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What changed in ADVANCED ENERGY INDUSTRIES INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of ADVANCED ENERGY INDUSTRIES INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+285 added−266 removedSource: 10-K (2026-02-13) vs 10-K (2025-02-18)

Top changes in ADVANCED ENERGY INDUSTRIES INC's 2025 10-K

285 paragraphs added · 266 removed · 202 edited across 10 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe also strive to follow the standards of the Responsible Business Alliance Code of Conduct at selected manufacturing sites, which promotes labor, health, safety, environmental, and ethics best practices. Employee Engagement We are committed to providing a collaborative and productive work environment for our employees.
Biggest changeWe 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.
Community Involvement 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 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.
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. 10 Table of Contents
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. ​ 11 Table of Contents
We design, manufacture, sell and support 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.
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 customers select our products based on various performance metrics such as high power conversion efficiency, high power density, and low noise emission, as well as our ability to tailor our solutions to meet the unique requirements of their critical applications.
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.
In addition, we are targeting to win customer adoptions of our new products to strengthen our positions in our 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.
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.
See Part I, Item 1A, “Risk Factors” for a discussion of certain risks related to our reliance on our intellectual property. 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.
See Part I, Item 1A, “Risk Factors” for a discussion of certain risks related to our reliance on our intellectual property. 8 Table of Contents 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.
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 growing need for more production capacity and new process technologies to meet expanding demand for semiconductor devices across many applications driven by megatrends such as artificial intelligence (“AI”), energy efficiency, automobile electrification and Internet of things (“IoT”).
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 network of global service support centers provides repair services, calibration, conversions, upgrades, refurbishments, and used equipment to companies that use our products. 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”) and end customers.
Our network of global service support centers provides repair services, calibration, conversions, upgrades, refurbishments, and used equipment to companies that use our products. 5 Table of Contents 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.
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 Industrial and Medical Data Center Computing Telecom and Networking COMET Holding AG. Daihen Corp. MKS Instruments, Inc. TRUMPF Hüttinger GmbH + Co.
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.
Lite-On Technology Corp. ​ ​ 8 Table of Contents 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.
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 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.
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 6 Table of Contents complement our power solutions.
For the years ended December 31, 2024, 2023, and 2022 our research and development expenses were $211.8 million, $202.4 million, and $191.0 million, respectively and have ranged from 10.4% to 14.3% of our total revenue. Human Capital Our people are our strength. We have a globally diverse workforce with approximately 10,000 employees as of December 31, 2024.
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.
KG Cosel Co., Ltd. Delta Electronics, Inc. MEAN WELL Enterprises TDK-Lambda Americas Inc. TRUMPF Hüttinger GmbH + Co. KG XP Power Ltd. Acbel Polytech Inc. Delta Electronics, Inc. Flex Ltd. Lite-On Technology Corp. ​ Acbel Polytech Inc. Delta Electronics, 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.
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 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.
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.
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 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.
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.
Long-Term Debt in Part II, Item 8 “Financial Statements and Supplementary Data.” Products and Services Our precision power products and solutions are designed to enable new process technologies, improve productivity, lower the cost of ownership, and provide critical power capabilities for our customers. These products are designed to meet our customers’ demanding requirements in efficiency, flexibility, performance, and reliability.
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.
Our broad portfolio of high and low voltage power products is used in a wide range of applications, such as semiconductor equipment, industrial production, medical and life science equipment, data center computing, 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 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.
Accordingly, we devote significant personnel and financial resources to the development of new products and the enhancement of existing products. 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.
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.
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 these adjacent semiconductor applications.
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.
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.
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.
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.
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.
We believe that continued development of technological 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 developing new products and enhancing existing products, and we expect these investments to continue.
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.
Our strategy is to outgrow the wafer fabrication equipment (“WFE”) market by developing products for applications that are growing faster than market and through market share gains in both plasma power and adjacent semiconductor applications.
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.
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 is critical for us to compete effectively in the markets we serve.
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.
Within this segment, our products are sold into the Semiconductor Equipment, Industrial and Medical, Data Center Computing, 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.
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 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. 6 Table of Contents 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 increased bandwidth.
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.
Culture 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 stive to provide an inclusive work environment where all of our employees feel respected, valued, and empowered.
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.
The accelerated pace of higher power for next generation AI processors has increased the power requirement for AI-based servers and racks, accelerated the transition to high-power 48 volt power shelf infrastructure, and amplified the importance of high power efficiency, density, and reliability for server rack power solutions.
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.
See Part I, Item 1A “Risk Factors” for a discussion of certain risks related to our sales and marketing operations. Manufacturing We manufacture our products primarily in the Philippines, Malaysia, Mexico, and China. We also perform limited specialty manufacturing for some of our products in the U.S., the United Kingdom, and Europe.
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. 7 Table of Contents Manufacturing We manufacture our products primarily in our large factories in the Philippines, Malaysia, and Mexico.
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.
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.
Advanced Energy serves as a leading provider of high-efficiency, high-density, server power conversion solutions and technologies with a proven track record of delivering production-ready products. Our products are designed into data center server and storage systems, as well as used by cloud service providers and their partners in their custom designed server racks and power shelves.
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.
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.
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.
Acquisition in Part II, Item 8 “Financial Statements and Supplementary Data.” 4 Table of Contents 2024 Restructuring Plan In 2024, we approved further manufacturing consolidation initiatives, including the closure of our Zhongshan, China manufacturing facility (the “2024 Plan”). In connection with the 2024 Plan, we recorded a $29.6 million charge primarily associated with expected employment-related charges and facility exit costs.
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.
We periodically conduct confidential employee surveys to solicit feedback on confidence in Company leadership, ethical conduct, work environment, career growth opportunities, and we continually evaluate suggestions on how we can make Advanced Energy a great place to work.
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.
During the year ended December 31, 2024, Applied Materials, Inc. and Lam Research Corporation accounted for 26% and 11%, respectively, of our total revenue. During the year ended December 31, 2023, Applied Materials, Inc. accounted for 22% of our total revenue.
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.
Total Rewards We provide market-competitive compensation and benefits to our employees to attract and retain a talented, highly engaged workforce. Our compensation programs are focused on equitable and fair pay practices, including market-based compensation. 9 Table of Contents Learning and Development We create growth and development opportunities to support our employees and offer internal and external learning and development opportunities.
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.
We recognize that diverse perspectives and collaboration enable us to drive innovation and future growth for our global customers and we remain committed to diversity. Through a combination of merit-based internal promotions and external hiring, we have continued to see increases in the number of diverse employees represented at the director and above level, as compared with 2023.
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.
