A Message from Our CEO
Dear Stockholders:
2025 was a highly successful year for Advanced Energy. We grew revenue by 21% to the second-highest
level in company history. Driven by demand for artificial intelligence (AI), Data Center Computing revenue
more than doubled for the year. Semiconductor revenue grew to the second highest level in company
history. Industrial and Medical revenue bottomed in the first quarter, followed by three quarters of sequential
growth as customer inventory conditions improved. We achieved solid profitability in 2025 and delivered
record cash flow from operations.
During the year, we made substantial progress executing our strategic initiatives. We maintained a solid
cadence of innovation, launching 26 new product platforms and numerous custom solutions. Customers
confirmed that our advanced semiconductor technologies – eVoSTM, eVerestTM, and NavXTM – are enabling
meaningful improvements in yield and throughput at the leading edge. In Data Center Computing, we
secured design wins for volume production and are working closely with key customers to develop solutions
to meet next-generation AI power requirements. In operations, we more than doubled total output at our
Philippines and Mexico factories, enabling our strong growth. We made substantial progress building our
new 500,000 square foot flagship factory in Thailand, which should provide more than $1 billion in
incremental revenue generating capacity. Finally, we continue to optimize our manufacturing footprint, an
important component of our gross margin expansion plan.
Looking forward, Advanced Energy seeks to extend its market leadership in precision power for
differentiated high-end applications. In 2026, we see positive demand trends across our target markets and
expect multiple new wins will ramp to production. Beyond this year, we believe that our diversification
strategy, investments for growth, and focus on execution position us to capture upside and deliver strong
financial results. We are confident in our ability to meet or exceed the long-term financial goals presented
at our 2024 Analyst Day.
On behalf of our employees and Board of Directors, we thank you for your continued support.
Best regards,
/s/ Stephen D. Kelley
Stephen D. Kelley
President and Chief Executive Officer
March 26, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☑
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2025
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 000-26966
ADVANCED ENERGY INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware
84-0846841
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
1595 Wynkoop Street, Suite 800, Denver, Colorado
80202
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (970) 407-6626
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.001 par value
AEIS
Nasdaq Global Select Market
Securities registered pursuant to section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act: Yes No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act: Yes ☐ No
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of
the Exchange Act.
Large accelerated filer
Accelerated filer ☐
Non-accelerated filer ☐
Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant’s executive officers during the relevant recovery period pursuant to section 240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The aggregate market value of voting and non-voting common stock held by non-affiliates of the registrant was $4,950,205,433 as of June 30, 2025, based upon the
price at which such common stock was last sold on such date.
As of February 4, 2026, there were 37,750,990 shares of the registrant’s common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Part III of this annual report on Form 10-K incorporates information by reference from the registrant’s definitive proxy statement for its 2026 annual meeting
of stockholders (to be filed with the Commission under Regulation 14A no later than 120 days after the end of the registrant’s fiscal year ended December 31, 2025).
2
ADVANCED ENERGY INDUSTRIES, INC.
FORM 10-K
TABLE OF CONTENTS
PART I
4
ITEM 1.
BUSINESS
4
ITEM 1A. RISK FACTORS
12
ITEM 1B. UNRESOLVED STAFF COMMENTS
27
ITEM 1C. CYBERSECURITY
28
ITEM 2.
PROPERTIES
29
ITEM 3.
LEGAL PROCEEDINGS
30
ITEM 4.
MINE SAFETY DISCLOSURES
30
PART II
31
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
31
ITEM 6. [RESERVED]
32
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
33
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
47
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
48
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
93
ITEM 9A. CONTROLS AND PROCEDURES
93
ITEM 9B. OTHER INFORMATION
94
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
94
PART III
95
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
95
ITEM 11. EXECUTIVE COMPENSATION
95
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
95
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
96
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
96
PART IV
96
ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES
96
ITEM 16. FORM 10-K SUMMARY
99
SIGNATURES
100
3
Special Note on Forward-Looking Statements
This annual report on Form 10-K contains, in addition to historical information, forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). Statements in this report that are not historical information are
forward-looking statements. For example, statements relating to our beliefs, expectations and plans are forward-looking
statements, as are statements that certain actions, conditions, events, or circumstances will continue. The inclusion of
words such as “anticipate,” “expect,” “estimate,” “can,” “may,” “might,” “continue,” “enable,” “plan,” “intend,”
“should,” “could,” “would,” “will,” “likely,” “potential,” “believe,” and similar expressions and the negative versions
thereof indicate forward-looking statements; however, not all forward-looking statements may contain such words or
expressions. These forward-looking statements are based upon information available as of the date of this report and
management’s current estimates, forecasts, and assumptions. Although we believe that our expectations reflected in or
suggested by these forward-looking statements are reasonable, we may not achieve the results, performance, plans, or
objectives expressed or implied by such forward-looking statements. Forward-looking statements involve risks and
uncertainties, which are difficult to predict and many of which are beyond our control.
Risks and uncertainties to which our forward-looking statements are subject include:
•
volatility and cyclicality, economic conditions, and business fluctuations in the industries in which we
compete;
•
our ability to achieve design wins with new and existing customers;
•
our ability to accurately forecast and meet customer demand;
•
risks related to global economic conditions, such as the impact of tariffs and export regulations,
escalating global conflicts on macroeconomic conditions, economic uncertainty, market volatility,
rising interest rates, inflation, lack of growth in our markets, or recession;
•
risks associated with scaling our manufacturing capacity and securing sufficient critical components to
meet customer demand;
•
pricing pressure from customers and competitors;
•
concentration of our customer base;
•
risks associated with potential breach of our information security measures— either external breach or
internal data theft;
•
difficulties with the implementation of our enterprise resource planning and other enterprise-wide
information technology system applications;
•
our loss of or inability to attract and retain key personnel;
•
risks associated with our manufacturing footprint optimization and movement of manufacturing
locations for certain products;
•
disruptions to our manufacturing operations or those of our customers or suppliers;
•
our ability to successfully identify, close, integrate and realize anticipated benefits from our acquisitions
or divestitures;
•
quality issues, unanticipated costs in fulfilling our warranty obligations or adequacy of our warranty
reserves, claims outside of warranty, or product liability claims;
•
risks inherent in our international operations, including the effect of export controls, the impact of
tariffs on our supply chain or products we sell, political and geographical risks, and fluctuations in
currency exchange rates;
•
our ability to enforce, protect and maintain our proprietary technology and intellectual property rights,
and avoid claims alleging infringement of the intellectual property rights of others;
4
•
regulatory risk related to our supply chain;
•
legal matters, claims, investigations, and proceedings;
•
changes to tax laws and regulations or our tax rates;
•
changes to and maintaining compliance with U.S. federal, state, local and foreign regulations, including
with respect to trade compliance, privacy and data protection, supply chain, and environmental
regulation;
•
effect of our debt obligations and restrictive covenants on our ability to operate our business;
•
risks related to our unfunded pension obligations;
•
our estimates of the fair value of intangible assets;
•
the potential impact of dilution related to our convertible debt, hedge, and warrant transactions;
•
risks relating to ownership of our common stock; and
•
the risks and uncertainties described in Part I, Item 1A in this Form 10-K.
Actual results could differ materially and adversely from those expressed in any forward-looking statements,
and readers are cautioned not to place undue reliance on forward-looking statements. Factors that could contribute to
these differences or prove our forward-looking statements, by hindsight, to be overly optimistic or unachievable include,
but are not limited to, the risks and uncertainties listed above and described in Part I, Item 1A “Risk Factors.” We
assume no obligation to update any forward-looking statement or provide the reasons why our actual results might differ.
Market and Industry Data
The market and industry information used in this annual report on Form 10-K is based on management’s good
faith estimates, which we derive from our review of internal information and independent sources. Although we believe
these independent sources to be reliable, we have not verified the accuracy or completeness of the information.
PART I
Unless the context otherwise requires, as used in this Form 10-K, references to “Advanced Energy,” “the
Company,” “our Company,” “we,” “us” or “our” refer to Advanced Energy Industries, Inc. and its consolidated
subsidiaries.
ITEM 1. BUSINESS
Company Overview
Advanced Energy provides highly engineered, critical, precision power conversion, measurement, and control
solutions to our global customers. We design, manufacture, sell and service precision power products that transform,
refine, and modify the raw electrical power coming from either the utility or the building facility and convert it into
various types of highly controllable, usable power that is predictable, repeatable, and customizable to meet the necessary
requirements for powering a wide range of complex equipment. Our products enable customers to reduce or optimize
their energy consumption through increased power conversion efficiency, power density, power coupling, and process
control across a wide range of applications.
We are organized on a global, functional basis and operate as a single segment of power electronics conversion
products. Within this segment, our products are sold in the Semiconductor Equipment, Data Center Computing,
Industrial and Medical, and Telecom and Networking markets.
We incorporated in Colorado in 1981 and reincorporated in Delaware in 1995. Our executive offices are located
at 1595 Wynkoop Street, Suite 800, Denver, Colorado 80202, and our telephone number is 970-407-6555.
5
Recent Events
Credit Agreement
On May 8, 2025, we terminated our prior credit agreement, dated as of September 10, 2019 (and subsequently
amended) and entered into a new credit agreement (the “Credit Agreement”) consisting of a senior unsecured term loan
facility (“Term Loan Facility”) and a senior unsecured revolving facility (“Revolving Facility”) both maturing on May 8,
2030. The maturity date may be accelerated to the date that is 91 days prior to the maturity date of our 2.50% convertible
senior notes due September 15, 2028 (the “Convertible Notes”), if the sum of our consolidated cash and cash equivalents
plus the undrawn balance on the Revolving Facility is less than 120% of the redemption amount of the Convertible
Notes. The financing terms of the new Credit Agreement are substantially the same as the terms of the prior credit
agreement. As part of the new credit facility, HSBC Bank USA, N.A. (“HSBC”) was appointed as the administrative
agent for the lender group. See Note 7. Long-Term Debt in Part II, Item 8 “Financial Statements and Supplementary
Data.”
Restructuring Activity
We continue to execute our previously announced manufacturing consolidation plan. In 2024, we approved
further manufacturing consolidation initiatives, including the closure of our Zhongshan, China manufacturing facility
(the “2024 Plan”). Manufacturing operations in Zhongshan ceased during the second quarter of 2025. Final site closure
activities are in progress and are expected to conclude in 2026. Further, we expect to continue to consolidate several of
our smaller manufacturing sites through 2026.
In 2025, further actions were approved related to consolidating our research and development, sales, and
administrative functions in connection with our manufacturing and footprint consolidation. See Note 11. Restructuring,
Asset Impairments, and Other Charges in Part II, Item 8 “Financial Statements and Supplementary Data.”
Products and Services
Our precision power products and solutions are designed to enable process technologies, improve productivity,
lower the cost of ownership, and/or provide critical power capabilities for our customers. These products are designed to
meet our customers’ demanding requirements in efficiency, flexibility, performance, and reliability. We also provide
repair and maintenance services for our products.
Our plasma power products enable innovation in complex semiconductor and thin film plasma processes such
as dry etch and deposition. Our broad portfolio of high and low voltage power products is used in a wide range of
applications, such as semiconductor equipment, data center computing, industrial production, medical and life science
equipment, aerospace and defense, networking, and telecommunications. We also supply related sensing, controls, and
instrumentation products primarily for advanced measurement and calibration of power and temperature for multiple
industrial markets.
Our network of global service support centers provides repair services, calibration, conversions, upgrades,
refurbishments, and used equipment to companies that use our products.
6
End Markets
Advanced Energy generates revenue from the sale of a broad range of advanced and system power products and
services to global original equipment manufacturers (“OEMs”), distributors, and end customers. Our customers select
our products based on various performance metrics such as high power conversion efficiency, high power density, low
noise emission, and lower power consumption as well as our ability to tailor our solutions to meet the unique
requirements of their critical applications. The future growth and demand for our products is driven by a combination of
factors within each of the end markets we serve, as follows:
Semiconductor Equipment Market
The Semiconductor Equipment market supports and enables the long-term need for production capacity and
new process technologies to meet demand for semiconductor devices across many applications driven by megatrends
such as artificial intelligence (“AI”), energy efficiency, automobile electrification, and Internet of things.
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.
Our strategy is to outgrow the wafer fabrication equipment (“WFE”) market by developing plasma power
products for advanced processing applications and through market share gains in both plasma power and adjacent
semiconductor applications. We believe the plasma power market will grow faster than WFE due to increasing number
of plasma process steps and growing demand for more complex power content. In addition, we are targeting to win
customer adoptions of our new plasma power products to strengthen our positions in core applications with leading
market share, such as conductor etch and deposition, and to grow our market position in targeted applications with lower
market share, such as dielectric etch. Finally, we are targeting to leverage our broad portfolio of system power, thermal
and sensing, remote plasma source, and high voltage products to gain share in adjacent semiconductor applications.
Data Center Computing Market
The Data Center Computing market is being driven by the rapid growth of AI and related investments. The
accelerated power rating of next-generation AI processors and increased density of AI processors in each IT rack have
significantly increased the power requirements for AI-based servers and racks which, in turn, increased the importance
of high power efficiency, density, and reliability for server rack power solutions.
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.
Our strategy in the market is to target high-end, high power, differentiated applications based on our
competitive strengths in power density, efficiency, reliability, and speed in delivering next-generation, production-ready
products. Due to higher power requirements for AI-based server racks, the demand for high-end AI power solutions has
been growing faster than the traditional server power market. We believe our capabilities in advancing new power
solutions for next-generation AI-based server racks position us to participate in the continued growth in this market.
Industrial and Medical Market
The Industrial and Medical market is fueled by continued investment in complex manufacturing processes,
increased adoption of new industrial technologies such as automation and clean energy, and increased breadth and
precision requirements of medical devices and life science equipment.
We supply this market with critical, precision power conversion products that deliver precise and highly
reliable, low noise and/or differentiated power. In addition, our sensing, control, and instrumentation products
7
complement our power solutions. Our products are used in a wide variety of applications, such as advanced material
fabrication, medical devices, life science, test and measurement equipment, robotics, industrial production, defense,
aerospace, and large-scale lighting applications.
Our strategy in the market is to penetrate a broader set of applications by expanding our product offerings,
leveraging common platforms, providing platform derivatives, and offering customizations. In addition, our strategy is to
expand our customer reach in this large, fragmented market through a focused direct sales team on larger and strategic
accounts, optimize and leverage our distribution channel, and expand visibility and access to our products through our
digital footprint and website.
Telecom and Networking Market
Demand in the Telecommunication and Networking market is driven by adoption of more advanced mobile
standards, such as 5G technologies, networking investments by telecommunication service providers, enterprises
upgrading their communication networks, and data centers investing in their networks for AI-driven increased
bandwidth.
We serve this market by providing application-specific power conversion products to many leading OEMs of
wireless infrastructure equipment and computer networking equipment.
Our strategy in the market is to optimize our power conversion products to more differentiated applications and
leverage investments across our power portfolio to maintain a position in the most attractive customers and applications.
For more information related to our expectations for the markets we serve, see Business Environment and
Trends in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Customers
Our products are sold worldwide to OEMs, distributors, and directly to end users.
During the year ended December 31, 2025, three customers accounted for 23%, 19%, and 12% of our total
revenue, respectively. During the year ended December 31, 2024, two customers accounted for 26% and 11% of our
total revenue, respectively. No other customers accounted for 10% or more of total revenues. We expect that the sale of
products to our largest customers will continue to account for a significant percentage of our revenue for the foreseeable
future. The loss of a large customer could have a material adverse effect on our results of operations.
For more information related to our significant customers, see Note 3. Revenue in Part II, Item 8 “Financial
Statements and Supplementary Data” and Part I, Item 1A “Risk Factors.”
Marketing, Sales, and Distribution
We sell our products through direct and indirect sales channels. Our primary direct sales operations are located
in the United States (“U.S.”), Asia, and Europe.
In addition to a direct sales force, we have distributors that support our selling efforts.
We maintain customer service centers globally, as we believe that customer service and technical support are
important competitive factors and are essential to building and maintaining close, long-term relationships with our
customers.
Refer to Note 3. Revenue in Part II, Item 8 “Financial Statements and Supplementary Data” for information
regarding our revenue by geographic area. See Part I, Item 1A “Risk Factors” for a discussion of certain risks related to
our sales and marketing operations.
8
Manufacturing
We manufacture our products primarily in our large factories in the Philippines, Malaysia, and Mexico. We also
perform limited specialty manufacturing for some of our products in the U.S., the United Kingdom, and Europe. During
2025, we continued to execute our previously announced manufacturing consolidation plan, which included the
shutdown of our Zhongshan, China manufacturing site. Manufacturing operations in Zhongshan ceased during the
second quarter of 2025. Final site closure activities are in progress and expected to conclude in 2026. We expanded
capacity in our Philippines and Mexicali factories, and we continued progress on a new factory in Thailand. We expect
to continue to consolidate several of our smaller factory sites during 2026.
Our manufacturing requires a wide variety of mechanical and electrical components, which are often made to
our specifications. We use numerous companies, including contract manufacturers, to supply parts for the manufacture
and support of our products. Although we make reasonable efforts to ensure that parts are available from multiple
qualified suppliers and at the lowest possible cost, some key parts may only be obtained from a sole supplier or a limited
group of suppliers. We address supply challenges and reduce the associated risks to production by endeavoring to select
and qualify alternate suppliers for key parts, maintain appropriate inventories of critical components, and competitively
source parts through electronic bidding tools to find the lowest possible total cost.
See Part I, Item 1A, “Risk Factors” for a discussion of certain risks related to our manufacturing operations.
Intellectual Property
Protection of our technology assets through intellectual property rights is important for our competitive
position. We believe that continued research and development of technologically advanced solutions and applications, as
well as enhancements to existing products and related software to support customer requirements, are critical for us to
compete in the markets we serve. Accordingly, we devote significant personnel and financial resources to the
development of new products and technology, and to the enhancement of existing products, and we expect these
investments to continue. Our investments in research and development enable us to create intellectual property,
including patents and trade secrets. We hold numerous U.S. and foreign patents and have multiple patent applications
pending in the U.S., Europe, and Asia.
See Part I, Item 1A, “Risk Factors” for a discussion of certain risks related to our reliance on our intellectual
property.
9
Competition
The markets we serve are highly competitive and characterized by rapid technological development and
changing customer requirements. We face a wide variety of competitors, and no single company dominates any of our
markets. Significant competitive factors in our markets include product performance, compatibility with adjacent
products, price, quality, reliability, meeting customer demand, and level of customer service and support.
We encounter substantial competition from foreign and domestic companies for each of our markets. Some of
our competitors have greater financial and other resources than we do. Other competitors are smaller than we are but
may be well established in specific product niches. Competitors in each of our market verticals include, but are not
limited to, the following:
Semiconductor
Equipment
Data Center Computing
Industrial and Medical
Telecom and Networking
COMET Holding AG.
Daihen Corp.
MKS Instruments, Inc.
TRUMPF Hüttinger
GmbH + Co. KG
Delta Electronics, Inc.
Flex Ltd.
Lite-On Technology Corp.
Cosel Co., Ltd.
Delta Electronics, Inc.
MEAN WELL Enterprises
TDK-Lambda Corp.
TRUMPF Hüttinger GmbH
+ Co. KG
XP Power Ltd.
Delta Electronics, Inc.
Kexin Communication
Technologies Co. Ltd.
Lite-On Technology Corp.
Research and Development
We perform research and development to develop products to address new or emerging applications, make
technological advances to provide higher performance, lower cost, or create other attributes that we may expect to appeal
to current or potential customers. We believe that continued research and development of technologically advanced
solutions and applications, as well as enhancements to existing products and related software to support customer
requirements, are critical for us to compete in the markets we serve. Accordingly, we devote significant personnel and
financial resources to the development of new products and technology, and to the enhancement of existing products,
and we expect these investments to continue. For the years ended December 31, 2025, 2024, and 2023 our research and
development expenses were $232.4 million, $211.8 million, and $202.4 million, respectively and have ranged from
12.2% to 14.3% of our total revenue.
Human Capital
Our people are our strength. We have a globally diverse workforce with approximately 13,000 employees. Our
employees are located in the Asia-Pacific region, Europe, and North America, and are comprised of approximately 53%
male and 47% female employees. Our employees are not represented by unions, except for statutory organization rights
applicable to our employees in China, Germany, and Mexico.
10
Culture
As an industry leading technology company, we work together collaboratively to solve complex, high-value
problems and achieve common goals. Our global talent, winning technology and operational excellence are our
competitive advantage. We are committed to nurturing a culture grounded in our core values: Innovation, Integrity,
Empowerment, Partnership, Accountability, and Execution. These core values are the foundation of how we operate. We
recognize that an inclusive work environment, diverse perspectives and collaboration enable us to drive innovation and
future growth for our global customers, and we remain committed to ensuring a work environment where employees can
grow and share in the Company’s success.
Health and Safety
We are committed to providing a safe work environment for our employees and have a global team that is
responsible for health and safety related activities including hazard and risk identification. We provide regular health and
safety trainings both on-site and through our virtual tool that assigns training based on job profiles and site-specific
requirements. We have established policies and practices to ensure that working conditions are safe, workers are treated
with respect and dignity, and manufacturing processes are environmentally responsible. We also reference the
Responsible Business Alliance Code of Conduct at selected manufacturing sites as a guide to promote labor, health,
safety, environmental, and ethics best practices.
Employee Engagement
We are committed to providing a collaborative and productive work environment for our employees. In 2025,
we conducted our confidential employee survey on topics relating to confidence in company leadership, ethical conduct,
career growth opportunities, and suggestions on how we can make our company a great place to work and also
communicated the results of the employee survey with our employees, leaders, executive team, and Board of Directors.
In 2024, we launched Powering Technology Together, our employee value proposition, to highlight our commitment to
providing a best-in-class employee experience for our people across the globe and to differentiate ourselves as an
employer of choice. We believe our employee value proposition will help us build our employer brand and attract and
retain the best talent.
Total Rewards
We provide market-competitive compensation and benefits to our employees to attract, motivate and retain a
highly talented and engaged workforce who are committed to the Company’s core values and objectives. Our
compensation programs are focused on equitable and fair pay practices that reward for high performance, continuous
improvement, and drive increased shareholder value.
Learning and Development
We provide learning and development opportunities to employees at all levels to support growth within their
current role and help prepare them for potential future roles. Our internal learning solutions are provided online and in
person, with training on topics such as technical skills, supervisor effectiveness, and leadership development. Where
training is not available internally, we support external training for skill development in current or future roles. We have
internship and graduate development programs, as well as annual talent reviews and succession planning to develop a
talent pipeline across various levels of the Company.
11
Community Involvement
Advanced Energy strives to make a positive impact in its communities through volunteerism, charitable giving
and partnerships with local communities. We have an active Community Investment Steering Committee and offer
employees paid time off to participate in Company organized initiatives and volunteer with non-profit organizations of
their choice. Our Child of Employee Scholarship Program, available to children of Advanced Energy employees,
celebrates education accomplishments and provides financial support for them to pursue their career and learning goals.
We also offer an annual Advanced Energy STEM (Science, Technology, Engineering, and Mathematics) Scholarship in
the U.S. to support and develop emerging talent in STEM.
Environmental Matters
We are subject to federal, state, and local environmental laws and regulations, as well as the environmental laws
and regulations of the foreign federal and local jurisdictions in which we have manufacturing and service facilities. We
believe we are in material compliance with all such laws and regulations.
Available Information
Our website address is www.advancedenergy.com. We make available, free of charge on our website, our
annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to these
reports as soon as reasonably practicable after filing such reports with, or furnishing them to, the Securities and
Exchange Commission (“SEC”). Such reports are also available at www.sec.gov. Information contained on our website is
not incorporated by reference in, or otherwise part of, this annual report on Form 10-K nor any of our other filings with
the SEC.
12
ITEM 1A. RISK FACTORS
Our business, financial condition, operating results, and cash flows can be impacted by a number of factors,
including, but not limited to, those set forth below, any of which could adversely impact our results and result in a
decline in the value or loss of an investment in our common stock. Other factors may also exist that we cannot anticipate
or that we currently do not consider to be material based on information that is currently available. These risks and
uncertainties have the potential to materially affect our business, financial condition, results of operations, cash flows
and future results. Such risks and uncertainties may also impact the accuracy of forward-looking statements included in
this Form 10-K and other reports we file with the SEC.
Business and Industry Risks
The industries in which we compete are subject to unpredictable fluctuation or cycles, which may be volatile.
As a supplier to the global semiconductor equipment, data center computing, industrial, medical,
telecommunication, and networking industries, we are subject to business fluctuations, the timing, length, and volatility
of which can be difficult to predict. We are impacted by sudden changes in customers’ manufacturing capacity
requirements and spending, which depend in part on technology transitions, capacity utilization, demand for customers’
products, inventory levels relative to demand, access to affordable capital, and changes in geopolitical factors, including
tariffs. These changes have affected the timing and amount of customers’ purchases and investments in technology, and
continue to affect our orders, net revenue, operating expenses, and net income. In addition, several of the markets in
which we compete are highly cyclical and experience downturns characterized by diminished product demand,
production overcapacity, high inventory levels, and price erosion, which has caused, and in the future could cause, our
revenue and gross margin to decline, adversely impacting our results of operations. It is difficult to predict the timing,
length, and severity of such fluctuations and downturns, and we may not be able to respond adequately or quickly to the
changes in demand.
To meet rapidly changing demand in each of the industries we serve, we must effectively manage our resources
and production capacity. During periods of decreasing demand for our products, we must be able to appropriately align
our cost structure with prevailing market conditions, effectively manage our supply chain, and motivate and retain key
employees. During periods of increasing demand, we must have enough manufacturing capacity and inventory to fulfill
customer orders, effectively manage our supply chain, and attract, retain, and motivate enough qualified individuals. If
we are not able to timely and appropriately adapt to changes in our business environment or to accurately assess where
we are positioned within a business cycle, our business, financial condition, or results of operations may be materially
and adversely affected.
