10-K – 2026-02-13 – aeis-20251231x10k.htm

ITEM 7A.         QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk and Risk Management
In the normal course of business, we typically have exposures to interest rate risk from our investments and Credit Agreement. We also have exposure to foreign exchange rate risk related to our foreign operations and foreign currency transactions.
Foreign Currency Exchange Rate Risk
We are impacted by changes in foreign currency exchange rates through revenue and purchasing transactions when we sell products and purchase materials in currencies different from the currency in which product and manufacturing costs were incurred. Our reported financial results of operations, including the reported value of our assets and liabilities, are also impacted by changes in foreign currency exchange rates. Assets and liabilities of substantially all our subsidiaries outside the U.S. are translated at period end rates of exchange for each reporting period. Operating results and cash flow statements are translated at average rates of exchange during each reporting period.
The functional currencies of our worldwide facilities primarily include the United States Dollar, Euro, South Korean Won, New Taiwan Dollar, Japanese Yen, Pound Sterling, and Chinese Yuan. We are subject to risks associated with revenue and purchasing activities and costs to operate that are denominated in currencies other than our functional currencies, such as the Singapore Dollar, Malaysian Ringgit, Mexican Peso, Philippine Peso, and Thai Baht. Historically, the impact of changes to these particular exchange rates has not been material to our operating results.
From time to time, we may enter into foreign currency exchange rate contracts to hedge against changes in foreign currency exchange rates on assets and liabilities expected to be settled at a future date, including foreign currency, which may be required for a potential foreign acquisition. Market risk arises from the potential adverse effects on the value of derivative instruments that result from a change in foreign currency exchange rates. We may enter into foreign currency forward contracts to manage the exchange rate risk associated with intercompany debt denominated in nonfunctional currencies. We minimize our market risk applicable to foreign currency exchange rate contracts by establishing and monitoring parameters that limit the types and degree of our derivative contract instruments. We enter into derivative contract instruments for risk management purposes only. We do not enter into or issue derivatives for trading or speculative purposes.
Interest Rate Risk
At the present time, a change in interest rates does not have an impact upon our future earnings and cash flow because our only outstanding debt is the Convertible Notes, which carry a fixed 2.5% interest rate. However, increases in interest rates could impact the decision to borrow under the Credit Agreement and our ability to refinance existing maturities or acquire additional debt on favorable terms.
For more information see Note 7. Long-Term Debt in Part II, Item 8 “Financial Statements and Supplementary Data.”
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ITEM 8.            FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
​

​

​

Report of Independent Registered Public Accounting Firm (PCAOB ID No. 42 )
49
​

Consolidated Balance Sheets
53
​

Consolidated Statements of Operations
54
​

Consolidated Statements of Comprehensive Income
55
​

Consolidated Statements of Stockholders’ Equity
56
​

Consolidated Statements of Cash Flows
57
​

Notes to Consolidated Financial Statements
58
​

​
​
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Advanced Energy Industries, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Advanced Energy Industries, Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 13, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
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​

​

​
​
Inventory valuation

Description of the Matter
​
As more fully described in Notes 1 and 4 to the consolidated financial statements, the Company has inventories with a carrying value of $411.2 million as of December 31, 2025. The Company adjusts its inventory carrying value for estimated excess or obsolescence equal to the difference between the cost of inventory and the estimated net realizable value based on projected customer demand, which is determined by considering historical usage, customer orders and forecast, and qualitative considerations such as market and economic conditions.
Auditing management’s inventory valuation was complex and involved judgment because a critical factor in determining excess and obsolete inventory requires management to determine projected customer demand, which could be impacted by future market and economic conditions.

How We Addressed the Matter in Our Audit
​
We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls related to the Company’s process for evaluating inventory valuation inclusive of controls related to the development of and management’s review of the underlying data, including historical usage and the estimation of projected customer demand.
We evaluated certain inventories for excess or obsolescence by testing key inputs, including historical usage and projected customer demand, and by testing the completeness and accuracy of the underlying data supporting management’s inventory valuation assessment. Specifically, we compared the Company’s projected customer demand to historical sales and inventory usage. We assessed historical trends of management’s estimates and performed analyses to evaluate management’s excess and obsolete inventory estimates and underlying assumptions. We also performed a retrospective review of the prior year valuation assumptions, including inventory write-off history.

​
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2019.
Denver, Colorado
February 13, 2026
​
​
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Advanced Energy Industries, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Advanced Energy Industries, Inc.’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Advanced Energy Industries, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and our report dated February 13, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Denver, Colorado
February 13, 2026
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​
ADVANCED ENERGY INDUSTRIES, INC.
Consolidated Balance Sheets
(In millions, except per share amounts)
​
​

​

​

​

​

​

​

​

​
​
December 31, 
​
December 31, 
​

​
  ​ ​ ​
2025
  ​ ​ ​
2024
​

ASSETS
 
​
  ​
 
​
  ​
 

Current assets:
 
​
  ​
 
​
  ​
 

Cash and cash equivalents
​
$
791.2
​
$
722.1
​

Accounts receivable, net
​
 
325.2
​
 
265.3
​

Inventories
​
 
411.2
​
 
360.4
​

Other current assets
​
​
46.3
​
​
41.5
​

Total current assets
​
 
1,573.9
​
 
1,389.3
​

Property and equipment, net
​
 
272.8
​
 
185.6
​

Operating lease right-of-use assets
​
​
98.1
​
​
96.3
​

Other assets
​
 
182.5
​
 
155.3
​

Intangible assets, net
​
 
117.7
​
 
139.4
​

Goodwill
​
 
300.8
​
 
296.0
​

TOTAL ASSETS
​
$
2,545.8
​
$
2,261.9
​

​
​
​
​
​
​
​
​

LIABILITIES AND STOCKHOLDERS’ EQUITY
​
 
​
​
 
​
​

Current liabilities:
​
 
​
​
 
​
​

Accounts payable
​
$
224.1
​
$
143.5
​

Accrued payroll and employee benefits
​
 
93.0
​
 
67.9
​

Other accrued expenses
​
 
78.1
​
 
73.6
​

Customer deposits and other
​
 
12.7
​
 
11.5
​

Current portion of long-term debt
​
​
567.5
​
​
—
​

Current portion of operating lease liabilities
​
​
15.8
​
​
17.8
​

Total current liabilities
​
 
991.2
​
 
314.3
​

Long-term debt, net
​
​
—
​
​
564.7
​

Operating lease liabilities
​
​
95.7
​
​
89.2
​

Defined employee benefit pension plan
​
​
49.4
​
​
49.6
​

Other long-term liabilities
​
​
38.9
​
​
37.5
​

Total liabilities
​
 
1,175.2
​
 
1,055.3
​

​
​
​
​
​
​
​
​

Deferred compensation
​
​
7.8
​
​
3.5
​

Commitments and contingencies (Note 15)
​
 
​
​
 
​
​

​
​
​
​
​
​
​
​

Stockholders' equity:
​
 
​
​
 
​
​

Preferred stock, $ 0.001 par value, 1.0 shares authorized, none issued and outstanding
​
 
—
​
 
—
​

Common stock, $ 0.001 par value, 70.0 shares authorized; 37.8 and 37.7 issued and outstanding at December 31, 2025 and December 31, 2024, respectively
​
 
—
​
 
—
​

Common stock associated with deferred compensation plan
​
​
( 2.6 )
​
​
( 0.9 )
​

Additional paid-in capital
​
 
230.6
​
 
189.1
​

Accumulated other comprehensive income (loss)
​
 
6.2
​
 
( 11.8 )
​

Retained earnings
​
 
1,128.6
​
 
1,026.7
​

Total stockholders' equity
​
 
1,362.8
​
 
1,203.1
​

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
​
$
2,545.8
​
$
2,261.9
​

​
​
​
​
​
​
​
​

​
The accompanying notes are an integral part of these consolidated financial statements.
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ADVANCED ENERGY INDUSTRIES, INC.
Consolidated Statements of Operations
(In millions, except per share amounts)
​
​

​

​

​

​

​

​

​

​

​

​
​
​
​
​
​
​
​
​
​

​
​
Years Ended December 31, 

​
  ​ ​ ​
2025
  ​ ​ ​
2024
  ​ ​ ​
2023

Revenue, net
​
$
1,798.8
​
$
1,482.0
​
$
1,655.8

Cost of revenue
​
 
1,121.4
​
 
952.7
​
 
1,063.4

Gross profit
​
 
677.4
​
 
529.3
​
 
592.4

​
​
​
​
​
​
​
​
​
​

Operating expenses:
​
 
​
​
 
​
​
 
  ​

Research and development
​
 
232.4
​
 
211.8
​
 
202.4

Selling, general, and administrative
​
 
242.4
​
 
224.6
​
 
221.0

Amortization of intangible assets
​
 
22.1
​
 
26.0
​
 
28.3

Restructuring, asset impairments, and other charges
​
 
12.5
​
 
30.3
​
 
27.0

Total operating expenses
​
 
509.4
​
 
492.7
​
 
478.7

Operating income
​
 
168.0
​
 
36.6
​
 
113.7

​
​
​
​
​
​
​
​
​
​

Interest income
​
​
26.6
​
​
42.9
​
​
27.1

Interest expense
​
​
( 16.7 )
​
​
( 25.1 )
​
​
( 16.6 )

Other expense, net
​
 
( 9.2 )
​
 
( 2.0 )
​
 
( 1.7 )

Income from continuing operations, before income tax
​
 
168.7
​
 
52.4
​
 
122.5

Income tax provision (benefit)
​
 
19.4
​
 
( 3.9 )
​
 
( 8.3 )

Income from continuing operations
​
 
149.3
​
 
56.3
​
 
130.8

Loss from discontinued operations, net of income tax
​
 
( 0.9 )
​
 
( 2.1 )
​
 
( 2.5 )

Net income
​
$
148.4
​
$
54.2
​
$
128.3

​
​
​
​
​
​
​
​
​
​

Basic weighted-average common shares outstanding
​
 
37.6
​
 
37.5
​
 
37.5

Diluted weighted-average common shares outstanding
​
 
38.6
​
 
37.8
​
 
37.8

​
​
​
​
​
​
​
​
​
​

Earnings (loss) per share:
​
 
​
​
 
​
​
 
  ​

Continuing operations:
​
 
​
​
 
​
​
 
  ​

Basic earnings per share
​
$
3.97
​
$
1.50
​
$
3.49

Diluted earnings per share
​
$
3.87
​
$
1.49
​
$
3.46

Discontinued operations:
​
 
​
​
 
​
​
 
​

Basic loss per share
​
$
( 0.02 )
​
$
( 0.06 )
​
$
( 0.07 )

Diluted loss per share
​
$
( 0.02 )
​
$
( 0.06 )
​
$
( 0.07 )

Net income:
​
 
​
​
 
​
​
 
​

Basic earnings per share
​
$
3.95
​
$
1.45
​
$
3.42

Diluted earnings per share
​
$
3.84
​
$
1.43
​
$
3.40

​
The accompanying notes are an integral part of these consolidated financial statements.
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ADVANCED ENERGY INDUSTRIES, INC.
Consolidated Statements of Comprehensive Income
(In millions)
​
​

​

​

​

​

​

​

​

​

​

​
​
Years Ended December 31, 

​
  ​ ​ ​
2025
  ​ ​ ​
2024
  ​ ​ ​
2023

Net income
​
$
148.4
​
$
54.2
​
$
128.3

Other comprehensive income (loss), net of income tax
​
 
  ​
​
 
  ​
​
 
  ​

Foreign currency translation
​
 
15.2
​
 
( 11.5 )
​
 
2.0

Cash flow hedges
​
 
—
​
 
( 5.5 )
​
 
( 6.3 )

Defined employee benefit plan
​
 
2.8
​
 
( 0.9 )
​
 
( 5.9 )

Comprehensive income
​
$
166.4
​
$
36.3
​
$
118.1

​
The accompanying notes are an integral part of these consolidated financial statements.
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ADVANCED ENERGY INDUSTRIES, INC.
Consolidated Statements of Stockholders’ Equity
(In millions)
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

​
​
Advanced Energy Industries, Inc. Stockholders' Equity
​
​
​

​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

​
​
Common Stock
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

​
​
​
​
​
​
​
Common Stock
​
​
​
​
Accumulated
​
​
​
​
​
​

​
​
​
​
​
​
​
Associated with
​
Additional
​
Other
​
​
​
​
Total

​
​
​
​
​
​
​
Deferred
​
Paid-in
​
Comprehensive
​
Retained
​
Stockholders'

​
​
Shares
​
Amount
​
Compensation Plan
​
Capital
​
Income (loss)
​
Earnings
​
Equity

Balances, December 31, 2022
​
37.4
​
$
—
​
$
—
​
$
134.6
​
$
16.3
​
$
915.2
​
$
1,066.1

Stock issued from equity plans, net
​
0.3
​
​
—
​
​
—
​
​
( 0.1 )
​
​
—
​
​
—
​
 
( 0.1 )

Stock-based compensation
​
—
​
​
—
​
​
—
​
​
29.3
​
​
—
​
​
—
​
 
29.3

Share repurchases
​
( 0.4 )
​
​
—
​
​
—
​
​
( 1.5 )
​
​
—
​
​
( 38.6 )
​
​
( 40.1 )

Dividends declared ($ 0.10 per share)
​
—
​
​
—
​
​
—
​
​
—
​
​
—
​
​
( 15.2 )
​
​
( 15.2 )

Other comprehensive loss
​
—
​
​
—
​
​
—
​
​
—
​
​
( 10.2 )
​
​
—
​
 
( 10.2 )

Warrants and note hedges, net
​
—
​
​
—
​
​
—
​
​
( 40.1 )
​
​
—
​
​
—
​
​
( 40.1 )

Tax impact of convertible notes and note hedges
​
—
​
​
—
​
​
—
​
​
26.1
​
​
—
​
​
—
​
​
26.1

Net income
​
—
​
​
—
​
​
—
​
​
—
​
​
—
​
​
128.3
​
 
128.3

Balances, December 31, 2023
​
37.3
​
​
—
​
​
—
​
​
148.3
​
​
6.1
​
​
989.7
​
​
1,144.1

Stock issued from equity plans, net
​
0.3
​
​
—
​
​
—
​
​
( 4.8 )
​
​
—
​
​
—
​
 
( 4.8 )

Stock issuance (Note 2)
​
0.1
​
​
—
​
​
—
​
​
4.5
​
​
—
​
​
—
​
​
4.5

Stock-based compensation
​
—
​
​
—
​
​
—
​
​
43.4
​
​
—
​
​
—
​
 
43.4

Share repurchases
​
—
​
​
—
​
​
—
​
​
( 0.1 )
​
​
—
​
​
( 1.7 )
​
​
( 1.8 )

Dividends declared ($ 0.10 per share)
​
—
​
​
—
​
​
—
​
​
—
​
​
—
​
​
( 15.4 )
​
​
( 15.4 )

Other comprehensive loss
​
—
​
​
—
​
​
—
​
​
—
​
​
( 17.9 )
​
​
—
​
 
( 17.9 )

Deferred compensation
​
—
​
​
—
​
​
—
​
​
( 2.2 )
​
​
—
​
​
( 0.1 )
​
​
( 2.3 )

Common stock issued to deferred compensation plan ( 9,487 shares)
​
—
​
​
—
​
​
( 0.9 )
​
​
—
​
​
—
​
​
—
​
​
( 0.9 )

