025, were due to increased AI investments by leading hyperscale customers and incremental growth associated with design wins secured previously.
Previous wording
The increases in Industrial and Medical revenue for the three and six months ended June 30, 2026, compared to the same periods in 2025 were primarily due to recovery in the end markets as a result of the completion of customer inventory rebalancing and an improved demand environment.
Current wording
The increases in Industrial and Medical revenue for the three and nine months ended September 30, 2026, compared to the same periods in 2025, were primarily due to an improved demand environment in the end markets.
Previous wording
The increases in Telecom and Networking revenue for the three and six months ended June 30, 2026, compared to the same periods in 2025 were primarily driven by growth in AI-related applications.
Current wording
The increases in Telecom and Networking revenue for the three and nine months ended September 30, 2026, compared to the same periods in 2025, were primarily driven by growth in AI-related applications.
Previous wording
Interest Income, Interest Expense, and Other Expense, Net
Current wording
Interest Income, Interest Expense, and Other Income (Expense), Net
Previous wording
Other expense, net consists primarily of foreign exchange gains and losses and other miscellaneous items. For the three and six months ended June 30, 2026, we had a $3.1 million and $6.5 million improvement, respectively, in other expense, net compared to the same periods in the prior year primarily as a result of foreign exchange gains.
Current wording
Other income (expense), net consists primarily of foreign exchange gains and losses and other miscellaneous items. For the three months ended September 30, 2026, other income (expense), net decreased by $0.6 million compared to the same period in the prior year primarily due to an increase in miscellaneous expense, partially offset by foreign exchange gains. For the nine months ended September 30, 2026, other income (expense), net increased by $5.9 million compared to the same period in the prior year primarily due to foreign exchange gains in the current year compared to foreign exchange losses in the prior year.
Previous wording
Interest expense remained relatively flat compared to the same period in the prior year. SeeNote 6. Long-Term Debt in Part I, Item 1 “Unaudited Consolidated Financial Statements” for information regarding our debt.
Current wording
Interest expense decreased compared to the same period in the prior year due to the partial repayment of the 2028 Notes during the second quarter of 2026. SeeNote 6. Long-Term Debt in Part I, Item 1 “Unaudited Consolidated Financial Statements” for information regarding our debt.
Previous wording
The induced conversion expense represents the fair value of the consideration issued upon conversion in excess of the fair value of the securities issuable under the original terms of the 2028 Notes.
Current wording
The induced conversion expense in the nine months ended September 30, 2026 represents the fair value of the consideration issued upon conversion in excess of the fair value of the securities issuable under the original terms of the 2028 Notes.
Previous wording
Our effective tax rate differs from the U.S. federal statutory rate of 21% primarily due to the benefit of earnings in foreign jurisdictions that are subject to lower tax rates, as well as tax credits, partially offset by net U.S. tax on foreign operations. The effective tax rate for the three months ended June 30, 2026, was higher than the effective tax rate for the same period in 2025 primarily due to the tax effect of the convertible note inducement charge incurred in the second quarter of 2026 being treated as a discrete event and disallowed as an expense for tax purposes, partially offset by the release of tax reserves based on statute of limitation expirations and the settlement of an audit in the same period. The effective tax rate for the six months ended June 30, 2026, was lower than the effective tax rate for the same period in 2025 primarily due to excess tax benefits recognized in 2026 from share-based compensation and the release of tax reserves based on statute of limitation expirations and the settlement of an audit in the same period.
Current wording
Our effective tax rate differs from the U.S. federal statutory rate of 21% primarily due to the benefit of earnings in foreign jurisdictions which are subject to lower tax rates, as well as tax credits, partially offset by net U.S. tax on foreign operations. The effective tax rate for the three months ended September 30, 2026, was higher than the same period in 2025 primarily due to the unwind of the remaining Note Hedges associated with the 2028 Notes, as well as a non-cash tax charge associated with the 5-year extension of the Singapore tax holiday incentive.
Previous wording
As of June 30,2026, our cash and cash equivalents totaled $1,396.5 million, while our available funding under our undrawn Revolving Facility was $600.0 million. We believe our sources of liquidity will be adequate to meet operational needs, including capital expenditures, as well as anticipated debt service, share repurchase programs, dividends, and strategic investments. We have suspended activity under our share repurchase plan in connection with the issuance of the redemption notice for the remaining 2028 Notes. The share repurchase program has no expiration date, has not been terminated, and remains authorized.