For example, infrastructure investments in artificial intelligence (“AI”) have increased substantially, which is
driving significant demand increases in the Data Center Computing market. We accelerated investments to increase
capacity and make upgrades to support higher demand and new product requirements in the market, but if we are unable
to timely or efficiently scale to meet growing demand or if we have not accurately assessed the magnitude or
sustainability of such demand, our results of operations could be adversely impacted.
We must achieve design wins to retain our existing customers and to obtain new customers, although design wins
achieved may not necessarily result in substantial revenue or gross profit.
The markets we serve are constantly changing in terms of advancement in applications, core technology, and
competitive pressures driven by continuing technology migration and changing customer demand. New products
designed for capital equipment manufacturers typically have a lifespan of many years. Increasingly, we are required to
accelerate our investment in research and development to meet the time-to-market, performance, and technology
adoption cycle needs of our customers simply to compete for design wins. Given such up-front investments we make to
develop, evaluate, and qualify products in the design win process, our success and future growth depend on our products
being designed into our customers’ new generations of equipment as they develop new technologies and applications.
We must work with these manufacturers early in their design cycles to modify, enhance, and upgrade our products or
design new products that meet the requirements of their new systems. The design win process is highly competitive, the
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design windows may be narrow, and there is no assurance we will succeed with new design wins for our existing
customers or new customers’ next generations of equipment. Our competitors may also be more successful in
implementing an AI strategy and develop more successful products with the aid of AI technology. In the last few years,
we have made significant investments to launch new technology platforms and products into the Semiconductor and
Industrial and Medical markets and upgrade our capabilities in the Data Center Computing market. If existing or new
customers do not choose our designs, we are unable to maintain single source status, or we cannot agree to pricing,
volumes, and other key commercial terms with these customers, our market share may decline, potential revenues related
to the lifespan of our products may not be realized, and our business, financial condition, and results of operations could
be materially and adversely impacted. Further, our ability to generate revenue or gross profit from design wins is in part
or wholly dependent upon the success of our customers’ solutions.
Failure to accurately forecast customer demand, supply chain disruptions, or manufacturing interruptions or delays
could affect our ability to meet customer demand, lead to higher costs, or result in excess or obsolete inventory.
We place orders with many of our suppliers based on our expectations as to demand for our products and our
customers’ forecasts. As the quarter and the year progress, such demand and product mix can change rapidly or we may
realize that our customers’ expectations were overly optimistic or pessimistic, especially when industry or general
economic conditions change.
Our sales are primarily made on a purchase order basis or are pulled from “just in time” bins or hubs by our
customers, and we generally do not have long-term purchase commitments from our customers. As a result, we are
limited in our ability to predict the level of future revenue or commitments from our current customers, which may
diminish our ability to allocate labor, materials, and equipment in the manufacturing process effectively. In addition, we
may purchase inventory in anticipation of sales that do not materialize, resulting in excess and obsolete inventory write-
offs. Customers may delay delivery of products or cancel orders prior to shipment and may not be subject to cancellation
penalties. Delays in delivery schedules and/or customer changes to backlog orders during any particular period could
cause a decrease in revenue and have a material adverse effect on our business and results of operations. Orders with our
suppliers cannot always be amended in response to changing demand conditions.
In addition, to assure availability of certain components or obtain priority pricing, we have entered into
contracts with some of our suppliers that require us to purchase a specified number of components and subassemblies
each quarter, even if we are not able to use such components or subassemblies. Moreover, we have obligations to some
of our customers to hold a minimum amount of finished goods in inventory to fulfill just in time orders, regardless of
whether the customers expect to place such orders. We currently have firm purchase commitments and agreements with
various suppliers to ensure the availability of components. If demand for our products does not meet expected levels, we
might not be able to use all of the components that we are required to purchase under these commitments and
agreements, and our cost of revenue may increase, which could have a material adverse effect on our results of
operations. If demand for our products exceeds our customers’ and our forecasts, we may not be able to timely obtain
enough raw materials, parts, components, or subassemblies, on favorable terms or at all, to fulfill the excess demand.
Furthermore, some of our products have lengthy lifecycles and are subject to supplier parts obsolescence, and sole-
sourced parts can create challenges in terms of purchasing parts on reasonable terms and lead-times.
Finally, if shortages of critical components or supply constraints were to reoccur, we could again experience the
longer lead times in procuring materials and subcomponents and, in some cases, meaningfully higher costs for the
subcomponents that we faced in the wake of the pandemic. Our revenues, earnings, and cash flow may be adversely
impacted if these conditions reoccur.
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We are exposed to risks associated with worldwide financial markets and the global economy.
Uncertain or adverse economic and business conditions, including uncertainties and volatility in the financial
markets, rising inflation and interest rates, economic recession, national debt, and fiscal or monetary concerns, could
materially adversely impact our operating results and financial condition. Disruptions in the global economy or financial
markets, higher interest rates and market volatility could have an adverse impact on our access to and cost of capital.
Additionally, tightening of credit markets, turmoil in the financial markets, and a weakening global economy have
contributed in the past and could again contribute to slowdowns in the industries in which we operate and adversely
impact the global demand for our products. Some of our key markets ultimately depend on a combination of consumer
and business spending. Economic uncertainty exacerbates negative trends in consumer and business spending and may
cause our customers to delay, cancel, or refrain from placing orders. Difficulties or increased costs in obtaining capital
and uncertain market conditions may also lead to customer liquidity constraints, a reduction of revenue, and greater
instances of nonpayment or other failures to perform their obligations. Adverse or uncertain economic conditions may
similarly affect our key suppliers, which could affect their ability to deliver parts and result in delays for our products.
Further, these conditions and uncertainty about future economic conditions could also make it challenging for us to
forecast our operating results and evaluate the risks that may affect our business, financial condition, and results of
operations.
We must scale our manufacturing capacity and secure sufficient critical components to meet customer demand.
Our manufacturing facilities are located globally, and the majority of our products are manufactured in a select
few key facilities. Most facilities are under operating leases, and interruptions in operations could be caused by early
termination of existing leases by landlords or failure by landlords to renew existing leases upon expiration, including the
possibility that suitable operating locations may not be available in proximity to existing facilities, which could result in
labor or supply chain risks, including risks related to our ability to secure critical components to meet customer demand.
Additionally, we are executing a restructuring plan to optimize and consolidate our manufacturing operations and
improve operating efficiencies, which we expect to be substantially complete during 2027. We continue to expand
output in and evaluate our existing manufacturing facilities, and we may decide to conduct additional optimization and
consolidation initiatives. We also recently constructed a new factory in Thailand in connection with our consolidation
plans. These plans and any future initiatives, however, may or may not be ultimately successful in achieving our
intended results. If the actual costs and charges are greater than anticipated, the actual cost savings or operating
efficiencies are lower than anticipated, market conditions deviate from our expectations, we encounter delays or other
challenges, or we experience a loss of continuity or inefficiency during transitional periods, our business and results of
operations may be adversely affected.
If we are unable to maintain our pricing strategy or adjust our business strategy successfully for some of our product
lines to reflect our customers’ price sensitivity, our business and financial condition could be harmed.
Our customers continually exert pressure on us to reduce our prices and extend payment terms and we have
been and may be required to enter into long-term pricing agreements, extended payment terms, exclusivity
arrangements, and other less favorable contract terms. In addition, we compete in markets in which customers may dual
or multi-source their power supply products. We believe some of our Asia-based competitors benefit from local
governmental funding incentives and purchasing preferences from end-user customers in their respective countries. If
competition against any of our product lines should come to focus solely on price rather than on product performance
and technology innovation, we would need to adjust our business strategy, product offerings, and product costs
accordingly, and if we are unable to do so, our business, financial condition, and results of operations could be materially
and adversely affected. We continue to execute our pricing strategies and practices; however, we have in the past had to
implement price increases and surcharges to reflect higher supply chain costs and any future price increases outside of
our normal pricing strategy could make our products less competitive in the market over time and could have an adverse
effect on our results of operations.
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A significant portion of our revenue and accounts receivable are concentrated among a few customers.
Consistent with prior years, a limited number of customers accounted for a significant portion of our business,
revenue and accounts receivable in 2025. A significant decline in revenue from these or our other large customers, the
loss of these or other large customers, or any inability to collect from large customers could materially and adversely
impact our business, results of operations, and financial condition. The mix of products sold to our customers,
particularly our large customers, may also impact our financial performance. For example, our Data Center Computing
market generally has lower margins than our other markets. As Data Center Computing grows to comprise a larger
proportion of our revenue, gross margin has been and could continue to be negatively impacted.
We expect that revenue from a few large customers will continue to account for a significant percentage of our
total revenue in future periods; however, we generally do not have long-term purchase commitments. If our largest
customers do not place orders, or if they substantially reduce, delay, or cancel orders, we may not be able to replace their
business on a timely basis or at all. As a result, our future success depends on our ability to maintain and strengthen our
existing customer relationships, build new customer relationships, and diversify our customer base. For more
information about our significant customers, see Note 3. Revenue in Part II, Item 8 “Financial Statements and
Supplementary Data.”
If our information security measures are breached, disrupted, or fail, we may incur significant legal and financial
exposure and liabilities.
As part of our day-to-day business, we process, transmit and store our own confidential data and certain data
about our customers and employees in our global information technology system. We are subject to ongoing data
security threats, including phishing attempts, denial of service attacks, ransomware, viruses, and other malware,
employee error or malfeasance, theft, natural disasters, and hardware or software malfunctions, any one of which could
compromise our data security, cause the loss of critical data, or disrupt operations, which could materially adversely
affect our business and results of operations. Additionally, third parties may attempt to fraudulently induce employees or
customers into disclosing sensitive information such as usernames, passwords, or other information to gain access to our
customers’ data or our data or our information technology systems. We and our third party providers have experienced,
and expect to continue to experience, cybersecurity events from external actors and confidential information theft from
internal actors, some of which could be devastating. We continue to devote significant resources to cybersecurity, IP
protection, data encryption, and other measures to protect our systems and data from unauthorized external access or
internal misuse, and we may be required to expend greater resources in the future for cybersecurity protection,
compliance, and remediation, especially in the face of continuously evolving and increasingly sophisticated
cybersecurity threats and privacy and data protection laws.
Despite our implementation of cybersecurity measures, there is no assurance that our actions will be sufficient
to prevent future threats and incidents. Because the techniques used to obtain unauthorized access or to sabotage systems
change frequently and generally are not recognized until launched against a target, we may be unable to anticipate these
techniques or to implement adequate preventative measures. A cybersecurity event or other breach, disruption, or failure
of our information and operational systems, could:
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result in the disclosure, misuse, corruption, or loss of our confidential business information, intellectual
property including trade secrets, or our customers’ data;
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damage our reputation;
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lead to a loss of confidence by our current and potential customers;
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adversely impact our future revenue;
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disrupt our business;
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divert management attention; and
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expose us to significant remediation costs, legal liability, and litigation risk.
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Difficulties with the implementation or transition to our next generation enterprise resource planning and other new
enterprise-wide information technology system applications could harm our business and impact our results of
operations.
Our business could be adversely affected to the extent we fail to appropriately manage, expand, and update our
information technology infrastructure. In particular, we are in the process of implementing a global enterprise resource
planning (“ERP”) system and other enterprise-wide applications that will upgrade and standardize our information
systems. These implementations are expected to occur in phases over the next several years. In 2025, we shifted our
deployment strategy for the new ERP system to a more staggered approach and delayed widespread implementation to
better align with our business needs and risk tolerance. Delays, unexpected challenges, or a failure to achieve our
implementation goals may lead to cost overrun, diversion of management attention and resources, or otherwise adversely
impact our operations. In addition, the failure to anticipate the necessary readiness and training needs, manage the
transition to systems, or appropriately convert historical and concurrent data could lead to business disruption and
potential loss of business. Failure or abandonment of any part of the ERP system could result in a write-off of part or all
of the costs that have been capitalized on the project.
The loss of and inability to attract and retain key personnel could significantly harm our results of operations and
competitive position.
Our success depends to a significant degree upon the continuing contributions of our management, technical,
marketing, and sales employees. If we are unable to attract, retain, and motivate qualified employees and leaders as
required, we may be unable to fully capitalize on current and new market opportunities, which could adversely impact
our business and results of operations. Our success in hiring and retaining employees depends on a variety of factors,
including market competitive compensation and benefits programs, global economic or political and industry conditions,
our organizational structure, our reputation, culture and working environment, competition for talent and the availability
of qualified employees, the readiness for and availability of career development opportunities, and our ability to offer a
challenging, safe, and rewarding work environment. We have experienced, and may continue to experience, increasing
costs to attract and retain qualified talent, driven by macroeconomic conditions and a highly competitive labor market.
In addition, the loss or retirement of key employees presents challenges to the extent the departing employee
had valuable institutional knowledge or experience. This requires us to identify and train existing or new employees to
perform necessary functions, therefore causing unforeseen delays, which could result in unexpected costs, reduced
productivity, or an impact to internal processes and controls. If we fail to have succession plans in place for key roles,
we may not be able to maintain continuity and our business could be adversely affected.
Disruptions to our manufacturing or other operations or the operations of our customers or suppliers, due to natural
or other disasters, uncontrollable events or other issues could affect our results of operations.
Certain of our manufacturing and other operations are in locations subject to natural disasters that could disrupt
operations, such as severe weather and geological events, including earthquakes or tsunamis. Natural disasters,
uncontrollable occurrences (including the emergence of pandemics, epidemics, or widespread outbreaks of infectious
disease), or other operational issues at any of our manufacturing or other facilities could significantly reduce or disrupt
our productivity and could prevent us from meeting our customers’ requirements in a timely manner, or at all. In
addition, our suppliers and customers are also subject to natural and other disaster risk exposure. A natural disaster, fire,
explosion, pandemic, or other event that results in a prolonged disruption to our operations or the operations of our
customers or suppliers, may materially adversely affect our business, workforce, supply chain, results of operations,
financial condition, or cash flows.
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Our long-term success and results of operations depend on our ability to successfully identify, close, integrate, and
realize the anticipated benefits from our acquisitions, strategic investments or divestitures.
As part of our business strategy, we have and will likely continue to acquire companies or businesses and make
investments or divestitures to further our business. Risks associated with these transactions are many, including the
following which could adversely affect our financial results:
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the inability to source or complete transactions timely or at all;
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any obligation to pay a termination fee or undergo litigation resulting from failed deals;
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the failure to perform adequate due diligence on target companies;
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the failure to realize expected revenues, gross and operating margins, net income, and other returns from
acquired businesses;
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the inability to successfully integrate product and/or service offerings to realize anticipated benefits from
business combinations;
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the inability to integrate acquired business into our existing ERP and other global information technology
systems to realize productivity improvement and cost efficiencies;
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we have incurred and will incur additional depreciation and amortization expense over the useful lives of
certain assets acquired in connection with business combination and, to the extent that the value of
goodwill or intangible assets acquired in connection with a business combination becomes impaired, we
may incur additional material charges related to impairment of those assets;
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deterioration in our effective tax rate;
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a failure to retain and motivate key employees of acquired businesses;
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our ability to maintain appropriate business processes, procedures, and internal controls at the acquired
business;
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litigation or claims associated with a proposed or completed transaction; and
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unknown, underestimated, undisclosed or undetected commitments or liabilities or non-compliance by
acquired business with laws, regulations, or policies.
Our products may suffer from defects or errors leading to increased costs, damages, warranty claims, claims outside
of warranty or product liability claims.
Our products use complex system designs and components that may contain errors or defects in designs,
manufacturing, firmware, software, component parts, or other materials. The manufacture of these products often
involves a highly complex and precise process and the utilization of specially qualified components. The production of
many of our products also requires highly skilled labor. As a result of the technical complexity of these products, design
defects, skilled labor turnover, changes in our or our suppliers’ manufacturing processes or the inadvertent use of
defective or nonconforming materials or components by us or our suppliers could adversely affect our manufacturing
quality and product reliability. Our products could also be, and have in the past been, counterfeited, misbranded or sold
without authorization on the “gray market.” To the extent our products are defective or fail, we might be required to
repair, redesign, replace, or recall those products, pay damages (including liquidated damages) in connection with claims
outside of warranty and/or product liability claims, or fulfill warranty claims, and we could suffer significant expenses as
well as harm to our reputation. Furthermore, some of our products are used in medical device applications where
malfunction of the device could result in serious injury or in critical infrastructure where malfunction could result in
significant damages. We accrue a warranty reserve for estimated costs to provide warranty services, including the cost of
technical support, product repairs, and product replacement for units that cannot be repaired. Our estimate of costs to
fulfill our warranty obligations is based on historical experience and expectation of future conditions. To the extent we
experience increased warranty claim activity or increased costs associated with servicing those claims, our warranty
accrual will increase, resulting in decreased gross profit.
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Our legacy inverter products may suffer higher than anticipated litigation, damage, or warranty claims.
Our legacy inverter products (of which we discontinued the manufacture, engineering, and sale in
December 2015 and which are reflected as discontinued operations in this filing) contain components that may contain
errors or defects and were sold with product warranties ranging from one to 20 years. If any of our products are defective
or fail because of their design, we might be required to repair, redesign, or recall those products or to pay damages
(including liquidated damages) or warranty claims, and we could suffer significant harm to our reputation. We have
experienced claims from customers and suppliers and are involved in litigation related to the legacy inverter product
line. We review such claims and vigorously defend against such lawsuits in the ordinary course of our business. We
cannot assure that any such claims or litigation will not have a material adverse effect on our business or financial
statements. Our involvement in such litigation could result in significant expense to us and divert the efforts of our
technical and management personnel. We also accrue a warranty reserve for estimated costs to provide warranty services
including the cost of technical support, product repairs, and product replacement for units that cannot be repaired. Our
estimate of costs to fulfill our warranty obligations is based on historical experience and expectation of future conditions.
To the extent we experience increased warranty claim activity or increased costs associated with servicing those claims,
our warranty accrual will increase, resulting in additional expenses in our Consolidated Statements of Operations in
future periods. We plan to continue supporting inverter customers with service maintenance and repair operations. This
includes performing service to fulfill obligations under existing service maintenance contracts. There is no certainty that
these contracts can be performed profitably, and our business could be adversely affected by higher than anticipated
product failure rates, loss of critical service technician skills, an inability to obtain service parts, customer demands and
disputes, and the cost of repair parts, among other factors.
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International Operations Risks
We are subject to risks inherent in international operations.
We are a global organization. We have employees in the Asia-Pacific region, Europe, and North America. Our
manufacturing facilities are located across the globe (mainly in the Asia-Pacific region), and revenue from customers
outside the United States represented 70% of our total revenue during the year ended December 31, 2025.
Given the global nature of our business, we have both domestic and international concentrations of cash and
investments. The value of our cash, cash equivalents, and marketable securities can be adversely affected by liquidity,
credit deterioration, inflation, foreign currency exchange rate fluctuations, financial results, economic risk, political risk,
sovereign risk, or other factors.
Additionally, our success producing goods internationally and competing in international markets is subject to
our ability to manage various operational risks and difficulties, including, but not limited to:
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our ability to effectively hire, manage, and retain our employees at locations operating in different business
environments from the United States;
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our ability to develop and maintain relationships with suppliers and other local businesses;
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interruptions to our and/or our suppliers’ supply chain;
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global trade issues and changes in and uncertainties with respect to trade and export regulations, trade
policies and sanctions, tariffs, and international trade disputes, including export regulations for certain
exports to China and any retaliatory measures;
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compliance with product safety requirements and standards that are different from those of the United
States;
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variations and changes in laws applicable to our operations in different jurisdictions, including
enforceability of contract rights;
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ineffective or inadequate legal and physical protection of intellectual property rights in certain countries;
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delays or restrictions on personnel travel and in shipping materials or finished products between and within
countries;
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political instability, international hostilities, natural disasters, health epidemics, disruptions in financial
markets, and deterioration of economic conditions;
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our ability to maintain appropriate business processes, procedures, and internal controls, and comply with
environmental, health and safety, anti-corruption, and other regulatory requirements;
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customs regulations including customs audits in various countries that occur from time to time;
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the ability to provide enough levels of technical support in different locations;
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our ability to obtain business licenses that may be needed in international locations to support expanded
operations;
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changes in tariffs, income tax, value added tax, and foreign currency exchange rates; and
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laws and regulations regarding privacy, data use and processing, data privacy and protection, cybersecurity,
and network security.
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Our operations in the Asia Pacific region are subject to significant political and economic uncertainties over which
we have little or no control and we may be unable to alter our business practice in time to avoid reductions in
revenues.
A significant portion of our operations and supply chain outside the United States are located in the Asia Pacific
region, which exposes us to risks, such as exchange controls and currency restrictions, changes in local economic
conditions, customs regulations and tariffs, tax policies, and local laws and regulations, possible retaliatory government
actions, potential inability to enforce intellectual property protection or contracts terms, and changes in U.S. policy
regarding overseas manufacturing and export controls. In particular, the U.S. and China regularly have significant
disagreements over geopolitical, trade, and economic issues, and there are currently considerable trade tensions between
the two countries. Any escalating political controversies between the U.S. and China or other countries in the Asia
Pacific region in which we operate, whether or not directly related to our business, could have a material adverse effect
on our operations, business, results of operations, and financial condition. Additionally, the Chinese government
exercises substantial control over the Chinese economy, and may exercise preferential treatment of local companies. Our
supply chain in China may be subject to various U.S. or China government and regulatory actions. Policy changes or the
imposition of new, stricter regulations or interpretations of existing regulations could increase our costs or limit our
ability to sell products in the Asia Pacific region.
Unfavorable currency exchange rate fluctuations may lead to lower operating margins, or may cause us to raise
prices, which could result in reduced revenue.
Currency exchange rate fluctuations could have an adverse effect on our revenue and results of operations, and
we could experience losses with respect to forward exchange contracts into which we may enter. Unfavorable currency
fluctuations could significantly increase the labor and other costs incurred in the operation of our international facilities
and the cost of raw materials, parts, components, and subassemblies that we source there, which could materially and
adversely affect our results of operations. These increased costs could require us to increase prices to foreign customers,
which could result in lower net revenue from such customers. Alternatively, if we do not adjust the prices for our
products in response to unfavorable currency fluctuations, our results of operations could be materially and adversely
affected. In addition, we have large, long-term liabilities, such as local lease and pension liabilities in Asia and Europe
creating more significant exposure to fluctuations in numerous currencies. We do not attempt to hedge these exposures
given the long-term nature of the underlying liabilities and the non-cash nature of the foreign exchange gain or loss.
Legal, Tax, and Compliance Related Risks
Continued restrictive global trade regulatory environment coupled with increasingly complex rules have
adversely impacted our business, could further impact our business, and could erode the competitiveness of our
products compared to local and global competitors.
As a global company, we are subject to the trade policies, export/import controls, and other rules and
regulations, including tariffs, trade sanctions, and license requirements of the U.S. and other government authorities. We
expect continued exposure to risk arising from both the further promulgation of global trade regulations and enforcement
of existing regulations. The implementation and interpretation of some of these complex rules and other regulatory
actions is uncertain and evolving, which can make it challenging for us to manage our operations and forecast our
operating results.
Since October 2022, we have been particularly affected by U.S. government-imposed export regulations on
U.S. semiconductor and supercomputing technology and related parts and services sold in China. As a result, Chinese
customers replaced us at least in part with competitors operate outside the scope of U.S. export rules. Additionally, our
ability to maintain business in China may be dependent at least in part on obtaining export licenses. Obtaining export
licenses may be difficult, costly, and time-consuming, and there is no assurance we will be issued licenses in time to
meet customer requirements or at all.
In 2025, the U.S. government imposed significant tariffs on imports from a wide range of countries, with
further tariffs threatened. The tariffs were imposed under various rules including Section 301 (punitive duties imposed
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by on imported goods, primarily from China, to counter unfair trade practices like intellectual property theft and forced
technology transfer), Section 232 (tariffs that aim to protect U.S. national security), and the International Emergency
Economic Powers Act. We are also subject to anti-dumping and countervailing duty rates. In 2025, higher costs from
tariffs partially offset benefits from cost optimization across our operations, and we expect this negative dynamic to
continue. If we are unable to mitigate the impact of these and any additional tariffs or other import restrictions in future
periods, we can expect our results of operations to be adversely affected.
The current political landscape has introduced greater uncertainty with respect to trade regulation, and we
cannot predict the extent to which unfavorable international trade policies may be implemented in the future or to what
extent our business may be impacted. Future regulatory changes that could materially and adversely affect our business
include but are not limited to additional or increased tariffs, additions or updates to various restricted party lists, further
restrictions on selling products to entities in certain countries whose actions or functions are intended to support policies
contrary to U.S. national security, new customs rules or requirements, and retaliatory trade actions or trade wars.
Additionally, governments of our customers may promote their own domestic businesses and competitors. Any or all of
the foregoing could decrease demand for our products, increase costs and decrease margins, reduce the competitiveness
of our products, or restrict our ability to sell products, provide services or purchase necessary equipment and supplies,
which in turn could have a material and adverse effect on our business, results of operations, or financial condition.
We are highly dependent on our intellectual property.
Our success depends significantly on our proprietary technology. We attempt to protect our intellectual property
rights through a variety of methods including trade secrets, patents, and non-disclosure agreements; however, we might
not be able to protect our technology, and customers or competitors might be able to develop similar technology.
Infringement, misappropriation, and unlawful use of our intellectual property rights, and resulting unauthorized
manufacture or sale of equipment using our IP rights, or loss of IP from employee turnover, could result in lost revenue.