Net income
​
—
​
​
—
​
​
—
​
​
—
​
​
—
​
​
54.2
​
 
54.2

Balances, December 31, 2024
​
37.7
​
​
—
​
​
( 0.9 )
​
​
189.1
​
​
( 11.8 )
​
​
1,026.7
​
​
1,203.1

Stock issued from equity plans, net
​
0.4
​
​
—
​
​
—
​
​
( 6.9 )
​
​
—
​
​
—
​
 
( 6.9 )

Stock-based compensation
​
—
​
​
—
​
​
—
​
​
48.3
​
​
—
​
​
—
​
 
48.3

Share repurchases
​
( 0.3 )
​
​
—
​
​
—
​
​
( 1.6 )
​
​
—
​
​
( 28.8 )
​
​
( 30.4 )

Dividends declared ($ 0.10 per share)
​
—
​
​
—
​
​
—
​
​
—
​
​
—
​
​
( 15.6 )
​
​
( 15.6 )

Other comprehensive income
​
—
​
​
—
​
​
—
​
​
—
​
​
18.0
​
​
—
​
 
18.0

Deferred compensation
​
—
​
​
—
​
​
—
​
​
—
​
​
—
​
​
( 2.1 )
​
​
( 2.1 )

Common stock issued to deferred compensation plan ( 24,025 shares)
​
—
​
​
—
​
​
( 1.7 )
​
​
1.7
​
​
—
​
​
—
​
​
—

Net income
​
—
​
​
—
​
​
—
​
​
—
​
​
—
​
​
148.4
​
 
148.4

Balances, December 31, 2025
​
37.8
​
$
—
​
$
( 2.6 )
​
$
230.6
​
$
6.2
​
$
1,128.6
​
$
1,362.8

​
The accompanying notes are an integral part of these consolidated financial statements.
​

56

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ADVANCED ENERGY INDUSTRIES, INC.
Consolidated Statements of Cash Flows
(In millions)
​
​

​

​

​

​

​

​

​

​

​

​
​
Years Ended December 31, 

​
  ​ ​ ​
2025
  ​ ​ ​
2024
  ​ ​ ​
2023

CASH FLOWS FROM OPERATING ACTIVITIES:
 
​
  ​
 
​
  ​
 
​
  ​

Net income
​
$
148.4
​
$
54.2
​
$
128.3

Less: loss from discontinued operations, net of income tax
​
 
( 0.9 )
​
 
( 2.1 )
​
 
( 2.5 )

Income from continuing operations, net of income tax
​
 
149.3
​
 
56.3
​
 
130.8

Adjustments to reconcile net income to net cash from operating activities:
​
 
  ​
​
 
  ​
​
 
  ​

Depreciation and amortization
​
 
62.0
​
 
68.5
​
 
66.5

Stock-based compensation
​
 
55.7
​
 
45.9
​
 
31.0

Amortization and write off of debt issuance costs and debt discount
​
​
3.2
​
​
3.8
​
​
1.3

Deferred income taxes
​
 
( 13.8 )
​
 
( 20.5 )
​
 
( 34.0 )

Other
​
​
0.8
​
​
1.2
​
​
0.5

Changes in operating assets and liabilities, net of assets acquired
​
 
​
​
 
​
​
 
​

Accounts receivable, net
​
 
( 57.4 )
​
 
14.6
​
 
23.3

Inventories
​
 
( 47.4 )
​
 
( 27.9 )
​
 
39.3

Other assets
​
 
( 9.5 )
​
 
( 2.1 )
​
 
5.0

Accounts payable
​
 
79.3
​
 
( 0.6 )
​
 
( 26.1 )

Operating lease right-of-use assets and operating lease liabilities, net
​
​
2.5
​
​
( 0.9 )
​
​
0.6

Other liabilities and accrued expenses
​
 
10.0
​
 
( 5.3 )
​
 
( 25.3 )

Net cash from operating activities from continuing operations
​
 
234.7
​
 
133.0
​
 
212.9

Net cash from operating activities from discontinued operations
​
 
( 1.4 )
​
 
( 2.2 )
​
 
( 4.0 )

Net cash from operating activities
​
 
233.3
​
 
130.8
​
 
208.9

​
​
​
​
​
​
​
​
​
​

CASH FLOWS FROM INVESTING ACTIVITIES:
​
 
  ​
​
 
  ​
​
 
  ​

Purchases of long-term investments
​
​
( 2.4 )
​
​
( 3.0 )
​
​
( 3.7 )

Purchases of property and equipment
​
 
( 107.4 )
​
 
( 56.8 )
​
 
( 61.0 )

Acquisitions, net of cash acquired
​
​
—
​
​
( 13.8 )
​
​
—

Net cash from investing activities
​
 
( 109.8 )
​
 
( 73.6 )
​
 
( 64.7 )

​
​
​
​
​
​
​
​
​
​

CASH FLOWS FROM FINANCING ACTIVITIES:
​
 
  ​
​
 
  ​
​
 
  ​

Proceeds from long-term borrowings
​
​
—
​
​
—
​
​
575.0

Payment of debt issuance costs
​
​
—
​
​
( 0.1 )
​
​
( 13.9 )

Dividend payments
​
​
( 15.6 )
​
​
( 15.4 )
​
​
( 15.2 )

Payments on long-term borrowings
​
​
( 1.9 )
​
​
( 355.0 )
​
​
( 20.0 )

Payment for purchase of note hedges
​
​
—
​
​
—
​
​
( 115.0 )

Payment of acquisition holdback
​
​
( 1.5 )
​
​
—
​
​
74.9

Purchase and retirement of common stock
​
​
( 30.2 )
​
​
( 1.8 )
​
​
( 40.0 )

Net payments related to stock-based awards
​
 
( 6.9 )
​
 
( 4.8 )
​
 
( 0.1 )

Net cash from financing activities
​
 
( 56.1 )
​
 
( 377.1 )
​
 
445.7

​
​
​
​
​
​
​
​
​
​

EFFECT OF CURRENCY TRANSLATION ON CASH AND CASH EQUIVALENTS
​
 
1.7
​
 
( 2.6 )
​
 
( 4.1 )

​
​
​
​
​
​
​
​
​
​

NET CHANGE IN CASH AND CASH EQUIVALENTS
​
 
69.1
​
 
( 322.5 )
​
 
585.8

CASH AND CASH EQUIVALENTS, beginning of period
​
 
722.1
​
 
1,044.6
​
 
458.8

CASH AND CASH EQUIVALENTS, end of period
​
$
791.2
​
$
722.1
​
$
1,044.6

​
The accompanying notes are an integral part of these consolidated financial statements.
​
​
​

57

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
​

NOTE 1.           SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES
Advanced Energy Industries, Inc., a Delaware corporation, and its consolidated subsidiaries (“we,” “us,” “our,” “Advanced Energy,” or the “Company”) provides highly engineered, critical, precision power conversion, measurement, and control solutions to our global customers. We design, manufacture, sell and service precision power products that transform, refine, and modify the raw electrical power coming from either the utility or the building facility and convert it into various types of highly controllable, usable power that is predictable, repeatable, and customizable to meet the necessary requirements for powering a wide range of complex equipment. Many of our products enable customers to reduce or optimize their energy consumption through increased power conversion efficiency, power density, power coupling, and process control across a wide range of applications .
In December 2015, we completed the wind down of engineering, manufacturing, and sales of our solar inverter product line. We have continuing involvement with regard to certain warranty obligations. Accordingly, the results of our inverter business are reflected as loss from discontinued operations, net of income taxes on our Consolidated Statements of Operations.
During 2025, we changed the presentation of our financial statements and accompanying footnote disclosures from thousands to millions. This change did not materially impact previously reported financial information.
Principles of Consolidation 
Our consolidated financial statements include the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated. Our consolidated financial statements are stated in United States (“U.S.”) Dollars and have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).
Use of Estimates in the Preparation of the Consolidated Financial Statements 
The preparation of our consolidated financial statements in conformity with U.S. GAAP requires us to make estimates, assumptions, and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The significant estimates, assumptions, and judgments include, but are not limited to, excess and obsolete inventory, income taxes and other provisions, and acquisitions and asset valuation.
Segment Information
Our Chief Executive Officer (“CEO”) is the chief operating decision maker who reviews financial information on a consolidated basis for purposes of allocating resources and evaluating financial performance. Accordingly, we determined we operate in a single reporting segment – power electronics conversion products. Within this segment, our products are sold into the Semiconductor Equipment, Data Center Computing, Industrial and Medical, and Telecom and Networking markets.
Our CEO assesses performance and decides how to allocate resources primarily based on consolidated net income, which is reported on our Consolidated Statements of Operations. Total assets on the Consolidated Balance Sheets represent our segment assets.
Foreign Currency Translation
The functional currency of certain of our foreign subsidiaries is the local currency. Assets and liabilities of these foreign subsidiaries are translated to the United States Dollar at prevailing exchange rates on the balance sheet date.

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ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Revenues and expenses are translated at the average exchange rates in effect for each period. Translation adjustments resulting from this process are reported as a separate component of other comprehensive income.
For certain other subsidiaries, the functional currency is the U.S. Dollar. Foreign currency transactions are recorded based on exchange rates at the time such transactions arise. Subsequent changes in exchange rates for foreign currency denominated monetary assets and liabilities result in foreign currency transaction gains and losses, which are reflected as unrealized (based on period end remeasurement) or realized (upon settlement of the transactions) in other income (expense), net in our Consolidated Statements of Operations.
Derivatives
We use derivative financial instruments to manage risks associated with foreign currency. Unless we meet specific hedge accounting criteria, changes in the fair value of derivative financial instruments are recognized in the Consolidated Statements of Operations within other income (expense), net.
Fair Value
We value certain financial assets and liabilities using fair value measurements.
U.S. GAAP for fair value establishes a hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach, and cost approach). Our financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels of the hierarchy and the related inputs are as follows:
● Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access on the measurement date.
● Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
● Level 3 — Unobservable inputs for the asset or liability.

We categorize fair value measurements within the fair value hierarchy based upon the lowest level of the most significant inputs used to determine fair value. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

59

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ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

We have various assets and liabilities measured at fair value on a recurring basis, including:
​
​

​

​
​
​

​

​

Category of Asset or Liability
​
Fair
Value
Hierarchy
​
Methodology for Estimating Fair Value

Certificates of deposit and investments
​

​

Level 2

​

Observable market data for similar assets

Foreign currency forward contracts
​

​

Level 2

​

Forecasted movement in the forward rates of foreign currency for the applicable duration in which the hedging instrument is denominated

Deferred compensation liability

​

Level 2

​

Observable market data for participants’ notional funds

Pension benefit obligations
​

​

Level 2

​

Actuarial analysis, which includes various estimates and assumptions including, but not limited to, discount rates, expected return on plan assets, and future inflation rates

​
The carrying amounts of our cash and cash equivalents, accounts receivable, accounts payable and other current assets and liabilities approximate fair value as recorded due to the short-term nature of these instruments.
Our non-financial assets, which primarily consist of property and equipment, operating lease right-of-use assets, goodwill, and other intangible assets, are not required to be carried at fair value on a recurring basis and are reported at carrying value. However, on a periodic basis or whenever events or changes in circumstances indicate that their carrying value may not be fully recoverable (and at least annually for goodwill), non-financial instruments are assessed for impairment and, if applicable, written down to and recorded at fair value. See Note 5. Intangible Assets and Goodwill for further discussion and presentation of these amounts.
Cash and Cash Equivalents
We consider all amounts on deposit with financial institutions and highly liquid investments with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash and cash equivalents consist primarily of short-term money market instruments and demand deposits with insignificant interest rate risk.
In some instances, we invest excess cash in money market funds not insured by the Federal Deposit Insurance Corporation. The investments in money market funds are on deposit with credit-worthy financial institutions and the funds are highly liquid. These investments are reported at fair value and included in cash and cash equivalents.
We classify investments with stated maturities of greater than three months at time of purchase in other current assets on the Consolidated Balance Sheets.
Concentrations of Credit Risk
Financial instruments with potential credit risk include cash and cash equivalents and trade accounts receivable. To preserve capital and maintain liquidity, we invest with financial institutions we deem to be of high quality and sound financial condition. Our investments are in low-risk instruments, and we limit our credit exposure in any one institution or type of investment instrument based upon criteria, including creditworthiness.

60

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Allowance for Credit Losses
We evaluate collection risk and establish expected credit loss primarily through a combination of the following: continuous monitoring of customer credit, analysis of historical aging and credit loss experience, current economic conditions, and customer specific information.
Our standard payment terms are net 30 days. Certain large volume customers have longer payment terms. Generally, we do not require collateral from customers.
Inventories
We value inventories at the lower of cost or net realizable value, computed on a first-in, first-out basis. General market conditions, as well as our design activities, can cause certain products to become obsolete and we adjust our inventory carrying value for estimated excess and obsolescence equal to the difference between the cost of inventory and the estimated net realizable value based on projected end-user demand, which is determined by considering historical usage, customer orders and forecast, and qualitative considerations such as market and economic conditions. The determination of projected end-user demand requires the use of estimates and assumptions related to projected unit sales for each product. Demand for our products can fluctuate significantly. A significant decrease in demand could result in an increase in the charges for excess inventory quantities on hand.
Property and Equipment
Property and equipment are stated at cost or estimated fair value if acquired in a business combination. We compute depreciation over the estimated useful lives using the straight-line method. Additions and improvements are capitalized, while maintenance and repairs are expensed as incurred. We evaluate the useful life and test for impairment whenever events or changes in circumstances indicate the carrying amount of an asset group containing the property and equipment may not be recoverable.
When depreciable assets are retired, or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any related gains or losses are included in other income (expense), net, in our Consolidated Statements of Operations.
Internal-Use Software Development Costs
We capitalize qualifying costs associated with software applications developed for internal use. We begin capitalization after meeting two criteria: (i) the preliminary project stage is completed and (ii) it is probable that the software will be completed and used for its intended function. We also capitalize costs related to specific upgrades and enhancements when it is probable the expenditures will result in significant additional functionality. We cease capitalization when the software is substantially complete and ready for its intended use, including the completion of all significant testing.
Costs related to preliminary project activities, post-implementation operating activities, maintenance, and minor upgrades are expensed as incurred.
We classify capitalized software development costs within property and equipment, net and other assets on the Consolidated Balance Sheets. These costs are amortized on a straight-line basis over the software’s estimated useful life. Amortization is included in both cost of revenue and operating expenses. We evaluate the useful life and test for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable.