Current wording
As of September 30, 2026, our cash and cash equivalents totaled $1,424.6 million, while our available funding under our undrawn Revolving Facility was $600.0 million. We believe our sources of liquidity will be adequate to meet operational needs, including capital expenditures, as well as anticipated debt service, share repurchase programs, dividends, and strategic investments.
Previous wording
During the ordinary course of business, we evaluate our cash requirements and, if necessary, adjust our expenditures to reflect the current market conditions and our projected revenue and demand. Our capital expenditures are primarily directed towards manufacturing and operations and can materially influence our available cash for other initiatives. In the past year and through the second quarter, our capital expenditures increased as we are investing in our factories to expand capacity and in our new ERP system. In addition, we may seek additional debt or equity financing from time to time; however, such additional financing may not be available on acceptable terms, if at all.
Current wording
During the ordinary course of business, we evaluate our cash requirements and, if necessary, adjust our expenditures to reflect the current market conditions and our projected revenue and demand. Our capital expenditures are primarily directed towards manufacturing and operations and can materially influence our available cash for other initiatives. In the past year and through the third quarter, our capital expenditures increased as we are investing in our factories to expand capacity and in our new ERP system. In addition, we may seek additional debt or equity financing from time to time; however, such additional financing may not be available on acceptable terms, if at all.
Previous wording
During the quarter, we completed a private, unregistered offering of $1.15 billion aggregate principal amount of the 2031 Notes and received net proceeds of approximately $1,128.1 million after deducting initial purchasers’ discounts and offering expenses. Concurrent with the issuance of the 2031 Notes, we also entered into privately negotiated exchange agreements on a portion of our outstanding 2028 Notes and exchanged an aggregate of approximately $438.3 million principal amount for aggregate consideration consisting of approximately $442.4 million in cash and approximately 2.0 million shares of common stock. We intend to use the remainder of the net proceeds from the offering for general corporate purposes.
Current wording
During the second quarter of 2026, we completed a private, unregistered offering of $1.15 billion aggregate principal amount of the 2031 Notes and received net proceeds of approximately $1,128.1 million after deducting initial purchasers’ discounts and offering expenses. Concurrent with the issuance of the 2031 Notes, we also entered into privately negotiated exchange agreements on a portion of our outstanding 2028 Notes and exchanged an aggregate of approximately $438.3 million principal amount for aggregate consideration consisting of approximately $442.4 million in cash and approximately 2.0 million shares of common stock. We intend to use the remainder of the net proceeds from the offering for general corporate purposes and debt repayment.
Previous wording
As of June 30, 2026, our outstanding debt includes $136.7 million principal amount of the 2028 Notes and $1.15 billion principal amount of the 2031 Notes. As of June 30, 2026, we had no borrowings under our Credit Agreement. Should we have future borrowings under our Term Loan Facility or Revolving Facility of our Credit Agreement, those borrowings would be subject to a variable rate.
Current wording
As of September 30, 2026, our outstanding debt included $136.4 million principal amount of the 2028 Notes and $1.15 billion principal amount of the 2031 Notes. As of September 30, 2026, we had $600.0 million available but no borrowings under our Credit Agreement. Should we have future borrowings under our Term Loan Facility or Revolving Facility of our Credit Agreement, those borrowings would be subject to a variable rate.
Previous wording
During the six months ended June 30, 2026, we paid quarterly cash dividends of $0.10 per share, totaling $7.9 million. We currently anticipate that a cash dividend of $0.10 per share will continue to be paid on a quarterly basis, although the declaration of any future cash dividend is at the discretion of our Board and will depend on our financial condition, results of operations, capital requirements, business conditions, and other factors.
Current wording
During the nine months ended September 30, 2026, we paid quarterly cash dividends of $0.10 per share, totaling $12.0 million. We currently anticipate that a cash dividend of $0.10 per share will continue to be paid on a quarterly basis, although the declaration of any future cash dividend is at the discretion of our Board and will depend on our financial condition, results of operations, capital requirements, business conditions, and other factors.
Previous wording
There were no share repurchases during the three months ended June 30, 2026.
Current wording
There were no share repurchases during the three months ended September 30, 2026. We suspended activity under our share repurchase program in connection with the issuance of the redemption notice for the remaining 2028 Notes on June 12, 2026, and resumed the program in October 2026 in accordance with the authorized share repurchase program.