Monitoring and detecting any unauthorized use of intellectual property is difficult and costly and we cannot be certain
that the protective measures we have implemented will completely prevent theft or misuse. If we are unable to protect
our intellectual property successfully, our business, financial condition, and results of operations could be materially and
adversely affected.
Patents, trademarks, and trade secret protection may not be adequate to deter infringement or misappropriation
of our proprietary rights. For example, patents issued to us may be challenged, invalidated, or circumvented. The loss or
expiration of any of our key patents could lead to a significant loss of sales of certain of our products and could
materially affect our future operating results. The process of seeking patent protection can be time consuming and
expensive and patents may not be issued for currently pending or future applications. Moreover, our existing patents or
any new patents that may be issued may not be sufficient in scope or strength to provide meaningful protection or any
commercial advantage to us. We may initiate claims, enforcement actions or litigation against third parties for
infringement of our proprietary rights, which claims could result in costly litigation, the diversion of our technical and
management personnel, and the assertion of counterclaims by defendants.
In addition, the laws of some foreign countries might not afford our intellectual property the same protections
as do the laws of the United States. Our intellectual property is not protected by patents in several countries in which we
do business, and we have limited or no patent protection in other countries, including China. Consequently,
manufacturing our products in these countries may subject us to an increased risk that unauthorized parties may attempt
to copy our products or otherwise obtain or use our intellectual property.
Third parties may also assert claims against us and our products or business practices. Claims that our products
or business practices infringe the rights of others, whether or not meritorious, can be expensive and time-consuming to
defend and resolve, and may divert the efforts and attention of management and personnel. The inability to obtain rights
to use third party intellectual property on commercially reasonable terms could also have an adverse impact on our
business. In addition, we may face claims based on the theft or unauthorized use or disclosure of third party trade secrets
and other confidential business information. Any such incidents and claims could severely harm our business and
reputation, result in significant expenses, harm our competitive position, and prevent us from selling certain products, all
of which could have a material and adverse impact on our business and results of operations.
22
Our supply chain is subject to regulatory risk.
Requirements applicable to our supply chain include rules aimed at promoting transparency as well as rules that
restrict sourcing from certain locations or suppliers. For example, rules aimed at extinguishing forced labor require
extensive efforts to map supply chains effectively and efficiently beyond tier 1 suppliers for any involvement in human
rights abuses. Goods suspected of being manufactured with forced labor could be blocked from importation into the
U.S., which could impact revenue. Another possible risk is U.S. or foreign governments that restrict our access to
supply; for example, China has restricted exports of rare earth minerals, and the U.S. government’s export controls have
resulted in restricted supply chains. Given such restrictions, we may be unable to obtain supply in a timely manner, in
sufficient quantities, or at a commercially reasonable cost.
We are, and expect to continue to be, involved in litigation. Legal proceedings are costly and could have a material
adverse effect on our commercial relationships, business, financial condition, and operating results.
We may be involved in legal proceedings, litigation, enforcement actions, or claims arising from our business,
including, but not limited to, those regarding product performance, product warranty, product certification, product
liability, patent infringement, misappropriation of trade secrets, other intellectual property rights, antitrust, various
regulations such as environmental or privacy, securities, contracts, unfair competition, employment, workplace safety,
business practices, and other matters. Legal proceedings, enforcement actions and claims, whether with or without merit,
and associated internal investigations, may be time-consuming and expensive to prosecute, defend or conduct; divert
management’s attention and other resources; inhibit our ability to sell our products or services; prevent us from using our
technology; result in adverse judgments for damages, injunctive relief, penalties, and fines; and adversely affect our
business. We can provide no assurance of the outcome of these legal proceedings, enforcement actions, or claims or that
the insurance we maintain will provide coverage or be adequate to cover them.
Changes in tax laws, tax rates, or mix of earnings in tax jurisdictions in which we do business could impact our
future tax liabilities and related corporate profitability.
We are subject to income taxes in the U.S. (federal and state) and numerous foreign jurisdictions. Tax laws,
regulations, and administrative practices in various jurisdictions by their nature are complex and may be subject to
significant change due to economic, political, and other conditions, and significant judgment is required in evaluating
and estimating our provision and accruals for these taxes. As both domestic and foreign governments contemplate or
make changes in tax law, our results could be adversely affected. Further, there are many transactions that occur during
the ordinary course of business for which the ultimate tax determination is uncertain. Our effective tax rates could be
adversely affected by earnings being lower than anticipated in jurisdictions where we have lower statutory rates and
earnings higher than anticipated in jurisdictions where we have higher statutory rates, losses incurred in jurisdictions for
which we are not able to realize the related tax benefit, changes in foreign currency exchange rates, entry into new
businesses and geographies and changes to our existing businesses, acquisitions (including integrations) and
investments, changes in our deferred tax assets and liabilities and their valuation, and changes in the relevant tax,
accounting, and other laws, regulations, administrative practices, principles, and interpretations, including fundamental
changes to the tax laws applicable to corporate multinationals.
Furthermore, due to shifting economic and political conditions, tax policies, laws, or rates in various
jurisdictions may be subject to significant changes in ways that could harm our financial condition and operating results.
For example, various jurisdictions around the world have enacted or are considering revenue-based taxes such as digital
services taxes and other targeted taxes, which could lead to inconsistent and potentially overlapping international tax
regimes. The Organization for Economic Cooperation and Development (“OECD”) is coordinating negotiations with the
goal of achieving consensus around substantial changes to international tax policies, including the implementation of a
minimum global effective tax rate of 15%. These changes could increase our effective tax rate and cash tax payments
could increase in future years, create additional compliance burdens, and/or require changes to our tax compliance
processes.
23
Increased governmental action on income tax regulations could adversely impact our business.
International governments have heightened their review and scrutiny of multinational businesses like ours,
which could increase our compliance costs and future tax liability to those governments. As governments continue to
look for ways to increase their revenue streams, they could increase audits of companies to accelerate the recovery of
monies perceived as owed to them under current or past regulations. As we are subject to examination by tax authorities
in every jurisdiction where we do business, an unfavorable audit outcome could adversely affect us.
Changes in our provision for income taxes or adverse outcomes resulting from examination of our income tax
returns could adversely affect our results.
Our provision for income taxes is subject to volatility and could be adversely affected by earnings being lower
than anticipated in countries that have lower tax rates and higher than anticipated in countries that have higher tax rates;
by changes in the valuation of our deferred tax assets and liabilities; by changes, regulations, and interpretations of
research and development capitalization and tax credit regulations, foreign-derived intangible income (“FDII”), global
intangible low-tax income (“GILTI”) and base erosion and anti-abuse tax (“BEAT”) laws; by expiration of or lapses in
tax incentives; by transfer pricing adjustments, including the effect of acquisitions on our legal structure; by tax effects
of nondeductible compensation; by tax costs and related tax effects from intercompany realignments; by changes in
accounting principles; or by changes in tax laws and regulations, treaties, or interpretations thereof, including changes to
the taxation of earnings of our foreign subsidiaries, the deductibility of expenses attributable to foreign income, the
foreign tax credit rules, and the impacts of the One Big Beautiful Bill (“OBBB”) Act. Significant judgment is required to
determine the recognition and measurement attribute prescribed in the accounting guidance for uncertainty in income
taxes. The OECD has made changes to numerous long-standing tax principles. There can be no assurance that these
changes, as adopted by countries in which we operate, will not have an adverse impact on our provision for income
taxes. Further, because of certain of our ongoing employment and capital investment actions and commitments, our
income in certain countries is subject to reduced tax rates. Our failure to meet these commitments could adversely
impact our provision for income taxes. In addition, we are the subject of regular examination of our income tax returns
by tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to
determine the adequacy of our provision for income taxes. There can be no assurance that the outcomes from these
continuous examinations will not have an adverse effect on our operating results and financial condition.
Our business is subject to complex and evolving U.S. and international laws and regulations regarding privacy and
data protection. Many of these laws and regulations are subject to change and uncertain interpretation and could
result in claims, changes to our business practices, penalties, increased cost of operations, or declines in customer
growth or engagement, or otherwise harm our business.
Regulatory authorities around the world have implemented or are considering several legislative and regulatory
proposals concerning data protection. In addition, the interpretation and application of consumer and data protection
laws in the U.S., Europe, China and elsewhere are often uncertain and in flux. It is possible that these laws may be
interpreted and applied in a manner that is inconsistent with our data practices. Violation of any of these rules could
result in fines or orders requiring that we change our data practices, which could have an adverse effect on our business
and results of operations. Complying with these various laws could cause us to incur substantial costs or require us to
change our business practices in a manner adverse to our business.
We are subject to numerous governmental regulations.
We are subject to federal, state, local and foreign regulations, including environmental regulations and
regulations relating to the design and operation of our products and control systems and regulations governing the
import, export and customs duties related to our products. We might incur significant costs as we seek to ensure that our
products meet safety and emissions standards, many of which vary across the states and countries in which our products
are used. In the past, we have invested significant resources to redesign our products to comply with these directives. In
addition, through previous acquisitions, we expanded our presence in the medical market to include more highly
regulated applications and added a medical-certified manufacturing center to our operating footprint. We may encounter
increased costs to maintain compliance with the quality systems and other regulations and requirements that apply to the
24
acquired business. Compliance with future regulations, directives, and standards could require us to modify or redesign
some products, make capital expenditures, or incur substantial costs. Also, we may incur significant costs in complying
with the numerous imports, exports, and customs regulations as we seek to sell our products internationally. If we do not
comply with current or future regulations, directives, and standards, we could be subject to fines and penalties, our
production or shipments could be suspended, and we could be prohibited from offering particular products in specified
markets. If we were unable to comply with current or future regulations, directives and standards, our business, financial
condition, and results of operations could be materially and adversely affected.
We are subject to risks associated with environmental, health, and safety regulations.
We are subject to environmental, health, and safety regulations in connection with our global business
operations, such as regulations related to the development, manufacture, sale, shipping, and use of our products;
handling, discharge, recycling and disposal of hazardous materials used in our products or in producing our products; the
operation of our facilities; and the use of our real property. The failure or inability to comply with existing or future
environmental, health and safety regulations could result in significant remediation or other legal liabilities; the
imposition of penalties and fines; restrictions on the development, manufacture, sale, shipping, or use of certain of our
products; limitations on the operation of our facilities or ability to use our real property; and a decrease in the value of
our real property. We could also be required to alter our manufacturing, operations, and product design, and incur
substantial expenses to comply with environmental, health and safety regulations. Any failure to comply with these
regulations could subject us to significant costs and liabilities that could adversely affect our business, financial
condition, and results of operations.
Our failure to maintain appropriate environmental, social, and governance (“ESG”) practices and disclosures could
result in reputational harm, a loss of customer and investor confidence, and adverse business and financial results.
Failure to adequately maintain appropriate ESG practices that meet diverse stakeholder expectations may result
in an inability to attract customers, the loss of business, diluted market valuation, and an inability to attract and retain top
talent. Maintaining possibly unlawful ESG programs could expose us to litigation threat. In addition, standards and
processes for measuring and reporting carbon emissions and other sustainability metrics change over time, which may
result in inconsistent data, or significant revisions to our sustainability commitments or our ability to achieve them. Any
scrutiny of our carbon emissions or other sustainability disclosures or our failure to achieve related goals could adversely
impact our reputation or performance. As governments impose greenhouse gas emission reporting requirements and
other ESG-related laws, or customers make ESG-related demands, we are subject to at least some of these rules and
concomitant regulatory risk exposure, and the potential for regulatory scrutiny, enforcement actions, and reputational
harm.
ESG compliance and reporting is costly, and we could be at a disadvantage compared to companies that do not
have similar regulatory requirements, customer pressures, or that have more resources to devote to ESG efforts.
Commercial and Financial Related Risks
Our debt obligations and the restrictive covenants in certain of the agreements governing our debt could limit our
ability to operate our business or pursue our business strategies, could adversely affect our business, financial
condition, results of operations, and cash flows, and could significantly reduce stockholder benefits from a change of
control event.
Our debt obligations could make us more vulnerable to general adverse economic and industry conditions and
could limit our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate,
thereby placing us at a disadvantage to our competitors that have less debt. We may enter into additional debt obligations
at any time.
Our Credit Agreement, including the associated revolving line of credit, imposes financial covenants on us and
our subsidiaries that require us to maintain a certain leverage ratio. The financial covenants place certain restrictions on
25
our business that may affect our ability to execute our business strategy successfully or take other actions that we believe
would be in the best interests of our Company. These include limitations or restrictions, among other things, on our
ability and the ability of our subsidiaries to:
•
incur additional indebtedness;
•
pay dividends or make distributions on our capital stock or certain other restricted payments or
investments;
•
conduct stock buybacks;
•
make domestic and foreign investments and extend credit;
•
engage in transactions with affiliates;
•
transfer and sell assets;
•
effect a consolidation or merger or sell, transfer, lease, or otherwise dispose of all or substantially all our
assets; and
•
create liens on our assets to secure debt.
Any breach of the covenants or other event of default could cause a default on our Credit Agreement, which
could result in the entire outstanding balance at that time being immediately due and payable. Such breach or default
may also constitute a default of our Convertible Notes, which could also result in the entire outstanding balance being
immediately due and payable. Our assets and cash flow may not be sufficient to fully repay borrowings under our
outstanding debt instruments if accelerated upon an event of default. If we are unable to repay, refinance, or restructure
our indebtedness as required, or amend the covenants contained in these agreements, the lenders can exercise all rights
and remedies available under our debt obligations or applicable laws or equity. There can be no assurance that we will
have sufficient financial resources or be able to arrange financing to repay any borrowings at such time.
Return on investments or interest rate declines on plan investments could result in additional unfunded pension
obligations for our pension plan.
We currently have unfunded obligations to our pension plans. The extent of future contributions to the pension
plan depends heavily on market factors such as the discount rate used to calculate our future obligations and the actual
return on plan assets which enable future payments. We estimate future contributions to the plan using assumptions with
respect to these and other items. Changes to those assumptions could have a significant effect on future contributions.
Additionally, a material deterioration in the funded status of the plan could increase pension expenses and reduce our
profitability. See Note 12. Employee Retirement Plans and Postretirement Benefits in Part II, Item 8 “Financial
Statements and Supplementary Data” contained herein.
Our intangible assets and goodwill may become impaired.
We periodically review the carrying value of our intangible assets and goodwill. We consider any events or
circumstances that might result in either a diminished fair value, and for intangible assets, a revised useful life. The
events and circumstances include significant changes in the business climate, legal factors, operating performance
indicators, and competition. Any impairment or revised useful life could have a material and adverse effect on our
financial position and results of operations and could harm the trading price of our common stock.
The conditional conversion features of the Convertible Notes may adversely affect our financial condition and
operating results.
One of the conditional conversion features of the Convertible Notes was triggered as of December 31, 2025 due
to the trading price of our common stock exceeding 130% of the Convertible Notes conversion price on at least 20 out of
the 30 consecutive trading days prior to such date. As a result, the Convertible Notes are currently convertible at the
option of the holders, in whole or in part, until March 31, 2026, and may in the future continue to be convertible at the
option of the holders during specified periods in the event the current conversion features or any additional conditional
conversion features of the Convertible Notes are triggered. If one or more holders elect to convert, we would be required
26
to settle any converted principal amount of such Convertible Notes through payment of cash, which could adversely
affect our liquidity. In addition, even if holders do not elect to convert, we could be required under applicable accounting
rules to reclassify all or a portion of the outstanding principal of the Convertible Notes as current rather than long-term
liability, which would result in a material reduction of our net working capital. For example, during 2025 our stock price
exceeded the conversion price of our Convertible Notes, resulting in the reclassification of the outstanding principal of
our Convertible Notes to current.
Conversion of the Convertible Notes may dilute the ownership interest of our stockholders and the existence of the
Convertible Notes may depress the price of our common stock.
The Convertible Notes currently are convertible through March 31, 2026, and may in the future continue to be,
convertible at the option of their holders. The conversion of some or all of the Convertible Notes may dilute the
ownership interests of our stockholders. Upon conversion, we have the option to pay or deliver, as the case may be, cash,
shares of our common stock, or a combination of cash and shares of our common stock with respect to the remainder, if
any, of our conversion obligation in excess of the aggregate principal amount of the Convertible Notes being converted.
If we elect to settle the remainder, if any, of our conversion obligation in excess of the aggregate principal amount of the
Convertible Notes being converted in shares of our common stock or a combination of cash and shares of our common
stock, that action will dilute the ownership interest of our stockholders. Additionally, any sales in the public market of
our common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock.
In addition, the existence of the Convertible Notes may encourage short selling by market participants because
the conversion could be used to satisfy short positions, and the anticipated conversion into shares of our common stock
could depress the price of our common stock.
The hedges and warrants in our own common stock may adversely affect the common stock’s trading price.
In September 2023, we entered into hedge and warrant transactions on our own common stock. These contracts
are expected to reduce the potential dilution to our common stock upon any conversion of the Convertible Notes and/or
offset any cash payments we are required to make in excess of the principal amount. Because the market value per share
of our common stock currently exceeds the exercise price of the warrants, we expect the warrants to separately have a
dilutive effect on our common stock as we will owe the warrant counterparties additional shares of common stock based
on the excess of such market price per share of the common stock over the exercise price.
In addition, the counterparties or their affiliates may modify their hedge positions by entering into or unwinding
various derivatives with respect to our common stock and sell our common stock prior to the maturity of the Convertible
Notes (and are likely to do so in connection with any conversion or redemption). This activity could cause a decrease in
the market price of our common stock.
27
We are subject to counterparty default risk with respect to the Convertible Note Hedges.
The counterparties for our hedge transactions are financial institutions, and we are subject to the risk that any or
all of them might default. Our exposure is not secured by any collateral. If a counterparty becomes subject to insolvency
proceedings, we will become an unsecured creditor. Our exposure will depend on many factors but, generally, an
increase in our exposure will correlate to an increase in the market price and in the volatility of our common stock. In
addition, counterparties may not be financially stable or viable. Upon a default by a counterparty, we may suffer adverse
tax consequences and more dilution than we currently anticipate with respect to our common stock.
Risks Relating to Ownership of Our Common Stock
The market price of our common stock has fluctuated and may continue to fluctuate for reasons over which we have
no control.
The stock market has from time to time experienced, and is likely to continue to experience, extreme price and
volume fluctuations. Prices of securities of technology companies are especially volatile and have often fluctuated for
reasons that are unrelated to their operating performance. In the past, companies that have experienced volatility in the
market price of their stock have been the subject of securities class action litigation. If we were the subject of securities
class action litigation, it could result in substantial costs and a diversion of management’s attention and resources.
We may not pay dividends on our common stock.
Holders of our common stock are only entitled to receive dividends when and if they are declared by our Board
of Directors. Our Credit Agreement restricts our ability to pay dividends on our capital stock under certain
circumstances. Although we have declared cash dividends on our common stock since 2021, we are not required to do
so, and we may reduce or eliminate our cash dividend in the future. This could adversely affect the market price of our
common stock. For information on our Credit Agreement, see Note 7. Long-Term Debt and Note 10. Derivative
Financial Instruments in Part II, Item 8 “Financial Statements and Supplementary Data.”
Our operating results are subject to fluctuations, and if we fail to meet the expectations of securities analysts or
investors, our share price may decrease significantly.
Our annual and quarterly results may vary significantly depending on various factors, many of which are
beyond our control. Because our operating expenses are based on anticipated revenue levels, our revenue cycle for
development work is relatively long, and a high percentage of our expenses are fixed for the short term, a small variation
in the timing of recognition of revenue can cause significant variations in operating results from period to period. If our
earnings do not meet the expectations of securities analysts or investors, the price of our stock could decline.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
28
ITEM 1C. CYBERSECURITY
Risk Management and Strategy
Advanced Energy maintains a comprehensive cybersecurity program developed with reference to the National
Institute of Standards and Technology (“NIST”) cybersecurity framework. Our cybersecurity program includes
administrative, organizational, technical, and physical safeguards reasonably designed to protect the confidentiality,
integrity, and availability of our data. We devote significant resources to network, operations, and product security, data
encryption, business continuity/disaster recovery, vulnerability management, event monitoring and incident response,
and other measures to protect our systems and data from unauthorized external access or internal misuse, including, but
not limited to, the following:
•
Operational Security. Access to our systems is restricted to those who require access in accordance with the
principle of least privilege.
•
Employee Training. We provide all employees with annual training on information security, data
protection, and relevant Company policies so that they are empowered to identify cybersecurity risks and
take action.
•
Third Party Assessment. We engage independent third party consultants to review the effectiveness and
maturity of our cybersecurity program.
•
Incident Response Plan. We maintain an incident response plan to respond to and mitigate the effects of an
information security incident. The plan provides for the formation of a multi-functional incident response
team led by the VP, Information Security and comprised of IT, legal, corporate communications, internal
audit, operational personnel, and members of the Board of Directors.
•
Global Recovery. We have developed global cyber and disaster recovery processes for our information
technology systems and critical information assets to preserve business continuity in the event of a
cybersecurity incident.
•
Third Parties. We have an assessment and audit process for third party vendors. Prior to granting key
vendor access to our systems or data, we conduct pre-engagement diligence to ensure that each of our third
party vendors involved in processing sensitive data have reasonable cybersecurity processes and
procedures in place. We also have contractual provisions with certain key vendors for prompt notification
of material cybersecurity incidents.
•
Insurance. We maintain cyber insurance coverage to mitigate the risk of losses from a cybersecurity
incident.
•
Risk Monitoring. Management and our Board monitor cybersecurity and data protection developments,
including new or forthcoming changes to the legislative and regulatory landscape as well as Advanced
Energy’s cybersecurity processes, investments, and actions as described below.
Cybersecurity risk is a component of Advanced Energy’s broader risk management program and managed at
the highest levels of the Company, starting with Advanced Energy’s Chief Information Officer (“CIO”) and VP,
Information Security, who meet with the Chief Executive Officer and other members of executive management regularly
to discuss issues, assess risks, and coordinate Company-wide cybersecurity initiatives. Our VP, Information Security
leads dedicated teams focused on cybersecurity, information protection and compliance. Each team manages, monitors,
and enforces compliance within their respective areas.
Although we have experienced non-material external cybersecurity security incidents from time to time in the
past, in the last three years, we have not experienced any material cybersecurity incidents, nor has any incident had a
material impact on our operations or financial condition. For a discussion of how risks from cybersecurity threats are
reasonably likely to affect us, including our business strategy, results of operations, or financial condition, please see “If
our information security measures are breached, disrupted, or fail, we may incur significant legal and financial exposure
and liabilities” under the heading Part I, Item 1A “Risk Factors”.
29
Governance
Pursuant to its charter, the Audit and Finance Committee of our Board of Directors is principally responsible
for oversight of managements’ actions to monitor and control cybersecurity risk exposure. The CIO and VP, Information
Security routinely report to the Audit and Finance Committee on enterprise cybersecurity matters, including, as
appropriate, information security strategy, policies, and procedures, status of cybersecurity initiatives, results of third
party assessments, emerging cybersecurity threats and risks, steps taken to mitigate such threats and risks, and
cybersecurity developments and trends. The Audit and Finance Committee reports to the full Board and, if warranted,
coordinates with the Board to address material risks. In addition, two members of the Board have been delegated
authority to serve as initial points of contact for the Board in the event of a severe information security incident. The full
Board receives a cybersecurity briefing from the CIO and VP, Information Security annually.
As discussed above, our cybersecurity risk management and strategy are led by our CIO and VP, Information
Security, both of whom have extensive leadership experience with enterprise information technology. Both have held
various executive roles related to and including IT strategy, including cybersecurity programs, information protection
programs, Sarbanes-Oxley compliance, and ISO certification, among other things.
ITEM 2. PROPERTIES
Information concerning our principal properties is set forth below:
Location
Principal Activity
Ownership
Denver, Colorado
Corporate headquarters, general and administrative
Leased
Bangkok, Thailand
Planned manufacturing (expected to be operational in 2026)
Leased
Fort Collins, Colorado
Research and development, distribution, sales, and service
Leased
Hong Kong, China
Distribution, engineering, and administrative
Leased
Littlehampton, United
Kingdom
Manufacturing, distribution, sales, service, and research and
development
Leased
Lockport, New York
Manufacturing, distribution, service, and research and development
Leased
Mexicali, Mexico
Manufacturing
Leased
Milpitas, California
Sales, marketing, research and development
Leased
Penang, Malaysia
Manufacturing and distribution
Leased
Quezon, Philippines
Engineering, research and development, administration, and support
Leased
Rosario, Philippines
Manufacturing
Owned
Santa Rosa, Philippines
Manufacturing
Leased
Singapore, Singapore
Global operations headquarters (sales, service, and research and
development)
Leased
Sungnam City, South Korea
Sales, distribution, and service
Leased
Taipei, Taiwan
Sales, distribution, engineering, and service
Leased
Vancouver, Washington
Manufacturing, research and development
Leased
Wilmington, Massachusetts
Research and development
Leased
Zhongshan, China
Manufacturing (operations ceased in 2025)
Leased
In addition to the above principal properties, we have several other facilities throughout North America,
Europe, and Asia. We consider the properties that we own or lease as adequate to meet our current and future
requirements. We regularly assess the size, capability, and location of our global infrastructure and periodically make
adjustments based on these assessments.
30
ITEM 3. LEGAL PROCEEDINGS
We are involved in disputes and legal actions arising in the normal course of our business. Although it is not
possible to predict the outcome of these matters, we believe that the results of these proceedings will not have a material
adverse effect on our financial condition, results of operations, or liquidity. For further information see Note 15.
Commitments and Contingencies in Part II, Item 8 “Financial Statements and Supplementary Data.”