Our employees are located across the globe in 16 countries and are comprised of approximately 56% male and 44% female employees. Our employees are not represented by unions, except for statutory organization rights applicable to our employees in China, Germany, and Mexico.
Our employees are not represented by unions, except for statutory organization rights applicable to our employees in China, Germany, and Mexico. ​ ​ ​ ​ ​ 9 Table of Contents Culture As an industry leading technology company, we work together collaboratively to solve complex, high-value problems and achieve common goals.
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Recent Events Airity Acquisition On June 20, 2024, we acquired Airity Technologies, Inc. (“Airity”). 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. See Note 2.
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Our executive offices are located at 1595 Wynkoop Street, Suite 800, Denver, Colorado 80202, and our telephone number is 970-407-6555. 4 Table of Contents 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.
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Restructuring, Asset Impairments, and Other Charges in Part II, Item 8 “Financial Statements and Supplementary Data.” Credit Agreement Amendment On September 9, 2024, we used existing cash on hand to prepay the full $345.0 million outstanding principal balance of the senior unsecured term loan facility (the “Term Loan Facility”) under the credit agreement dated as of September 10, 2019, as amended (the “Credit Agreement”).
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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.
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On the same date, we entered into an additional amendment to the Credit Agreement to increase the capacity on our senior unsecured revolving facility (the “Revolving Facility”) from $200.0 million to $600.0 million. As a result, as of December 31, 2024, our only outstanding debt was the Convertible Notes due in 2028. See Note 18.
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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.
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We believe long-term growth in the market will be driven by increased demand for wafer capacity, an increased number of etch and deposition process steps with new technology inflections, and the transition to advanced technology nodes requiring higher content of advanced power solutions per tool. ​ 5 Table of Contents Our portfolio of power conversion and related products includes plasma power, high-voltage power, system power, and adjacent sensing solutions.
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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.
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We believe the plasma power market will grow faster than WFE due to increasing number of plasma etch and deposition process steps and growing demand for more complex and high power content.
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We also supply related sensing, controls, and instrumentation products primarily for advanced measurement and calibration of power and temperature for multiple industrial markets.
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Our products are used in a wide variety of applications, such as advanced material fabrication, medical devices, analytical instrumentation, test and measurement equipment, robotics, industrial production, and large-scale connected light-emitting diode applications. We serve our broad customer base through both our direct sales force and indirect sales channels including independent sales representatives and distributors.
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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.
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Data Center Computing Market The Data Center Computing market is driven by shifts from traditional enterprise, on-premise computing to cloud computing, as well as the rapid growth of AI and related investments.
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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.
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We serve this market by providing application-specific AC-DC and DC-DC power conversion products to many leading OEMs of wireless infrastructure equipment and computer networking equipment. Our solutions are often customized with unique features such as ruggedization for mobile radio in the field.
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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.
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In addition to a direct sales force, we have distributors that support our selling efforts. We maintain customer service offices in many of the locations listed above, as well as other sites near our customers’ locations.
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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.
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In 2024, as part of our multi-year factory optimization and consolidation initiatives, we announced the closure of our Zhongshan, China manufacturing facility and several smaller manufacturing sites, expanded capacity in our Mexico factory, and progress on a new factory near Bangkok, Thailand, which we expect to be operational in 2026. 7 Table of Contents Our manufacturing requires a wide variety of mechanical and electrical components, which are often made to our specifications.
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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.
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We have a Corporate Diversity & Inclusion Steering Committee which provides guidance, coordination, and support to local diversity and inclusion activities. We also have an active Women’s Leadership Forum focused on career development and internal networking.
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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.
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We communicate the results of these confidential employee surveys with our employees, leaders, executive team, and Board of Directors and use the feedback to identify opportunities to drive improvements across our Company.
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We hold numerous U.S. and foreign patents and have multiple patent applications pending in the U.S., Europe, and Asia.
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We also perform internal talent reviews and succession planning. We provide a 10-week leadership essential training program for our people leaders across all corporate levels. We also have internship and graduate development programs designed to develop a talent pipeline.
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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.
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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.
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Our employees are located in the Asia-Pacific region, Europe, and North America, and are comprised of approximately 53% male and 47% female employees.
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Employee Engagement We are committed to providing a collaborative and productive work environment for our employees.
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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.
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Where training is not available internally, we support external training for skill development in current or future roles.
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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. 10 Table of Contents Community Involvement Advanced Energy strives to make a positive impact in its communities through volunteerism, charitable giving and partnerships with local communities.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

90 edited+22 added−14 removed91 unchanged
Biggest changeThere can be no assurance that these changes, once 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.
Biggest changeSignificant 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.
As a supplier to the global semiconductor equipment, industrial, medical, data center computing, telecommunication, and networking industries, we are subject to business fluctuations, the timing, length, and volatility of which can be difficult to predict.
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 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. Driven by continuing technology migration and changing customer demand, the markets we serve are constantly changing in terms of advancement in applications, core technology, and competitive pressures.
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.
Regulatory, 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 .
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 .
Claims that our products 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.
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.
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 independently.
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.
A significant portion of our operations and supply chain outside the United States are located in the Asia Pacific region, including China, which exposes us to risks, such as exchange controls and currency restrictions, changes in local economic conditions, changes in customs regulations and tariffs, changes in tax policies, changes in 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.
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.
The Organization for Economic Cooperation and Development 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%.
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%.
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: ● our ability to effectively manage our employees at remote locations who are operating in different business environments from the United States; ● our ability to develop and maintain relationships with suppliers and other local businesses; ● interruptions to our and/or our suppliers’ supply chain; ● 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; ● compliance with product safety requirements and standards that are different from those of the United States; ● variations and changes in laws applicable to our operations in different jurisdictions, including enforceability of contract rights; ● ineffective or inadequate legal and physical protection of intellectual property rights in certain countries; ● delays or restrictions on personnel travel and in shipping materials or finished products between and within countries; ● political instability, international hostilities, natural disasters, health epidemics, disruptions in financial markets, and deterioration of economic conditions; ● our ability to maintain appropriate business processes, procedures, and internal controls, and comply with environmental, health and safety, anti-corruption, and other regulatory requirements; ● customs regulations including customs audits in various countries that occur from time to time; ● the ability to provide enough levels of technical support in different locations; ● our ability to obtain business licenses that may be needed in international locations to support expanded operations; ● changes in tariffs, income tax, value added tax, and foreign currency exchange rates; and ● laws and regulations regarding privacy, data use and processing, data privacy and protection, cybersecurity, and network security . ​ ​ 17 Table of Contents Our operations in the Asia Pacific region, including China, 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.