Previous wording
Net cash from continuing operations for the six months ended June 30, 2026, was $80.0 million, as compared to $75.7 million for the same period in the prior year. The $4.3 million increase was primarily due to higher net income from continuing operations offset by a net increase in working capital driven by increases in accounts receivable on higher revenue and inventory to support anticipated future demand partially offset by an increase in accounts payable.
Current wording
Net cash from continuing operations for the nine months ended September 30, 2026 was $145.7 million, compared to $154.6 million for the same period in the prior year. The $8.9 million decrease was primarily due to increased working capital, driven by higher inventory levels to support anticipated future demand and higher accounts receivable associated with increased revenue, partially offset by higher net income from continuing operations and higher accounts payable.
Previous wording
Net cash used in investing activities for the six months ended June 30, 2026, was $87.5 million primarily due to $86.1 million in purchases of property and equipment, which was largely driven by continued investments in our manufacturing footprint and capacity, our new ERP system, and investments in other capabilities across multiple sites.
Current wording
Net cash used in investing activities for the nine months ended September 30, 2026 was $118.6 million, primarily due to $117.2 million in purchases of property and equipment. Capital expenditures were largely driven by continued investments in our manufacturing footprint and capacity, implementation of our new ERP system, and other capabilities across multiple sites.
Previous wording
Net cash used in investing activities for the six months ended June 30, 2025, was $43.6 million primarily due to $42.0 million in purchases of property and equipment, which was largely driven by investments in our manufacturing footprint and capacity, and $1.6 million in purchases of investments.
Current wording
Net cash used in investing activities for the nine months ended September 30, 2025 was $71.9 million primarily due to $69.9 million in purchases of property and equipment, which were largely driven by investments in our manufacturing footprint and capacity, as well as $2.0 million in purchases of investments.
Previous wording
Net cash from financing activities for the six months ended June 30, 2026, was $616.8 million driven by net proceeds of $1,129.3 million from issuance of the 2031 Notes partially offset by $440.5 million for partial repayment of the 2028 Notes. In connection with the 2031 Notes, $69.0 million was paid for the cost of the Capped Call and $44.6 million was received for the partial unwind of the Note Hedges and Warrants associated with the 2028 Notes. Additionally, other financing activities include $39.1 million in net payments related to stock-based award activities, and $7.9 million for dividend payments.
Current wording
Net cash from financing activities for the nine months ended September 30, 2026 was $610.2 million, primarily driven by net proceeds of $1,129.3 million from the issuance of the 2031 Notes, partially offset by $440.9 million of cash paid to settle a portion of the 2028 Notes. In connection with the issuance of the 2031 Notes, the Company paid $69.0 million for the Capped Call associated with the 2031 Notes. $44.6 million was received from the partial unwind of the Note Hedges and Warrants. Other financing activities included $40.6 million in net payments related to stock-based award activities and $12.0 million of dividend payments.
Previous wording
Net cash used in financing activities for the six months ended June 30, 2025, was $42.8 million and included $23.7 million for repurchase of common stock, $8.0 million in net payments related to stock-based award activities, and $7.7 million for dividend payments. In addition, we paid $1.9 million in fees related to entering the Credit Agreement and $1.5 million for the release of the holdback associated with the Airity Acquisition.
Current wording
Net cash used in financing activities for the nine months ended September 30, 2025 was $47.0 million and included $23.7 million for repurchases of common stock, $8.3 million in net payments related to stock-based award activities, and $11.6 million for dividend payments. In addition, we paid $1.9 million in fees related to entering the Credit Agreement and $1.5 million for the release of the holdback associated with the Airity Acquisition.
Previous wording
During the six months ended June 30, 2026, foreign currency translation had a minimal impact on cash. See “Foreign Currency Exchange Rate Risk” in Part I, Item 3 for more information**.**
Current wording
During the nine months ended September 30, 2026, foreign currency translation had a minimal impact on cash. See “Foreign Currency Exchange Rate Risk” in Part I, Item 3 for more information**.**
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
We expect this trend to continue, along with adoption of our next generation high power solutions, to support growing demand in the remainder of 2026.
Previous report — wording carried elsewhere
On June 12, 2026, we issued a notice of redemption for the remaining outstanding principal amount of the 2028 Notes and specified a redemption date of September 23, 2026.