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
31
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information and Dividends
Our common stock is listed on the NASDAQ Global Select Market under the symbol “AEIS.” On January 30,
2026, the number of common stockholders of record was 178. This does not include stockholders whose shares are held
in “street name” through brokers or other nominees.
In each of the four quarters in 2025, we paid quarterly cash dividends of $0.10 per share, totaling $15.6 million
for the full year. We currently anticipate that a quarterly 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 the Board and will depend on
our financial condition, results of operations, capital requirements, business conditions, and other factors.
Purchases of Equity Securities by the Issuer
To repurchase shares of our common stock, we periodically enter into share repurchase agreements, open-
market transactions, and/or other transactions in accordance with applicable federal securities laws. Before repurchasing
our shares, we consider the market price of our common stock, the nature of other investment opportunities, available
liquidity, cash flows from operations, general business and economic conditions, and other relevant factors.
We repurchased 32,758 shares during the fourth quarter of 2025, which are summarized in the following table.
At December 31, 2025, the remaining amount authorized by our Board for future share repurchases was $166.9 million
with no time limitation. All purchases were made pursuant to a previously announced plan.
Month
Total
Number of
Shares
Purchased
Average
Price Paid
Per Share
Total Number of Shares Purchased
as Part of Publicly Announced
Plans or Programs
Maximum Dollar Value of Shares
that May Yet be Purchased Under
the Plans or Programs(1)
(in millions, except share and price per share data)
October
—
$
—
—
November
19,552
$
200.92
19,552
December
13,206
$
211.97
13,206
Total
32,758
$
205.38
32,758
$
166.9
(1) On August 3, 2022, we announced that our Board approved an increase to the authorized amount under the
existing share repurchase program by $97.6 million to $200.0 million, with no time limitation.
32
Performance Graph
The performance graph below shows the five-year cumulative total stockholder return on our common stock in
comparison to certain other indices during the period from December 31, 2020 through December 31, 2025. The
comparison assumes $100 invested on December 31, 2020 in Advanced Energy common stock and in each of the indices
and assumes reinvestment of dividends, if any. Dollar amounts in the graph are rounded to the nearest whole dollar. The
performance shown in the graph represents past performance and should not be considered an indication of future
performance.
December 31,
2020
2021
2022
2023
2024
2025
Advanced Energy Industries, Inc. (NASDAQ: AEIS) $ 100.00 $ 94.31 $ 89.25 $ 113.79 $ 121.24 $ 220.15
Dow Jones US Electrical Components & Equipment $ 100.00 $ 125.35 $ 103.42 $ 132.15 $ 176.57 $ 236.57
NASDAQ Composite
$ 100.00 $ 122.22 $ 82.48 $ 119.35 $ 154.67 $ 187.42
S&P 1000
$ 100.00 $ 125.31 $ 107.72 $ 125.26 $ 140.66 $ 150.54
Russell 2000
$ 100.00 $ 114.78 $ 91.30 $ 106.71 $ 119.00 $ 134.23
Information relating to compensation plans under which our equity securities are authorized for issuance is set
forth in Part III, Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters” of this annual report on Form 10-K.
ITEM 6. [RESERVED]
33
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Certain statements set forth below under this caption constitute forward-looking statements. See “Special
Note Regarding Forward-Looking Statements” in this annual report on Form 10-K for additional factors relating to such
statements and see “Risk Factors” in Part I, Item 1A for a discussion of certain risks applicable to our business, financial
condition, and results of operations.
The following section discusses our results of operations for 2025 and 2024 and year-to-year comparisons
between those periods.
Company Overview
Advanced Energy provides highly engineered, critical, precision power conversion, measurement, and control
solutions to our global customers. We design, manufacture, sell and service precision power products that transform,
refine, and modify the raw electrical power coming from either the utility or the building facility and convert it into
various types of highly controllable, usable power that is predictable, repeatable, and customizable to meet the necessary
requirements for powering a wide range of complex equipment. Many of our products enable customers to reduce or
optimize their energy consumption through increased power conversion efficiency, power density, power coupling, and
process control across a wide range of applications.
We are organized on a global, functional basis and operate as a single segment of power electronics conversion
products. Within this segment, our products are sold in the Semiconductor Equipment, Data Center Computing,
Industrial and Medical, and Telecom and Networking markets.
Business Environment and Trends
2025 Summary Results and Key Activities
For the year ended December 31, 2025, our revenue was $1,798.8 million, representing an increase of 21.4% as
compared to 2024. The increase was primarily attributable to more than doubling of revenue from the Data Center
Computing market. For more details on the trends in our end markets, see “End Markets Summary and Trends” below.
In 2025, we increased gross margin and gross profit largely as a result of executing our manufacturing cost
improvement program and higher revenue. We reported higher operating expenses of $509.4 million, an increase of
$16.7 million from 2024 primarily attributable to higher research and development program costs, higher compensation
costs related to stock-based compensation and annual merit increases, partially offset by lower restructuring charges
driven by the timing of our restructuring plan decisions.
Throughout 2025 we managed tariffs affecting AE announced by the U.S. government and continue to evaluate
the impact of any additional tariffs or other trade policy measures on our supply chain or on our customers. While the
tariff impact was not material to our results in 2025, the effects could be material in future periods as any further tariff,
export control, trade restrictions, policy measures, and retaliatory responses to the U.S. trade policy announcements, or
any related macroeconomic effects could adversely impact our product demand, production costs, or ability to sell our
products and provide services.
During 2025, we continued to execute the 2024 Plan. Manufacturing operations in Zhongshan ceased during the
second quarter of 2025. Final site closure activities are in progress and are expected to conclude in 2026. During the
second quarter of 2025, we also approved actions related to consolidating our research and development, sales, and
administrative functions in connection with our manufacturing and footprint consolidation. We expect these actions to be
substantially complete during 2027 and do not expect to incur significant additional charges. See Note 11. Restructuring,
Asset Impairments, and Other Charges in Part II, Item 8 “Financial Statements and Supplementary Data.” We also
continued progress on a new factory in Thailand.
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During the second quarter of 2025, we terminated our prior credit agreement, dated as of September 10, 2019
(and subsequently amended) and entered into a new credit agreement consisting of a senior unsecured term loan and a
senior unsecured revolving facility, both maturing on May 8, 2030. See Note 7. Long-Term Debt in Part II, Item 8
“Financial Statements and Supplementary Data” and Liquidity and Capital Resources below.
End Markets Summary and Trends
Advanced Energy generates revenue from the sale of a broad range of advanced and system power products and
services to global original equipment manufacturers (“OEMs”), distributors, and end customers. Our customers select
our products based on various performance metrics such as high power conversion efficiency, high power density, and
low noise emission, and lower power consumption, as well as our ability to tailor our solutions to meet the unique
requirements of their critical applications. The future growth and demand for our products is driven by a combination of
factors within each of the end markets we serve, as follows:
Semiconductor Equipment Market
The Semiconductor Equipment market supports and enables the long-term need for production capacity and
new process technologies to meet demand for semiconductor devices across many applications driven by megatrends
such as artificial intelligence (“AI”), energy efficiency, automobile electrification, and Internet of things.
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.
In 2025, the Semiconductor Equipment market continued to be driven by demand for leading-edge devices in
logic and memory used in AI applications, partially offset by lower trailing-edge logic demand due to capacity
underutilization, particularly in China, U.S. export restrictions to China, and the impact of tariffs. However, end market
conditions started to improve in the fourth quarter of 2025. We expect these improving conditions to continue into 2026
and to accelerate demand for our products in the second half of the year.
Data Center Computing Market
The Data Center Computing market is being driven by the rapid growth of AI and related investments. The
accelerated power rating of next-generation AI processors and increased density of AI processors in each IT rack have
significantly increased the power requirements for AI-based servers and racks which, in turn, increased the importance
of high power efficiency, density, and reliability for server rack power solutions.
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.
Due to increased investments in AI applications by leading hyperscale customers, along with adoption of our
next- generation high-power solutions, our revenue in the Data Center Computing market more than doubled in 2025.
We expect continued investments and adoption of newer, higher power solutions for AI-related applications
will continue to support robust demand in 2026.
35
Industrial and Medical Market
The Industrial and Medical market is fueled by continued investment in complex manufacturing processes,
increased adoption of new industrial technologies such as automation and clean energy, and increased breadth and
precision requirements of medical devices and life science equipment.
We supply this market with critical, precision power conversion products that deliver precise and highly
reliable, low noise and/or differentiated power. In addition, our sensing, control, and instrumentation products
complement our power solutions. Our products are used in a wide variety of applications, such as advanced material
fabrication, medical devices, life science, test and measurement equipment, robotics, industrial production, defense,
aerospace, and large-scale lighting applications.
We believe that the Industrial and Medical market began to recover starting in the second quarter of 2025
following a major industry downturn as a result of macroeconomic conditions and supply chain disruptions from prior
years. The positive trend continued in the second half of 2025 as customer inventories approached normalized levels. We
expect this trend to continue in 2026, paced by overall economic conditions.
Telecom and Networking Market
Demand in the Telecommunication and Networking market is driven by adoption of more advanced mobile
standards, such as 5G technologies, networking investments by telecommunication service providers, enterprises
upgrading their communication networks, and data centers investing in their networks for AI-driven increased
bandwidth.
We serve this market by providing application-specific power conversion products to many leading OEMs of
wireless infrastructure equipment and computer networking equipment.
End demand in the Telecom and Networking market remained stable in 2025, and we expect current market
conditions to continue in 2026, with some potential for improvement driven by AI-related demand.
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Results of Continuing Operations
The analysis presented below is organized to provide the information we believe will be helpful for
understanding of our historical performance and relevant trends going forward and should be read in conjunction with
our consolidated financial statements, including the notes thereto, in Part II, Item 8 “Financial Statements and
Supplementary Data” of this annual report on Form 10-K. Also included in the following analysis are measures that are
not in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). A
reconciliation of the non-GAAP measures to U.S. GAAP is provided below.
The following table summarizes our Consolidated Statements of Operations and as a percentage of revenue:
Year Ended December 31,
2025
2024
(in millions)
Revenue
$
1,798.8 100.0 % $
1,482.0 100.0 %
Gross profit
677.4
37.7
529.3
35.7
Operating expenses
509.4
28.3
492.7
33.2
Operating income from continuing operations
168.0
9.3
36.6
2.5
Interest income
26.6
1.5
42.9
2.9
Interest expense
(16.7)
(0.9)
(25.1)
(1.7)
Other expense, net
(9.2)
(0.5)
(2.0)
(0.1)
Income from continuing operations, before income tax
168.7
9.4
52.4
3.5
Income tax provision (benefit)
19.4
1.1
(3.9)
(0.3)
Income from continuing operations
$
149.3
8.3 % $
56.3
3.8 %
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Revenue
The following tables summarize net revenue and percentages of revenue by markets:
Year Ended December 31,
Change 2025 v. 2024
2025
2024
Dollar Percent
(in millions)
Semiconductor Equipment
$ 839.9 46.7 % $ 792.5 53.5 % $ 47.4
6.0 %
Data Center Computing
587.3
32.6
284.2
19.2
303.1 106.7 %
Industrial and Medical
282.3
15.7
316.2
21.3
(33.9) (10.7)%
Telecom and Networking
89.3
5.0
89.1
6.0
0.2
0.2 %
Total
$ 1,798.8
100.0 % $ 1,482.0
100.0 % $ 316.8
21.4 %
Revenue by Market
Sales in the Semiconductor Equipment market increased $47.4 million, or 6.0%, to $839.9 million, as compared
to $792.5 million in the prior year. The increase was primarily due to increased demand for platforms used in leading-
edge process tools and incremental revenue generated from new products in this market, partially offset by lower
trailing-edge logic demand.
Sales in the Data Center Computing market increased $303.1 million, or 106.7%, to $587.3 million, as
compared to $284.2 million in the prior year. The increase was due to growing hyperscale investments in new, AI-driven
platforms and growth associated with new design wins secured in 2024.
Sales in the Industrial and Medical market decreased $33.9 million, or 10.7%, to $282.3 million, as compared to
$316.2 million in the prior year. The decrease was primarily due to lower demand as a result of ongoing customer
inventory rebalancing and continued slow demand environment in 2025.
Sales in the Telecom and Networking market remained relatively flat compared to the prior year due to fairly
stable end demand in this market.
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Gross Profit and Gross Margin
Year Ended December 31,
Change 2025 v. 2024
2025
2024
Dollar
Percent
(in millions)
Gross profit
$ 677.4
$ 529.3 $ 148.1
28.0 %
Gross margin
37.7 %
35.7 %
The increase in gross profit was largely due to increase in revenue and manufacturing cost improvements. Gross
margin improved mainly due to the impact of higher volume, and approximately 140 basis points resulting from
manufacturing cost reduction programs.
Operating Expenses
The following table summarizes our operating expenses:
Year Ended December 31,
2025
2024
(in millions)
Research and development
$
232.4
12.9 % $
211.8
14.3 %
Selling, general, and administrative
242.4
13.5
224.6
15.2
Amortization of intangible assets
22.1
1.2
26.0
1.8
Restructuring, asset impairments, and other charges
12.5
0.7
30.3
2.0
Total operating expenses
$
509.4
28.3 % $
492.7
33.3 %
Research and Development
Research and development expenses increased $20.6 million to $232.4 million, as compared to $211.8 million
in the prior year. The increase is related to higher compensation costs, related to stock-based compensation and annual
merit increases, and higher engineering program and materials costs.
Selling, General and Administrative
Selling, general and administrative expenses increased $17.8 million to $242.4 million, as compared to $224.6
million in the prior year. The increase is mainly due to higher compensation costs, related to stock-based compensation
and annual merit increases.
Amortization of Intangible Assets
Amortization expense decreased $3.9 million to $22.1 million, as compared to $26.0 million in the prior year.
The decrease is primarily due to certain intangible assets reaching the end of their estimated useful life. This was
partially offset by amortization of intangible assets acquired in the Airity acquisition in 2024. For additional information,
see Note 2. Acquisition and Note 5. Intangible Assets and Goodwill in Part II, Item 8 “Financial Statements and
Supplementary Data.”
39
Restructuring, Asset Impairments and Other Charges
Restructuring, asset impairment and other charges decreased $17.8 million to $12.5 million, as compared to
$30.3 million in the prior year, primarily driven by the timing of our restructuring plan decisions.
During the second quarter of 2025, we approved actions related to consolidating our research and development,
sales, and administrative functions in connection with our manufacturing and footprint consolidation. We expect these
actions to be substantially complete during 2027 and do not expect to incur significant additional charges.
For additional information about this and prior-year restructuring plans, see Note 11. Restructuring, Asset
Impairments, and Other Charges in Part II, Item 8 “Financial Statements and Supplementary Data.”
Interest Income, Interest Expense, and Other Expense, Net
We experienced a decrease in interest income and expense caused by lower cash and debt balances as a result of
using cash on hand to fully prepay our prior senior unsecured term loan facility in the prior year.
Other expense, net was $9.2 million in 2025, as compared to $2.0 million of expense in the prior year. Other
expense, net consists primarily of foreign exchange gains and losses and other miscellaneous items. During 2025, we
recorded a $9.7 million increase in unrealized foreign exchange losses, while the prior year included $3.0 million of
expense related to nonrecurring foreign currency translation adjustments. These prior-year adjustments related to the
liquidation of certain foreign operations as well as the write-off of debt discount fees associated with the early repayment
of our prior senior unsecured term loan facility. See Note 7. Long-Term Debt in Part II, Item 8 “Financial Statements and
Supplementary Data” for information regarding our debt.
40
Income Tax Provision (Benefit)
The following table summarizes tax provision (benefit) and the effective tax rate for our income from
continuing operations:
Years Ended December 31,
2025
2024
(in millions)
Income from continuing operations, before income tax
$ 168.7 $
52.4
Income tax provision (benefit)
$
19.4 $
(3.9)
Effective tax rate
11.5 %
(7.4)%
Our effective tax rates differ from the U.S. federal statutory rate of 21% for the years ended December 31, 2025
and 2024, primarily due to valuation allowance releases partially offset by the impact of non-US tax law changes in
2025, and the intercompany transfer of intellectual property among certain of our subsidiaries in 2024. Additionally,
both 2025 and 2024 included 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 and the net effect of Pillar II top-up taxes.
Our future effective income tax rate depends on various factors, such as changes in tax laws, regulations,
accounting principles, or interpretations thereof, and the geographic composition of our pre-tax income. We carefully
monitor these factors and adjust our effective income tax rate accordingly.
As of December 31, 2025, 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 determine any potential cash tax expense and tax rate impact in the
countries in which we operate.
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 year ended December 31,
2025.
Non-GAAP Results
Management uses non-GAAP net income, non-GAAP operating income, and non-GAAP earnings per share
(“EPS”) to evaluate business performance without the impacts of certain non-cash charges and other charges which are
not part of our usual operations. We use these non-GAAP measures to assess performance against business objectives,
and make business decisions, including developing budgets and forecasting future periods. In addition, management’s
incentive plans include certain of these non-GAAP measures as criteria for achievements. These non-GAAP measures
are not prepared in accordance with U.S. GAAP and may differ from non-GAAP methods of accounting and reporting
used by other companies. However, we believe these non-GAAP measures provide additional information that enables
readers to evaluate our business from the perspective of management. The presentation of this additional information
should not be considered a substitute for results prepared in accordance with U.S. GAAP.
41
The non-GAAP results presented below exclude the impact of non-cash related charges, such as stock-based
compensation, amortization of intangible assets, and long-term unrealized foreign exchange gains and losses. In
addition, we exclude discontinued operations and other items such as acquisition-related costs, facility, infrastructure,
and other transition costs, and restructuring expenses, as they are not indicative of future performance. The tax effect of
our non-GAAP adjustments represents the anticipated annual tax rate applied to each non-GAAP adjustment after
consideration of their respective book and tax treatments. Non-GAAP results also exclude non-recurring discrete tax
expenses or benefits. Finally, non-GAAP diluted weighted-average common shares are adjusted to reflect the dilutive
impact of our convertible notes based on the higher note hedge strike price instead of the initial conversion price.
Reconciliation of non-GAAP measures
Non-GAAP gross profit, gross margin, operating expenses,
Years Ended December 31,
operating income, and operating margin
2025
2024
(in millions)
Gross profit from continuing operations, as reported
$
677.4
$
529.3
Adjustments to gross profit:
Stock-based compensation
4.9
4.0
Facility, infrastructure, and other transition costs
14.7
4.5
Non-GAAP gross profit
697.0
537.8
GAAP gross margin
37.7%
35.7%
Non-GAAP gross margin
38.7%
36.3%
Operating expenses from continuing operations, as reported
509.4
492.7
Adjustments:
Amortization of intangible assets
(22.1)
(26.0)
Stock-based compensation
(50.8)
(41.9)
Acquisition-related costs
(5.8)
(6.0)
Facility, infrastructure, and other transition costs
(5.2)
(1.2)
Restructuring, asset impairments, and other charges
(12.5)
(30.3)
Non-GAAP operating expenses
413.0
387.3
Non-GAAP operating income
$
284.0
$
150.5
Operating income, as reported
$
168.0
$
36.6
Adjustments to gross profit
19.6
8.5
Adjustments to operating expenses
96.4
105.4
Non-GAAP operating income
$
284.0
$
150.5
Income from continuing operations, as reported
GAAP operating margin
9.3%
2.5%
Non-GAAP operating margin
15.8%
10.2%
42
Reconciliation of non-GAAP measure
Years Ended December 31,
Non-GAAP income, net of income tax
2025
2024
(in millions)
Income from continuing operations, net of income tax
$
149.3
$
56.3
Adjustments:
Amortization of intangible assets
22.1
26.0
Acquisition-related costs
5.8
6.0
Facility, infrastructure, and other transition costs
19.9
5.7
Restructuring, asset impairments, and other charges
12.5
30.3
Unrealized foreign currency loss (gain)
5.2
(3.4)
Other costs included in other expense, net
0.2
2.8
Stock-based compensation
55.7
45.9
Tax effect of non-GAAP adjustments, including certain discrete tax benefits
(25.7)
(29.2)
Non-GAAP income, net of income tax
$
245.0
$
140.4
Reconciliation of non-GAAP measure
Years Ended December 31,
Non-GAAP diluted weighted-average common shares
2025
2024
(in millions)
Diluted weighted-average common shares outstanding
38.6
37.8
Dilutive effect of convertible notes
(0.4)
—
Non-GAAP diluted weighted-average common shares outstanding
38.2
37.8
Reconciliation of non-GAAP measure
Year Ended December 31,
Non-GAAP earnings per share
2025
2024
Diluted earnings per share from continuing operations, as reported
$
3.87 $
1.49
Add back:
Per share impact of non-GAAP adjustments, net of tax
2.54
2.22
Non-GAAP earnings per share
$
6.41 $
3.71
43
Reconciliation of non-GAAP measure
Year Ended December 31,
Non-GAAP provision for income taxes
2025
2024
(in millions)
Provision (benefit) for income taxes, as reported
$
19.4
$
(3.9)
Adjustment:
Non-GAAP items and other discrete tax items excluding stock-based
compensation
14.0
19.6
Tax effect of stock-based compensation
11.7
9.6
Non-GAAP provision for income taxes
$
45.1
$
25.3
Reconciliation of non-GAAP measure
Year Ended December 31,
Non-GAAP income before income taxes
2025
2024
(in millions)
Income from continuing operations, before income tax
$
168.7
$
52.4
Adjustments:
Amortization of intangible assets
22.1
26.0
Stock-based compensation
55.7
45.9
Acquisition-related costs
5.8
6.0
Facility, infrastructure, and other transition costs
19.9
5.7
Restructuring, asset impairments, and other charges
12.5
30.3
Unrealized foreign currency loss (gain)
5.2
(3.4)
Other costs included in other expense, net
0.2
2.8
Non-GAAP income before income taxes
$
290.1
$
165.7
Effective tax rate, as reported
11.5%
(7.4)%
Non-GAAP effective tax rate
15.5%
15.3%
Liquidity and Capital Resources
Liquidity
Adequate liquidity and cash generation are important to the execution of our strategic initiatives. Our ability to
fund our operations, acquisitions, capital expenditures, and product development efforts may depend on our ability to
generate cash from operating activities, which is subject to future operating performance, as well as general economic,
financial, competitive, legislative, regulatory, and other conditions, some of which may be beyond our control. Our
primary sources of liquidity continue to be our available cash, cash generated from operations, and available borrowing
capacity under the Revolving Facility (refer to Note 7. Long-Term Debt in Part II, Item 8 “Financial Statements and
Supplementary Data”).
As of December 31, 2025, our cash and cash equivalents totaled $791.2 million, and our available funding
under our undrawn Revolving Facility is $600.0 million. Additionally, we generated $234.7 million of cash flow from
continuing operations in 2025. 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. 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 recent year, 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.
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Debt
See Note 7. Long-Term Debt in Part II, Item 8 “Financial Statements and Supplementary Data” for information
regarding the Credit Agreement.
As of December 31, 2025, our only outstanding debt is the $575.0 million Convertible Notes, which mature on
September 15, 2028 and carry a 2.5% interest rate. As of December 31, 2025, our common stock traded above the
conversion price for at least 20 trading days during a 30 consecutive trading-day period, which resulted in the
Convertible Notes becoming convertible at the option of the holders. Accordingly, the Convertible Notes balance was
reclassified from long-term to current debt as of December 31, 2025. Exclusive of any early conversion elections by the
convertible noteholders, there are no scheduled debt maturities until 2028. See Note 7. Long-Term Debt in Part II, Item 8
“Financial Statements and Supplementary Data” for information regarding the Convertible Notes.
Should we have future borrowings under our Term Loan Facility or Revolving Facility, those borrowings
would be subject to a variable rate.
As of December 31, 2025, 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.
Dividends
During 2025, we paid quarterly cash dividends of $0.10 per share, totaling $15.6 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 of Directors and will depend on our financial condition,
results of operations, capital requirements, business conditions, and other factors.
Share Repurchases
To repurchase shares of our common stock, we periodically enter into share repurchase agreements. During the
year we repurchased $30.4 million of shares and during 2024, we repurchased $1.8 million of shares. At December 31,
2025, the remaining amount authorized by the Board for future share repurchases was $166.9 million with no time
limitation.
Cash Flows
A summary of our cash from operating, investing, and financing activities was as follows:
Year Ended December 31,
2025
2024
(in millions)
Net cash from operating activities from continuing operations
$
234.7
$
133.0
Net cash used in operating activities from discontinued operations
(1.4)
(2.2)
Net cash from operating activities
233.3
130.8
Net cash used in investing activities
(109.8)
(73.6)
Net cash used in financing activities
(56.1)
(377.1)
Effect of currency translation on cash and cash equivalents
1.7
(2.6)
Net change in cash and cash equivalents
69.1
(322.5)
Cash and cash equivalents, beginning of period
722.1
1,044.6
Cash and cash equivalents, end of period
$
791.2
$
722.1
45
Net Cash From Operating Activities
Net cash from operating activities from continuing operations was $234.7 million, an increase of $101.7
million, compared to $133.0 million in the prior year. The increase was primarily due to higher net income from
continuing operations driven by growth in the Data Center Computing and Semiconductor Equipment markets.
Additionally, we had unfavorable changes in working capital from accounts receivable, inventories, and other assets
which was partially offset by timing of payments.
Net Cash From Investing Activities
Net cash used in investing activities in 2025 was $109.8 million, an increase of $36.2 million, compared to
$73.6 million in the prior year. The increase was primarily due to an increase of $50.6 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.