61

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Leases
We lease manufacturing and office space under non-cancelable operating leases. Some of these leases contain provisions for landlord funded leasehold improvements, which we record as a reduction to right-of-use (“ROU”) assets and the related operating lease liabilities. Our lease agreements generally contain lease and non-lease components, and we combine fixed payments for non-lease components with lease payments and account for them together as a single lease component. Certain lease agreements may contain variable payments, which are expensed as incurred and not included in the right-of-use lease assets and operating lease liabilities. When renewal options are reasonably certain of exercise, we include the renewal period in the lease term. In many cases, we have leases with a term of less than one year. We elected the practical expedient to exclude these short-term leases from our ROU assets and operating lease liabilities. On an ongoing basis, we negotiate and execute new leases to meet business objectives.
Right-of-use assets and operating lease liabilities are recognized at the present value of the future lease payments on the lease commencement date. The interest rate used to determine the present value of the future lease payments is our incremental borrowing rate because the interest rate implicit in our leases is not readily determinable. Our incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments. We have a centrally managed treasury function; therefore, we apply a portfolio approach for determining the incremental borrowing rate applicable to the lease term. Operating lease expense is recognized on a straight-line basis over the lease term.
We evaluate the useful life and test for impairment whenever events or changes in circumstances indicate the carrying amount of an asset group containing the right-of-use assets may not be recoverable.
Intangible Assets and Goodwill
Our intangible assets consist of customer relationships, developed technology, trademarks, patents, and intellectual property, which are stated at cost less accumulated amortization. Intangible assets, which are considered long-lived assets, are amortized over their estimated useful lives and reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset group containing these assets may not be recoverable.
Goodwill represents the excess of the purchase price over the fair value of the identifiable net assets acquired in a business combination. We evaluate goodwill for impairment as a single reporting unit annually during the fourth quarter or when events or changes in circumstances indicate the carrying value may not be recoverable.
Our goodwill impairment evaluation consists of a qualitative assessment. If this assessment indicates it is more likely than not that the Company’s estimated fair value exceeds the carrying value of our net assets, we do not consider goodwill to be impaired. Otherwise, we perform a quantitative assessment by comparing the Company’s fair value to the carrying value of our net assets, including goodwill. If the carrying value of our net assets exceeds the fair value, we consider goodwill to be impaired.
Based on the facts and circumstances, we determine the fair value based on an income, market, or cost approach. Each method is subjective in nature and involves the use of significant estimates and assumptions, which can include projected financial results, discount rates, long-term growth rates, and industry trends.
We determined that there were no indicators of impairment of our long-lived intangible assets or goodwill during the year ended December 31, 2025.
​

62

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Debt Issuance Costs
We capitalize costs associated with issuing debt. Depending on the nature of the agreement, we record these costs on the Consolidated Balance Sheets either in other assets or as a direct deduction from the carrying amount of the debt. We amortize the costs over the term of the agreement using the effective interest method. Amortization expense is reflected within interest expense on the Consolidated Statements of Operations. See Note 7.   Long-Term Debt for additional details.
Revenue Recognition
Net revenue consists of products and support services.
We recognize substantially all revenue at a point in time when we satisfy our performance obligations. Typically, this occurs on shipment of goods because, at that point, we transfer control to our customer. The transaction price is based upon the standalone selling price. In most transactions, we have no obligations to our customers after the date products are shipped, other than pursuant to warranty obligations. We recognize revenue net of any taxes collected from customers, which are subsequently remitted to governmental authorities. Surcharges, cost recoveries, and shipping and handling fees billed to customers, if any, are recognized as revenue. The related cost for shipping and handling fees is recognized in cost of revenue.
Support services include warranty and non-warranty repair services, upgrades, and refurbishments on the products we sell. Repairs covered under our standard warranty do not generate revenue. We recognize substantially all non-warranty revenue upon completion of the service because that is the point in time when we satisfy our performance obligation.
As part of our ongoing service business, we satisfy our service obligations under preventative maintenance contracts and extended warranties. Up-front fees received for extended warranties or maintenance plans are deferred and recorded in customer deposits and other on the Consolidated Balance Sheets. Revenue under these arrangements is recognized ratably over the underlying terms, as we do not have historical information that would allow us to project the estimated service usage pattern at this time.
We expense the incremental costs of obtaining contracts when the amortization period of the costs is less than one year. These costs are included in selling, general, and administrative expenses in our Consolidated Statements of Operations.
Our remaining performance obligations primarily relate to customer purchase orders for products we have not yet shipped. We expect to fulfill the majority of these performance obligations within one year.
Research and Development Expenses
Costs incurred to advance, test, or otherwise modify our technology or develop new technologies are considered research and development costs and are expensed when incurred. These costs are primarily comprised of costs associated with the operation of our laboratories and research facilities, including internal labor, materials, and overhead.
Stock-Based Compensation
Accounting for stock-based compensation requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair value at the grant date.

63

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

We estimate the fair value of restricted stock units (“RSUs”) on the grant date. For RSUs that contain a time-based and certain performance-based vesting condition, we calculate fair value using the closing share price on the grant date.
We record stock-based compensation expense for awards with time-based vesting conditions on a straight-line basis over the requisite service period. For awards with a performance-based vesting condition, we record stock-based compensation expense (based on our assessment of the probability of meeting the performance conditions) over the estimated period to achieve the performance conditions. If the awards are forfeited, we reverse the stock-based compensation expense.
Certain RSUs vest based on a market condition. Our stock-based compensation expense is based on an estimate of the fair value and probability of achievement for each tranche of these awards using a Monte Carlo simulation. For these RSUs, we recognize stock-based compensation expense over each tranche’s estimated achievement period even if some or all of the shares never vest.
For all stock awards, we estimate forfeitures at the grant date and revise those estimates in subsequent periods if actual forfeitures differ from our estimates.
Income Taxes
We follow the liability method of accounting for income taxes under which deferred tax assets and liabilities are recognized for future tax consequences. A deferred tax asset or liability is computed for both the expected future impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carryforwards. Tax rate changes are reflected in the period such changes are enacted.
We assess the recoverability of our net deferred tax assets and the need for a valuation allowance on a quarterly basis. Our assessment includes several factors, including historical results and taxable income projections for each jurisdiction. The ultimate realization of deferred income tax assets is dependent on the generation of taxable income in appropriate jurisdictions during the periods in which those temporary differences are deductible. We consider the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in determining the amount of the valuation allowance. Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred income tax assets are deductible, we determine if we will more likely than not realize the benefits of these deductible differences.
Accounting for income taxes requires a two-step approach to recognize and measure uncertain tax positions. The first step is to evaluate the tax position for recognition by determining, if based on the technical merits, it is more likely than not that the position will be sustained upon audit, including resolutions of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. We regularly assess the likelihood of favorable or unfavorable outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity.
Under U.S. GAAP, an accounting policy election can be made to either recognize deferred taxes for temporary basis differences expected to reverse as global intangible low-tax income (“GILTI”) in future years, or to provide for the tax expense related to GILTI in the year that the tax is incurred as a period expense only. We have elected to account for GILTI in the year that the tax is incurred.

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Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Commitments and Contingencies
We are involved in disputes and legal actions arising in the normal course of our business. While we currently believe that the amount of any ultimate loss would not be material to our financial position, the outcome of these actions is inherently difficult to predict. In the event of an adverse outcome, the ultimate loss could have a material adverse effect on our financial position or reported results of operations. An unfavorable decision in intellectual property litigation also could require material changes in production processes and products or result in our inability to ship products or components found to have violated third party intellectual property rights. We accrue loss contingencies in connection with our commitments and contingencies, including litigation, when it is probable that a loss has occurred, and the amount of such loss can be reasonably estimated. We are not currently a party to any legal action that we believe would reasonably have a material adverse impact on our business, financial condition, results of operations or cash flows.
New Accounting Standards
From time to time, the Financial Accounting Standards Board (“FASB”) or other standards setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification (“ASC”) are communicated through issuance of an Accounting Standards Update (“ASU”). Unless otherwise discussed, we believe that the impact of recently issued guidance, whether adopted or to be adopted in the future, will not have a material impact on the consolidated financial statements upon adoption.
New Accounting Standards Adopted
In December 2023, the FASB issued ASU 2023-09 “ Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ” ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional disclosure on income taxes paid. We adopted this guidance for the year ending December 31, 2025 and have provided the required disclosures. See Note 14. Income Taxes .
New Accounting Standards Issued But Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03 “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” ASU 2024-03 requires disaggregated disclosure of income statement expenses for public business entities. The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. This guidance will be effective for us on January 1, 2027. We do not expect the above guidance to materially impact our consolidated financial statements.
In July 2025, the FASB issued ASU 2025-05 “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets.” ASU 2025-05 permits the use of certain estimates and assumptions in developing forecasts used for determining expected credit losses on accounts receivable. This guidance will be effective for us on January 1, 2026. We do not expect the above guidance to materially impact our consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06 “Intangibles – Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software.” ASU 2025-06 eliminates the consideration of project development stages in determining whether a cost is eligible for capitalization. Instead, cost capitalization will be based on a “probable to complete” threshold. This guidance will be effective for us on January 1, 2028. We are evaluating the impact, if any, that the adoption of ASU 2025-06 may have on our consolidated financial statements.

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Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

NOTE 2.           ACQUISITION
On June 20, 2024, we acquired 100 % of the issued and outstanding shares of capital stock of Airity Technologies, Inc. (“Airity”). We accounted for this transaction as a business combination. This acquisition added high voltage power conversion technologies and products, broadening our range of targeted applications within the Semiconductor Equipment and Industrial and Medical markets.
The following table summarizes the consideration paid:
​
​

​

​

​

​
​
Consideration

​
​
(in millions)

Cash paid at closing
​
$
14.3

Advanced Energy common stock
​
​
4.5

Settlement of payables
​
​
( 0.7 )

Indemnity holdback payable on the one-year anniversary
​
​
1.5

Total fair value of purchase consideration
​
$
19.6

​
We allocated the purchase price consideration to the assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date, with the excess allocated to goodwill. The following represents the final purchase price allocation.
​
​

​

​

​

​
​
Fair Value

​
​
(in millions)

Cash
​
$
0.5

Current assets and liabilities, net
​
​
0.5

Deferred tax liability
​
​
( 1.7 )

Intangible assets
​
​
4.2

Goodwill (not deductible for tax purposes)
​
​
16.1

Total fair value of net assets acquired
​
$
19.6

​
We included Airity’s results of operations in our consolidated financial statements from the date of acquisition, which were not material.
In connection with the acquisition, we entered into agreements with certain former Airity employees. On the closing date, these individuals received a total of 0.1 million shares of Advanced Energy common stock valued at $ 15.6 million based on the June 20, 2024 closing price, of which $ 4.5 million was allocated to purchase consideration and $ 11.1 million will be future compensation. We will record the $ 11.1 million as stock-based compensation expense over the three-year expected vesting period. See Note 13. Stock-based Compensation .
During 2025, we paid $ 1.5 million in connection with the release of the indemnity holdback. See our Consolidated Statements of Cash Flows.
​
​
​
​

66

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

NOTE 3.           REVENUE
Disaggregation of Revenue
The following tables present additional information regarding our revenue:
​
Revenue by Market
​

​

​

​

​

​

​

​

​

​

​
​
Years Ended December 31, 

​
  ​ ​ ​
2025
  ​ ​ ​
2024
  ​ ​ ​
2023

​
​
(in millions)

Semiconductor Equipment
​
$
839.9
​
$
792.5
​
$
743.8

Data Center Computing
​
​
587.3
​
​
284.2
​
​
249.9

Industrial and Medical
​
 
282.3
​
 
316.2
​
 
474.4

Telecom and Networking
​
​
89.3
​
​
89.1
​
​
187.7

Total
​
$
1,798.8
​
$
1,482.0
​
$
1,655.8

​
​
Revenue by Significant Countries
​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​
​
Years Ended December 31, 
 

​
  ​ ​ ​
2025
  ​ ​ ​
2024
  ​ ​ ​
2023
 

​
​
(in millions)
​

United States
​
$
541.4
​
30.1
%  
$
508.7
​
34.3
%  
$
598.4
​
36.1
%

Mexico
​
​
252.8
​
14.1
​
​
160.1
​
10.8
​
​
123.5
​
7.5
​

Taiwan
​
​
130.2
​
7.2
​
​
159.6
​
10.8
​
​
124.2
​
7.5
​

Japan
​
​
218.2
​
12.1
​
​
53.6
​
3.6
​
​
62.5
​
3.8
​

All others
​
​
656.2
​
36.5
​
​
600.0
​
40.5
​
​
747.2
​
45.1
​

Total
​
$
1,798.8
  ​ ​ ​
100.0
%  
$
1,482.0
  ​ ​ ​
100.0
%  
$
1,655.8
  ​ ​ ​
100.0
%

​
We attribute revenue to individual countries and regions based on the customer’s ship to location. Aside from the specific countries listed above, no individual country exceeded 10% of our total consolidated revenues during the periods presented.

67

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Revenue by Category
​

​

​

​

​

​

​

​

​

​

​
​
Years Ended December 31, 

​
  ​ ​ ​
2025
  ​ ​ ​
2024
  ​ ​ ​
2023

​
​
(in millions)

Product
​
$
1,614.9
​
$
1,315.7
​
$
1,484.0

Services and other
​
​
183.9
 
​
166.3
 
​
171.8

Total
​
$
1,798.8
  ​ ​ ​
$
1,482.0
  ​ ​ ​
$
1,655.8

​
Other revenue includes certain spare parts and products sold by our service group.
​
Significant Customers
During the year ended December 31, 2025, three customers accounted for 23 %, 19 %, and 12 % of our total revenue, respectively. During the year ended December 31, 2024, two customers accounted for 26 % and 11 % of our total revenue, respectively. During the year ended December 31, 2023, one customer accounted for 22 % of our total revenue.
As of December 31, 2025, the account receivable balance from three customers accounted for 26 %, 10 %, and 20 %, respectively, of our total accounts receivable. During the year ended December 31, 2024, two customers accounted for 25 % and 14 %, respectively, of our total accounts receivable. No other customer’s account receivable exceeded 10% of our total accounts receivable in the periods presented.
​

68

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

​
NOTE 4.           BALANCE SHEET INFORMATION
Accounts Receivable, Net
​
We record accounts receivable at net realizable value. Our accounts receivable, net balance on the Consolidated Balance Sheets was $ 325.2 million at December 31, 2025. The following table summarizes the changes in expected credit losses related to receivables:
​
​

​

​

​

​

​

​

​

​

​

​
​
Years Ended December 31, 

​
  ​ ​ ​
2025
  ​ ​ ​
2024
  ​ ​ ​
2023

​
​
(in millions)

Balance at beginning of period
  ​ ​
$
0.9
​
$
1.7
​
$
1.8

Additions
​
 
—
​
​
0.1
​
 
0.2

Deductions - write-offs and other adjustments
​
​
( 0.3 )
​
​
( 0.9 )
​
​
( 0.3 )

Balance at end of period
​
$
0.6
​
$
0.9
​
$
1.7

​
​
​
Inventories
​
We value inventories at the lower of cost or net realizable value, computed on a first-in, first-out basis. Components of inventories were as follows:
​
​

​

​

​

​

​

​

​
​
December 31, 

​
  ​ ​ ​
2025
  ​ ​ ​
2024

​
​
(in millions)

Parts and raw materials
​
$
313.6
​
$
255.1

Work in process
​
 
27.3
​
 
20.6

Finished goods
​
 
70.3
​
 
84.7

Total
​
$
411.2
​
$
360.4

​
Property and Equipment, Net
​
Property and equipment, net increased $ 87.2 million due to continued investment in our new ERP system, expanding capacity in our existing factories, and our new factory in Thailand. Property and equipment, net is comprised of the following:
​
​

​

​

​

​

​

​

​

​

​
​
Estimated Useful
​
December 31, 
​
December 31, 

​
  ​ ​ ​
Life (in years)
  ​ ​ ​
2025
  ​ ​ ​
2024

​
​
​
​
(in millions)

Buildings, machinery, and equipment
​
5 to 25
​
$
241.4
​
$
196.6

Software
​
3 to 10
​
​
40.7
​
​
35.6

Computer equipment, furniture, fixtures, and vehicles
​
3 to 5
​
 
31.0
​
 
26.0

Leasehold improvements
​
2 to 10
​
 
101.0
​
 
93.0

Capital projects in process
​
​
​
 
82.5
​
 
35.4

​
​
​
​
 
496.6
​
 
386.6

Less: Accumulated depreciation
​
​
​
 
( 223.8 )
​
 
( 201.0 )