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: ● our ability to effectively hire, manage, and retain our employees at locations operating in different business environments from the United States; ● our ability to develop and maintain relationships with suppliers and other local businesses; ● interruptions to our and/or our suppliers’ supply chain; ● 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; ● compliance with product safety requirements and standards that are different from those of the United States; ● variations and changes in laws applicable to our operations in different jurisdictions, including enforceability of contract rights; ● ineffective or inadequate legal and physical protection of intellectual property rights in certain countries; ● delays or restrictions on personnel travel and in shipping materials or finished products between and within countries; ● political instability, international hostilities, natural disasters, health epidemics, disruptions in financial markets, and deterioration of economic conditions; ● our ability to maintain appropriate business processes, procedures, and internal controls, and comply with environmental, health and safety, anti-corruption, and other regulatory requirements; ● customs regulations including customs audits in various countries that occur from time to time; ● the ability to provide enough levels of technical support in different locations; ● our ability to obtain business licenses that may be needed in international locations to support expanded operations; ● changes in tariffs, income tax, value added tax, and foreign currency exchange rates; and ● laws and regulations regarding privacy, data use and processing, data privacy and protection, cybersecurity, and network security . 19 Table of Contents 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.
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. 16 Table of Contents International Operations Risks We are subject to risks inherent in international operations.
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. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 18 Table of Contents International Operations Risks We are subject to risks inherent in international operations.
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 21 Table of Contents increased costs to maintain compliance with the quality systems and other regulations and requirements that apply to the acquired business.
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 23 Table of Contents acquired business.
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. 19 Table of Contents Our supply chain is subject to regulatory risk .
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. 21 Table of Contents Our supply chain is subject to regulatory risk .
Risks associated with these transactions are many, including the following which could adversely affect our financial results: ● the inability to source or complete transactions timely or at all; ● any obligation to pay a termination fee or undergo litigation resulting from failed deals; ● the failure to perform adequate due diligence on target companies; ● the failure to realize expected revenues, gross and operating margins, net income, and other returns from acquired businesses; ● the inability to successfully integrate product and/or service offerings to realize anticipated benefits from business combinations; ● the inability to integrate acquired business into our existing enterprise resource planning and other global information technology systems to realize productivity improvement and cost efficiencies; ● 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 15 Table of Contents 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; ● deterioration in our effective tax rate; ● a failure to retain and motivate key employees of acquired businesses; ● our ability to maintain appropriate business processes, procedures, and internal controls at the acquired business; ● litigation or claims associated with a proposed or completed transaction; and ● unknown, underestimated, undisclosed or undetected commitments or liabilities or non-compliance by acquired business with laws, regulations, or policies.
Risks associated with these transactions are many, including the following which could adversely affect our financial results: ● the inability to source or complete transactions timely or at all; ● any obligation to pay a termination fee or undergo litigation resulting from failed deals; ● the failure to perform adequate due diligence on target companies; ● the failure to realize expected revenues, gross and operating margins, net income, and other returns from acquired businesses; ● the inability to successfully integrate product and/or service offerings to realize anticipated benefits from business combinations; ● the inability to integrate acquired business into our existing ERP and other global information technology systems to realize productivity improvement and cost efficiencies; ● 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; ● deterioration in our effective tax rate; ● a failure to retain and motivate key employees of acquired businesses; ● our ability to maintain appropriate business processes, procedures, and internal controls at the acquired business; ● litigation or claims associated with a proposed or completed transaction; and ● unknown, underestimated, undisclosed or undetected commitments or liabilities or non-compliance by acquired business with laws, regulations, or policies.
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, if triggered, may adversely affect our financial condition and operating results.
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.
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. 20 Table of Contents Increased governmental action on income tax regulations could adversely impact our business.
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. 22 Table of Contents Increased governmental action on income tax regulations could adversely impact our business.
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 13 Table of Contents affect our business and results of operations.
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.
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 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.
Certain of our manufacturing and other operations are in locations subject to natural disasters, such as severe weather and geological events, including earthquakes or tsunamis, which could disrupt 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.
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. ​ ​ ​ 25 Table of Contents
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. ​ ​ ​ 27 Table of Contents
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, and the foreign tax credit rules.
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.
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 reduced pricing agreements, extended payment terms, exclusivity arrangements, and other unfavorable contract terms. In addition, we compete in markets in which customers may dual or multi-source their power supply products.
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.
The design win process is highly competitive, the 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.
The design win process is highly competitive, the 12 Table of Contents 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.
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, environmental regulations, securities, contracts, unfair competition, employment, workplace safety, and other matters.
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.
The financial covenants place certain restrictions on 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.
The financial covenants place certain restrictions on 24 Table of Contents 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.
If one or more holders elect to convert, we would be required to settle any converted principal amount of such Convertible Notes through payment of cash, which could adversely affect our liquidity.
If one or more holders elect to convert, we would be required 25 Table of Contents to settle any converted principal amount of such Convertible Notes through payment of cash, which could adversely affect our liquidity.
In addition, standards and processes for measuring and reporting carbon emissions and other sustainability metrics may change over time, resulting in inconsistent data, or could result in significant revisions to our sustainability commitments or our ability to achieve them.
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.
Consistent with prior years, a limited number of customers accounted for a significant portion of our business, revenue and accounts receivable.
Consistent with prior years, a limited number of customers accounted for a significant portion of our business, revenue and accounts receivable in 2025.
ESG compliance and reporting costly, and we could be at a disadvantage compared to companies that do not have similar reporting requirements or that have more resources to devote to ESG efforts. ​ ​ ​ 22 Table of Contents 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.
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.
We must work with these manufacturers early in their design cycles to modify, enhance, and upgrade our products or 11 Table of Contents design new products that meet the requirements of their new systems.
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.
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 12 Table of Contents materially adversely impact our operating results and financial condition.
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.
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; restrictions on the presence of certain substances in our products; the operation of our facilities; and the use of our real property.
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.
If existing or new customers do not choose our designs 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.
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.
The failure or inability to comply with existing or future environmental, health and safety regulations, including with respect to energy consumption and climate change, 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.
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.
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.
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 success in hiring and retaining employees depends on a variety of factors, including the attractiveness of our compensation and benefit 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 and rewarding work environment.
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 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.
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.
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 ongoing activity in both the promulgation of newly imposed global trade regulations and increased enforcement of existing regulations.
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.
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.
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.
We have experienced, and may continue to experience, increasing costs to attract and retain needed talent, driven by macroeconomic conditions and a highly competitive labor market. 14 Table of Contents In addition, the loss or retirement of key employees presents particular challenges to the extent the departing employee had particularly valuable knowledge or experiences.
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.
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.