Net Cash From Financing Activities
Net cash used in financing activities in 2025 was $56.1 million, compared to a cash outflow of $377.1 million
in the prior year. In 2024, we used existing cash on hand to make payments towards our prior senior unsecured term loan
facility for $355.0 million, including $10.0 million in principal payment made in the first half of the year and the
September prepayment of the remaining $345.0 million outstanding principal balance, and repurchased common stock
for $1.8 million. In 2025, we repurchased $30.2 million of our common stock.
Critical Accounting Estimates
The preparation of consolidated financial statements and related disclosures in conformity with U.S. GAAP
requires us to make judgments, assumptions, and estimates that affect the amounts reported. Note 1. Summary of
Operations and Significant Accounting Policies and Estimates in Part II, Item 8 “Financial Statements and
Supplementary Data” describes the significant accounting policies used in the preparation of our consolidated financial
statements. The accounting positions described below are significantly affected by critical accounting estimates. Such
accounting policies and estimates require significant judgments and assumptions to be used in the preparation of the
consolidated financial statements and actual results could differ materially from the amounts reported based on
variability in factors affecting these estimates.
Inventories
We value inventories at the lower of cost or net realizable value, computed on a first-in, first-out basis. General
market conditions, as well as our design activities, can cause certain products to become obsolete and we adjust our
inventory carrying value for estimated excess and obsolescence equal to the difference between the cost of inventory and
the estimated net realizable value based on projected end-user demand, which is determined by considering historical
usage, customer orders and forecast, and qualitative considerations such as market and economic conditions. The
determination of projected end-user demand requires the use of estimates and assumptions related to projected unit sales
for each product. Demand for our products can fluctuate significantly. A significant decrease in demand could result in
an increase in the charges for excess inventory quantities on hand.
Income Taxes
We follow the liability method of accounting for income taxes under which deferred tax assets and liabilities
are recognized for future tax consequences. A deferred tax asset or liability is computed for both the expected future
impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future
tax benefit to be derived from tax loss and tax credit carryforwards. Tax rate changes are reflected in the period such
changes are enacted.
46
We assess the recoverability of our net deferred tax assets and the need for a valuation allowance on a quarterly
basis. Our assessment includes several factors, including historical results and taxable income projections for each
jurisdiction. The ultimate realization of deferred income tax assets is dependent on the generation of taxable income in
appropriate jurisdictions during the periods in which those temporary differences are deductible. We consider the
scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in
determining the amount of the valuation allowance. Based on the level of historical taxable income and projections for
future taxable income over the periods in which the deferred income tax assets are deductible, we determine if we will
more likely than not realize the benefits of these deductible differences.
Due to uncertainties in any tax audit outcome, our estimates of the ultimate settlement of our unrecognized tax
positions may change and the actual tax benefits may differ significantly from the estimates. We regularly assess the
likelihood of favorable or unfavorable outcomes resulting from these examinations to determine the adequacy of our
provision for income taxes. This evaluation is based on factors including, but not limited to, changes in facts or
circumstances, changes in tax law, effectively settled issues under audit, and new audit activity.
For more details see Note 14. Income Taxes in Part II, Item 8 “Financial Statements and Supplementary Data.”
Business Combinations
We record the assets acquired and liabilities assumed in a business combination at their acquisition date fair
values. Fair values of assets acquired, and liabilities assumed are based upon available information and may involve
engaging an independent third party to perform an appraisal. Estimating fair values can be complex and subject to
significant business judgment. We must also identify and include in the allocation all acquired tangible and intangible
assets that meet certain criteria, including assets that were not previously recorded by the acquired entity. The estimates
most commonly involve intangible assets. The excess of the purchase price over the net fair value of acquired assets and
assumed liabilities is recorded as goodwill, which is not amortized but instead is evaluated for impairment at least
annually. Pursuant to U.S. GAAP, an entity is allowed a reasonable period of time (not to exceed one year) to obtain the
information necessary to identify and measure the fair value of the assets acquired and liabilities assumed in a business
combination.
Off-Balance Sheet Arrangements
As of December 31, 2025, we did not have any off-balance sheet arrangements pursuant to Regulation S-K.
Contractual Obligations
In the normal course of business, we enter into contracts and commitments that obligate us to make payments in
the future. Information regarding our obligations relating to income taxes, lease obligations, pension liabilities, and debt
is provided in Note 14. Income Taxes, Note 6. Leases, Note 12. Employee Retirement Plans and Postretirement Benefits,
and Note 7. Long-Term Debt, respectively, in Part II, Item 8 “Financial Statements and Supplementary Data.”
Recent Accounting Pronouncements
From time to time, updates to the Accounting Standards Codification are communicated through issuance of an
Accounting Standards Update. Unless otherwise discussed, we believe that the impact of recently issued guidance,
whether adopted or to be adopted in the future, is not expected to have a material impact on our consolidated financial
statements upon adoption.
To understand the impact of recently issued guidance from the Financial Accounting Standards Board
(“FASB”) or other standards setting bodies, whether adopted or to be adopted, please review the information provided in
Note 1. Summary of Operations and Significant Accounting Policies and Estimates in Part II, Item 8 “Financial
Statements and Supplementary Data.”
47
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk and Risk Management
In the normal course of business, we typically have exposures to interest rate risk from our investments and
Credit Agreement. We also have exposure to foreign exchange rate risk related to our foreign operations and foreign
currency transactions.
Foreign Currency Exchange Rate Risk
We are impacted by changes in foreign currency exchange rates through revenue and purchasing transactions
when we sell products and purchase materials in currencies different from the currency in which product and
manufacturing costs were incurred. Our reported financial results of operations, including the reported value of our
assets and liabilities, are also impacted by changes in foreign currency exchange rates. Assets and liabilities of
substantially all our subsidiaries outside the U.S. are translated at period end rates of exchange for each reporting period.
Operating results and cash flow statements are translated at average rates of exchange during each reporting period.
The functional currencies of our worldwide facilities primarily include the United States Dollar, Euro, South
Korean Won, New Taiwan Dollar, Japanese Yen, Pound Sterling, and Chinese Yuan. We are subject to risks associated
with revenue and purchasing activities and costs to operate that are denominated in currencies other than our functional
currencies, such as the Singapore Dollar, Malaysian Ringgit, Mexican Peso, Philippine Peso, and Thai Baht.
Historically, the impact of changes to these particular exchange rates has not been material to our operating results.
From time to time, we may enter into foreign currency exchange rate contracts to hedge against changes in
foreign currency exchange rates on assets and liabilities expected to be settled at a future date, including foreign
currency, which may be required for a potential foreign acquisition. Market risk arises from the potential adverse effects
on the value of derivative instruments that result from a change in foreign currency exchange rates. We may enter into
foreign currency forward contracts to manage the exchange rate risk associated with intercompany debt denominated in
nonfunctional currencies. We minimize our market risk applicable to foreign currency exchange rate contracts by
establishing and monitoring parameters that limit the types and degree of our derivative contract instruments. We enter
into derivative contract instruments for risk management purposes only. We do not enter into or issue derivatives for
trading or speculative purposes.
Interest Rate Risk
At the present time, a change in interest rates does not have an impact upon our future earnings and cash flow
because our only outstanding debt is the Convertible Notes, which carry a fixed 2.5% interest rate. However, increases in
interest rates could impact the decision to borrow under the Credit Agreement and our ability to refinance existing
maturities or acquire additional debt on favorable terms.
For more information see Note 7. Long-Term Debt in Part II, Item 8 “Financial Statements and Supplementary
Data.”
48
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 42)
49
Consolidated Balance Sheets
53
Consolidated Statements of Operations
54
Consolidated Statements of Comprehensive Income
55
Consolidated Statements of Stockholders’ Equity
56
Consolidated Statements of Cash Flows
57
Notes to Consolidated Financial Statements
58
49
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Advanced Energy Industries, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Advanced Energy Industries, Inc. (the
Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income,
stockholders' equity and cash flows for each of the three years in the period ended December 31, 2025, and the related
notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024,
and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in
conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on
criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (2013 framework), and our report dated February 13, 2026 expressed an unqualified opinion
thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express
an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion
on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter
below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
50
Inventory valuation
Description of the
Matter
As more fully described in Notes 1 and 4 to the consolidated financial statements, the
Company has inventories with a carrying value of $411.2 million as of December 31, 2025.
The Company adjusts its inventory carrying value for estimated excess or obsolescence equal
to the difference between the cost of inventory and the estimated net realizable value based on
projected customer demand, which is determined by considering historical usage, customer
orders and forecast, and qualitative considerations such as market and economic conditions.
Auditing management’s inventory valuation was complex and involved judgment because a
critical factor in determining excess and obsolete inventory requires management to determine
projected customer demand, which could be impacted by future market and economic
conditions.
How We Addressed the
Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of
internal controls related to the Company’s process for evaluating inventory valuation inclusive
of controls related to the development of and management’s review of the underlying data,
including historical usage and the estimation of projected customer demand.
We evaluated certain inventories for excess or obsolescence by testing key inputs, including
historical usage and projected customer demand, and by testing the completeness and
accuracy of the underlying data supporting management’s inventory valuation assessment.
Specifically, we compared the Company’s projected customer demand to historical sales and
inventory usage. We assessed historical trends of management’s estimates and performed
analyses to evaluate management’s excess and obsolete inventory estimates and underlying
assumptions. We also performed a retrospective review of the prior year valuation
assumptions, including inventory write-off history.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2019.
Denver, Colorado
February 13, 2026
51
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Advanced Energy Industries, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Advanced Energy Industries, Inc.’s internal control over financial reporting as of
December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion,
Advanced Energy Industries, Inc. (the Company) maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2025, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the
related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of
the three years in the period ended December 31, 2025, and the related notes and our report dated February 13, 2026
expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying
Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion
on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a
material effect on the financial statements
52
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls
may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
/s/ Ernst & Young LLP
Denver, Colorado
February 13, 2026
53
ADVANCED ENERGY INDUSTRIES, INC.
Consolidated Balance Sheets
(In millions, except per share amounts)
December 31,
December 31,
2025
2024
ASSETS
Current assets:
Cash and cash equivalents
$
791.2
$
722.1
Accounts receivable, net
325.2
265.3
Inventories
411.2
360.4
Other current assets
46.3
41.5
Total current assets
1,573.9
1,389.3
Property and equipment, net
272.8
185.6
Operating lease right-of-use assets
98.1
96.3
Other assets
182.5
155.3
Intangible assets, net
117.7
139.4
Goodwill
300.8
296.0
TOTAL ASSETS
$
2,545.8
$
2,261.9
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
224.1
$
143.5
Accrued payroll and employee benefits
93.0
67.9
Other accrued expenses
78.1
73.6
Customer deposits and other
12.7
11.5
Current portion of long-term debt
567.5
—
Current portion of operating lease liabilities
15.8
17.8
Total current liabilities
991.2
314.3
Long-term debt, net
—
564.7
Operating lease liabilities
95.7
89.2
Defined employee benefit pension plan
49.4
49.6
Other long-term liabilities
38.9
37.5
Total liabilities
1,175.2
1,055.3
Deferred compensation
7.8
3.5
Commitments and contingencies (Note 15)
Stockholders' equity:
Preferred stock, $0.001 par value, 1.0 shares authorized, none issued and outstanding
—
—
Common stock, $0.001 par value, 70.0 shares authorized; 37.8 and 37.7 issued and outstanding at
December 31, 2025 and December 31, 2024, respectively
—
—
Common stock associated with deferred compensation plan
(2.6)
(0.9)
Additional paid-in capital
230.6
189.1
Accumulated other comprehensive income (loss)
6.2
(11.8)
Retained earnings
1,128.6
1,026.7
Total stockholders' equity
1,362.8
1,203.1
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
2,545.8
$
2,261.9
The accompanying notes are an integral part of these consolidated financial statements.
54
ADVANCED ENERGY INDUSTRIES, INC.
Consolidated Statements of Operations
(In millions, except per share amounts)
Years Ended December 31,
2025
2024
2023
Revenue, net
$ 1,798.8 $ 1,482.0 $ 1,655.8
Cost of revenue
1,121.4
952.7 1,063.4
Gross profit
677.4
529.3
592.4
Operating expenses:
Research and development
232.4
211.8
202.4
Selling, general, and administrative
242.4
224.6
221.0
Amortization of intangible assets
22.1
26.0
28.3
Restructuring, asset impairments, and other charges
12.5
30.3
27.0
Total operating expenses
509.4
492.7
478.7
Operating income
168.0
36.6
113.7
Interest income
26.6
42.9
27.1
Interest expense
(16.7)
(25.1)
(16.6)
Other expense, net
(9.2)
(2.0)
(1.7)
Income from continuing operations, before income tax
168.7
52.4
122.5
Income tax provision (benefit)
19.4
(3.9)
(8.3)
Income from continuing operations
149.3
56.3
130.8
Loss from discontinued operations, net of income tax
(0.9)
(2.1)
(2.5)
Net income
$
148.4 $
54.2 $
128.3
Basic weighted-average common shares outstanding
37.6
37.5
37.5
Diluted weighted-average common shares outstanding
38.6
37.8
37.8
Earnings (loss) per share:
Continuing operations:
Basic earnings per share
$
3.97 $
1.50 $
3.49
Diluted earnings per share
$
3.87 $
1.49 $
3.46
Discontinued operations:
Basic loss per share
$
(0.02) $
(0.06) $
(0.07)
Diluted loss per share
$
(0.02) $
(0.06) $
(0.07)
Net income:
Basic earnings per share
$
3.95 $
1.45 $
3.42
Diluted earnings per share
$
3.84 $
1.43 $
3.40
The accompanying notes are an integral part of these consolidated financial statements.
55
ADVANCED ENERGY INDUSTRIES, INC.
Consolidated Statements of Comprehensive Income
(In millions)
Years Ended December 31,
2025
2024
2023
Net income
$ 148.4 $
54.2 $ 128.3
Other comprehensive income (loss), net of income tax
Foreign currency translation
15.2
(11.5)
2.0
Cash flow hedges
—
(5.5)
(6.3)
Defined employee benefit plan
2.8
(0.9)
(5.9)
Comprehensive income
$ 166.4 $
36.3 $ 118.1
The accompanying notes are an integral part of these consolidated financial statements.
56
ADVANCED ENERGY INDUSTRIES, INC.
Consolidated Statements of Stockholders’ Equity
(In millions)
Advanced Energy Industries, Inc. Stockholders' Equity
Common Stock
Common Stock
Accumulated
Associated with Additional
Other
Total
Deferred
Paid-in Comprehensive
Retained Stockholders'
Shares Amount Compensation Plan
Capital
Income (loss)
Earnings
Equity
Balances, December 31, 2022
37.4 $
— $
— $
134.6 $
16.3 $
915.2 $
1,066.1
Stock issued from equity plans, net
0.3
—
—
(0.1)
—
—
(0.1)
Stock-based compensation
—
—
—
29.3
—
—
29.3
Share repurchases
(0.4)
—
—
(1.5)
—
(38.6)
(40.1)
Dividends declared ($0.10 per share)
—
—
—
—
—
(15.2)
(15.2)
Other comprehensive loss
—
—
—
—
(10.2)
—
(10.2)
Warrants and note hedges, net
—
—
—
(40.1)
—
—
(40.1)
Tax impact of convertible notes and note
hedges
—
—
—
26.1
—
—
26.1
Net income
—
—
—
—
—
128.3
128.3
Balances, December 31, 2023
37.3
—
—
148.3
6.1
989.7
1,144.1
Stock issued from equity plans, net
0.3
—
—
(4.8)
—
—
(4.8)
Stock issuance (Note 2)
0.1
—
—
4.5
—
—
4.5
Stock-based compensation
—
—
—
43.4
—
—
43.4
Share repurchases
—
—
—
(0.1)
—
(1.7)
(1.8)
Dividends declared ($0.10 per share)
—
—
—
—
—
(15.4)
(15.4)
Other comprehensive loss
—
—
—
—
(17.9)
—
(17.9)
Deferred compensation
—
—
—
(2.2)
—
(0.1)
(2.3)
Common stock issued to deferred
compensation plan (9,487 shares)
—
—
(0.9)
—
—
—
(0.9)
Net income
—
—
—
—
—
54.2
54.2
Balances, December 31, 2024
37.7
—
(0.9)
189.1
(11.8)
1,026.7
1,203.1
Stock issued from equity plans, net
0.4
—
—
(6.9)
—
—
(6.9)
Stock-based compensation
—
—
—
48.3
—
—
48.3
Share repurchases
(0.3)
—
—
(1.6)
—
(28.8)
(30.4)
Dividends declared ($0.10 per share)
—
—
—
—
—
(15.6)
(15.6)
Other comprehensive income
—
—
—
—
18.0
—
18.0
Deferred compensation
—
—
—
—
—
(2.1)
(2.1)
Common stock issued to deferred
compensation plan (24,025 shares)
—
—
(1.7)
1.7
—
—
—
Net income
—
—
—
—
—
148.4
148.4
Balances, December 31, 2025
37.8 $
— $
(2.6) $
230.6 $
6.2 $ 1,128.6 $
1,362.8
The accompanying notes are an integral part of these consolidated financial statements.
57
ADVANCED ENERGY INDUSTRIES, INC.
Consolidated Statements of Cash Flows
(In millions)
Years Ended December 31,
2025
2024
2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$ 148.4 $
54.2 $ 128.3
Less: loss from discontinued operations, net of income tax
(0.9)
(2.1)
(2.5)
Income from continuing operations, net of income tax
149.3
56.3
130.8
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization
62.0
68.5
66.5
Stock-based compensation
55.7
45.9
31.0
Amortization and write off of debt issuance costs and debt discount
3.2
3.8
1.3
Deferred income taxes
(13.8)
(20.5)
(34.0)
Other
0.8
1.2
0.5
Changes in operating assets and liabilities, net of assets acquired
Accounts receivable, net
(57.4)
14.6
23.3
Inventories
(47.4)
(27.9)
39.3
Other assets
(9.5)
(2.1)
5.0
Accounts payable
79.3
(0.6)
(26.1)
Operating lease right-of-use assets and operating lease liabilities, net
2.5
(0.9)
0.6
Other liabilities and accrued expenses
10.0
(5.3)
(25.3)
Net cash from operating activities from continuing operations
234.7
133.0
212.9
Net cash from operating activities from discontinued operations
(1.4)
(2.2)
(4.0)
Net cash from operating activities
233.3
130.8
208.9
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of long-term investments
(2.4)
(3.0)
(3.7)
Purchases of property and equipment
(107.4)
(56.8)
(61.0)
Acquisitions, net of cash acquired
—
(13.8)
—
Net cash from investing activities
(109.8)
(73.6)
(64.7)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings
—
—
575.0
Payment of debt issuance costs
—
(0.1)
(13.9)
Dividend payments
(15.6)
(15.4)
(15.2)
Payments on long-term borrowings
(1.9) (355.0)
(20.0)
Payment for purchase of note hedges
—
— (115.0)
Payment of acquisition holdback
(1.5)
—
74.9
Purchase and retirement of common stock
(30.2)
(1.8)
(40.0)
Net payments related to stock-based awards
(6.9)
(4.8)
(0.1)
Net cash from financing activities
(56.1) (377.1)
445.7
EFFECT OF CURRENCY TRANSLATION ON CASH AND CASH
EQUIVALENTS
1.7
(2.6)
(4.1)
NET CHANGE IN CASH AND CASH EQUIVALENTS
69.1 (322.5)
585.8
CASH AND CASH EQUIVALENTS, beginning of period
722.1 1,044.6
458.8
CASH AND CASH EQUIVALENTS, end of period
$ 791.2 $ 722.1 $ 1,044.6
The accompanying notes are an integral part of these consolidated financial statements.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
58
NOTE 1. SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES AND
ESTIMATES
Advanced Energy Industries, Inc., a Delaware corporation, and its consolidated subsidiaries (“we,” “us,” “our,”
“Advanced Energy,” or the “Company”) provides highly engineered, critical, precision power conversion, measurement,
and control solutions to our global customers. We design, manufacture, sell and service precision power products that
transform, refine, and modify the raw electrical power coming from either the utility or the building facility and convert
it into various types of highly controllable, usable power that is predictable, repeatable, and customizable to meet the
necessary requirements for powering a wide range of complex equipment. Many of our products enable customers to
reduce or optimize their energy consumption through increased power conversion efficiency, power density, power
coupling, and process control across a wide range of applications.
In December 2015, we completed the wind down of engineering, manufacturing, and sales of our solar inverter
product line. We have continuing involvement with regard to certain warranty obligations. Accordingly, the results of
our inverter business are reflected as loss from discontinued operations, net of income taxes on our Consolidated
Statements of Operations.
During 2025, we changed the presentation of our financial statements and accompanying footnote disclosures
from thousands to millions. This change did not materially impact previously reported financial information.
Principles of Consolidation
Our consolidated financial statements include the Company and its subsidiaries. All intercompany accounts and
transactions have been eliminated. Our consolidated financial statements are stated in United States (“U.S.”) Dollars and
have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).
Use of Estimates in the Preparation of the Consolidated Financial Statements
The preparation of our consolidated financial statements in conformity with U.S. GAAP requires us to make
estimates, assumptions, and judgments that affect the reported amounts of assets and liabilities, the disclosure of
contingent liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the
reporting period. The significant estimates, assumptions, and judgments include, but are not limited to, excess and
obsolete inventory, income taxes and other provisions, and acquisitions and asset valuation.
Segment Information
Our Chief Executive Officer (“CEO”) is the chief operating decision maker who reviews financial information
on a consolidated basis for purposes of allocating resources and evaluating financial performance. Accordingly, we
determined we operate in a single reporting segment – power electronics conversion products. Within this segment, our
products are sold into the Semiconductor Equipment, Data Center Computing, Industrial and Medical, and Telecom and
Networking markets.
Our CEO assesses performance and decides how to allocate resources primarily based on consolidated net
income, which is reported on our Consolidated Statements of Operations. Total assets on the Consolidated Balance
Sheets represent our segment assets.
Foreign Currency Translation
The functional currency of certain of our foreign subsidiaries is the local currency. Assets and liabilities of these
foreign subsidiaries are translated to the United States Dollar at prevailing exchange rates on the balance sheet date.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
59
Revenues and expenses are translated at the average exchange rates in effect for each period. Translation adjustments
resulting from this process are reported as a separate component of other comprehensive income.
For certain other subsidiaries, the functional currency is the U.S. Dollar. Foreign currency transactions are
recorded based on exchange rates at the time such transactions arise. Subsequent changes in exchange rates for foreign
currency denominated monetary assets and liabilities result in foreign currency transaction gains and losses, which are
reflected as unrealized (based on period end remeasurement) or realized (upon settlement of the transactions) in other
income (expense), net in our Consolidated Statements of Operations.
Derivatives
We use derivative financial instruments to manage risks associated with foreign currency. Unless we meet
specific hedge accounting criteria, changes in the fair value of derivative financial instruments are recognized in the
Consolidated Statements of Operations within other income (expense), net.
Fair Value
We value certain financial assets and liabilities using fair value measurements.
U.S. GAAP for fair value establishes a hierarchy that prioritizes fair value measurements based on the types of
inputs used for the various valuation techniques (market approach, income approach, and cost approach). Our financial
assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels of the
hierarchy and the related inputs are as follows:
•
Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can
access on the measurement date.
•
Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly.
•
Level 3 — Unobservable inputs for the asset or liability.
We categorize fair value measurements within the fair value hierarchy based upon the lowest level of the most
significant inputs used to determine fair value. Our assessment of the significance of a particular input to the fair value
measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their
placement within the fair value hierarchy levels.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
60
We have various assets and liabilities measured at fair value on a recurring basis, including:
Category of Asset or
Liability
Fair
Value
Hierarchy
Methodology for Estimating Fair Value
Certificates of deposit and
investments
Level 2
Observable market data for similar assets
Foreign currency forward
contracts
Level 2
Forecasted movement in the forward rates of foreign currency for
the applicable duration in which the hedging instrument is
denominated
Deferred compensation
liability
Level 2
Observable market data for participants’ notional funds
Pension benefit
obligations
Level 2
Actuarial analysis, which includes various estimates and
assumptions including, but not limited to, discount rates, expected
return on plan assets, and future inflation rates
The carrying amounts of our cash and cash equivalents, accounts receivable, accounts payable and other current
assets and liabilities approximate fair value as recorded due to the short-term nature of these instruments.
Our non-financial assets, which primarily consist of property and equipment, operating lease right-of-use assets,
goodwill, and other intangible assets, are not required to be carried at fair value on a recurring basis and are reported at
carrying value. However, on a periodic basis or whenever events or changes in circumstances indicate that their carrying
value may not be fully recoverable (and at least annually for goodwill), non-financial instruments are assessed for
impairment and, if applicable, written down to and recorded at fair value. See Note 5. Intangible Assets and Goodwill for
further discussion and presentation of these amounts.
Cash and Cash Equivalents
We consider all amounts on deposit with financial institutions and highly liquid investments with an original
maturity of three months or less at the time of purchase to be cash equivalents. Cash and cash equivalents consist
primarily of short-term money market instruments and demand deposits with insignificant interest rate risk.
In some instances, we invest excess cash in money market funds not insured by the Federal Deposit Insurance
Corporation. The investments in money market funds are on deposit with credit-worthy financial institutions and the
funds are highly liquid. These investments are reported at fair value and included in cash and cash equivalents.
We classify investments with stated maturities of greater than three months at time of purchase in other current
assets on the Consolidated Balance Sheets.
Concentrations of Credit Risk
Financial instruments with potential credit risk include cash and cash equivalents and trade accounts receivable.
To preserve capital and maintain liquidity, we invest with financial institutions we deem to be of high quality and sound
financial condition. Our investments are in low-risk instruments, and we limit our credit exposure in any one institution
or type of investment instrument based upon criteria, including creditworthiness.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
61
Allowance for Credit Losses
We evaluate collection risk and establish expected credit loss primarily through a combination of the following:
continuous monitoring of customer credit, analysis of historical aging and credit loss experience, current economic
conditions, and customer specific information.