Property and equipment, net
​
​
​
$
272.8
​
$
185.6

​
​
​
​
​
​

69

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

​
​
The following table summarizes property and equipment, net by geographic area:
​
​

​

​

​

​

​

​

​
​
December 31, 

​
  ​ ​ ​
2025
  ​ ​ ​
2024

​
​
(in millions)

United States
​
$
107.6
​
$
83.8

Asia
​
​
146.4
​
​
87.8

Europe and other
​
​
18.8
​
​
14.0

Total
​
$
272.8
​
$
185.6

​
The following table summarizes depreciation expense. All depreciation expense is recorded in income from continuing operations:
​
​

​

​

​

​

​

​

​

​

​

​

​
​
​
Years Ended December 31, 

​
  ​ ​ ​
​
2025
  ​ ​ ​
2024
  ​ ​ ​
2023

​
​
​
(in millions)

Depreciation expense
​
​
$
39.8
​
$
42.5
​
$
38.3

​
Warranties
​
Our sales agreements include customary product warranty provisions, which generally range from 12 to 36 months after shipment. We record the estimated warranty obligations cost when we recognize revenue. This estimate is based on historical experience by product.
Our estimated warranty obligation is included in other accrued expenses in our Consolidated Balance Sheets. Changes in our product warranty obligation were as follows:
​
​

​

​

​

​

​

​

​
​
Years Ended December 31, 

​
  ​ ​ ​
2025
  ​ ​ ​
2024

​
​
(in millions)

Balance at beginning of period
​
$
5.7
​
$
4.0

Net increases to accruals
​
 
4.4
​
 
3.6

Warranty expenditures
​
 
( 2.8 )
​
 
( 2.0 )

Effect of changes in exchange rates
​
 
( 0.1 )
​
 
0.1

Balance at end of period
​
$
7.2
​
$
5.7

​
​

70

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

NOTE 5.           INTANGIBLE ASSETS AND GOODWILL
Intangible assets consisted of the following:
​
​

​

​

​

​

​

​

​

​

​

​

​

​
​
December 31, 2025

​
  ​ ​ ​
Gross Carrying 
  ​ ​ ​
Accumulated 
  ​ ​ ​
Net Carrying 
  ​ ​ ​
Weighted Average Remaining

​
​
Amount
​
Amortization
​
Amount
 
Useful Life (in years)

​
​
(in millions)
​
​

Technology
​
$
101.8
​
$
( 78.2 )
​
$
23.6
​
6.6

Customer relationships
​
 
171.4
​
​
( 86.3 )
​
 
85.1
​
7.7

Trademarks and other
​
 
27.3
​
​
( 18.3 )
​
 
9.0
​
3.6

Total
​
$
300.5
​
$
( 182.8 )
​
$
117.7
​
7.2

​
​
​
​
​
​
​
​
​
​
​
​

​
​
December 31, 2024

​
  ​ ​ ​
Gross Carrying 
  ​ ​ ​
Accumulated 
  ​ ​ ​
Net Carrying
​
Weighted Average Remaining

​
​
Amount
​
Amortization
​
 Amount
​
Useful Life (in years)

​
​
(in millions)
​
​

Technology
​
$
99.9
​
$
( 70.0 )
​
$
29.9
​
7.0

Customer relationships
​
 
168.9
​
​
( 70.9 )
​
 
98.0
​
8.5

Trademarks and other
​
 
27.1
​
​
( 15.6 )
​
 
11.5
​
4.6

Total
​
$
295.9
​
$
( 156.5 )
​
$
139.4
​
7.9

​
Amortization expense related to intangible assets was as follows:
​
​

​

​

​

​

​

​

​

​

​

​
​
Years Ended December 31, 

​
​
2025
  ​ ​ ​
2024
  ​ ​ ​
2023

​
​
(in millions)

Amortization expense
​
$
22.1
​
$
26.0
​
$
28.3

​
Estimated future amortization expense related to intangibles is as follows:
​
​

​

​

​

Year Ending December 31, 
  ​ ​ ​
​
(in millions)

2026
​
$
20.1

2027
​
 
17.8

2028
​
 
16.6

2029
​
 
15.0

2030
​
​
13.4

Thereafter
​
 
34.8

Total
​
$
117.7

​
​
The following table summarizes the changes in goodwill:
​
​

​

​

​

​

​

​

​
​
December 31, 
​
December 31, 

​
​
2025
  ​ ​ ​
2024

​
​
(in millions)

Balance at beginning of period
​
$
296.0
​
$
283.8

Additions from acquisition
​
​
—
​
​
16.1

Foreign currency translation and other
​
​
4.8
​
​
( 3.9 )

Balance at end of period
  ​ ​ ​
$
300.8
​
$
296.0

​
​

71

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

NOTE 6. LEASES
Components of total operating lease cost were as follows:
​
​

​

​

​

​

​

​

​

​

​

​

​
​
​
Years Ended December 31, 

​
  ​ ​ ​
​
2025
  ​ ​ ​
2024
  ​ ​ ​
2023

​
​
​
(in millions)

Operating lease cost
​
​
$
25.7
​
$
23.8
​
$
22.6

Short-term and variable lease cost
​
​
​
5.7
​
​
3.1
​
​
4.2

Total operating lease cost
​
​
$
31.4
​
$
26.9
​
$
26.8

​
Estimated future payments on our operating lease liabilities are as follows:
​
​

​

​

​

Year Ending December 31,
  ​ ​ ​
​
(in millions)

2026
​
$
22.9

2027
​
 
19.7

2028
​
 
19.4

2029
​
​
16.1

2030
​
​
14.6

Thereafter
​
​
54.4

Total lease payments
​
​
147.1

Less: Interest
​
​
( 35.6 )

Present value of lease liabilities
​
$
111.5

​
​
In addition to the above, we have a lease agreement with total payments of $ 6.4 million that commences in the first quarter of 2026 and extends through 2035.
​
The following tables present additional information about our lease agreements:
​
​

​

​

​

​

​

​

​

​
​
December 31,
​
December 31,
​

​
  ​ ​ ​
2025
  ​ ​ ​
2024
​

Weighted average remaining lease term (in years)
  ​ ​ ​
​
8.2
​
​
8.4
​

Weighted average discount rate
​
 
6.4
%
​
6.1
%

​
​

​

​

​

​

​

​

​

​

​

​
​
Years Ended December 31, 

​
  ​ ​ ​
2025
  ​ ​ ​
2024
​
2023

​
​
(in millions)

Cash paid for operating leases
​
$
26.8
​
$
23.7
​
$
23.0

Right-of-use assets obtained in exchange for operating lease liabilities
​
$
19.7
​
$
41.1
​
$
14.3

​
​
​
​
​
​

72

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

NOTE 7.           LONG-TERM DEBT
Long-term debt on our Consolidated Balance Sheets consists of the following:
​
​

​

​

​

​

​

​

​
​
December 31, 
​
December 31, 

​
  ​ ​ ​
2025
  ​ ​ ​
2024

​
​
(in millions)

Convertible Notes due 2028, 2.5 % interest
​
$
575.0
​
$
575.0

Less: debt discount
​
​
( 7.5 )
​
​
( 10.3 )

Net long-term debt
​
​
567.5
​
​
564.7

Less: current maturities
​
​
( 567.5 )
​
​
—

Net long-term debt
​
$
—
​
$
564.7

​
For all periods presented, we were in compliance with the covenants under all debt agreements. As of December 31, 2025, our common stock traded above the conversion price for at least 20 trading days during a 30 consecutive trading-day period, which resulted in the Convertible Notes becoming convertible at the option of the holders. Accordingly, the Convertible Notes balance was reclassified from long-term to current debt as of December 31, 2025. We reassess the classification of the Convertible Notes at each quarterly reporting period, considering the trading price of our common stock relative to the conversion criteria. Exclusive of any early conversion elections by the convertible noteholders, there are no scheduled debt maturities until 2028
The following table summarizes interest expense related to our debt:
​
​

​

​

​

​

​

​

​

​

​

​

​
​
​
Years Ended December 31, 

​
  ​ ​ ​
​
2025
  ​ ​ ​
2024
  ​ ​ ​
2023

​
​
​
(in millions)

Interest expense
​
​
$
13.6
​
$
22.0
​
$
15.2

Amortization of debt issuance costs
​
​
​
3.1
​
​
3.2
​
​
1.3

Total interest expense related to debt
​
​
$
16.7
​
$
25.2
​
$
16.5

​
Credit Agreement
On May 8, 2025, we terminated our prior credit agreement, dated as of September 10, 2019 (and subsequently amended) and entered into a new credit agreement (the “Credit Agreement”) consisting of a senior unsecured term loan facility (“Term Loan Facility”) and a senior unsecured revolving facility (“Revolving Facility”), both maturing on May 8, 2030. The maturity date may be accelerated to the date that is 91 days prior to the maturity date of our $ 575.0 million aggregate principal amount of 2.50 % convertible senior notes due September 15, 2028 (the “Convertible Notes”), if the sum of our consolidated cash and cash equivalents plus the undrawn balance on the Revolving Facility is less than 120 % of the redemption amount of the Convertible Notes.
The financing terms of the new Credit Agreement are substantially the same as the terms of the prior credit agreement. As part of the new credit facility, HSBC Bank USA, N.A. (“HSBC”) was appointed as the administrative agent for the lender group.
In connection with the Credit Agreement, we paid $ 1.9 million in lender and professional fees, which were capitalized and will be amortized over the term of the Credit Agreement.
​
​
​
​

73

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

At the time of termination, no borrowings were outstanding under the prior credit agreement, and there have been no borrowings under the Credit Agreement to date. As of December 31, 2025, we had $ 600.0 million available on the Revolving Facility.
​
​

​

​

​

​

​

​

​
​
December 31, 
​
December 31, 

​
  ​ ​ ​
2025
  ​ ​ ​
2024

​
​
(in millions)

Available capacity on Revolving Facility
​
$
600.0
​
$
600.0

​
In addition to our available capacity on the Revolving Facility, prior to the maturity date of the Credit Agreement, we may request an increase to the financing commitments in either the Term Loan Facility or Revolving Facility by an aggregate amount not to exceed $ 250.0 million. Any requested increase is subject to lender approval.
Should we have future borrowings under the Term Loan Facility or Revolving Facility, they will bear interest, at our option, at a rate based on the Base Rate or SOFR, as defined in the Credit Agreement, plus an applicable margin.
​
Convertible Senior Notes due 2028
On September 12, 2023, we completed a private, unregistered offering of the Convertible Notes. The remaining outstanding principal amount of the Convertible Notes, amounting to $ 567.5  million, net of unamortized issuance costs, was classified as current as of December 31, 2025. Pursuant to the indenture governing the Convertible Notes, because the last reported sale price of the Company’s common stock for at least  20  trading days during the period of  30  consecutive trading days ending on December 31, 2025 was greater than or equal to $ 179.76  on each applicable trading day, the holders have the right to surrender any portion of their Convertible Notes (in minimum denominations of $ 1,000 in principal amount or an integral multiple thereof) for conversion during the calendar quarter ending March 31, 2026, and only during such calendar quarter.
The Convertible Notes mature on September 15, 2028, unless earlier repurchased, redeemed, or converted. Interest is payable semi-annually in arrears in March and September. We do not maintain a sinking fund.

74

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

We may redeem for cash all or any portion of the Convertible Notes, at our option, on or after September 20, 2026 if the last reported sale price of our common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading-day period (including the last trading day of such period). The redemption price is 100 % of the principal amount plus accrued and unpaid interest.
Prior to May 15, 2028, holders have the option to convert all or a portion of their Convertible Notes under the following circumstances:
● during any calendar quarter if the last reported sale price of our common stock, for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days is greater than or equal to 130 % of the conversion price on each applicable trading day;
● during the five business day period immediately after any five consecutive trading day period in which the trading price per $ 1,000 principal amount of the Convertible Notes for each trading day was less than 98 % of the product of the last reported sale price of our common stock on each such trading day and the conversion rate on each such trading day;
● if Advanced Energy calls any or all of the Convertible Notes for redemption; or
● upon the occurrence of specified corporate transactions or events described in the indenture.

From May 15, 2028 through the maturity date, holders have the option to convert at any time regardless of circumstances.
The initial conversion rate is 7.2747 shares of common stock per $ 1,000 principal amount, which is equivalent to an initial conversion price of approximately $ 137.46 per share of common stock. The conversion rate is subject to adjustment upon the occurrence of certain specified events as set forth in the indenture.
Upon conversion, Advanced Energy will do the following:
● pay cash up to the aggregate principal amount to be converted; and
● pay or deliver cash, shares of our common stock, or a combination (at our election) with respect to the remainder, if any, of the conversion obligation in excess of the aggregate principal amount being converted.

Concurrent with the Convertible Notes issuance, we entered into hedges (“Note Hedges”) with respect to our common stock and sold warrants to purchase our common stock (“Warrants”) . I n combination, the Note Hedges and Warrants synthetically increase the initial conversion price on the Convertible Notes from $ 137.46 to $ 179.76 , reducing the potential dilutive effect.
The Warrants provide the counterparties the option to acquire approximately 4.2  million aggregate shares of our common stock (subject to customary anti-dilution adjustments), which is the same number of shares of our common stock covered by the Note Hedges at a $ 179.76 per share initial exercise price, which represents a  70 % premium over the $ 105.74  closing price of our common stock on September 7, 2023. The Warrants expire on July 7, 2029.
If the market value per share of our common stock exceeds the exercise price of the Warrants during the measurement period at the maturity of such Warrants, the Warrants will have a dilutive effect on our earnings per share as we will owe the counterparties a number of shares of common stock in an amount based on the excess of such market price per share of the common stock over the Warrants’ exercise price.