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.
We and our third party providers have experienced, and expect to continue to experience, cybersecurity events or confidential information theft incidents, some of which could be devastating.
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 are a global organization. We have employees in 16 countries, our manufacturing facilities are located across the globe (mainly in the Asia-Pacific region), and revenue from customers outside the United States represented 66% of our total revenue during the year ended December 31, 2024.
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.
We continue to execute our pricing strategies and practices; however, any future price increases could make our products less competitive in the market over time and could have an adverse effect on our results of operations. A significant portion of our revenue and accounts receivable are concentrated among a few customers.
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. 14 Table of Contents A significant portion of our revenue and accounts receivable are concentrated among a few customers.
A cybersecurity event or other breach, disruption, or failure of our information and operational systems, could: ● result in the disclosure, misuse, corruption, or loss of our confidential business information, intellectual property including trade secrets, or our customers’ data; ● damage our reputation; ● lead to a loss of confidence by our current and potential customers; ● adversely impact our future revenue; ● disrupt our business; ● divert management attention; and ● expose us to significant remediation costs, legal liability, and litigation risk.
A cybersecurity event or other breach, disruption, or failure of our information and operational systems, could: ● result in the disclosure, misuse, corruption, or loss of our confidential business information, intellectual property including trade secrets, or our customers’ data; ● damage our reputation; ● lead to a loss of confidence by our current and potential customers; ● adversely impact our future revenue; ● disrupt our business; ● divert management attention; and ● expose us to significant remediation costs, legal liability, and litigation risk. 15 Table of Contents 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.
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.
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.
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.
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 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. Our legacy inverter products may suffer higher than anticipated litigation, damage, or warranty claims.
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. 17 Table of Contents Our legacy inverter products may suffer higher than anticipated litigation, damage, or warranty claims.
This activity could cause fluctuations in the market price of our common stock. ​ 24 Table of Contents We are subject to counterparty default risk with respect to the Note Hedges. The counterparties 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.
This activity could cause a decrease in the market price of our common stock. ​ 26 Table of Contents 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.
The implementation and interpretation of these complex rules and other regulatory actions is uncertain and evolving, trending towards continued increasing restrictions, which is deleterious to our business and challenging for us to manage our operations and forecast our operating results.
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.
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 18. Long-Term Debt and Note 7.
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.
If the expected costs and charges are greater than anticipated, the estimated cost savings are lower than anticipated, or we experience a loss of continuity or inefficiency during transitional periods, our business and results of operations may be adversely affected.
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.
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.
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.
Our products may suffer from defects or errors leading to increased costs, damages, or warranty 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.
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.
If we are unable to attract, retain, and motivate qualified employees and leaders, 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 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.
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.
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.
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.
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.
This requires us to identify and train existing or new employees to perform necessary functions, which we may be unable to do, or which could result in unexpected costs, reduced productivity, or difficulties with respect to internal processes and controls.
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.
The U.S. and China regularly have significant disagreements over geopolitical, trade, and economic issues. Any escalating political controversies between the U.S. and China, whether or not directly related to our business, could have a material adverse effect on our operations, business, results of operations, and financial condition.
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 our operations and supply chain in China may be subject to various government and regulatory interference.
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.
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.
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.
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), or fulfill warranty claims, and we could suffer significant expenses as well as harm to our reputation.
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.
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.
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.
Consequently, manufacturing our products in China may subject us to an increased risk that unauthorized parties may attempt to copy our products or otherwise obtain or use our intellectual property. Generally, our efforts to obtain international patents have been concentrated in the European Union and Korea, Japan, and Taiwan. Third parties may also assert claims against us and our products.
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.
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.
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.
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.
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.
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.
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.
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.
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.
These supply constraints led to longer lead times in procuring materials and subcomponents and, in some cases, meaningfully higher costs for the subcomponents. Our revenues, earnings, and cash flow may be adversely impacted if these conditions reoccur. We are exposed to risks associated with worldwide financial markets and the global economy.
Our revenues, earnings, and cash flow may be adversely impacted if these conditions reoccur. ​ ​ ​ 13 Table of Contents We are exposed to risks associated with worldwide financial markets and the global economy.
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 15.
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.
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.
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. ​ 16 Table of Contents 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.
Additionally, we are currently restructuring to optimize and consolidate our manufacturing operations and improve operating efficiencies, and we continue to evaluate our manufacturing facilities and may decide to conduct additional optimization and consolidation initiatives. These plans and any future initiatives may or may not be successful in achieving our intended results.
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.
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.
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.
Infringement, misappropriation, and unlawful use of our intellectual property rights, and resulting unauthorized manufacture or sale of equipment using our IP rights, 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.
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.
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 conversion of some or all of the Convertible Notes may dilute the ownership interests of our stockholders.
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.
Furthermore, some of our products are used in medical device applications where malfunction of the device could result in serious injury. 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.
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.
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 and climate risk assessment requirements, along with other ESG-related laws, we are subject to at least some of these rules and concomitant regulatory risk exposure.
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.
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.
Our business could be adversely affected to the extent we fail to appropriately manage, expand, and update our information technology infrastructure. In particular, w e 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.
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 and strategic investments. As part of our business strategy, we have and will likely continue to acquire companies or businesses and make investments to further our business.
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.
Additionally, with increasing geopolitical risks, we might experience customers or governments of our customers promoting their own domestic businesses and competitors.
Additionally, governments of our customers may promote their own domestic businesses and competitors.
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.
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 .

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe 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. To further enhance awareness and responsiveness to potential threats, we also conduct regular phishing simulations and email communications on cybersecurity trends awareness throughout the year. ● Third Party Assessment.
Biggest changeAccess 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.
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 key vendors for prompt notification of material cybersecurity incidents. ● Insurance.
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.
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”. 26 Table of Contents Cybersecurity 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.
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”. ​ 28 Table of Contents 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 routinely reports 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 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 plan provides for the formation of a multi-functional incident response team led by the Chief Information Officer (“CIO”) and comprised of IT, legal, corporate communications, internal audit, operational personnel, and members of the Board of Directors. ● Global Recovery.
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.
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 CIO, who meets with the Chief Executive Officer and other members of executive management regularly to discuss issues, assess risks, and coordinate Company-wide cybersecurity initiatives.
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 CIO leads a dedicated cybersecurity technical team that manages, monitors, and enforces compliance with the cybersecurity program. Although we have experienced non-material information 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.
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.
ITEM 1C. CYBERSECURITY Cybersecurity Risk Management and Assessment Advanced Energy understands the importance of managing risks from cybersecurity threats and maintains a comprehensive cybersecurity program developed with reference to the National Institute of Standards and Technology (“NIST”) cybersecurity framework.