Our standard payment terms are net 30 days. Certain large volume customers have longer payment terms.
Generally, we do not require collateral from customers.
Inventories
We value inventories at the lower of cost or net realizable value, computed on a first-in, first-out basis. General
market conditions, as well as our design activities, can cause certain products to become obsolete and we adjust our
inventory carrying value for estimated excess and obsolescence equal to the difference between the cost of inventory and
the estimated net realizable value based on projected end-user demand, which is determined by considering historical
usage, customer orders and forecast, and qualitative considerations such as market and economic conditions. The
determination of projected end-user demand requires the use of estimates and assumptions related to projected unit sales
for each product. Demand for our products can fluctuate significantly. A significant decrease in demand could result in
an increase in the charges for excess inventory quantities on hand.
Property and Equipment
Property and equipment are stated at cost or estimated fair value if acquired in a business combination. We
compute depreciation over the estimated useful lives using the straight-line method. Additions and improvements are
capitalized, while maintenance and repairs are expensed as incurred. We evaluate the useful life and test for impairment
whenever events or changes in circumstances indicate the carrying amount of an asset group containing the property and
equipment may not be recoverable.
When depreciable assets are retired, or otherwise disposed of, the cost and related accumulated depreciation are
removed from the accounts, and any related gains or losses are included in other income (expense), net, in our
Consolidated Statements of Operations.
Internal-Use Software Development Costs
We capitalize qualifying costs associated with software applications developed for internal use. We begin
capitalization after meeting two criteria: (i) the preliminary project stage is completed and (ii) it is probable that the
software will be completed and used for its intended function. We also capitalize costs related to specific upgrades and
enhancements when it is probable the expenditures will result in significant additional functionality. We cease
capitalization when the software is substantially complete and ready for its intended use, including the completion of all
significant testing.
Costs related to preliminary project activities, post-implementation operating activities, maintenance, and minor
upgrades are expensed as incurred.
We classify capitalized software development costs within property and equipment, net and other assets on the
Consolidated Balance Sheets. These costs are amortized on a straight-line basis over the software’s estimated useful life.
Amortization is included in both cost of revenue and operating expenses. We evaluate the useful life and test for
impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
62
Leases
We lease manufacturing and office space under non-cancelable operating leases. Some of these leases contain
provisions for landlord funded leasehold improvements, which we record as a reduction to right-of-use (“ROU”) assets
and the related operating lease liabilities. Our lease agreements generally contain lease and non-lease components, and
we combine fixed payments for non-lease components with lease payments and account for them together as a single
lease component. Certain lease agreements may contain variable payments, which are expensed as incurred and not
included in the right-of-use lease assets and operating lease liabilities. When renewal options are reasonably certain of
exercise, we include the renewal period in the lease term. In many cases, we have leases with a term of less than one
year. We elected the practical expedient to exclude these short-term leases from our ROU assets and operating lease
liabilities. On an ongoing basis, we negotiate and execute new leases to meet business objectives.
Right-of-use assets and operating lease liabilities are recognized at the present value of the future lease
payments on the lease commencement date. The interest rate used to determine the present value of the future lease
payments is our incremental borrowing rate because the interest rate implicit in our leases is not readily determinable.
Our incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms
and payments. We have a centrally managed treasury function; therefore, we apply a portfolio approach for determining
the incremental borrowing rate applicable to the lease term. Operating lease expense is recognized on a straight-line
basis over the lease term.
We evaluate the useful life and test for impairment whenever events or changes in circumstances indicate the
carrying amount of an asset group containing the right-of-use assets may not be recoverable.
Intangible Assets and Goodwill
Our intangible assets consist of customer relationships, developed technology, trademarks, patents, and
intellectual property, which are stated at cost less accumulated amortization. Intangible assets, which are considered
long-lived assets, are amortized over their estimated useful lives and reviewed for impairment when events or changes in
circumstances indicate that the carrying amount of an asset group containing these assets may not be recoverable.
Goodwill represents the excess of the purchase price over the fair value of the identifiable net assets acquired in
a business combination. We evaluate goodwill for impairment as a single reporting unit annually during the fourth
quarter or when events or changes in circumstances indicate the carrying value may not be recoverable.
Our goodwill impairment evaluation consists of a qualitative assessment. If this assessment indicates it is more
likely than not that the Company’s estimated fair value exceeds the carrying value of our net assets, we do not consider
goodwill to be impaired. Otherwise, we perform a quantitative assessment by comparing the Company’s fair value to the
carrying value of our net assets, including goodwill. If the carrying value of our net assets exceeds the fair value, we
consider goodwill to be impaired.
Based on the facts and circumstances, we determine the fair value based on an income, market, or cost
approach. Each method is subjective in nature and involves the use of significant estimates and assumptions, which can
include projected financial results, discount rates, long-term growth rates, and industry trends.
We determined that there were no indicators of impairment of our long-lived intangible assets or goodwill
during the year ended December 31, 2025.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
63
Debt Issuance Costs
We capitalize costs associated with issuing debt. Depending on the nature of the agreement, we record these
costs on the Consolidated Balance Sheets either in other assets or as a direct deduction from the carrying amount of the
debt. We amortize the costs over the term of the agreement using the effective interest method. Amortization expense is
reflected within interest expense on the Consolidated Statements of Operations. See Note 7. Long-Term Debt for
additional details.
Revenue Recognition
Net revenue consists of products and support services.
We recognize substantially all revenue at a point in time when we satisfy our performance obligations.
Typically, this occurs on shipment of goods because, at that point, we transfer control to our customer. The transaction
price is based upon the standalone selling price. In most transactions, we have no obligations to our customers after the
date products are shipped, other than pursuant to warranty obligations. We recognize revenue net of any taxes collected
from customers, which are subsequently remitted to governmental authorities. Surcharges, cost recoveries, and shipping
and handling fees billed to customers, if any, are recognized as revenue. The related cost for shipping and handling fees
is recognized in cost of revenue.
Support services include warranty and non-warranty repair services, upgrades, and refurbishments on the
products we sell. Repairs covered under our standard warranty do not generate revenue. We recognize substantially all
non-warranty revenue upon completion of the service because that is the point in time when we satisfy our performance
obligation.
As part of our ongoing service business, we satisfy our service obligations under preventative maintenance
contracts and extended warranties. Up-front fees received for extended warranties or maintenance plans are deferred and
recorded in customer deposits and other on the Consolidated Balance Sheets. Revenue under these arrangements is
recognized ratably over the underlying terms, as we do not have historical information that would allow us to project the
estimated service usage pattern at this time.
We expense the incremental costs of obtaining contracts when the amortization period of the costs is less than
one year. These costs are included in selling, general, and administrative expenses in our Consolidated Statements of
Operations.
Our remaining performance obligations primarily relate to customer purchase orders for products we have not
yet shipped. We expect to fulfill the majority of these performance obligations within one year.
Research and Development Expenses
Costs incurred to advance, test, or otherwise modify our technology or develop new technologies are considered
research and development costs and are expensed when incurred. These costs are primarily comprised of costs associated
with the operation of our laboratories and research facilities, including internal labor, materials, and overhead.
Stock-Based Compensation
Accounting for stock-based compensation requires the measurement and recognition of compensation expense
for all stock-based awards made to employees and directors based on estimated fair value at the grant date.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
64
We estimate the fair value of restricted stock units (“RSUs”) on the grant date. For RSUs that contain a time-
based and certain performance-based vesting condition, we calculate fair value using the closing share price on the grant
date.
We record stock-based compensation expense for awards with time-based vesting conditions on a straight-line
basis over the requisite service period. For awards with a performance-based vesting condition, we record stock-based
compensation expense (based on our assessment of the probability of meeting the performance conditions) over the
estimated period to achieve the performance conditions. If the awards are forfeited, we reverse the stock-based
compensation expense.
Certain RSUs vest based on a market condition. Our stock-based compensation expense is based on an estimate
of the fair value and probability of achievement for each tranche of these awards using a Monte Carlo simulation. For
these RSUs, we recognize stock-based compensation expense over each tranche’s estimated achievement period even if
some or all of the shares never vest.
For all stock awards, we estimate forfeitures at the grant date and revise those estimates in subsequent periods if
actual forfeitures differ from our estimates.
Income Taxes
We follow the liability method of accounting for income taxes under which deferred tax assets and liabilities
are recognized for future tax consequences. A deferred tax asset or liability is computed for both the expected future
impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future
tax benefit to be derived from tax loss and tax credit carryforwards. Tax rate changes are reflected in the period such
changes are enacted.
We assess the recoverability of our net deferred tax assets and the need for a valuation allowance on a quarterly
basis. Our assessment includes several factors, including historical results and taxable income projections for each
jurisdiction. The ultimate realization of deferred income tax assets is dependent on the generation of taxable income in
appropriate jurisdictions during the periods in which those temporary differences are deductible. We consider the
scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in
determining the amount of the valuation allowance. Based on the level of historical taxable income and projections for
future taxable income over the periods in which the deferred income tax assets are deductible, we determine if we will
more likely than not realize the benefits of these deductible differences.
Accounting for income taxes requires a two-step approach to recognize and measure uncertain tax positions.
The first step is to evaluate the tax position for recognition by determining, if based on the technical merits, it is more
likely than not that the position will be sustained upon audit, including resolutions of related appeals or litigation
processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of
being realized upon ultimate settlement. We regularly assess the likelihood of favorable or unfavorable outcomes
resulting from these examinations to determine the adequacy of our provision for income taxes. This evaluation is based
on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues
under audit, and new audit activity.
Under U.S. GAAP, an accounting policy election can be made to either recognize deferred taxes for temporary
basis differences expected to reverse as global intangible low-tax income (“GILTI”) in future years, or to provide for the
tax expense related to GILTI in the year that the tax is incurred as a period expense only. We have elected to account for
GILTI in the year that the tax is incurred.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
65
Commitments and Contingencies
We are involved in disputes and legal actions arising in the normal course of our business. While we currently
believe that the amount of any ultimate loss would not be material to our financial position, the outcome of these actions
is inherently difficult to predict. In the event of an adverse outcome, the ultimate loss could have a material adverse
effect on our financial position or reported results of operations. An unfavorable decision in intellectual property
litigation also could require material changes in production processes and products or result in our inability to ship
products or components found to have violated third party intellectual property rights. We accrue loss contingencies in
connection with our commitments and contingencies, including litigation, when it is probable that a loss has occurred,
and the amount of such loss can be reasonably estimated. We are not currently a party to any legal action that we believe
would reasonably have a material adverse impact on our business, financial condition, results of operations or cash
flows.
New Accounting Standards
From time to time, the Financial Accounting Standards Board (“FASB”) or other standards setting bodies issue
new accounting pronouncements. Updates to the FASB Accounting Standards Codification (“ASC”) are communicated
through issuance of an Accounting Standards Update (“ASU”). Unless otherwise discussed, we believe that the impact
of recently issued guidance, whether adopted or to be adopted in the future, will not have a material impact on the
consolidated financial statements upon adoption.
New Accounting Standards Adopted
In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax
Disclosures.” ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate
reconciliation as well as additional disclosure on income taxes paid. We adopted this guidance for the year ending
December 31, 2025 and have provided the required disclosures. See Note 14. Income Taxes.
New Accounting Standards Issued But Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03 “Income Statement—Reporting Comprehensive Income—
Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” ASU 2024-03
requires disaggregated disclosure of income statement expenses for public business entities. The ASU does not change
the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain
expense captions into specified categories in disclosures within the footnotes to the financial statements. This guidance
will be effective for us on January 1, 2027. We do not expect the above guidance to materially impact our consolidated
financial statements.
In July 2025, the FASB issued ASU 2025-05 “Financial Instruments - Credit Losses (Topic 326):
Measurement of Credit Losses for Accounts Receivable and Contract Assets.” ASU 2025-05 permits the use of certain
estimates and assumptions in developing forecasts used for determining expected credit losses on accounts receivable.
This guidance will be effective for us on January 1, 2026. We do not expect the above guidance to materially impact our
consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06 “Intangibles – Goodwill and Other - Internal-Use Software
(Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software.” ASU 2025-06 eliminates the
consideration of project development stages in determining whether a cost is eligible for capitalization. Instead, cost
capitalization will be based on a “probable to complete” threshold. This guidance will be effective for us on January 1,
2028. We are evaluating the impact, if any, that the adoption of ASU 2025-06 may have on our consolidated financial
statements.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
66
NOTE 2. ACQUISITION
On June 20, 2024, we acquired 100% of the issued and outstanding shares of capital stock of Airity
Technologies, Inc. (“Airity”). We accounted for this transaction as a business combination. This acquisition added high
voltage power conversion technologies and products, broadening our range of targeted applications within the
Semiconductor Equipment and Industrial and Medical markets.
The following table summarizes the consideration paid:
Consideration
(in millions)
Cash paid at closing
$
14.3
Advanced Energy common stock
4.5
Settlement of payables
(0.7)
Indemnity holdback payable on the one-year anniversary
1.5
Total fair value of purchase consideration
$
19.6
We allocated the purchase price consideration to the assets acquired and liabilities assumed based on their
estimated fair values as of the acquisition date, with the excess allocated to goodwill. The following represents the final
purchase price allocation.
Fair Value
(in millions)
Cash
$
0.5
Current assets and liabilities, net
0.5
Deferred tax liability
(1.7)
Intangible assets
4.2
Goodwill (not deductible for tax purposes)
16.1
Total fair value of net assets acquired
$
19.6
We included Airity’s results of operations in our consolidated financial statements from the date of acquisition,
which were not material.
In connection with the acquisition, we entered into agreements with certain former Airity employees. On the
closing date, these individuals received a total of 0.1 million shares of Advanced Energy common stock valued at $15.6
million based on the June 20, 2024 closing price, of which $4.5 million was allocated to purchase consideration and
$11.1 million will be future compensation. We will record the $11.1 million as stock-based compensation expense over
the three-year expected vesting period. See Note 13. Stock-based Compensation.
During 2025, we paid $1.5 million in connection with the release of the indemnity holdback. See our
Consolidated Statements of Cash Flows.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
67
NOTE 3. REVENUE
Disaggregation of Revenue
The following tables present additional information regarding our revenue:
Revenue by Market
Years Ended December 31,
2025
2024
2023
(in millions)
Semiconductor Equipment
$
839.9 $
792.5 $
743.8
Data Center Computing
587.3
284.2
249.9
Industrial and Medical
282.3
316.2
474.4
Telecom and Networking
89.3
89.1
187.7
Total
$ 1,798.8 $ 1,482.0 $ 1,655.8
Revenue by Significant Countries
Years Ended December 31,
2025
2024
2023
(in millions)
United States
$ 541.4
30.1 % $ 508.7
34.3 % $ 598.4
36.1 %
Mexico
252.8
14.1
160.1
10.8
123.5
7.5
Taiwan
130.2
7.2
159.6
10.8
124.2
7.5
Japan
218.2
12.1
53.6
3.6
62.5
3.8
All others
656.2
36.5
600.0
40.5
747.2
45.1
Total
$ 1,798.8 100.0 % $ 1,482.0 100.0 % $ 1,655.8 100.0 %
We attribute revenue to individual countries and regions based on the customer’s ship to location. Aside from
the specific countries listed above, no individual country exceeded 10% of our total consolidated revenues during the
periods presented.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
68
Revenue by Category
Years Ended December 31,
2025
2024
2023
(in millions)
Product
$ 1,614.9
$ 1,315.7
$ 1,484.0
Services and other
183.9
166.3
171.8
Total
$ 1,798.8 $ 1,482.0 $ 1,655.8
Other revenue includes certain spare parts and products sold by our service group.
Significant Customers
During the year ended December 31, 2025, three customers accounted for 23%, 19%, and 12% of our total
revenue, respectively. During the year ended December 31, 2024, two customers accounted for 26% and 11% of our
total revenue, respectively. During the year ended December 31, 2023, one customer accounted for 22% of our total
revenue.
As of December 31, 2025, the account receivable balance from three customers accounted for 26%, 10%, and
20%, respectively, of our total accounts receivable. During the year ended December 31, 2024, two customers accounted
for 25% and 14%, respectively, of our total accounts receivable. No other customer’s account receivable exceeded 10%
of our total accounts receivable in the periods presented.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
69
NOTE 4. BALANCE SHEET INFORMATION
Accounts Receivable, Net
We record accounts receivable at net realizable value. Our accounts receivable, net balance on the Consolidated
Balance Sheets was $325.2 million at December 31, 2025. The following table summarizes the changes in expected
credit losses related to receivables:
Years Ended December 31,
2025
2024
2023
(in millions)
Balance at beginning of period
$
0.9 $
1.7 $
1.8
Additions
—
0.1
0.2
Deductions - write-offs and other adjustments
(0.3)
(0.9)
(0.3)
Balance at end of period
$
0.6 $
0.9 $
1.7
Inventories
We value inventories at the lower of cost or net realizable value, computed on a first-in, first-out basis.
Components of inventories were as follows:
December 31,
2025
2024
(in millions)
Parts and raw materials
$
313.6
$
255.1
Work in process
27.3
20.6
Finished goods
70.3
84.7
Total
$
411.2
$
360.4
Property and Equipment, Net
Property and equipment, net increased $87.2 million due to continued investment in our new ERP system,
expanding capacity in our existing factories, and our new factory in Thailand. Property and equipment, net is comprised
of the following:
Estimated Useful
December 31,
December 31,
Life (in years)
2025
2024
(in millions)
Buildings, machinery, and equipment
5 to 25
$
241.4 $
196.6
Software
3 to 10
40.7
35.6
Computer equipment, furniture, fixtures, and vehicles
3 to 5
31.0
26.0
Leasehold improvements
2 to 10
101.0
93.0
Capital projects in process
82.5
35.4
496.6
386.6
Less: Accumulated depreciation
(223.8)
(201.0)
Property and equipment, net
$
272.8 $
185.6
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
70
The following table summarizes property and equipment, net by geographic area:
December 31,
2025
2024
(in millions)
United States
$
107.6
$
83.8
Asia
146.4
87.8
Europe and other
18.8
14.0
Total
$
272.8
$
185.6
The following table summarizes depreciation expense. All depreciation expense is recorded in income from
continuing operations:
Years Ended December 31,
2025
2024
2023
(in millions)
Depreciation expense
$ 39.8 $ 42.5 $ 38.3
Warranties
Our sales agreements include customary product warranty provisions, which generally range from 12 to 36
months after shipment. We record the estimated warranty obligations cost when we recognize revenue. This estimate is
based on historical experience by product.
Our estimated warranty obligation is included in other accrued expenses in our Consolidated Balance Sheets. Changes in
our product warranty obligation were as follows:
Years Ended December 31,
2025
2024
(in millions)
Balance at beginning of period
$
5.7 $
4.0
Net increases to accruals
4.4
3.6
Warranty expenditures
(2.8)
(2.0)
Effect of changes in exchange rates
(0.1)
0.1
Balance at end of period
$
7.2 $
5.7
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
71
NOTE 5. INTANGIBLE ASSETS AND GOODWILL
Intangible assets consisted of the following:
December 31, 2025
Gross Carrying Accumulated Net Carrying Weighted Average Remaining
Amount
Amortization
Amount
Useful Life (in years)
(in millions)
Technology
$
101.8 $
(78.2) $
23.6
6.6
Customer relationships
171.4
(86.3)
85.1
7.7
Trademarks and other
27.3
(18.3)
9.0
3.6
Total
$
300.5 $
(182.8) $
117.7
7.2
December 31, 2024
Gross Carrying Accumulated Net Carrying Weighted Average Remaining
Amount
Amortization
Amount
Useful Life (in years)
(in millions)
Technology
$
99.9 $
(70.0) $
29.9
7.0
Customer relationships
168.9
(70.9)
98.0
8.5
Trademarks and other
27.1
(15.6)
11.5
4.6
Total
$
295.9 $
(156.5) $
139.4
7.9
Amortization expense related to intangible assets was as follows:
Years Ended December 31,
2025
2024
2023
(in millions)
Amortization expense
$
22.1 $
26.0 $
28.3
Estimated future amortization expense related to intangibles is as follows:
Year Ending December 31,
(in millions)
2026
$
20.1
2027
17.8
2028
16.6
2029
15.0
2030
13.4
Thereafter
34.8
Total
$
117.7
The following table summarizes the changes in goodwill:
December 31,
December 31,
2025
2024
(in millions)
Balance at beginning of period
$
296.0
$
283.8
Additions from acquisition
—
16.1
Foreign currency translation and other
4.8
(3.9)
Balance at end of period
$
300.8
$
296.0
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
72
NOTE 6.
LEASES
Components of total operating lease cost were as follows:
Years Ended December 31,
2025
2024
2023
(in millions)
Operating lease cost
$
25.7 $
23.8 $
22.6
Short-term and variable lease cost
5.7
3.1
4.2
Total operating lease cost
$
31.4 $
26.9 $
26.8
Estimated future payments on our operating lease liabilities are as follows:
Year Ending December 31,
(in millions)
2026
$
22.9
2027
19.7
2028
19.4
2029
16.1
2030
14.6
Thereafter
54.4
Total lease payments
147.1
Less: Interest
(35.6)
Present value of lease liabilities
$
111.5
In addition to the above, we have a lease agreement with total payments of $6.4 million that commences in the
first quarter of 2026 and extends through 2035.
The following tables present additional information about our lease agreements:
December 31,
December 31,
2025
2024
Weighted average remaining lease term (in years)
8.2
8.4
Weighted average discount rate
6.4 %
6.1 %
Years Ended December 31,
2025
2024
2023
(in millions)
Cash paid for operating leases
$
26.8
$
23.7
$
23.0
Right-of-use assets obtained in exchange for operating lease liabilities
$
19.7 $
41.1 $
14.3
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
73
NOTE 7. LONG-TERM DEBT
Long-term debt on our Consolidated Balance Sheets consists of the following:
December 31,
December 31,
2025
2024
(in millions)
Convertible Notes due 2028, 2.5% interest
$
575.0
$
575.0
Less: debt discount
(7.5)
(10.3)
Net long-term debt
567.5
564.7
Less: current maturities
(567.5)
—
Net long-term debt
$
—
$
564.7
For all periods presented, we were in compliance with the covenants under all debt agreements. As of
December 31, 2025, our common stock traded above the conversion price for at least 20 trading days during a 30
consecutive trading-day period, which resulted in the Convertible Notes becoming convertible at the option of the
holders. Accordingly, the Convertible Notes balance was reclassified from long-term to current debt as of December 31,
2025. We reassess the classification of the Convertible Notes at each quarterly reporting period, considering the trading
price of our common stock relative to the conversion criteria. Exclusive of any early conversion elections by the
convertible noteholders, there are no scheduled debt maturities until 2028
The following table summarizes interest expense related to our debt:
Years Ended December 31,
2025
2024
2023
(in millions)
Interest expense
$
13.6 $
22.0 $
15.2
Amortization of debt issuance costs
3.1
3.2
1.3
Total interest expense related to debt
$
16.7 $
25.2 $
16.5
Credit Agreement
On May 8, 2025, we terminated our prior credit agreement, dated as of September 10, 2019 (and subsequently
amended) and entered into a new credit agreement (the “Credit Agreement”) consisting of a senior unsecured term loan
facility (“Term Loan Facility”) and a senior unsecured revolving facility (“Revolving Facility”), both maturing on
May 8, 2030. The maturity date may be accelerated to the date that is 91 days prior to the maturity date of our $575.0
million aggregate principal amount of 2.50% convertible senior notes due September 15, 2028 (the “Convertible
Notes”), if the sum of our consolidated cash and cash equivalents plus the undrawn balance on the Revolving Facility is
less than 120% of the redemption amount of the Convertible Notes.
The financing terms of the new Credit Agreement are substantially the same as the terms of the prior credit
agreement. As part of the new credit facility, HSBC Bank USA, N.A. (“HSBC”) was appointed as the administrative
agent for the lender group.
In connection with the Credit Agreement, we paid $1.9 million in lender and professional fees, which were
capitalized and will be amortized over the term of the Credit Agreement.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
74
At the time of termination, no borrowings were outstanding under the prior credit agreement, and there have
been no borrowings under the Credit Agreement to date. As of December 31, 2025, we had $600.0 million available on
the Revolving Facility.
December 31,
December 31,
2025
2024
(in millions)
Available capacity on Revolving Facility
$
600.0
$
600.0
In addition to our 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.
Should we have future borrowings under the Term Loan Facility or Revolving Facility, they will bear interest,
at our option, at a rate based on the Base Rate or SOFR, as defined in the Credit Agreement, plus an applicable margin.
Convertible Senior Notes due 2028
On September 12, 2023, we completed a private, unregistered offering of the Convertible Notes. The remaining
outstanding principal amount of the Convertible Notes, amounting to $567.5 million, net of unamortized issuance costs,
was classified as current as of December 31, 2025. Pursuant to the indenture governing the Convertible Notes, because
the last reported sale price of the Company’s common stock for at least 20 trading days during the period
of 30 consecutive trading days ending on December 31, 2025 was greater than or equal to $179.76 on each applicable
trading day, the holders have the right to surrender any portion of their Convertible Notes (in minimum denominations of
$1,000 in principal amount or an integral multiple thereof) for conversion during the calendar quarter ending March 31,
2026, and only during such calendar quarter.
The Convertible Notes mature on September 15, 2028, unless earlier repurchased, redeemed, or converted.
Interest is payable semi-annually in arrears in March and September. We do not maintain a sinking fund.