75

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

The Note Hedge and Warrants are separate from the Convertible Notes. The Convertible Notes holders have no rights with respect to the Note Hedges and Warrants. Counterparties in the Note Hedge and Warrants transactions have no rights with respect to the Convertible Notes.
We use level 2 measurements to estimate the fair value of our debt. As of December 31, 2025 and 2024, we estimated the fair value of our Convertible Notes to be $ 951.1 million and $ 624.6 million, respectively.
​
NOTE 8.           STOCKHOLDERS’ EQUITY AND EARNINGS PER SHARE
Accumulated Other Comprehensive Income (Loss)
The following table summarizes the components of, and changes in, accumulated other comprehensive income (loss), net of income taxes.
​
​

​

​

​

​

​

​

​

​

​

​

​

​

​
  ​ ​ ​
​
Foreign Currency Translation
  ​ ​ ​
​
Change in Fair Value of Cash Flow Hedges
  ​ ​ ​
​
Defined Employee Benefit Plan
  ​ ​ ​
​
Total

​
​
(in millions)

Balance at December 31, 2022
​
$
( 12.8 )
​
$
11.8
​
$
17.3
​
$
16.3

Other comprehensive income (loss) prior to reclassifications
​
​
2.0
​
​
4.6
​
​
( 5.5 )
​
​
1.1

Amounts reclassified from accumulated other comprehensive income
​
​
—
​
​
( 10.9 )
​
​
( 0.4 )
​
​
( 11.3 )

Balance at December 31, 2023
​
$
( 10.8 )
​
$
5.5
​
$
11.4
​
$
6.1

Other comprehensive income (loss) prior to reclassifications
​
​
( 13.1 )
​
​
2.2
​
​
( 0.7 )
​
​
( 11.6 )

Amounts reclassified from accumulated other comprehensive loss
​
​
1.6
​
​
( 7.7 )
​
​
( 0.2 )
​
​
( 6.3 )

Balance at December 31, 2024
​
$
( 22.3 )
​
$
—
​
$
10.5
​
$
( 11.8 )

Other comprehensive income (loss) prior to reclassifications
​
​
15.1
​
​
—
​
​
—
​
​
15.1

Amounts reclassified from accumulated other comprehensive income (loss)
​
​
0.1
​
​
—
​
​
2.8
​
​
2.9

Balance at December 31, 2025
​
$
( 7.1 )
​
$
—
​
$
13.3
​
$
6.2

​
Amounts reclassified from accumulated other comprehensive income (loss) to the specific caption within the Consolidated Statements of Operations were as follows:
​
​

​

​

​

​

​

​

​

​

​

​

​

​
​
Years Ended December 31, 
​
To Caption on Consolidated

​
  ​ ​
2025
  ​ ​
2024
  ​ ​ ​
2023
  ​ ​
Statements of Operations

​
​
(in millions)
​
​

Foreign currency translation
​
$
( 0.1 )
​
$
( 1.6 )
​
$
—
​
Other income (expense), net

Cash flow hedges
​
​
—
​
​
7.7
​
​
10.9
​
Interest expense

Defined employee benefit plan
​
 
( 2.8 )
​
 
0.2
​
 
0.4
​
Other income (expense), net

Total reclassifications
​
$
( 2.9 )
​
$
6.3
​
$
11.3
​
​

​

76

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Earnings Per Share
The following table summarizes our earnings per share (“EPS”):
​
​

​

​

​

​

​

​

​

​

​

​
​
Years Ended December 31, 

​
  ​ ​ ​
2025
  ​ ​ ​
2024
  ​ ​ ​
2023

​
​
(in millions, except per share amounts)

Income from continuing operations
​
$
149.3
​
$
56.3
​
$
130.8

​
​
​
​
​
​
​
​
​
​

Basic weighted-average common shares outstanding
​
 
37.6
​
 
37.5
​
 
37.5

Dilutive effect of Convertible Notes
​
​
0.4
​
​
—
​
​
—

Dilutive effect of Warrants
​
​
0.1
​
​
—
​
​
—

Dilutive effect of stock awards
​
 
0.5
​
 
0.3
​
 
0.3

Diluted weighted-average common shares outstanding
​
 
38.6
​
 
37.8
​
 
37.8

​
​
​
​
​
​
​
​
​
​

​
​
​
​
​
​
​
​
​
​

EPS from continuing operations
​
 
  ​
​
 
  ​
​
 
  ​

Basic EPS
​
$
3.97
​
$
1.50
​
$
3.49

Diluted EPS
​
$
3.87
​
$
1.49
​
$
3.46

​
​
​
​
​
​
​
​
​
​

​
​
​
​
​
​
​
​
​
​

Anti-dilutive shares not included above
​
​
​
​
​
​
​
​
​

Warrants
​
​
1.5
​
​
3.0
​
​
3.5

​
Anti-dilutive stock awards rounded to zero for the periods presented.
We compute basic earnings per share of common stock (“Basic EPS”) by dividing income available to common stockholders by the weighted-average number of common shares outstanding during the period.
See Note 7. Long-Term Debt for information regarding our Convertible Notes, Note Hedges, and Warrants. For diluted earnings per share of common stock (“Diluted EPS”), we increase the weighted-average number of common shares outstanding during the period, as needed, to include the following:
● Additional common shares that would have been outstanding if our outstanding stock awards had been converted to common shares using the treasury stock method. We exclude any stock awards that have an anti-dilutive effect;
● Dilutive impact associated with the Convertible Notes using the if-converted method. The Convertible Notes are repayable in cash up to par value and in cash or shares of common stock for the excess over par value. When the stock price is lower than the strike price, there is no dilutive or anti-dilutive impact. When the stock price is higher than the initial strike price, there is a dilutive impact associated with the Convertible Notes. Prior to conversion, we do not consider the Note Hedges for purposes of Diluted EPS as their effect would be anti-dilutive. Upon conversion, we expect the Note Hedges to offset the dilutive effect of the Convertible Notes when the stock price is above $ 137.46 but below $ 179.76 ; and
● Dilutive effect of the Warrants issued concurrently with the Convertible Notes using the treasury stock method. For the fourth quarter of 2025, the Warrants increased the weighted-average number of common shares outstanding because the average market price of our common stock exceeded the $ 179.76 exercise price of the Warrants.

77

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Share Repurchases
To repurchase shares of our common stock, we periodically enter into share repurchase agreements. The following table summarizes these repurchases:
​
​

​

​

​

​

​

​

​

​

​

​
​
Years Ended December 31, 

​
  ​ ​ ​
2025
  ​ ​ ​
2024
  ​ ​ ​
2023

​
​
(in millions, except per share amounts)

Amount paid or accrued to repurchase shares
​
$
30.4
​
$
1.8
​
$
40.1

Number of shares repurchased
​
 
0.3
​
 
—
​
 
0.4

Average repurchase price per share
​
$
96.79
​
$
93.58
​
$
105.74

​
There were no shares repurchased from related parties. Repurchased shares were retired and assumed the status of authorized and unissued shares. At December 31, 2025, we had $ 0.2 million accrued in other accrued expenses in our Consolidated Balance Sheets for share repurchases.
At December 31, 2025, the remaining amount authorized by the Board of Directors (“our Board” or “the Board”) for future share repurchases was $ 166.9 million with no time limitation .
​
NOTE 9.           FAIR VALUE MEASUREMENTS
Refer to Note 12. Employee Retirement Plans and Post Retirement Benefits for information on fair value of our pension asset and liabilities. The following tables present information about our non-pension assets and liabilities measured at fair value on a recurring basis. We classify all items below within level 2 of the fair value hierarchy. See Note 7. Long-Term Debt for information regarding the fair value of our Convertible Notes.
​
​

​

​

​

​

​

​

​

​

​
​
​
​
December 31, 
​
December 31, 

​
  ​ ​ ​
​
  ​ ​ ​
2025
  ​ ​ ​
2024

Description
​
Balance Sheet Classification
​
(in millions)

Certificates of deposit
​
Other current assets
​
$
0.2
​
$
0.2

Foreign currency forward contracts
​
Other accrued expenses
​
$
0.1
​
$
0.3

Investments
​
Other assets
​
$
13.5
​
$
9.9

Deferred compensation liabilities
​
Other liabilities
​
$
13.4
​
$
10.1

​
​
​
​
​

78

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

NOTE 10.           DERIVATIVE FINANCIAL INSTRUMENTS
Changes in foreign currency exchange rates impact our results of operations and cash flows. We may manage these risks through the use of derivative financial instruments, primarily forward contracts with banks. These forward contracts manage the exchange rate risk associated with assets and liabilities denominated in nonfunctional currencies. Typically, we execute these derivative instruments for one-month periods and do not designate them as hedges for accounting purposes; however, they do partially offset the economic fluctuations of certain of our assets and liabilities due to foreign exchange rate changes.
The gains and losses related to these foreign currency exchange contracts are intended to offset the corresponding gains and losses on the revaluation of the underlying assets and liabilities. Both are included as a component of other income (expense), net in our Consolidated Statements of Operations.
As of December 31, 2025 and 2024, we had $ 60.5 million and $ 70.6 million, respectively, of foreign currency forward contracts outstanding.
See Note 9. Fair Value Measurements for information regarding the fair value of derivative instruments.
As a result of using derivative financial instruments, we are exposed to the risk that counterparties to contracts could fail to meet their contractual obligations. We manage this credit risk by reviewing counterparty creditworthiness on a regular basis and limiting exposure to any single counterparty.
​
​
NOTE 11.           RESTRUCTURING, ASSET IMPAIRMENTS, AND OTHER CHARGES
Details of restructuring, asset impairments, and other charges are as follows:
​
​

​

​

​

​

​

​

​

​

​

​
​
Years Ended December 31, 

​
​
2025
  ​ ​ ​
2024
  ​ ​ ​
2023

​
​
(in millions)

Restructuring
​
$
6.3
​
$
28.1
​
$
25.1

Asset impairments
​
​
1.8
​
​
—
​
​
1.4

Other charges
​
 
4.4
​
 
2.2
​
 
0.5

Total restructuring, asset impairments, and other charges
​
$
12.5
​
$
30.3
​
$
27.0

​
Restructuring
We have several restructuring plans in process. The amounts incurred as a result of the approved actions are estimates, and actual results may differ, which could result in incremental restructuring charges in future periods.
2025 Plan
During the second quarter of 2025, we approved actions related to consolidating our research and development, sales, and administrative functions in connection with our manufacturing and footprint consolidation (the “2025 Plan”). We expect these actions to be substantially complete during 2027 and do not expect to incur significant additional charges.
​
​
​
​

79

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

2024 Plan
In 2024, we approved actions in furtherance of our manufacturing consolidation initiatives intended to optimize our manufacturing footprint and cost structure, including the closure of our Zhongshan, China manufacturing facility (the “2024 Plan”). Manufacturing operations in Zhongshan ceased during the second quarter of 2025. Final closure activities are in progress and expected to conclude in 2026. We do not expect to incur significant additional charges.
​
2023 Plan
In 2023, we approved a plan intended to optimize and further consolidate our manufacturing operations and functional support groups as well as a general reduction-in-force to align our expenses to revenue levels (the “2023 Plan”). We expect final activities to conclude in the first quarter of 2027 and do not expect to incur significant additional charges.
​
2022 Plan
​
This plan was approved to improve our operating efficiencies and drive the realization of synergies from our business combinations by consolidating our operations, optimizing our factory footprint, including moving certain production into our higher volume factories, reducing redundancies, and lowering our cost structure. The 2022 Plan is now complete.
​
Changes in restructuring liabilities were as follows:
​
​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​
  ​ ​ ​
2025 Plan
  ​ ​ ​
2024 Plan
  ​ ​ ​
2023 Plan
  ​ ​ ​
2022 & Other Plans
  ​ ​ ​
Total

​
​
(in millions)

December 31, 2023
​
$
—
​
$
—
​
$
14.2
​
$
3.1
​
$
17.3

Costs incurred and charged to expense
​
​
—
​
​
29.6
​
​
( 1.6 )
​
​
0.1
​
​
28.1

Costs paid
​
​
—
​
​
( 5.1 )
​
​
( 7.6 )
​
​
( 3.2 )
​
​
( 15.9 )

Foreign currency translation
​
​
—
​
​
0.5
​
​
—
​
​
-
​
​
0.5

December 31, 2024
​
​
—
​
​
25.0
​
​
5.0
​
​
( 0.0 )
​
​
30.0

Costs incurred and charged to expense
​
​
4.7
​
​
1.1
​
​
0.5
​
​
—
​
​
6.3

Costs paid
​
​
( 0.2 )
​
​
( 22.6 )
​
​
( 2.2 )
​
​
—
​
​
( 25.0 )

Foreign currency translation
​
​
—
​
​
( 0.1 )
​
​
( 0.1 )
​
​
—
​
​
( 0.2 )

December 31, 2025
​
$
4.5
​
$
3.4
​
$
3.2
​
$
( 0.0 )
​
$
11.1

​
The above restructuring liability of $ 11.1 million is comprised of $ 6.3 million in other accrued expenses and $ 4.8 million included in other long-term liabilities on our Consolidated Balance Sheets.
Charges related to our restructuring plans are as follows:
​
​

​

​

​

​

​

​

​

​

​

​
​
​
​
​
​
​
​
​
​

​
​
Years Ended December 31, 

​
​
2025
  ​ ​ ​
2024
  ​ ​ ​
2023

​
​
(in millions)

Severance and related charges
​
$
6.3
​
$
28.0
​
$
25.1

Facility relocation and closure charges
​
 
—
​
 
0.1
​
 
—

Total restructuring charges
​
$
6.3
​
$
28.1
​
$
25.1

​

80

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

​

​

​

​

​

​

​

​

​

​

​

​

​

​
​
Cumulative Cost Through

​
​
December 31, 2025

​
  ​ ​ ​
2025 Plan
  ​ ​ ​
2024 Plan
  ​ ​ ​
2023 Plan
  ​ ​ ​
Total

​
​
(in millions)

Severance and related charges
  ​ ​ ​
$
4.7
​
$
30.7
​
$
15.9
​
$
51.3

Facility relocation and closure charges
​
​
—
​
​
0.1
​
​
—
​
​
0.1

Total restructuring charges
​
$
4.7
​
$
30.8
​
$
15.9
​
$
51.4

​
Asset Impairments
During 2025, we recorded $ 1.8 million of impairment charges in connection with vacating facilities.
Other Charges
Other charges relate to vacating and relocating facilities and personnel transition costs.
​
NOTE 12.           EMPLOYEE RETIREMENT PLANS AND POSTRETIREMENT BENEFITS
Defined Contribution Plans
We have a 401(k) profit-sharing and retirement savings plan covering substantially all full-time U.S. employees. Participants may defer up to the maximum amount permitted by law. Participants are immediately vested in both their own contributions and profit-sharing contributions. Profit-sharing contributions, which are discretionary, are approved by the Board. For all periods presented, we based our profit-sharing contribution on matching 100 % of employee contributions up to 3 % of compensation plus an additional match of 50 % on the next 2 % of compensation.
During the years ended December 31, 2025, 2024, and 2023, we recognized total defined contribution plan costs of $ 5.1 million, $ 5.0 million, and $ 5.1 million, respectively.
Defined Benefit Plans
We maintain defined benefit pension plans for certain of our non-U.S. employees in the United Kingdom, Germany, and Philippines. Each plan is managed locally and in accordance with respective local laws and regulations.
In light of the United Kingdom’s High Court ruling in the case of Virgin Media Ltd v. NTL Pension Trustees II Ltd & Ors, we reviewed past amendments made to our United Kingdom pension plans. We continue to account for our United Kingdom pension plans in accordance with the plan agreements and amendments.
To measure the expense and related benefit obligation, we make various assumptions, including discount rates used to value the obligation, expected return on plan assets used to fund these expenses, and estimated future inflation rates. We base these assumptions on historical experience as well as current facts and circumstances. We use an actuarial analysis to measure the expense and liability associated with pension benefits.
The information provided below includes one pension plan which is part of discontinued operations. As such, for all periods presented, all related expenses are reported in discontinued operations in the Consolidated Statements of Operations.