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.
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Our cybersecurity program includes administrative, organizational, technical, and physical safeguards reasonably designed to protect the confidentiality, integrity, and availability of our data.
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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.
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Access to our systems is restricted to those who require access in accordance with the principle of least privilege. We also conduct background checks for our employees where permitted by local law, require signed confidentiality agreements and acceptable use agreements, and follow termination/access removal processes. ● Employee Training.
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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.
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The full Board receives a cybersecurity briefing from the CIO annually.
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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.
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As discussed above, our cybersecurity risk management and strategy are led by our CIO, who has extensive leadership experience with enterprise information technology in the manufacturing and telecom industries, where he has held various executive roles in which he developed and executed IT strategy, including cybersecurity programs, helped achieve and maintain Sarbanes-Oxley compliance, and brought companies into compliance with ISO 27001, among other things.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changePROPERTIES Information concerning our principal properties is set forth below: ​ ​ ​ ​ ​ ​ Location Principal Activity Ownership Denver, Colorado ​ Corporate headquarters, general and administrative ​ Leased Fort Collins, Colorado ​ Research and development, distribution, sales, and service ​ Leased Penang, Malaysia ​ Manufacturing and distribution ​ Leased Rosario, Philippines ​ Manufacturing ​ Owned Santa Rosa, Philippines ​ Manufacturing ​ Leased Zhongshan, China ​ Manufacturing (planned closure in 2025) ​ Leased Mexicali, Mexico ​ Manufacturing ​ Leased Bangkok, Thailand ​ Planned manufacturing ​ Leased Littlehampton, United Kingdom ​ Manufacturing, distribution, sales, service, and research and development ​ Leased Lockport, New York ​ Manufacturing, distribution, service, and research and development ​ Leased Singapore, Singapore ​ Global operations headquarters (sales, service, and research and development) ​ Leased Quezon, Philippines ​ Engineering, research and development, administration, and support ​ Leased Taipei, Taiwan ​ Sales, distribution, and service ​ Leased Sungnam City, South Korea ​ Sales, distribution, and service ​ Leased Hong Kong, Hong Kong ​ Distribution and general and administrative ​ Leased ​ In addition to the above principal properties, we have several other facilities throughout North America, Europe, and Asia.
Biggest changePROPERTIES 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.
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. 29 Table of Contents

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeFor further information see Note 17 . Commitments and Contingencies in Part II, Item 8 “Financial Statements and Supplementary Data.” ​ ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ​ 27 Table of Contents PART II
Biggest changeFor 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. ​ 30 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeITEM 4. MINE SAFETY DISCLOSURES ​ 27 ​ ​ ​ ​ ​ PART II ​ 28 ​ ​ ​ ​ ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES ​ 28 ​ ​ ​ ​
Biggest changeITEM 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 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe performance shown in the graph represents past performance and should not be considered an indication of future performance. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2019 2020 2021 2022 2023 2024 Advanced Energy Industries, Inc. $ 100.00 ​ $ 136.19 ​ $ 128.44 ​ $ 121.56 ​ $ 154.97 ​ $ 165.12 NASDAQ Composite $ 100.00 ​ $ 145.05 ​ $ 177.27 ​ $ 119.63 ​ $ 173.11 ​ $ 224.34 Dow Jones US Electrical Components & Equipment $ 100.00 ​ $ 120.75 ​ $ 151.36 ​ $ 124.87 ​ $ 159.57 ​ $ 213.20 S&P 1000 $ 100.00 ​ $ 112.96 ​ $ 141.54 ​ $ 121.67 ​ $ 141.49 ​ $ 158.89 Russell 2000 $ 100.00 ​ $ 119.93 ​ $ 137.67 ​ $ 109.50 ​ $ 127.98 ​ $ 142.73 ​ 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.
Biggest change(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] ​ ​ 32 Table of Contents
The comparison assumes $100 invested on December 31, 2019 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 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.
This does not include stockholders whose shares are held in “street name” through brokers or other nominees. In each of the four quarters in 2024, we paid quarterly cash dividends of $0.10 per share, totaling $15.4 million for the full year.
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.
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 31, 2025, the number of common stockholders of record was 196.
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.
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 did not repurchase any shares during the fourth quarter of 2024.
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, 2024, the remaining amount authorized by our Board for future share repurchases was $197.4 million with no time limitation. 28 Table of Contents 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, 2019 through December 31, 2024.
At December 31, 2025, the remaining amount authorized by our Board for future share repurchases was $166.9 million with no time limitation.
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RESERVED Not applicable. ​ 29 Table of Contents
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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. ​ 31 Table of Contents 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.
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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.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeITEM 6. RESERVED ​ 29 ​ ​ ​ ​ ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ​ 30 ​ ​ ​ ​ ITEM 7A . QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ​ 41 ​ ​ ​ ​ ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ​ 43 ​ ​ ​ ​
Biggest changeITEM 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 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFinally, non-GAAP results exclude one-time tax benefits and losses associated with changes in our legal entity structure or ownership of certain assets. ​ ​ 36 Table of Contents ​ ​ ​ ​ ​ ​ ​ Reconciliation of non-GAAP measure ​ ​ ​ ​ ​ ​ Operating expenses and operating income from continuing ​ Years Ended December 31, operations, excluding certain items 2024 2023 ​ ​ (in thousands) Gross profit from continuing operations, as reported ​ $ 529,343 ​ $ 592,398 Adjustments to gross profit: ​ ​ ​ Stock-based compensation ​ 3,994 ​ 2,059 Facility expansion, relocation costs and other ​ 4,421 ​ 2,334 Acquisition-related costs ​ ​ (13) ​ ​ 238 Non-GAAP gross profit ​ 537,745 ​ 597,029 Non-GAAP gross margin ​ 36.3% ​ 36.1% ​ ​ ​ ​ ​ ​ ​ Operating expenses from continuing operations, as reported ​ ​ 492,736 ​ ​ 478,704 Adjustments: ​ ​ ​ ​ Amortization of intangible assets ​ (26,046) ​ (28,254) Stock-based compensation ​ (41,946) ​ (28,942) Acquisition-related costs ​ (5,965) ​ (4,026) Facility expansion, relocation costs and other ​ (1,222) ​ (189) Restructuring, asset impairments, and other charges ​ (30,318) ​ (26,977) Non-GAAP operating expenses ​ ​ 387,239 ​ ​ 390,316 Non-GAAP operating income ​ $ 150,506 ​ $ 206,713 Non-GAAP operating margin ​ 10.2% ​ 12.5% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Reconciliation of non-GAAP measure ​ Years Ended December 31, Income from continuing operations, excluding certain items 2024 2023 ​ ​ (in thousands) Income from continuing operations, less non-controlling interest, net of income tax ​ $ 56,306 ​ $ 130,749 Adjustments: ​ ​ Amortization of intangible assets ​ 26,046 ​ 28,254 Acquisition-related costs ​ 5,952 ​ 4,264 Facility expansion, relocation costs, and other ​ 5,643 ​ 2,523 Restructuring, asset impairments, and other charges ​ 30,318 ​ 26,977 Unrealized foreign currency gain ​ ​ (3,512) ​ ​ (89) Other costs included in other income (expense), net ​ ​ 2,812 ​ ​ (1,516) Tax effect of non-GAAP adjustments, including certain discrete tax benefits ​ (19,563) ​ (31,303) Non-GAAP income, net of income tax, excluding stock-based compensation ​ ​ 104,002 ​ ​ 159,859 Stock-based compensation, net of tax ​ ​ 36,292 ​ ​ 24,181 Non-GAAP income, net of income tax ​ $ 140,294 ​ $ 184,040 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, Weighted-average common shares ​ 2024 ​ 2023 ​ ​ (in thousands) Diluted weighted-average common shares outstanding ​ ​ 37,839 ​ ​ 37,750 ​ ​ ​ ​ ​ ​ ​ ​ Reconciliation of non-GAAP measure ​ Years Ended December 31, Per share earnings excluding certain items 2024 2023 Diluted earnings per share from continuing operations, as reported ​ $ 1.49 ​ $ 3.46 Add back: ​ ​ ​ ​ ​ ​ Per share impact of non-GAAP adjustments, net of tax ​ 2.22 ​ ​ 1.42 Non-GAAP earnings per share ​ $ 3.71 ​ $ 4.88 37 Table of Contents Liquidity and Capital Resources Liquidity Adequate liquidity and cash generation are important to the execution of our strategic initiatives.