We may redeem for cash all or any portion of the Convertible Notes, at our option, on or after September 20,
2026 if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for
at least 20 trading days (whether or not consecutive) during any 30 consecutive trading-day period (including the last
trading day of such period). The redemption price is 100% of the principal amount plus accrued and unpaid interest.
Prior to May 15, 2028, holders have the option to convert all or a portion of their Convertible Notes under the
following circumstances:
•
during any calendar quarter if the last reported sale price of our common stock, for at least 20 trading
days (whether or not consecutive) during a period of 30 consecutive trading days is greater than or
equal to 130% of the conversion price on each applicable trading day;
•
during the five business day period immediately after any five consecutive trading day period in which
the trading price per $1,000 principal amount of the Convertible Notes for each trading day was less
than 98% of the product of the last reported sale price of our common stock on each such trading day
and the conversion rate on each such trading day;
•
if Advanced Energy calls any or all of the Convertible Notes for redemption; or
•
upon the occurrence of specified corporate transactions or events described in the indenture.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
75
From May 15, 2028 through the maturity date, holders have the option to convert at any time regardless of
circumstances.
The initial conversion rate is 7.2747 shares of common stock per $1,000 principal amount, which is equivalent
to an initial conversion price of approximately $137.46 per share of common stock. The conversion rate is subject to
adjustment upon the occurrence of certain specified events as set forth in the indenture.
Upon conversion, Advanced Energy will do the following:
•
pay cash up to the aggregate principal amount to be converted; and
•
pay or deliver cash, shares of our common stock, or a combination (at our election) with respect to the
remainder, if any, of the conversion obligation in excess of the aggregate principal amount being
converted.
Concurrent with the Convertible Notes issuance, we entered into hedges (“Note Hedges”) with respect to our
common stock and sold warrants to purchase our common stock (“Warrants”). In combination, the Note Hedges and
Warrants synthetically increase the initial conversion price on the Convertible Notes from $137.46 to $179.76, reducing
the potential dilutive effect.
The Warrants provide the counterparties the option to acquire approximately 4.2 million aggregate shares of our
common stock (subject to customary anti-dilution adjustments), which is the same number of shares of our common
stock covered by the Note Hedges at a $179.76 per share initial exercise price, which represents a 70% premium over the
$105.74 closing price of our common stock on September 7, 2023. The Warrants expire on July 7, 2029.
If the market value per share of our common stock exceeds the exercise price of the Warrants during the
measurement period at the maturity of such Warrants, the Warrants will have a dilutive effect on our earnings per share
as we will owe the counterparties a number of shares of common stock in an amount based on the excess of such market
price per share of the common stock over the Warrants’ exercise price.
The Note Hedge and Warrants are separate from the Convertible Notes. The Convertible Notes holders have no
rights with respect to the Note Hedges and Warrants. Counterparties in the Note Hedge and Warrants transactions have
no rights with respect to the Convertible Notes.
We use level 2 measurements to estimate the fair value of our debt. As of December 31, 2025 and 2024, we
estimated the fair value of our Convertible Notes to be $951.1 million and $624.6 million, respectively.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
76
NOTE 8. STOCKHOLDERS’ EQUITY AND EARNINGS PER SHARE
Accumulated Other Comprehensive Income (Loss)
The following table summarizes the components of, and changes in, accumulated other comprehensive income
(loss), net of income taxes.
Foreign
Currency
Translation
Change in
Fair Value
of Cash
Flow
Hedges
Defined
Employee
Benefit Plan
Total
(in millions)
Balance at December 31, 2022
$
(12.8) $
11.8 $
17.3 $
16.3
Other comprehensive income (loss) prior to
reclassifications
2.0
4.6
(5.5)
1.1
Amounts reclassified from accumulated other
comprehensive income
—
(10.9)
(0.4)
(11.3)
Balance at December 31, 2023
$
(10.8) $
5.5 $
11.4 $
6.1
Other comprehensive income (loss) prior to
reclassifications
(13.1)
2.2
(0.7)
(11.6)
Amounts reclassified from accumulated other
comprehensive loss
1.6
(7.7)
(0.2)
(6.3)
Balance at December 31, 2024
$
(22.3) $
— $
10.5 $
(11.8)
Other comprehensive income (loss) prior to
reclassifications
15.1
—
—
15.1
Amounts reclassified from accumulated other
comprehensive income (loss)
0.1
—
2.8
2.9
Balance at December 31, 2025
$
(7.1) $
— $
13.3 $
6.2
Amounts reclassified from accumulated other comprehensive income (loss) to the specific caption within the
Consolidated Statements of Operations were as follows:
Years Ended December 31,
To Caption on Consolidated
2025
2024
2023
Statements of Operations
(in millions)
Foreign currency translation
$
(0.1) $
(1.6) $
— Other income (expense), net
Cash flow hedges
—
7.7
10.9 Interest expense
Defined employee benefit plan
(2.8)
0.2
0.4 Other income (expense), net
Total reclassifications
$
(2.9) $
6.3 $
11.3
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
77
Earnings Per Share
The following table summarizes our earnings per share (“EPS”):
Years Ended December 31,
2025
2024
2023
(in millions, except per share amounts)
Income from continuing operations
$ 149.3 $ 56.3 $ 130.8
Basic weighted-average common shares outstanding
37.6
37.5
37.5
Dilutive effect of Convertible Notes
0.4
—
—
Dilutive effect of Warrants
0.1
—
—
Dilutive effect of stock awards
0.5
0.3
0.3
Diluted weighted-average common shares outstanding
38.6
37.8
37.8
EPS from continuing operations
Basic EPS
$ 3.97 $ 1.50 $
3.49
Diluted EPS
$ 3.87 $ 1.49 $
3.46
Anti-dilutive shares not included above
Warrants
1.5
3.0
3.5
Anti-dilutive stock awards rounded to zero for the periods presented.
We compute basic earnings per share of common stock (“Basic EPS”) by dividing income available to common
stockholders by the weighted-average number of common shares outstanding during the period.
See Note 7. Long-Term Debt for information regarding our Convertible Notes, Note Hedges, and Warrants. For
diluted earnings per share of common stock (“Diluted EPS”), we increase the weighted-average number of common
shares outstanding during the period, as needed, to include the following:
•
Additional common shares that would have been outstanding if our outstanding stock awards had been
converted to common shares using the treasury stock method. We exclude any stock awards that have
an anti-dilutive effect;
•
Dilutive impact associated with the Convertible Notes using the if-converted method. The Convertible
Notes are repayable in cash up to par value and in cash or shares of common stock for the excess over
par value. When the stock price is lower than the strike price, there is no dilutive or anti-dilutive
impact. When the stock price is higher than the initial strike price, there is a dilutive impact associated
with the Convertible Notes. Prior to conversion, we do not consider the Note Hedges for purposes of
Diluted EPS as their effect would be anti-dilutive. Upon conversion, we expect the Note Hedges to
offset the dilutive effect of the Convertible Notes when the stock price is above $137.46 but below
$179.76; and
•
Dilutive effect of the Warrants issued concurrently with the Convertible Notes using the treasury stock
method. For the fourth quarter of 2025, the Warrants increased the weighted-average number of
common shares outstanding because the average market price of our common stock exceeded the
$179.76 exercise price of the Warrants.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
78
Share Repurchases
To repurchase shares of our common stock, we periodically enter into share repurchase agreements. The
following table summarizes these repurchases:
Years Ended December 31,
2025
2024
2023
(in millions, except per share amounts)
Amount paid or accrued to repurchase shares
$
30.4
$
1.8 $
40.1
Number of shares repurchased
0.3
—
0.4
Average repurchase price per share
$
96.79
$
93.58 $ 105.74
There were no shares repurchased from related parties. Repurchased shares were retired and assumed the status
of authorized and unissued shares. At December 31, 2025, we had $0.2 million accrued in other accrued expenses in our
Consolidated Balance Sheets for share repurchases.
At December 31, 2025, the remaining amount authorized by the Board of Directors (“our Board” or “the
Board”) for future share repurchases was $166.9 million with no time limitation.
NOTE 9. FAIR VALUE MEASUREMENTS
Refer to Note 12. Employee Retirement Plans and Post Retirement Benefits for information on fair value of our
pension asset and liabilities. The following tables present information about our non-pension assets and liabilities
measured at fair value on a recurring basis. We classify all items below within level 2 of the fair value hierarchy. See
Note 7. Long-Term Debt for information regarding the fair value of our Convertible Notes.
December 31,
December 31,
2025
2024
Description
Balance Sheet Classification
(in millions)
Certificates of deposit
Other current assets
$
0.2
$
0.2
Foreign currency forward contracts
Other accrued expenses
$
0.1
$
0.3
Investments
Other assets
$
13.5
$
9.9
Deferred compensation liabilities
Other liabilities
$
13.4
$
10.1
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
79
NOTE 10. DERIVATIVE FINANCIAL INSTRUMENTS
Changes in foreign currency exchange rates impact our results of operations and cash flows. We may manage
these risks through the use of derivative financial instruments, primarily forward contracts with banks. These forward
contracts manage the exchange rate risk associated with assets and liabilities denominated in nonfunctional currencies.
Typically, we execute these derivative instruments for one-month periods and do not designate them as hedges for
accounting purposes; however, they do partially offset the economic fluctuations of certain of our assets and liabilities
due to foreign exchange rate changes.
The gains and losses related to these foreign currency exchange contracts are intended to offset the
corresponding gains and losses on the revaluation of the underlying assets and liabilities. Both are included as a
component of other income (expense), net in our Consolidated Statements of Operations.
As of December 31, 2025 and 2024, we had $60.5 million and $70.6 million, respectively, of foreign currency
forward contracts outstanding.
See Note 9. Fair Value Measurements for information regarding the fair value of derivative instruments.
As a result of using derivative financial instruments, we are exposed to the risk that counterparties to contracts
could fail to meet their contractual obligations. We manage this credit risk by reviewing counterparty creditworthiness
on a regular basis and limiting exposure to any single counterparty.
NOTE 11. RESTRUCTURING, ASSET IMPAIRMENTS, AND OTHER CHARGES
Details of restructuring, asset impairments, and other charges are as follows:
Years Ended December 31,
2025
2024
2023
(in millions)
Restructuring
$
6.3 $
28.1 $
25.1
Asset impairments
1.8
—
1.4
Other charges
4.4
2.2
0.5
Total restructuring, asset impairments, and other charges
$
12.5 $
30.3 $
27.0
Restructuring
We have several restructuring plans in process. The amounts incurred as a result of the approved actions are
estimates, and actual results may differ, which could result in incremental restructuring charges in future periods.
2025 Plan
During the second quarter of 2025, we approved actions related to consolidating our research and development,
sales, and administrative functions in connection with our manufacturing and footprint consolidation (the “2025 Plan”).
We expect these actions to be substantially complete during 2027 and do not expect to incur significant additional
charges.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
80
2024 Plan
In 2024, we approved actions in furtherance of our manufacturing consolidation initiatives intended to optimize
our manufacturing footprint and cost structure, including the closure of our Zhongshan, China manufacturing facility
(the “2024 Plan”). Manufacturing operations in Zhongshan ceased during the second quarter of 2025. Final closure
activities are in progress and expected to conclude in 2026. We do not expect to incur significant additional charges.
2023 Plan
In 2023, we approved a plan intended to optimize and further consolidate our manufacturing operations and
functional support groups as well as a general reduction-in-force to align our expenses to revenue levels (the “2023
Plan”). We expect final activities to conclude in the first quarter of 2027 and do not expect to incur significant additional
charges.
2022 Plan
This plan was approved to improve our operating efficiencies and drive the realization of synergies from our
business combinations by consolidating our operations, optimizing our factory footprint, including moving certain
production into our higher volume factories, reducing redundancies, and lowering our cost structure. The 2022 Plan is
now complete.
Changes in restructuring liabilities were as follows:
2025 Plan 2024 Plan 2023 Plan
2022 &
Other
Plans
Total
(in millions)
December 31, 2023
$
— $
— $ 14.2 $
3.1 $
17.3
Costs incurred and charged to expense
—
29.6
(1.6)
0.1
28.1
Costs paid
—
(5.1)
(7.6)
(3.2) (15.9)
Foreign currency translation
—
0.5
—
-
0.5
December 31, 2024
—
25.0
5.0
(0.0)
30.0
Costs incurred and charged to expense
4.7
1.1
0.5
—
6.3
Costs paid
(0.2) (22.6)
(2.2)
—
(25.0)
Foreign currency translation
—
(0.1)
(0.1)
—
(0.2)
December 31, 2025
$
4.5
$
3.4
$
3.2
$
(0.0) $
11.1
The above restructuring liability of $11.1 million is comprised of $6.3 million in other accrued expenses and
$4.8 million included in other long-term liabilities on our Consolidated Balance Sheets.
Charges related to our restructuring plans are as follows:
Years Ended December 31,
2025
2024
2023
(in millions)
Severance and related charges
$
6.3 $
28.0 $
25.1
Facility relocation and closure charges
—
0.1
—
Total restructuring charges
$
6.3 $
28.1 $
25.1
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
81
Cumulative Cost Through
December 31, 2025
2025 Plan 2024 Plan 2023 Plan
Total
(in millions)
Severance and related charges
$
4.7
$
30.7
$
15.9
$
51.3
Facility relocation and closure charges
—
0.1
—
0.1
Total restructuring charges
$
4.7
$
30.8
$
15.9
$
51.4
Asset Impairments
During 2025, we recorded $1.8 million of impairment charges in connection with vacating facilities.
Other Charges
Other charges relate to vacating and relocating facilities and personnel transition costs.
NOTE 12. EMPLOYEE RETIREMENT PLANS AND POSTRETIREMENT BENEFITS
Defined Contribution Plans
We have a 401(k) profit-sharing and retirement savings plan covering substantially all full-time
U.S. employees. Participants may defer up to the maximum amount permitted by law. Participants are immediately
vested in both their own contributions and profit-sharing contributions. Profit-sharing contributions, which are
discretionary, are approved by the Board. For all periods presented, we based our profit-sharing contribution on
matching 100% of employee contributions up to 3% of compensation plus an additional match of 50% on the next 2% of
compensation.
During the years ended December 31, 2025, 2024, and 2023, we recognized total defined contribution plan
costs of $5.1 million, $5.0 million, and $5.1 million, respectively.
Defined Benefit Plans
We maintain defined benefit pension plans for certain of our non-U.S. employees in the United Kingdom,
Germany, and Philippines. Each plan is managed locally and in accordance with respective local laws and regulations.
In light of the United Kingdom’s High Court ruling in the case of Virgin Media Ltd v. NTL Pension Trustees II
Ltd & Ors, we reviewed past amendments made to our United Kingdom pension plans. We continue to account for our
United Kingdom pension plans in accordance with the plan agreements and amendments.
To measure the expense and related benefit obligation, we make various assumptions, including discount rates
used to value the obligation, expected return on plan assets used to fund these expenses, and estimated future inflation
rates. We base these assumptions on historical experience as well as current facts and circumstances. We use an actuarial
analysis to measure the expense and liability associated with pension benefits.
The information provided below includes one pension plan which is part of discontinued operations. As such,
for all periods presented, all related expenses are reported in discontinued operations in the Consolidated Statements of
Operations.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
82
Our projected benefit obligation and plan assets for defined benefit pension plans and the related assumptions
used to determine the related liabilities are as follows:
December 31, December 31,
2025
2024
(in millions)
Projected benefit obligation, beginning of year
$
64.3 $
65.7
Service cost
1.5
1.0
Interest cost
3.2
2.8
Actuarial loss (gain)
(2.6)
(0.4)
Benefits paid
(2.8)
(1.9)
Translation adjustment
4.1
(2.9)
Projected benefit obligation, end of year
67.7
64.3
Fair value of plan assets, beginning of year
$
14.0 $
14.1
Expected return
0.8
0.7
Contributions
1.7
1.6
Benefits paid
(1.9)
(1.4)
Actuarial gain (loss)
0.3
(0.6)
Translation adjustment
1.2
(0.4)
Fair value of plan assets, end of year
16.1
14.0
Funded status of plan
$
(51.6) $
(50.3)
December 31, December 31,
2025
2024
(in millions)
Accumulated benefit obligation
$
59.0 $
55.9
The following table summarizes classification of our net pension benefit obligation on our Consolidated
Balance Sheets. The current portion of the liability is included in accrued payroll and employee benefits.
December 31,
2025
2024
(in millions)
Current
$
2.2 $
0.7
Long-term
49.4
49.6
Total pension benefit obligation
$
51.6 $
50.3
The components of net periodic pension benefit cost recognized in our Consolidated Statements of Operations
for the periods presented are as follows:
Years Ended December 31,
2025
2024
2023
(in millions)
Service cost
$
1.5 $
1.0 $
1.0
Interest cost
3.2
2.8
2.9
Expected return on plan assets
(0.8)
(0.7)
(0.7)
Amortization of actuarial gains and losses
(0.3)
(0.2)
(0.4)
Net periodic pension cost
$
3.6 $
2.9 $
2.8
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
83
Assumptions used in the determination of the net periodic pension cost are:
Years Ended December 31,
2025
2024
2023
Discount rate used for net periodic pension costs
5.0 %
4.4 %
5.1 %
Discount rate used for pension benefit obligations
5.3 %
5.0 %
4.4 %
Expected long-term return on plan assets
5.8 %
5.9 %
5.2 %
The fair value of our qualified pension plan assets by category was as follows:
December 31, 2025
Level 1
Level 2
Level 3
Total
(in millions)
Diversified Growth Fund
$
—
$
13.5
$
—
$
13.5
Corporate Bonds
—
1.5
—
1.5
Insurance Contracts
—
—
0.8
0.8
Cash
0.3
—
—
0.3
Total
$
0.3
$
15.0
$
0.8
$
16.1
December 31, 2024
Level 1
Level 2
Level 3
Total
(in millions)
Diversified Growth Fund
$
—
$
11.5
$
—
$
11.5
Corporate Bonds
—
1.3
—
1.3
Insurance Contracts
—
—
0.7
0.7
Cash
0.5
—
—
0.5
Total
$
0.5
$
12.8
$
0.7
$
14.0
Expected future payments during the next ten years for our defined benefit pension plans are as follows:
Year Ending December 31,
(in millions)
2026
$
3.9
2027
3.8
2028
3.4
2029
4.8
2030
4.5
2031 to 2035
25.9
As of December 31, 2025 and 2024, accumulated other comprehensive income (loss) on the Consolidated
Balance Sheets includes net actuarial gains and other deferred items, net of related taxes of $13.3 million and $10.5
million, respectively, that have not yet been recognized in net periodic pension cost.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
84
NOTE 13. STOCK-BASED COMPENSATION
The Compensation Committee of our Board of Directors administers our stock plans. As of December 31, 2025,
we have two active stock-based incentive compensation plans: the Amended and Restated 2023 Omnibus Incentive Plan
(the “2023 Incentive Plan”) and the Employee Stock Purchase Plan (“ESPP”). We issue all new equity compensation
grants under the 2023 Incentive Plan. Outstanding awards previously issued under inactive plans will continue to vest
and remain exercisable in accordance with the terms of the respective plans.
The 2023 Incentive Plan provides for the grant of awards including stock options, stock appreciation rights,
performance stock units, performance units, stock, restricted stock, restricted stock units, and cash incentive awards.
The following table summarizes information related to our stock-based incentive compensation plans:
December 31, 2025
(in millions)
Shares available for future issuance under the 2023 Incentive Plan
1.4
Shares available for future issuance under the ESPP
0.5
Stock-based Compensation Expense
We recognize stock-based compensation expense based on the fair value of the awards issued and the functional
area of the employee receiving the award. For the year ended December 31, 2025, stock-based compensation expense
includes $3.7 million related to the Airity acquisition (see Note 2. Acquisition). Stock-based compensation expense was
as follows:
Years Ended December 31,
2025
2024
2023
(in millions)
Stock-based compensation expense
$
55.7 $
45.9 $
31.0
Restricted Stock Units
Generally, we grant restricted stock units (“RSUs”) with a three year time-based vesting schedule. Certain
RSUs contain performance-based or market-based vesting conditions in addition to the time-based vesting requirements.
RSUs are generally granted with a grant date fair value based on the market price of our stock on the date of grant. For
RSUs that vest based on our relative total shareholder return over the performance period to a predetermined peer group,
fair value is predetermined based on a Monte Carlo simulation as of the date of the grant.
Changes in our RSUs were as follows:
Year Ended December 31, 2025
Weighted-
Average
Number of
Grant Date
RSUs
Fair Value
(in millions)
RSUs outstanding at beginning of period
1.0
$
95.05
RSUs granted
0.5
$
119.54
RSUs vested
(0.4)
$
87.26
RSUs forfeited
(0.1)
$
84.98
RSUs outstanding at end of period
1.0
$
111.72
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
85
For vested RSUs, employees withheld shares for income tax totaling $14.5 million.
The weighted-average grant date fair value for RSUs granted in the years ended December 31, 2025, 2024, and
2023 was $119.54, $104.84, and $100.04, respectively. The fair value of RSUs vested for the years ended December 31,
2025, 2024 and 2023 was $34.9 million, $28.2 million, and $19.5 million, respectively. As of December 31, 2025, there
was $61.9 million of total unrecognized compensation cost, net of expected forfeitures, related to non-vested RSUs, that
we expect to recognize through December 2028, with a weighted-average remaining vesting period of 1.0 years.
Stock Options
Generally, we grant stock option awards with an exercise price equal to the market price of our stock at the date
of grant and with either a three or four-year vesting schedule or performance-based vesting. Stock option awards
generally have a term of ten years.
Changes in our stock options were as follows:
Year Ended December 31, 2025
Weighted-
Weighted-
Average
Average
Number of
Exercise Price
Remaining
Options
per Share Contractual Life
(in millions)
Options outstanding at beginning of period
0.1
$
83.05 6.86 years
Options exercised
—
$
80.70
Options outstanding at end of period
0.1
$
85.97 6.21 years
Options vested at end of period
—
$
85.97 6.21 years
The total intrinsic value of options exercised for the years ended December 31, 2025, 2024 and 2023 was $2.6
million, $0.8 million, and $4.6 million, respectively. As of December 31, 2025, the aggregate intrinsic value of options
outstanding and exercisable was $4.4 million and $4.4 million, respectively. As of December 31, 2025, there were no
stock options outstanding or exercisable, and no remaining unrecognized compensation cost related to stock options.
Employee Stock Purchase Plan
The ESPP is a stockholder-approved plan that allows eligible employees to purchase our common stock at a
discount. Employees who meet the eligibility criteria may contribute up to the lesser of 15% of their eligible earnings or
$5,000 during each plan period. Currently, the plan period is six months. The purchase price of common stock purchased
under the ESPP is currently equal to the lower of 1) 85% of the fair market value of our common stock on the
commencement date of each plan period or 2) 85% of the fair market value of our common shares on each plan period
purchase date.
As of December 31, 2025, there was $0.6 million of total unrecognized compensation cost related to the ESPP
that we expect to recognize over a remaining period of five months.
Deferred Compensation Plan
We offer certain employees the opportunity to defer compensation and stock awards and maintain a rabbi trust
in connection with this deferred compensation plan. Assets of the rabbi trust are consolidated as we are the primary
beneficiary. Although we cannot use the rabbi trust’s assets for any purpose other than meeting our obligations under the
deferred compensation plan, the trust’s assets, liabilities, and activity are included in our consolidated financial
statements.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
86
Assets of the rabbi trust not held in Company shares are presented in other assets, and the fair value of the
Company shares held in the rabbi trust is classified in stockholders’ equity.
After a holding period, employees have the option to diversify the Company shares into other funds. Stock
awards that have been elected for deferral but have not yet vested and are probable of vesting are reported as deferred
compensation in the temporary equity section of the Consolidated Balance Sheets. The stock awards recorded in
temporary equity are recognized at fair value, with any difference from stock based compensation recorded in retained
earnings.