81

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Our projected benefit obligation and plan assets for defined benefit pension plans and the related assumptions used to determine the related liabilities are as follows:
​
​

​

​

​

​

​

​

​
​
December 31, 
​
December 31, 

​
  ​ ​ ​
2025
  ​ ​ ​
2024

​
​
(in millions)

Projected benefit obligation, beginning of year
​
$
64.3
​
$
65.7

Service cost
​
 
1.5
​
 
1.0

Interest cost
​
 
3.2
​
 
2.8

Actuarial loss (gain)
​
 
( 2.6 )
​
 
( 0.4 )

Benefits paid
​
 
( 2.8 )
​
 
( 1.9 )

Translation adjustment
​
 
4.1
​
 
( 2.9 )

Projected benefit obligation, end of year
​
​
67.7
​
​
64.3

​
​
​
​
​
​
​

Fair value of plan assets, beginning of year
​
$
14.0
​
$
14.1

Expected return
​
 
0.8
​
 
0.7

Contributions
​
 
1.7
​
 
1.6

Benefits paid
​
 
( 1.9 )
​
 
( 1.4 )

Actuarial gain (loss)
​
 
0.3
​
 
( 0.6 )

Translation adjustment
​
 
1.2
​
 
( 0.4 )

Fair value of plan assets, end of year
​
​
16.1
​
​
14.0

Funded status of plan
​
$
( 51.6 )
​
$
( 50.3 )

​
​

​

​

​

​

​

​

​
​
December 31, 
​
December 31, 

​
  ​ ​ ​
2025
  ​ ​ ​
2024

​
​
(in millions)

Accumulated benefit obligation
​
$
59.0
​
$
55.9

​
The following table summarizes classification of our net pension benefit obligation on our Consolidated Balance Sheets. The current portion of the liability is included in accrued payroll and employee benefits.
​
​

​

​

​

​

​

​

​
​
December 31, 

​
  ​ ​ ​
2025
  ​ ​ ​
2024

​
​
(in millions)

Current
​
$
2.2
​
$
0.7

Long-term
​
 
49.4
​
 
49.6

Total pension benefit obligation
​
$
51.6
​
$
50.3

​
The components of net periodic pension benefit cost recognized in our Consolidated Statements of Operations for the periods presented are as follows:
​
​

​

​

​

​

​

​

​

​

​

​
​
Years Ended December 31, 

​
  ​ ​ ​
2025
  ​ ​ ​
2024
  ​ ​ ​
2023

​
​
(in millions)

Service cost
​
$
1.5
​
$
1.0
​
$
1.0

Interest cost
​
​
3.2
​
​
2.8
​
​
2.9

Expected return on plan assets
​
 
( 0.8 )
​
 
( 0.7 )
​
 
( 0.7 )

Amortization of actuarial gains and losses
​
 
( 0.3 )
​
 
( 0.2 )
​
 
( 0.4 )

Net periodic pension cost
​
$
3.6
​
$
2.9
​
$
2.8

​

82

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Assumptions used in the determination of the net periodic pension cost are:
​
​

​

​

​

​

​

​

​

​
​
Years Ended December 31, 
 

​
  ​ ​ ​
2025
  ​ ​ ​
2024
  ​ ​ ​
2023
 

Discount rate used for net periodic pension costs
 
5.0
%  
4.4
%  
5.1
%

Discount rate used for pension benefit obligations
​
5.3
%  
5.0
%  
4.4
%  

Expected long-term return on plan assets
 
5.8
%  
5.9
%  
5.2
%

​
The fair value of our qualified pension plan assets by category was as follows:
​
​

​

​

​

​

​

​

​

​

​

​

​

​

​
​
December 31, 2025

​
  ​ ​ ​
Level 1
  ​ ​ ​
Level 2
  ​ ​ ​
Level 3
  ​ ​ ​
Total

​
​
(in millions)

Diversified Growth Fund
​
$
—
​
$
13.5
​
$
—
​
$
13.5

Corporate Bonds
​
 
—
​
​
1.5
​
​
—
​
​
1.5

Insurance Contracts
​
​
—
​
​
—
​
​
0.8
​
​
0.8

Cash
​
 
0.3
​
​
—
​
​
—
​
​
0.3

Total
​
$
0.3
​
$
15.0
​
$
0.8
​
$
16.1

​
​

​

​

​

​

​

​

​

​

​

​

​

​

​
​
December 31, 2024

​
  ​ ​ ​
Level 1
  ​ ​ ​
Level 2
  ​ ​ ​
Level 3
  ​ ​ ​
Total

​
​
(in millions)

Diversified Growth Fund
​
$
—
​
$
11.5
​
$
—
​
$
11.5

Corporate Bonds
​
 
—
​
 
1.3
​
 
—
​
 
1.3

Insurance Contracts
​
​
—
​
 
—
​
 
0.7
​
 
0.7

Cash
​
 
0.5
​
 
—
​
 
—
​
 
0.5

Total
​
$
0.5
​
$
12.8
​
$
0.7
​
$
14.0

​
Expected future payments during the next ten years for our defined benefit pension plans are as follows:
​
​

​

​

​

Year Ending December 31,
  ​ ​ ​
​
(in millions)

2026
​
$
3.9

2027
​
​
3.8

2028
​
​
3.4

2029
​
​
4.8

2030
​
​
4.5

2031 to 2035
​
​
25.9

​
As of December 31, 2025 and 2024, accumulated other comprehensive income (loss) on the Consolidated Balance Sheets includes net actuarial gains and other deferred items, net of related taxes of $ 13.3 million and $ 10.5 million, respectively, that have not yet been recognized in net periodic pension cost.
​
​
​
​

83

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

NOTE 13.            STOCK-BASED COMPENSATION
The Compensation Committee of our Board of Directors administers our stock plans. As of December 31, 2025, we have two active stock-based incentive compensation plans: the Amended and Restated 2023 Omnibus Incentive Plan (the “2023 Incentive Plan”) and the Employee Stock Purchase Plan (“ESPP”). We issue all new equity compensation grants under the 2023 Incentive Plan. Outstanding awards previously issued under inactive plans will continue to vest and remain exercisable in accordance with the terms of the respective plans.
The 2023 Incentive Plan provides for the grant of awards including stock options, stock appreciation rights, performance stock units, performance units, stock, restricted stock, restricted stock units, and cash incentive awards.
The following table summarizes information related to our stock-based incentive compensation plans:
​
​

​

​

​
​
December 31, 2025

​
​
(in millions)

Shares available for future issuance under the 2023 Incentive Plan
​
1.4

Shares available for future issuance under the ESPP
​
0.5

​
Stock-based Compensation Expense
We recognize stock-based compensation expense based on the fair value of the awards issued and the functional area of the employee receiving the award. For the year ended December 31, 2025, stock-based compensation expense includes $ 3.7 million related to the Airity acquisition (see Note 2. Acquisition ). Stock-based compensation expense was as follows:
​
​

​

​

​

​

​

​

​

​

​

​

​
​
​
Years Ended December 31, 

​
  ​ ​ ​
  ​ ​ ​
2025
  ​ ​ ​
2024
  ​ ​ ​
2023

​
​
​
(in millions)

Stock-based compensation expense
​
​
$
55.7
​
$
45.9
​
$
31.0

​
Restricted Stock Units
Generally, we grant restricted stock units (“RSUs”) with a three year time-based vesting schedule. Certain RSUs contain performance-based or market-based vesting conditions in addition to the time-based vesting requirements. RSUs are generally granted with a grant date fair value based on the market price of our stock on the date of grant. For RSUs that vest based on our relative total shareholder return over the performance period to a predetermined peer group, fair value is predetermined based on a Monte Carlo simulation as of the date of the grant.
Changes in our RSUs were as follows:
​
​

​

​

​

​

​

​
​
Year Ended December 31, 2025

​
  ​ ​ ​
​
  ​ ​ ​
Weighted-

​
​
​
​
Average

​
​
Number of
​
Grant Date

​
​
RSUs
​
Fair Value

​
​
(in millions)
​
​

RSUs outstanding at beginning of period
 
1.0
​
$
95.05

RSUs granted
 
0.5
​
$
119.54

RSUs vested
 
( 0.4 )
​
$
87.26

RSUs forfeited
 
( 0.1 )
​
$
84.98

RSUs outstanding at end of period
 
1.0
​
$
111.72

​

84

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

For vested RSUs, employees withheld shares for income tax totaling $ 14.5 million.
The weighted-average grant date fair value for RSUs granted in the years ended December 31, 2025, 2024, and 2023 was $ 119.54 , $ 104.84 , and $ 100.04 , respectively. The fair value of RSUs vested for the years ended December 31, 2025, 2024 and 2023 was $ 34.9 million, $ 28.2 million, and $ 19.5 million, respectively. As of December 31, 2025, there was $ 61.9 million of total unrecognized compensation cost, net of expected forfeitures, related to non-vested RSUs, that we expect to recognize through December 2028, with a weighted-average remaining vesting period of 1.0 years .
Stock Options
Generally, we grant stock option awards with an exercise price equal to the market price of our stock at the date of grant and with either a three or four-year vesting schedule or performance-based vesting. Stock option awards generally have a term of ten years .
Changes in our stock options were as follows:
​
​

​

​

​

​

​

​

​

​
​
Year Ended December 31, 2025

​
  ​ ​ ​
​
  ​ ​ ​
Weighted-
  ​ ​ ​
Weighted-

​
​
​
​
Average
​
Average

​
​
Number of
​
Exercise Price
​
Remaining

​
​
Options
​
per Share
​
Contractual Life

​
​
(in millions)
​
​
​
​

Options outstanding at beginning of period
 
0.1
​
$
83.05
​
6.86 years

Options exercised
 
—
​
$
80.70
​
​

Options outstanding at end of period
 
0.1
​
$
85.97
​
6.21 years

Options vested at end of period
 
—
​
$
85.97
​
6.21 years

​
The total intrinsic value of options exercised for the years ended December 31, 2025, 2024 and 2023 was $ 2.6 million, $ 0.8 million, and $ 4.6 million, respectively. As of December 31, 2025, the aggregate intrinsic value of options outstanding and exercisable was $ 4.4 million and $ 4.4 million, respectively. As of December 31, 2025, there were no stock options outstanding or exercisable, and no remaining unrecognized compensation cost related to stock options.
Employee Stock Purchase Plan
The ESPP is a stockholder-approved plan that allows eligible employees to purchase our common stock at a discount. Employees who meet the eligibility criteria may contribute up to the lesser of 15 % of their eligible earnings or $ 5,000 during each plan period. Currently, the plan period is six months. The purchase price of common stock purchased under the ESPP is currently equal to the lower of 1)  85 % of the fair market value of our common stock on the commencement date of each plan period or 2)  85 % of the fair market value of our common shares on each plan period purchase date.
As of December 31, 2025, there was $ 0.6 million of total unrecognized compensation cost related to the ESPP that we expect to recognize over a remaining period of five months .
Deferred Compensation Plan
We offer certain employees the opportunity to defer compensation and stock awards and maintain a rabbi trust in connection with this deferred compensation plan. Assets of the rabbi trust are consolidated as we are the primary beneficiary. Although we cannot use the rabbi trust’s assets for any purpose other than meeting our obligations under the deferred compensation plan, the trust’s assets, liabilities, and activity are included in our consolidated financial statements.

85

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Assets of the rabbi trust not held in Company shares are presented in other assets, and the fair value of the Company shares held in the rabbi trust is classified in stockholders’ equity.
After a holding period, employees have the option to diversify the Company shares into other funds. Stock awards that have been elected for deferral but have not yet vested and are probable of vesting are reported as deferred compensation in the temporary equity section of the Consolidated Balance Sheets. The stock awards recorded in temporary equity are recognized at fair value, with any difference from stock based compensation recorded in retained earnings.
The following table summarizes information regarding the rabbi trust’s assets and liabilities:
​
​

​

​

​

​

​

​

​
​
December 31,

​
​
2025
​
2024

Description
Balance Sheet Classification
(in millions)

Investments
Other assets
$
13.5
​
$
9.9

Deferred compensation liabilities
Other liabilities
$
13.4
​
$
10.1

Stock awards elected for deferral
Temporary equity
$
7.8
​
$
3.5

Company shares of common stock
Stockholders equity
$
2.6
​
$
0.9

​
​
​
​
NOTE 14.           INCOME TAXES
The geographic distribution of pretax income from continuing operations was as follows:
​
​

​

​

​

​

​

​

​

​

​

​
​
Years Ended December 31, 

​
  ​ ​ ​
2025
  ​ ​ ​
2024
  ​ ​ ​
2023

​
​
(in millions)

Domestic
​
$
( 54.2 )
​
$
( 43.2 )
​
$
( 17.5 )

Foreign
​
 
222.9
​
 
95.6
​
 
140.0

Income from continuing operations, before income taxes
​
$
168.7
​
$
52.4
​
$
122.5

​

86

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

The income tax provision (benefit) from continuing operations is summarized as follows:
​
​

​

​

​

​

​

​

​

​

​

​

​
​
Years Ended December 31, 
 

​
  ​ ​ ​
2025
  ​ ​ ​
2024
  ​ ​ ​
2023
 

​
​
(in millions)
​

Current:
 
​
  ​
 
​
  ​
 
​
  ​
​

Federal
​
$
( 1.8 )
​
$
3.8
​
$
13.4
​

State
​
 
1.2
​
 
0.5
​
 
0.6
​

Foreign
​
 
33.8
​
 
12.3
​
 
11.7
​

Total current provision
​
​
33.2
​
​
16.6
​
​
25.7
​

​
​
​
​
​
​
​
​
​
​
​

Deferred:
​
 
  ​
​
 
  ​
​
 
  ​
​

Federal
​
​
( 5.9 )
​
​
( 1.4 )
​
​
( 5.5 )
​

State
​
 
( 0.3 )
​
 
( 0.1 )
​
 
( 1.0 )
​

Foreign
​
 
( 7.6 )
​
 
( 19.0 )
​
 
( 27.5 )
​

Total deferred benefit
​
 
( 13.8 )
​
 
( 20.5 )
​
 
( 34.0 )
​

​
​
​
​
​
​
​
​
​
​
​

Total income tax provision (benefit)
​
$
19.4
​
$
( 3.9 )
​
$
( 8.3 )
​

Effective tax rate
​
​
11.5
%
​
( 7.4 )
%
​
( 6.8 )
%

​
The principal causes of the difference between the federal statutory rate and the effective income tax rate for each of the years below are as follows:
​
​

​

​

​

​

​

​

​
​
Years Ended December 31,

​
  ​ ​ ​
2024
  ​ ​ ​
2023

​
​
(in millions)

Income taxes per federal statutory rate
​
$
11.0
​
$
25.9

State income taxes, net of federal deduction
​
​
0.3
​
​
( 0.5 )

U.S. tax on foreign operations
​
​
18.9
​
​
20.5

Foreign derived intangible income deduction
​
​
( 1.4 )
​
​
( 2.9 )

Tax effect of foreign operations
​
​
( 14.8 )
​
​
( 28.1 )

Uncertain tax positions
​
​
( 1.1 )
​
​
1.3

Change in valuation allowance assessment
​
​
0.6
​
​
( 25.6 )

Tax credits
​
​
( 7.8 )
​
​
( 7.3 )

Change in valuation allowance
​
​
3.6
​
​
12.9

Executive compensation limitation
​
​
2.3
​
​
2.0

Impact of intellectual property transfer
​
​
( 23.0 )
​
​
-

Other permanent items, net
​
​
7.5
​
​
( 6.5 )

Total income tax provision (benefit)
​
$
( 3.9 )
​
$
( 8.3 )