Biggest changeFinally, 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% ​ 41 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ ​ 42 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ 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.
Non-GAAP Results Management uses 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.
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.
We design, manufacture, sell and support 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.
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.
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, 2024, we did not have any off-balance sheet arrangements pursuant to Regulation S-K.
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.
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 18. Long-Term Debt in Part II, Item 8 “Financial Statements and Supplementary Data”).
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”).
The following section discusses our results of operations for 2024 and 2023 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.
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.
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 4.
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.
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.” ​
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.” ​ 46 Table of Contents
In 2024, we used existing cash on hand to make payments towards our 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 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 addition, we exclude discontinued operations and other non-recurring items such as acquisition-related costs, facility expansion and related 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.
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.
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 4. Income Taxes , Note 14. Leases , Note 15. Employee Retirement Plans and Postretirement Benefits, and Note 18.
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.
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. For more information see Note 18.
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.
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.
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.
Additionally, both 2024 and 2023 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.
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.
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 the Board of Directors and will depend on our financial condition, results of operations, capital requirements, business conditions, and other factors. 38 Table of Contents Share Repurchases To repurchase shares of our common stock, we periodically enter into share repurchase agreements.
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.
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 impact in the countries in which we operate. The impact of these changes may have a material impact on our cash tax expense and tax rate.
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.
We expect the current market conditions to continue for several quarters. 31 Table of Contents 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.
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. 35 Table of Contents 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.
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.
Tax rate changes are reflected in the period such changes are enacted. 45 Table of Contents 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.
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.
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.
Net Cash From Financing Activities Net cash used in financing activities in 2024 was $377.1 million, compared to a cash inflow of $445.7 million in the prior year.
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.
Long-Term Debt in Part II, Item 8 “Financial Statements and Supplementary Data” for information regarding our debt. ​ 35 Table of Contents Income Tax Benefit The following table summarizes tax benefit and the effective tax rate for our income from continuing operations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ ​ 2024 2023 ​ ​ ​ (in thousands) ​ Income from continuing operations, before income tax ​ ​ $ 52,377 ​ $ 122,461 ​ Income tax benefit ​ ​ $ (3,929) ​ $ (8,288) ​ Effective tax rate ​ ​ ​ (7.5) % ​ (6.8) % ​ Our effective tax rates differ from the U.S. federal statutory rate of 21% for the years ended December 31, 2024 and 2023, primarily due to the intercompany transfer of intellectual property among certain of our subsidiaries in 2024 and a valuation allowance release in 2023.
Long-Term Debt in Part II, Item 8 “Financial Statements and Supplementary Data” for information regarding our debt. ​ 39 Table of Contents 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.
In addition, management’s incentive plans include 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.
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.
Certain intangible assets reached the end of their estimated useful life in the current year. This was partially offset by amortization of intangible assets acquired in the Airity acquisition. For additional information, see Note 2. Acquisition and Note 11.
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.
Income Taxes in Part II, Item 8 “Financial Statements and Supplementary Data.” 40 Table of Contents Business Combinations We record the assets acquired and liabilities assumed in a business combination at their acquisition date fair values.
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.
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.
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.
The presentation of this additional information should not be considered a substitute for results prepared in accordance with U.S. GAAP. 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.
GAAP. 40 Table of Contents 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.
On the same date, we entered into an additional amendment to the Credit Agreement to increase the capacity on the Revolving Facility from $200.0 million to $600.0 million. As of December 31, 2024, 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 only outstanding debt is the $575.0 million Convertible Notes, which mature on September 15, 2028 and carry a 2.5% interest rate.
Operating Expenses The following table summarizes our operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ Change 2024 v. 2023 ​ ​ 2024 ​ 2023 ​ Dollar ​ Percent ​ ​ ​ (in thousands) Research and development $ 211,834 $ 202,439 $ 9,395 4.6 % Selling, general, and administrative ​ 224,538 ​ ​ 221,034 ​ 3,504 ​ 1.6 % Amortization of intangible assets ​ ​ 26,046 ​ ​ 28,254 ​ ​ (2,208) ​ (7.8) % Restructuring, asset impairments, and other charges ​ 30,318 ​ ​ 26,977 ​ 3,341 ​ 12.4 % Total operating expenses ​ $ 492,736 ​ $ 478,704 ​ $ 14,032 ​ 2.9 % ​ Research and Development Research and development expenses increased $9.4 million to $211.8 million, as compared to $202.4 million in the prior year.
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.
As of December 31, 2024, no amounts were outstanding under the Revolving Facility, and we had $600.0 million in available funding.
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.
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.
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.
The increase is related to higher stock-based compensation expense as well as higher program and materials costs compared to the prior year. This was partially offset by lower variable compensation. Selling, General and Administrative Selling, general and administrative expenses increased $3.5 million to $224.5 million, as compared to $221.0 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.