The following table summarizes information regarding the rabbi trust’s assets and liabilities:
December 31,
2025
2024
Description
Balance Sheet Classification
(in millions)
Investments
Other assets
$
13.5
$
9.9
Deferred compensation liabilities
Other liabilities
$
13.4
$
10.1
Stock awards elected for deferral
Temporary equity
$
7.8
$
3.5
Company shares of common stock
Stockholders equity
$
2.6
$
0.9
NOTE 14. INCOME TAXES
The geographic distribution of pretax income from continuing operations was as follows:
Years Ended December 31,
2025
2024
2023
(in millions)
Domestic
$
(54.2)
$
(43.2)
$
(17.5)
Foreign
222.9
95.6
140.0
Income from continuing operations, before income taxes
$
168.7
$
52.4
$
122.5
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
87
The income tax provision (benefit) from continuing operations is summarized as follows:
Years Ended December 31,
2025
2024
2023
(in millions)
Current:
Federal
$
(1.8)
$
3.8
$
13.4
State
1.2
0.5
0.6
Foreign
33.8
12.3
11.7
Total current provision
33.2
16.6
25.7
Deferred:
Federal
(5.9)
(1.4)
(5.5)
State
(0.3)
(0.1)
(1.0)
Foreign
(7.6)
(19.0)
(27.5)
Total deferred benefit
(13.8)
(20.5)
(34.0)
Total income tax provision (benefit)
$
19.4
$
(3.9)
$
(8.3)
Effective tax rate
11.5 %
(7.4)%
(6.8) %
The principal causes of the difference between the federal statutory rate and the effective income tax rate for
each of the years below are as follows:
Years Ended December 31,
2024
2023
(in millions)
Income taxes per federal statutory rate
$
11.0
$
25.9
State income taxes, net of federal deduction
0.3
(0.5)
U.S. tax on foreign operations
18.9
20.5
Foreign derived intangible income deduction
(1.4)
(2.9)
Tax effect of foreign operations
(14.8)
(28.1)
Uncertain tax positions
(1.1)
1.3
Change in valuation allowance assessment
0.6
(25.6)
Tax credits
(7.8)
(7.3)
Change in valuation allowance
3.6
12.9
Executive compensation limitation
2.3
2.0
Impact of intellectual property transfer
(23.0)
-
Other permanent items, net
7.5
(6.5)
Total income tax provision (benefit)
$
(3.9)
$
(8.3)
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
88
Years Ended December 31,
2025
Tax Effect
Rate Effect
(in millions)
U.S. Federal Statutory Tax Rate
$
35.4
21.0 %
State and Local Income Taxes, Net of Federal Income Tax Effect
0.7
0.4 %
Effect of Cross-Border Tax Laws
Global intangible low-taxed income
17.3
10.2 %
Other
0.8
0.5 %
Tax Credits
Foreign tax credit
(12.4)
(7.4)%
Research and development tax credits
(4.1)
(2.4)%
Nontaxable or Nondeductible Items
Executive compensation limitation
3.2
1.9 %
Other
(0.1)
(0.1)%
Other Adjustments
Change in prepaid tax on intercompany profit
(2.8)
(1.6)%
Other
2.4
1.4 %
Foreign Tax Effects
Germany
Effect of tax rate changes in the year
2.9
1.7 %
Changes in valuation allowances
(3.1)
(1.9)%
Other
1.7
1.0 %
Hong Kong
Statutory rate difference
(3.3)
(2.0)%
Changes in valuation allowances
(9.2)
(5.4)%
Non-taxable income
(9.7)
(5.8)%
Withholding tax
1.7
1.0 %
Other
0.9
0.5 %
Pillar II
10.0
5.9 %
Philippines
Enterprise zone benefit
(3.1)
(1.8)%
Other
2.1
1.2 %
Singapore
Statutory rate difference
(4.7)
(2.8)%
Tax holiday
(4.8)
(2.9)%
Other
(3.7)
(2.1)%
Other Jurisdictions
1.8
1.2 %
Changes in Unrecognized Tax Benefits
(0.5)
(0.2)%
Total
$
19.4
11.5 %
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
89
The income taxes paid (net of refunds) is summarized as follows:
Year Ending
December 31, 2025
(in millions)
U.S. Federal
$
(6.5)
U.S. State & Local
(0.9)
Foreign
(13.4)
Total
$
(20.8)
From the above amounts, income taxes paid (net of refunds) exceed the 5% of taxes paid threshold in the
following foreign jurisdictions. U.S. state and local jurisdictions did not exceed the 5% threshold.
Year Ending
December 31, 2025
(in millions)
Foreign:
Malaysia
$
(3.3)
Singapore
$
(2.6)
China
$
(2.3)
Philippines
$
(1.7)
From the above amounts, states that equal more than 50% of our state income taxes paid (net of refunds) but do
not exceed the 5% of taxes paid include the following jurisdictions.
Year Ending
December 31, 2025
(in millions)
U.S. State & Local:
Texas
$
(0.3)
Tennessee
$
(0.3)
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
90
Deferred tax assets and liabilities are recognized for the future tax consequences of differences between the
carrying amounts of assets and liabilities and their respective tax bases using enacted tax rates in effect for the year in
which the differences are expected to be reversed. Significant deferred tax assets and liabilities consist of the following:
December 31,
December 31,
2025
2024
(in millions)
Deferred tax assets:
Net operating loss and tax credit carryforwards
$
85.6
$
72.0
Pension obligation
8.1
9.2
Bond hedge original issue discount
15.2
20.2
Amortization
41.0
43.0
Operating lease liabilities
15.1
12.3
Other
54.4
56.5
Total deferred tax assets
219.4
213.2
Less: valuation allowance
(36.6)
(42.4)
Deferred tax assets, net of valuation allowance
182.8
170.8
Deferred tax liabilities:
Depreciation
2.4
2.5
Amortization
23.6
26.8
Unremitted earnings
4.1
2.8
Operating lease right-of-use assets
12.5
9.9
Operating lease liabilities
1.5
5.3
Other
1.6
2.7
Total deferred tax liabilities
45.7
50.0
Net deferred tax assets
$
137.1
$
120.8
Of the $137.1 million and $120.8 million net deferred tax assets as of December 31, 2025 and 2024,
respectively, $137.7 million and $121.4 million, respectively, were included as a net non-current deferred tax asset
within other assets on the Consolidated Balance Sheets. $0.6 million for both years were included as a net non-current
deferred tax liability within other long-term liabilities on the Consolidated Balance Sheets.
During 2025, we completed a series of intercompany restructuring actions that created additional future taxable
income that was previously not available in certain tax jurisdictions. Based on updated financial projections and planned
business integration steps, these activities provided sufficient positive evidence to support the realization of deferred tax
assets for which valuation allowances had previously been recorded. As a result, in 2025, we released deferred tax
valuation allowances totaling $9.8 million with a corresponding decrease to tax expense. We will continue to update
financial projections and integration plans on a periodic basis, and additional adjustments to the valuation allowance may
be required in future periods.
As of December 31, 2025, we have recorded a total valuation allowance on $2.6 million of our U.S. domestic
deferred tax assets, largely attributable to state carryforward attributes that are expected to expire before sufficient
income can be realized in those jurisdictions. The remaining valuation allowance on deferred tax assets approximates
$34.0 million and is associated primarily with operations in Hong Kong, China, and Switzerland. As of December 31,
2025, there is not sufficient positive evidence to conclude that such deferred tax assets, presently reduced by a valuation
allowance, will more likely than not be recognized. For the year ended December 31, 2025, the valuation allowance
decreased by $5.8 million.
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
91
As of December 31, 2025, we had U.S., foreign and state tax loss carryforwards of $28.4 million, $347.7
million, and $105.2 million, respectively. Additionally, we had $1.9 million and $30.5 million of capital loss and interest
expense limitation carryforwards, respectively. Finally, we had U.S. and state tax credit carryforwards of $4.8 million
and $2.0 million, respectively. The U.S. and state net operating losses, tax credits, and interest expense limitation are
subject to various utilization limitations under Section 382 of the Internal Revenue Code and applicable state laws.
These Section 382 limited attributes have various expiration periods through 2036 or, in the case of the interest expense
limitation amount, no expiration period. Much of the foreign loss carryforwards, and $8.1 million of the federal net
operating loss carry forwards, have no expiration period.
We operate under a tax holiday in Singapore. This tax holiday is in effect through June 30, 2027. The tax
holiday is conditional upon our meeting certain employment and investment thresholds. The expected benefit of the tax
holidays may be limited by the impact of Pillar II global minimum tax or other actions taken by these countries. For the
years ended December 31, 2025, 2024 and 2023, the impact of the tax holidays decreased foreign taxes by $31.0 million,
$12.4 million, and $14.3 million, respectively, and the benefit on earnings per diluted share was $0.82, $0.33, and $0.38,
respectively.
We have undistributed earnings in certain foreign subsidiaries that we have indefinitely invested, and on which
we have not recognized deferred taxes.
We account for uncertain tax positions by applying a minimum recognition threshold to tax positions before
recognizing these positions in the consolidated financial statements. The following table provides a reconciliation of our
total gross unrecognized tax benefits, which we include within other long-term liabilities on the Consolidated Balance
Sheets:
Years Ended December 31,
2025
2024
2023
(in millions)
Balance at beginning of period
$
5.7
$
8.5
$
7.5
Additions based on tax positions taken during a prior period
—
—
0.2
Additions based on tax positions taken during the current period
0.3
0.5
1.0
Reductions based on tax positions taken during a prior period
(0.2)
(2.1)
—
Reductions related to a lapse of applicable statute of limitations
(0.9)
(1.2)
(0.1)
Reductions related to a settlement with taxing authorities
—
—
(0.1)
Balance at end of period
$
4.9
$
5.7
$
8.5
The unrecognized tax benefits of $4.9 million, if recognized, will impact our effective tax rate. In accordance
with our accounting policy, we recognize accrued interest and penalties related to unrecognized tax benefits as a
component of tax expense. We had $0.9 million and $0.8 million of accrued interest and penalties on December 31, 2025
and 2024, respectively. With few exceptions, we are no longer subject to federal, state, or foreign income tax
examinations by tax authorities for years before 2022.
As of December 31, 2025, 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 determine any potential cash tax expense and tax rate impact in the
countries in which we operate.
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
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
92
has reflected the impact of the OBBB’s elective tax law items in its financial statements for the period ending
December 31, 2025.
NOTE 15. COMMITMENTS AND CONTINGENCIES
We are involved in disputes and legal actions arising in the normal course of our business. While we currently
believe that the amount of any ultimate loss would not be material to our financial position, the outcome of these actions
is inherently difficult to predict. In the event of an adverse outcome, the ultimate loss could have a material adverse
effect on our financial position or reported results of operations. An unfavorable decision in intellectual property
litigation also could require material changes in production processes and products or result in our inability to ship
products or components found to have violated third party intellectual property rights. We accrue loss contingencies in
connection with our commitments and contingencies, including litigation, when it is probable that a loss has occurred,
and the amount of such loss can be reasonably estimated. We are not currently a party to any legal action that we believe
would have a material adverse impact on our business, financial condition, results of operations or cash flows.
NOTE 16. SUPPLEMENTAL CASH FLOW INFORMATION
Years Ended December 31,
2025
2024
2023
(in millions)
Non-cash investing activities:
Capital expenditures in accounts payable and other accrued expenses
$
30.6
$
9.7
$
9.0
Common stock used as consideration in business combination
$
—
$
4.5
$
—
Cash paid for:
Interest
$
14.7
$
17.3
$
14.4
Income taxes
$
24.1
$
33.3
$
47.9
Cash received from income taxes
$
3.3
$
3.8
$
2.4
93
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We have established disclosure controls and procedures, which are designed to ensure that information required
to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported,
within the time periods specified in the SEC’s rules and forms. These disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that we file
or submit under the Exchange Act is accumulated and communicated to management, including our Principal Executive
Officer (Stephen D. Kelley, President and Chief Executive Officer) and Principal Financial Officer (Paul Oldham,
Executive Vice President and Chief Financial Officer), as appropriate, to allow timely decisions regarding required
disclosures.
As of the end of the period covered by this report, we conducted an evaluation, with the participation of
management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and
operation of the disclosure controls and procedures pursuant to the Exchange Act Rule 13a-15(b). Based upon this
evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures
were effective as of December 31, 2025. The conclusions of the Chief Executive Officer and Chief Financial Officer from
this evaluation were communicated to the Audit and Finance Committee. Management recognizes that any controls and
procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their
objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible
controls and procedures. We intend to continue to review and document our disclosure controls and procedures, including
our internal controls over financial reporting, and may from time to time make changes aimed at enhancing their
effectiveness and to ensure that our systems evolve with our business.
Management’s Annual Report on Internal Control over Financial Reporting
It is management’s responsibility to establish and maintain effective internal control over our financial reporting,
which is a process designed under the supervision of our Chief Executive Officer and Chief Financial Officer and effected
by our Board of Directors, management, and other personnel. Our internal control over financial reporting is designed to
provide reasonable assurance concerning the reliability of our financial reporting and the preparation of our financial
statements for external purposes in accordance with generally accepted accounting principles.
Management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the
effectiveness of our internal control over financial reporting as of December 31, 2025, using the criteria described in
Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based upon this evaluation, management concluded that our internal control over financial reporting was
effective as of December 31, 2025.
Ernst & Young LLP, an independent registered public accounting firm, has audited our consolidated financial
statements included in this Form 10-K, and as part of the audit, has issued an audit report, included herein, on the
effectiveness of our internal control over financial reporting as of December 31, 2025.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the fourth quarter of the
current year that has materially affected, or is reasonably likely to materially affect, our internal control over financial
reporting.
94
Limitations on Controls and Procedures
Management concluded that our disclosure controls and procedures and internal control over financial reporting
provide reasonable assurance that the objectives of our control system are met. We do not expect, however, that our
disclosure controls and procedures or internal control over financial reporting will prevent or detect all misstatements,
errors, or fraud, if any. All control systems, no matter how well designed and implemented, have inherent limitations, and
therefore no evaluation can provide absolute assurance that every misstatement, error, or instance of fraud, if any, or risk
thereof, has been or will be prevented or detected. The occurrence of a misstatement, error, or fraud, if any, would not
necessarily require a conclusion that our controls and procedures are not effective.
ITEM 9B. OTHER INFORMATION
During the fourth quarter of 2025, two of our officers and two of our directors adopted a “Rule 10b5-1 trading
arrangement” (as defined in Item 408 of Regulation S-K) intended to satisfy the affirmative defense conditions of Rule
10b5-1(c), as amended. The table below summarizes the terms of Rule 10b5-1 trading arrangements adopted:
Name and Title
Date of
Adoption
Duration of the Trading Arrangement 1
Aggregate Number of Shares
to be Sold
Elizabeth K. Vonne
Executive Vice President,
General Counsel and Secretary
November 12,
2025
Until July 31, 2026 or such earlier date upon
which all transactions are completed
1,930
John A. Roush
Director
December 3,
2025
Until December 3, 2026 or such earlier date
upon which all transactions are completed
10,225
Stephen D. Kelley
President and Chief Executive
Officer
December 5,
2025
Until December 4, 2026 or such earlier date
upon which all transactions are completed
50,000
Brian M. Shirley
Director
December 12,
2025
Until December 11, 2026 or such earlier date
upon which all transactions are completed
2,468
(1) The Rule 10b5-1 trading arrangements also provide for termination prior to the above-listed expiration date following
the occurrence of certain events, such as public announcement of a tender offer, exchange offer or certain M&A,
reorganization, or recapitalization transactions or the bankruptcy, insolvency, or death of the adopting person.
(2) The aggregate number of shares available for sale under Mr. Kelley’s Rule 10b5-1 trading arrangement is not yet
determinable because the trading arrangement includes shares issuable pursuant to unvested RSUs and PSUs which
are subject to tax withholding obligations that arise in connection with the vesting and settlement of such awards and,
with respect to the PSUs, satisfaction of the applicable performance goals. As such, the shares included in this table
reflect the aggregate number of shares underlying Mr. Kelley’s RSUs and PSUs assuming target performance goals
were met and without excluding shares that will be withheld to satisfy tax withholding obligations.
During the fourth quarter of 2025, no other director or officer adopted or terminated a “Rule 10b5-1 trading
arrangement” or a “non-Rule 10b5-1 trading arrangement” (as defined in Item 408 of Regulation S-K).
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
95
PART III
In accordance with General Instruction G (3) of Form 10-K, certain information required by this Part III is
incorporated by reference to the definitive proxy statement relating to our 2026 annual meeting of stockholders (the “2026
Proxy Statement”), as set forth below. The 2026 Proxy Statement will be filed with the SEC within 120 days after the end
of our fiscal year.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
The information set forth in the 2026 Proxy Statement under the headings “Proposal No. 1 - Election of
Directors,” “Corporate Governance,” and “Management,” is incorporated herein by reference.
We adopted a Code of Ethical Conduct that applies to all employees, including our Chief Executive Officer,
Chief Financial Officer, and others performing similar functions. We posted a copy of the Code of Ethical Conduct on our
website at www.advancedenergy.com, and such Code of Ethical Conduct is available, in print, without charge, to any
stockholder who requests it from our Secretary. We intend to satisfy the disclosure requirements under Item 5.05 of
Form 8-K regarding amendments to, or waivers from, the Code of Ethical Conduct by posting such information on our
website at www.advancedenergy.com. We are not including the information contained on our website as part of, or
incorporating it by reference into, this report.
We have also adopted an Insider Trading Policy governing the purchase, sale, and/or other dispositions of the
Company’s securities that applies to all directors, officers, and employees, as well as the Company itself. We believe our
Insider Trading Policy is reasonably designed to promote compliance with insider trading laws, rules and regulations, and
applicable listing standards. A copy of the Insider Trading Policy was filed with our annual report on Form 10-K for the
fiscal year ended December 31, 2024 and is incorporated by reference as Exhibit 19.1.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth in the 2026 Proxy Statement under the headings “Executive Compensation” and
“Director Compensation” is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information set forth in the 2026 Proxy Statement under the headings “Security Ownership of Certain
Beneficial Owners and Management” and “Equity Compensation Plan Information” is incorporated herein by reference.
Securities Authorized for Issuance under Equity Compensation Plans
The following table summarizes information about the equity incentive compensation plans as of December 31,
2025. All outstanding awards relate to our common stock.
(A)
(B)
(C)
Plan Category
Number of securities to be issued
upon exercise of outstanding
options, warrants and rights
Weighted average exercise price
of outstanding options, warrants
and rights
Number of securities remaining available
for future issuance under equity
compensation plans (excluding securities
reflected in column A)
(in millions, except exercise price per share)
Equity compensation plans approved
by security holders
0.1 (1) $
85.97
1.9 (2)
Equity compensation plans not
approved by security holders
—
—
—
Total
0.1 (1) $
85.97
1.9
(1) Includes shares underlying options granted under the prior plan.
(2) This number includes 0.5 million shares available for future issuance under the Employee Stock Purchase Plan.
96
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information set forth in the 2026 Proxy Statement under the heading “Certain Relationships and Related
Transactions” and under the sub-heading “Independence”, which appears under the heading “Proposal No. 1 - Election of
Directors” is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information set forth in the 2026 Proxy Statement under the heading “Proposal No. 2 - Ratification of the
Appointment of Ernst & Young LLP as Advanced Energy’s Independent Registered Public Accounting Firm for 2026” is
incorporated herein by reference.
PART IV
ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES
(A) Documents filed as part of this annual report on Form 10-K are as follows:
1. Financial Statements:
See Index to Financial Statements at Part II, Item 8 herein.
2. Financial Statement Schedules for the years ended December 31, 2025, 2024, and 2023
NOTE: All schedules have been omitted because they are either not applicable or the required information is
included in the financial statements and notes thereto.
(B) Exhibits:
Exhibit
Incorporated by Reference
Number
Description
Form
File No.
Exhibit
Filing Date
2.1
Stock Purchase Agreement by and among
Advanced Energy Industries, Inc., Artesyn
Embedded Technologies, Inc., Pontus
Intermediate Holdings II, LLC and Pontus
Holdings, LLC, dated May 14, 2019 **
8-K
000-26966 2.1
May 15, 2019
2.2
First Amendment to the Stock Purchase
Agreement by and among Advanced Energy
Industries, Inc., Artesyn Embedded
Technologies, Inc., Pontus Intermediate
Holdings II, LLC and Pontus Holdings, LLC,
dated September 9, 2019 **
8-K
000-26966 2.2
September 10, 2019
2.3
Stock Purchase Agreement, dated April 1, 2022,
by and among SL Power Electronics
Corporation,
SL Delaware Holdings, Inc., Steel Partners
Holdings L.P., AEI US Subsidiary, LLC and
Advanced Energy Industries, Inc. **
8-K
000-26966 2.1
April 4, 2022
97
Exhibit
Incorporated by Reference
Number
Description
Form
File No.
Exhibit
Filing Date
3.1
Amended and Restated Certificate of
Incorporation of Advanced Energy Industries,
Inc.
8-K
000-26966 3.1
May 1, 2024
3.2
Third Amended and Restated By-Laws of
Advanced Energy Industries, Inc.
8-K
000-26966 3.2
May 1, 2024
4.1
Form of Specimen Certificate for Common
Stock
S-1
33-97188 4.1
September 21, 1995
4.2
Description of Advanced Energy Industries, Inc.
Securities
10-K
000-26966 4.2
February 18, 2025
4.3
Indenture, dated September 12, 2023, between
Advanced Energy Industries, Inc. and U.S. Bank
Trust Company, National Association, as trustee 8-K
000-26966 4.1
September 13, 2023
4.4
Form of Global 2.50% Convertible Senior Note
due 2028 (included in Exhibit 4.3)
8-K
000-26966 4.2
September 13, 2023
10.1
Form of Director and Officer Indemnification
Agreement
Filed herewith
10.2
2017 Omnibus Incentive Plan *
DEF 14A 000-26966 Appendix A March 14, 2017
10.3
Employee Stock Purchase Plan *
DEF 14A 000-26966 Appendix B March 10, 2021
10.4
Offer Letter dated February 8, 2021 *
8-K
000-26966 10.2
February 10, 2021
10.5
Offer Letter to Paul Oldham, dated March 26,
2018 *
8-K
000-26966 10.1
March 29, 2018
10.6
Offer of Employment to Eduardo Bernal
Acebedo, dated August 2, 2021 *
8-K
000-26966 10.1
September 8, 2021
10.7
Form of Long-Term Incentive Plan *
8-K
000-26966 10.1
February 4, 2021
10.8
Amended and Restated Deferred Compensation
Plan *
10-Q
000-26966 10.1
November 1, 2022
10.9
Form of Restricted Stock Unit Agreement under
2017 Omnibus Incentive Plan *
10-K
000-26966 10.25
February 17, 2023
10.10
Form of LTI Performance Stock Unit Agreement
under 2017 Omnibus Incentive Plan *
10-K
000-26966 10.26
February 17, 2023
10.11
Form of Option Agreement under 2017 Omnibus
Incentive Plan *
Filed herewith
10.12
Form of Confirmation for Convertible Note
Hedges***
8-K
000-26966 10.1
September 13, 2023
10.13
Form of Confirmation for Warrants***
8-K
000-26966 10.2
September 13, 2023
98
Exhibit
Incorporated by Reference
Number
Description
Form
File No.
Exhibit
Filing Date
10.14
Amended and Restated 2023 Omnibus Incentive
Plan *
8-K
000-26966 10.1
November 8, 2023
10.15
Form of Executive Change in Control and
General Severance Agreement *
8-K
000-26966 10.2
November 8, 2023
10.16
Form of Performance Stock Unit Agreement
under the Amended and Restated 2023 Omnibus
Incentive Plan *
10-K
000-26966 10.32
February 20, 2024
10.17
Form of Restricted Stock Unit Agreement under
the Amended and Restated 2023 Omnibus
Incentive Plan *
10-K
000-26966 10.24
February 18, 2025
10.18
Form of Annual Incentive Plan *
10-K
000-26966 10.34
February 20, 2024
10.19
Credit Agreement, dated as of May 8, 2025,
among Advanced Energy Industries, Inc., as the
borrower, the guarantors party thereto, HSBC
Bank USA, N.A., as the administrative agent,
and the lenders party thereto.**
8-K
000-26966 10.1
August 5, 2025
19.1
Insider Trading Policy
10-K
000-26966 19.1
February 18, 2025
21.1
Subsidiaries of Advanced Energy Industries, Inc.
Filed herewith
23.1
Consent of Independent Registered Public
Accounting Firm
Filed herewith
31.1
Certification of the Chief Executive Officer
Pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
Filed herewith
31.2
Certification of the Principal Financial Officer
Pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
Filed herewith
32.1
Certification of the Chief Executive Officer
Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
Filed herewith
32.2
Certification of the Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
Filed herewith
97.1
Compensation Clawback Policy
10-K
000-26966 97.1
February 20, 2024
101.INS
Inline XBRL Instance Document
Filed herewith
101.SCH Inline XBRL Taxonomy Extension Schema
Document
Filed herewith
99
Exhibit
Incorporated by Reference
Number
Description
Form
File No.
Exhibit
Filing Date
101.CAL Inline XBRL Taxonomy Extension Calculation
Linkbase Document
Filed herewith
101.DEF Inline XBRL Taxonomy Extension Definition
Linkbase Document
Filed herewith
101.LAB Inline XBRL Taxonomy Extension Label
Linkbase Document
Filed herewith
101.PRE Inline XBRL Taxonomy Extension Presentation
Linkbase Document
Filed herewith
104
Cover Page Interactive Data File (formatted as
Inline XBRL with applicable taxonomy
extension information contained in Exhibits 101)
Filed herewith
* Management contract or compensatory plan.
** Schedules, exhibits, and similar supporting attachments or agreements have been omitted pursuant to
Item 601(b)(2) of Regulation S-K. Advanced Energy Industries, Inc. agrees to furnish a supplemental copy of any
omitted schedule or similar attachment to the SEC upon request.
*** Certain personally identifiable information has been omitted from this exhibit pursuant to Item 601(a)(6) of
Regulation S-K.
ITEM 16. FORM 10-K SUMMARY
None.
100
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has
duly caused this annual report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
ADVANCED ENERGY INDUSTRIES, INC.
(Registrant)
/s/ Stephen D. Kelley
Stephen D. Kelley
Chief Executive Officer
Date: February 13, 2026
Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report has been signed below
by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signatures
Title
Date
/s/ Stephen D. Kelley
Chief Executive Officer and Director
February 13, 2026
Stephen D. Kelley
(Principal Executive Officer)
/s/ Paul Oldham
Chief Financial Officer and Executive Vice President
February 13, 2026
Paul Oldham
(Principal Financial Officer)
/s/ Bernard R. Colpitts, Jr.
Chief Accounting Officer and Senior Vice President
February 13, 2026
Bernard R. Colpitts, Jr.
(Principal Accounting Officer)
/s/ Grant H. Beard
Chairman of the Board
February 13, 2026
Grant H. Beard
/s/ Frederick A. Ball
Director
February 13, 2026
Frederick A. Ball
/s/ Anne T. DelSanto
Director
February 13, 2026
Anne T. DelSanto
/s/ Tina M. Donikowski
Director
February 13, 2026
Tina M. Donikowski
/s/ Ronald C. Foster
Director
February 13, 2026
Ronald C. Foster
/s/ Lanesha T. Minnix
Director
February 13, 2026
Lanesha T. Minnix
/s/ David W. Reed
Director
February 13, 2026
David W. Reed
/s/ John A. Roush
Director
February 13, 2026
John A. Roush
/s/ Brian M. Shirley
Director
February 13, 2026
Brian M. Shirley