​
​

87

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

​
​

​

​

​

​

​

​
​
Years Ended December 31,
​

​
  ​ ​ ​
2025
​

​
​
Tax Effect
​
Rate Effect
​

​
​
(in millions)
​

U.S. Federal Statutory Tax Rate
$
35.4
​
21.0
%

State and Local Income Taxes, Net of Federal Income Tax Effect
​
0.7
​
0.4
%

Effect of Cross-Border Tax Laws
​
​
​
​
​

Global intangible low-taxed income
​
17.3
​
10.2
%

Other
​
0.8
​
0.5
%

Tax Credits
​
​
​
​
​

Foreign tax credit
​
( 12.4 )
​
( 7.4 )
%

Research and development tax credits
​
( 4.1 )
​
( 2.4 )
%

Nontaxable or Nondeductible Items
​
​
​
​
​

Executive compensation limitation
​
3.2
​
1.9
%

Other
​
( 0.1 )
​
( 0.1 )
%

Other Adjustments
​
​
​
​
​

Change in prepaid tax on intercompany profit
​
( 2.8 )
​
( 1.6 )
%

Other
​
2.4
​
1.4
%

Foreign Tax Effects
​
​
​
​
​

Germany
​
​
​
​
​

Effect of tax rate changes in the year
​
2.9
​
1.7
%

Changes in valuation allowances
​
( 3.1 )
​
( 1.9 )
%

Other
​
1.7
​
1.0
%

Hong Kong
​
​
​
​
​

Statutory rate difference
​
( 3.3 )
​
( 2.0 )
%

Changes in valuation allowances
​
( 9.2 )
​
( 5.4 )
%

Non-taxable income
​
( 9.7 )
​
( 5.8 )
%

Withholding tax
​
1.7
​
1.0
%

Other
​
0.9
​
0.5
%

Pillar II
​
10.0
​
5.9
%

Philippines
​
​
​
​
​

Enterprise zone benefit
​
( 3.1 )
​
( 1.8 )
%

Other
​
2.1
​
1.2
%

Singapore
​
​
​
​
​

Statutory rate difference
​
( 4.7 )
​
( 2.8 )
%

Tax holiday
​
( 4.8 )
​
( 2.9 )
%

Other
​
( 3.7 )
​
( 2.1 )
%

Other Jurisdictions
​
1.8
​
1.2
%

Changes in Unrecognized Tax Benefits
​
( 0.5 )
​
( 0.2 )
%

Total
$
19.4
​
11.5
%

​
​
​
​
​
​

88

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

The income taxes paid (net of refunds) is summarized as follows:
​
​

​

​

​
​
Year Ending

​
​
December 31, 2025

​
​
(in millions)

U.S. Federal
$
( 6.5 )

U.S. State & Local
​
( 0.9 )

Foreign
​
( 13.4 )

Total
$
( 20.8 )

​
From the above amounts, income taxes paid (net of refunds) exceed the 5% of taxes paid threshold in the following foreign jurisdictions. U.S. state and local jurisdictions did not exceed the 5% threshold.
​
​

​

​

​
​
Year Ending

​
​
December 31, 2025

​
​
(in millions)

Foreign:
​
​

Malaysia
$
( 3.3 )

Singapore
$
( 2.6 )

China
$
( 2.3 )

Philippines
$
( 1.7 )

​
From the above amounts, states that equal more than 50% of our state income taxes paid (net of refunds) but do not exceed the 5% of taxes paid include the following jurisdictions.
​
​

​

​

​
​
Year Ending

​
​
December 31, 2025

​
​
(in millions)

U.S. State & Local:
​
​

Texas
$
( 0.3 )

Tennessee
$
( 0.3 )

​

89

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

Deferred tax assets and liabilities are recognized for the future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax bases using enacted tax rates in effect for the year in which the differences are expected to be reversed. Significant deferred tax assets and liabilities consist of the following:
​
​

​

​

​

​

​

​

​
​
December 31,
​
December 31,

​
  ​ ​ ​
2025
  ​ ​ ​
2024

​
​
(in millions)

Deferred tax assets:
 
​
  ​
 
​
  ​

Net operating loss and tax credit carryforwards
​
$
85.6
​
$
72.0

Pension obligation
​
 
8.1
​
 
9.2

Bond hedge original issue discount
​
 
15.2
​
 
20.2

Amortization
​
 
41.0
​
 
43.0

Operating lease liabilities
​
​
15.1
​
​
12.3

Other
​
 
54.4
​
 
56.5

Total deferred tax assets
​
 
219.4
​
 
213.2

Less: valuation allowance
​
 
( 36.6 )
​
 
( 42.4 )

Deferred tax assets, net of valuation allowance
​
 
182.8
​
 
170.8

​
​
​
​
​
​
​

Deferred tax liabilities:
​
 
​
​
 
  ​

Depreciation
​
 
2.4
​
 
2.5

Amortization
​
​
23.6
​
​
26.8

Unremitted earnings
​
 
4.1
​
 
2.8

Operating lease right-of-use assets
​
​
12.5
​
​
9.9

Operating lease liabilities
​
​
1.5
​
​
5.3

Other
​
 
1.6
​
 
2.7

Total deferred tax liabilities
​
 
45.7
​
 
50.0

​
​
​
​
​
​
​

Net deferred tax assets
​
$
137.1
​
$
120.8

​
Of the $ 137.1 million and $ 120.8 million net deferred tax assets as of December 31, 2025 and 2024, respectively, $ 137.7 million and $ 121.4 million, respectively, were included as a net non-current deferred tax asset within other assets on the Consolidated Balance Sheets. $ 0.6 million for both years were included as a net non-current deferred tax liability within other long-term liabilities on the Consolidated Balance Sheets.
During 2025, we completed a series of intercompany restructuring actions that created additional future taxable income that was previously not available in certain tax jurisdictions. Based on updated financial projections and planned business integration steps, these activities provided sufficient positive evidence to support the realization of deferred tax assets for which valuation allowances had previously been recorded. As a result, in 2025, we released deferred tax valuation allowances totaling $ 9.8 million with a corresponding decrease to tax expense. We will continue to update financial projections and integration plans on a periodic basis, and additional adjustments to the valuation allowance may be required in future periods.
As of December 31, 2025, we have recorded a total valuation allowance on $ 2.6 million of our U.S. domestic deferred tax assets, largely attributable to state carryforward attributes that are expected to expire before sufficient income can be realized in those jurisdictions. The remaining valuation allowance on deferred tax assets approximates $ 34.0 million and is associated primarily with operations in Hong Kong, China, and Switzerland. As of December 31, 2025, there is not sufficient positive evidence to conclude that such deferred tax assets, presently reduced by a valuation allowance, will more likely than not be recognized. For the year ended December 31, 2025, the valuation allowance decreased by $ 5.8 million.

90

Table of Contents
ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

As of December 31, 2025, we had U.S., foreign and state tax loss carryforwards of $ 28.4 million, $ 347.7 million, and $ 105.2 million, respectively. Additionally, we had $ 1.9 million and $ 30.5 million of capital loss and interest expense limitation carryforwards, respectively. Finally, we had U.S. and state tax credit carryforwards of $ 4.8 million and $ 2.0 million, respectively. The U.S. and state net operating losses, tax credits, and interest expense limitation are subject to various utilization limitations under Section 382 of the Internal Revenue Code and applicable state laws. These Section 382 limited attributes have various expiration periods through 2036 or, in the case of the interest expense limitation amount, no expiration period. Much of the foreign loss carryforwards, and $ 8.1 million of the federal net operating loss carry forwards, have no expiration period.
We operate under a tax holiday in Singapore. This tax holiday is in effect through June 30, 2027. The tax holiday is conditional upon our meeting certain employment and investment thresholds. The expected benefit of the tax holidays may be limited by the impact of Pillar II global minimum tax or other actions taken by these countries. For the years ended December 31, 2025, 2024 and 2023, the impact of the tax holidays decreased foreign taxes by $ 31.0 million, $ 12.4 million, and $ 14.3 million, respectively, and the benefit on earnings per diluted share was $ 0.82 , $ 0.33 , and $ 0.38 , respectively.
We have undistributed earnings in certain foreign subsidiaries that we have indefinitely invested, and on which we have not recognized deferred taxes.
​
We account for uncertain tax positions by applying a minimum recognition threshold to tax positions before recognizing these positions in the consolidated financial statements. The following table provides a reconciliation of our total gross unrecognized tax benefits, which we include within other long-term liabilities on the Consolidated Balance Sheets:
​
​

​

​

​

​

​

​

​

​

​

​
​
Years Ended December 31, 

​
  ​ ​ ​
2025
  ​ ​ ​
2024
  ​ ​ ​
2023

​
​
(in millions)

Balance at beginning of period
​
$
5.7
​
$
8.5
​
$
7.5

Additions based on tax positions taken during a prior period
​
 
—
​
 
—
​
 
0.2

Additions based on tax positions taken during the current period
​
 
0.3
​
 
0.5
​
 
1.0

Reductions based on tax positions taken during a prior period
​
 
( 0.2 )
​
 
( 2.1 )
​
 
—

Reductions related to a lapse of applicable statute of limitations
​
 
( 0.9 )
​
 
( 1.2 )
​
 
( 0.1 )

Reductions related to a settlement with taxing authorities
​
 
—
​
 
—
​
 
( 0.1 )

Balance at end of period
​
$
4.9
​
$
5.7
​
$
8.5

​
The unrecognized tax benefits of $ 4.9 million, if recognized, will impact our effective tax rate. In accordance with our accounting policy, we recognize accrued interest and penalties related to unrecognized tax benefits as a component of tax expense. We had $ 0.9 million and $ 0.8 million of accrued interest and penalties on December 31, 2025 and 2024, respectively. With few exceptions, we are no longer subject to federal, state, or foreign income tax examinations by tax authorities for years before 2022.
​
As of December 31, 2025, certain countries in which the Company operates have implemented or are in the process of implementing the Pillar II minimum global effective tax rate regime as put forth by the Organization for Economic Cooperation and Development (“OECD”). Specifically, the OECD released prospective “Side-by-Side” guidance in early 2026 which is generally beneficial to U.S. parented organizations, but will require adoption by member countries to implement. As countries continue to make revisions to their legislation and release additional guidance with respect to the global minimum tax, we continue to determine any potential cash tax expense and tax rate impact in the countries in which we operate.
On July 4, 2025, the One Big Beautiful Bill (“OBBB”) Act, which includes a broad range of elective tax law items available in 2025 and prescribed tax law changes in 2026, was signed into law in the United States. The Company

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ADVANCED ENERGY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

has reflected the impact of the OBBB’s elective tax law items in its financial statements for the period ending December 31, 2025.
​
​
​
NOTE 15.           COMMITMENTS AND CONTINGENCIES
We are involved in disputes and legal actions arising in the normal course of our business. While we currently believe that the amount of any ultimate loss would not be material to our financial position, the outcome of these actions is inherently difficult to predict. In the event of an adverse outcome, the ultimate loss could have a material adverse effect on our financial position or reported results of operations. An unfavorable decision in intellectual property litigation also could require material changes in production processes and products or result in our inability to ship products or components found to have violated third party intellectual property rights. We accrue loss contingencies in connection with our commitments and contingencies, including litigation, when it is probable that a loss has occurred, and the amount of such loss can be reasonably estimated. We are not currently a party to any legal action that we believe would have a material adverse impact on our business, financial condition, results of operations or cash flows.
​
NOTE 16.           SUPPLEMENTAL CASH FLOW INFORMATION
​
​

​

​

​

​

​

​

​

​

​

​
​
Years Ended December 31, 

​
​
2025
​
2024
​
2023

​
​
(in millions)

Non-cash investing activities:
​
​
​
​
​
​
​
​
​

Capital expenditures in accounts payable and other accrued expenses
​
$
30.6
​
$
9.7
​
$
9.0

Common stock used as consideration in business combination
​
$
—
​
$
4.5
​
$
—

Cash paid for:
​
​
​
​
​
​
​
​
​

Interest
​
$
14.7
​
$
17.3
​
$
14.4

Income taxes
​
$
24.1
​
$
33.3
​
$
47.9

Cash received from income taxes
​
$
3.3
​
$
3.8
​
$
2.4

​
​
​
​
​
​
​
​
​
​
​

92

Table of Contents

ITEM 9.            CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A.          CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We have established disclosure controls and procedures, which are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms. These disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our Principal Executive Officer (Stephen D. Kelley, President and Chief Executive Officer) and Principal Financial Officer (Paul Oldham, Executive Vice President and Chief Financial Officer), as appropriate, to allow timely decisions regarding required disclosures.
As of the end of the period covered by this report, we conducted an evaluation, with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the disclosure controls and procedures pursuant to the Exchange Act Rule 13a-15(b). Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2025. The conclusions of the Chief Executive Officer and Chief Financial Officer from this evaluation were communicated to the Audit and Finance Committee. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. We intend to continue to review and document our disclosure controls and procedures, including our internal controls over financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.
Management’s Annual Report on Internal Control over Financial Reporting
It is management’s responsibility to establish and maintain effective internal control over our financial reporting, which is a process designed under the supervision of our Chief Executive Officer and Chief Financial Officer and effected by our Board of Directors, management, and other personnel. Our internal control over financial reporting is designed to provide reasonable assurance concerning the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles.
Management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our internal control over financial reporting as of December 31, 2025, using the criteria described in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based upon this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2025.
Ernst & Young LLP, an independent registered public accounting firm, has audited our consolidated financial statements included in this Form 10-K, and as part of the audit, has issued an audit report, included herein, on the effectiveness of our internal control over financial reporting as of December 31, 2025.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the fourth quarter of the current year that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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Table of Contents

Limitations on Controls and Procedures
Management concluded that our disclosure controls and procedures and internal control over financial reporting provide reasonable assurance that the objectives of our control system are met. We do not expect, however, that our disclosure controls and procedures or internal control over financial reporting will prevent or detect all misstatements, errors, or fraud, if any. All control systems, no matter how well designed and implemented, have inherent limitations, and therefore no evaluation can provide absolute assurance that every misstatement, error, or instance of fraud, if any, or risk thereof, has been or will be prevented or detected. The occurrence of a misstatement, error, or fraud, if any, would not necessarily require a conclusion that our controls and procedures are not effective.
ITEM 9B.          OTHER INFORMATION
During the fourth quarter of 2025, two of our officers and two of our directors adopted a “Rule 10b5-1 trading arrangement” (as defined in Item 408 of Regulation S-K) intended to satisfy the affirmative defense conditions of Rule 10b5-1(c), as amended. The table below summarizes the terms of Rule 10b5-1 trading arrangements adopted:

​

Name and Title
Date of Adoption
Duration of the Trading Arrangement 1
Aggregate Number of Shares to be Sold

Elizabeth K. Vonne
Executive Vice President, General Counsel and Secretary
November 12, 2025
Until July 31, 2026 or such earlier date upon which all transactions are completed
1,930

​
​
​
​

John A. Roush
Director
December 3, 2025
Until December 3, 2026 or such earlier date upon which all transactions are completed
10,225

​
​
​
​

Stephen D. Kelley
President and Chief Executive Officer
December 5, 2025
Until December 4, 2026 or such earlier date upon which all transactions are completed
50,000

​
​
​
​

Brian M. Shirley
Director
December 12, 2025
Until December 11, 2026 or such earlier date upon which all transactions are completed
2,468

(1) The Rule 10b5-1 trading arrangements also provide for termination prior to the above-listed expiration date following the occurrence of certain events, such as public announcement of a tender offer, exchange offer or certain M&A, reorganization, or recapitalization transactions or the bankruptcy, insolvency, or death of the adopting person.
(2) The aggregate number of shares available for sale under Mr. Kelley’s Rule 10b5-1 trading arrangement is not yet determinable because the trading arrangement includes shares issuable pursuant to unvested RSUs and PSUs which are subject to tax withholding obligations that arise in connection with the vesting and settlement of such awards and, with respect to the PSUs, satisfaction of the applicable performance goals. As such, the shares included in this table reflect the aggregate number of shares underlying Mr. Kelley’s RSUs and PSUs assuming target performance goals were met and without excluding shares that will be withheld to satisfy tax withholding obligations.
​
During the fourth quarter of 2025, no other director or officer adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” (as defined in Item 408 of Regulation S-K).
​
ITEM 9C.          DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
​