Cash Flows A summary of our cash from operating, investing, and financing activities was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2024 2023 ​ ​ (in thousands) Net cash from operating activities from continuing operations ​ $ 132,924 ​ $ 212,925 Net cash used in operating activities from discontinued operations ​ (2,177) ​ (3,988) Net cash from operating activities ​ 130,747 ​ 208,937 Net cash used in investing activities ​ (73,541) ​ (64,751) Net cash (used in) from financing activities ​ (377,093) ​ 445,684 Effect of currency translation on cash and cash equivalents ​ (2,583) ​ (4,132) Net change in cash and cash equivalents ​ (322,470) ​ 585,738 Cash and cash equivalents, beginning of period ​ 1,044,556 ​ 458,818 Cash and cash equivalents, end of period ​ $ 722,086 ​ $ 1,044,556 ​ Net Cash From Operating Activities Net cash from operating activities from continuing operations was $132.9 million, a decrease of $80.0 million, compared to $212.9 million in the prior year.
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 ​ ​ 44 Table of Contents 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.
Should we have future borrowings under our Term Loan Facility or Revolving Facility, those borrowings would be subject to a variable rate. Other expense, net was $2.0 million in 2024, as compared to $1.8 million of expense in the prior year. Other expense, net consists primarily of foreign exchange gains and losses and other miscellaneous items.
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.
As of December 31, 2024, our cash and cash equivalents totaled $722.1 million, and our available funding under our Revolving Facility is $600.0 million. Additionally, we generated $132.9 million of cash flow from continuing operations in 2024. We believe our sources of liquidity will be adequate to meet anticipated debt service, share repurchase programs, and dividends.
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.
In 2024, we reported higher operating expenses of $492.7 million, an increase of $14.0 million primarily attributable to higher stock-based compensation expense, higher research and development (“R&D”) program costs, higher restructuring charges from initiatives focused on optimizing manufacturing and support operations, partially offset by a general workforce reduction to align to our revenue levels.
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.
The increase is primarily driven by higher stock-based compensation expense, partially offset by actions taken to control costs, including headcount reduction and lower variable compensation. Amortization of Intangible Assets Amortization expense decreased $2.2 million to $26.0 million, as compared to $28.3 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.
Restructuring, Asset Impairments, and Other Charges in Part II, Item 8 “Financial Statements and Supplementary Data.” ​ Interest Income, Interest Expense, and Other Income (Expense), net We experienced an increase in interest income on higher cash balances, due in part to proceeds from the issuance of the Convertible Notes in the third quarter of 2023, our ability to concentrate cash in investment accounts, and higher short term market interest rates.
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.
The following table summarizes our Consolidated Statements of Operations and as a percentage of revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ Change 2024 v. 2023 ​ ​ ​ 2024 ​ 2023 ​ Dollar ​ Percent ​ ​ (in thousands) Revenue $ 1,482,042 $ 1,655,810 $ (173,768) (10.5) % Gross profit ​ 529,343 ​ ​ 592,398 ​ (63,055) ​ (10.6) % Operating expenses ​ 492,736 ​ ​ 478,704 ​ 14,032 ​ 2.9 % Operating income from continuing operations ​ 36,607 ​ ​ 113,694 ​ (77,087) ​ (67.8) % Interest income ​ ​ 42,860 ​ ​ 27,092 ​ ​ 15,768 ​ 58.2 % Interest expense ​ ​ (25,105) ​ ​ (16,566) ​ ​ (8,539) ​ 51.5 % Other income (expense), net ​ (1,985) ​ ​ (1,759) ​ (226) ​ 12.8 % Income from continuing operations, before income tax ​ 52,377 ​ ​ 122,461 ​ (70,084) ​ (57.2) % Income tax benefit ​ (3,929) ​ ​ (8,288) ​ 4,359 ​ (52.6) % Income from continuing operations ​ $ 56,306 ​ $ 130,749 ​ $ (74,443) ​ (56.9) % ​ ​ 32 Table of Contents Revenue The following tables summarize net revenue and percentages of revenue by markets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ Change 2024 v. 2023 ​ ​ ​ 2024 ​ 2023 Dollar Percent ​ ​ ​ (in thousands) Semiconductor Equipment ​ $ 792,559 53.5 % ​ $ 743,794 44.9 % ​ $ 48,765 6.6 % Industrial and Medical ​ 316,177 ​ 21.3 ​ ​ 474,449 ​ 28.7 ​ ​ (158,272) (33.4) % Data Center Computing ​ ​ 284,192 ​ 19.2 ​ ​ ​ 249,874 ​ 15.1 ​ ​ ​ 34,318 13.7 % Telecom and Networking ​ 89,114 ​ 6.0 ​ ​ 187,693 ​ 11.3 ​ ​ (98,579) (52.5) % Total ​ $ 1,482,042 ​ 100.0 % ​ $ 1,655,810 ​ 100.0 % ​ $ (173,768) (10.5) % Total revenue decreased from the same period in the prior year due primarily to lower end demand and customer inventory rebalancing, resulting in lower demand in our Industrial and Medical and Telecom and Networking markets.
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 % ​ ​ 36 Table of Contents 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.
Net Cash From Investing Activities Net cash used in investing activities in 2024 was $73.5 million, an increase of $8.7 million, compared to $64.8 million in the prior year. The increase was primarily due to our acquisition of Airity for $13.8 million and continued capital investments in our Mexico and Thailand manufacturing facilities.
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.
Acquisition in Part II, Item 8 “Financial Statements and Supplementary Data.” Business Environment and Trends 2024 Summary Results and Key Activities For the year ended December 31, 2024, our revenue was $1,482.0 million, representing a decline of 10.5% as compared to 2023.
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.
Long-Term Debt in Part II, Item 8 “Financial Statements and Supplementary Data.” Dividends During 2024, we paid quarterly cash dividends of $0.10 per share, totaling $15.4 million.
Dividends During 2025, we paid quarterly cash dividends of $0.10 per share, totaling $15.6 million.
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.
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.
In conjunction with the Convertible Note issuance, we also received $74.9 million proceeds from sale of warrants and made a $115.0 million payment for purchase of note hedges. We also repurchased $40.1 million of our common stock. Critical Accounting Estimates The preparation of consolidated financial statements and related disclosures in conformity with U.S.
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.
The increase was primarily due to improved demand as we emerge from the cyclical trough in 2023. Sales in the Industrial and Medical market decreased $158.3 million, or 33.4%, to $316.2 million, as compared to $474.4 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.