94

Table of Contents

PART   III
In accordance with General Instruction G (3) of Form 10-K, certain information required by this Part III is incorporated by reference to the definitive proxy statement relating to our 2026 annual meeting of stockholders (the “2026 Proxy Statement”), as set forth below. The 2026 Proxy Statement will be filed with the SEC within 120 days after the end of our fiscal year.
ITEM 10.           DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
The information set forth in the 2026 Proxy Statement under the headings “Proposal No. 1 - Election of Directors,” “Corporate Governance,” and “Management,” is incorporated herein by reference.
We adopted a Code of Ethical Conduct that applies to all employees, including our Chief Executive Officer, Chief Financial Officer, and others performing similar functions. We posted a copy of the Code of Ethical Conduct on our website at www.advancedenergy.com, and such Code of Ethical Conduct is available, in print, without charge, to any stockholder who requests it from our Secretary. We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding amendments to, or waivers from, the Code of Ethical Conduct by posting such information on our website at www.advancedenergy.com. We are not including the information contained on our website as part of, or incorporating it by reference into, this report.
​
We have also adopted an Insider Trading Policy governing the purchase, sale, and/or other dispositions of the Company’s securities that applies to all directors, officers, and employees, as well as the Company itself. We believe our Insider Trading Policy is reasonably designed to promote compliance with insider trading laws, rules and regulations, and applicable listing standards. A copy of the Insider Trading Policy was filed with our annual report on Form 10-K for the fiscal year ended December 31, 2024 and is incorporated by reference as Exhibit 19.1.
ITEM 11.           EXECUTIVE COMPENSATION
The information set forth in the 2026 Proxy Statement under the headings “Executive Compensation” and “Director Compensation” is incorporated herein by reference.
ITEM 12.           SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information set forth in the 2026 Proxy Statement under the headings “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” is incorporated herein by reference.
Securities Authorized for Issuance under Equity Compensation Plans
The following table summarizes information about the equity incentive compensation plans as of December 31, 2025. All outstanding awards relate to our common stock.
​
​

​

​

​

​

​

​

​

​

​

​
(A)
​
(B)
​
(C)
​

Plan Category
Number of securities to be issued
upon exercise of outstanding
options, warrants and rights
  ​ ​ ​
Weighted average exercise price
of outstanding options, warrants
and rights
  ​ ​ ​
Number of securities remaining available
for future issuance under equity
compensation plans (excluding securities
reflected in column A)
​

​
(in millions, except exercise price per share)
​

Equity compensation plans approved by security holders
  ​
0.1
(1) ​
$
85.97
​
  ​
1.9
(2) ​

Equity compensation plans not approved by security holders
​
—
​
​
—
​
​
—
​

Total
​
0.1
(1) ​
$
85.97
​
​
1.9
​

(1) Includes shares underlying options granted under the prior plan.
(2) This number includes 0.5 million shares available for future issuance under the Employee Stock Purchase Pla n.
​

95

Table of Contents

​
ITEM 13.           CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information set forth in the 2026 Proxy Statement under the heading “Certain Relationships and Related Transactions” and under the sub-heading “Independence”, which appears under the heading “Proposal No. 1 - Election of Directors” is incorporated herein by reference.
ITEM 14.           PRINCIPAL ACCOUNTING FEES AND SERVICES
The information set forth in the 2026 Proxy Statement under the heading “Proposal No. 2 - Ratification of the Appointment of Ernst & Young LLP as Advanced Energy’s Independent Registered Public Accounting Firm for 2026” is incorporated herein by reference.
PART IV
ITEM 15.           EXHIBIT AND FINANCIAL STATEMENT SCHEDULES
(A)
Documents filed as part of this annual report on Form 10-K are as follows:

1.
Financial Statements:

See Index to Financial Statements at Part II, Item 8 herein.
​
2.
Financial Statement Schedules for the years ended December 31, 2025, 2024, and 2023

NOTE:   All schedules have been omitted because they are either not applicable or the required information is included in the financial statements and notes thereto.
(B)
Exhibits:

​
Exhibit
​
​
​
Incorporated by Reference

Number
  ​ ​
Description
  ​ ​
Form
  ​ ​
File No.
  ​ ​
Exhibit
  ​ ​
Filing Date

​
​
​
​
​
​
​
​
​
​
​

2.1
​
Stock Purchase Agreement by and among Advanced Energy Industries, Inc., Artesyn Embedded Technologies, Inc., Pontus Intermediate Holdings II, LLC and Pontus Holdings, LLC, dated May 14, 2019 **
​
8-K
​
000-26966
​
2.1
​
May 15, 2019

​
​
​
​
​
​
​
​
​
​
​

2.2
​
First Amendment to the Stock Purchase Agreement by and among Advanced Energy Industries, Inc., Artesyn Embedded Technologies, Inc., Pontus Intermediate Holdings II, LLC and Pontus Holdings, LLC, dated September 9, 2019 **
​
8-K
​
000-26966
​
2.2
​
September 10, 2019

​
​
​
​
​
​
​
​
​
​
​

2.3
​
Stock Purchase Agreement, dated April 1, 2022,
by and among SL Power Electronics Corporation,
SL Delaware Holdings, Inc., Steel Partners
Holdings L.P., AEI US Subsidiary, LLC and
Advanced Energy Industries, Inc. **
​
8-K
​
000-26966
​
2.1
​
April 4, 2022

​
​
​
​
​
​
​
​
​
​
​

96

Table of Contents

Exhibit
​
​
​
Incorporated by Reference

Number
  ​ ​
Description
  ​ ​
Form
  ​ ​
File No.
  ​ ​
Exhibit
  ​ ​
Filing Date

​
​
​
​
​
​
​
​
​
​
​

3.1
​
Amended and Restated Certificate of Incorporation of Advanced Energy Industries, Inc.
​
8-K
​
000-26966
​
3.1
​
May 1, 2024

​
​
​
​
​
​
​
​
​
​
​

3.2
​
Third Amended and Restated By-Laws of Advanced Energy Industries, Inc.
​
8-K
​
000-26966
​
3.2
​
May 1, 2024

​
​
​
​
​
​
​
​
​
​
​

4.1
​
Form of Specimen Certificate for Common Stock
​
S-1
​
33-97188
​
4.1
​
September 21, 1995

​
​
​
​
​
​
​
​
​
​
​

4.2
​
Description of Advanced Energy Industries, Inc. Securities
​
10-K
​
000-26966
​
4.2
​
February 18, 2025

​
​
​
​
​
​
​
​
​
​
​

4.3
​
Indenture, dated September 12, 2023, between Advanced Energy Industries, Inc. and U.S. Bank Trust Company, National Association, as trustee
​
8-K
​
000-26966
​
4.1
​
September 13, 2023

​
​
​
​
​
​
​
​
​
​
​

4.4
​
Form of Global 2.50% Convertible Senior Note due 2028 (included in Exhibit 4.3)
​
8-K
​
000-26966
​
4.2
​
September 13, 2023

​
​
​
​
​
​
​
​
​
​
​

​
​
​
​
​
​
​
​
​
​
​

10.1
​
Form of Director and Officer Indemnification Agreement
​
​
​
​
​
​
​
Filed herewith

​
​
​
​
​
​
​
​
​
​
​

10.2
​
2017 Omnibus Incentive Plan *
​
DEF 14A
​
000-26966
​
Appendix A
​
March 14, 2017

​
​
​
​
​
​
​
​
​
​
​

10.3
​
Employee Stock Purchase Plan *
​
DEF 14A
​
000-26966
​
Appendix B
​
March 10, 2021

​
​
​
​
​
​
​
​
​
​
​

10.4
​
Offer Letter dated February 8, 2021 *
​
8-K
​
000-26966
​
10.2
​
February 10, 2021

​
​
​
​
​
​
​
​
​
​
​

10.5
​
Offer Letter to Paul Oldham, dated March 26, 2018  *
​
8-K
​
000-26966
​
10.1
​
March 29, 2018

​
​
​
​
​
​
​
​
​
​
​

​
​
​
​
​
​
​
​
​
​
​

10.6
​
Offer of Employment to Eduardo Bernal Acebedo, dated August 2, 2021 *
​
8-K
​
000-26966
​
10.1
​
September 8, 2021

​
​
​
​
​
​
​
​
​
​
​

10.7
​
Form of Long-Term Incentive Plan *
​
8-K
​
000-26966
​
10.1
​
February 4, 2021

​
​
​
​
​
​
​
​
​
​
​

10.8
​
Amended and Restated Deferred Compensation Plan *
​
10-Q
​
000-26966
​
10.1
​
November 1, 2022

​
​
​
​
​
​
​
​
​
​
​

10.9
​
Form of Restricted Stock Unit Agreement under 2017 Omnibus Incentive Plan *
​
10-K
​
000-26966
​
10.25
​
February 17, 2023

​
​
​
​
​
​
​
​
​
​
​

10.10
​
Form of LTI Performance Stock Unit Agreement under 2017 Omnibus Incentive Plan *
​
10-K
​
000-26966
​
10.26
​
February 17, 2023

​
​
​
​
​
​
​
​
​
​
​

10.11
​
Form of Option Agreement under 2017 Omnibus Incentive Plan *
​
​
​
​
​
​
​
Filed herewith

​
​
​
​
​
​
​
​
​
​
​

10.12
​
Form of Confirmation for Convertible Note Hedges***
​
8-K
​
000-26966
​
10.1
​
September 13, 2023

​
​
​
​
​
​
​
​
​
​
​

10.13
​
Form of Confirmation for Warrants***
​
8-K
​
000-26966
​
10.2
​
September 13, 2023

​
​
​
​
​
​
​
​
​
​
​

​
​
​
​
​
​
​
​
​
​
​

97

Table of Contents

Exhibit
​
​
​
Incorporated by Reference

Number
  ​ ​
Description
  ​ ​
Form
  ​ ​
File No.
  ​ ​
Exhibit
  ​ ​
Filing Date

​
​
​
​
​
​
​
​
​
​
​

10.14
​
Amended and Restated 2023 Omnibus Incentive Plan *
​
8-K
​
000-26966
​
10.1
​
November 8, 2023

​
​
​
​
​
​
​
​
​
​
​

10.15
​
Form of Executive Change in Control and General Severance Agreement *
​
8-K
​
000-26966
​
10.2
​
November 8, 2023

​
​
​
​
​
​
​
​
​
​
​

10.16
​
Form of Performance Stock Unit Agreement under the Amended and Restated 2023 Omnibus Incentive Plan *
​
10-K
​
000-26966
​
10.32
​
February 20, 2024

​
​
​
​
​
​
​
​
​
​
​

10.17
​
Form of Restricted Stock Unit Agreement under the Amended and Restated 2023 Omnibus Incentive Plan *
​
10-K
​
000-26966
​
10.24
​
February 18, 2025

​
​
​
​
​
​
​
​
​
​
​

10.18
​
Form of Annual Incentive Plan *
​
10-K
​
000-26966
​
10.34
​
February 20, 2024

​
​
​
​
​
​
​
​
​
​
​

​
​
​
​
​
​
​
​
​
​
​

10.19
​
Credit Agreement, dated as of May 8, 2025, among Advanced Energy Industries, Inc., as the borrower, the guarantors party thereto, HSBC Bank USA, N.A., as the administrative agent, and the lenders party thereto.**
​
8-K
​
000-26966
​
10.1
​
August 5, 2025

​
​
​
​
​
​
​
​
​
​
​

19.1
​
Insider Trading Policy
​
10-K
​
000-26966
​
19.1
​
February 18, 2025

​
​
​
​
​
​
​
​
​
​
​

21.1
​
Subsidiaries of Advanced Energy Industries, Inc.
​
​
​
​
​
​
​
Filed herewith

​
​
​
​
​
​
​
​
​
​
​

23.1
​
Consent of Independent Registered Public Accounting Firm
​
​
​
​
​
​
​
Filed herewith

​
​
​
​
​
​
​
​
​
​
​

31.1
​
Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
​
​
​
​
​
​
​
Filed herewith

​
​
​
​
​
​
​
​
​
​
​

31.2
​
Certification of the Principal Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
​
​
​
​
​
​
​
Filed herewith

​
​
​
​
​
​
​
​
​
​
​

32.1
​
Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
​
​
​
​
​
​
​
Filed herewith

​
​
​
​
​
​
​
​
​
​
​

32.2
​
Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
​
​
​
​
​
​
​
Filed herewith

​
​
​
​
​
​
​
​
​
​
​

97.1
​
Compensation Clawback Policy
​
10-K
​
000-26966
​
97.1
​
February 20, 2024

​
​
​
​
​
​
​
​
​
​
​

101.INS
​
Inline XBRL Instance Document
​
​
​
​
​
​
​
Filed herewith

​
​
​
​
​
​
​
​
​
​
​

101.SCH
​
Inline XBRL Taxonomy Extension Schema Document
​
​
​
​
​
​
​
Filed herewith

98

Table of Contents

Exhibit
​
​
​
Incorporated by Reference

Number
  ​ ​
Description
  ​ ​
Form
  ​ ​
File No.
  ​ ​
Exhibit
  ​ ​
Filing Date

​
​
​
​
​
​
​
​
​
​
​

​
​
​
​
​
​
​
​
​
​
​

101.CAL
​
Inline XBRL Taxonomy Extension Calculation Linkbase Document
​
​
​
​
​
​
​
Filed herewith

​
​
​
​
​
​
​
​
​
​
​

101.DEF
​
Inline XBRL Taxonomy Extension Definition Linkbase Document
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Filed herewith

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101.LAB
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Inline XBRL Taxonomy Extension Label Linkbase Document
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Filed herewith 

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101.PRE
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Inline XBRL Taxonomy Extension Presentation Linkbase Document
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Filed herewith

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104
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Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101)
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Filed herewith

*     Management contract or compensatory plan.
**   Schedules, exhibits, and similar supporting attachments or agreements have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Advanced Energy Industries, Inc. agrees to furnish a supplemental copy of any omitted schedule or similar attachment to the SEC upon request.
*** Certain personally identifiable information has been omitted from this exhibit pursuant to Item 601(a)(6) of Regulation S-K.
ITEM 16.           FORM 10-K SUMMARY
None.
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99

Table of Contents

SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this annual report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
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ADVANCED ENERGY INDUSTRIES, INC.

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(Registrant)

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/s/ Stephen D. Kelley

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Stephen D. Kelley

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Chief Executive Officer

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Date:
February 13, 2026

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Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
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Signatures
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Title
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Date

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/s/ Stephen D. Kelley
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Chief Executive Officer and Director
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February 13, 2026

Stephen D. Kelley
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(Principal Executive Officer)
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/s/ Paul Oldham
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Chief Financial Officer and Executive Vice President
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February 13, 2026

Paul Oldham
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(Principal Financial Officer)
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/s/ Bernard R. Colpitts, Jr.
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Chief Accounting Officer and Senior Vice President
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February 13, 2026

Bernard R. Colpitts, Jr.
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(Principal Accounting Officer)
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/s/ Grant H. Beard
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Chairman of the Board
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February 13, 2026

Grant H. Beard
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/s/ Frederick A. Ball
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Director
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February 13, 2026

Frederick A. Ball
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/s/ Anne T. DelSanto
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Director
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February 13, 2026

Anne T. DelSanto
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/s/ Tina M. Donikowski
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Director
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February 13, 2026

Tina M. Donikowski
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/s/ Ronald C. Foster
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Director
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February 13, 2026

Ronald C. Foster
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/s/ Lanesha T. Minnix
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Director
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February 13, 2026

Lanesha T. Minnix
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/s/ David W. Reed
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Director
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February 13, 2026

David W. Reed
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/s/ John A. Roush
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Director
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February 13, 2026

John A. Roush
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/s/ Brian M. Shirley
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Director
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February 13, 2026

Brian M. Shirley
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100