Intangible Assets and Goodwill in Part II, Item 8 “Financial Statements and Supplementary Data.” ​ 34 Table of Contents Restructuring, Asset Impairments and Other Charges In the third quarter of 2024, we approved further manufacturing consolidation initiatives, including the closure of our Zhongshan, China manufacturing facility.
Intangible Assets and Goodwill in Part II, Item 8 “Financial Statements and Supplementary Data.” ​ 38 Table of Contents 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.
Restructuring, Asset Impairments, and Other Charges in Part II, Item 8 “Financial Statements and Supplementary Data.” 30 Table of Contents In the third quarter of 2024, we entered into an amendment to the Credit Agreement to increase the capacity on the Revolving Facility from $200.0 million to $600.0 million.
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. ​ 33 Table of Contents 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.
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. Debt On September 9, 2024, we used existing cash on hand to prepay the full $345.0 million outstanding principal balance under our Term Loan Facility.
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. 43 Table of Contents Debt See Note 7. Long-Term Debt in Part II, Item 8 “Financial Statements and Supplementary Data” for information regarding the Credit Agreement.
Gross margin declined mainly due to the impact of lower volume, largely offset by lower manufacturing, material, and other costs of 170 basis points and favorable mix of 150 basis points.
Gross margin improved mainly due to the impact of higher volume, and approximately 140 basis points resulting from manufacturing cost reduction programs.
We anticipate the 2024 Plan will be substantially completed by the end of second quarter of 2025, with final activities expected to conclude in 2026. For additional information about this and prior year restructuring plans, see Note 12.
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.
The following table summarizes these repurchases: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2024 2023 2022 ​ ​ (in thousands, except per share amounts) Amount paid or accrued to repurchase shares ​ $ 1,770 ​ $ 40,132 ​ $ 26,635 Number of shares repurchased ​ 19 ​ 378 ​ 356 Average repurchase price per share ​ $ 93.58 ​ $ 105.74 ​ $ 74.90 ​ At December 31, 2024, the remaining amount authorized by the Board for future share repurchases was $197.4 million with no time limitation.
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.
Removed
Within this segment, our products are sold into the Semiconductor Equipment, Industrial and Medical, Data Center Computing, and Telecom and Networking markets. On June 20, 2024, we acquired Airity Technologies, Inc. (“Airity”). 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. See Note 2.
Added
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.
Removed
The decline was attributable to lower revenue from our Industrial and Medical and Telecom and Networking markets due to customer inventory rebalancing, resulting in a lower demand environment. These declines were partially offset by higher revenues in the Semiconductor Equipment market, from the 2023 trough level, and growing AI-related demand in the Data Center Computing market.
Added
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.
Removed
For more details on the trends in our end markets, see “End Markets Summary and Trends” elsewhere in this Item 7.
Added
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.
Removed
The restructuring actions should largely be completed in 2026 and are expected to enable a more efficient and cost-effective operating structure. In the third quarter of 2024, we approved further manufacturing consolidation initiatives, including the closure of our Zhongshan, China manufacturing facility.
Added
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.
Removed
In connection with the 2024 Plan, we recorded a $29.6 million charge primarily associated with expected employment-related charges and facility exit costs. See Note 12.
Added
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.
Removed
This amendment was in connection with the concurrent prepayment, using existing cash on hand, of the full $345.0 million outstanding principal balance under our Term Loan Facility. See Note 18. Long-Term Debt in Part II, Item 8 “ Financial Statements and Supplementary Data ” and Liquidity and Capital Resources below.
Added
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.
Removed
During 2024, we continued progress on a new factory near Bangkok, Thailand, which we expect to be operational in 2026. End Markets Summary and Trends The demand environment in each of our markets is impacted by macroeconomic conditions, various market trends, customer buying patterns, design wins, and other factors.
Added
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.
Removed
Although we are currently experiencing a lower demand environment in certain markets, we continue to believe that the long-term market growth drivers support our long-term strategy, research and development efforts, and capital investments.
Added
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.
Removed
However, in the short-term it is unclear how certain macroeconomic conditions, including the effect of higher interest rates impacting end customers’ capital investment, the timing of inventory digestion, and customer buying patterns, will affect customer demand and our revenue. Semiconductor Equipment Market The Semiconductor Equipment market appears to be slowly recovering from a cyclical downturn, which bottomed in 2023.
Added
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.
Removed
Demand improved in 2024, but a number of external factors continue to limit the market recovery, including unfavorable macroeconomic conditions, prolonged weak demand for consumer electronics, low fab utilization, and U.S. export restrictions to China. We continue to believe the long-term growth drivers will support cyclical growth for this market.
Added
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.
Removed
Growth drivers include more manufacturing capacity needed to support increasing demand for semiconductor devices, increasing etch and deposition process steps with new technology inflections, and the transition to advanced technology nodes requiring higher content of advanced power solutions per tool. In addition, we believe our investment in new products can enable market share gains resulting in higher than market growth.
Added
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.
Removed
Industrial and Medical Market Beginning in the second half of 2023, the impact of weaker macroeconomic conditions started to lower demand for our products in the Industrial and Medical market. In addition, in the previous two years, many customers built inventories of our products following the supply chain disruption and extended lead times.
Added
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.
Removed
As lead times normalized in 2024, customers rebalanced their elevated inventory levels resulting in further decline in revenue. We expect these factors will continue to limit our revenue in the near term but believe that growth will return to this market after customer inventories return to normal levels and end markets recover.
Added
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.
Removed
Data Center Computing Market Revenue in the Data Center Computing market was weak in the first quarter of 2024 driven by reduced investments by our hyperscale customers, lower demand for enterprise systems, and the timing of large customer orders.
Added
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.
Removed
Starting in the second quarter of 2024, demand rebounded driven by accelerated investments in AI and customers starting to ramp new generations of high power solutions, resulting in revenue growth in 2024. We expect these factors will continue to support strong demand for the next few quarters.
Added
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−1 removed7 unchanged
Biggest changeAlthough these translation changes have no immediate cash impact, the translation changes may impact future borrowing capacity, and overall value of our net assets. 41 Table of Contents 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.
Biggest changeOperating 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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market Risk and Risk Management In the normal course of business, we 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.
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.
However, increases in interest rates could impact the decision to borrow under our Credit Agreement and our ability to refinance existing maturities or acquire additional debt on favorable terms. For more information see Note 18. Long-Term Debt in Part II, Item 8 “Financial Statements and Supplementary Data.” ​ 42 Table of Contents
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.” ​ 47 Table of Contents
Removed
Operating results and cash flow statements are translated at average rates of exchange during each reporting period.

Other AEIS 10-K year-over-year comparisons